SDBA eNews

December 30, 2021

Nichols Recaps ABA's 2021 Accomplishments

In a year-end message to ABA member banks last week, ABA President and CEO Rob Nichols provided a recap of several major accomplishments made on behalf of the banking industry in 2021, including those related to the COVID-19 response, economy recovery, banking policy and financial inclusion.

Nichols highlighted bank efforts to support their customers throughout the pandemic and recovery, particularly through the Small Business Administration’s Paycheck Protection Program. He also highlighted efforts by ABA and bankers to defeat a controversial proposal to create a new bank account-based IRS reporting regime; educate senators from both parties on the policy views of former OCC nominee Saule Omarova; advocate for the withdrawal of several controversial rules, including the 2020 Community Reinvestment Act rule; and draw attention to the unlevel playing field between banks and credit unions, through the relaunch of the Reform Credit Unions campaign.

In addition, Nichols noted that in 2021, ABA continued its efforts to champion the Bank On movement as a way to promote financial inclusion; relaunched its successful #BanksNeverAskThat anti-phishing campaign; provided resources to help banks navigate the intersection of banking and technology; offered a free ABA speakers bureau to help member banks and state associations request ABA staff experts to speak at events; made its Frontline Compliance Training courses available to 1,600 banks; and updated its turnkey financial education resources to help provide critical information on financial management during the pandemic. Read the CEO Update.

Agencies: CBLR Returns to 9% on Jan. 1

With the expiration of coronavirus-related relief provided under the CARES Act, the community bank leverage ratio (CBLR) will revert to a minimum of 9% starting on Jan. 1, 2022, the banking agencies said last week. Banking organizations that elect the CBLR framework on their March 31, 2022, call reports will be subject to the requirement. “The community bank leverage ratio framework includes a two-quarter grace period that generally allows banking organizations additional time to build capital and manage their balance sheets to either remain in the framework or prepare to comply with the generally applicable risk-based and leverage capital requirements,” the agencies added.

The CBLR had been set at 8% since spring 2020. ABA and the state associations have been advocating passage of H.R. 6145, a bill introduced by Rep. Tracey Mann (R-Kan.) that would direct the regulators to set the CBLR between 8% and 8.5% until the end of 2024. 

“While today’s announcement by banking regulators on the scheduled year-end community bank leverage ratio increase was anticipated, it underscores the need for a legislative solution to support community banks and the services they provide to their customers, clients and communities,” said ABA President and CEO Rob Nichols. “This sensible, temporary solution would provide important relief to these institutions without undue risk to the financial system or to the communities in which these banks operate. We urge Congress to consider the bill as soon as possible.” Read more.

ABA Issues Staff Analyses on FinCEN AMLA Regulatory Work

ABA has released staff analyses of two regulatory releases from the Financial Crimes Enforcement Network implementing elements of Anti-Money Laundering Act (AMLA) of 2020. The first one analyzes FinCEN’s request for information on modernizing anti-money laundering regulations. With comments due Feb. 14, the RFI seeks feedback on how FinCEN can streamline, modernize, and update anti-money laundering and countering the financing of terrorism rules in the United States.

Meanwhile, another staff analysis covers FinCEN’s proposal to create a beneficial ownership registry for U.S. legal entities, as required in AMLA. The proposal—the first of three regulations to establish the registry—covers the terms of which entities must report. Comments are due Feb. 7. The staff analysis provides an overview of the proposal, its scope, definitions and timing.

Agencies Release 2020 CRA Data on Small Biz, Community Development Lending

The federal banking agencies last week released 2020 Community Reinvestment Act data on small business, small farm and community development lending. The CRA requires banks with more than $1.305 billion in assets to report data in these areas.

The 687 reporting banks originated or purchased 8.4 million small business loans totaling $461.8 billion. The total number of loans originated by reporting banks increased by about 9.7% from 2019, due largely to the Paycheck Protection Program, the agencies said. Small farm loan originations fell by about 1.7% year-on-year, while the total dollar amount increased by 7.9%. About 40.7% of the reported small business loans and 56.3% of reported farm loans were made to firms with less than $1 million in revenue.

