By Rose Oswald Poels

If there was a year-in-review report that could perfectly capture the sudden move from chaos to preparation bankers experienced throughout 2020, it would contain enough content for a novel. Looking back on a year that for many represented struggle and uncertainty, bankers were able to offer assistance and hope. It was and always will be our mission to provide resources, education, and advocacy to you so you could provide the same for your customers. Below are just a few examples of the successes we feel so fortunate to share as a community.

Once the world was initially struck by the coronavirus, having accessible resources became a critical part of WBA’s work. To assure everyone stayed up to date on Paycheck Protection Program (PPP) loans that seemed to distribute as soon as the program was created, we were in constant communication with Treasury and the Small Business Association (SBA) to assure regular and accurate information was able to reach you in a timely manner.

At the same time, our legal department was working around the clock to answer pressing questions about the everchanging loan regulations. The result of this became our PPP FAQ to help break down and summarize the program’s eligibility, application, forgiveness, and more, as well as a COVID-19 resource page which has been updated to cover the most recent changes in the new stimulus package. It was bankers’ desire for knowledge that further led to our E-signature Toolkit, a guide to the frequently asked questions about the growing topic’s legality in the state of Wisconsin.

This year was further met with racial injustice and the tragic deaths of George Floyd, Breonna Taylor, Eric Garner, and so many more. The need to discuss and highlight equality became a priority that WBA quickly brought to action. Our event “A Conversation on Racial Equity” with author, professor, and activist Dr. Ibram X. Kendi brought a new light to what it means to be an anti-racist. Managing to get such an influential person such as Dr. Kendi to speak at the event was no easy feat, but bridging the gap between our members and these rare opportunities is part of what we believe drives this incomparable industry.

Events like this have allowed several opportunities to continue these necessary conversations, including banker panels and other virtual discussions to address ongoing steps to be taken and how other banks are establishing and continuing their DEI objectives.

In October, WBA also hosted Larry Kudlow, director of the National Economic Council, as he discussed prospects of a post-COVID economic recovery. Kudlow then opened the panel for participating WBA members to have a direct conversation with him, where he answered questions on a potential stimulus package, PPP forgiveness, and more.

Our advocacy efforts once again proved the importance of our commitment to the needs of our members. The 2020 Virtual Capitol Day saw 151 bankers meet with 28 key legislators on the issues critical for the upcoming legislative session. We joined a strong list of companies and organizations in writing, reviewing, and signing letters to lawmakers, one of which aimed to secure bipartisan legislation to assist Wisconsin communities struggling as a result of the pandemic.

It would be ideal to add every page of this long year to this list of challenges and accomplishments we’ve faced together. From FIPCO’s first full year of ShareFI to the introduction of our Associated Health Plans which expanded our members’ options to health care, the past twelve months have been an opportunity to reconsider what we view as normal and continue sharing the stories of how bankers have helped their customers not only survive, but thrive.

The year has been a long and unprecedented part of WBA’s history, but it has been one of continued leadership and advocacy. As 2020 reaches a close, I’d like to keep in mind that none of this would have been possible without you, the members, and a willingness to come out stronger on the other side. New challenges in 2021 will be approached with innovation, and new achievements will be celebrated along the way. Entering this new year, I expect there will be more of the unexpected we’ve come to know all too well, but 2020 has shown us that we are more than capable of preparing for whatever might come our way.

The latest round of the Paycheck Protection Program (PPP) is bringing more than just much-needed funds to small businesses. It’s attracting third-party vendors that want to be your lender. Compared to Wisconsin banks, these vendors are not as heavily regulated nor are they examined as closely by regulators to be sure every step was taken correctly and securely. 

That’s why it’s important for a business to know who they are using for the entire PPP process. Many non-banks participating in PPP will have different entities work on different steps of the process. From the initial application to the forgiveness phase, it’s critical to know which business is handling which step. Consulting your bank will give you a necessary understanding of how the process works. 

Wisconsin banks have been through two rounds of PPP already and have the knowledge and experience that most are lacking with this powerful program. 

Business owners should consult their bank as to whether a PPP loan is the right choice or if there are other options to be considered. The bank will also guide them on how to gather the right paperwork including payroll information and financial reports. 

By, Eric Skrum

Many contractor balance sheets are reporting 2020 revenue numbers that normally reflect a strong economy and healthy industry. That seems to be a mixed message when we know that COVID-19 has devastated the financial stability of many businesses, institutions and local and state governments. To make sense of this, it is important to understand that construction projects completed this year were bid, negotiated and won in 2019 or earlier.

Even though 3 out of 4 contractors across the country experienced project delays or cancellations due to COVID-19, being deemed an ‘essential’ industry was critical in allowing many construction projects to continue over the last year – some were even completed in record time because of reduced occupants in schools, vacant corporate office buildings and fewer vehicles on the road. The construction industry was also one of the largest recipients of Payroll Protection Program (PPP) loans, allowing contractors to retain employees and providing an economic boost to counter balance increased project costs and project delays.

The common storyline from contractors about the 2021 outlook is concern over the decreasing backlog of work as their customers are uncertain about future building plans. National and local politics, increasing COVID-19 cases that make a return-to-work or school soon unlikely, and concerns about an economic recession all contribute to this uncertainty. It is no surprise that the collective prediction of economists is that the impact of the COVID-19 pandemic will be significant to both public and private sector construction because select industries were essentially shut down (manufacturing, retail and hospitality among them) and tax revenue, critical to public project funding, has decreased.

While multi-family and single-family residential construction has been strong throughout 2020, all major categories of nonresidential construction spending have decreased since February. Power, distribution centers and data centers are markets forecasted to have positive increases in 2021. Education construction is a mixed story with declining higher education construction due to decreased revenues for the UW System, but K-12 construction will likely be strong as Wisconsin voters passed 85% of school referendums on the ballots in November.

