FASB to Delay CECL Implementation for Some Institutions

In a significant move, the Financial Accounting Standards Board (FASB) yesterday voted to propose a delay for the implementation of the current expected credit loss standard until January 2023 for certain companies. The delay would apply to small reporting companies (as defined by the SEC), non-SEC public companies and private companies.

'FASB’s vote to delay CECL for certain smaller banks offers further proof that the required efforts to implement this costly standard are far greater than the board has previously led bankers to believe,” said ABA President and CEO Rob Nichols after the vote. He noted with concern, however, that the delay would not apply to all banks; for larger public companies, the standard would still take effect in January 2020.

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Registration Open for LEAD STRONG: Women in Banking Conference

Image of WomenRegistration is now open for the SDBA's second annual LEAD STRONG: Women in Banking Conference. The event is set for Oct. 10, 2019, at the Sioux Falls Convention Center in Sioux Falls.  An optional networking reception will be held the night prior.

The conference is designed to encourage, support and inspire women to succeed in the workplace. This event will benefit all levels of staff interested in the enhancement and career growth of women in South Dakota banking.

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Podcast: How Diversity and Inclusion Create a 'Sense of Belonging'

For Monica Sylvain, chief diversity officer at Louisiana-based IberiaBank, a focus on diversity, equity and inclusion (or DE&I, as it's increasingly widely known) starts with building community. “It’s important to lead with the ‘I,’ or ‘inclusion,’” she says on the latest ABA Banking Journal Podcast, “having a sense of fairness, and [having] your employees feeling like they have a sense of belonging.” On the podcast, Sylvain discusses IberiaBank's approach to DE&I, including:

  • Having a DE&I council comprising a broad cross-section of employees at all levels of the organization. “That group is really helping us to think through the things that are top of mind for our associates when they think about inclusion, when they think about equity, when they think about diversity.”
  • Educating the bank’s leadership team—and its employees—on recognizing and understanding unconscious bias. “All of us as human beings have unconscious or implicit bias. [We] make snap judgment decisions,” she explains. “If you look at the neuroscience, we do it in nanoseconds.”
  • The importance of including supplier diversity, as well as employee diversity, in the bank's DE&I framework.

Listen to the episode.

Registration Now Open for SDBA 2019 Bank Technology Conference

Technology PhotoThe role of an IT professional is ever-changing, especially in today’s environment. The SDBA Bank Technology Conference is designed to provide support as you keep on top of technology trends and scams, navigate the business of banking, and build and sustain your bank’s technology strategy. 

The SDBA will hold the 2019 Bank Technology Conference on Sept. 11 in Sioux Falls, with a reception the evening of Sept. 10. The conference will be held at the Hilton Garden Inn Sioux Falls South. This conference will provide attendees with an opportunity to learn from industry experts, network with other IT colleagues, and visit with exhibitors to see and experience the latest in products and services. 

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Podcast: Bankers and the Founding of the United States

To mark Independence Day this week, this bonus episode of the ABA Banking Journal explores the role of banking and finance in the American Revolution and the founding era. This week’s guest, John Steele Gordon, is an acclaimed economic historian whose books include Hamilton’s Blessing, The Great Game and An Empire of Wealth; he is also the ABA Banking Journal’s “From the Vault” columnist. In this episode, Gordon discusses:

  • How not having any chartered banks prior to 1782 put the United States at a disadvantage during the Revolution.
  • Conversely, how the Bank of England was a “secret weapon” for Britain during the war.
  • The role of patriotic financiers like Robert Morris in achieving U.S. victory.
  • The debates over a central bank in the post-revolutionary period and how they contributed to the development of the Constitution.
Listen to the episode.

Private Flood Insurance Rule Takes Effect

The financial regulatory agencies’ joint rule on private flood insurance acceptance took effect on Monday, July 1. The rule is the long-awaited implementation of the 2012 Biggert Waters Act provision that requires federally-regulated lending institutions to accept private flood insurance policies that meet certain statutory criteria, in satisfaction of the mandatory purchase requirement.

ABA has prepared a staff analysis of the private flood insurance regulations. The six-page paper summarizes and analyzes the provisions of the final rule, including the definition of private flood insurance, the compliance aid, mandatory and discretionary acceptance and cceptance of policies issued by mutual aid societies. A previously recorded webinar on the private flood rule is also available for purchase.

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ABA Seeks Greater Clarity on Banks' Ability to Serve Industrial Hemp Businesses

In a letter to the heads of the financial regulatory agencies last Friday, ABA called for greater clarification on how banks may serve businesses dealing with hemp—a low-THC strain of marijuana that was removed from the Controlled Substances Act by Congress as part of the 2018 Farm Bill.

Despite this legislative action, regulators have yet to issue a clear directive on distinguishing legal hemp and illegal marijuana, leaving many banks uncertain about whether they can legally serve these businesses, ABA noted. “Banks want to serve their communities and support their local economies but need clear, unequivocal assurance from their regulators that hemp is distinguishable from cannabis and that serving the industry will not expose them to criminal and civil liability, or regulatory censure.”

