Webinar to Focus on Liquidity Challenges During Coronavirus Pandemic

As the coronavirus pandemic continues, banks must ensure that their balance sheet is positioned to face liquidity challenges that could arise. In a webinar Thursday, April 9, at noon CDT—the latest of several ABA has produced on the coronavirus in recent weeks—bankers will hear insights from Keith Reagan, managing director of Darling Consulting Group, on liquidity risk modeling and analytics.

Also participating in the webinar will be Laura Lipscomb, assistant director of the Federal Reserve's Division of Monetary Affairs, who will explain the liquidity tools available through the Fed discount window. The presentations will address strengthening the bank’s core liquidity position; monitoring early warning and key performance indicators; developing a thoughtful framework for forecasting and stress testing during the pandemic; contingency funding plans; and setting up borrowing agreements and placing collateral with the Federal Reserve Banks.

The webinar will be recorded, and members will be able to access the recording on Friday. Register now. Bankers can also find recordings of previous webinars, as well as the latest updates on the coronavirus pandemic, at aba.com/coronavirus. Register for the webinar.

Treasury Addresses Several Industry Questions on PPP Implementation

The Treasury Department yesterday updated its frequently asked questions on the Small Business Administration’s Paycheck Protection Program to address several questions raised by ABA and member banks. Bankers should bookmark the Treasury FAQs, which will be regularly updated as Treasury addresses questions.

Among other topics, the newly added answers clarify:

  • That lenders may rely on borrower certifications as to the applicability of affiliation rules.
  • That lenders do not need to re-verify beneficial ownership information for existing customers. (If participating depository institutions have not yet collected beneficial ownership information on existing customers, they are not required to do so for those customers applying for PPP loans.)
  • How payroll is defined under the CARES Act, including the calculation of non-cash benefits and coverage of paid leave.
  • Methods for determining payroll to calculate maximum loan amounts.
  • That lenders who processed applications based on the April 2 interim final rule may rely on the laws, rules and guidance available at the time.
ABA continues to seek guidance from Treasury and SBA, including on the use of promissory notes and the eligibility of bank directors for PPP loans, and will share updates with members as they become available. ABA has set up a dedicated email address, [email protected], for bankers to submit questions they may have about the PPP that are not addressed in the FAQs, or to report challenges they may be experiencing accessing SBA systems. Read the Treasury FAQs.

SD Congressional Delegation Urges USDA to Provide Immediate Assistance to Cattle Producers

Sen. Mike Rounds, Sen. John Thune and Congressman Dusty Johnson last week helped secure support for South Dakota’s farmers and ranchers in the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was signed into law on Friday, March 27. The bill provides $14 billion to replenish the U.S. Department of Agriculture’s Commodity Credit Corporation and will also provide $9.5 billion in emergency funding to support certain producers, including livestock producers, affected by the COVID-19 pandemic.

Yesterday, South Dakota's congressional delegation joined more than 140 other members of Congress to send a bipartisan, bicameral letter to U.S. Department of Agriculture (USDA) Secretary Sonny Perdue requesting that he provide immediate assistance to cattle producers by using the resources provided in the CARES Act. Doing so would help facilitate the stabilization of farm and ranch income for producers who are facing market volatility in the wake of the COVID-19 pandemic and economic fallout. 

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Treasury Issues Guidelines, Application for SBA Paycheck Protection Program

The Treasury Department on Tuesday issued much-anticipated guidance for the Paycheck Protection Program, which starting this week will provide up to $350 billion in fully-forgivable loans to help small businesses maintain payrolls during the coronavirus pandemic. The loans are fully guaranteed by the Small Business Administration, but the SBA will waive all SBA guaranty fees. PPP loans are made for two years at a 0.5% fixed rate with payments deferred for six months.‌

All banks, as well as a broad range of nonbanks, are eligible to make PPP loans. Existing SBA-certified lenders will be given delegated authority; others must be approved before making loans. Banks that have not yet been certified with the SBA should submit an application to [email protected]. The SBA will quickly verify that banks applying are federally regulated, and new applicants will be able to process applications as soon as Friday, according to a senior administration official.‌

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Banks Are an Essential Service: Your Money is Safe, Sound and Easily Accessible

Image of CoinsCOVID-19 is causing many concerns with consumers, but access to your money shouldn’t be one of them. Banks are considered an essential service, so they will continue to operate and you will have uninterrupted access to your money. Here are the top five things to know about your money and South Dakota banks:

1. You have continued access to your funds and bank services. 
Banks are considered an essential service, which means you continue to have access to your funds through in-person services and self-service tools, such as mobile or online banking. 

