South Dakota Banks Remain Financially Solid

South Dakota banks are ensuring the delivery of important financial services such as money and credit availability, while proactively working to safeguard the health and safety of their customers, staff and communities as the COVID-19 situation evolves. This is the message the SDBA shared in a press release on Tuesday.

With approximately $692 billion in deposits and strong capital levels, South Dakota banks remain financially solid and stand ready to provide important financial services to our fellow South Dakotans. South Dakota banks will look to deliver a larger number of products and services through their enhanced mobile and digital channels. Federal and state regulation requires financial institutions to have continuity plans and testing processes in place which address pandemic response scenarios.

“South Dakota’s banks are open for business,” said Sen. Mike Rounds. “This nation’s financial system is strong and healthy. The Federal Deposit Insurance Corporation, or FDIC, insures all deposits at insured banks including checking, savings accounts, money market deposit accounts and certificates of deposit up to the insurance limit of $250,000 per depositor.”

While each individual bank’s plan may differ, a growing number of South Dakota banks are implementing changes to minimize person-to-person contact and to encourage responsible social distancing, including:

Encouraging customers to utilize drive-through, digital and ATM channels for transactional services.
Closing or limiting lobby access to walk-in traffic and asking customers who desire personal or specific banker services to set up office appointments in advance of their visit.
Enhancing cleaning and sanitary practices to help mitigate the potential spread of the virus.
Implementing travel restrictions for staff members.
Encouraging customers to take advantage of debit and credit cards for purchases.

“South Dakota banks are the bedrock of their communities. Providing safe and reliable service is a key priority for every bank in our state, especially in challenging times like these,” said South Dakota Bankers Association (SDBA) Chair Shawn Rost, South Dakota market president for First Interstate Bank in Rapid City. “I am particularly proud of the steps SDBA member banks are taking to provide continuing support for their customers and, at the same time, protecting the health and safety of their neighbors and friends.”

The SDBA has created a coronavirus resource page, which includes links to how member banks are handling the COVID-19 situation. Read the full press release.

SDBA Postpones April Events

The SDBA has postponed two events which were originally scheduled for April: New Accounts Seminar and Agricultural Credit Conference.

Originally scheduled for April 8, the SDBA's New Accounts Seminar has been postponed to Oct. 14, 2020, at the Holiday Inn & Suites Sioux Falls--Airport in Sioux Falls. For those already registered, your registration will carry forward. If the new date does NOT work for you, please contact the SDBA Office at 605.224.1653 or email [email protected] for a refund.

Originally scheduled for April 15-17, the SDBA's Agricultural Credit Conference has been postponed to July 8-10, 2020, at the Ramkota Hotel & Conference Center in Pierre. If the new dates do NOT work for you, please contact the SDBA Office at 605.224.1653 or email [email protected] for a refund. Be watching for changes to the conference schedule, which we will post as soon as details are available.

The health and well-being of our members is of the upmost importance to the SDBA. We will be continually monitoring the COVID-19 situation and, if need be, will adjust other future events. The SDBA will continue to post scheduling updates on its coronavirus resource page.

SD Division of Banking Encourages Banks to Prepare

The South Dakota Division of Banking last week sent a memo to state-chartered banks encouraging them to be prepared for disruption in operations due to pandemic events. The Division encouraged banks to review recent guidance issued by the FFIEC and revise or establish appropriate pandemic plans in the event of a disruption.

These plans should be integrated into business continuity plans and address the threat of a pandemic outbreak and its potential impact on the delivery of critical financial services. Plans should also consider ways to maintain essential financial services for customers while limiting any impact to employees.

"Access to financial services is critical for all South Dakotans. While the magnitude of the impact to South Dakota from the current coronavirus outbreak is unknown, it is important nonetheless for your institution to be prepared," the Division said. "Division staff will continue to monitor the impact and alter onsite examination activities as needed, including having discussions with bank management during examination planning and off-site portions of examinations."

Read the full memo.

Fed Creates Liquidity Facility for Money Market Funds

As part of its policy response to the market turmoil triggered by the coronavirus pandemic, the Federal Reserve overnight announced a new Money Market Mutual Fund Liquidity Facility, or MMLF. Through the MMLF, the Federal Reserve Bank of Boston will lend to financial institutions secured by high-quality assets purchased by the the institution from MMFs. Any depository institution, U.S. bank holding company or U.S. branch or agency of a foreign bank is eligible to participate.

