MAKING YOUR MARK: Choosing & Protecting Your Bank’s Trademark

Photo of Kara SemmlerA good trademark can send a message about your company, products or services and is a way to obtain and keep the consumer’s attention. 

Before personal devices and Facebook, trademarks were used to distinguish products. Today, trademarks continue to distinguish products but also serve as an effective communication tool to reach an audience who expects to receive information quickly and efficiently.

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Ness Named Banker of the Year by NorthWestern Financial Review Magazine

Photo of Larry NessLarry Ness, chairman and CEO of First Dakota National Bank, Yankton, has been named 2018 Banker of the Year by NorthWestern Financial Review magazine. Bell Bank partners with NorthWestern Financial Review as program sponsor to honor the 72-year-old banker. Ness started working at First Dakota National Bank when it was on the verge of failing and turned it into one of the nation’s leading agricultural lenders and one of South Dakota’s leading financial institutions.

"As chairman and CEO, Ness is reaping the rewards of a lifetime of work," says NorthWestern Financial Review publisher Tom Bengtson. "Ness shares many leadership traits with previous Banker of the Year selections, including having a knack for innovation, aggressively recruiting talent, recognizing opportunities in tough times, being engaged in helping the community, and gratitude.

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Registration Open for SDBA/NDBA Dakota School of Lending Principles

Photo of LendingThe Dakota School of Lending Principles, hosted by the SDBA and co-sponsored by the NDBA on April 24- 27, 2018, in Aberdeen, S.D., is a learning event with one foot grounded in the classroom and one foot in the bank. This school allows students to learn the theory and process of basic lending and then put this knowledge to work in actual nuts and bolts sessions. 

This school provides basic instruction appropriate for loan officer trainees, loan support personnel and personal bankers. To ensure exposure to bank structure and terminology, it is recommended that applicants have a minimum of six months lending experience or one year of loan department experience. Applicants not meeting the suggested prerequisites will be contacted to discuss admission qualifications.

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SEC Issues Guidance on Accounting for Tax Reform

Last Friday, the SEC issued a staff bulletin and related guidance regarding accounting for tax reform. Addressing several key financial reporting issues expressed to the commission by ABA and other organizations, the guidance recognizes the challenges associated with the timing and complexity of the calculations required by the enactment of tax reform. It recognizes that estimates are required and that there may be a need for adjustments when information becomes available. 


The guidance generally provides a one-year period for making refinements to estimates, but notes that if actual or reasonable estimations of tax reform effects are available, they should be reported in the year of enactment, which is 2017. It also includes guidance on Regulation 8K disclosure requirements. 

ABA believes that the SEC guidance also effectively sets the framework for expectations by the banking agencies in examining non-SEC registrants. 

CFPB to Delay Prepaid Rule Effective Date

The CFPB is expecting to issue a final rule amending its prepaid rule “soon after the new year,” the bureau announced last week. The final rule is expected to also extend the current April 1, 2018, effective date. ABA in August had expressed general support for the Bureau's proposed amendments but also urged an extended compliance date to allow banks more time for implementation. For more information, contact ABA's Nessa Feddis

Agencies Update Rulemaking Schedules

The federal regulatory agencies last week updated their rulemaking agendas for the remainder of 2017 and into 2018. In introducing the agendas, the Office of Management and Budget’s Office of Information and Regulatory Affairs noted that all federal regulators have been directed to reevaluate and eliminate burdensome regulations and reiterated the Trump administration’s position that guidance, FAQs and other sub-regulatory actions should not be used to impose new or additional legal obligations or requirements.

According to the schedules, the CFPB will conduct a review of inherited regulations, with a particular focus on open-end credit, including credit cards. As part of that effort, the CFPB will consider rules to modernize its database of credit card agreements and make the database more useful to the industry and the public. The bureau will also be in the “pre-rule activities” stage on small business lending data and overdrafts throughout 2018.

Additionally, the bureau is targeting February 2018 for a proposed rule on third-party debt collection, May 2018 for a proposed rule on the supervision of larger market participants in markets for personal loans, and December 2018 for a proposed HMDA rule on making permanent the adjusted threshold for collecting and reporting data on open-end lines of credit.

Meanwhile, the Financial Crimes Enforcement Network expects to issue technical amendments to customer due diligence requirements. The Federal Reserve, FDIC and OCC are planning to issue a final rule expanding the current exemption for appraisals of commercial properties, and a final rule to implement the Basel net stable funding ratio standards. The OCC and FDIC also plan to issue a final rule that would shorten the standard settlement cycle for certain securities purchased or sold by national banks, federal savings associations and FDIC-supervised institutions.