As Governor Evers prepares the budget that will be presented to the Legislature in February, it is critical that there be a focus on continued investment in Wisconsin’s infrastructure. Even throughout the pandemic when fewer residents were on the road, we realize how essential transportation is to our everyday life – keeping store shelves stocked, allowing grocery and meal deliveries to continue and stocking Amazon distribution centers. We also realized how essential our fiber-optic infrastructure is due to remote work and learning demands, and investments to improve fiber-optic infrastructure, especially in rural Wisconsin, must continue.

Ongoing investment in Wisconsin’s infrastructure is essential for recruiting and retaining businesses in our state and to post-Covid-19 economic recovery. That investment is also crucial in providing financially rewarding jobs to the more than 125,000 construction industry employees that call Wisconsin home. Wisconsin’s construction industry is essential to the health and success of our state and we welcome the challenges and opportunities that 2021 will bring.

The Construction Business Group promotes and protects the construction industry. They ensure fair contracting laws are followed on public construction projects. They work co- operatively with contractors, employees, and public entities by educating them on fair contracting laws, monitoring projects for fair contracting compliance, and identifying and helping to resolve compliance issues.

By, Alex Paniagua

Realistically speaking, how much worse can 2021 be than the mess of a pandemic year that preceded it? In hopes that 2021 will release COVID-19’s insidious grip, here are predictions for what to expect out of the new year in Wisconsin and Washington, D.C.

Tech innovation isn’t just for Madison and Milwaukee anymore. Rock County is the home of two companies that aim to supply next-generation medical radioisotopes now produced exclusively offshore. A software company formed in an Eau Claire basement recently went public on the NASDAQ. A unique partnership between the Green Bay Packers, the UW-Green Bay and Microsoft has created a tech hub in Green Bay. More examples will unfold as the year moves on.

Early stage investing in Wisconsin will rebound. COVID-19 couldn’t kill venture and angel investing in Wisconsin or, for that matter, most of the nation. Even if the state’s 2020 numbers come in below the 2019 record $454 million in Wisconsin investments, the coming year will likely bring a fresh look at young tech deals. One reason is the 2020 surge of tech IPOs, or initial public offerings, which means more COVID-parked money will search for new on-ramps to financial returns.

The changing face of Wisconsin’s investor corps will help. It’s no secret that angel and venture capital has largely been a province of white guys who made money in tech over time, but some important changes are afoot. Women are involved in leadership positions at more than 20 Wisconsin funds, networks, corporate venture funds or other early stage investment groups. Also, Black-led funds are emerging. Diversity will likely lead to different kinds of deals, if not more deals.

Tech will accelerate healthcare changes. Some of Wisconsin’s largest healthcare companies and systems were pressed into a “pivot mode” during the pandemic. Companies such as Epic, Exact Sciences, GE Healthcare and Promega made waves nationally, but so did many smaller Wisconsin firms such as Midwest Prototyping, Carebot, AIQ Global, Novir, Semba Biosciences, FluGen and many more. Telehealth exploded in most clinical settings, as did platforms using artificial intelligence and digital health records. Look for more of the same.

Rural development can’t be ignored. If the Democratic Party learned anything from the 2020 elections, it should be that it must look beyond big cities to rural America when it comes to fostering economic growth. A bipartisan approach in Congress and the Wisconsin Legislature on broadband is needed more than ever. Also, the coming revolution in bio-industrial innovation is ideally suited for states such as Wisconsin that can lever natural resources as well as manufacturing.

Address data privacy nationally. The United States was a leader in data privacy laws decades ago, but not enough is being done at the federal level today to prevent personal information from being misused. The European Union’s General Data Protection Regulation aims to harmonize privacy laws across the EU, but critics say it continues practices that have long stifled innovation in Europe. China’s data privacy protocol is even more far-reaching and, some argue, even dangerous, given fears of cyber-snooping on U.S. tech companies. President-elect Biden and Congress should adopt federal standards to pre-empt 50 different state privacy laws, an outcome that would make a mess of interstate commerce while confusing consumers.

The new year can’t be much worse than the old. With luck and hard work, it can be a lot better.

Interested in what 2021 holds for Wisconsin's economy? Join us virtually on January 7 for the Midwest Economic Forecast Forum with guest speaker Chicago Fed President Charles Evans. Click here for more information.

By, Alex Paniagua

It has almost become cliché to say that this past year was unprecedented. No one obviously predicted the arrival of the COVID-19 pandemic, and no one correctly predicted the breadth or length of its impact. The ramifications of this health crisis on our economy were great this past year, and I expect this to unfortunately linger well into 2021.

Bankers are always focused on helping their customers, but throughout last year staff were stretched very thin to accomplish the workload while balancing their own COVID-related challenges. The persistent low interest rate environment we experienced at the beginning of last year meant mortgage lenders and operational staff were already very busy. As low interest rates continued throughout the year, there was no substantial decrease in demand. Add to that the Paycheck Protection Program (PPP) and it quickly became clear that bankers were on the economic frontlines of this crisis. Indeed, net loans and leases grew by over 10% from the prior year through the third quarter, with commercial loans growing by over 41%.

In the two rounds of PPP stimulus this past year, Wisconsin bankers across the state proactively engaged to help their customers by providing nearly $10 billion in funding to almost 90,000 businesses. The volume of loans made in this four-month span of time exceeded what most banks do in one year’s time. At the time of this writing, a third round of new PPP stimulus has not yet passed, and if legislation does not pass during the lame duck session it is expected to pass early in the 117th Congress. Since helping their customers and communities is in the DNA of bankers, the industry will once again step up to help those businesses in need by participating in this next round of PPP.

