Volume II 2021
The
Independent and proud of it!
Bottom Line
What to Expect at the 2021 Black Hills Retreat Megan Olson, ICBSD President & CEO Sustaining the community banking tradition Roger Weber, ICBSD Chairman of the Board People You Should Know: Stacy Hall, Vice President, Correspondent Account Executive, West Gate Bank Twila Schmitt, ICBSD Contributing Writer The Corporate Transparency Act: Will It Impact My Bank? TIffany Miller, Davenport Evans Law Firm The Importance of a Strong E-Commerce Strategy Teresa Ulven, The Advantage Network Taking on the Family Business www.icbsd.com
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contents
INSIDE This Issue ICBSD 2021
FROM THE DESK OF 2 President’s Message See you in Deadwood! by Megan Olson, President & CEO of ICBSD 3
021 Black Hills Retreat 2 Agenda & Activities
5 Rebeca’s Remarks
Flourish by Rebeca Romero Rainey, President & CEO of ICBA
6 From the ICBSD
Chairman Sustaining the Community Banking Tradition by Roger Weber, Chairman of ICBSD, Sioux Falls Market President, CorTrust Bank
7 From the ICBA Chairman
From the Top by Robert M. Fisher, Chairman of ICBA, Sioux Falls Market President, CorTrust Bank FROM CAPITOL HILL
9 Federal Delegate’s
10
Report by Emily Hofer, CFO, Merchants State Bank, Freeman, SD, ICBA National Director
ICBSD PAC: Contribute Today!
12 Rounds’ Report
Where’s the Beef by Senator Mike Rounds
www.icbsd.com P.O. Box 615, Watertown, SD 57201 605.878.3040
megan@icbsd.com
13 A Tale of Two Pipelines by Senator John Thune
Community spirit
14 People You Should
Know: Stacy Hall Vice President, Correspondent Account Executive, West Gate Bank by Twila Schmitt, ICBSD Contributing Writer
16 The Importance of a
Strong E-Commerce Strategy by Teresa Ulven, Manager of The Advantage Network, an ICBSD Preferred Partner
18 Taking on the
Family Business
20 The Corporate
Transparency Act: Will it Impact My Bank? by Tiffany M. Miller, Partner at Davenport Evans Lawyers
22 ATM Theft On the Rise by Travelers, an ICBSD Preferred Partner
22 How to Maximize New
PPP Loan Relationships by Onovative, an ICBSD Preferred Partner
26 Munis for the Many
Taxable Municipal Bonds Have Appeal for Nearly All Community Banks by Jim Reber, President and CEO, ICBA Securities
President’s Message From the president
Megan Olson, President & CEO of ICBSD
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See you in Deadwood!
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JULY 29 - 31, 2021 NEW LOCATION
“Along with the new location comes many new and exciting activities that will be fun and enjoyable for the whole family.”
megan@icbsd.com
After an unwanted hiatus in 2020, the ICBSD annual retreat is BACK and we could not be more excited! Kicking off the fun weekend of events is the ICBSD PAC Golf Scramble happening at Boulder Canyon Country Club in Sturgis, SD. Check-in is at noon with a 1:00 tee time to follow. Lunch, pin prizes and good conversation will be provided! This year, the main retreat will be taking place at a new and exciting location: The Lodge at Deadwood. Here you will find an award winning lodge, multiple dining options, an indoor water playland for the kids (or kids at heart) and endless entertainment in an iconic Black Hills setting. Along with the new location comes many new and exciting activities that will be fun and enjoyable for the whole family. This year, the retreat is taking place during Deadwood’s annual summer celebration, Days of ’76. The Days of ’76 celebration first began in 1924 as a way to honor the pioneers, madams, miners, muleskinners and prospectors who came to the Black Hills in 1876 to settle the goldfilled gulches of Dakota Territory. Since then, this celebration has evolved into a legendary annual event complete with a historic parade and an award-winning PRCA rodeo – both of which our retreat attendees will get to see! We are also bringing some magic to community banking with our keynote performer – comedian and magician Jared Sherlock! Additionally, Keith Gruebele of Bankers Healthcare Group (an ICBSD Preferred Partner) will be giving a motivational talk on the Mindsets of Change, something we will all find value in after the past year! Deadwood is legendary and so are our community bankers! I couldn’t think of a better location to hold our annual retreat! In addition to an overall fantastic environment, the 2021 Black Hills Retreat will also feature incredible speakers focusing on several important areas of interest including cannabis banking in South Dakota, cyber security, sustaining bank franchises, bank marketing and much more. Each topic was selected by our education committee of bankers and designed specifically to provide you with information and resources which you can take back and share within your bank network. A full breakdown of events for the three-day retreat is available on our website – icbsd.com/black-hills-retreat or on page 3. By participating in the golf scramble and attending the retreat, you are supporting the ICBSD Political Action Committee. Your involvement in these two key ICBSD events allows us a seat at the table with our legislators, in South Dakota and in Washington, and allows our voices to be heard. In an effort to continue to grow and strengthen our PAC program, I would like to personally invite you, your family and those within your bank network to attend the 2021 Black Hills Retreat. In addition to serving as a fundraising event, this event is also an excellent networking and learning opportunity for bank and associate members. If you haven’t registered yet, I encourage you to do so by visiting our website! I look forward to seeing you all in a few short weeks!
4 The bottom line
Here’s tHe Deal 2021 Black Hills retreat u
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Thursday, July 29, 2021
Saturday, July 31, 2021
1:00pm
ICBSD PAC golf scramble Boulder Canyon Country Club
7:00 – 9:00am Breakfast is served
5:00pm
Welcome party and dinner The Lodge at Deadwood
8:30pm
Group tour of Broken Boot Mine
10:00am
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Tea & Tour at the historic Adams House
Banker education: 8:00am
Friday, July 30, 2021
Top Cybersecurity Challenges Facing Community Banks Nick Podhradsky, SBS Cyber Security
8:45am
SBA 504 Express Paula Hulscher, First District Development Company
7:00 – 9:00am Breakfast is served
9:15am
Leveraging Technology to Drive Marketing Success Kelly Larson, Onovative
10:00am
Stretch and Refresh
10:15am
Equipment Leasing and Financing for Community Banks Expanding C&I Mike La Salle, Bell Bank
11:00am
ICBSD Annual Meeting
11:30am
Lunch is served Keynote performer Jared Sherlock takes the stage, guests and families welcome!