The Department of Labor is projecting October 2018 for issuing a proposed rule on the salary level for the executive, administrative and professional employee exemptions to the overtime and minimum wage requirements of the Fair Labor Standards Act. View the agendas. For more information, contact ABA's Virginia O’Neill or Jonathan Thessin.

Landmark Tax Reform Bill Clears Final Vote; Enactment Now Likely in 2018

The tax reform bill cleared its final procedural hurdle yesterday as the House voted again to approve the measure, marking the first fundamental changes to the U.S. tax code in more than three decades. The bill now goes to President Trump for signing, which may not happen until the first week of January.

“The changes in this bill, particularly the reduction in business tax rates, will help grow the economy and create jobs, which will benefit all Americans,” said ABA President and CEO Rob Nichols, who applauded the bill’s passage. “Thanks to this legislation, America’s banks will get to expand their role as the lifeblood of the economy by increasing financial services, investing in new and more convenient technologies, and opening more doors of opportunity for their customers.”

For technical reasons related to the budget, the President may delay signing the bill into law until the new year. This would shift the immediate accounting implications for earnings and capital to the next quarter, giving bankers more time to handle the impacts of, for example, devalued deferred tax assets. The delay, however, won’t alter the effective dates or substance of the legislation. Read highlights of the tax bill.

Burgess Letter to WSJ: It's Time to Tax Credit Unions

The tax code shouldn’t pick winners and losers, and businesses performing the same service should face the same rules, ABA Chairman Ken Burgess wrote in a letter to the Wall Street Journal posted yesterday. The letter was in response to a Dec. 5 article highlighting the fact that credit unions were left out of the tax reform bill.

“At a time when Congress is asking everyone from teachers to homeowners to give up tax breaks in the name of lowering rates, why is the trillion-dollar credit-union industry still getting a free ride?” wrote Burgess, chairman of FirstCapital Bank of Texas in Midland, Texas.

Burgess added that today’s credit unions look nothing like those of the 1930s, when Congress first exempted them from federal income tax and noted that there are now 282 credit unions with more than $1 billion in assets.

“These fast-growing and increasingly complex institutions are larger than 88 percent of the banks in this country, advertise that they are just like banks, take any customer who walks in the door (openly promoting that fact), devote significant resources to complex commercial lending and aggressively market to attract the affluent,” he said. “It’s time for Congress to end the uneven playing field and require the nation’s billion-dollar credit unions to pay their fair share.”

SDBA 2018 State Legislative Day to Include Special Events for Emerging Leaders

The SDBA 2018 State Legislative Day on Feb. 7 in Pierre is your opportunity to stay up-to-date on both state and federal legislation which could affect the banking industry and to visit with state legislators.

The day will feature two special events specifically for emerging leaders in the banking industry. Gov. Dennis Daugaard will address all attendees regarding the importance of banks on Main Street at 2 p.m. This session will be directed toward emerging leaders in the audience and will reinforce the necessity for and importance of the banking industry in building local economies. At 4 p.m., a reception for emerging leaders only will provide an opportunity to network exclusively with other emerging leaders.

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Registration Now Open for NDBA/SDBA Bank Management Conference

Now is the perfect time to make plans to attend the NDBA/SDBA Bank Management Conference in Scottsdale, Ariz.The conference will be held Feb. 16-17, 2018, at The Westin Kierland Resort & Spa, a AAA Four Diamond resort located adjacent to Kierland Commons, an outdoor shopping center with 70 stores and restaurants.

The conference program will include six keynote speakers who will provide timely insight on banking trends, the economic landscape, FinTech opportunities and workplace culture. In addition, Lt. Col. Robert J. Darling will share how he experienced first-hand the crisis leadership decisions in the White House on 9/11.

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ABA Urges Bankers to Contact Senators in Support of Reg Reform Bill

As momentum continues to build in Congress for common-sense regulatory reform, ABA is calling on all bankers to contact their senators and urge them to support S. 2155, a solid step towards right-sizing regulations for the nation’s banks. ABA has created two letters--one thanking the bill’s co-sponsors for their efforts and one urging general support for the bill--for bankers to use when contacting their lawmakers. Contact your senators now.

Yellen: Bipartisan Reg Reform Bill Would Help Fed Tailor Regulations

The bipartisan Senate regulatory reform bill introduced by Sen. Mike Crapo (R-Idaho) and a group of Senate Democrats and Republicans, including Sen. Mike Rounds, would help the Federal Reserve tailor its supervision of financial institutions, Fed Chairman Janet Yellen told the House Financial Services Committee.