It is clear that the stimulus money provided this past year was critically needed by businesses and individuals to help get them through the shutdowns and related challenges of the pandemic. The unique lens that gives bankers insight to all sectors of the economy allowed them to act quickly to defer loans to help their customers financially weather what we thought was a short-term health crisis. Most of these same customers received PPP and other stimulus money to help them keep employees paid and their businesses open. With the money running out and the health crisis continuing, it is causing undue financial stress on certain business sectors that will have long-term implications for some while others will have no choice but to shut down. We started to see this happening in the fourth quarter of last year.

As a result, bankers were already preparing last year in anticipation of a higher than normal number of loan defaults. The third quarter FDIC data shows that Wisconsin banks increased their allocation to loan loss reserve accounts by 31% year over year. As the stimulus money starts to run out causing businesses and individuals to have more difficulty paying their loans, the third quarter also saw noncurrent loans and leases increase by 23% year over year. In the first six months of 2021, I expect there will continue to be higher than normal loan defaults which will cause strain on bank’s balance sheets, particularly if a bank did not put enough money into its reserve allocation.

Strain did start to appear last year, however, in the margin of profitability of banks where Wisconsin banks’ net interest margin only grew by 3.27% through the third quarter of 2020 compared to 3.51% in third quarter 2019. Despite the roller coaster ride we experienced across the business sector last year, Wisconsin banks continued to be financially stable and profitable through the third quarter of 2020. I expect the industry will end the year strong as well. Moving into the new year, banks will retain strong balance sheets and profitability, although it will continue to be measured until the health crisis recedes.

Interested in what 2021 holds for Wisconsin's economy? Join us virtually on January 7 for the Midwest Economic Forecast Forum with guest speaker Chicago Fed President Charles. Evans. Click here for more information.

By, Alex Paniagua

By Rose Oswald Poels

Communities and organizations recognize the importance of the banking industry to local economies and to the state. They understand the knowledge, perspective, and resources you and your bank bring to the table. That’s the reason so many of you are asked to serve in influential roles with these various groups.

It’s also the reason WBA is asked to represent you and the banking industry in a wide range of roles. As representatives of the broader industry in Wisconsin, WBA staff are often involved in different organizations and working groups to provide your perspective and make sure that banking’s voice is heard. I’d like to take a moment to share a few recent examples where the executive team has been in action for the industry.

Earlier this month, WBA’s Mike Semmann was invited to address the Assembly Republican Caucus on behalf of the banking industry as part of their special meeting focused on session-wrap up and the year ahead. Mike highlighted banks’ integral role in the Paycheck Protection Program (PPP) and the work Wisconsin bankers had performed in their communities on the front lines of the economy. Bankers received two rounds of applause for recognition of their involvement and work in their communities. He thanked the Representatives for their passage of the COVID-19 relief bill which was enacted last April as well as their work on other WBA-supported legislation. Lastly, he previewed several of the active and reactive legislative priorities for the upcoming 2021-22 session.

Also this month, the Marquette University Commercial Banking Advisory Board invited WBA’s Daryll Lund to join its ranks. WBA continues to be pleased to be part of this unique program designed to provide college students with specific training on banking. As an Advisory Board member, Daryll ensures that as the program continues to develop, the industry’s needs in the next generation of bankers are met within the curriculum.

Finally, last week I was invited by the Federal Reserve Bank of Chicago to represent Wisconsin’s banking industry on a small-group panel to discuss the Fed’s CRA modernization proposal. Joining me on the panel were representatives from the Michigan and Iowa Bankers Associations, as well as former banker Joaquin Altoro, now CEO of WHEDA.  This panel provided us with a unique opportunity to provide feedback to direct questions from the Fed, while representatives from OCC and FDIC listened in, on all aspects of the Fed’s CRA advanced proposal. While formal comments are not due until February, I shared several specific thoughts and suggestions on the proposal, including noting how critical it is for all three regulators to ultimately agree to the same proposal.

This type of advocacy and engagement is part of what we do routinely each year on behalf of our members, and we look forward to continuing our proactive involvement in 2021. It truly remains our honor to represent the good work each of you do every day.

To learn more about topics like this, join WBA at our Midwest Economic Forecast Forum and our Bank Executives Conference.

With the news that another round of $284 billion in Paycheck Protection Program (PPP) funding has been re-authorized in the recent stimulus bill, it’s only a short matter of time before the funds begin to roll out. More specifically, the new bill places the Small Business Administration (SBA) in a position where all required regulations must be enacted within 10 days. For many, this rush may be reminiscent of the initial distribution. Whether your scenario went smoothly or not will likely shape your view of this next round, but there are several aspects to consider. 

At the beginning, the mass amount of PPP loans was an entirely new process, and it was implemented in such a short period of time. Because of this, the previous rounds have seen a number of obstacles and uncertainty. With everything we’ve learned, what are the factors that held back the program in recent months and how will this round be different? 

The Changes 

When Congress passed the CARES Act creating the PPP on March 27th, the SBA was tasked with getting the plan out the door. Something that typically takes several months for rules and regulations to be written had to be finished the following week. The entire scenario, much like 2020 itself, was completely unprecedented. The result of this was that changes needed to be made on the spot as the situation evolved. 

“As challenges were happening there were changes being made,” said Eric Ness, director of SBA’s Wisconsin district. “The [PPP loan] percentage that went to payroll went down a little bit so you could utilize more for other expenses, and the length of time that [funds could be used increased with the PPP Flexibility Act in June]. That’s where it’s necessary for organizations like WBA to communicate what worked and what didn’t work, so when Congress is working on their new bill, they can use that information.”

Ness looked back on the many phone calls between he and Wisconsin Bankers Association President and CEO Rose Oswald Poels as they worked through a better understanding of PPP’s complexities. Among these conversations, forgiveness seemed to be a key talking point in assuring that funding goes better than last time. 

