Wisconsin Banking Hemp Likely to Expand in 2020
Nearly 50% of bank respondents will extend banking services to hemp-related customers

MADISON – Nearly 50% of bank respondents who are currently not banking hemp said they will extend services to hemp-related customers in 2020 according to a recent Wisconsin Bankers Association (WBA) survey. 

WBA’s annual Bank CEO Economic Conditions Survey asked three hemp-related questions in addition to more traditional economic inquiries. The responses highlighted that many Wisconsin banks have been working through the complex regulatory issue of hemp and are now better prepared to assist their customers.

“Wisconsin’s community bankers strive to help their customers and communities. The reality is that hemp is a very new and complex issue from both a regulatory and business viewpoint,” explained Rose Oswald Poels, WBA President and CEO. “It takes time to work through these complexities. Because there is no one-size-fits-all approach, each bank’s approach and timeframe will be different.”

It was only within the last month that federal regulators issued their first guidance for banks regarding hemp banking. 

Thirty-eight percent of responding Wisconsin banks are currently accepting deposits from hemp-related businesses. In comparison, fewer banks, 15%, are lending to hemp-related businesses.

Some of the lack of participation by banks may be due to demand. Several participating bankers shared they haven’t had any customers request these services.

“Wisconsin continues to benefit from a very diverse banking industry which means consumers and businesses have the opportunity to find the banking relationship that is right for their unique needs,” said Oswald Poels. “We really encourage the public to keep reaching out to bankers until they find the right fit.”

There will be more banking opportunities for hemp-related businesses according to respondents. Forty-eight percent of bankers currently not offering services will do so in 2020. 

Banks aren’t the only businesses working through the issue of hemp. As a relatively new industry, there are still questions about the crop including cost, price, yield, returns, contracts, and markets. As the industry grows, the data needed for businesses and bankers alike to make decisions will increase and become easier to navigate from both a regulatory and operational viewpoint.

Community banks continue to be dedicated to working with their customers to find ways to help their businesses grow. A Wisconsin bank is always the safest place for Wisconsin consumers and businesses to entrust their money.

The survey was conducted over the first two weeks of December with 85 respondents. 

Below is a breakdown of the questions and responses.

Are you currently accepting deposits from hemp-related businesses?

 

Yes

38%

No

62%

 

 

Are you currently lending to hemp-related businesses?

 

Yes

15%

No

85%

 

 

If you are not currently banking hemp, will you do so in the next year?

 

Yes

48%

No

52%

 

 

By, Eric Skrum

The below article is the Compliance Notes section of the December 2019 Compliance Journal. The full issue may be viewed by clicking here.

FRB, FDIC, OCC, FinCEN, and the Conference of State Bank Supervisors issued a statement clarifying the legal status of hemp growth and production and the relevant requirements under the Bank Secrecy Act (BSA) for banks providing services to hemp-related businesses. The statement emphasizes that banks are no longer required to file suspicious activity reports (SAR) for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants. The joint guidance may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20191203a1.pdf


FDIC approved a 2020 Operating Budget of $2.017 billion, down nearly $43 million or 1.3 percent from 2019. FDIC’s 2020 Operating Budget includes nearly $1.9 billion for ongoing operations, $75 million for receivership funding, and nearly $43 million for the Office of the Inspector General (OIG). In addition, the Board also approved an authorized 2020 staffing level of 5,755 positions, a net reduction of 160 positions from 2019. The budget may be viewed at: https://www.fdic.gov/news/board/2019/2019-12-12-notice-dis-c-mem.pdf 


The U.S. District Court for the Western District of Texas has again continued its stays of the litigation of pending case Community Financial Services Association of America, Ltd. et al v. Consumer Financial Protection Bureau et al and of the August 19, 2019, compliance date of CFPB’s Payday Lending Rule, and ordered that the parties file a Joint Status Report about proceedings related to the Rule and litigation no later than April 24, 2020. 


FDIC has updated its Consumer Compliance Examination Manual to add new section X-6.1 on Disclosure Requirements for Sweep Accounts, to include examination procedures for FDIC Part 360.8(e), which requires consumer disclosures for sweep account transactions to inform whether the swept funds are deposits. The manual may be viewed at: https://www.fdic.gov/regulations/compliance/manual/index.html


OCC has issued its Semiannual Risk Perspective for Fall 2019. The report indicates that operational, credit, and interest rate risks are among the key themes for the federal banking system. The report also highlights cybersecurity and technology management as a special topic in emerging risks. The full report may be viewed at: https://www.occ.gov/publications-and-resources/publications/semiannual-risk-perspective/files/pub-semiannual-risk-perspective-fall-2019.pdf


OFAC took action against Evil Corp, the Russia-based cybercriminal organization responsible for the development and distribution of the Dridex malware. Evil Corp has used the Dridex malware to infect computers and harvest login credentials from hundreds of banks and financial institutions in over 40 countries, causing more than $100 million in theft. This malicious software has caused millions of dollars of damage to U.S. and international financial institutions and their customers. Concurrent with OFAC’s action, the Department of Justice charged two of Evil Corp’s members with criminal violations, and the Department of State announced a reward for information up to $5 million leading to the capture or conviction of Evil Corp’s leader. The announcement may be viewed at: https://home.treasury.gov/news/press-releases/sm845


The U.S. Department of Justice joined with the U.S. Department of State and the United Kingdom’s National Crime Agency in charging two Russian nationals with a vast and long-running cybercrime spree that stole from thousands of individuals and organizations in the United States and abroad. Along with several co-conspirators, Maksim V. Yakubets and Igor Turashev are charged with an effort that infected tens of thousands of computers with a malicious code called Bugat. Once installed, the computer code, also known as Dridex or Cridex, allowed the criminals to steal banking credentials and funnel money directly out of victims’ accounts. The long-running scheme involved a number of different code variants, and later version also installed ransomware on victim computers. The criminals then demanded payment in cryptocurrency for returning vital data or restoring access to critical systems. The announcement may be viewed at: https://www.fbi.gov/news/stories/charges-announced-in-malware-conspiracy-120519


FinCEN released a new strategic analysis of Bank Secrecy Act (BSA) reporting, indicating that elders face an increased threat to their financial security by both domestic and foreign actors. Elder financial exploitation Suspicious Activity Report (SAR) filings increased dramatically over the six-year study period, from about 2,000 filings per month in 2013 to reaching a peak of nearly 7,500 filings per month in August 2019. The yearly dollar amount of suspicious activity reported for elder financial exploitation also rose. The report may be viewed at: https://www.fincen.gov/sites/default/files/shared/FinCEN%20Financial%20Trend%20Analysis%20Elders_FINAL%20508.pdf 


CFPB, FRB, FDIC, OCC, and NCUA issued a joint statement on the use of alternative data in underwriting by banks, credit unions, and non-bank financial firms. The statement explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data. Alternative data includes information not typically found in consumers’ credit reports or customarily provided by consumers when applying for credit. Alternative data include cash flow data derived from consumers’ bank account records. The agencies recognize that use of alternative data in a manner consistent with applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system. The statement may be viewed at: https://files.consumerfinance.gov/f/documents/cfpb_interagency-statement_alternative-data.pdf


FDIC posted its Formal and Informal Enforcement Actions Manual to its website to provide greater transparency regarding the FDIC’s enforcement program. The manual provides direction for professional staff related to the work necessary to pursue formal and informal enforcement actions. Developed by the Division of Risk Management Supervision and the Division of Depositor and Consumer Protection, the manual is intended to support the work of field office, regional office, and Washington office staff involved in processing and monitoring enforcement actions. The manual may be viewed at: https://www.fdic.gov/regulations/examinations/enforcement-actions/index.html


FRB announced it has joined the U.S. Faster Payments Council (FPC) as a founding sponsor. The FPC and its members seek to facilitate faster payments in the United States, enabling Americans to securely pay anyone, anywhere, at any time with near-immediate funds availability. Its priorities include faster payments education and fraud mitigation. The announcement may be viewed at: https://www.frbservices.org/news/press-releases/120519-us-faster-payments-council.html


FFIEC revised the “Business Continuity Management” booklet, one of a series of booklets that make up the FFIEC Information Technology Examination Handbook (IT Handbook). The revised “Business Continuity Management” booklet provides information for examiners to assess the adequacy of a bank’s risk management related to the availability of critical financial products and services. The revised booklet replaces the “Business Continuity Planning” booklet issued in February 2015 and rescinds “FFIEC Information Technology Examination Handbook: Strengthening the Resilience of Outsourced Technology Services, New Appendix for Business Continuity Planning Booklet.” The booklet may be viewed at: https://ithandbook.ffiec.gov/it-booklets/business-continuity-management.aspx


FRB released its Supervision and Regulation Report, which summarizes banking conditions and the Federal Reserve’s supervisory and regulatory activities, in conjunction with semiannual testimony before Congress by the Vice Chairman for Supervision. The report may be viewed at: https://www.federalreserve.gov/publications/files/201911-supervision-and-regulation-report.pdf


OCC released its schedule of Community Reinvestment Act (CRA) evaluations to be conducted in the first quarter and second quarter 2020. The schedule may be viewed at: https://www.occ.gov/static/cra/exam-schedule/craq120.pdf 

By, Ally Bates

The below article is the Regulatory Spotlight section of the December 2019 Compliance Journal. The full issue may be viewed by clicking here.

