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The FDIC has issued its list of 55 state nonmember banks recently evaluated for CRA compliance whose evaluations were assigned in July 2024. Three banks received "Needs to Improve" ratings. One was rated "Substantial Noncompliance." Forty-eight banks received "Satisfactory" ratings.

We congratulate The Dime Bank (Honesdale, PA), Beardstown Savings S.B. (Beardstown, IL), and Toyota Financial Savings Bank (Henderson, NV), for receiving "Outstanding" ratings.

The CFPB has released a Nonbank Registration: Orders Rule Coverage Chart summarizing how an entity may determine if it is required to register an order under the Nonbank Registration Orders Rule.

The chart can be found in the Resources for filers section of the Bureau's nonbank registry portal and public database webpage.

FinCEN has posted additions and updates to its FAQ page on the Beneficial Ownership Information Reporting requirements. Updated and added questions are dated October 3, 2024.

The Federal Reserve Board has released two enforcement actions.

The OCC has issued Bulletin 2024-29 to provide OCC-supervised institutions with commercial loans with guidance for managing credit risk associated with refinance risk, and has rescinded Bulletin 1993-50, "Loan Refinancing."

According to the Bulletin, refinance risk is the risk that borrowers will not be able to replace existing debt at a future date under reasonable terms and prevailing market conditions. Refinance risk increases in rising interest rate environments and can be amplified by large volumes of loans set to mature in underperforming markets. If a borrower cannot refinance under current market conditions, a bank could be burdened with an underperforming or nonperforming loan. Refinance risk primarily affects loans with principal balances remaining at maturity and borrowers who rely on recurring debt to finance their capital structure or business operations. Examples of loan types most affected by refinance risk include interest-only loans, commercial real estate loans, leveraged loans, and revolving working capital lines. Fully amortizing loans to sound borrowers generally have lower refinance risk than loans that are not fully amortizing.

Banks should have processes to identify, measure, monitor, and control refinance risk at both the transaction and portfolio levels. The tools to monitor refinance risk should be tailored to the bank’s size, complexity, risk profile, and types of lending. Sound transaction-level credit risk management practices include assessing refinance risk at underwriting, during ongoing monitoring, and near maturity. At the portfolio level, banks should have systems and processes to monitor the volume and cadence of upcoming loan maturities. Independent credit risk review should consider the level of refinance risk when determining an appropriate review scope and assessing credit quality.

The FDIC has released the 2024 Small Business Lending Survey Report (SBLS). Conducted in 2022, the SBLS is a nationally representative sample of U.S. banks that offers important insights into their small business lending practices and how banks meet the credit needs of the nation’s small businesses.

The SBLS gathered responses from over a quarter of the nation’s banks on the way they approve and underwrite small business loans, their geographic markets and competition, their use of financial technology, and their lending to start-ups. Overall, the FDIC’s survey found that while most banks are adopting new technologies, these innovations have not replaced the relationship-oriented and staff-intensive nature of small business lending that continues to be focused around local branch office locations.

The FDIC has issued FIL-71-2024 with materials pertaining to the Call Report for the September 30, 2024, report date and guidance on certain reporting issues. The FIL and accompanying Supplemental Instructions should be shared with the individual(s) responsible for preparing the Call Report at your institution. Completed Call Reports must be received by Wednesday, October 30, 2024.

The Treasury Department yesterday reported that OFAC designated one individual and three companies that have facilitated weapons procurement and smuggling operations for Ansarallah, commonly known as the Houthis. This action targets key procurement operatives and suppliers located in Iran and the People’s Republic of China (PRC) that have enabled the Houthis to acquire dual-use materials and components needed to manufacture, maintain, and deploy an arsenal of advanced missiles and unmanned aerial vehicles (UAVs) against U.S. and allied interests.

Additionally, OFAC designated one entity and two vessels linked with illicit Houthi and Iranian commercial shipments, including one that has transported shipments for Houthi financial official Sa’id al-Jamal and an affiliate of Iran’s Armed Forces General Staff.

For the names and identification information of the designated individuals, entities and vessels, see yesterday's BankersOnline OFAC Update.