“There needs to be clarity around forgiveness this time around,” said Oswald Poels. “If the business owner doesn’t understand the terms of it from the time of application, they are going to be very reluctant to apply.” 

This point on borrower discretion is one that could very likely concern borrowers into thinking they’ll accrue debt rather than gain assistance. Transparency and consistency will be two critical elements of the next round, and the SBA is certain they can provide this after the necessary time it took to adapt. 

“The SBA has been around for 67 years, and our programs have been fairly static with incremental changes over the years,” said Ness. “To build a brand-new program that no one understood and get that up and running in one week was monumental. We were flying the plane and building at the same time. As we found out that things didn’t work the way they should have or they needed some fine-tuning, we changed them—or Congress did. Having gone through that process, we will be in a much better place.”

It already seems that the situation is shaping out to be clearer than before. According to the proposed relief plan, $284 billion will be designated to forgivable PPP loan funds. This will be for some businesses that have already received loans during a previous round of PPP as well as other businesses that may have missed out. A total of $20 billion in grants (advances) will also be available for businesses in low-income communities through the Economic Injury Disaster Loan (EIDL) program. Going forward, it will simply be a matter of sticking with what has been clarified, and Ness believes that the problems faced last time will help to assure this round is significantly more stable. 

“Clearly the first time it was hectic and at that point we were working days and nights,” Ness added. “During the second round we were busy but the process fell into line, and my hope is that as we move forward, that trend will continue.”

The Technology 

The plans surrounding PPP loans were not the only thing undergoing changes through the process. Due to the surge in demand for loans, the SBA’s electronic loan processing service, E-Tran, faced problems as well. 

“The first round was really barred by technology issues,” said American Bank President and CEO John Oathout. “When the money got released and it was a frenzy to get the loans applications in, we all maxed out the capacity of SBA’s system and had trouble getting the applications in.” 

The constant regulatory changes and technological updates were more difficult for some than others. But with these dilemmas came solutions, and that is what needs to be apparent as businesses begin applying for another round of PPP loans. 

“The problems have really stemmed from an operational standpoint,” said Oswald Poels. “Some of it related to clarity. But I think the SBA can get prepared for this next round leveraging the lessons they’ve learned over the last nine months.” 

Oathout agreed that with the lessons learned through the process, there is a much better chance that a new round of PPP funding will go smoother. He added that while he’s optimistic, it’s important to not expect perfection. 

“SBA has done a much better job with their technology, so I think the next round will go a lot better,” Oathout said. “Will there still be some issues? Probably. I don’t think the system is really built to handle the quantity that’s going into it, but I’m hopeful that they’ve put the money and resources into their technology just like us banks have done to make this go better.” 

To accommodate for the unforeseeable rise in user traffic, E-Tran underwent several updates. This included launching a new search functionality within the E-Tran Servicing section of the Capital Access Financial System (CAFS) to help PPP lenders review loans in their portfolios. They also changed the way PPP loan data is received from lenders, noting that the type of business will determine whether an SSN or EIN should be used to submit a loan application.  

“There were changes made to E-Tran as this was all happening,” said Shirah Apple, public affairs specialist for the SBA’s Wisconsin district. “If there is a need for something to change moving forward, I don’t have a doubt that the change will be implemented."

As a result of the increase in traffic, additional access points were introduced through the loan process. The SBA worked to expand these access points by expanding the lenders who could work with these loans due to the increase in demand. This expansion included CDFIs, certified development companies, and microlenders. 

“As we went through the process, a huge volume of loans slowed the system down,” Ness said. “We actually had to create a different process so that more lenders could have access. Going forward, those are in place for when another round rolls out.”

The Media 

Depending on who you ask, the media attention throughout the loan process was either a blessing or a curse. The negative side of this attention deals with how public opinion has been shaped, whereas the positive focuses on awareness. Oathout believes that while much of the attention has not been ideal, the media actually has an opportunity to make things better this time around. 

“The media has taken a bit of a negative connotation of PPP loans,” said Oathout. “They’ve been out searching for which firms have used them. I think what we can do is help people understand that these loans are great for America, and our friends and neighbors should endorse this so our small businesses can survive. The media really has a chance to help us with this whole thing.” 

Ness believes that part of this has to do with the fact that the general public may not have received comprehensive information on the program; only so much can be explained in the news, and as many have come to know, the program is much more comprehensive than a few-minute broadcast can explain. 

“A lot of [the negative coverage] had to do with the name of the program,” said Ness. “The name of it is the ‘Paycheck Protection Program.’ This process was all about making sure employees continued to be paid. Even though loans went to small businesses, the bulk of it went to payroll, and portions went to rental and other areas, but it was a focus on employees keeping their pay.” 

“The media was very focused on the relief programs,” said Apple. “Because of the high interest– and thanks to places like the Wisconsin Bankers Association – when something wasn’t working, multiple sources were hearing about it. SBA and U.S. Department of the Treasury were writing rules based on what field offices like ours were hearing from small business owners, from the media, from partners, and from constituent relations staff in Congressional offices. This was all happening with extremely fast turnarounds, which is highly unusual.”

She credits this as part of the reason that the office's Twitter followers and newsletter subscribers have increased substantially; with so much going on, people are after credible information.

This immediate feedback allowed for the SBA to note what was working well and what changes needed to be made. Ness noted that with the urgency to make the program exist and get it off the ground, there were details that became better understood through trial and error. The media communication allowed for the knowledge of updates and reconsiderations to be suggested to Congress by the SBA. Despite what has circulated throughout the general public, Ness reiterated that the SBA is not involved in creating the program’s regulations. 