Agencies Propose Community Reinvestment Act Regulations.

The Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Department of the Treasury (Treasury) issued a joint notice of proposed rulemaking (rule) to modernize Community Reinvestment Act (CRA) regulations. The rule contains four main elements designed to encourage banks to serve their communities by making the regulatory framework more objective, transparent, consistent, and easy to understand. Specifically, the agencies have proposed to clarify which activities qualify for CRA credit, update where activities count for CRA credit, create a more transparent and objective method for measuring CRA performance, and provide for more transparent, consistent, and timely CRA-related data collection, recordkeeping, and reporting. At the time of publication, this proposal has not yet been published in the Federal Register. Comments on the proposal will be due 60 days after publication in the Federal Register. The notice may be viewed at: https://www.occ.treas.gov/news-issuances/federal-register/2019/nr-ia-2019-147-federal-register.pdf.

Agencies Finalize Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds.

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) are adopting amendments to the regulations implementing section 13 of the Bank Holding Company Act. Section 13 contains certain restrictions on the ability of a banking entity and nonbank financial company supervised by FRB to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. These final amendments are intended to provide banking entities with clarity about what activities are prohibited and to improve supervision and implementation of section 13. The effective date for amendatory instructions 1 through 14 (OCC), 16 through 29 (FRB), 31 through 44 (FDIC), and 46 through 58 (CFTC) is 01/01/2020; the effective date for amendatory instructions 60 through 73 (SEC) is 01/13/2020; and the effective date for the addition of appendices Z at amendatory instructions 15 (OCC), 30 (FRB), and 45 (FDIC) is 01/01/2020, through 12/31/2020, except for amendatory instruction 74 (SEC), which is effective 01/13/2020, through 12/31/2020. Banking entities must comply with the final amendments by 01/01/2021. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-14/pdf/2019-22695.pdf. Federal Register, Vol. 84, No. 220, 11/14/2019, 61974-62277.

Agencies Finalizes Capital Simplification for Qualifying Community Banking Organizations.

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) are adopting a final rule that provides for a simple measure of capital adequacy for certain community banking organizations, consistent with section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (final rule). Under the final rule, depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9 percent, will be eligible to opt into the community bank leverage ratio framework (qualifying community banking organizations). Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than 9 percent will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules (generally applicable rule) and, if applicable, will be considered to have met the well-capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act. The final rule includes a two-quarter grace period during which a qualifying community banking organization that temporarily fails to meet any of the qualifying criteria, including the greater than 9 percent leverage ratio requirement, generally would still be deemed well-capitalized so long as the banking organization maintains a leverage ratio greater than 8 percent. At the end of the grace period, the banking organization must meet all qualifying criteria to remain in the community bank leverage ratio framework or otherwise must comply with and report under the generally applicable rule. Similarly, a banking organization that fails to maintain a leverage ratio greater than 8 percent would not be permitted to use the grace period and must comply with the capital rule’s generally applicable requirements and file the appropriate regulatory reports. The final rule is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-13/pdf/2019-23472.pdf. Federal Register, Vol. 84, No. 219, 11/13/2019, 61776-61804.

Agencies Finalize Simplifications to the Capital Rule. 

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) are adopting a final rule that permits insured depository institutions and depository institution holding companies not subject to the advanced approaches capital rule to implement certain provisions of the final rule titled Regulatory Capital: Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996, which was issued by the agencies in 07/22/2019, (Capital Simplifications Final Rule) on 01/01/2020, rather than 04/01/2020, as initially provided. Consistent with this approach, the transition provisions of the regulatory capital rule are being amended to provide that banking organizations not subject to the advanced approaches capital rule will be permitted to implement the Capital Simplifications Final Rule as of its revised effective date in the quarter beginning 01/01/2020, or to wait until the quarter beginning 04/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-13/pdf/2019-23467.pdf. Federal Register, Vol. 84, No. 219, 11/13/2019, 61804-61808.

CFPB Issues Interpretive Rule on Regulation Z.

The Bureau of Consumer Financial Protection (CFPB) issued an interpretive rule which construes CFPB’s Regulation Z, which implements the Truth in Lending Act (TILA). Generally, if a mortgage loan originator organization employs an individual loan originator who is not licensed and is not required to be licensed, Regulation Z requires the loan originator organization to perform specific screening of that individual before permitting the individual to act as a loan originator and to provide certain ongoing training. Regulation Z is ambiguous as to whether these requirements apply to loan originator organizations employing individual loan originators who have temporary authority to originate loans pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA) amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act). These amendments take effect on 11/24/2019. This interpretive rule concludes that a loan originator organization is not required to comply with certain screening and training requirements under Regulation Z if the individual loan originator employee is authorized to act as a loan originator pursuant to the temporary authority described in the SAFE Act. The interpretive rule is effective 11/24/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-19/pdf/2019-24944.pdf. Federal Register, Vol. 84, No. 223, 11/19/2019, 63791-63794.

CFPB Issues Final Rule on Fair Credit Reporting Act Disclosures.

CFPB issued a final rule amending an appendix for Regulation V, which implements the Fair Credit Reporting Act (FCRA). CFPB is required to calculate annually the dollar amount of the maximum allowable charge for disclosures by a consumer reporting agency to a consumer pursuant to FCRA Section 609; this final rule establishes the maximum allowable charge for the 2020 calendar year. The final rule is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-25695.pdf. Federal Register, Vol. 84, No, 229, 11/27/2019, 65280-65281.

CFPB Issues Correction to Truth in Lending Annual Threshold Adjustments.

CFPB published a final rule in the Federal Register on 08/01/2019 amending the regulation text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA), to include annual calculations for dollar amounts for several provisions in Regulation Z. This document corrects an error in one of the amendments to the official interpretation for Regulation Z. The correction is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25812.pdf. Federal Register, Vol. 84, No. 230, 11/29/2019, 65646-65647.

CFPB Proposes Amendments to Remittance Transfers.

CFPB is proposing changes to the remittance rule in Regulation E to mitigate the effects of the expiration of a statutory exception that allows insured institutions to disclose estimates instead of exact amounts to consumers. That exception expires on 07/21/2020. In addition, CFPB is proposing to increase a safe harbor threshold in the Rule related to whether a person makes remittance transfers in the normal course of its business, which would have the effect of reducing compliance costs for entities that make a limited number of remittance transfers annually. Comments are due 01/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-06/pdf/2019-25944.pdf. Federal Register, Vol. 84, No. 235, 12/06/2019, 67132-67167.

CFPB Requests Comment on Information Collection.

  • CFPB announced it seeks comment on the information collection titled Application Forms for Financial Empowerment Training Programs. CFPB also gave notice that it sent the collection to OMB for review. Comments are due 01/14/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-15/pdf/2019-24799.pdf. Federal Register, Vol. 84, No. 221, 11/15/2019, 62514-62515.
  • CFPB announced it seeks comment on the information collection titled Application for the Bureau’s Advisory Committees. CFPB also gave notice that it sent the collection to OMB for review. Comments are due 01/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-02/pdf/2019-25994.pdf. Federal Register, Vol. 84, No. 231, 12/02/2019, 65972-65973.
  • CFPB announced it seeks comment on the information collection titled Generic Information Collection Plan for Surveys Using the Consumer Credit Panel. CFPB also gave notice that it sent the collection to OMB for review. Comments are due 01/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-02/pdf/2019-26021.pdf. Federal Register, Vol. 84, No. 231, 12/02/2019, 65973.

CFPB Requests Comment on Regulation X and Regulation Z. 

CFPB is conducting an assessment of the Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) Rule and certain amendments in accordance with section 1022(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). CFPB is requesting public comment on its plans for assessing this rule as well as certain recommendations and information that may be useful in conducting the planned assessment. Comments are due 01/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-22/pdf/2019-25260.pdf. Federal Register, Vol. 84, No. 226, 11/22/2019, 64436-64441.

FRB Proposes Supervision and Regulation Assessments of Fees for Bank Holding Companies and Savings and Loan Holding Companies. 