10:00am
Days of ’76 Museum tour for guests and families
Banker education: 8:00am
Welcome
8:15am
What You Don’t Know That You Need to Know Mike Martin and Tom Caruthers, Eide Bailly
9:00am
Sustaining Your Banks Franchise Value Through a Prolonged Zero Interest Rate and Liquid Environment Marty Mosby, ICBA Securities
9:45am
Stretch and Refresh
7:00pm
Social Hour, PAC auction
10:00am
Banker to Banker: The Lowdown on Cannabis Banking Tony Repanich, Shield Compliance
8:00pm
Dinner
10:00pm
Bonfire on the patio
10:45am
M&A Activity and Bank Valuations Coming Out of the Pandemic Dwight Larsen, United Bankers’ Bank
A L r et r
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ICBA Update Russell Laffitte, ICBA Vice Chairman
12:00pm
Lunch is served | Mindsets of Change Keith Gruebele, Bankers Healthcare Group (Guest and families welcome)
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Days of ’76 Historic Parade, Main Street Deadwood
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Days of ’76 Rodeo, Juso Brothers Grandstand *Tough Enough to Wear Pink Night* – be sure to pack your pink! We will provide a retreat t-shirt and pink bandanna to each registrant.
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4:30 – 6:30pm Buffet style dinner located in the banquet room at Deadwood Mountain Grand *Come and go during this time frame as your schedule allows*
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afternoon activities & recommendations: (on your own after 1PM each day):
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• Deadwood Escape Room • Deadwood Historic Tours • Self-guided tour of Mount Moriah Cemetery • Sick-N-Twisted Brewery • Naked Winery
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• His and Hers Ale House and Wine Bar • “Showdown on Gold Street Shootout” with Deadwood Alive at 4:00pm at the Bodega/Holiday Inn Express
To regisTer and for more informaTion visiT
www.iCBsd.Com ICBSD 2021 5
Come out Swinging IC BSD PAC Golf S c r a m b le
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P resented by IC B A S e c ur i t i es
Please join us for the 2021 ICBSD PAC golf scramble. Boulder Canyon Country Club 12312 US Highway 14A, Sturgis, SD 57785 1PM Shotgun Start.
6 The bottom line
Rebeca’s Remarks Flourish From the president
Rebeca Romero Rainey, President & CEO of ICBA
When I transitioned from a community bank CEO to ICBA president and CEO, my team gave me a beautiful handmade card with notes and best wishes. On the front is a favorite quote of mine from French writer Anatole France: “To accomplish great things, we must not only act,
“We must work to remain optimistic in the face of adversity and keep in mind that no matter how difficult that feat may be, it’s worth the effort.”
but also dream; not only plan, but also believe.” To this day, the card sits on my desk. I keep it there for sentimental reasons, but also because that quote has been a daily inspiration to me throughout my career. It’s a constant reminder that it’s our choice whether to see the glass half empty or half full. We must work to remain optimistic in the face of adversity and keep in mind that no matter how difficult that feat may be, it’s worth the effort. Over the past year, community banks have had a crash course in this philosophy. We were faced with shifting requirements around the Paycheck Protection Program; not knowing if lobbies would be open from one day to the next; the health and safety of employees, friends and families; and so many other situations. Despite it all, community bankers remained committed to the path ahead. We held fast to a singular focus on getting through the trials by increasing support for our communities, by knowing that if we just stood the course, we would get through it even stronger. That unwavering optimism endured even in the most difficult times. But it wasn’t all smooth sailing. Challenge after challenge emerged. Yet, because community banks focus on the long haul, we were able to see these difficulties as opportunities to experiment with new processes, products and approaches—like identifying more streamlined solutions for needs such as document signature and retention, and enabling enhanced remote work and banking capabilities. Thankfully, tenacity, nimbleness and ingenuity helped us steer the ship around the storm and stay on course at our banks, enabling us to better rise to meet the needs of our communities. So, it’s no surprise that as we look at this month’s 40 Under 40 winners, it becomes readily apparent that each of these emerging leaders demonstrates resiliency. But they also display a universal sense of optimism, a willingness to do what it takes to meet the needs of their communities. And that can-do outlook sits at the core of community banking. No matter the challenge, we see the light through the storm and persevere because of it.
What you need to know @romerorainey
In this time of change, foundational risk and compliance knowledge will anchor your bank as you navigate new developments. This month, ICBA’s virtual Risk Management and Compliance Institutes will provide your team with tools in these areas. icba.org/events ICBSD 2021 7
rweber@cortrustbank.com
From the Chairman’s Desk From the Chairman Roger Weber, Chairman of ICBSD, Sioux Falls Market President, CorTrust Bank Sustaining the Community Banking Tradition This July will mark my final month as chairman of the ICBSD board of directors. The past year has been a privilege and an honor, and I am humbled to have the opportunity to serve alongside you all. Throughout the challenges of the year, I’ve witnessed the resilience, grit, and dedication you all possess. These qualities have served as the backbone and tradition of community banking, and will continue to do so for generations to come. As you know, the 2021 PAC Golf Scramble and Black Hills Retreat is taking place July 29th-31st with the golf scramble happening at Boulder Canyon Country Club and the retreat happening at The Deadwood Lodge. If you haven’t done so already, I encourage you, your family and those within your network to register and participate in the fun events that are planned! Not only is this event an excellent networking and educational
8 The bottom line
opportunity, it is also highly important to the financial stability of the ICBSD Political Action Committee (PAC). The PAC program gives you, our South Dakota independent community bankers, a seat at the table so that your voices can be heard on important banking issues during the state legislative process. In addition to the golf scramble, the association holds a silent auction during the annual retreat which is also a fundraiser for the PAC program. With that said, I ask for your generosity and consideration by donating to the PAC in any of the following ways:
EasyAS1•2•3 1. Making a monetary donation to the ICBSD PAC. 2. Donating an item that will go on the PAC silent auction which is taking place Saturday, July 31st at the retreat.
