SDBA eNews

November 10, 2022

Ag Lender Survey: Interest Rate Volatility is Top Concern in 2023 

Agricultural lenders are primarily concerned with interest rate volatility in the coming year, based on the 2022 Agricultural Lender Survey by ABA and Farmer Mac. Forty-nine percent ranked interest rate volatility among their top two concerns, up 35.5 percentage points from last year. Rising rates helped bolster bank net interest margins, but a combination of higher funding costs, fears of weakening loan demand and strong competition is expected to cut into rising yields, according to today’s report released at ABA’s Agricultural Bankers Conference in Omaha, Nebraska.

Lenders said inflationary pressure is their top concern for producers. Liquidity and farm income, two of the top two concerns in prior years, were the second- and third-greatest concerns, respectively, in 2022. Lenders remain comparatively more concerned about weather and less concerned about total leverage than in prior survey years. Recession risk, a new category this year, was lenders’ fifth-highest ranked concern for producers. By comparison, lenders ranked “a slowing economic recovery” near the bottom of their list of concerns for producers in 2021.

For the second consecutive year, most ag lenders (66.3%) reported overall farm profitability increased, while one in ten reported profitability decline. Lenders expect conditions to deteriorate in 2023, with 52.6% projecting a decline in farm profitability—still well below the 2016-2020 survey average of 82.3%. Approximately four out of five ag lenders reported rising land values in 2022, consistent with last year. A growing percentage of lenders expected land values to slow down (59.4%) or decline (12.7%).

Top concerns after interest rate volatility were lender competition and weak ag loan demand. Approximately one in three respondents ranked competition among their top two concerns, down 17 points from last year. Nearly 80% ranked the Farm Credit System as their primary competitor for agricultural loans. Demand for loans secured by farmland increased in 2022 at about the same pace as in 2021. Demand for agricultural production loans also grew in 2022, reversing the downward trend reported last year. However, demand for ag production loans remains below the 2016-2018 survey average. Respondents anticipate that loan demand for both categories will continue to increase over the next 12 months.


National Survey: Bank Customers Continue Turning to Mobile Apps More Than Any Other Channel to Manage Their Accounts 

For the third year in a row, consumers are conducting their banking via mobile apps more often than any other method, according to a new survey conducted by Morning Consult on behalf of the American Bankers Association. The national survey found that consumers continued to embrace digital banking channels, with 45% of bank customers using apps on phones or other mobile devices as their top option for managing their bank account and 27% using online banking via laptop or PC the most in the past 12 months. Branch banking, which fell to 10% during the pandemic, increased to 14% at the expense of other channels such as ATMs (from 8% last year to 6% this year) and telephone calls (from 7% last year to 3% this year). 

These findings are consistent with a recent FDIC survey that found the use of mobile banking increased sharply between 2017 and 2021, becoming the most prevalent primary method of account access. 

“As mobile banking capabilities have evolved exponentially over the past decade thanks to bank investments in technology, we’ve seen many consumers become more comfortable embracing their phones and tablets to make everyday transactions,” said Brooke Ybarra, ABA’s senior vice president of innovation strategy. “When the pandemic made in-person interactions more difficult, even more people leveraged the easy-to-use technology at their fingertips to deposit checks, pay bills or send money to friends, and they haven’t looked back. At the same time, in-person branch visits continue to play an important albeit less frequent role for many bank customers, particularly when it comes to more complex transactions.”  

A breakdown of age demographics shows different preferences among different generations. More than half of Generation Z, Millennials and Generation X use mobile banking apps most often, while a plurality of Baby Boomers most often utilize online banking (38%). One in 5 Baby Boomers (20%) visit bank branches the most often, while only 6% of Gen Z prefer to visit a branch. [See infographic for a full breakdown of top banking preferences by age.]

ABA released an accompanying infographic highlighting the survey results. The data released today are the latest in a series of results gauging U.S. consumers’ preferences and opinions regarding banks and their services. ABA recently released additional survey data on major bank policy issues as well as data revealing that Americans are highly satisfied with their bank and variety of options, value credit card rewards and trust banks most to protect them from fraud and scams. The full results for today’s survey questions are as follows:

When asked “In the past year, which method did you use most often to manage your bank account(s)?” consumers responded as follows: 

  • Mobile (apps on smartphone or tablet) – 45%
  • Internet/Online (Laptop or PC) – 27%
  • Branches – 14%
  • ATM – 6%
  • Telephone (calls to your bank) – 3%
  • Mail – 2%
  • Don’t Know/no opinion – 3%

Age Breakdown:

  • Gen Z (1997-2012)
    • Mobile              — 56%
    • Mail                    — 2%
    • Telephone       — 5%
    • Branches         — 6%
    • ATM                   — 11%
    • Online               — 15%
  • Millennials (1981-1996)
    • Mobile                — 58%
    • Online                — 18%
    • Branches          — 9%
    • ATM                    — 8%
    • Mail                     — 3%
    • Telephone         — 3%
  • Gen X (1965-1980)
    • Mobile                — 50%
    • Online                — 23%
    • Branches           — 11%
    • Telephone         — 3%
    • Mail                      — 3%
    • ATM                     — 4%
  • Baby Boomers (1946-1964)
    • Online                — 38%
    • Mobile                — 32%
    • Branches           — 20%
    • ATM                     — 5%
    • Telephone         — 2%
    • Mail                      — 1%

About the Survey:

This poll was conducted by Morning Consult on behalf of the American Bankers Association from September 16-17, 2022, among a national sample of 2,211 adults. The interviews were conducted online and the data were weighted to approximate a target sample of adults based on age, race/ethnicity, gender, educational attainment, and region. Results from the full survey have a margin of error of plus or minus 2 percentage points.


SBA South Dakota District Seeks Nominations for Small Business Week 2023 

The U.S. Small Business Administration (SBA) announces the SBA South Dakota District Officeis accepting nominations for the 2023 National and South Dakota Small Business Week Awards, including the annual Small Business Person of the Year award.  Nominations are accepted through December 8, 2022, 3 p.m. CST. The awardees will be honored during national and statewide award ceremonies during National Small Business Week, the first week of May 2023.

Visit the SBA’s dedicated website at www.sba.gov/nsbw to download forms, criteria, and guidelines for submitting a nomination. The South Dakota District Nomination Guidelines and district awards categories can be found on the district’s website at www.sba.gov/district/south-dakota .

The SBA awards given in celebration of Small Business Week include the following categories:

NATIONAL:

  • Small Business Person of the Year: A business/owner from each of the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam will be selected for the State Winner award. The state award winners will compete for the title of National Small Business Person of the Year, SBA’s signature award.
  • Small Business Exporter of the Year
  • Phoenix Awards for Disaster Recovery:
    • Phoenix Award for Small Business Disaster Recovery
    • Phoenix Award for Small Business Disaster Recovery - Mitigation
    • Phoenix Award for Outstanding Contributions to Disaster Recovery, Public Official
    • Phoenix Award for Outstanding Contributions to Disaster Recovery, Volunteer
  • Federal Procurement Awards:
    • Small Business Prime Contractor of the Year
    • Small Business Subcontractor of the Year
    • Dwight D. Eisenhower Awards for Excellence (for large prime contractors who use small businesses as suppliers and contractors)
    • 8(a) Graduate of the Year
  • Awards to SBA Resource Partners:
    • Small Business Development Center (SBDC) Excellence and Innovation Center Award
    • Women’s Business Center of Excellence Award
    • Veterans Business Outreach Center of the Year
  • Small Business Investment Company of the Year

SOUTH DAKOTA:

  • Small Business Person of the Year (National and District – one nomination required for both)
  • Small Business Exporter (National and District – one nomination required for both)
  • Family-Owned Small Business: Nominees must serve as a majority owner & operator, or hold principal responsibility for operating a small business with at least a 15-year positive revenue history that has been passed down through one or more generations.
  • Minority-Owned Small Business: Any individual who qualifies as a minority, is at least 51% owner, and operates a small business with a three-year positive revenue history and a commitment to strengthen minority-owned businesses in the community.
  • Veteran-Owned Small Business: A business that is at least 51% veteran-owned with a positive revenue history and a commitment to strengthen veteran-owned businesses within the community.
  • Woman-Owned Small Business: A business that is at least 51% women-owned with a positive revenue history and a commitment to strengthen woman-owned businesses within the community.
  • Young Entrepreneur -Owned Small Business:  Any individual who serves as majority owner and operates or holds principal responsibility for operating a small business with a three-year positive revenue history, and who will not reach the age of 30 by June 1, 2023.
  • Small Business Champion: An organization/individual selected by the District Director who goes above and beyond as an economic advocate for small business in the State of South Dakota.

“Business owners and economic advocates work diligently throughout the year to ensure we have the goods and services we rely on,” said Jaime Wood, SBA SD District Director. “We have a long line of exceptional business awardees from previous years, and we are eager to continue acknowledging excellence in the business space.  These awards are for business owners and advocates who go the extra mile to make resounding economic and personal impact in their local communities and nationally.”

To obtain additional information on the award nomination process, please contact Michele Arends, SBA SD, at [email protected]. For current SBA SD information, please register for the district e-newsletter at www.sba.gov/updates.


CFPB Proposes Data-Sharing Rules

The CFPB has outlined proposals to implement Section 1033 of the Dodd-Frank Act, which require businesses to make a consumer’s financial information available to them or a third party at the consumer's direction.  The Bureau is considering proposals that would allow consumers who want to switch providers to transfer their account history to a new company, so they do not have to start over if they are unsatisfied with the service provided by an incumbent firm.