"The legislation that's been proposed, I haven't had a chance to study every detail of it, but I would say it generally incorporates those principles and is a move in a direction that we think would be good in enabling us to appropriately tailor our supervision," Yellen said of S. 2155.

During testimony before the Senate Banking Committee on Tuesday, Federal Reserve Chairman-Designate Jerome Powell expressed general support for the Senate’s bipartisan framework for regulatory reform, which he referred to as “workable” and “sensible.” The draft legislation, which is expected to receive a committee vote next week, includes a number of reg relief provisions advocated by ABA, including simplifying capital calculations for community banks. 

Powell added that the Fed will continue to seek opportunities to provide relief for banks through tailored regulation that takes into account an institution’s size and risk profile. “We will continue to consider appropriate ways to ease regulatory burdens while preserving core reforms--strong levels of capital and liquidity, stress testing and resolution planning--so that banks can provide the credit to families and businesses necessary to sustain a prosperous economy,” he said. “In doing so, we must be clear and transparent about the principles that are driving our decisions and about the expectations we have for the institutions we regulate.” 

Powell also noted that the financial system is significantly stronger today than it was at the time of financial crisis and told lawmakers that he does not believe that any banks today are “too big to fail.” Read Powell's testimony.





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SD Banking Division Issues Money and Mortgage Lender Reporting Guidance

House Bill 1179 passed during the 2017 Legislative Session and became effective July 1, 2017. It created limited exemptions for certain money lenders and nonresidential mortgage lenders under SDCL Chapters 54-4 and 54-14.
 
Official guidance on House Bill 1179 and the required annual reporting forms are posted at dlr.sd.gov/banking. Annual reports must be filed with the South Dakota Division of Banking by Dec. 31, 2017.  
 
The reporting requirement included in House Bill 1179 is not intended to apply to loans made between family members. Additional questions can be directed to the South Dakota Division of Banking at 605.773.3421.

2018 High School Scholarship Program Application Now Available

The South Dakota Bankers Foundation has allocated $90,000 for the High School Scholarship Program for 2018. Matched by recipient banks, the program will result in a total of $180,000 in high school scholarships awarded to high school seniors throughout South Dakota in 2018.

Scholarship are available in $500 increments to the first 180 banks/branches who agree to match an equal amount. Banks who participated in the High School Scholarship Capital Campaign are eligible to apply for funding. 

Students who receive the scholarships must be high school seniors who plan to attend an accredited South Dakota college, university, vocational technical school or community college on a full-time basis. Winners must agree to have their names released to the media. Other scholarship eligibility requirements may apply as determined by the sponsoring bank. The deadline for SDBA banks to apply for high school scholarship funding is Dec. 22, 2017. Learn more and apply.

South Dakota Banking Division Nationally Accredited

The South Dakota Division of Banking has received a certificate of accreditation from the Conference of State Banking Supervisors (CSBS). This latest accreditation is the Division’s third consecutive five-year accreditation.

“South Dakota has an experienced team of banking regulators,” said state Labor and Regulation Secretary Marcia Hultman. “The Division practices the highest standards while serving the public and our banks, trust companies and other financial institutions.”

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Appraisal Qualifications Board Issues New Proposal to Combat Appraiser Shortage

As lenders continue to raise concerns about a lack of certified appraisers, particularly in rural areas, the Appraisal Qualifications Board last week released a fourth exposure draft of a proposal to change the qualification criteria for real property appraisers.

Importantly, the AQB proposed to remove college degree requirements for licensed residential appraisers and provide alternatives to the bachelor’s degree requirement for certified residential appraisals. The proposal also outlines an alternative track for licensed residential appraisers to become certified without obtaining a bachelor’s degree. In addition, it would reduce the number of field hours needed from 2,000 to 1,000 for licensed appraisers and 2,500 to 1,500 for certified appraisers.

ABA has previously called for changes to the appraiser qualifications as part of its ongoing effort to address the appraiser shortage in rural areas and welcomed the proposal. Comments on the proposal are due Jan. 12. View the proposal. For more information, contact ABA's Sharon Whitaker.

Farm Profitability Remains Down but Fewer Lenders Report Declines

Farm profitability continued to decline in the first half of 2017, according to the latest agricultural lenders survey conducted by ABA and Farmer Mac. While the overwhelming majority of ag lenders--82 percent--reported declines in profitability, that figure was down seven points from six months before. The approval rate for ag loans was 84 percent.