3. Or, making a monetary donation which can be used by Megan to purchase an item for the PAC silent auction on your behalf. Making a donation is easy. Simply contact Megan at Megan@ICBSD.com and let her know you would like to support the PAC. She will send you a form to complete and return, and she will take care of the rest! Your support of the PAC will ensure the benefits of the community banking tradition are enjoyed by generations to come. Thank you for your consideration and for a great year as chairman! I look forward to formally welcoming Brian Gilbert of First National Bank in Sioux Falls, the 2021-2022 chairman of the board, into office this July at the retreat!
@ RobertMFisher
From the Top From the Chairman Robert M. Fisher, Chairman of ICBA, Sioux Falls Market President, CorTrust Bank
“One of my early mentors told me, ‘It’s often easier to ask for forgiveness than to ask for permission.’ That piece of advice has ... allowed us to be a little more progressive as a bank.” Leading a family-owned community bank offers a lot of opportunities, but transitioning into the helm comes with a number of challenges. You go from being the kid your dad’s team watched growing up to being their direct supervisor. That’s why, throughout my banking career, I felt compelled to be the hardest worker in the room. I wanted to prove I was worthy of my leadership role, not because I was little Bobby Fisher, but because I had earned it. I suspect I’m not alone in that sentiment. But I realized a long time ago that the best way to live up to the title is to lead with integrity and stay true to who you are. For me, that means I follow three principles:
1. Be a lifelong learner. I’m a big proponent of going the extra mile, because if you don’t continuously grow, you’re falling behind. At the bank,
having this approach means you’re always asking “why?” to understand the rationale behind decisions. You’re also not afraid to fail, because some of the best knowledge comes from an unsuccessful attempt.
2. Strive to make those around you better. Michael Jordan was one of the greatest basketball players of all time, but he was a great leader as well. When he walked onto the court, everyone stepped up their games, and he made those around him better. In that vein, I work really hard to empower my team to do what they do best and to support them so we can excel together.
3. Seek out mentors and be one yourself. One of my early mentors told me, “It’s often easier to ask
myTOP3
Before I settled into my role as a fifth-generation bank leader, I was a U.S. Air Force navigator. Here are three of my favorite trips I took in that role:
1. Moscow, Russia 2. G aborone, Botswana 3. Ascension Island
for forgiveness than to ask for permission.” That piece of advice has served me well and allowed us to be a little more progressive as a bank. When there’s something that we really want to do, we will proceed and manage the fallout later, if it arises. And I try to instill that concept throughout the bank, so everyone feels inspired to seek new opportunities. Certainly, every leader approaches the role differently, and as future generations of bankers come into their own—like those featured in this issue—they will carve their own paths, centered on their communities. Yet, all community bank leaders approach their roles with one core belief in mind: The relationship—with families, staff, customers, other bankers, and communities—guides everything we do. Above all, being a community bank leader means keeping your relationships as your due north. ICBSD 2021 9
Apply todAy! $1, 000 S c h o l a r s h i p f o r S tu d en t s o f C o m m u n i t y Ban k e r s The ICBSD is offering ten, $1,000 scholarships for high school seniors or post-secondary students for the 2021-2022 academic year attending a SD college or Technical college. Applications will be accepted August 1-October 1, 2021. Open to high school seniors or college students who are the children or grandchildren of an ICBSD member bank employees or has been employed/interned at an ICBSD member bank.
Apply today at: ICBSD.com/scholarship 10 The bottom line
ehofer@msb-sd.com 605-660-4790
Federal Delegate’s Report by Emily Hofer, ICBA National Director, Merchants State Bank, Freeman, SD Summer – my favorite time of year. Baseball games, golf, convertible days, lake days, pool days, etc. These are a few of my favorite summertime things. However, the highlight of the summer is always the ICBSD Retreat in the Black Hills. With a year break from the Retreat due to COVID and a change in venue this year, I’m looking forward to this year more than ever. It’s always a great opportunity to connect with peers and old friends. I hope to see many of you in Deadwood in July! The return of summer has also brought a return to what I would consider “normalcy.” We have recently opened all of our branch lobbies to normal traffic. In-person meetings have started to resurface. We learned that we can work remotely and carry out meetings virtually. However, I, for one, prefer the in-person meeting, where you don’t have awkward pauses and mute button and connection issues! It’s so nice to sit across the table from someone, look him in the eye, and have a candid conversation. Throughout all of the hurdles that the last year and a half has thrown at our industry, ICBA has been a steadfast partner and advocate for community
banks. Our banks realized some real results from ICBA’s advocacy: namely simplified forgiveness for PPP loans of less than $150,000, a fix to the EIDL Advance grants, and a lender “held harmless” provision. Additionally, ICBA’s efforts extended the suspension of TDR classification through 2021 and delayed the CECL start date until 2022. While there have been many successes, there is still much work to do on the legislative and regulatory fronts. Following are some of ICBA’s key priorities for 2021. ICBA’s “WAKE UP” Campaign The mission of this campaign is to pursue legislative and regulatory changes to contain or reverse the expansion of credit unions and to draw media and public attention to the industry’s aggressive and abusive exploitation of their tax exemption. Tax Incentives and Support for Agriculture ICBA supports the creation of new tax credits or deductions for community bank lending to low- and moderate-income individuals, businesses, farmers, and ranchers. Not only would these programs support and strengthen lending options for these customers, it would offset the competitive advantages enjoyed by tax-exempt credit unions and Farm Credit System lenders. ICBA has also lobbied for enhanced USDA guaranteed lending, as well as direct assistance and other measures to support American agriculture. Preserving Tax Cuts ICBA is working to preserve the 2017 tax cuts and opposes transaction taxes, limitations on the deductibility of FDIC premiums, and other proposals specifically targeting the financial services sector.
