FDIC Provides Temporary Relief for Banks with COVID-Bulked Balance Sheets

For banks that have experienced rapid and possibly short-term inflows of assets and deposits during the coronavirus pandemic, the FDIC on Tuesday issued an interim final rule providing relief from changed regulatory treatment as a result of those inflows. The agency noted that these inflows—a result of banks’ participation in the Paycheck Protection Program and other government-encouraged relief and recovery efforts—“may be temporary, but are significant and unpredictable.”

Under the rule, banks may determine the applicability of Part 363 of the FDIC’s regulations for fiscal years ending in 2021 with their consolidated total assets as of Dec. 31, 2019, or the beginning of fiscal years ending in 2021, whichever is less.

“With today’s actions on bank audit requirements, the FDIC has taken an important step toward alleviating the regulatory pressures on banks that have seen their balance sheets swell as a result of serving their customers during COVID-19, including absorbing an influx of deposits and participating in the critical Paycheck Protection Program,” said ABA SVP Hugh Carney. “Recognizing that the growth at these institutions is in safe assets and is a byproduct of the national response to the pandemic, we encourage other regulatory agencies and policymakers to consider taking similar steps.” Read the interim final rule.

Nichols Urges All Banks to Offer 'Bank On' Certified Accounts

To help reduce the number of unbanked Americans, ABA President and CEO Rob Nichols on Monday urged all banks to offer a Bank On-certified account. In his opening remarks at ABA’s Unconventional Convention, Nichols also commended the nation’s core processors for committing to make it easier for banks to offer these accounts.‌

“We believe that expanding the number of banks that offer these safe, affordable accounts can help lower the number of unbanked and underbanked in the country and promote financial inclusion,” Nichols said. Created by the Cities for Financial Empowerment Fund, Bank On accounts’ key features include low costs, no overdraft fees, robust transaction capabilities via a debit or prepaid card and free online bill pay.‌

Nichols also announced that 20 core technology providers—including Fiserv, FIS, Jack Henry and Associates and Finastra—have committed to simplify the process for their bank clients to create and offer a Bank On-certified account. “The core providers deserve credit for stepping up to support this important initiative and their bank customers,” Nichols added. “Their partnership will make it easier for banks across the country to offer these accounts and join the Bank On movement.”

Currently, 43 banks offer Bank On-certified accounts, and many banks may already offer accounts that meet the Bank On standards. “Old National has been a champion of the Bank On program since 2008, and today our Bank On-certified EZ Access account allows us to bring in new clients who otherwise might not have enjoyed the safety and convenience of a bank account,” commented Jim Ryan, chairman and CEO of Old National Bank in Evansville, Ind.

Podcast: Behind the Scenes with a 'Bank On' Product

While the FDIC’s latest figures on unbanked Americans show improvement between 2017 and 2019, the headline numbers mask the fact that some demographic categories face substantial disparities in access to mainstream finance. To address this gap, ABA recently encouraged all banks to offer Bank On-certified accounts — safe and affordable transaction accounts designed to meet the needs of unbanked Americans currently offered by 43 banks.

On the latest episode of the ABA Banking Journal Podcast, Old National Bank’s Ben Joergens discusses his bank’s experience launching a Bank On-certified account. Joergens explains the behind-the-scenes process of developing ONB EZ Access Checking, which has no minimum balance, five free money orders per month for bill payments, no overdraft fees and a monthly fee of $4.95. He also discusses how customers have responded—particularly customers who didn’t think they would find a bank account that worked for them.

ABA Chief Policy Officer Naomi Camper also provides background on Bank On and the development of the standards. This episode is part of a series this fall focused on how banks of all sizes are promoting financial inclusion, making the banking system work for all Americans.

Listen to the episode.
Learn more at joinbankon.org/certify.

First Dakota National Bank Honored with Brand Slam Marketing Award

The ABA recognized seven of the nation’s best bank marketing initiatives, including that of First Dakota National Bank headquartered in Yankton, at its Unconventional Convention on Monday. The 2020 ABA Brand Slam awards honored elite bank marketing strategies that stood out among hundreds of entries from banks of all sizes nationwide.

“Marketing is essential to nurturing a company’s reputation and enhancing its engagement with customers,” said Jim Edrington, ABA’s chief member engagement officer. “During a year filled with extraordinary challenges, these award winners have excelled at implementing creative solutions to make powerful connections with their customers and communities.”