Eligible collateral will include Treasurys, agency securities and qualifying asset-backed or unsecured commercial paper from U.S. issuers. A term sheet specified that the banking agencies will “act to fully neutralize the impact of a depository institution holding company or depository institution’s participation in the facility for purposes of regulatory capital requirements” by fully exempting from risk-based capital and leverage requirements any assets pledged to the MMLF or purchased from an MMF starting March 18 and intended to be pledged to the MMLF.

The Fed’s move came as MMFs—usually viewed as a safe, cash-like investment vehicle—saw increasing demand for redemptions by households, businesses and other investors, causing strain in the MMF market, according to news reports. The Treasury Department said it will support the MMLF with $10 billion worth of credit protection from its Exchange Stabilization Fund. Read more.

Agencies: Banks Can Use Capital, Liquidity Buffers to Meet Coronavirus Challenges

The Federal Reserve, FDIC and OCC on Tuesday issued a statement calling on banks to use their capital and liquidity buffers to help meet the needs of households and businesses as the coronavirus pandemic continues. The agencies noted that banks have “built up substantial levels of capital and liquidity in excess of regulatory buffers and minimums” in the years since the financial crisis.

“The agencies support banking organizations that choose to use their capital and liquidity buffers to lend and undertake other supportive actions in a safe and sound manner,” the statement said. “The agencies expect banking organizations to continue to manage their capital actions and liquidity risk prudently.”

The agencies also issued an interim final rule to facilitate the use of capital buffers to bolster lending. The rule, which takes effect upon publication in the Federal Register, revises the definition of eligible retained income for all depository institutions, bank holding companies and savings and loan holding companies subject to the agencies’ capital rule. The revised definition of eligible retained income will make any automatic limitations on capital distributions that could apply under the agencies’ capital rules more gradual. Read the statement. Read the interim final rule.

SBA Streamlines Criteria for States Requesting Disaster Assistance Loans

In response to the coronavirus pandemic, the Small Business Administration yesterday revised its criteria for states or territories seeking an economic injury declaration. This action will create a faster, easier qualification process for states seeking SBA disaster assistance as a result of the pandemic, while expanding statewide access to SBA disaster assistance loans, which offer up to $2 million for each affected small business.

Specifically, states or territories will only be required to certify that at least five small businesses within the state or territory have suffered substantial economic injury, regardless of where those businesses are located. SBA will make disaster assistance loans available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to the coronavirus. Read more.

On Monday, Gov. Kristi Noem released a statement that she is working to activate the SBA's Economic Injury Disaster Loan Fund Program in South Dakota to help eligible businesses and nonprofits impacted by COVID-19.

“We are working very closely with the SBA to ensure that South Dakota companies negatively impacted by Covid-19 have access to economic assistance,” said Noem. “This is unchartered territory for everyone, including the SBA, but my economic development team stands ready to help businesses and counties work through this process. I’m extremely thankful for the quick response and strong leadership that President Trump and his team at SBA are providing.”

Affected small businesses and nonprofits need to download, complete and submit this SBA EIDL Worksheet and instructions to expedite activation of the EIDL program. Completed forms may be submitted by email to [email protected]. Please note, this initial survey form is not a SBA loan application. When the EIDL program is activated, businesses will be contacted to apply directly to the SBA.

Banks Encouraged to Submit Information About Coronavirus Response

As the coronavirus pandemic continues to spread in the United States, with effects both on individuals’ health and the U.S. economy, ABA has launched a dedicated webpage on aba.com to help publicize the actions banks are taking to support their retail and business clients, protect their employees and support the economy.

This webpage is intended to help educate both the public and policymakers about how banks are helping customers affected by the coronavirus. ABA is calling on all banks to share information about their institution’s response to the pandemic by emailing [email protected] or filling out this survey. View the webpage.

FDIC Warns Consumers of Scams in Connection with Coronavirus

In response to recent scams connected to the coronavirus pandemic, the FDIC yesterday issued a statement reminding consumers that FDIC-insured banks remain the safest place to keep their money. FDIC emphasized that "since 1933, no depositor has ever lost a penny of FDIC-insured funds."

FDIC also highlighted its Electronic Deposit Insurance Estimator, a tool that can be used to determine deposit insurance coverage based on the accounts they may already have with a bank or accounts they are considering opening. Read more.

Question of the Week

Question: Our bank qualifies for the HMDA partial exemption. Some of the data points that we are exempt are things we don’t use, like credit scores or automatic underwriting systems. So in reporting these data points, should I report “Exempt” or “Not applicable” in those fields?

Answer: If the bank meets the partial exemption, the bank would report “Exempt/1111” for those fields if the bank is choosing to not report them. See generally: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_hmda_interpretive-procedural-rule_2018-08_executive-summary.pdf

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