The Board of Governors of the Federal Reserve System (FRB) issued a proposal to amend FRB’s assessment rule (Regulation TT), pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), to address amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The proposed amendments to Regulation TT raise the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies and adjust the amount charged to assessed companies with total consolidated assets between $100 billion and $250 billion to reflect changes in supervisory and regulatory responsibilities resulting from EGRRCPA. Comments are due 01/09/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-12/pdf/2019-24491.pdf. Federal Register, Vol. 84, No. 218, 11/12/2019, 60944-60949.

FRB Issues Correction to Proposed Supervision and Regulation Assessments of Fees for Bank Holding Companies and Savings and Loan Holding Companies. 

FRB issued a notice in the Federal Register on 11/12/2019 regarding proposed changes to Regulation TT. The original notice included an expired comment period end date, this notice corrects that error. The correct comment due date for the proposal is 01/09/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-19/pdf/2019-24959.pdf. Federal Register, Vol. 84, No. 223, 11/19/2019, 63820. 

FDIC Finalizes Amendments to Assessments.

  • The Federal Deposit Insurance Corporation (FDIC) is amending the deposit insurance assessment regulations that govern the use of small bank assessment credits (small bank credits) and one-time assessment credits (OTACs) by certain insured depository institutions (IDIs). Under this final rule, now that the FDIC is applying small bank credits to quarterly deposit insurance assessments, such credits will continue to be applied as long as the Deposit Insurance Fund (DIF) reserve ratio is at least 1.35 percent (instead of, as originally provided, 1.38 percent). In addition, after small bank credits have been applied for four quarterly assessment periods, and as long as the reserve ratio is at least 1.35 percent, the FDIC will remit the full nominal value of any remaining small bank credits in lump-sum payments to each IDI holding such credits in the next assessment period in which the reserve ratio is at least 1.35 percent, and will simultaneously remit the full nominal value of any remaining OTACs in lumpsum payments to each IDI holding such credits. The final rule is effective 11/27/2019 and applicable 07/01/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-25566.pdf. Federal Register, Vol. 84, No. 229, 11/27/2019, 65269-65276.
  • FDIC is amending its deposit insurance assessment regulations to apply the community bank leverage ratio (CBLR) framework to the deposit insurance assessment system (CBLR Assessments final rule). The FDIC, the Board of Governors of the Federal Reserve System (FRB) and the Office of the Comptroller of the Currency (OCC) (collectively, the Federal banking agencies) are considering, and are expected to adopt, a final rule that provides for a simple measure of capital adequacy for certain community banking organizations (CBLR final rule). The CBLR Assessments final rule: prices all insured depository institutions (IDIs) that elect to use the CBLR framework as small institutions; makes technical amendments to the FDIC’s assessment regulations to ensure that the assessment regulations continue to reference the prompt corrective action (PCA) regulations for the definitions of capital categories used in the deposit insurance assessment system; and clarifies that an IDI that elects to use the CBLR framework and also meets the definition of a custodial bank will have no change to its custodial bank deduction or reporting items required to calculate the deduction. The final rule does not make any changes to the FDIC’s assessment methodology for small or large institutions. The final rule is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-06/pdf/2019-25897.pdf. Federal Register, Vol. 84, No. 235, 12/06/2019, 66833-66838.

FDIC Finalizes Removal of Transferred OTS Regulation Regarding Deposits.

FDIC is adopting a final rule to rescind and remove a subpart from the Code of Federal Regulations entitled “Deposits,” applicable to State savings associations, because the subpart is duplicative of other rules and statutes and is unnecessary to the regulation of State savings associations. FDIC did not receive any comments on the Notice of Proposed Rulemaking (NPR) and is finalizing the rule as proposed. The final rule is effective 12/27/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-25697.pdf. Federal Register, Vol. 84, No. 229, 11/27/2019, 65276-25280.

FDIC Issues Correction to Rule on Company-Run Stress Testing Requirements.

FDIC is correcting a final rule that appeared in the Federal Register on 10/24/2019, regarding Company-Run Stress Testing Requirements for FDIC-Supervised State Nonmember Banks and State Savings Associations. This correction replaces three additional references to “subpart” with “part,” in order to standardize the language in FDIC regulations. The correction is effective 11/25/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-26/pdf/2019-25691.pdf. Federal Register, Vol. 84, No. 228, 11/26/2019, 64984-64985.

FDIC Issues Correction to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds.

FDIC is correcting a final rule that appeared in the Federal Register on Thursday, 11/14/2019, regarding Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds. These corrections are necessary to standardize the language in the FDIC regulations with the other agencies’ regulations. The correction is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-03/pdf/2019-26066.pdf. Federal Register, Vol. 84, No. 232, 12/03/2019, 66063.

FDIC Proposes Brokered Deposit Regulations.

FDIC issued a notice of proposed rulemaking to brokered deposit restrictions that apply to less than well capitalized institutions. The proposed rule would address concerns raised by WBA, other industry and trade groups, and banking organizations desiring clarification of the definition of “deposit broker.” The proposed rule would create a new framework for analyzing that definition, as well as other related provisions. Comments on the proposal will be due 60 days after publication in the Federal Register. The proposal may be viewed at: https://www.fdic.gov/news/board/2019/2019-12-12-notice-dis-b-fr.pdf.

FDIC Proposes Regulations on Federal Interest Rate Authority.

FDIC is seeking comment on proposed regulations clarifying the law that governs the interest rates State-chartered banks and insured branches of foreign banks (collectively, State banks) may charge. The proposed regulations would provide that State banks are authorized to charge interest at the rate permitted by the State in which the State bank is located, or one percent in excess of the ninety-day commercial paper rate, whichever is greater. The proposed regulations also would provide that whether interest on a loan is permissible under section 27 of the Federal Deposit Insurance Act would be determined at the time the loan is made, and interest on a loan permissible under section 27 would not be affected by subsequent events, such as a change in State law, a change in the relevant commercial paper rate, or the sale, assignment, or other transfer of the loan. Comments are due 02/04/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-06/pdf/2019-25689.pdf. Federal Register, Vol. 84, No. 235, 12/06/2019, 66845-66853.

FDIC Requests Comment on Framework for Analyzing the Effects of FDIC Regulatory Actions.

FDIC is seeking comment on approaches it is considering to analyze the effects of its regulatory actions. FDIC views analysis of the effects of regulatory actions and alternatives as an important part of a credible and transparent rulemaking process. The comments received will help FDIC to strengthen its analysis of regulatory actions. Comments are due 01/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25928.pdf. Federal Register, Vol. 84, No. 230, 11/30/2019, 65808-65814.

FDIC Requests Comment on Information Collection.

FDIC announced it seeks comment on the information collection titled Joint Standards for Assessing Diversity Policies and Practices. FDIC also gave notice that it sent the collection to OMB for review. Comments are due 01/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-04/pdf/2019-26170.pdf. Federal Register, Vol. 84, No. 233, 12/04/2019, 66404-66405.

FDIC Establishes Advisory Committee of State Regulators.

FDIC is establishing the FDIC Advisory Committee of State Regulators (ACSR). The ASCR will provide advice and recommendations to the FDIC on a broad range of policy issues regarding the regulation of state-chartered financial institutions throughout the United States, including its territories. The ACSR will provide a forum where state regulators and the FDIC can discuss a variety of current and emerging issues that have potential implications regarding the regulation and supervision of state-chartered financial institutions. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-02/pdf/2019-26013.pdf. Federal Register, Vol. 84, No. 231, 12/02/2019, 65979-65980.

FDIC Issues Terminations of Receivership.

FDIC as Receiver was charged with the duty of winding up the affairs of former depository institutions and liquidating all related assets. The Receiver has fulfilled its obligations and made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary, including but not limited to releases, discharges, satisfactions, endorsements, assignments, and deeds. Effective on the termination dates listed in the final column of the chart in the notice, the Receiverships have been terminated, the Receiver has been discharged, and the Receiverships have ceased to exist as legal entities. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-09/pdf/2019-26417.pdf. Federal Register, Vol. 84, No. 236, 12/09/2019, 67270.

HUD Requests Comment on Information Collection.

The Department of Housing and Urban Development (HUD) announced it seeks comment on the information collection titled FHA TOTAL Mortgage Scorecard. HUD also gave notice that it sent the collection to OMB for review. Comments are due 01/27/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-25694.pdf. Federal Register, Vol. 84, No. 229, 11/27/2019, 65403-65404.

FEMA Issues Final Flood Hazard Determinations.

The Federal Emergency Management Agency (FEMA) has issued a final notice which identifies communities in the states of Iowa, Nebraska, and Ohio, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The final notice is effective 04/17/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-05/pdf/2019-26247.pdf. Federal Register, Vol. 84, No. 234, 12/05/2019, 66686-66687.

FEMA Issues Final Notices of Changes in Flood Hazard Determinations.

