SDBA Bank Technology Conference Registration Now Open

Technology Graphic The role of an IT professional is ever-changing, especially in today’s environment. The SDBA Bank Technology Conference set for Sept. 11-12 in Sioux Falls is designed to provide support as you keep on top of technology trends and scams, navigate the business of banking, and build and sustain your bank’s technology strategy. This conference will provide you with an opportunity to learn from industry experts, network with other IT colleagues, and visit with exhibitors to see and experience the latest in products and services.

Sessions will cover cybersecurity, website design, incident response plans, trends and developments, preparing for your next exam, recruitment and retention of IT personnel and much more. Presenters include Lee Wetherington, who will provide the bottom line on fintechs, bigtechs, branches, blockchain and more and how to navigate the most strategically important challenges and opportunities ahead and Dave DeFazio, who will talk about the Amazon Prime effect and surviving in the new subscription society. See the full agenda. Register to attend.

There is also an opportunity for business partners to exhibit and sponsor at this year's conference. Learn more.

2019 Scenes of South Dakota Calendar Photo Submission Deadline Nearing

If you are an amateur photographer and would like the opportunity to have your creativity displayed in homes and businesses across South Dakota, the 2019 Scenes of South Dakota Calendar is your chance. Produced by the SDBA, the calendar features photos of South Dakota submitted by South Dakota bankers, their family members and customers.

Send the SDBA your photos of farms, barns, agricultural activities, historical South Dakota locations, county fairs, carnivals, parades or festivals, fall colors, winter snowfalls, spring flowers, or summer fun. Any photo that shows the history and beauty of the great state of South Dakota qualifies. All photos submitted will be judged and the top photos will be featured throughout the 2019 Scenes of South Dakota calendar. The deadline to submit a photo is July 28, 2018. Photo submission form.

The Scenes of South Dakota Calendar is exclusive to SDBA member banks and associate members. The calendars are a great opportunity to thank your customers for their business and promote your bank or business. Your bank, branch or business' logo and name can be printed on each calendar to display in homes and businesses all year long. Calendar orders are due by Sept. 1, 2018, to get the low price of $1.19 per calendar. Calendar order form.

Agencies Grant S. 2155 Stress Testing Exemption to All Institutions Under $100B

Thanks to a joint statement by the federal banking agencies last Friday, the Dodd-Frank Act-mandated company-run stress tests have been ended for banks, as well as bank holding companies, with less than $100 billion in assets. Under S. 2155, the ABA-backed regulatory reform law enacted in May, BHCs with less than $100 billion were immediately exempted from company-run stress tests and other enhanced prudential standards, but not banks.

However, banks with less than $250 billion in assets will receive stress test relief under S. 2155 no later than 18 months after passage. “[T]o avoid unnecessary burden for depository institutions and to maintain consistency between BHCs and depository institutions,” the banking agencies said that they would use their authority to delay the deadline for regulatory requirements connected to stress testing for banks and savings and loan holding companies with less than $100 billion in assets until Nov. 25, 2019. At that point, the 18-month period would have passed and statutory exemptions will be in effect.

“Today’s action will spare many banks from having to participate in stress tests that both regulators and banks have said provided little value and only distracted from more effective safety and soundness tools,” said ABA President and CEO Rob Nichols. “Instead of a one-size-fits-all approach, regulators are now bringing us closer to a program of tailored supervision in stress testing, which will allow banks to devote more of their time and resources to serving their customers and communities and helping grow the U.S. economy.”

In a separate statement, the Fed announced that it will not collect assessments from BHCs and S&LHCs with under $100 billion in assets for the year 2018 and forward. The Fed also said it will not require BHCs with less than $100 billion in assets to comply with certain regulatory requirements connected to enhanced prudential standards under Regulations Y, WW and YY. Read the joint statement. Read the Fed's statement.

Agencies Outline Regulatory Approach to S. 2155 Policy Changes

In addition to outlining their approach to company-run stress testing and enhanced prudential standards in light of the new regulatory reform law, the agencies last Friday also announced how they intend to approach the implementation of several other provisions of S. 2155.

Consistent with the new law--which allows banks to risk weight at 150 percent only those high-volatility commercial real estate loans that fall under the statutory “HVCRE ADC” definition--regulators affirmed that banks may report only those loans when filing their Call Report and FR Y-9C. Alternatively, institutions and holding companies can report and risk-weight HVCRE exposures in a manner consistent with the current instructions to the Call Report and FR Y-9C until the agencies take further action, they said in a joint statement.

Regulators also clarified that they would not enforce existing final rules on the Volcker Rule, resolution planning or the treatment of municipal securities as high-quality liquid assets in ways that would contradict provisions included in the new law. They also announced that they will begin rulemaking to implement sections of the law raising the threshold for well-capitalized banks to be eligible for an 18-month examination cycle and treating certain municipal obligations as HQLA under the Liquidity Coverage Ratio. The agencies also said they are determining what further action is needed to implement the exemption for appraisal requirements for certain rural transactions.