Small Business Loan Data Collection Rule The CFPB has released an outline of proposals that would require banks to collect and report data on loans made to small businesses, as required by the Dodd-Frank Act. There is an exemption being considered for banks under $200 million. It is ICBA’s position that the proposal fails to recognize the customized nature of small business lending, and we are seeking a higher exemption limit. Beneficial Ownership Rule Implementation Recently-enacted, ICBA-supported legislation requires companies to submit beneficial ownership information directly to FinCEN. ICBA is working with Treasury to ensure the forthcoming rules create meaningful relief for community banks. Cannabis Banking As more states - ours included - legalize cannabis for medical and/or recreational use, it’s critically important for public safety that cannabis-related businesses, as well as those businesses that serve them, have access to the traditional banking system. ICBA supports legislation that would create a safe harbor from federal sanctions for financial institutions that serve these businesses. Just as the seasons change, so does the banking landscape. Our “constant” is “change.” My hats off to all of the community bankers in our state that have proven to be nimble in the face of the last year’s challenges. Our communities are better off because of you all. I hope you find time this summer to enjoy your family and friends, and I hope to see you in Deadwood in July. Please feel free to reach out to me at any time with questions, comments, concerns, etc. regarding our industry or ICBA. Better yet, let me know how your golf game is going! I can be reached at ehofer@ msb-sd.com or 605-660-4790. ICBSD 2021 11
Thank you for supporting the ICBSD Political Action Committee!
Contribute
Today!
The ICBSD Political Action Committee... helps provide South Dakota community banks with a strong voice in state politics through contributions to candidates for state elected offices. These contributions help ensure we have a seat at the table when issues affecting your bank are being discussed in Pierre.
Contribute Our thanks in advance for your support of the PAC 100. Your PAC 100 contribution supports legislative candidates throughout our bankers’ districts. Contact Megan Olson to learn more. megan@icbsd.com Your checks can be mailed to: ICBSD PAC PO Box 615 Watertown, SD 57201
12 The bottom line
2021 Pac 100 Club Monte Troske . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers State Bank, Turton Mark Troske . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers State Bank, Turton Rory Troske . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers State Bank, Turton Wayne Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers State Bank, Turton Terry Vogel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers State Bank, Turton Kevin Teigen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers State Bank, Turton Jeffery Fullerton . . . . . . . . . . . . . . . . . . . . . . . First Western Federal Savings Bank Nicholas Conway . . . . . . . . . . . . . . . . . . . . . . First Western Federal Savings Bank Dean Zubke . . . . . . . . . . . . . . . . . . . . . . . . . First Western Federal Savings Bank Ted Grooms . . . . . . . . . . . . . . . . . . . . . . . . . First Western Federal Savings Bank Leroy Christianson . . . . . . . . . . . . . . . . . . . . . First Western Federal Savings Bank Peter Molitor Jr. . . . . . . . . . . . . . . . . . . . . . . . First Western Federal Savings Bank Robert Huber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank Troy Beck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank John Wiest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank Myron Rieker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank Roy Dean Schwartz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank Bruce Brandner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank Scott Nuzs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campbell County Bank David Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Jan Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank David Ebers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Josh Houge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Jane Swenson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Bob Smithback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Hugh Bartels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Mark Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Jermey Keizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Reid Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Charles Hagerfeld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BankStar Financial Harold Schoeneman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BankStar Financial John Heylens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BankStar Financial Craig Steen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BankStar Financial Greg Fargen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BankStar Financial Fredrick Hegerfeld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BankStar Financial Cameron Becker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rivers Edge Bank Joell Bieber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Toni Bukaske . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Kelly Eiseman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Lori Faw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Phillip Hettick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Brittany Hoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Jessica Holscher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .First State Bank of Roscoe Sandra Kirschenmann . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Cindy Rohrbach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Clay Spielman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Patty Beyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Robert Kaul . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Chad Lang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Reed Swenson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe Mary Jo Grismer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First State Bank of Roscoe
Tiffany Miller, Davenport Evans Lawyer, Financial Services Group Hometown: Burke, SD First Job: Walking beans for area farms. Great Places: The Missouri River, especially Lake Francis Case. Great Eats: Cheeseburgers made from my dad’s South Dakota beef. Weekends in South Dakota: Camping and boa�ng on the River. South Dakota Memories: 4th of July celebra�ons (fireworks!), stacking bales, skiing at Terry Peak, street dances, and ball games. Banking in Ac�on: Several years ago, I was in a checkout line when the individual in front of me started complaining to the cashier about the “pointlessness” of having to use the chip on her credit card. I couldn’t pass up the opportunity to (helpfully?) pipe up and explain the data security benefits of using chip technology. And in true South Dakota fashion, this discussion seemed totally normal to have amongst strangers in a checkout line! Contact a lawyer: (605) 336-2880 info@dehs.com Davenport, Evans, Hurwitz & Smith, LLP
davenportevans.com
ICBSD 2021 13
FROM CAPITOL HILL
Rounds’ Report Where’s the Beef? Mike Rounds
United States Senator (R-S.D.)
Do you remember Clara Peller? In 1984 she was the main character in the Wendy’s Hamburger Restaurant commercial who famously yelled the phrase… “Where’s the beef?” The point of the ad was to highlight the amount of fresh beef used in Wendy’s burgers compared to their competitors. Ironically, during the 2020 pandemic, Wendy’s rolled out a new version of the ad to highlight the supply chain issues which were impacting the availability of beef in grocery stores. The ad begged another question… Do you know where your beef comes from? I’ve often wondered if folks who aren’t from cattle country understand the importance of this issue. Regardless of where you live or what you do for a living, this is an issue that should matter to you. Consumers are paying way too much for beef at the grocery store. And if you think the money is going to the producer, you’re wrong. U.S. farm and ranch families work hard every day to produce the best beef in the world. In a recent article on the Successful Farming website Agriculture.com, journalist Chuck Abbott writes… “A decade ago, farmers received 17.6¢ of each $1 spent on food by Americans. Their share now is barely above 14¢ while processors, retailers, and others in the food chain take a larger share, according to USDA economists, who have tracked the farmer/marketer relationship for a quarter century.”
