December 21, 2021

2020 was a year of challenges in many aspects of life, business, and the economy. The start of 2021 brought a close to a tumultuous year and opened the door to a year of economic recovery and hope for more normal times. In March 2020, the banking industry was rocked when the Fed funds rate was cut to zero at an unprecedented speed, and Treasury yields tumbled to all-time lows. Additionally, the massive influx of stimulus-related deposits that flowed into the banking system greatly changed the size and structure of balance sheets. As a former bank examiner, I am taking a chapter from my previous regulatory career by looking at the banking industry as it relates to the Uniform Financial Institutions Rating System and its six components, known
as CAMELS.

New leadership usually takes us into the future. The Office of the Comptroller of the Currency (OCC) is reversing this trend by first taking us into the past for a bit. Seeing the June 5, 2020, final rule to modernize its Community Reinvestment Act (CRA) framework (June 2020 Rule) as a false start, the OCC has issued a proposed rule to rescind it in favor of working with the other agencies to develop a new rule. The proposed rule would replace the existing 12 CFR part 25 with a revised 12 CFR part 25 based on the 1995 Rules and reinstate 12 CFR part 195 (for savings associations). The proposed 12 CFR part 25 would be substantively identical to the 1995
rule. All definitions, performance tests and standards, and related data collection, recordkeeping, and reporting requirements would revert to those in place before the OCC issued the June 2020 Rule. Also, the rules surrounding the public file and public notice requirements would revert to those in the 1995 rule. The proposed rule applies to all national banks and all federal and state savings associations. If you would like to comment on any aspect of the proposal, you must submit those before Oct. 29, 2021. The June 2020 Rule would remain in effect until replaced by final rules based on this proposal.

The thought of a vendor breach is terrifying. We engage in vendor relationships because the value proposition is that the vendor will provide us better service and security than we can provide for ourselves, often at a lower cost than we would incur to perform and secure the service for ourselves. We put immense trust in our vendors, yet the news is riddled with stories of data breaches involving trusted vendors.

It’s the message a CEO never wants to receive: “We’ve got your data and you need to pay up if you want it back.”
Unfortunately, that message is landing in CEO inboxes increasingly often, as ransomware attacks ramp up in the U.S. In just the first six months of 2021, the Financial Crimes Enforcement Network identified $590 million in ransomware-related Suspicious Activity Reports — a 42% increase from the 2020 total of $416 million. And FinCEN reports that we could be on track to see a higher transaction value for ransomware-related SARs than we’ve seen in the past 10 years combined.

Growing up on a farm near Arlington, Krista Prinz was heavily involved in 4-H and FFA. When it came time to choose a college major, the ag banking and finance option of the agribusiness major at the University of Nebraska-Lincoln (UNL) was a natural fit. The major includes both traditional finance classes and courses with an emphasis on agriculture. Students in the program are eligible to receive a scholarship and complete an internship at a Nebraska bank. The program is a partnership of the NBA and UNL and is designed to fill the need for ag bankers in Nebraska.

as I was sitting down to finalize my magazine column for the month, I received a notice from the Nebraska Department of Labor indicating the state’s unemployment rate for September had fallen to 2.0%, tied for the lowest unemployment rate ever recorded by a state. Similarly, the rate in Lincoln had dropped to 1.3%, a record low for the Capitol City.

LENDERS OFTEN REQUIRE THEIR
borrowers grant them a security
interest in their accounts in
order to secure the borrowers’
loan obligations. Accounts are arguably
one of the most liquid types of collateral
available to secured lenders and can
sometimes lead to substantial recovery
for lenders when loans go bad.