  • FEMA issued new or modified Base (1% annual-chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) for communities in the states of Illinois, Indiana, Michigan, Minnesota, Nebraska, Ohio, and Wisconsin. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. The flood hazard determinations modified by each LOMR will be used to calculate flood insurance premium rates for new buildings and their contents. The effective date for each LOMR is indicated in the table in the final notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-05/pdf/2019-26248.pdf. Federal Register, Vol. 84, No. 234, 12/05/2019, 66688-66691.
  • FEMA issued new or modified Base (1% annual-chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) for communities in the states of Illinois, Michigan, Minnesota, and Wisconsin. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. The flood hazard determinations modified by each LOMR will be used to calculate flood insurance premium rates for new buildings and their contents. The effective date for each LOMR is indicated in the table in the final notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-09/pdf/2019-26421.pdf. Federal Register, Vol. 84, No. 236, 12/09/2019, 67289-67292.

FEMA Issues Proposed Flood Hazard Determinations.

FEMA has requested comments on proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the states of Iowa, and Michigan. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 03/09/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-09/pdf/2019-26422.pdf. Federal Register, Vol. 84, No. 236, 12/09/2019, 67284-67286.

Treasury Finalizes IMARA Calculation Under the Terrorism Risk Insurance Program.

The Department of the Treasury (Treasury) issued a final rule to implement technical changes to program regulations that address the calculation and notification to the public of the Terrorism Risk Insurance Program’s insurance marketplace aggregate retention amount (IMARA) under the Terrorism Risk Insurance Act, as amended. The rule is effective 12/16/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-15/pdf/2019-24801.pdf. Federal Register, Vol. 84, No. 221, 11/15/2019, 62450-62452. 

Treasury Finalizes Estate and Gift Taxes Regulations.

Treasury finalized regulations addressing the effect of recent legislative changes to the basic exclusion amount allowable in computing Federal gift and estate taxes. The final regulations will affect donors of gifts made after 2017 and the estates of decedents dying after 2025. The final regulations are effective 11/26/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-26/pdf/2019-25601.pdf. Federal Register, Vol. 84, No. 228, 11/26/2019, 64995-65000.

Treasury Requests Comment on Information Collections.

  • Treasury announced it seeks comment on the information collection titled Agreement and Request for Disposition of a Decedent’s Treasury Securities. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25895.pdf. Federal Register, Vol. 84, No. 230, 11/29/2019, 65897.
  • Treasury announced it seeks comment on the information collection titled Special Bond of Indemnity By Purchaser of United States Savings Bonds/Notes Involved in a Chain Letter Scheme. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25894.pdf. Federal Register, Vol. 84, No. 230, 11/29/2019, 65896-65897.
  • Treasury announced it seeks comment on the information collection titled Returns Regarding Payments of Interest. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25881.pdf. Federal Register, Vol. 84, No. 230, 11/29/2019, 65898-65899.
  • Treasury announced it seeks comment on the information collection titled Offering of U.S. Mortgage Guaranty Insurance Company Tax and Loss Bonds. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/31/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-02/pdf/2019-25998.pdf. Federal Register, Vol. 84, No. 231, 12/02/2019, 66053.

SBA Finalizes Regulations on Women’s Business Center Program.

The Small Business Administration (SBA) is codifying regulations for the Women’s Business Center (WBC) Program as directed in section 29 of the Small Business Act (the Act). The final rule also codifies policy and procedural changes included in the WBC Program Announcement and Notice of Award (NOA). These changes include, but are not limited to, the following: Language on risk assessment, as required by the Uniform Grant Guidance; limitations on carryovers; a reduction in reporting requirements; and eligibility criteria for selection as a WBC. Implementing these regulations will result in greater standardization and transparency in the delivery of the WBC Program. The final rule is effective 01/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-25/pdf/2019-24239.pdf. Federal Register, Vol. 84, No. 227, 11/25/2019, 64707-64723.

SBA Finalizes Streamlining and Modernizing Certified Development Company Program.

SBA finalized a rule streamlining the operational and organizational requirements for Certified Development Companies (CDCs) in order to improve efficiencies and reduce costs without unduly increasing risk in the 504 Loan Program. The changes include streamlining the requirements that apply to the corporate governance of CDCs, and updating the requirements that apply to professional services contracts entered into by CDCs, the requirements related to the audit and review of a CDC’s financial statements, and the requirements related to the balance that a Premier Certified Lender Program (PCLP) CDC must maintain in its Loan Loss Reserve Fund. The final rule is effective 01/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-04/pdf/2019-26042.pdf. Federal Register, Vol. 84, No. 233, 12/04/2019, 66287-66296.

SBA Issues Small Business Size Standards.

SBA is modifying its method for calculating average annual receipts used to prescribe size standards for small businesses. Specifically, in accordance with the Small Business Runway Extension Act of 2018, SBA is changing its regulations on the calculation of average annual receipts for all of SBA’s receipts-based size standards, and for other agencies’ proposed receipts-based size standards, from a 3-year averaging period to a 5-year averaging period, outside of the SBA Business Loan and Disaster Loan Programs. SBA intends to seek comment on the Business Loan and Disaster Loan Programs in a proposed rule through a separate rulemaking. For all other programs, SBA adopts a transition period through 01/06/2022, during which firms may choose between using a 3-year averaging period and a 5-year averaging period. The rule is effective 01/06/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-05/pdf/2019-26041.pdf. Federal Register, Vol. 84, No. 234, 12/05/2019, 66561-66579.

FCIC Issues Rice Crop Insurance Provisions.

The Federal Crop Insurance Corporation (FCIC) finalized amendments to the Common Crop Insurance Regulations, Rice Crop Insurance Provisions (Crop Provisions). The intended effect of this action is to allow for new irrigation methods and change the cancellation and termination dates in certain states to align with other row crops to implement the changes contained in the Agriculture Improvement Act of 2018 (commonly referred to as the 2018 Farm Bill). The changes will be effective for the 2020 and succeeding crop years. The final rule is effective 11/30/2019. Comments are due 01/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-22/pdf/2019-25386.pdf. Federal Register, Vol. 84, No. 226, 11/22/2019, 64411-64413.

FCIC Issues Coarse Grains Crop Insurance Provisions.

FCIC amends the Common Crop Insurance Regulations, Coarse Grains Crop Insurance Provisions (Crop Provisions). The intended effect of this action is to allow separate enterprise and optional units by the cropping practices Following Another Crop (FAC) and Not Following Another Crop (NFAC). The changes will be effective for the 2020 and succeeding crop years. The final rule is effective 11/30/2019. Comments are due 01/27/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-25862.pdf. Federal Register, Vol. 84, No. 229, 11/27/2019, 65259-65262.

FCIC Issues Sugar Beet Crop Insurance Regulations.

FCIC finalizes the Common Crop Insurance Regulations, Sugar Beet Crop Insurance Provisions (Crop Provisions) and makes amendments to the final rule, with request for comment, published in the Federal Register on 09/10/2018, that updated existing policy provisions and definitions to better reflect current agricultural practices. This final rule is amended based on comments received and other issues identified since implementation of the previous final rule. The changes will be effective for the 2020 and succeeding crop years in states with a November 30 contract change date and for the 2021 and succeeding crop years in all other states. The final rule is effective 11/30/2019. Comments are due 01/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25844.pdf. Federal Register, Vol. 84, No. 230, 11/29/2019, 65627-65639.

FCIC Issues Correction to Common Crop Insurance Policy Basic Provisions.

FCIC is correcting a final rule that was published in the Federal Register on 07/28/2019, which revised the Catastrophic Risk Protection Endorsement, the Area Risk Protection Insurance Basic Provisions, and the Common Crop Insurance Policy (CCIP) Basic Provisions. The correction is being published to correct an incorrect reference in section 3(g)(3) of the Common Crop Insurance Policy Basic Provisions. The correction is effective 11/22/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-22/pdf/2019-25387.pdf. Federal Register, Vol. 84, No. 226, 11/22/2019, 64413-64414.

RBC Issues Notice of Solicitation of Applications for Inviting Applications for the Rural Economic Development Loan and Grant Programs.

The Rural Business-Cooperative Service (RBC) announced that the maximum loan amount awarded for applications competing in the Second, Third, and Fourth Quarter funding cycles of fiscal year (FY) 2020 will be $1 million. The notice contains key dates for FY 2020 complete loan applications to be received. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-13/pdf/2019-24597.pdf. Federal Register, Vol. 84, No. 219, 11/13/2019, 61594-61595.

RHS Proposes Amendments to Single Family Housing Direct Loan and Grant Programs.