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New Report Finds Credit Unions Operate with 'Scant Regard' for Statutory Mission

In advance of Wednesday's 85th anniversary of the Federal Credit Union Act’s enactment, new research released on Tuesday found that credit unions are falling short of their mission to serve households of “small means.” In fact, according to the research by respected analyst Karen Shaw Petrou, credit union members are disproportionately from middle- and upper-income households, and credit unions’ lack of “mission compliance” deepens U.S. economic inequality.

The report from Petrou’s firm, Federal Financial Analytics, found that the National Credit Union Administration maintains no data on credit unions’ effectiveness at providing financial services to people of “small means,” and that its definition of “low-income” is far more expansive than that used by other federal agencies. As a result, she found, designated low-income credit unions simply replace community bank credit instead of providing new credit.

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Minneapolis Fed to Hold Town Hall in Aberdeen

Do you have a question about how the Federal Reserve System affects you? Wondering about economic disparities, regulating big banks or the Fed's recent interest rate decisions? Curious about how the Federal Reserve Bank of Minneapolis gathers data and informs its work within the Federal Reserve System?

Minneapolis Fed President Neel Kashkari will speak on these topics and more during a town hall meeting in Aberdeen on July 11 at 4 p.m. CDT. Kashkari is a member of the Federal Open Market Committee, the body of the Federal Reserve System that sets national monetary policy. Since taking over as president of the Minneapolis Fed in January 2016, he has spearheaded several initiatives including releasing a plan to end the too big to fail problem and launching the Federal Reserve's Opportunity & Inclusive Growth Institute, housed at the Minneapolis Fed.

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Credit Card Skimmers Discovered in Vermillion

On June 16, the Vermillion Police Department (VPD) investigated the discovery of two fraudulent credit card “skimmers” at Pump & Pak, located at 629 Stanford St. in Vermillion, according to a report by the VPD. Staff at the business noted customers’ comments about how the countertop card readers did not feel quite right and ultimately found that a “second face” had been installed over the top of the readers. The VPD has retrieved those items as evidence and has determined that their intended purpose was to record and/or transmit credit card information fraudulently. Investigation into the incident is continuing, including an attempt to determine exactly when the skimmers were installed. The readers at Pump & Pak are no longer believed to be compromised since the removal of the devices.

The VPD is asking area businesses to inspect their credit card readers for any evidence of additions or modifications. If evidence of tampering is discovered, secure the reader(s) and contact police. Additionally, customers who have recently used the indoor credit card readers at Pump & Pak should monitor accounts for fraudulent activity and should contact their card’s issuing bank for instructions related to those account(s). Persons who believe they are a victim of a crime or who have noticed suspicious persons or activity potentially related to this investigation should contact the Vermillion Police Department at 605.677.7070.

SDBA Seeking Photo Submissions for 2020 Scenes of South Dakota Calendar

If you are an amateur photographer and would like the opportunity to have your creativity displayed in homes and businesses across South Dakota, this is your chance.

Send the SDBA your photos of farms, barns, agricultural activities, historical South Dakota locations, county fairs, carnivals, parades or festivals, fall colors, winter snowfalls, spring flowers, summer fun, etc.. Any photo that shows the history and beauty of the great state of South Dakota qualifies. All photos submitted will be judged and the top photos will be featured throughout the 2020 Scenes of South Dakota calendar. The deadline to submit a photo is July 29, 2019. Photo submission form

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Promote Elder Abuse Awareness on June 15

June 15 is Elder Abuse Awareness Day in South Dakota, which provides an opportunity for communities to promote a better understanding of abuse and neglect of the older population throughout the state.

“Our elders, along with all people, have the right to live their lives with dignity and respect, free from abuse of any kind," said  Yvette Thomas, director of the South Dakota Department of Human Services Division of Long-Term Services and Supports (LTSS). "The best way to protect elders from abusive situations is to focus on prevention--providing information, education and support.

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ABA Urges FCC to Protect Lawful Bank Calls

As the Federal Communications Commission prepares to vote Thursday on a proposal permitting telephone companies to block unwanted calls, ABA submitted two letters to the commission explaining how it could result in the erroneous blocking of lawful calls placed by banks. The letters expanded upon arguments made by ABA and other trade groups in a separate communication late last week urging the FCC to seek feedback before moving forward with the proposal.

The FCC’s draft declaratory ruling would permit voice service providers to enroll customers automatically in a call-blocking program that is “based on any reasonable analytics designed to identify unwanted calls.” The ability for customers to opt out of the program would be required. If adopted, the ruling would be effective immediately.

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McWilliams: CRA Reform to Clarify Qualifying Activities, Lending Assessment

In remarks Wednesday at a meeting of community development bankers, FDIC Chairman Jelena McWilliams highlighted several ongoing initiatives at the agency to strengthen and sustain the nation’s community banks, including the highly-anticipated reform of the Community Reinvestment Act regulations.

