ABA Survey: Ag Borrower Profitability Increased in 2021

Photo of Nate Franzen speaking at ABA's Agricultural Bankers ConferenceA majority of ag lenders—69.7%—reported that overall farm profitability increased in the prior year, due in large part to government support, which is estimated to account for 38% of ag borrowers’ net income, according to the 2021 Agricultural Lenders Survey conducted by ABA and Farmer Mac. This marks the first time since the survey began in 2016 that a majority of ag lenders reported an increase in overall farm profitability. Lenders also said they expect that 80% of their borrowers will be profitable in 2021.

Competition with other lenders was the greatest overall concern facing ag lenders in 2021, with just more than half ranking it among their top two concerns, up 13 points from last year. The majority—82.3%—said the Farm Credit System was their number one competitor. Other top concerns included weak loan demand, interest rate volatility and credit quality and ag loan deterioration.

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ABA, Banking Groups Express Opposition to Proposed SBA Direct Lending Program

ABA and a coalition of financial trade groups yesterday expressed opposition to a proposed Small Business Administration direct lending program that has been included in the Biden administration’s “Build Back Better” legislation. In a letter to congressional leaders yesterday, the groups raised concerns that the proposed program will undermine existing public-private partnership SBA loan programs and potentially limit access to capital to small businesses “due to increased complexity.”

The proposed Build Back Better legislation provides only 90 days to stand up a $2 billion direct lending program, the groups wrote, adding that the complexity of setting up a lending program so quickly will lead to issues that could drive applicants away from any SBA lending program, including the popular 7(a) lending program in which many banks and credit unions participate. “The regulatory safeguards that exist for financial institutions have proven to be a much better shield to fraud and defaults as compared to SBA-run programs,” the trade groups said.

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Banking, Consumer Groups Call for Oversight Hearing on NCUA

In a joint letter with the Independent Community Bankers of America and the National Community Reinvestment Coalition yesterday, ABA urged lawmakers to schedule an oversight hearing for the National Credit Union Administration (NCUA) in light of several recent NCUA rulemakings that the groups said “would undermine important statutory guardrails designed to protect low-income consumers.” The groups noted that an NCUA-specific congressional hearing has not been held since 2015.

The letter came one day before NCUA is set to finalize a new rule that would expand the definition of “service facility” for common bond credit unions, enabling them to add groups to their fields of membership on effectively a national basis—disregarding the statutory requirement that credit unions be in “reasonable proximity” to the customers they seek to serve. The NCUA board appears likely to approve the rule even amid opposition from the current Democratic NCUA Chairman Todd Harper and former chairman Mark McWatters, a Republican. Previously, NCUA finalized another controversial rule—which Harper also opposed—expanding the range of permissible lending activities for credit union service organizations, or CUSOs.

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OCC's Hsu: Bank Board Guidance on Climate Risk Coming Soon

In remarks Monday at the OCC, Acting Comptroller Michael Hsu indicated that the agency plans to address climate change risk regulation with high-level framework guidance and five “range of practices” questions for large-bank boards by the end of 2021.

The questions are intended to spur conversations at the board level with management and to inform more detailed guidance that would likely be developed in 2022. Examinations based upon the guidance will follow after the more detailed guidance in 2022, and a focus on climate risk and midsize and smaller banks will follow after that, he said.

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Federal Court Issues Administrative Stay of Vaccine Mandate

A federal appellate court on Saturday issued an administrative stay of enforcement of the emergency temporary standard that will require all employers with 100 or more employees to be fully vaccinated or test weekly for COVID-19. The stay—which appears to apply nationwide—was issued in response to a legal challenge to the ETS filed by several governors and private entities.

Under the standard—which was developed by the Occupational Safety and Health Administration at the direction of President Biden—employees of covered firms would have until Jan. 4 to receive the vaccine or be required to produce a negative test on “at least a weekly basis.”

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ABA: 'Whole-of-Government' Approach Needed to Address Chip Shortage

With millions of microchips needed annually to equip smart chip payment cards, ABA yesterday told the Commerce Department that a “whole-of-government approach” is needed to weather the expected shortages in the global chip supply.

Large numbers of chip cards need to be replaced each year as they expire, ABA said, adding that without a sufficient supply of chips, some consumers and businesses may not receive a timely replacement of an expired, lost or stolen payment card.

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State Announces Funding for Health Services for Farmers and Ranchers

The South Dakota Department of Agriculture and Natural Resources (DANR) has allocated $500,000 to support mental and behavioral health programs for rural areas and specifically farmers and ranchers across the state. DANR is partnering with the Department of Social Services (DSS), Avera Health and South Dakota State University (SDSU) Extension to fund new and existing programs.