The Rural Housing Service (RHS) is proposing to amend its regulations to update and improve the direct Single-Family Housing (SFH) loans and grants programs. The proposed changes would increase program flexibility, allow more borrowers to access affordable loans, better align the programs with best practices, and enable the programs to be more responsive to economic conditions and trends. Comments are due 01/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-25/pdf/2019-25128.pdf. Federal Register, Vol. 84, No. 227, 11/25/2019, 64788-64795.

CCC Issues Interim Rule on Conservation Reserve Program.

The Commodity Credit Corporation (CCC) is revising its Conservation Reserve Program (CRP) regulations to specify the terms and conditions of CRP and to implement amendments made by the Agriculture Improvement Act of 2018 (2018 Farm Bill). The 2018 Farm Bill authorizes CRP through fiscal year 2023. The rule makes required changes to the eligibility criteria for enrollment in CRP, the benefits available to participants, and the land use and compliance provisions of CRP. In addition, the rule will implement two new pilot programs, the Clean Lakes, Estuaries, and Rivers 30 (CLEAR 30) Pilot Program and the Soil Heath and Income Protection Pilot (SHIPP) Program, as required by the 2018 Farm Bill. The rule is effective 12/06/2019. Comments are due 02/04/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-06/pdf/2019-26268.pdf. Federal Register, Vol. 84, No. 235, 12/06/2019, 66813-66833.

FASB Requests Comment on Annual Report for FY 2019 and Three-Year Plan.

The Federal Accounting Standards Advisory Board (FASB) has issued its Annual Report for Fiscal Year 2019 and Three-Year Plan. The Annual Report for Fiscal Year 2019 and Three-Year Plan is available on the FASB website at https://www.fasab.gov/our-annual-reports/. Copies can be obtained by contacting FASB at (202)512–7350. Comments are due 01/17/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-26/pdf/2019-25662.pdf. Federal Register, Vol. 84, No. 228, 11/26/2019, 65154. 

NCUA Finalized Exceptions to Employment Restrictions.

The National Credit Union Administration (NCUA) is updating and revising its Interpretive Ruling and Policy Statement (IRPS) regarding statutory prohibitions imposed by Section 205(d) of the Federal Credit Union Act (FCU Act). Section 205(d) prohibits, except with the prior written consent of NCUA, any person who has been convicted of any criminal offense involving dishonesty or breach of trust, or who has entered into a pretrial diversion or similar program in connection with a prosecution for such offense, from participating in the affairs of an insured credit union. NCUA is rescinding current IRPS 08–1 and issuing a revised and updated IRPS to reduce regulatory burden. NCUA is amending and expanding the current de minimis exception to reduce the scope and number of offenses that will require an application to NCUA. Specifically, the final IRPS will not require an application for convictions involving insufficient funds checks of aggregate moderate value, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults. The final rule is effective 01/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-02/pdf/2019-25699.pdf. Federal Register, Vol. 84, No. 231, 12/02/2019, 65907-65923.

NCUA Proposes Amendments to Real Estate Appraisals.

NCUA proposes to amend the agency’s regulation requiring appraisals for certain real estate-related transactions. The proposed rule would increase the threshold level below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Consistent with the requirement for other transactions that fall below applicable appraisal thresholds, federally insured credit unions (FICUs) would be required to obtain written estimates of market value of the real estate collateral that is consistent with safe and sound banking practices in lieu of an appraisal. For easier reference, the proposed rule would explicitly incorporate the existing statutory requirement that appraisals be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). This proposal is consistent with the final rule, effective on 10/09/2019, issued by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) that increases the threshold level at or below which appraisals are not required for residential real estate transactions from $250,000 to $400,000. Comments are due 01/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-29/pdf/2019-25768.pdf. Federal Register, Vol. 84, No. 230, 11/29/2019, 65707-65714.

NCUA Requests Comment on Information Collections.

  • NCUA announced it seeks comment on the information collection titled Recordkeeping and Disclosure Requirements Associated with Regulations B, E, M, and CC. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 01/13/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-14/pdf/2019-24723.pdf. Federal Register, Vol. 84, No. 220, 11/14/2019, 61941-61942.
  • NCUA announced it seeks comment on the information collection titled NCUA Profile. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 01/14/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-15/pdf/2019-24760.pdf. Federal Register, Vol. 84, No. 221, 11/15/2019, 62558.
  • NCUA announced it seeks comment on the information collection titled Corporate Credit Union Monthly Call Report and Report of Officers. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 01/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-03/pdf/2019-26114.pdf. Federal Register, Vol. 84, No. 232, 12/03/2019, 66223.
  • NCUA announced it seeks comment on the information collection titled Maximum Borrowing Authority, 12 CFR 741.2. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 02/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-05/pdf/2019-26238.pdf. Federal Register, Vol. 84, No. 234, 12/05/2019, 66699.

SSA Proposes Regulations on Designation of Representative Payees.

The Social Security Administration (SSA) issued a notice of proposed rulemaking to promulgate regulations specifying the information Social Security beneficiaries and applicants must provide to designate a representative payee in advance of the determination that the beneficiary needs a representative payee. Comments are due 12/26/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-11-26/pdf/2019-25569.pdf. Federal Register, Vol. 84, No. 228, 11/26/2019, 65040-65044.

By, Ally Bates

The below article is the Special Focus section of the December 2019 Compliance Journal. The full issue may be viewed by clicking here.

In early 2019, I served as the Compliance Officer of a small-community bank that was in the early stages of an acquisition. While both institutions performed necessary due-diligence, including review of the Compliance Management System I managed, certain compliance and regulatory aspects began to emerge that never previously hit my radar. After all, M&A activity is not an area of focus for the typical Compliance Officer. What I came to realize is that emerging trends in our industry are beginning to change the dynamics of where our responsibilities lie, while prevention of consumer harm rises to a new level.

So, what is a Compliance Officer to do? First, I turned toward my regulator for guidance. The Summer 2013 edition of Supervisory Highlights from the FDIC was a great starting point. The article, Mergers and Acquisitions: A Compliance Perspective, written by Matthew Z. Zamora, Senior Compliance Examiner, Division of Depositor and Consumer Protection, reminded me of the importance of maintaining a good Compliance Management System (CMS) during and after the merger. It helped me recognize that the ability of the surviving institution to establish and maintain its CMS would be subject to regulatory scrutiny and non-compliance could lead to punitive damages. 

Equipped with this new-found knowledge, I confronted the next challenge of putting it to practical use. To further complicate matters, areas and issues not addressed when merger discussions first began started to crop-up. For example, if management decided to merge any products, services, and software, it would undoubtedly create a vacuum of new disclosures, changed processes, enhanced procedures, and potentially limit resources. 

So, what is a compliance officer to do?

First, I analyzed which regulations brought the most risk, including reputational and regulatory. I identified several regulations that presented potential punitive damages for non-compliance which, if not addressed early, could result in negative consequences to shareholder value. To tackle this, I created a chart of the regulations applicable to both institutions, along with potential civil monetary penalties. What I found was staggering.

Next, I created a checklist. I know, I know, Compliance Officers live by these. But a well-documented checklist of which regulations needed to be considered, which tasks needed to be performed, and who was be responsible for performing them helped me to keep this aspect of M&A in the forefront. I then communicated this information with management of both institutions so that proper resources could be allocated.

Then, much like the first steps in introducing a new product or service, I engaged my experiences as a Compliance Officer. For instance, in the case of mapping loan and deposit accounts, a Compliance Officer should perform a side-by-side comparison of account related disclosures, including Truth in Savings, TRID and contracts, looking for commonality in terms and fees to help find the right products that bring synergy. By applying this method I found that, in some cases, it made more sense to build a new product on the acquirer’s system to mirror the product of the merged institution. The key was to find as much commonality as possible to avoid additional disclosures and customer confusion. As I worked with the merger and acquisition team, we found differences and tracked them in a table format so we could use this information when it came time to inform our customers well in advance of the actual merger. 

Next, I worked with management to determine what the departments would look like following the formal merger of both institutions. I found that because of how the merged institution serviced its mortgage loans, a simple name change triggered RESPA requirements on providing Notice of Servicing Rights to all mortgage customers, even though payments, address and phone number remained the same. Once the merger was announced and a legal closing date was determined, I worked with our mortgage processing department to properly disclose the likelihood that servicing would be transferred to the new bank and prepared a mass mailing for existing customers. 

And what about that thing they call HMDA? This can be disastrous for an institution if done wrong, so the team began by analyzing if one or both institutions were required to file. If one institution did not file, we knew it would be a major change for the other institution, especially for collecting necessary information. We started by asking questions about Pre-approval and Pre-qualification programs and if ether institution reported HELOC’s, knowing that how these are defined and reported could be different for each bank and might lead to missed applications. Until the end of the year, we found that keeping and filing separate HMDA LAR’s could be advantageous, but not efficient. Referencing A Guide to HMDA Reporting Getting It Right! was my greatest tool as a compliance officer. I also found that a conversation with our reporting vendor about license fees and implementation helped prepare for another calendar year of reporting. Planning a new collection, reporting, and review process before the next calendar year helped put both banks on the right path.

