August 11, 2023

State Banking Board Elects Knudtson, Weaver as New Officers

The Missouri State Banking and Savings and Loan Board recently elected Jay B. Knudtson, executive vice president and chief banking officer of First Missouri State Bank in Cape Girardeau, to serve as chairman and R. Bradley Weaver, senior vice president and chief lending officer of Systematic Savings Bank in Springfield, as secretary.

Knudtson, appointed to the board in January 2020, replaces Harold Miles, president and CEO of Bank of Advance. Weaver, appointed in April 2021, replaces Thane Kifer, an attorney from Bolivar. Both Miles and Kifer remain on the board.

“It is my honor and privilege to be elected Chairman of the State Banking and Savings and Loan Board,” said Knudtson. “I am extremely proud of all that we have accomplished under the direction of Chairman Harold Miles, but there is still much more to do. Missouri ranks fourth in the nation with 198 state-chartered banks, so strategic oversight and advocacy of Missouri’s banks is essential.”

The board advises the commissioner of the Missouri Division of Finance as to the proper administration of the office and the banking laws of Missouri and makes recommendations to the Missouri General Assembly regarding changes in those laws. The board must approve all regulations pertaining to banks promulgated by the commissioner. In addition, the board considers appeals pertaining to certain decisions made by the commissioner with respect to the chartering of new banks, the approval or disapproval of bank branches or the relocation of banks or branches.  

Lawsuit Challenges New Missouri Rules

The Securities Industry and Financial Markets Association filed a federal court challenge Thursday to new Missouri documentation rules. As previously shared by MBA, the rules implemented by Missouri Secretary of State Jay Ashcroft require financial firms and professionals that incorporate any “social objective or other nonfinancial objective” into their analysis to obtain their customers’ written consent on a state-written prescribed script. 

SIFMA said the new rules, effective July 30, require financial professionals in Missouri to create a highly prescriptive documentary record that none of the other 49 states require. By doing so, the new rules directly conflict with a primary objective of the federal securities laws — namely, to create a uniform, consistent, regulatory regime across all 50 states designed to enhance the efficiency of the U.S. capital markets and ensure the free flow of capital nationwide.

SIFMA added the new Missouri rules fill no void or blind spot that would protect Missouri investors. Under existing federal securities laws, broker-dealers and investment advisers are already required to provide investment advice that is in the best interest of their customers. That means firms cannot put their interests ahead of their customers’ interests and must base their advice on the customers’ individual investment objectives. The Missouri rules are thus unnecessary and create confusion, SIFMA said.

In its federal lawsuit, SIFMA asks the court to declare that Missouri, in promulgating its new rules, overstepped its boundaries in violation of both federal preemption statutes and federal constitutional requirements. This lawsuit is necessary to prevent Missouri from both violating federal law and potentially harming Missouri investors and the financial professionals and firms in Missouri who today serve their customers’ best interests.

Missouri Department of Revenue Issues Notification to Dealers

The Missouri General Assembly passed Senate Bill 398, effective Aug. 28, that provides that once the Missouri Department of Revenue’s new integrated online system is operational, motor vehicle dealers will collect and remit sales tax to DOR at the time of sale. The system is expected to be ready sometime in 2026.

Recent news reports have focused on the increase in expired temporary tags and expired license plates across Missouri. MBA met with state and industry stakeholders recently to discuss potential methods to reduce the number of expired temporary tags. One of those discussions centered around the possibility of borrowers financing the sales tax to provide them with the funds that they may not otherwise have readily available. This week, the DOR sent a notification to their licensed dealers — portions are excerpted below.

“The Department of Revenue is partnering with the Department of Public Safety, Missouri State Highway Patrol, Department of Transportation, Department of Commerce and Insurance, Office of Administration, and the Missouri Automobile Dealers Association to look for ways to help reduce the number of expired temporary tags in Missouri.

The Department is asking dealerships to consider discussing with buyers the possibility of including vehicle sales and local tax in the sales finance contract. If the customer agrees to finance these costs, the dealer should issue a check payable to the Missouri Department of Revenue for the sales and local tax, title and licensing fees and provide the check to the buyer at the time of sale. The buyer can then submit the check with the title application at the local license office.

The buyer may still need to cover nominal fees, but avoidance of the sales tax liability will no longer be the reason for driving with expired temporary tags.