“Sitting between the producer and the consumer are meatpacking companies. Four large packers, two of which are Brazilianowned, control almost 85% of the beef processing capacity in the United States and are seemingly able to control prices at their will. Meanwhile, our independent cattle producers – who we rely on to feed the world – can barely make enough to feed their families. We must redouble our efforts to fix this.” This is not fair to South Dakota producers who work day and night to raise healthy cattle. Current U.S. Secretary of Agriculture Tom Vilsack from Iowa is quoted as saying… “For every $1 spent on food, only 14¢ goes to farmers. Now is the time to transform our food system to create a fairer, more transparent system, so at the end of the day more of that dollar ends up in a farmer’s pocket.” I couldn’t agree more. The problem in this story is the middleman. Sitting between the producer and the consumer are meatpacking companies. Four large packers, two of which are Brazilian-owned, control almost 85% of the beef processing capacity in the United States and are seemingly able to control prices at their will. Meanwhile, our independent cattle producers – who we rely on to feed the world – can barely make enough to feed their families. We must redouble our efforts to fix this. Senator Tina Smith from Minnesota and I have launched a bipartisan, nationwide effort to defend our consumers and cattlemen. We led a broad coalition of 26 Members of Congress from across the ideological spectrum in sending a letter to Attorney General Merrick Garland, asking him to examine whether the influence large packers have over the market violates U.S. antitrust laws.
14 The bottom line
FROM CAPITOL HILL
A Tale of Two Pipelines
john Thune
United States Senator (R-S.D.)
The recent Colonial Pipeline hack was a stark reminder of the importance of American energy independence and security. Americans should never have to question whether they will have reliable and affordable access to energy and fuel, but lines at gas pumps across the northeast hearkened back to the 1970s, when conflict in the Middle East resulted in serious shortages in the United States. Over the last several decades, Republicans have prioritized efforts to ensure that our country can rely almost entirely on North American energy sources instead of imports from overseas – and we’ve made great strides. But for America to maintain its competitive energy posture, we cannot hamstring industries that have helped reduce our dependency on foreign energy. Unfortunately, President Biden has already begun to do just that, starting when he halted construction of the jobcreating Keystone XL pipeline on the first day of his presidency. The pipeline, which was already under construction, would have run through nine counties in South Dakota and brought economic growth to small towns like Philip and Murdo. Its cancellation will rob 11,000 Americans of goodpaying jobs – all because of exaggerated concerns over the environmental impact and an unrealistic and costly agenda to end the use of fossil fuels. Pipelines are the most environmentally responsible way of transporting oil, and even the Obama administration agreed that Keystone XL was the most environmentally sensitive approach compared to using rail or trucks. The
project’s emissions would also be entirely offset with a $1.7 billion investment in renewable energy. President Biden’s decision to cancel this infrastructure project was shortsighted and entirely counterproductive. The oil in question needs to be transported whether Keystone XL is built or not, especially as consumer demand for fuel rebounds. Given President Biden’s firm position on the Keystone XL pipeline, I find it particularly troubling that he took a notably different position on a pipeline being built from Russia to Germany – the Nord Stream 2 pipeline. His administration recently decided not to sanction the builders of the Russian pipeline because, as the president said, “It’s almost completely finished.” Allowing the successful construction of Nord Stream 2 will make our European allies more dependent on Russia’s energy monopoly for their energy supplies and serve an economic blow to Ukraine as it fends off Russian aggression. The president has talked aggressively about countering Russian President Vladimir Putin and his destabilizing agenda, but now, with a chance to do something about halting construction of the pipeline, President Biden is taking the pressure off. It’s a tale of two pipelines: our president has decided to allow the construction of Nord Stream 2, a Russian pipeline that will leave our European allies more vulnerable to Russia, and halted construction of Keystone XL, a pipeline that would create 11,000 American jobs and transport Canadian and American crude oil in the most environmentally safe way. Unfortunately, it feels like
the president is picking Russia’s energy monopoly, to the detriment of America and South Dakota’s energy independence, and putting politics over practicality. It’s not just President Biden who is pushing these kinds of left-wing energy policies. I’ve spoken out against the Democrats’ $259 billion “Clean Energy for America Act” because of its expansive wish list of new government spending. I’ve argued that if we want to make meaningful, fiscally responsible investments in American energy, it will require a real “all-the-above” approach. Since being elected to Congress, I have promoted the use of homegrown biofuels to help reduce carbon emissions from transportation, and many people may be surprised to learn that due to robust hydroelectric and wind energy, approximately 70 percent of South Dakota’s energy production is renewable. Still, President Biden and Democrats are wrong to increasingly minimize the critical role oil and natural gas play in ensuring affordable and reliable energy for all Americans. While I’m a longtime advocate of clean energy and clean fuels, the fact of the matter is that our economy is still going to need traditional sources of energy – namely oil and natural gas – for a long time to come. I hope Democrats change course and work with Republicans on delivering affordable and reliable energy to consumers, creating and expanding good-paying jobs for American workers, and securing American energy independence – all while lowering our emissions. ICBSD 2021 15
Stacy Hall
Vice President, Correspondent Account Executive West Gate Bank
Stacy Hall loves helping people solve problems. In her role as Vice President, Correspondent Account Executive for West Gate
PEOPLE
you should
KNOW By Twila Schmitt ICBSD Contributing Writer
Bank she has ample opportunities to do just that. West Gate Bank Correspondent Mortgage has been helping community banks provide home ownership to their customers by offering the right products, at the right price, in a fast and efficient manner for decades. “We work with over 150 lenders covering a 23-state area and we are expanding,” said Hall. “We pride ourselves in making the complex, simpler.” Hall is responsible for overseeing the North Central Region which covers North Dakota, South Dakota, Minnesota, Iowa, Oklahoma, Arkansas and Texas. While much of the day-to-day details can be handled via technology, she also has an extensive travel schedule. “I never in my life thought I would go to South Dakota as much as I have,” said Hall, who lives with her family in Tulsa, Oklahoma. “It’s a beautiful state.”