Finally, as one who handled multiple responsibilities, I didn’t forget to dust off my CRA Officer hat and update our public file. I had to redraw our CRA assessment area, update our list of products and services for the combined institution, and re-post the corresponding lobby notice. I also prepared for the possibility of customer complaints that might follow after the merger.

Conclusion

While these are just a few examples of what I encountered during a merger and acquisition, through them I found that the role of the Compliance Officer is a critical component, before, during, and after the merge. Keeping abreast of these challenges introduced a new dynamic in managing the newly formed CMS program. To prepare your bank for these or other types of challenges, please contact Jeffery Schmid, Director of Compliance and Management Services through FIPCO at jschmid@fipco.com to see how our experience can assist your bank.

By, Ally Bates

WI Bankers’ Economic Forecast: 2020 Economy Likely to Be Strong and Steady

(Madison) – Nearly 80% of bankers rated Wisconsin’s current economy as “good” with nearly the same percentage predicting that the economy will stay the same in 2020 for the Badger State. Low unemployment, strong manufacturing, low interest rates, a diverse economic base, and strong consumer confidence were some of the factors cited as to why the economy was doing so well. Bankers cited the agricultural section of the economy and a lack of available employees when hiring as negative factors creating some economic headwinds for Wisconsin.

Seventy-nine percent of the Wisconsin bank CEOs and Presidents contributing to the latest Wisconsin Bankers Association (WBA) Bank CEO Economic Conditions Survey said the economy was good while another 16% weighed in with “excellent.” Following up on that question, 72% predicted the Wisconsin economy will stay the same with 23% saying it will improve.

“As predicted in our last survey, 2019 was a strong year for Wisconsin’s economy and lending activity. It’s very encouraging to see most bankers believe 2020 will continue that positive trend,” explained Rose Oswald Poels, WBA president and CEO. “Bankers are the best barometers of the economy as they see all segments of every marketplace. They work together with their communities and are the first to see and understand Wisconsin’s economic trends due to their customers’ activities. In turn, our members use that information to help their communities prosper.”

The majority of responses to questions about other economic indicators follow this trend. Loan demand for business, commercial real estate, and residential real estate are good with the 2020 forecast saying those levels will stay the same in the new year. The exception is agricultural loans with 51% saying levels are “fair” and 33% say “poor.” The prediction by 56% of CEOs and presidents was that levels would stay consistent in 2020.

Businesses will hire more employees according to 45% of the respondents, while 54% say businesses will maintain their current staffing levels. 

The survey was conducted over the first two weeks of December with 83 respondents. 

Please Note: James Bullard, President and CEO, Federal Reserve of St. Louis, will be speaking about the economy at the WBA’s upcoming Wisconsin Economic Forecast Luncheon. Held Jan. 9 in Madison, the media is welcome to attend. To secure a media pass, please contact WBA’s Eric Skrum via email

Below is a breakdown of the questions and responses.

 

How would you rate the current health of the Wisconsin economy…

 

Excellent

16%

Good

79%

Fair

5%

Poor

0%

 

 

In the next six months, do you expect the Wisconsin economy to … 

 

Grow

23%

Weaken

5%

Stay the same

72%

 

 

Rate the current demand in the following categories:

 

Business loans

 

Excellent

6%

Good

61%

Fair

30%

Poor

3%

 

 

Commercial real estate

 

Excellent

15%

Good

60%

Fair

23%

Poor

1%

 

 

Residential real estate

 

Excellent

25%

Good

64%

Fair

12%

Poor

0%

 

 

Agricultural

 

Excellent

0%

Good

16%

Fair

51%

Poor

33%

 

 

In the next six months, do you anticipate the demand for the following loan categories will…

 

Business loans

 

Grow

17%

Weaken

8%

Stay the same

75%

 

 

Commercial real estate

 

Grow

21%

Weaken

8%

Stay the same

72%

 

 

Residential real estate

 

Grow

25%

Weaken

14%

Stay the same

61%

 

 

Agricultural

 

Grow

9%

Weaken

36%

Stay the same

56%

 

 

In the next six months, are the businesses in your bank’s market area likely to…

 

Hire employees

45%

Maintain current staffing levels

54%

Llay off employees

1%

 

 

In the next six months, is your bank likely to …

 

Hire employees

29%

Maintain current staffing levels

66%

Llay off employees

5%

 

By, Eric Skrum

Our economy is becoming more global, and the value proposition is strong for Wisconsin bankers to get more involved in international trade. Nationally, the Small Business Administration (SBA) estimates that a total of 287,314 companies exported goods from the United States in 2016. Of these, 280,229, or 97.5%, were small firms; they generated 33.3% (or nearly $433 billion) of the United States' $1.3 trillion in total exports.

In Wisconsin alone, a total of 8,485 companies exported goods in 2016. Of these, 7,337 (or 86.5%) were small firms; they generated 26.8% of Wisconsin's $19 billion in total exports. Senior SBA staff recently conducted a local roundtable for lenders in southeast Wisconsin to discuss the various ways SBA can play a role in helping banks grow their portfolio to include international finance.

"Our job is to mitigate your risk," said David Glaccum, SBA Associate Administrator for the Office of International Trade, at the meeting to lenders. SBA has three different export loan programs designed to provide bank customers, notably small businesses, with solid financing options through their local bank while also providing the bank with as much as a 90% guaranty depending on the program used. 

"Small business customers are an untapped market opportunity for SBA lenders," said Michael Fazio, SBA Export Finance Manager for the Office of International Finance, to the lenders in the audience. And the numbers prove that to be true. Of the four key export sectors (manufacturing, wholesale trade, retail trade, and ag) identified by SBA, there are nearly 1.7 million small businesses operating in these sectors, with over 172,000 of those exporting products or services in 2018. Of those small business exporters, only 165 SBA export loans were provided in 2018. It is a goal of the SBA to grow these loan numbers over the next year or so. Not only small businesses that export, but also those that sell goods and services to others that export, can use SBA's export loan programs, thereby expanding the pool of potential borrowers.

Part of the explanation for the disconnect in the numbers is because many small business exporters are using cash in advance terms to finance their export business rather than obtain a loan. "Cash in advance terms are really not the best solution for businesses to get better margins compared to financing through a bank with the benefit of an SBA export program," Glaccum stated. 

In addition to the loan programs, SBA has local staff in Wisconsin who are ready to help lenders not only become more educated on these guaranty programs, but are also willing to jointly call on bank customers and prospects to provide the expertise needed to effectively talk with small business exporters. 

With more businesses exporting their products and services, there is a growing underserved market opportunity for banks to tap into, in industries commonly targeted by the banking industry. Nearly 35% of small business exporters surveyed stated that they find it more difficult to finance foreign sales. "Indeed, as banks begin to look deeper into their existing customer base, many are surprised to find existing customers already exporting products or services," Fazio shared. Moreover, diversifying a bank's loan portfolio to include some international loans helps strengthen a bank's balance sheet with customers who will be sticky to the bank. 

For more information about the SBA Export Loan programs, or to be added to a referral list of export businesses SBA encounters that have financing needs, contact Mike Fazio at michael.fazio@sba.gov, or 202-322-3352. 

Oswald Poels is WBA President and CEO.

By, Amber Seitz

Q: Has USDA Published a Rule Establishing Regulations to Produce Hemp?

A: Yes. 

The United States Department of Agriculture (USDA) published an interim final rule (rule) on October 31, 2019 specifying rules and regulations to produce hemp. The rule is directed by the Agriculture Improvement Act of 2018 and is effective October 31, 2019 through November 1, 2021. 

The rule establishes a Federal plan for producers in States that do not have their own USDA-approved plan. The program includes provisions for maintaining information on the land where hemp is produced, testing of THC levels, disposing of plants not meeting certain requirements, and licensing requirements. USDA has also outlined provisions to approve plans submitted by States for the domestic production of hemp. 

It is WBA's understanding that the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) will submit a Hemp Program Plan to USDA. However, DATCP will continue under the 2014 Farm Bill provisions in 2020. DATCP has begun its hemp licensing as of November 1, 2019, for the 2020 hemp season, and is waiting for the State Legislature to approve legislation to align Wisconsin law with the 2018 Farm Bill. At this time, DATCP expects to begin the new program under the 2018 Farm Bill in 2021.

Birrenkott is WBA assistant director – legal. For legal questions, please email wbalegal@wisbank.com.

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution's attorney for special legal advice or assistance.