First Dakota National Bank was honored for its video campaign titled “Not Canceled” used to effectively tell the bank's story. In early March, South Dakota consumers had weathered a steady stream of preemptive event cancellations and business closures as the novel coronavirus started impacting American lives. To help soften the blow, First Dakota created an uplifting TV spot encouraging consumers that there’s still plenty of good all around us, and that some things--like family, charity, kindness and compassion--can’t be canceled no matter how bleak things might seem. Watch the video.

A volunteer panel of 124 certified financial marketing professional-credentialed experts judged the concept, strategy, creativity, execution and impact of entries in seven categories: Crisis Communication, Integrated Marketing Campaign, Out of the Box Idea, Public Relations/Community Engagement Activity, Social Media Campaign, Video Campaign and Website Redesign. A winner was selected for each category. Read more about the award winners.

Promontory Interfinancial Network Changes its Name to IntraFi Network

Promontory Interfinancial Network, a SDBA associate member, announced this week during ABA’s Unconventional Convention that it has changed its name to IntraFi Network. The innovative fintech is adopting new names that better describe its suite of financial services — popular products that until now have included CDARS^®, Insured Cash Sweep^®, Insured Network Deposits^®. Going forward, the company’s deposit products will be consolidated into IntraFi^SM Network Deposits^SM and its funding products will become IntraFi Funding^SM.

The new name recognizes the evolution over the past 18 years, from a small fintech providing a single service for less than 100 banks to a company offering an array of all-weather solutions to thousands of institutions. It’s a new name, but the same people, products and service to financial institutions. Learn more.

SDBA to Hold Two Virtual Events Next Week

The SDBA will hold two virtual events next week--the NEXT STEP: Emerging Leaders Summit on Tuesday and Wednesday, Oct. 27-28, and Security Officers Conference on Tuesday, Oct. 27. There is still time to register for both events, which will be held via Zoom and also recorded.

NEXT STEP: Emerging Leaders is designed to help cultivate, connect, engage and empower South Dakota’s future bank leaders. This event will encourage emerging bank leaders to find and express their voices within their organizations, communities and the banking industry and provide opportunities to network and exchange ideas with other industry professionals. It will also increase emerging bank leaders’ knowledge of topics of interest to the banking industry and promote involvement and advocacy. Learn more and register.

The Security Officers Conference focuses on a range of issues of concern to security officers, facility personnel and management. Using current trends and examples, a variety of topics will be covered: pandemic fraud: what’s ahead, human trafficking, elder fraud: growing faster than the speed of age, social engineering—creating accomplices, financial crime investigations and preparing your case for law enforcement. Learn more and register.

ABA to Host Webinar with Regulators on COVID-19 and Bank Examination

The ABA will host a free, members-only webinar on Monday, Oct. 26, at 1 p.m. CDT on bank examinations and the updated guidance regarding COVID-19. In response to the pandemic, federal banking agencies jointly issued guidance to their examiners to encourage flexibility in their supervisory response.

ABA staff and senior leadership at FDIC, OCC and Federal Reserve will discuss the updated guidance including what kind of borrower outreach, analyses, accounting processes and documentation examiners are expecting. Register here.

Learn What Cyber Risks 2020 Has Exposed

Cybersecurity villains are a constant threat in the IT industry. That is because the methods are always changing. Add in a shakeup--like the pandemic and shift to work from home--and organizations are facing an increased threat landscape.

Join Marco today at noon to 1 p.m. CDT for the virtual Cyber Roundtable: What Risks 2020 Has Exposed. Marco will talk through the emerging threats seen in 2020 and how the security threats can impact your company. Don't miss this informative session to learn what organizations can do to modernize security and safeguard their data. Learn more and register.

Compliance Alliance

Question of the Week

Question: FCRA 222.91 - Section about address changes and card issuance. Do we only care of address changes made first followed by card request, versus card ordered and then address change?

Answer: So while the regulation and the guidance only refer to times when a debit or credit card is ordered shortly after a change of address is requested, it is highly advisable and a best practice to validate addresses in general because of the potential identity theft and red flag concerns.

Address validation requirements (12 CFR 222.91(c)). A card issuer must establish and implement policies and procedures to assess the validity of a change of address if it receives notification of a change of address for a consumer’s debit or credit card account and, within a short period of time afterwards (during at least the first 30 days after it receives such notification), the card issuer receives a request for an additional or replacement card for the same account. In such situations, the card issuer must not issue an additional or replacement card until it assesses the validity of the change of address in accordance with its policies and procedures.

https://www.federalreserve.gov/boarddocs/srletters/2008/SR0807a3.pdf

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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.