“Congress writes the legislation; they determine the parameters of the program,” Ness said. “SBA has some power once they write the legislation to tweak certain things, and we did see between Treasury and SBA that they put certain rules into place after legislation was written to make things more easily understood, or to direct funds to minority business owners. In a way we’re all building the plane, but congress makes a lot of the calls and then SBA implements.” 

What Should be Expected? 

The main difference between this round and previous ones is that we now have a better understanding of what to expect. The overall hope is that the program is as clear as it can possibly be and that the changes stay at an absolute minimum.  

Still, it doesn’t appear rational that this ride goes without a single bump in the road. Although much has been smoothed out, there is still the fact that the situation continues to evolve. The truth of the matter is, we have no idea what tomorrow will bring; there is the very real possibility that the program may need to reflect that. 

“I think SBA was put in an unimaginable position of trying to interpret these rules and find something they can implement,” said Oathout. “The rules still aren’t perfected. After nine months I think they’re better. The banking organization has worked tirelessly with PPP, and I think ultimately that has helped us get to where we are today. While it’s not perfect, it’s workable. I ultimately think SBA is going to do a much better job with everything considered.”  

Over the course of the last nine months, there has been ample time that has been dedicated to informing and training anyone in need of the information. The fact that this knowledge is already so widespread will be key to how the next round of loans will be handled.  

“Throughout this whole process we’ve been doing webinars and training, especially for small business owners, partners, and lenders,” said Apple. “During the first three months of PPP we trained about 10,000 people through the Wisconsin SBA office with assistance from the Small Business Development Centers. Our job is to make sure the information is out there so people can become more familiar with it.”

And when it comes down to it, Ness was very clear when asked if the SBA, with all factors considered, is ready for the next round of PPP loans.  

“We are prepared for any small business relief package that Congress chooses to pass and if we need to make changes to rise to the challenge, we will. We are ready to help small businesses continue with their recovery, and we are still helping small businesses start, grow, and expand despite the pandemic.” 

WBA has worked constantly to make sure its membership received accurate and timely information during the first round of PPP loans and will remain in contact with the SBA to provide its membership with the most relevant information as it becomes available. A resource page is available here and will be updated regularly. 

For further information, contact your SBA lender relations specialist Ellie Berg (for eastern Wisconsin) or Chris Dedrick (western Wisconsin).

By, Alex Paniagua

Or better yet, what’s not in your TRID?  It’s the never-ending saga between a mortgage lender who is trying to keep the customer happy, the mortgage processor who has nightmares about LE’s and CD’s, the auditor who plays the “gotcha” game, and the applicant who is trying to make sense of it all.  Therefore, it becomes imperative that all information contained in these complex disclosures are complete and accurate as possible. And whatever is not in your TRID can get you in trouble.

It has only been a few short years ago, five to be exact, when TRID was first introduced.  One would think after this year’s onslaught of mortgage refinances, mortgage processing staff would be experts in this regulatory field, but recent findings by the FDIC suggest otherwise. In fact, 86% of all compliance exams in 2019 (WI) had violations of TRID. Everything from loan costs, general information, calculating cash to close and closing cost details is fair game when it comes to making inadvertent mistakes.

So, what is a banker to do? First, select the best LOS system and test your defaults for accuracy including fees and third-party providers, including any updates considering our new era of refinance business. Building your system to be bulletproof from clerical errors may be your first line of defense.  Second, look for red flags within your disclosure that are relevant. For example, are you disclosing estimated PMI premiums on the initial LE when the estimated value exceeds 80%? Does the LE figures on your CD match the last revised LE issued to the customer? Third, be aware of when Taxes and Home-Owners Insurance is due and possibly considered a pre-paid, especially for loans that will close in the coming weeks. Lastly, don’t let your processor(s) make any changes to TRID documents that don’t follow the protocols of your LOS system. While bankers are always looking for workaround solutions, making hard changes to a TRID document can have negative and costly effects. 

Choosing the right LOS, being fully trained on TRID and utilizing resources to review your TRID documents and processes may keep your bank out of the 86% of financial institutions struggling to comply.  What is in your TRID (or not in your TRID) will make all the difference.  For further assistance on complying with this regulation, please contact me at

By, Ally Bates

A comprehensive $900 Billion, nearly 5,600-page bill called the “Consolidated Appropriations Act of 2021,” was passed last night which included provisions related to the Paycheck Protection Program and other items of interest to the banking industry. This lengthy e-publication provides a detailed overview of these changes.  
The “Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act” contains several changes of importance to bankers, most notably related to the Paycheck Protection Program. The new law sets aside $284 billion for PPP both for new borrowers and for those borrowers meeting the criteria for a “second draw.” Except as otherwise provided, the new law requires SBA to promulgate rules within 10 days of enactment of this law to implement this section. Clearly the SBA staff will not have an enjoyable holiday season! 


  • $284 billion in new funds for the Paycheck Protection Program, including a second draw option for prior PPP borrowers and $15 billion set aside specifically for first and second draws issued by community financial institutions, including community development financial institutions and minority depository institutions 
  • $12 billion in targeted emergency investments to help low-income and minority communities, including $9 billion to be used by Treasury to create an Emergency Capital Investment Program to make direct and indirect capital investments in low- and moderate income financial institutions 
  • A hold-harmless safe harbor for PPP lenders from enforcement and penalties to include all certifications made by borrowers or applicants connected to initial or second-draw PPP loans 
  • A simplified PPP forgiveness process allowing PPP loans of $150,000 or less to be forgiven after the borrower completes a one-page attestation 
  • Repeal of a CARES Act provision that required PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount 
  • Enhancements of existing SBA loan programs, including the 7(a), 504 and microloan programs 
  • A new round of $600-per-person economic impact payments for eligible recipients (not subject to garnishment) 
  • An extension of enhanced unemployment insurance 
  • An extension until Jan. 1, 2022, of the troubled debt restructuring provisions that were included in the CARES Act 
  • A delay of CECL implementation until Jan. 1, 2022 