The FDIC, Federal Reserve Board, NCUA, OCC and state financial regulators have issued an interagency statement on supervisory practices regarding financial institutions affected by Hurricane Helene. These agencies recognize the serious impact of Hurricane Helene on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

The statement addressed agency views on lending, temporary facilities, publishing requirements, regulatory reporting requirements, and potential CRA consideration for certain financial institutions' efforts.

For more information, refer to the Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster, which is available as follows:

• State Financial Regulators
• FDIC
• FRB
• OCC
• NCUA

The NMLS has posted a reminder that the NMLS annual renewal period begins November 1 (and ends December 31). All MLO institutions must renew their registrations in NMLS in that two-month period, and individual mortgage loan originators actively registered before July 1, 2024, must be renewed for 2025. The NMLS provides details on its Renew-Reactive page.

The CFPB yesterday issued an Advisory Opinion on "Debt Collection Practices (Regulation F); Deceptive and Unfair Collection of Medical Debt," to prevent families from being targeted by illegal medical debt collection tactics. The advisory opinion clarifies that debt collectors, which may include third-party “revenue cycle management” companies, are violating federal law when they collect on inaccurate or legally invalid medical debts. These illegal practices include double-dipping to get paid for services already covered by insurance, hounding consumers to pay fake or exaggerated charges, misrepresenting consumers’ rights to contest bills, and collecting on debts without documentation that the amount is actually owed. The CFPB’s action aims to protect consumers from careless or predatory practices that can lead to inflated healthcare costs.

• CFPB press release
• Publication update: Published in the Federal Register at 89 FR 80715 on 10/4/2024, with applicability from 12/3/2024.

The FDIC yesterday issued FIL-70-2024 with guidance to help financial institutions and facilitate recovery in areas affected by Hurricane Helene in Florida, Georgia, North Carolina, and South Carolina, on September 23, 2024, and continuing.

The OCC yesterday released CRA evaluations for 21 national banks and federal savings associations that were made public in September. Sixteen of the evaluations are rated satisfactory. We congratulate the remaining five institutions, whose evaluations received outstanding ratings:

• Capital Bank, National Association, Rockville, MD
• First FS&LA of Valdosta, Valdosta, GA
• First National Bank of Gillette, Gillette, WY
• First National Bank of Pulaski, Pulaski, TN
• Presidential Bank, FSB, Bethesda, MD

The OCC has released its bank supervision operating plan for fiscal year (FY) 2025. The plan outlines the OCC’s supervision priorities and objectives for the year. It also facilitates the implementation of supervisory strategies for individual national banks, federal savings associations, federal branches and agencies of foreign banking organizations, and third-party service providers subject to OCC examination. OCC staff uses this plan to guide its supervisory priorities, planning, and resource allocations.

Heightened focus areas include:

• Financial
  • Credit
  • Allowance for credit losses
  • Asset and liability management
  • Capital
  • Climate-related financial risks for banks with over $100 billion in total consolidated assets
• Operational
  • Cybersecurity
  • Enterprise change management
  • Operations
  • Third-party risks
  • Payments
• Compliance
  • Bank Secrecy Act/anti-money laundering/countering the financing of terrorism and Office of Foreign Assets Control
  • Consumer compliance
  • Community Reinvestment Act
  • Fair lending

The Treasury Department yesterday announced that OFAC was designating Hilltop Youth, a violent extremist group that has repeatedly attacked Palestinians and destroyed Palestinian homes and property in the West Bank.

The Treasury Department alsoreported that OFAC was designating seven individuals and two entities associated with the Russia-based cybercriminal group Evil Corp, in a tri-lateral action with the United Kingdom’s Foreign, Commonwealth & Development Office (FCDO) and Australia’s Department of Foreign Affairs and Trade (DFAT). Additionally, the U.S. Department of Justice has unsealed an indictment charging one Evil Corp member in connection with his use of BitPaymer ransomware targeting victims in the United States.

For identification information on the sanctioned individuals and entities, see BankersOnline’s October 1, 2024, OFAC Update.