16 The bottom line
West Gate Bank is a state-chartered bank regulated by the Nebraska Department of Banking and the Federal Deposit Insurance Corporation. West Gate Bank was chartered in 1968 in Lincoln, Nebraska and currently has several branches serving the Omaha and Lincoln communities.
Hall loves to travel – for work and outside work. Their last family trip to South Dakota included landing in Sioux Falls, then driving across the state to Rapid City.
Hall said West Gate Bank’s Midwest origins are one of the organization’s strongest selling points. “Our servicing center is in Lincoln, Nebraska, where we will give you access to all of our staff to help you better serve your customers. Because of our size, we work with everyone,” she said. While she has a degree in marketing, Hall described herself as a non-traditional sales person. “I’m more of a get-to-know-you and start a friendship type,” she said. Hall completed the Mortgage Leadership Program through the Oklahoma Mortgage Bankers Association in 2019 and has her CMP (Certified Mortgage Professional) designation. She’s been in banking for 22 ½ years, with 17 years on the mortgage side. She started in banking shortly after moving to Arkansas in 1999 – working in a call center. “Every person in banking should have to work at a call center at some point,” she said. “You learn so much.” Since that time, she has gained experience working in all aspects of banking including auto loans and mortgages. Her current role at West Gate Bank includes signing up new clients, answering questions, underwriting and compliance – to name a few. In Hall’s day-to-day duties, she generally works with sales managers, secondary market managers and operations managers. She’s also worked with loan officers in smaller banks. “In some rural areas, with even smaller banks, I’ve worked with the bank presidents,” she said. Hall says community banks who partner with West Gate Bank will be better equipped to serve their customers with a choice of loan products. West Gate Bank products for community banks include: Fannie Mae conventional, FHA, VA, USDA and an inhouse jumbo product. They offer non-delegated or delegated lending authority. With increased regulations in the industry, smaller banks may not be able to hire all the staff to keep on top of the ever-changing times. This is where Hall’s expertise is invaluable.
“I love helping people solve problems,” said Hall. “My boss says I’m like a CIA agent.” Hall also said that it is important for community bankers to know that “your customers remain your customers” when working with West Gate Bank. We will not cross-sell other bank services on any loan we service. Hall will celebrate five years with West Gate in September. She and her husband, Beau, both work in the mortgage industry. They have two sons, Landon, 14, and Gavin, 19. While both sons excel playing lacrosse, Hall has recently taken up golf. “My golf game can best be described as ‘entertaining,’” she said. Hall loves to travel – for work and outside work. Their last family trip to South Dakota included landing in Sioux Falls, then driving across the state to Rapid City. “I always google what each city is known for ahead of time,” she said. “We were absolutely awed by the Dignity sculpture along the Missouri River.” Reflecting back to work, Hall said that West Gate’s underwriters are very familiar with South Dakota. “They understand about additional structures or expansive land on a property. Because of our size, we can work with anyone.” Hall ultimately credits her current career in banking to her father. “My dad always taught me to know your bankers because you’ll need them someday,” she said. Stacy Hall, VP, Correspondent Account Executive West Gate Bank, (402) 853-7318 ICBSD 2021 17
The Importance of a Strong
E-Commerce Strategy Teresa Ulven
“Not only will an e-commerce strategy make shopping online quick and easy for your customers, but it can also drive more noninterest income for your institution, something that has proven to be very important over the last year.”
18 The Thebottom Bottomline Line
Manager of The Advantage Network, an ICBSD Preferred Partner
Due to COVID-19 health and safety protocols, e-commerce has seen exponential growth. In 2020, digital commerce sales came in at more than $861 billion in the U.S. alone, which was up 44 percent from 2019. There are no signs of a slowdown any time soon. As a result, financial institutions everywhere have an amazing opportunity to meet their customers where they’re shopping: online.
non-interest income for you. Here are a few ways we can help encourage e-commerce amongst your cardholders.
Develop a Card-on-File strategy Perhaps one of the best ways to support your cardholders as they shop online is through a Card-on-File strategy. Card-on-File refers to the storage of a cardholder’s credentials or card information with a specific merchant,
Not only will an e-commerce strategy make shopping online quick and easy for your customers, but it can also drive more non-interest income for your institution, something that has proven to be very important over the last year.
which makes online shopping easy. We can
For over 40 years, The Advantage Network has helped financial institutions in this very way. Not only can these strategies help you better serve your customers, but they can also make a difference in your bottom line. When it comes to e-commerce, there are lots of ways to make debit card usage easier for your customers, which in turn can drive
to all of Visa’s analytics, marketing tools,
help identify if a cardholder has their card enrolled at specific merchants based on the transaction type. As a Visa partner, The Advantage Network and our member institutions have access services, and reports, including Visa Checkout, Visa’s card-on-file platform. With Visa Checkout, cardholders can store their debit card and billing information to make their online shopping faster, easier, and more secure, and can use it at any merchant where Visa Checkout is accepted.
Reward your cardholders for shopping online Debit card spending campaigns are a great way to reward cardholders for using their card(s) online. Effective incentives can range from cash back or a gift card. When you work with us, we can provide this type of marketing support, brochures, and other collateral to enhance your e-commerce strategy. We can customize a marketing campaign specific to your institution’s needs by reviewing your current program and seeing where a campaign would be beneficial to increase transaction volume. We can also discuss the different rewards programs available to see which one would be a good fit for your debit card program.