DSS will receive $120,000 to support its Behavioral Health Voucher Program through 605 Strong, and DANR will receive $35,000 to promote the expansion of the program. Farmers and ranchers will now be eligible to receive mental health or substance use disorder counseling at no cost by calling 211 or visiting https://www.605strong.com/#voucher-program.

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Survey: Banks Continue to Offer More Products Favorable for Older Customers

As older Americans—those born before 1965—hold 65% of deposit balances in the U.S., banks have continued to offer more products with terms that are favorable to them, according to the ABA Foundation’s 2021 Older Americans Benchmarking Report released yesterday.

The survey found that 60% of responding banks offer favorable products for older customers, an increase from 53% in 2019. Banks with less than $1 billion in assets are most likely to offer those products at 67%. The products offered to older customers include no-fee checking accounts, no-minimum balances and senior savings accounts with no fees. Many banks also waive fees for providing paper statements on senior accounts, as some older customers may be less likely than younger ones to use online banking, the survey found.

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Dusty Pinske Appointed to SDBA Board of Directors

Photo of Dusty PinskeDusty Pinske, First Interstate Bank, Rapid City, has been appointed to the Board of Directors for the South Dakota Bankers Association (SDBA), the professional and trade association for South Dakota’s financial services industry. SDBA Chair Kristina Schaefer, First Bank & Trust, Sioux Falls, appointed Pinske to fill a vacant seat on the SDBA Board of Directors through April 30, 2022.

Pinske has been with First Interstate Bank for 24 years (12 with First Western Bank and 12 with First Interstate Bank). She has worked at numerous First Interstate Bank locations in South Dakota and has held many positions including mortgage lending, small business lending and branch management. Pinske’s current role is VP, Retail Manager III for the bank’s Rapid City market. She enjoys building strong teams that work well together to achieve common goals.

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Twenty-One House Democrats Call for IRS Reporting Proposal to be Cut from Spending Bill

A group of 21 Democratic representatives wrote to House leadership yesterday calling for the removal of the Biden administration’s controversial proposal for financial institutions to report information on gross inflows and outflows on all accounts above a certain de minimis threshold. “We respectfully request that this proposal be withdrawn from further consideration in favor of a more targeted approach,” the lawmakers wrote to House Speaker Nancy Pelosi (D-Calif.) and House Ways and Means Committee Chairman Richard Neal (D-Mass.).

The Democrats said that they share the proposal’s goal of reducing the so-called tax gap but that “the data that would be turned over to the IRS is overly broad and raises significant privacy concerns. We have little information about how the IRS plans to protect or use this massive trove of data. Americans expect their bank or credit union to safeguard their financial information. This proposal would erode trust in financial services providers.”

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SDBA Holds NEXT STEP: Emerging Leaders Summit in Sioux Falls

Photo of SDBA Emerging Leaders SummitEighty-five emerging bank leaders from across the state gathered in Sioux Fall yesterday for the SDBA's NEXT STEP: Emerging Leaders Summit. The annual event is designed to help cultivate, connect, engage and empower South Dakota’s future bank leaders.

Topics at this year's event included the challenge of leadership, having tough conversations in the workplace, what not to say to handle complex and diverse situations, lessons in leadership, banking in the time of COVID-19 and self management versus crisis management. The event also included ignite sessions presented by five emerging bank leaders, speed networking and a reception the evening prior at Hotel on Phillips. 

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Scholarships Now Available Through South Dakota Bankers Foundation

Photo of college students.Looking for ways to recruit new bankers to your organization? The Sound Dakota Bankers Foundation can help. Don’t miss out on the opportunity to apply for a $2,000 scholarship to award to a potential future banker.

Applications must be submitted through the parent bank, however, scholarships may be awarded through any of your organization’s locations. These scholarships must be awarded to South Dakota college juniors/seniors with an expressed interest in banking/financial services or second-year South Dakota technical school students with an expressed interest in banking/financial services. 

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Sen. Thune: IRS Tax Reporting Proposal an Unprecedented Shakedown of American's Financial Data

U.S. Sen. John Thune (R-S.D.) on Tuesday reiterated his strong opposition to Democrats’ proposal to double the size of the IRS and monitor everyday Americans’ bank accounts to offset the cost of additional spending programs in the American Families Plan.

In September, Thune led a letter to Senate Majority Leader Chuck Schumer (D-N.Y.) urging him to abandon the Biden administration’s unprecedented proposal to expand the reporting of the private, confidential financial data of law-abiding Americans from financial institutions to the Internal Revenue Service (IRS). Thune’s letter was signed by every Republican member of the Senate Committee on Finance and the Senate Committee on Banking, Housing, and Urban Affairs.