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Free Webinars Explore Business Continuity, Transitioning to Mobile Workforce

As part of its suite of resources helping banks respond to the coronavirus pandemic, ABA will host two additional free member webinars this week:

Business Continuity With Core Providers: On Wednesday, April 1, at 1 p.m. CDT, the four major core providers will speak on business continuity and digital banking. Joined by two community bank executives, representatives from FIS, Fiserv, Finastra and Jack Henry will discuss how they are supporting banks’ business continuity and resilience efforts, as well as strategies banks can use to run a successful digital bank during this time when consumers cannot rely as much on in-person banking services. Register for the webinar.

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ABA to Host Webinar Today on Coronavirus Relief Law

The CARES Act—the new coronavirus relief law signed by President Trump last week—provides an unprecedented amount of relief to consumers and businesses hit by the economic repercussions of the coronavirus pandemic. The legislation anticipates that banks of all sizes will serve as the delivery mechanism for much of that relief. Key provisions affecting banks and their ability to work with customers include:

  • A 100% guarantee of loans made for a new SBA 7(a) Payment Protection Program.
  • Temporary relief from troubled debt restructuring categorizations and an option to delay the implementation of the current expected credit loss standard.
  • A lower community bank leverage ratio of 8%.
  • $500 billion for the U.S. Treasury’s Exchange Stabilization fund to provide sufficiently collateralized loans, loan guarantees and other investments to eligible entities.
  • Authority for the FDIC to establish a temporary program to guarantee bank debt.
  • Forbearance policies for loans backed by federal government agencies or GSEs.

The ABA will host a webinar today at 1 p.m. CDT with ABA President and CEO Rob Nichols and a panel of ABA experts who will offer an overview of these and other provision, followed by a moderated banker Q&A. Register for the webinar.

ABA Offers Tips for Consumers to Avoid Coronavirus Fraud Scams

As the coronavirus pandemic continues, scammers are exploiting consumers’ fears and uncertainties about the virus to perpetrate a range of fraud scams. ABA has published a list of common scams associated with the coronavirus, as well as 10 tips for consumers to follow to protect themselves and their finances. Bankers are welcome to use these tips freely to educate their customers. Read more.

SDBA To Hold Member COVID-19 Update Conference Call on Friday

The SDBA will hold a member COVID-19 update conference call on Friday, March 27, at 11 a.m. CDT (10 a.m. MDT). 

During the call, Bret Afdahl, director of the South Dakota Division of Banking, will discuss COVID-19 public health concerns, best practices and regulatory guidance. SDBA President Curt Everson will discuss state and local government issues and federal economic stimulus legislation. There will also be time for Q&A from bankers. 

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ABA-Advocated Provisions Included in New Coronavirus Bill

In a unanimous vote late last night, the Senate passed a sweeping $2 trillion stimulus package to provide relief to American consumers and businesses struggling as a result of the coronavirus pandemic. Once approved by the House and signed into law by President Trump, this legislation—which reflects days of bipartisan negotiations by Senate leadership and the White House—will help ensure banks have additional tools to help their customers and communities, and the nation’s economy, through the crisis.

Among other things, the law will provide significant enhancements to the Small Business Administration’s lending programs, including increasing to 100% the government guarantee of loans made for the 7(a) loan program’s new Paycheck Protection Program, and waiving certain requirements for SBA Economic Injury Disaster Loans made in response to the COVID-19 emergency.