Promote digital wallets A digital wallet is a phone app or service that can be used to pay for purchases at participating stores. It’s the perfect way to make shopping and paying online quick
and easy for your customers. Mobile wallets provide a one-step checkout process, which allows the customer to skip having to enter their card and billing information, making the transactions seamless and secure. Instead, the customer simply holds their phone up to the terminal or enters their mobile wallet credentials online, and that’s it! No swiping cards or entering card numbers. By getting your card uploaded into a mobile wallet, you have the opportunity to increase the chances of a cardholder using their debit card, and therefore, increase your institution’s non-interest income. When you source your debit card production with us, we can provide hands-on service in implementing these programs.
Communicate security features of debit cards Some cardholders may be hesitant to shop online using their debit card due to security concerns. A great way to address these concerns and encourage
these cardholders to use their debit cards while shopping online is to educate and communicate about the security features of their card. As an issuer of Visa debit cards, we can offer information about Visa’s Zero Liability Policy, 24-hour fraud monitoring, transaction alerts, and card controls. Each of them offers different protection and peace of mind for your customers.
Want help creating a strategy like this? Work with us! As a regional leader in electronic funds transfer (EFT) services including debit card production, ATM driving, and more, we have the expertise and customer service to make your debit card program a success. To learn more about creating a powerful e-commerce strategy, please contact us. We’d love to work with you! Contact me at 605-335-5112 or tmulven@fnbsf.com. ICBSD 2021 2021 19
taking on the
family business Farmers State Bank, Canton, SD
Valerie
Anderson-Boudaka
President of Farmers State Bank
When Valerie Anderson-Boudaka took over as President of Farmers State Bank in Canton in November of 2019, she expected there would be a learning curve to conquer. What she didn’t expect was a global pandemic and the complete pandemonium that would follow. Fortunately, Valerie’s tremendous work ethic, extensive training and deep roots in community banking aided her through the challenges. Valerie hails from a family of community bankers who have operated in some of the most challenging times. Her dad, Bruce, began his role as president of Farmers State Bank in Marion in extraordinary times too; during the height of the farm crisis in 1982. He was just 30 years old, which officially made him the youngest bank president in South Dakota that year. Like her dad’s experience, Valerie’s first years as bank president have been nothing short of mundane!
HISTORY Farmers State Bank of Canton has been a special place for the Anderson family since the mid-1940’s beginning with 20 The bottom line
Valerie’s paternal grandparents. After World War II, Elmer Anderson took a job as teller and loan officer at Farmers State Bank of Canton. It was there that he met Eleanor Aasheim, who was employed as a bookkeeper. The two began to date, then were married in 1946. They later had three children: Bruce, Drew, and Teresa. Throughout their upbringing, the bank was an important place for their children, especially for Bruce and Drew, who followed in their father’s footsteps and pursued careers in banking. Bruce went on to work at Farmers State Bank in Canton throughout college. To Bruce’s disappointment, after graduating the bank did not have capacity to hire him full time as he had hoped. He was told to pursue employment with other banks and gain outside experience, so Bruce did just that. The formative years of Bruce’s career were spent familiarizing himself with insurance, bank operations, securities and bonds, lending and management at Farmers State Bank in Marion. Bruce also served on the banks board of directors.
While Valerie was attending college at Augustana in Sioux Falls, she began working at Wells Fargo as a teller. By the time she was a senior, at the age of twenty-one Valerie was the youngest person to successfully complete the Wells Fargo banker training program for loan officers. By the end of her senior year she was working twelve to fifteen hours per week as a loan officer while managing her full college course schedule. “Looking back, I’m grateful for the years of experience I received in Marion. It’s where I cut my teeth, learned all facets of bank operations and navigated difficult times. The experiences and knowledge I gained guided me throughout the rest of my career,” said Bruce. In 1982 Bruce was named president of Farmers State Bank in Marion. Interestingly, during this time his father was also serving as president of Farmers State Bank of Canton. Even by today’s standards, it is highly unusual to have a father and son running the same position in two, unrelated banks! After serving as president for two years, Bruce decided it was time to return home to Canton where his passion for banking first began. Bruce, alongside his father Elmer and brother Drew, saw an opportunity to purchase Farmers State Bank of Canton. After several years and a great deal of persistence, the Anderson men assumed ownership of Farmers State Bank of Canton in 1988. “The bank is a special place for our family. My parents met there. It is where I worked in college and discovered my passion for banking. I had hoped to work there full time after graduating but fate had different plans. Ownership brought it all full circle,” said Bruce. Given the era of their purchase, and all the challenges banks were facing as a result of the farm crisis, a lot can be said about the Anderson family’s commitment to their vision and passion for community
banking. Today, Farmers State Bank in Canton has over $60 million in assets and remains committed to serving the Canton and surrounding communities.
THE NEXT GENERATION In 2013, and after 43 years in the bank, Bruce retired as an owner of the very bank he began working at in college. To this day, he still serves as chairman of the board of directors. Prior to his retirement becoming official, Valerie returned to the family bank in 2011 allowing her the opportunity to work alongside her dad before his retirement. For Valerie, from a young age becoming a banker was something she always wanted to pursue. Valerie is now the third generation banker from the Anderson family to continue the family tradition, and has wasted no time embracing her role and making it her own. Valerie says she is grateful to have the opportunity to serve her community. “Growing up, I always knew I was going to be a banker. I am fortunate to have been dealt a great hand, I am committed to doing my best to play it,” said Valerie. “At thirty-five years old, Val is young given her professional accomplishments. What a lot of people don’t realize is she began working in the bank as a teller her junior year of high school. She has been in banking half of her life! Her tremendous drive to learn the industry and excel has served her very well and will continue to do so throughout her career,” said Bruce.