Your customers may benefit from including the total costs associated with a vehicle purchase in the sales finance contract (less the value of any trade and down payment). Customers would still need to meet the financing requirements associated with the increased loan amount.”

The language above is a request to dealers, and there is no current requirement that the dealer collect and remit the sales tax to the DOR at the time of the sale, and there is no requirement that any lender finance sales tax. Banks that purchase dealer paper should visit with those dealers to ensure that accurate information is being presented when agreeing to financing terms and to also ensure that when sales tax is financed, the proceeds representing that amount are distributed to the borrower by the dealer via check payable to the DOR.

Please contact MBA Senior Vice President Carol Barnett with any questions.

MBA, Associations Urge CFPB To Delay 1071 Implementation

MBA and state bankers associations urged the Consumer Financial Protection Bureau to extend a court-ordered stay of its Section 1071 final rule to cover all FDIC-insured banks while the U.S. Supreme Court considers a separate legal challenge concerning the bureau. As previously shared by MBA, a federal judge in in Texas last week issued a preliminary injunction of the rule until the Supreme Court decides on a case involving the constitutionality of the bureau’s funding structure in CFPB v. Community Financial Services Association of America.

The 1071 case was brought by the Texas Bankers Association, Rio Bank and the American Bankers Association, which asked for a national injunction covering all lenders. However, the judge sided with the CFPB’s request to have the order apply only to the associations’ members. ABA and TBA have since asked CFPB Director Rohit Chopra to delay 1071 compliance for all banks, and the state associations repeated that request in their letter.

“As the TBA and the ABA asserted in their letter, a stay from the bureau would streamline administration for the agency after the Supreme Court’s ruling in the Community Financial case by including all banks and not just those that are members of TBA or ABA,” the associations said. “We agree that extending the relief already provided to numerous banks nationwide would be prudent and ameliorate confusion.”

In a recent call with banks, ABA General Counsel Tom Pinder said banks would need to be association members in good standing at the time the Supreme Court decision is delivered. ABA is encouraging banks to renew or join by Oct. 1 in order to be conservative about the timing for being covered by the injunction.

ABA membership is offered at the standalone bank or holding company level, so bank subsidiaries under a member bank holding company would be covered; nonbank subsidiaries are not covered. Associate members — providers to the financial industry — are not eligible for coverage by the injunction.

Missouri Banks See Increase in Check Fraud

Several banks have contacted MBA about the recent increase in check fraud for their customers. According to the bankers, the fraud is related to the theft of keys that unlock blue U.S. Postal Service boxes — the thieves steal checks from mailboxes, change the amounts and payees, and then proceed to cash the checks.

MBA advises banks to be aware of any unusual account activity for their customers and if any checks appear to be altered. Banks should remind their customers to check their statements daily and to use online banking to submit payments for their bills. In addition, if customers are mailing checks, they should take the checks inside post offices.

As previously shared by MBA, the American Bankers Association has created an online Check Fraud Claim Directory to help banks resolve check fraud claims more efficiently. The directory is available to both ABA members and nonmembers.

Preston to Retire From MBA; Hart Joins MBA

After 20 years of service, MBA Vice President of Member Services Rachael Preston is retiring from MBA. Her last day with the association is Tuesday, Aug. 15.

“I’ve loved the variety here at MBA,” Preston said. “I had the unique privilege to work in all areas of the association, and it allowed me to do a little bit of many different things.”

During her tenure at MBA, Preston was crucial in spearheading several special projects, including the revitalization of the Young Bankers Leadership Division (now Next Generation in Banking), further development of the Missouri Bankers Foundation and the creation of vendorpro.

“I’m thankful for the opportunities that MBA entrusted me to lead,” Preston said. “MBA connected me with so many wonderful people in our banks.”

With Preston’s retirement, MBA named Melissa Hart as its director of membership services. In her new role, Hart is responsible for membership growth and engagement as she focuses on seeking new member banks and associate members to join the association.

“The banking industry is evolving, and it’s an exciting time to be a part of this dynamic change,” Hart said. “I look forward to meeting our member banks and connecting them with firms that can aid bankers in enhancing their products and services for their customers.”

Hart spent the past 11 years with Central Bank in Jefferson City, where she most recently served as commercial payments and business credit card manager.