By, Amber Seitz

It is unlikely that a banker would want to travel back in time ten years. Yes, Apple was just about to unveil the iPad, and Navy Seals stormed a home in Pakistan and killed the most wanted terrorist in the world. Life back then was a little less technical because mobile banking was not quite mainstreamed, and no bank ever questioned whether a Pokémon would be digitally hiding behind its teller counters. But 2010 was a dark time for the banking industry; in 2010, the Great Recession's wake rocked Wisconsin banks. 

At the turn of each decade, it is often inevitable that industries, and people for that matter, reflect on how far they have come and what the future may hold. The Wisconsin banking industry is no exception. In the past decade, Wisconsin banks evolved from standing shoulder-to-shoulder, ready for battle against a crumbled economy and a misinformed reputation, to a thriving industry that embraces the ever-changing technological world. However, what has not changed over the years is the thing that will make Wisconsin banks strong going into the next decade: resiliency.

Thinking back to 2010

There's no denying that 2010 brought challenges to the Wisconsin banking industry. With the world still reeling from the impacts of the Great Recession and increased federal regulatory pressure, Wisconsin banks were faced with a difficult task: they had to fight to deliver a healthy banking environment to their customers. No aspect of financial services was untouched by the recession, yet commercial and community banks were left to pick up the pieces.

"The recession was all-encompassing: housing, land development, agriculture, and commercial real estate… There were no safe havens," said Robert Just Jr., retired president and CEO of Mound City Bank and WBA Chair in 2010. "What banks did to survive was remarkable; we closed ranks and fought for our good names."

This resiliency was indeed remarkable, but unsurprising. Wisconsin banks never saw the magnitude of bank closures or failures to the same degree as other parts of the country, including some from neighboring states. They had fewer causalities than others in the industry because they stuck to their core competency: supporting their communities. Wisconsin banks hold traditional values of conservativism and put their customers first. They fought to uphold their communities even in a turbulent economic environment.

"Wisconsin banks have historically been prudent in their underwriting and conservative in how they manage their balance sheets," said Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association. "I think that helped them be able to weather the challenging times in 2010."

Weathering the storm was certainly no easy task. In addition to the overall impact of the recession on the economy, the crisis triggered a domino chain reaction of regulations that all but crippled some banks. Prior to 2008, regulators did not express many concerns during bank evaluations. However, the recession changed everything. Panic electroshocked regulators into a reactive mode and banks found themselves whiplashed from the new scrutiny imposed upon them. And then, of course, Dodd Frank hit.

"Dodd Frank was approved in 2010 and it just unleashed a waterfall of change in the regulatory and risk management piece of banking," said Matt Sitkwoski, executive vice president and chief financial officer of Bankers' Bank, Madison. "A lot of bankers had to re-educate themselves. It wasn't necessarily a bad thing, but it was challenging."

As if banks did not have enough on their plates, they were also faced with a full-frontal attack from the media and others from outside the banking industry. It is no secret that risky moves made by certain Wall Street investment mortgage brokers and firms caused the severity of the recession. However, commercial and community banks bore the impact and were unjustly blamed for the actions of the bad apples in the industry.

"We suffered because of this, but it wasn't the community banks that caused this… It was hard to get that message out," said Jeff Niesen, senior vice president of Bankers' Bank. "I remember back in the time, if you said you worked at a bank, people would say 'oh, you're one of them' and I would say 'yes, I am, but this wasn't caused by us.'"

Despite this misrepresented perception from those outside the industry, Wisconsin banks continued to grind through the tough economy with an eye for the future and for the communities they served in. That ability to see the glass half-full during economic hardship distinguished them from other financial servicers in the industry and helped them thrive later into the decade.

"If there are challenges, that means that there are opportunities to differentiate and succeed," said Mark Meloy, CEO of First Business Bank, Madison and current WBA Chair. "I always felt like 2010-2012 were some of the fastest moving, most exciting times that we had because we were able to take advantage of some recovery moments and deliver products and services that clients and prospects were asking for, and doing it in a way that was faster and better for them."

Today's banking environment

As the calendar approaches 2020, the Wisconsin banking industry looks quite different than it did entering 2010. Community banking has been at the center of the economic recovery, and it has seen major payoff for this effort, especially in the last five years. Bank capital is much larger and Wisconsin banks have developed sound lending markets, which has contributed to a flourishing economy. It seems like a long time coming for many bankers in Wisconsin. 

However, the industry also faces a dramatic shift in the way that individuals engage with their bank. There is no denying that the mobile phone explosion now encompassing all aspect of human interaction has revolutionized the way Americans bank.

"Mobile banking has changed everything from the client's ability to authorize wire transfers to simply looking up account balances," said Meloy. "That client or potential client now looks at the entire financial landscape on a 360-degree basis entirely with their phone these days."

Further, the culture shock of mobile phones also developed new competition that community banks in Wisconsin had never faced before. 

"I think there was always increased competition into the new millennium for bank customers. This disintermediation has been going on for many years, but I think it's really intensified," said Sitkwoski. "The new players, whether they be fintech or online lenders or whatever the case may be, challenge the ability for community banks to defend their customers and defend themselves, and there are aspects of the marketplace that are reaching to grab their customers to take them away."

The expectations of customers have also shifted. Millennials in particular focus more on the experience of their business in a different way than older generations. They want their banking to be as fast-paced as their lifestyles. This shift has changed the way that community banks need to evolve, as these new products have subtly given consumers reasons not to come into the bank. However, something that has not changed over the years is that community banks are very good at engaging with the communities they serve in. As Just said, "face-to-face interaction will never go out of style." 

This concept is no understatement and differentiates Wisconsin community banks from their online and national competitors. Throughout his travels, Niesen has found a direct correlation between a vibrant community and a strong community bank at the center of it.

"They'll treat their customers how they should be treated. I'm not going to imply that regional banks and national banks aren't doing so, but at the community banks you're more than just a number," he said. "They haven't extended beyond their capabilities within their communities and that's something they continue to do well."

Sticking to their core competency has helped many community banks, especially family-owned banks, remain independent in an environment that has seen an increase in mergers and acquisitions in the past few years. According to Sitkowski, the quality of capital is significantly stronger than it was in the early 2010s. While this is good from a safety and soundness standpoint, the return on equity is lower and a bank needs to earn more to be successful. He attributes the increasing number of consolidations to this new challenge. But, as seen during the early post-recession years, Wisconsin's community banks are resilient and able to take on whatever challenge is thrown their way.

"I think Wisconsin banks have a nimbleness and are able to adjust to whatever environment they've found themselves in," said Meloy. "I think that's the hallmark of the Wisconsin banking industry for a very long time and continues to be."

Thinking of the future

It is nearly impossible to predict the future of the Wisconsin banking industry. The industry metamorphosizes itself to economic, political, and cultural factors. However, experts in the field unanimously predict that the trend of consolidation is here to stay in the short future, and banks need to adapt.

"I think it's inevitable that we'll continue to see some consolidation in the banking industry, not only in Wisconsin but nationwide," said Meloy. "I also strongly believe that the competitive environment really goes far beyond what we've always considered competition, and I think that's going to grow and with it provide opportunities for us to succeed." 

Oswald Poels agrees that mergers and acquisitions are unlikely to disappear in the next decade. However, she is hopeful that this trend will begin to plateau because community banks are often more than just financial servicers; they breathe life into the towns they serve.

"Communities really need local banks, and their presence is really important, not just because of the traditional banking services that are needed in the community, but also for the philanthropical support and just the vibrancy of the overall local economy," she said. "We really need local banks." 

Local banks will only survive if they are able to be as adaptable as they were during the early 2010 years, yet strategic with their decision-making into the future. Oswald Poels believes that this means going into the new decade, banks need to develop a strong succession plan for the future and also peer network with other banks to share ideas about how to best serve their communities.

Niesen adds that community banks need to develop and nurture partnerships with technological firms with aligned goals that best service their customers. However, whether it is 2010 or 2029, Wisconsin banks will succeed so long as they stick to the values that make them vibrant, dependable, and unique. 

"I think community banks need to get past this perception that the community bank cannot survive, regardless of the size," said Sitkowski. "Community banks have a viable role going forward and they will survive with the right partnerships and relationships."

Kallien is a content creation associate/editor at WBA.

Bankers Bank is a WBA Gold Associate Member.

By, Amber Seitz

The world is changing, as it always has, and so is banking. The best way to navigate a changing landscape is with strong leadership, but leadership is becoming a scarce resource. Extrapolating from that, the laws of supply and demand also tell us that leadership is more valuable than ever before. 

The banking environment is different from what it was even only five years ago, and also different are the skills required for leaders. "We need to make sure that leaders and managers realize it is important to embrace change and stay nimble," says Jim Tubbs, president and CEO, State Bank of Cross Plains. 