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SDBA Mesage to Member Banks

Dear SDBA Member CEOs and SDBA Board Members:

Like all of you, in recent days all of us at the SDBA have been absorbing and adjusting to COVID-19 related news and long list of changes to our daily work and personal routines which we all hope will be relatively short-lived. Rather than trying to layer individual phone calls of conference calls on top of what I know are very busy days and nights, we have tried to focus on building a robust COVID-19 resource page on our website as follows:  https://www.sdba.com/covid-19. This pandemic situation is very fluid, prompting reactions and release of information by a host of public and private sources. We will strive to keep the information as fresh and content rich as possible.

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SBA Streamlines Criteria for States Requesting Disaster Assistance Loans

In response to the coronavirus pandemic, the Small Business Administration yesterday revised its criteria for states or territories seeking an economic injury declaration. This action will create a faster, easier qualification process for states seeking SBA disaster assistance as a result of the pandemic, while expanding statewide access to SBA disaster assistance loans, which offer up to $2 million for each affected small business.

Specifically, states or territories will only be required to certify that at least five small businesses within the state or territory have suffered substantial economic injury, regardless of where those businesses are located. SBA will make disaster assistance loans available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to the coronavirus. Read more.

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Agencies: Banks Can Use Capital, Liquidity Buffers to Meet Coronavirus Challenges

The Federal Reserve, FDIC and OCC on Tuesday issued a statement calling on banks to use their capital and liquidity buffers to help meet the needs of households and businesses as the coronavirus pandemic continues. The agencies noted that banks have “built up substantial levels of capital and liquidity in excess of regulatory buffers and minimums” in the years since the financial crisis.

“The agencies support banking organizations that choose to use their capital and liquidity buffers to lend and undertake other supportive actions in a safe and sound manner,” the statement said. “The agencies expect banking organizations to continue to manage their capital actions and liquidity risk prudently.”

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Fed Creates Liquidity Facility for Money Market Funds

As part of its policy response to the market turmoil triggered by the coronavirus pandemic, the Federal Reserve overnight announced a new Money Market Mutual Fund Liquidity Facility, or MMLF. Through the MMLF, the Federal Reserve Bank of Boston will lend to financial institutions secured by high-quality assets purchased by the the institution from MMFs. Any depository institution, U.S. bank holding company or U.S. branch or agency of a foreign bank is eligible to participate.

Eligible collateral will include Treasurys, agency securities and qualifying asset-backed or unsecured commercial paper from U.S. issuers. A term sheet specified that the banking agencies will “act to fully neutralize the impact of a depository institution holding company or depository institution’s participation in the facility for purposes of regulatory capital requirements” by fully exempting from risk-based capital and leverage requirements any assets pledged to the MMLF or purchased from an MMF starting March 18 and intended to be pledged to the MMLF.

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South Dakota Banks Remain Financially Solid

coronavirusSouth Dakota banks are ensuring the delivery of important financial services such as money and credit availability, while proactively working to safeguard the health and safety of their customers, staff and communities as the COVID-19 situation evolves.
 
With approximately $692 billion in deposits and strong capital levels, South Dakota banks remain financially solid and stand ready to provide important financial services to our fellow South Dakotans. South Dakota banks will look to deliver a larger number of products and services through their enhanced mobile and digital channels. Federal and state regulation requires financial institutions to have continuity plans and testing processes in place which address pandemic response scenarios.
 
“South Dakota’s banks are open for business,” said Sen. Mike Rounds. “This nation’s financial system is strong and healthy. The Federal Deposit Insurance Corporation, or FDIC, insures all deposits at insured banks including checking, savings accounts, money market deposit accounts and certificates of deposit up to the insurance limit of $250,000 per depositor.”
 
While each individual bank’s plan may differ, a growing number of South Dakota banks are implementing changes to minimize person-to-person contact and to encourage responsible social distancing, including:
  • Encouraging customers to utilize drive-through, digital and ATM channels for transactional services.
  • Closing or limiting lobby access to walk-in traffic and asking customers who desire personal or specific banker services to set up office appointments in advance of their visit.
  • Enhancing cleaning and sanitary practices to help mitigate the potential spread of the virus.
  • Implementing travel restrictions for staff members.
  • Encouraging customers to take advantage of debit and credit cards for purchases.
Customers facing financial hardships as a result of COVID-19 should contact their banks to discuss their individual situation. They are also encouraged to check their bank’s website for updates as the situation evolves.
 
