Overview / Major Events
The Iowa General Assembly concluded its business on Saturday evening, May 5, with House passage of SF 2417, the final version of tax reform / reduction.
House, Senate, and Governor agree on tax reform and reduction
Late last week the House, Senate, and Governor reached final agreement on the details of their tax reform and reduction effort. That agreement became SF 2417 and it was the last bill to clear the Legislature before they headed home to face the voters.
Here are the highlights of SF 2417:
Rural Mainstreet Index Improves for December: Retail Sales Soar to Highest December Reading Since 2014
December Survey Results at a Glance:
OMAHA, Neb. (Dec. 21, 2017) – The Creighton University Rural Mainstreet Index improved from November’s weak reading but remained below growth neutral, according to the latest monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The index, like all indices in the survey, ranges between 0 and 100 with 50.0 representing growth neutral, expanded to 47.8 from 44.7 in November. While the overall index remained below growth neutral, it is up approximately 11.4 percent from December, 2016.
“While the overall Rural Mainstreet Index (RMI) for December remained below growth neutral, this is the highest December reading that we have recorded since 2014. Clearly, based on our recent surveys, the negatives are getting less negative,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Only one-fifth, or 20.4 percent, of bank CEOs reported that their local economy was expanding. While this indicator remains bearish, it is well up from the 8.7 percent reporting an expanding local economy in February 2016.
by Lisa M. Smith, President & CEO
IBA Securities - Division of Broker Dealer Financial Services Corp.
The Future is Fiduciary - This rule applies to Wealth Management, Bank Investment Centers, and any bank offering retirement accounts.
Acting as a fiduciary carries a greater level of responsibility. Fiduciaries are bound to act in their clients' best interests. The regulatory framework around fiduciary status has been the subject of much attention and uncertainty in recent years. Adhering to a fiduciary standard gives your investment recommendations a greater weight and level of accountability. This standard requires you to take into account your clients' entire financial circumstances, making holistic wealth management services even more important.
The new DOL Fiduciary Rule makes one a fiduciary when a recommendation is made with respect to rollovers, transfers, or distributions from a Qualified Retirement Plan (including 401ks) or IRA -- which is collectively known as "retirement asset movement" -- and is paid a fee or other compensation as a result. In addition, the DOL Fiduciary Rule also includes existing retirement accounts for which you are advising. The retirement asset movement must be in the client's best interest. The advice regarding retirement asset movement and reasons why it is in the clients' best interest will need to be documented and maintained. As a result, one needs a number of processes and resources in place by June 9, 2017, when the rule goes into effect.
The Governor recently signed legislation that makes a few changes to the trust code, the probate code, and the power of attorney statutes. House File 2335 was sent to Governor Branstad on April 12 after passing though both chambers. HF 2335 deals with amendments and additions to Civil Law Provisions.
The bill had three Divisions: Division 1 provided an additional exception to the general rule regarding notice on transfer of real property of an estate. Section 633.389 of the probate code allowed notice to be waived by all interested parties where real property of an estate was to be transferred. This bill will allow another exception to the notice requirement: where all interested persons are also personal representatives and have signed the petition then notice need not be served.
Division 2 of the bill adds a new section to the Trust Code. Section 633A.1109 will be added to the “Definitions and General Provisions” of the Trust Code and provides for the “methods of Notice and Document Delivery – Waiver.” The new provision directs trustees or other individuals who might be required to give notice to a beneficiary or other interested party that notice shall be accomplished in a manner that is reasonably suitable under the circumstances. This can include first-class mail, personal delivery to a last-known address, or by correct email address. Additionally, where the notice or document is sent through the US postal service, service is complete when the mail is given proper postage, addressed to the last known post office address, and deposited in a mailbox provided by the US postal service. Where there is a judicial proceeding against an unknown person with unknown whereabouts, the court can allow for notification by publication. A person can waive his or her right to be notified. This new section will apply to all notices and documents sent on or after July 1, 2016.
The 86th Iowa General Assembly will officially begin on January 11, 2016. As we near the start of a new legislative session it is fitting to review what exactly Community Bankers of Iowa advocates for on the Hill, both in Iowa and Washington DC.
Below are the current policy resolutions CBI supports and advocates for on behalf of Iowa’s independent, community banks and bankers. Download Policy Issues (PDF)
1. CBI continues to support beneficial and fair competition among insured depository institutions through active enforcement of Iowa’s laws relating to multi-bank holding company deposit concentration and CBI will remain active in any ongoing dialogue to ensure that existing limitations remain and enforceability continues.
2. CBI supports parity for Iowa-based financial institutions with out-of-state entities.
3. CBI supports the right of individual states to regulate financial institutions within their borders, regardless of charter source and selection. As a result, CBI opposes blanket preemption of state laws designed to protect the welfare of Iowa’s citizens by any federal agency or regulator and supports legislation or regulations that defer to state-established minimum standards over federally-established minimum standards for Iowa financial institutions.
4. CBI supports legislation designed to provide parity to Iowa banks in cases where federally chartered banks have privileges or permissible activities not allowed to state chartered banks to better enable Iowa chartered banks to remain competitive and thereby better able to serve Iowa consumers.
5. CBI supports state policies that strengthen, diversify, and promote adding value to Iowa’s agricultural production including alternative fuel and energy production.
CBI Urges You to Read the Summary of the FASB Proposal
The Financial Accounting Standards Board has proposed an Accounting Standards Update on credit losses that will require every community bank in the country to revise the way they account for their loan loss reserves (ALLL) and the way they account for their securities. Please read the Summary and Questions and Answers below. Also, we encourage you to send a comment letter to FASB (firstname.lastname@example.org) expressing your views on the proposal. A link to a sample letter is provided below. Please use this letter as a guide and customize to your bank’s specific concerns.
READ THE FULL PROPOSAL
Why is FASB proposing changes to the allowance for credit losses?
There is a general consensus that the recent financial crisis was caused and prolonged by the delayed recognition of credit losses stemming from the adoption of the incurred loss model. The lack of forward-looking information in loss estimates and the reliance on multiple credit impairment models resulted in carrying values for financial instruments that were overstated.
How does the proposal change the current provisioning method?
The current incurred loss model and the historical loss model would be replaced by an expected credit loss model that would require the bank to generate an estimate of contractual cash flows not expected to be collected. The generation of estimated cash flows would be based on reasonable and supportable forecasts. Banks would be prohibited from generating an estimate of credit losses based solely on the most likely outcome. The proposed expected credit loss model would apply to both loans and investment securities.
When is FASB expected to issue a final accounting standards update on these changes?
FASB has announced that they expect to finalize the allowance changes in the first quarter of 2014.
Does the proposal result in a day one loss for new loans recorded on the balance sheet?
Yes. When a loan is initially recognized on the balance sheet the net present value of contractual cash flows not expected to be collected would be recorded under the loan loss provision.
The House voted 303-121 to pass CBI-advocated legislation to delay enforcement of the TILA-RESPA Integrated Disclosure rule that took effect Oct. 3. H.R. 3192 would provide a reasonable hold-harmless period through Feb. 1, 2016, for good-faith efforts to comply with the TRID rule.
The Senate has yet to act on the grace period, and the White House may veto the bill if it reaches the president's desk. however, the bipartisan vote in the House is above the 2/3 majority needed to override a veto.
DOWNLOAD TRID RULE SUMMARY GUIDE
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