There are also proposals under consideration that include options around privacy for personal financial data authorized for third-party use, including limitations that would prevent third parties from reselling authorized data for other uses.  The CFPB is required by law to convene a small business review panel to consult with representatives of small entities likely to be affected by the regulations the agency is considering.  The panel will prepare a report on the input received from the small entities, which the CFPB will consider as it develops a proposed rule.  Comments must be submitted by January 25, 2023.

To read more, visit: https://www.consumerfinance.gov/about-us/newsroom/cfpb-kicks-off-personal-financial-data-rights-rulemaking/


Americans Cite Branch Availability as Reason for Bank Choice

A recent survey of bank customers found that roughly a quarter of respondents visit a bank branch at least once a month, with U.S. respondents the most likely to say that having a nearby branch is an important feature when choosing a bank. Systems software provider Epam polled 26,000 bank customers in eight countries, including 5,000 customers in the U.S. Thirty-eight percent of U.S. respondents said a nearby branch was important when choosing a bank, which was higher than the overall average of 32% and the highest among the nations surveyed.

Eighty-five percent of all respondents said they had visited a bank branch at least once during the past year, up slightly from 84% in similar survey in 2021. The main reasons for branch visits were making deposits (43%) and payments (22%). When asked why they visit branches, 35% of respondents cited face-to-face interactions, 32% said it was for services that can’t be accessed online and 26% said it was easier to do their banking in-person.


US Banks Processed $1.2 Billion for Ransomware Hackers Last Year

New data from the US Treasury Department shows ransomware attacks cost victims more than $1 billion in 2021.

The estimate comes from the Treasury’s Department’s Financial Crimes Enforcement Network (FinCEN), which looked at US banks and their filings concerning money transactions to suspected ransomware hackers. 

“In 2021, FinCEN received 1,489 ransomware-related filings worth nearly $1.2 billion, a 188% increase compared to the total of $416 million for 2020,” the Treasury Department wrote in a report published on Tuesday. 

Of the 1,489 filings made last year, 1,251 of them concerned incidents involving a ransomware demand or payment that occurred in 2021. “The total value of these incidents was roughly $886 million,” Treasury added. 

The report also shows that the number of filings for ransomware incidents coming from banks has sharply risen over the last few years. On average, FinCEN is receiving 132 and a median of 136 ransomware-related incidents per month, "although significant month-to-month variability was observed across the entire year,” the agency said. 

The numbers highlight the uphill battle the US faces in countering the persistent ransomware scourge, which can take entire company networks hostage. However, the Treasury Department also noted that in the second half of 2021 it released advisories to banks about alerting authorities to suspected ransomware incidents. So it’s possible the recent spike in the numbers comes from more financial institutions reporting ransomware payments. 

View the full article here.


CISA News: Cyber Criminals and Social Media

Cybercriminals use social media to spread malware, malicious links, and malicious advertising. They can also leverage hacked credentials to refine their malware and scamming targets. In addition, they will use the “oversharing” of personal information to target online accounts. It is critical that you practice good cyber hygiene by understanding their tactics and knowing the cyber basics.

• Never click and tell. Limit what information you post on social media—from personal addresses to where you like to grab coffee. What many people do not realize is that these seemingly random details are all a criminal needs to know to target you, your loved ones, and your physical belongings—online and in the real world. Keep Social Security numbers, account numbers, and passwords private, as well as specific information about yourself, such as your full name, address, birthday, and even vacation plans.

• Connect only with people you trust. While some social networks might seem safer for connecting because of the limited personal information shared within them, keep your connections to people you know and trust. If communication from a post seems strange or odd, delete it.

• Speak up if you’re being cyberbullied online. Report any and all instances of cyberbullying you see or experience to the appropriate social platform.

• Report suspicious or harassing activity. Work with your social media platform to report and possibly block harassing users. Report an incident if you have been a victim of cybercrime. Local and national authorities are ready to help you.


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QUESTION OF THE WEEK

Q. We are planning on opening a loan production office. What are the signage requirements?

A.  Not all loan production offices are the same, and the signage required is going to depend on which activities take place there. If you do not take deposits, the “Member FDIC” signage is not required, but it's still best practice. You will need the CIP notice if you will be taking applications and the Equal Housing Lender notice. The FCRA notice is not technically required, but is highly recommended. The HMDA Statement notice will not be required if the LPO is not a branch. Lastly, all the employment disclosures (EEOC, Federal wage, Employee polygraph, OSHA, FMLA) are required as well. Our Bank Lobby Signage tool can assist in breaking down the general signage requirement and help determine which signs are needed in your loan production office depending on the activities that take place there.
Bank Lobby Signage | Compliance Alliance

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 [email protected] and ask for our Membership Team.

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