“South Dakota banks are the bedrock of their communities. Providing safe and reliable service is a key priority for every bank in our state, especially in challenging times like these,” said South Dakota Bankers Association (SDBA) Chair Shawn Rost, South Dakota market president for First Interstate Bank in Rapid City. “I am particularly proud of the steps SDBA member banks are taking to provide continuing support for their customers and, at the same time, protecting the health and safety of their neighbors and friends.”
 
The SDBA also reminds residents that your bank will never contact you to verify your account information or credentials to access those funds. Please be on the lookout for criminals who may be posing as your banker to take advantage of the pandemic.

ABA to Host Webinar on Coronavirus, Pandemic Planning Resources

To help bankers address the operational challenges posed by the 2019 novel coronavirus, also known as COVID-19, the ABA will host a free webinar for its members on Thursday, March 12, at noon CDT, to provide an update on the situation and discuss business continuity planning practices for banks.

The webinar will provide an overview of the health threat and review CDC guidelines on virus transmission; help bankers assess their business continuity plans and highlight available resources to assist with planning; and review leading industry practices and lessons learned in a 2007 pandemic exercise conducted by public and private-sector participants.

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Policymakers Urge Banks to Work with Borrowers Affected by Coronavirus

Recognizing the potential effects of the 2019 coronavirus disease on bank customers, financial regulators on Monday issued a statement calling on banks to work constructively with borrowers and others affected by the virus in their communities. The agencies emphasized that “prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism.”

The agencies also said that to help mitigate staffing challenges banks may experience as a result of the virus, “regulators will expedite, as appropriate, any request to provide more convenient availability of services in affected communities” and “work with affected financial institutions in scheduling examinations or inspections to minimize disruption or burden.” Read the statement

SDBA Seeking Candidates for Board Elections

Elections for the SDBA’s Board of Directors are scheduled for April. Two directors have terms that expire on April 30, 2020, in addition to a vacancy and the election of a new sized-based category. Elections will take place in Group 1, Group IV, Mid-Size Community Bank Category and the new Community Bank Category.

Group I: The Group I seat became vacant when the director who previously held the seat, Kristina Schaefer with First Bank & Trust in Sioux Falls, was voted SDBA vice chair last year. There are two years remaining in the term for the Group I seat (through April 30, 2022). Employees of member banks located in the following counties are eligible to run for the Group I seat: Bon Homme, Clay, Davison, Hanson, Hutchinson, Jerauld, Lake, Lincoln, McCook, Miner, Minnehaha, Moody, Sanborn, Turner, Union and Yankton counties.

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Fed Announces Emergency Rate Cut Amid Coronavirus Fears; ABA Updates Bankers on Latest Developments

Acknowledging the “evolving risks” that the coronavirus outbreak poses to the U.S. economy, the Federal Open Market Committee unanimously voted yesterday to cut the target range for the federal funds rate by 50 basis points to a range of 1% to 1.25%. This is the first emergency rate cut the FOMC has made since 2008.

The committee said it would closely monitor the situation as it develops and “will use its tools and act as appropriate to support the economy” in the days ahead. In a press conference, Federal Reserve Chairman Jerome Powell emphasized that the underlying fundamentals of the economy remain strong. “Financial markets are functioning in an orderly manner,” he said, adding that “supervisors will be working with banks to ensure that they work with their borrowers” that may be struggling as a result of the outbreak.

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South Dakota Prepares for Coronavirus

State health officials on Feb. 27 outlined South Dakota’s steps to prepare for community spread of COVID-19 (coronavirus), as well as what South Dakotans can do now. To date, no one in South Dakota has tested positive for COVID-19.

“Since the start of this outbreak, South Dakota has taken steps to prepare for and carefully monitor for potential cases of COVID-19 in South Dakota,” said Kim Malsam-Rysdon, secretary of the South Dakota Department of Health.

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