Expansion of Permitted Purposes for PPP Covered Loans 
The new law adds four more “allowable uses” of PPP covered loans (which are retroactively effective except if a borrower already received forgiveness) to include the following: 

VIII.“Covered operations expenditures” as defined in the new law to mean: a payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.  
IX. “Covered property damage costs” as defined in the new law to mean: a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation. 
X. “Covered supplier costs” as defined in the new law to mean: an expenditure made by an entity to a supplier of goods for the supply of goods that (A) are essential to the operations of the entity at the time at which the expenditure is made; and (B) is made pursuant to a contract, order, or purchase order: (i) in effect at any time before the covered period with respect to the applicable covered loan; or (ii) with respect to perishable goods, in effect before or at any time during the covered period with respect to the applicable covered loan. 
XI. “Covered worker protection expenditures”, as defined in the new law to mean:  
(A) means an operating or a capital expenditure to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et 8 seq.) with respect to the Coronavirus Disease 2019 (COVID–19) expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19;  
(B) may include—  

(i) the purchase, maintenance, or renovation of assets that create or expand—  

(I)  a drive-through window facility;  
(II) an indoor, outdoor, or combined air or air pressure ventilation or filtration system;  
(III) a physical barrier such as a sneeze guard;  
(IV) an expansion of additional indoor, outdoor, or combined business space;  
(V)   an onsite or offsite health screening capability; or  
(VI) other assets relating to the compliance with the requirements or guidance described in subparagraph (A), as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and  

(ii) the purchase of—  

(I) covered materials described in section 328.103(a) of title 44, Code of Federal Regulations, or any successor regulation;  
particulate filtering face piece respirators approved by the National Institute for
(II) Occupational Safety and Health, including those approved only for emergency use authorization; or  
(III) other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and  

(C) does not include residential real property or intangible property. 

These new four categories for which PPP loan monies may be used were also added to other important areas of the existing law related to forgiveness. These changes mean that if a small business owner received or receives a PPP loan, any monies spent in one or more of these new 4 categories will also be considered forgivable expenses under the program. However, these costs along with other allowed “non-payroll costs” are still subject to the 40% test. This means that the PPP loan proceeds must continue to be used 60% for payroll costs and 40% for non-payroll costs. 
Simplified PPP Forgiveness Application 
The new law provides a simplified forgiveness application for covered loans up to $150,000, regardless of when made, which SBA is required to create within 24 days after the date of enactment. The form, which may not exceed one page in length, will contain certifications from the borrower, and shall only require the borrower to provide: a description of the number of employees the borrower was able to retain because of the covered loan; the estimated amount of the covered loan amount spent by the borrower on payroll costs; and the total loan value. The form will also contain attestations that the borrower accurate provided the required certification and complied with the requirements in the law.  
Finally, the borrower is required to retain records relevant to the form that prove compliance with the requirements. For employment records, the borrower is required to retain those documents for the 4-year period following submission of the forgiveness application. For all other records, the borrower is required to retain those documents for the 3-year period following submission of the form. Borrowers of a covered loan not more than $150,000 shall not, at the time of applying for forgiveness, be required to submit any application or documentation in addition to the one-page form and information required to substantiate forgiveness. Nonetheless, nothing in the new law would exempt a borrower from having to provide additional documentation if required by the lender, or if required by the SBA pursuant to an audit. 

The documentation requirements for covered loans more than $150,000 did not change. 
Specific Group Insurance Payments as Payroll Costs 
The new law codifies a previous interpretation by providing that payments for group life, disability, vision or dental insurance are included in the definition of “payroll costs” in addition to group health care benefits which was enumerated in the original CARES Act. This change is effective retroactively as well. 
Collection of Certain Demographic Information 
The new law requires that both the loan origination application and the forgiveness application be modified to collect certain optional information related to the owner of the borrower, including the sex, race, ethnicity and veteran status of the owner. 
Clarification of and Additional Limitations on Eligibility 
The new law clarifies that if a business or organization was not in operation on February 15, 2020, then it is not eligible for a PPP loan. Furthermore, the new law clarifies that any entity that received a shuttered venue operator grant is also not eligible for a PPP loan. 
PPP Second Draw Loans 
The new law creates a new structure where certain borrowers that already received a PPP loan are able to request a second loan subject to very specific terms and conditions. Most of the definitions of the PPP program found in the original CARES Act are retained for this purpose with the notable exception of “eligible entity.” This new term is intended to be used instead of borrower or “eligible recipient” wherever those terms are found in the original law.  

An “eligible entity” is defined to mean: 

I. Any business concern, nonprofit organization, housing cooperative, veterans organization, Tribal business concern, eligible self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative that—  

(aa) employs not more than 300 employees; and  

(bb)(AA) except as provided in subitems (BB), (CC), and (DD), had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter in 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the same quarter in 2019;  

(BB) if the entity was not in business during the first or second quarter of 2019, but was in business during the third and fourth quarter of 2019, had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the third or fourth quarter of 2019;  

(CC) if the entity was not in business during the first, second, or third quarter of 2019, but was in business during the fourth quarter of 2019, had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the fourth quarter of 2019; or 

(DD) if the entity was not in business during 2019, but was in operation on February 15, 2020, had gross receipts during the second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the first quarter of 2020. 

The law further describes a narrow set of additional entities that may be eligible and delineates several that are specifically ineligible.  