“We understand these announcements are interim steps and look forward to providing comment as agencies consider permanent changes to tailor these regulations going forward,” said ABA President and CEO Rob Nichols. Read the joint statement.

Agencies Issue Statements on Implementing S. 2155's HMDA Reporting Exemptions

The Consumer Financial Protection Bureau, FDIC and OCC last Thursday each issued statements acknowledging the partial exemptions granted under S. 2155--the new regulatory reform law--for certain Home Mortgage Disclosure Act data reporting requirements for some insured depository institutions. The law provides a partial exemption to banks and credit unions for closed-end mortgage loans if the institution originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years and for open-end lines of credit if the institution originated fewer than 500 open-end lines of credit in each of the two preceding calendar years.

The agencies noted that the new law will not affect the format of the loan/application registers for institutions filing HMDA data collected in 2018. Institutions that no longer have to report information for certain data fields as a result of the partial exemption will enter an exemption code for the specified field. More information will be provided in a revised filing instructions guide, which the CFPB expects to issue later this summer.

The agencies also reminded institutions that--as previously announced--they will not require data resubmission for HMDA data collected in 2018 and reported in 2019 unless data errors are material. They added that they do not intend to assess penalties for errors in 2018 HMDA data, and will credit good-faith compliance efforts in their diagnostic examinations of 2018 HMDA data.

Read the CFPB's statement.
Read the OCC's statement.
Read the FDIC's statement.
For more information, contact ABA's Rod Alba.

Legal Battle Over CFPB Leadership Comes to Close

Consumer Financial Protection Bureau Deputy Director Leandra English said last Friday that she will resign this week, ending her court claim to be recognized as acting director of the bureau, which until now was pending in federal appeals court. A lower court earlier this year rebuffed English’s effort to be recognized as acting director over President Trump’s designee, Mick Mulvaney.

Mulvaney was appointed acting director under the Federal Vacancies Reform Act, which allows the president to name a currently serving Senate-confirmed official as acting director for a set period of time or until a permanent director is confirmed. The nomination of Kathy Kraninger is currently pending in the Senate. Named deputy director shortly before Richard Cordray’s resignation last fall, English sued Mulvaney and Trump on the theory that the Dodd-Frank Act made her the bureau’s acting director during a vacancy.

Learn How to Take Advantage of New Reciprocal Deposit Legislation

Thanks to the newly-signed regulatory relief bill, most reciprocal deposits are no longer brokered. This comes as banks face intense and increasing competition for deposits.

Join Promontory Interfinancial Network—the nation’s leading provider and inventor of reciprocal deposit placement services—for a free webinar that outlines key provisions of the new law and the impact ICS®, or Insured Cash Sweep®, and CDARS® can have on banks’ balance sheets. The webinar will also cover how banks can use ICS and CDARS to capitalize on the opportunities at hand; presenters will discuss cost-effective ways to use the services to attract high-value relationships (even as deposit competition intensifies) and to lock-in more low-cost funding (even as interest rates continue to rise).

The webinar "ICS and CDARS: Taking Advantage of New Opportunities" is a “must” for decision-makers at banks of all sizes, especially for community banks that utilize collateralized deposits and/or listing services. Promontory will offer the webinar at various dates and times. See the list of webinars and register to take part.

ABA Launches Campaign to Highlight Competition, Innovation in Payments

ABA on Monday launched a new media campaign called “Innovation Pays” to highlight ways that private-sector payment solutions provided by banks of all sizes are working for both consumers and merchants. The campaign highlights EMV chip technology, biometrics, tokenization, geolocation, end-to-end encryption, mobile payments and other innovations originating in the financial sector.

Innovation Pays emphasizes that the access, convenience and security customers and merchants enjoy from these innovations result from a competitive, free-market environment--not from government mandates. The campaign rebuts talking points by some in the retail industry that call for new mandates and regulatory requirements, such as mandatory chip and PIN, that would stifle the ability of banks to offer new technologies to merchants and consumers.

ABA is sharing the positive Innovation Pays message through geotargeted digital ads, sponsorship of Politico’s widely-read Morning Money newsletter and an ad in Tuesday's print issue of Politico. Learn more at InnovationPays.com.

Question of the Week

Question: Is the bank required to provide an appraisal notice when it takes real estate as an abundance of caution?

Answer: If a loan is secured by a dwelling, the appraisal notice is required. If the dwelling is an abundance of caution, an appraisal itself, however, would not be required. Abundance of caution specifically exempts the lender from hanging to get an appraisal, as long as it is a true abundance of caution. The bank should not invoke this exemption if its credit analysis reveals that the transaction would not be adequately secured by sources of repayment other than the real estate, even if the contributory value of the real estate collateral is low relative to the entire collateral pool and other repayment sources.

See Appendix A in the Interagency Appraisal and Evaluation Guidelines here: https://www.fdic.gov/regulations/laws/rules/5000-4800.html

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.