Building a culture of leadership development and succession planning is integral to ensuring that your bank has leaders and potential future leaders that will help the bank thrive in not just the current banking environment, but also in whatever environment banking finds itself in the future. 

"[The State Bank of Cross Plains] for a long time had a strong belief in investing in employees, and creating education and leadership opportunities," continued Tubbs. "And a few years ago, we identified a need to focus on internal leadership. So, we created a new Leadership and Development position, the individual we brought in had no banking background – she came from an education background – and she brought in a new perspective on creating leadership opportunities internally." 

As a part of this, the State Bank of Cross Plains incorporated leadership development into their strategic planning. "We started with defining what leadership qualities and characteristics are expected, instead of just asking people for intangible concepts" explained Tubbs. "We then could tell staff 'to help your career path, here are the expectations we have for leaders,' and give them a document to reference." 

Making sure leadership development is continuous is key, according to Vicki Kraai, owner/founder, VK Solutions. "Leadership development is not a one and done thing," she explains. "You can't send someone to a leadership class and then say 'ok, they're developed' – it needs to be ongoing and intentional."

JP Morgan Chase has a similar attitude, as explained by Al Araque, executive director – market director banking: "There is a normal cadence of training that we provide to all our employees. There are monthly training requirements, training on enhancements to sales and service processes. We also have knowledge assessments, keeping employees fresh when it comes to their general banking knowledge."

"Intentional" is really a key term in leadership development. According to the Harvard Business Review, over half of senior corporate leaders believe that their talent development efforts are not adequately building the critical skills and organizational capabilities they want. So, like Tubbs mentioned, getting away from the intangible buzzwords and defining the wants and needs of the bank can create more focused development. 

"There are four things needed for successful leadership development," Kraai discussed. "You need to be intentional about coaching the people who have been identified as leaders or future leaders, they need a mentor." A mentor is, in addition to a supervisor or manager, someone who is going to be a coach and be able to provide honest feedback, perspective, and experiences. 

"The second thing, if you've identified people for leadership, have them put together a personal development plan that says 'here are the two or three initiatives I'm going to work on to develop my leadership skills,'" Kraai continued. "Third, those people who do lead or are identified as future leaders need to be open to 360-degree feedback, including self-assessments—self-assessments are so important." 

"And finally," Kraai concluded, "to be a successful leader, you need to have what I call 'empathy,' but it's really humility. A sincere interest in the success of your team over your own individual accomplishments." 

Another important aspect of leadership is a commitment to individual growth. "One priority of ours is to create a culture of learning across all job families, especially leaders," explained Araque. "The future of banking looks a lot different, so how do we train our employees to stay relevant and meet morphing customer expectations?" 

Identification and training of future leaders also needs to begin sooner, says Kraai. "We need to identify and develop people at a very early level, the younger generation is our up and coming future banking leaders. We need to embrace this and do what we can to set them up for success." 

Tubbs echoed a similar sentiment. "We use the term 'Strength of Bench' a lot when talking about succession planning," he shared. "We want to make sure that if there is a vacancy—be it retirement, personal leave, or something else—we are not only preparing our current leaders but also the future leaders that will step up." 

There was a lot of "stepping up" for the State Bank of Cross Plains recently as everyone got a taste of one of the biggest things changing within banking: consolidation. Throughout the process of combining with Union Bank & Trust Company, staff had a merger partner. All the staff new to State Bank of Cross Plains were paired with a more seasoned staff member who they could turn to as a reliable source of information throughout the merger process, and the more seasoned staff knew they had the responsibility to be a resource and connection for the new staff. 

A lot of leading through a period of change is ensuring everyone is clear on what is changing. "After the merger announcement I started sending out a merger update email to the whole staff," Tubbs discussed. "It was just a 'Hey What's Going On?' sort of email, because it was important to have consistent communication. Even now, after the merger has been completed, I'm maintaining that discipline just to give staff a bigger picture of what's going on at the bank." 

Investing in leadership development for employees is important to ensure that your bank has strong leaders, and is also key to retaining talent that could be future leaders. Actively and regularly investing in employees with leadership potential can make a big difference in whether they stay with your bank, it is a strong message to your employees that they are important and valued. Ensuring your employees feel valued is good leadership, and in turn it builds them into good leaders as well.

By, Amber Seitz

WI Agricultural Bankers: 2020 Lending Levels Will Be Higher; Top Concerns Include Liquidity, Income, and Uncertainty Around Tariffs and Trade

Ag Banking Survey on Current and Future Trends in the Agricultural Economic Landscape

(Madison) – A recent poll of Wisconsin’s agricultural bankers by the Wisconsin Bankers Association spotlights the good and the bad of Wisconsin’s agricultural community as well forecasts what the future may hold for the Badger State.

Agricultural lending increased in 2019 and is expected to continue to increase in the upcoming year. According to responding agricultural bankers, the volume/portfolio of ag loans grew in the past year for 44% of respondents while another 34% indicated the volume had stayed the same. Additionally, 53% anticipate there will be an increase in ag loans in 2020 with 31% indicating the current levels will continue for the near future.

Loan restructures increased according to 46% of respondents in 2019 compared to 2018. A similar margin, 48%, indicated restructure levels stayed the same during the same timeframe.

Liquidity topped the list of concerns ag bankers had for conditions facing their agricultural borrowers. Ranking as an extremely close second and third, farm-level incomes and uncertainty around tariffs and trade were top of mind as well. Weather, farm labor (cost or availability), total leverage, third-party financing, land rents, and interest rate volatility all ranked much lower in the poll.

When asked about specific agricultural segments, dairy was the highest ranked area of concern for ag bankers by a wide margin. Ranked much lower as an area of concern were grains, beef cattle, swine, vegetables, fruits and nuts, and poultry.

78% of respondents expect ag land prices to stay the same in 2020 while only 4% predict an increase in prices. However, dairy building site values are expected to decrease in the same timeframe as predicted by 82% of respondents. No ag banker believed these prices would increase in the new year.

“Bankers value the farms, agribusiness, and hardworking people that make up the communities they serve,” said Rose Oswald Poels, WBA President and CEO. “It’s important for the ag community to have Wisconsin banks to help them through these tough times. Bankers are dedicated to serving their ag customers, even when a loan or other financial product isn’t the best solution.”

“One of our members said it best. ‘In these difficult times, just being there to listen is the most important thing we do. Saying yes is easy, saying no is difficult… and sometimes no is the most honest answer.’”

Below is a breakdown of the survey questions and responses contributed by 50 agricultural bankers from around the state.

 

What percentage of your ag borrowers are currently profitable?

 

0-20%

12%

21-40%

28%

41-60%

28%

61-80%

24%

81-100%

8%

 

 

What percentage of your ag borrowers will remain profitable through 2020?

 

0-20%

4%

21-40%

22%

41-60%

27%

61-80%

37%

81-100%

10%

 

 

Over the past year, has your volume/portfolio of ag loans:

 

Increased

44%

Stayed the same

34%

Decreased

22%

 

 

For 2020, do you anticipate volume/portfolio of ag loans will:

 

Increase

53%

Stay the same

31%

Decrease

16%

 

 

What percentage of your ag loan customers needed to have their loans restructured in 2019?

 

0-20%

42%

21-40%

38%

41-60%

18%

61-80%

2%

81-100%

0%

 

 

How does the number of restructures done in 2019 compare to the restructures in 2018?

 

Increased

46%

Stayed the same

48%

Decreased

6%

 

 

How many of your ag customers have fixed rate loans, greater than 3 year terms?

 

0-20%

20%

21-40%

16%

41-60%

26%

61-80%

28%

81-100%

10%

 

 

How many of your ag customers have fixed rate loans, greater than 5 year terms?

 

0-20%

46%

21-40%

26%

41-60%

12%

61-80%

12%

81-100%

4%

 

 

Please indicate your relative level of concern for the following conditions facing your ag borrowers currently (the lower the number score, the higher the concern):

 

Liquidity

1.6

Farm-level incomes

1.8

Uncertainty around tariffs and trade

1.9

Weather

2.1

Farm labor (cost or availability)

2.3

Total leverage

2.4

Third-party financing

2.6

Land Rents

2.8

Interest rate volatility

3.1

 

 

Please rate your relative concern for ___ in your area currently (the lower the number score, the higher the concern):

 

Dairy

1.6

Grains

1.9

Beef cattle

2.5

Swine

3.3

Vegetables

3.5

Fruits and nuts

3.6

Poultry

3.7

 

 

What is your expectation of ag land prices in the next year?

 

Increase

4%

Stay the same

78%

Decrease

18%

 

 

What is your expectation of dairy building site values in the next year?

 

Increase

0%

Stay the same

18%

Decrease

82%

 

By, Eric Skrum