In April of 2012, 4 years ago, I began a conversation with the ICBSD board regarding the need for a new association executive. The conversation revolved around the desire for the ICBSD board to implement a new and better direction for the association. The board through a strategic planning process made the commitment towards an association focused on advocacy and more specifically regulatory reform advocacy, better member communication, higher caliber event speakers and strengthening service partnerships and investigating new partnerships for the benefit community banks in South Dakota. At this time the board of directors also committed to the position of sole affiliation and support of the ICBA, recognizing that legislation and regulations must not be one size fits all and thus community banks must have a voice on issues which impact community banks.
Four years ago the board selected a new path of growth for the ICBSD, this path has transformed your association into a more effective voice for you. I recognize that any organization is dependent upon the premise of, what have you done for me lately? Here are a few wins we have advocated on your behalf.
FASB Reforms to CECL Standard Supporting Community Bank Accounting Methods
The revised Current Expected Credit Loss (CECL) proposal is more flexible and scalable for community banks, which will allow them to continue using their personal understanding of their local markets, instead of complex modeling systems to determine their loan-loss reserves. By allowing community banks to evaluate and adjust their loan-loss amounts using qualitative factors, historical losses, and current systems (such as spreadsheets and narratives), FASB has made important changes to its proposed accounting standard. We were very pleased to see changes being made and feel the changes will significantly reduce the burden on community banks in South Dakota.
Dividends on Federal Reserve Stock Fully Restored for Smaller Community Banks
Higher G-Fees Eliminated. An earlier version of the highway bill contained a steep cut in the dividend paid on Federal Reserve stock, from 6 percent to 1.5 percent, for member banks with assets of more than $1 billion. The bill also would have extended higher guarantee fees on loans sold to Fannie Mae and Freddie Mac. Both of these provisions were included to offset the cost of new transportation spending. As a direct result of ICBSD and ICBA advocacy, an effective grass roots campaign, and the coordinated support of 43 state-based community bank associations, the final bill completely eliminated the higher guarantee fee provision and significantly modified the Federal Reserve stock provision by creating an exemption for banks with assets of less than $10 billion and linking the dividend rate to the 10-year Treasury note.
Community Bank Regulatory Relief and Crop Insurance Funding Authorization Signed into Law
On December 4, the President signed a highway bill into law, which includes four significant community bank regulatory relief provisions: (i) an 18-month exam cycle for CAMELS 1 and 2 banks with assets of less than $1 billion: (ii) easier qualification for “rural lender” status under CFPB mortgage rules by elimination of the requirement that such lenders operate “predominantly” in rural areas; (iii) elimination of annual privacy notice mailings when a bank has not changed its privacy policies; and (iv) new SEC registration and deregistration thresholds for thrift holding companies, equal to those that apply to bank holding companies. All four of these provisions are included in the ICBSD endorsed ICBA Plan for Prosperity. In addition, the new law favorably modifies the application of the $15 billion asset threshold above which a bank may not count the proceeds of trust preferred securities as tier 1 capital. It restores $3 billion in recent cuts to the federal crop insurance program which were included in the recent budget agreement. In addition to these newly enacted provisions, both the Senate and the House have advanced meaningful community bank regulatory relief bills. In May, the Senate Banking Committee reported out the Financial Regulatory Improvement Act (S. 1484), which would provide automatic QM status for mortgages held in portfolio, short form call reports for banks up to $1 billion in assets, and a number of other relief provisions. The House Financial Services Committee has reported out a series of regulatory relief bills. Community banker advocacy during the Washington Policy Summit resulted in a surge of cosponsors for the Clear Relief Act (H.R. 1233 and S. 812), the Community Bank Access to Capital Act (H.R. 1523 and S. 1816), and other priority bills.
Expanded Service, Product and Education Opportunities
Along with our Community Bankers Webinar Network we have expanded our endorsement program to bring the best products and services to our members. I would invite you to utilize, the SBS Institute for your cyber security education, United Bankers Bank Identity Theft Solutions for your customers, utilize the buying power of the ICB Purchasing Exchange for your office product needs. Further we have been working to get you information from ICBA Securities, Bancard & TCM Bank along with the other ICBA Services which not only save your bank money but helps support our association. We also continue to recommend the services of Spectrum Financial who can provide fee income opportunities for your community bank.
Lastly we want to make sure you are getting the best insurance coverage for your bank at a fair price. We have expanded our relationship with Community Bankers Financial Services a subsidiary of the Independent Community bankers of MN. Kevin and I have seen many of you as we are doing joint member bank visits. When your banks insurance is ready for renewal please give Kevin Burr a call for a quote from up to 5 different bank insurance providers. CBFS only deals in community bank insurance and will work hard to find the right solution for your bank.
I want to thank each of you for your support and membership. We have come a long way in 4 years. I am enthused about continuing to be a loud voice for community bankers.
McCurry, a native of MN and resident of Mitchell, SD, holds a Bachelor of Arts degree in Communications / Marketing from the Minnesota State University, Mankato. Prior to joining the ICBSD as President and CEO, he directed the marketing, sales and government relations efforts at Santel