The SBA guarantee will be in place for these covered loans as well under the same terms as lenders were given in the original CARES Act, except as otherwise stated in this section  

The maximum loan amount for these second draw PPP loans varies based on the type of business applying. In general, the maximum loan amount is the lesser of: 2.5 times the average total monthly payment for payroll costs incurred by the eligible entity during the one year period before the date on which the loan is made (or, at the election of the eligible entity, calendar year 2019); or $2,000,000.  

For seasonal employers, the maximum loan amount is the lesser of, at the election of the eligible entity, 2.5 times the average total monthly payments for payroll costs incurred by the eligible entity for any 12-week period between February 15, 2019 and February 15, 2020; or $2,000,000.  

For new entities that did not exist in the one-year period prior to February 15, 2020, the maximum loan amount is the lesser of:  

I. the product obtained by multiplying—  

(aa) the quotient obtained by dividing—  

(AA) the sum of the total monthly payments by the eligible entity for payroll costs paid or incurred by the eligible entity as of the date on which the eligible entity applies for the covered loan; by  

(BB) the number of months in which those payroll costs were paid or incurred; by  

(bb) 2.5; or  

(II) $2,000,000. 

The maximum amount of a covered loan made to an eligible entity that is assigned a North American Industry Classification System code beginning with 72 (generally, the food service sector) at the time of disbursal is the lesser of: 3.5 times the average total monthly payment for payroll costs incurred by the eligible entity during the 1-year period before the date on which the loan is made (or at the election of the eligible entity, calendar year 2019); or $2,000,000. 

For loans up to $150,000, an eligible entity may certify that it suffered a 25% revenue loss in any quarter compared to that same quarter in 2019. If an entity certifies to this revenue loss, then on or before submission of a forgiveness application, the entity must submit documentation to substantiate that revenue loss.  

New Lender Fees 
The new law has changed what may be paid for lender’s fees for small dollar PPP loans regardless of whether it is a first or second draw loan. Lender fees for larger loan categories remains the same as what was provided in the original CARES Act. For a loan amount up to $50,000, lenders will receive the lesser of 50% of the principal loan amount or $2,500. For loans of more than $50,000 to $350,000, lenders will receive 5% of the principal loan amount. For loans greater than $350,000, lenders will receive 3% of the principal loan amount.PPP Forgiveness and EIDL 
The new law repeals the language in the CARES Act that caused borrowers that received both an EIDL advance and a PPP loan to not receive full forgiveness of the PPP loan. This provision is retroactive; however, at this time it is unknown how SBA will handle reimbursing borrowers where forgiveness decisions have already been made. 
Hold Harmless 
The new law provides greater hold harmless clarity for lenders, stating that lenders may rely on all documentation and certifications submitted by a borrower, and is not subject for enforcement action for any falsehoods contained in a borrower’s origination or forgiveness application if the lender acts in good faith and follows all relevant laws and regulations.  
Other PPP Changes 
There are several other changes made to the PPP program not described above that are unique to certain situations. For example, the definition of seasonal employer is changed. In addition, specific eligibility criteria have been established for certain groups such as news organizations and destination marketing organizations. WBA will produce additional comprehensive compliance resources for its members that will include all aspects of the changes in the law, in addition to incorporating rulemaking and other guidance from SBA as it is issued over the course of the next 10-45 days.   

The following highlights the provisions in the new law of interest to bankers that are not related to the PPP program. 

New Round of Economic Impact Payments 
An additional round of economic relief payments is to be made available in the next several days. An individual with an income of $75,000 or less may receive a maximum amount of $600. The amount of payment will be prorated for individuals with an income greater than $75,000. An individual with an income greater than $87,000 will not receive payment unless the individual has dependents. If a couple files a joint tax return, the couple can receive up to $1,200 for an income threshold of up to $150,000, with a cutoff from payment at $174,000. A dependent may also receive $600. The Treasury Department and IRS have been instructed to make the payments available as soon as possible and it is expected that payments will be made electronically wherever possible. The agencies have the authority to make payment to any account for which the individual has previously authorized the IRS to use on or after January 1, 2019, for the payment of a tax refund.  Banks should prepare for receipt of new relief payments by customers.  
Continuation of Unemployment Benefits  
The relief bill has extended unemployment aid. The new level of payment is $300 per week for payments beginning after December 26, 2020 until March 14, 2021. As banks in Wisconsin have experienced high levels of unauthorized or fraudulent payments related to unemployment benefits, banks should continue their diligent monitoring and identification of such transactions or activity.  
Temporary Relief from CECL Standards  
The relief bill has also extended the implementation period of CECL for banks. The new period for implementation of the CECL standard is the earlier of the first day of the fiscal year of the bank that begins after the termination date of the national pandemic emergency, or January 1, 2022. This is an extension from December 31, 2020. Banks are still encouraged to work closely with their accounting resources regarding how best to implement requirements under CECL. Banks’ regulators should also be kept apprised of decisions and implementation status.  
Extension of Relief from Troubled Debt Restructuring (TDR)  
The termination date of the CARES Act provision which allowed banks greater flexibility when classifying a credit as a TDR has been extended. The original relief was to expire next week on December 31, 2020. The relief bill extends relief afforded by TDRs under the CARES Act until January 1, 2022. The extension will allow banks the necessary flexibility to continue to work with struggling borrowers. Banks are encouraged to continue to work with struggling borrowers, to keep in constant contact with borrowers so as to identify risks, and act accordingly in a timely manner.  
Cybersecurity of Financial Systems Resiliency  
The relief bill requires the federal banking regulators to report to Congress within 180 days after enactment of the relief bill, and annually thereafter, of the steps the agencies have taken to strengthen cybersecurity within the financial services industry. Banks can expect continued heightened regulator scrutiny in examinations as the topic of cybersecurity continues to be a focus of bank regulators.  
Extension of Eviction Moratorium  
The order issued by the Center of Disease and Control Prevention (CDC) entitled, Temporary Halt in Residential Eviction to Prevent the Future Spread of COVID-19, has been extended through January 31, 2021.  
Revision to Certain Bankruptcy Processes  
The relief bill has made revision to procedures under Titles 11 and 13 of the U.S. Code. One example, is the creation of a new procedure to allow the bankruptcy court to grant discharge of debt dischargeable to a debtor who has not completed payments to the trustee or creditor holding a security interest in a principal residence if the debtor defaults on no more than three monthly payments on or after March 13, 2020, caused by a material, financial hardship related to COVID-19. Other revisions include the creation of a CARES forbearance claim. Only a creditor is authorized to file this supplemental proof of claim. Banks will need to continue to work closely with counsel as it relates to bankruptcy filings and procedures to ensure revisions made by the relief bill are incorporated into bank’s bankruptcy strategy.  