McWilliams stressed that modernization of the Community Reinvestment Act will focus on clarifying exactly what bank activities qualify for CRA credit. The revised regulatory framework will also address the lending offered beyond a bank’s brick-and-mortar market area, as well as ways to ensure that CRA investments target those most in need within the community. While she did not put a timeline on the reform process, she noted that she continues to meet regularly with her counterparts at the OCC and Federal Reserve “to see if we can come to a broad agreement on a set of priorities for CRA reform.”

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ABA Slams NCUA Proposal Expanding FCU's Access to Non-Members

The National Credit Union Administration board last Thursday proposed a rule that would allow federal credit unions to have up to 50% of their deposits come from other credit unions and government entities, up from a 20% cap. As NCUA acknowledged in its proposal, the 20% cap dates to the late 1980s and was imposed “because of the asset/liability management problems related to public unit and nonmember shares that arose at certain FCUs, which resulted in material losses for the National Credit Union Share Insurance Fund.”

Under the proposal, FCUs could take these insured deposits (or “receive payment on shares,” in NCUA terminology) of up to half of their paid-in and unimpaired capital and surplus, less the public unit and non-member shares. Public units include the federal government, states and territories, counties and municipalities and tribal entities. Under the proposal, designated low-income FCUs—which account for 57% of all FCUs, according to current NCUA figures—would be able to accept deposits from any non-member up to the 50% level. Comments on the proposal are due 60 days after publication in the Federal Register.

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SDBA Annual Convention Kicks Off on Sunday

Question: How do you climb a mountain? Answer: One step at a time.

Dr. Richard Deming will be the fellowship keynote at this year's SDBA/NDBA Annual Convention on Monday, June 3. Join Dr. Deming for his session "Above + Beyond Cancer" as he teaches us that through adversity, we can all achieve personal growth. As we focus forward, Dr. Deming will teach us that life is a gift and not a single minute should be “un-lived.”

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S. 2155 Rule Changes to Be Done by Year-End, Regulators Say

The heads of the banking agencies told lawmakers that they expect to have regulatory changes from the S. 2155 regulatory reform law implemented by year-end. Testifying before the House Financial Services Committee last week, Federal Reserve Vice Chairman for Supervision Randal Quarles said that the agencies are “on track to complete the implementing actions for S. 2155,” adding that they would “have the bulk of the implementing actions completed by the third quarter of this year and all of them completed by the end of this year.”

Items still outstanding include a final rule on the treatment of high-volatility commercial real estate, a framework for applying enhanced prudential standards to banks with more than $100 billion in assets, an appraisal exemption for certain rural real-estate transactions and the finalization of the community bank leverage ratio.

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Bill Introduced to 'Stop and Study' CECL

Sen. Thom Tillis (R-N.C.) on Tuesday introduced a long-awaited bill—S. 1564—calling for a delay in the implementation of the Financial Accounting Standards Board’s current expected credit loss standard until a quantitative impact study can be completed to understand its likely effects it will have on the economy.

The bill comes after bipartisan groups of lawmakers from both the House and Senate earlier this month wrote to the heads of several regulatory agencies raising concerns about CECL. ABA—which has long highlighted the procyclical effects of the standard to both lawmakers and regulators—welcomed the bill’s introduction.

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ABA Banker Committee Shares Concerns with Four Core Providers

The ABA Core Platforms Committee—a group of 20 bank leaders representing community and midsize banks—on Tuesday met with top executives from four of the nation’s largest core processing firms. During the meeting, the bankers shared their concerns on three key issues—data access, API deployment and contract fairness—with FIS, Fiserv, Jack Henry and Finastra. The representatives of each participating core agreed to provide written responses by July 15 to explain how they will address those issues and were invited to meet with the committee again in August.

“The tone of today’s meeting was positive and cooperative, even as we acknowledged that there is still work to do to address these challenges,” ABA President and CEO Rob Nichols said in an email to ABA member bank CEOs on Wednesday. “We look forward to seeing that spirit of cooperation in the form of meaningful commitments when the companies respond in writing and when we meet again later this summer.” Nichols convened the Core Platforms Committee earlier this year to evaluate how community and midsize banks’ current relationships with their core processors may be inhibiting innovation and provide recommendations that can help banks and cores move forward together.

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Don't Miss Out on SDBA's Largest Event of the Year

Evolving digital technologies, shifting consumer preferences and increasing competition are creating new challenges for banks. As the banking industry is being transformed, there is uncertainty around what the future of the industry will look like over the next decade. Are you ready to re-imagine the future of banking?

The SDBA invites you to FOCUS FORWARD at the 2019 SDBA/NDBA Annual Convention on June 2-4 at the Sioux Falls Convention Center in Sioux Falls. Explore new pathways, seek innovative partners and motivate to embrace the future of banking. You will return to work with a refreshed perspective and renewed vision after attending this year's event.

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