The Securities and Exchange Commission has announced charges against registered broker-dealer TD Securities (USA) LLC for manipulating the U.S. Treasury cash securities market through an illicit trading strategy known as spoofing. The bank was also charged for failing to supervise the then-head of its U.S. Treasuries trading desk, who allegedly made hundreds of illegal trades over a 13-month period.

According to the SEC's order, between April 2018 and May 2019, the former TD Securities trader spoofed the U.S. Treasury cash securities market by entering orders on one side of the market that he had no intention of executing (herein, non-bona fide orders), so he could obtain more favorable execution prices on bona fide orders he was entering simultaneously on the other side of the market. After the bona fide orders were filled, resulting in profits to TD Securities, the trader allegedly then canceled the non-bona fide orders. The SEC’s order also finds that TD Securities lacked adequate controls and that it failed to take reasonable steps to scrutinize the trader after receiving warnings of his potentially irregular trading activity.

TD Securities consented to the entry of the SEC’s order finding that it violated an antifraud provision of the federal securities laws and failed to reasonably supervise the trader. TD Securities was further ordered to cease and desist from future violations of the relevant antifraud provision, was censured, and was ordered to pay disgorgement of $400,000, prejudgment interest, and a civil penalty of $6.5 million. In a related matter, TD Securities has entered into a deferred prosecution agreement with the U.S. Department of Justice and has agreed to pay a total monetary sanction of more than $15 million as part of that agreement, of which $400,000 will be credited by disgorgement to the SEC. TD Securities has separately agreed to pay a $6 million fine to the Financial Industry Regulatory Authority to resolve related charges.

The National Credit Union Administration has announced it has issued a Consent Prohibition Order against Monica Jackson, formerly the operation and marketing director at Koin Credit Union, Brentwood, Tennessee, after a finding that she took cash out of the credit union’s vault, made unauthorized transfers to herself out of the account of a deceased member, and fraudulently opened and used lines of credit in the names of nominees for her own personal gain. She further used the master administration access code to lock one of the accounts she was using to conceal her fraudulent activity from other employees and KCU. Her fraudulent activities caused the credit union significant financial loss.

The NCUA also issued a Notice of Prohibition to Autumn S. Smith formerly employed by SecurityPlus Federal Credit Union, Baltimore, Maryland, after a conviction for the offense of theft ($1,500 to under $25,000) resulting from her misconduct at the credit union.

The U.S. Small Business Administration has published [89 FR 79734] in today's Federal Register a Direct Final Rule amending regulations governing SBA's 504 Loan Program for debt refinancing with expansion and debt refinancing without expansion. The changes will streamline the loan application process, expand eligibility criteria for small businesses borrowers, and make minor corrections. The amendments include: removing the 50% cap on debt refinance without expansion to conform with current legislation; raising the loan to value requirement on debt refinancing without expansion projects that include other business expenses to 90% and eliminating the cap on Eligible Business Expenses; aligning the “substantially all” standard for 504 debt refinancing with expansion so it is consistent with the debt refinancing without expansion standard of 75%; eliminating the 10% substantial benefit test on 504 debt refinancing with expansion and 504 debt refinancing without expansion on refinancing other government debt; and allowing certain “other secured debt” to be included as an Eligible Business Expense.

The rule will become effective November 15, 2024. SBA must receive comments on this direct final rule on or before October 31, 2024. If adverse comment is received, SBA will publish a timely withdrawal of the rule in the Federal Register.

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The Federal Housing Finance Agency yesterday announced a proposed rule on Unsecured Credit Limits for Federal Home Loan Banks.

The proposed rule would improve the FHLBanks’ ability to provide liquidity to members by aligning the treatment of interest-bearing deposit accounts (IBDAs) and other authorized overnight investments with the treatment of Federal Funds sales. This updated regulatory treatment would allow the FHLBanks to better manage and respond to the intraday liquidity needs of their members. The proposed rule also clarifies terms for the FHLBanks to determine limits on unsecured credit to counterparties.

The FHFA will accept public comments on the proposed rule for 60 days following its publication in the Federal Register.