By, Eric Skrum

With the largest gathering of Wisconsin bank executives going fully virtual, WBA is excited to offer a new and creative approach to your annual Bank Execs Conference, or “Bank Execs” as many have come to call it. The theme of 2021’s Bank Executives Conference is “Advancing Your Culture” and will be held from Feb. 1-3.  

This event will address the countless aspects of culture that impact your bank and the industry topics unique to Wisconsin bankers to best prepare you for 2021. Attendees will benefit from live presentations with keynote speakers, connect with hundreds of bank leaders from across the Badger State, and be able to bring along 10 staff members for one fee.  

Even as this year’s conference shifts to a virtual format, we haven’t forgotten how important networking is to you. Peer groups during the event will allow participants the opportunity to speak with bankers in similar positions in other Wisconsin community banks, including CEOs, CFOs, COOs, CCOs, HR leaders, lending managers, retail managers, and more.  

The 2021 WBA Bank Executives Conference kicks off on Monday, Feb. 1 with opening remarks from WBA Board Chairman Paul Kohler, Charter Bank, as well as some helpful tips on accessing and taking advantage of the conference’s virtual platform. The opening session, “Advancing Your Culture” will offer an overview of the innovative approaches your bank can take to expanding your culture.   

On Tuesday, Mark Zinder of Mark Zinder & Associates will address the potential impacts of the pandemic during the first presentation, “Is It Different This Time?” He will also explore the more current events that are not rooted in any historical context that might have you asking, “Is this time really different?”  

Zinder will reflect on the pandemic by discussing the aftermath of other crises throughout history. This includes how the Bubonic Plague presented a chance to change the way the economy worked and who it served as well as the new tools used after the Great Depression to ensure another similar event would cease to happen. He will further address the ‘Golden Age of Labor,’ how we currently have an opportunity to “remake” the global economy that will benefit the many vs. the very few, and how it is that the government flooded the market with liquidity, but inflation is nowhere in sight.  

Tuesday will also have an allotted hour to visit with conference exhibitors in their virtual booths. It’s as simple as clicking on their exhibitor profile and then “Join Virtual Booth” to connect with your partners and colleagues. 

On Wednesday, after an Economic Outlook, the presentation “Inclusive Leadership: Unconscious Bias, Trust and Decision-Making" will feature keynote speaker Deborah Biddle, founder and chief consultant of The People Company LLC. Biddle will discuss how an inclusive work culture promotes innovation, productivity, and profitability.  

This session will address your leadership role in embracing diversity, equity, and inclusion within your organization. During this session, bankers will discover why inclusive leadership is an essential skill for developing high functioning teams, uncover key skills for leading inclusively, explore how unconscious bias affects decision-making and workplace inclusion, and learn success factors for highly inclusive leaders.  

During the final session of the day, Dr. Fred Johnson, CEO and founder of InitiativeOne will be presenting “Create a Championship Culture Within Your Organization” to show how to develop a championship workplace that current and future employees want to be a part of. He will share leadership lessons from his time in NFL locker rooms and help you to identify your team’s strengths and talents with a focus on goal setting that delivers world class impact and results.  

Continuing with tradition, this year will once again be honoring 50 and 60 Year Club Members and celebrating the Banker of the Year. Once the sessions have concluded, you’ll continue to have full access to the conference via WBA’s virtual library. This library of several additional "on-demand" presentations will be available at any time through March 5, 2021.  

New this year will be a virtual silent auction powered by GiveSmart to raise funds for the Wisconsin Bankers Foundation. Over the course of all three event days, attendees will be able to seamlessly bid on donated auction items using their computer or phone. You can also receive notifications if someone has outbid you on an item. Prizes in the past have included a collection of pieces from the Museum of Wisconsin Art, resort packages, and tickets to a variety of events such as Bucks games, Badger games, and the Milwaukee Symphony.  

If you’re interested in donating a prize for this year’s silent auction or to learn more about how the Wisconsin Bankers Foundation advocates for financial literacy through programs like their Reading Raises Interest Kits, please contact

The virtual edition of Bank Execs will host a Virtual Exhibit Booth for each attendee. These booths will include access to the full conference and the conference attendee list, bank titles, and a profile created on the virtual platform. You’ll also be able to add content to your virtual booth, including a video library, links to your website or video hosting sites, a resource library, white papers, and more.  

WBA also offers the opportunity to upgrade your virtual presence this year by becoming an event sponsor. Event sponsors receive all the benefits of a virtual exhibitor, plus verbal recognition during a live keynote speech, recognition in promotional emails, on WBA’s website, and on a welcome PowerPoint that will loop before each live session. Other benefits include the option to have a pre-recorded educational webinar provided and presented to bankers in an on-demand content library, and to provide an item in our “conference kit” that will be mailed to all participating banks. Contact for more information on customizing your event sponsorship! 

To learn more about the 2021 WBA Bank Executives Conference or to register, click here.

By, Ally Bates