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Natalie Likness Joins SDBA as Member Services Coordinator

Photo of Natalie LiknessNatalie Likness is the newest face at the SDBA, having joined the Association on Oct. 12 as its member services coordinator.

A Pierre native, Likness brings to the SDBA her previous experience as public relations coordinator for the South Dakota Governor’s Office of Economic Development (GOED) and communications and community outreach coordinator for the Pierre Area Chamber of Commerce. She most recently served as assistant executive director at Edgewood Healthcare, an assisted living community in Pierre.

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How the IRS Tax Reporting Proposal Would Affect You

By Karlton Adam, President and CEO, South Dakota Bankers Association

The Biden administration is proposing a sweeping expansion of tax information reporting aimed at raising revenue to help offset the cost of additional spending programs in the American Families Plan. If enacted, the proposal would require banks to report to the IRS detailed information on the inflows and outflows of every customer account above $600. Every South Dakotan should be concerned with this significant expansion of government data collection and abuse of consumer privacy.

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SDBA to Hold IRA Update Seminar

The SDBA will hold the IRA Update Seminar on Nov. 4 at Hyatt Place, Sioux Falls South in Sioux Falls. This seminar builds on the attendees’ knowledge of IRA basics to address some of the more complex IRA issues their financial organizations may handle. The course will also include all changes that have occurred and discuss any pending legislation. This is a specialty session; previous IRA knowledge is assumed. The instructor uses real-world exercises to help participants apply information to job-related situations.  Learn more and register

Federal Reserve Governor Michelle Bowman Visits South Dakota, Speaks with Bankers

Photo of Federal Reserve Governor Michelle Bowman visiting SDBA. Federal Reserve Governor Michelle Bowman, a onetime Midwest community banker, spoke about her outlook for the U.S. economy and what the Federal Reserve has been doing to support economic activity during the COVID-19 pandemic recovery during a presentation at South Dakota State University in Brookings last evening. She also touched on what she has learned of the economic conditions in South Dakota from meeting with business and community leaders throughout the state this week.

Bowman made a pre-dawn visit to Mount Rushmore on Tuesday while en route to the Pine Ridge Indian Reservation. Later on Tuesday, she met with state, business and tribal leaders in Pierre, including a visit with SDBA President Karl Adam and area agribusiness leaders at the SDBA's office. She also met with a group of SDBA bankers in Brookings yesterday prior to speaking to the public Tuesday evening as part of the Dykhouse Scholar Program in Money, Banking and Regulation in the Ness School of Management and Economics at SDSU.

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Pelosi: Budget Reconciliation Package to Include Tax Reporting Provision

House Speaker Nancy Pelosi (D-Calif.) told reporters on Tuesday that Democrats plan to include a controversial tax reporting provision in their budget reconciliation package that would require banks to report information to the Internal Revenue Service on gross inflows and outflows on customer accounts above a certain de minimis threshold.

Pelosi did not specify what the threshold would be, though Democrats have eyed a $10,000 threshold in recent days, up from the $600 threshold originally proposed by the Biden administration. Despite Pelosi’s remarks, House Democrats have not yet agreed on the details of a final reconciliation package, and no vote has been scheduled at this time. Any final version will have to also clear the U.S. Senate, where some Democrats are pushing for a smaller package.

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U.S. Coin Task Force Urges Increased Circulation of Coins

As part of October’s Get Coin Moving Month, the U.S. Coin Task Force—of which ABA is a member—is urging Americans to return their dormant coins into circulation. There is currently $46.8 billion in coins in circulation, according to the task force, but much of it is sitting unused in 128 million households.

"Returning coins into circulation by spending them, or depositing or exchanging them at banks or kiosks will make a meaningful difference for the millions of American people and businesses that rely on coins to support cash transactions,” the task force said.

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U.S. Postal Service Launches Financial Services Pilot Program in Select Cities

The U.S. Postal Service (USPS) last month quietly launched a pilot program in four U.S. cities offering expanded financial services at certain post office locations in Washington D.C., Baltimore, Falls Church, Va., and the Bronx, New York according to news reports. Consumers may now access check-cashing services at these locations, and USPS is contemplating piloting additional offerings such as bill paying services, ATM access, expanded money order capabilities and expanded wire transfer capabilities, according to reports.

Offering postal banking services on a larger scale would require congressional authorization. However, the pilot program marks a concerning first step toward enabling USPS to enter the banking business. ABA has long been a vocal opponent of postal banking and has previously noted that it could be perceived as a government-endorsed provider competing with taxpaying banks and would create risks that USPS is ill-suited to manage.

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