“We were encouraged to see that lenders remain ready to assist farmers and fulfill their credit needs despite the drag in the agricultural economy,” said Brittany Kleinpaste, director of economic policy and research at ABA. “Overall, the data showed that agricultural lenders are a little more optimistic about what’s ahead for their customers than they were in December of 2016.”

Just over half of the lenders surveyed reported an increase in demand for agricultural operating loans, and 53 percent said they expect that trend to continue over the next six months. Lenders were also more confident in stable land values than in the previous survey.

Commodity prices continued to be a top concern among 93 percent of ag lenders, particularly grain and dairy, the survey found. In addition, 87 percent said they were concerned about liquidity, 85 percent were concerned about farm income and 77 percent were concerned about farm leverage. View the survey results.

Trump Makes Arbitration Rule Repeal Official

President Trump yesterday signed the Congressional Review Act resolution invalidating the Consumer Financial Protection Bureau’s final rule that had effectively banned the use of mandatory arbitration for consumer financial products. ABA President and CEO Rob Nichols attended the signing at the White House along with other leaders from financial and business groups.

The signing marks a hard-fought victory for the banking industry and for ABA, which has been vocally opposed to the rule since it was proposed in 2015. In comments to the CFPB and lawmakers, ABA repeatedly pointed out that the arbitration rule would have imposed significant costs on consumers and banks of all sizes while enriching plaintiffs’ lawyers.

In an op-ed for The Hill newspaper this morning, Nichols and U.S. Chamber of Commerce President and CEO Tom Donohue wrote that the repeal is a victory for consumers. "Arbitration provides vastly better outcomes for consumers," they wrote. "The CFPB’s study of the topic showed that in cases where arbitrators found for consumers and granted an award, the average award was $5,389. Meanwhile, in 87 percent of class action settlements the bureau studied, consumers received nothing. The 13 percent of those that resulted in settlements only got money to an estimated 4 percent of class members--and the average amount was just $32.35." Read the op-ed.

SDBA Encourages Bankers to Share Video Showcasing Bank Responses to Hurricanes

The ABA unveiled a new video spotlighting how bankers pitched in and responded to the wave of devastating hurricanes that hit Texas, Florida and Puerto Rico this fall.

In Texas, the six-minute video spotlights the efforts of one community Bank in Rockport, where Hurricane Harvey made landfall. It also showcases a commercial lender working as a first responder in the Houston area, bank support for small business recovery and food relief and even a Pennsylvania bank whose employees personally delivered a truckload of supplies.

Meanwhile, in Florida, the video shows how a community bank helped business customers flooded by Hurricane Irma run payroll over the bank’s systems, how a regional bank deployed a mobile branch to open right away and how a community bank provided much-needed supplies to a local nonprofit.

ABA continues to urge bankers to join the association and its employees in supporting the ongoing recovery from hurricanes Harvey, Irma and Maria. Watch the video and donate.

CFPB Outlines Principles for Third-Party Data Access

The Consumer Financial Protection Bureau yesterday issued nine guiding principles for protecting consumers that choose to share their financial data with third parties and data aggregators. The principles were released after the CFPB last year conducted a formal investigation into “screen scraping,” a process in which consumers provide their online banking credentials to a third-party app or tool. The principles do not reflect new or alter any existing guidance.

While the CFPB affirmed that consumers should generally have the ability to share their financial data, it noted that consumers should not be required to give up their banking credentials to do so. The principles establish that third parties that are granted access to customer data should use it only to the extent necessary to provide the products and services selected by the customer, and that the data should be accessed, stored and used safely and securely. In addition, the CFPB emphasized that consumers should have the ability to quickly review who has access to their data and have disputes over unauthorized access resolved in a timely manner.

ABA welcomed the CFPB’s commitment to protecting consumer financial data as new technologies continue to emerge and noted that the principles incorporate several recommendations the association made in previous comments to the bureau. “Customers deserve bank-level security wherever they share their financial information, and the CFPB principles pay particular attention to protecting this sensitive data,” said ABA VP Rob Morgan. “ABA believes customers should understand and control how third parties use their information.”

Morgan added that per ABA’s recommendation, “CFPB recognized that customers should not be required to share their online banking username and password to facilitate data sharing. There are technologies that can facilitate more secure access, and the banking industry will continue to work closely with technology companies to give customers the ability to share their financial data securely.” View the principles. For more information, contact Morgan.