A total of 621 banks reported community development lending activity totaling nearly $169 billion in 2020, a 52% increase from the amount reported in 2019, again largely attributable to PPP lending since many PPP loans that did not meet requirements for CRA small business loan reporting qualified for community development reporting. Read more

Fed Observes 'Unprecedented Decline' in In-Person Payments During COVID

Payment behavior “changed sharply in 2020 with the COVID-19 pandemic,” the Federal Reserve said in a new research brief last week. In-person card payments exhibited an “unprecedented decline” in 2020, with the number of these payments falling by 11.7 billion—the first one-year decline of in-person card payments ever seen in the Fed’s data. Meanwhile, remote card payments increased by 8.7 billion, the largest on-year increase ever observed.

The value of remote payments also exceeded the value of in-person payments for the first time in 2020, the Fed said, reaching $3.85 trillion, compared to $3.2 trillion for in-person payments. E-commerce was a key driver in the increase of remote card payments; in 2020, e-commerce transactions comprised 67.8% of remote card payments by number and 59.2% by value, compared with 64% and 54.8%, respectively in 2019.

The study also found that consumers continued to adopt new payments technologies during the pandemic, including contactless payments, which increased as a share of all in-person payments to 4.63%, up from 1.7% in 2019 and 0.77% in 2018. The adoption of digital wallet also picked up significantly in 2020, as did P2P payments, which saw a considerable spike in the first quarter. Read more.

FinCEN Accepting Nominations for BSA Advisory Group

FinCEN is also seeking nominees for its Bank Secrecy Act Advisory Group, which advises the Treasury Department on the operations of the Bank Secrecy Act. Individuals representing banks, trade groups and non-federal regulatory and law enforcement agencies may be nominated to the advisory group, and new members will serve a three-year term. Nominations must be received by Jan. 24. Read more and apply. For more information, contact ABA’s Rob Rowe .

Midwest Economic Forecast Forum to be Held on Jan. 4

The Midwest Economic Forecast Forum will be presented on Tuesday, Jan. 4, virtually by the Wisconsin Bankers Association, in partnership with the Illinois Bankers Association, Michigan Bankers Association, Minnesota Bankers Association, Montana Bankers Association and South Dakota Bankers Association. The forum will be held from 10:30 a.m. to noon CST.

Prepare for 2022 by joining an economic outlook with Minneapolis Fed President Neel Kashkari during this virtual event. Then listen to Dr. David Kohl, economist and professor emeritus with Virginia Tech, as he dives into the economic mega trends he expects in 2022 and beyond.

Bankers are encouraged to invite their best clients to virtually share these economic insights. Individual or group registration rates are available. Learn more and register

Learn Succession Planning How-To's on Jan. 7

Prairie Family Business Association will hold a Succession Planning How-To's Webinar on Friday, Jan. 7, at 10 a.m. CST. Learn from three families in various stages of their succession plans: David and Jan Johnson of Reliabank, Jarod Stec of Stec's Advertising, and Darcy Christenson of Quality and Triview Communications. You'll come away with strategies that work as well as pitfalls for you to avoid. Learn more and register.

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Question of the Week

Question: For an open-end credit card account, can a due date on the monthly billing statement vary if the usual due date is a Sunday? Example: The due date is usually the 12th of every month. However, Sept. 12, 2021, is a Sunday, therefore, the billing statement reflects the due date as Sept. 13, 2021, this month.

Answer: The answer to this question depends on how the bank determines their due date. The regulation provides the following requirements:

"6. Same day each month. The requirement that the due date be the same day each month means that the due date must generally be the same numerical date. For example, a consumer's due date could be the 25th of every month. In contrast, a due date that is the same relative date but not numerical date each month, such as the third Tuesday of the month, generally would not comply with this requirement. However, a consumer's due date may be the last day of each month, even though that date will not be the same numerical date. For example, if a consumer's due date is the last day of each month, it will fall on February 28th (or February 29th in a leap year) and on August 31st.

7. Change in due date. A creditor may adjust a consumer's due date from time to time provided that the new due date will be the same numerical date each month on an ongoing basis. For example, a creditor may choose to honor a consumer's request to change from a due date that is the 20th of each month to the 5th of each month or may choose to change a consumer's due date from time to time for operational reasons. See comment 2(a)(4)-3 for guidance on transitional billing cycles."

Regulation Z, § 1026.7(b)(11), Comment 6 –

"(A) The due date for a payment. The due date disclosed pursuant to this paragraph shall be the same day of the month for each billing cycle."

Regulation Z, § 1026.7(b)(11)(i)(A) –

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