After graduating from college in 2008, Valerie’s plan to return to Canton and work full-time for the bank did not go as expected. She found herself in the same situation her father did after graduating college. Like her father, Valerie was encouraged to purse employment with another bank and gain outside experience. So, she did just that. Valerie stayed with Wells Fargo for a few months after graduating, then went on to hold various roles at TCF Bank and US Bank before returning home to Farmers State Bank in Canton as a loan officer. “They were great experiences! They really made me appreciate community banking!” said Valerie. After serving as a loan officer and vice president for eight years, Valerie became president of Farmers State Bank in Canton in November of 2019. Just four short months later, the COVID-19 pandemic struck making Valerie’s inaugural year anything but normal. “Working through the pandemic in my first few months as president helped me realize how fortunate we are to have long-term, hardworking and dedicated employees,” she explained. Despite the chaos, the pandemic and Paycheck Protection Program presented an opportunity to reach and retain new customers who otherwise would have been out of reach. For Valerie, the pandemic also reinforced the importance of her role as a community banker and her passion for community. ICBSD 2021 21
The Corporate Transparency Act: Will it Impact My Bank? On April 5, 2021, the Financial Crimes Enforcement Network (FinCEN) published an advanced notice of proposed rulemaking (ANPR) seeking feedback from financial institutions (and others) regarding the beneficial ownership reporting requirements to be adopted under the Corporate Transparency Act (CTA). This call to action presents financial institutions the opportunity to offer perspective and insights that may help inform FinCEN’s rulemaking in connection with beneficial ownership reporting. As many of you likely know, Congress passed the CTA in late 2020 as part of the Anti-Money Laundering Act of 2020 (which was included as part of the National Defense Authorization Act for Fiscal Year 2021 (NDAA)). U.S. government reports identified the ability to operate through legal entities without identifying such entities’ beneficial owners as a significant risk to the U.S. finance
system. Thus, Congress passed the CTA to develop a framework under which certain “reporting companies” would be required to report beneficial ownership information to FinCEN in order to protect U.S. national interests and better enable law enforcement to fight money laundering and other illicit activity.
What organizations will be required to report beneficial ownership information under the CTA? The CTA defines a “reporting company” as any corporation, limited liability company, or other similar entity that is (i) created by the filing of a document with a secretary of state or similar office under state (or tribal) law; or (ii) formed under the law of a foreign country and registered to do business in the U.S. by the filing of a document with a secretary of state or similar office under state (or tribal) law. Notably, the CTA does not generally consider banks, credit unions,
registered money transmitters, nonprofits, or certain larger entities operating at a physical office within the U.S. to be reporting companies for purposes of the beneficial ownership reporting requirements.
What kind of information will reporting companies need to provide FinCEN? The CTA requires a reporting company to provide FinCEN identifying information for each of the reporting company’s beneficial owners. A “beneficial owner” includes any individual who, directly or directly, exercises substantial control over the reporting company or who owns or controls not less than 25 percent of the ownership interests of the company. Beneficial owners do not include individuals acting as custodians or agents on behalf of another individual or individuals who have control over (or receive economic benefit from) a
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22 The bottom line
reporting company solely due to their status as employees of such company. Identifying information should include the beneficial owner’s full legal name, date of birth, current residential or street address, and a unique identifying number from an acceptable identification document. Reporting companies will have two years to submit their beneficial ownership information to FinCEN if those companies were formed or registered prior to the effective date of FinCEN’s implementing CTA regulations, which must be promulgated by January 1, 2022 but may have a later effective date. Reporting companies formed after the CTA regulations take effect will have an immediate reporting obligation.
How will FinCEN use the beneficial ownership information received under the CTA? Information reported to FinCEN under the CTA is confidential and may not be used or disclosed by FinCEN except as expressly permitted under the CTA and applicable CTA regulations. Permissible uses by FinCEN of such information include disclosure to (i) federal agencies engaged in national security, intelligence or law enforcement activity; (ii) state, local, or tribal law enforcement agencies if a court has authorized such agencies to seek the information in a criminal or civil investigation; (iii) financial institutions (with the consent of the reporting company) to facilitate compliance with customer due diligence requirements; and (iv) federal functional regulators or other appropriate regulatory agencies.
How will the CTA impact financial institutions’ beneficial ownership obligations under FinCEN’s customer due diligence (CDD) rule? In 2016, FinCEN promulgated the CDD rule, which requires financial institutions to identify the beneficial owner(s) of legal entity customers at the time a new account is opened and verify such identification according to risk-based procedures. Many
of the beneficial ownership reporting obligations under the CTA overlap with the CDD rule. For example, the definitions for who is a “beneficial owner” are substantially similar and both rules require similar information to be obtained from beneficial owners. Congress appears to be aware of the overlap between the CDD rule and the CTA. The NDAA also provides that, one year after the effective date of FinCEN’s CTA regulations, FinCEN should revise the CDD rule to bring it into conformance with the CTA and account for financial institution’s access to beneficial ownership information filed by reporting companies under the CTA. Unfortunately, this likely does not mean that financial institutions will be able to avoid collecting beneficial ownership information in the future. The NDAA also states that FinCEN’s revisions to the CCD rule should only account for financial institution’s access to beneficial ownership information under the CTA “in order to confirm the beneficial ownership information provided directly to the financial institution.” In addition, the NDAA states that FinCEN shall revise the CDD rule by rescinding paragraphs (b) through (j) of 31 C.F.R. § 1010.230 (the CDD rule). Even if these paragraphs were rescinded, paragraph (a) of the CCD rule would remain in effect. Paragraph (a) generally requires that financial institutions maintain procedures designed to identify and verify the beneficial owners of legal entity customers. Nonetheless, financial institutions have the opportunity to comment on the ANPR and provide feedback on how, in light of the CTA, some financial institution beneficial ownership obligations might be unnecessary or duplicative. For example, the ANPR specifically requests feedback on how FinCEN can make beneficial ownership information available to financial institutions with CDD obligations in order to make such information most useful to financial institutions. Responding to FinCEN’s request for comments on the
ANPR is one action financial institutions can take now to help shape how the CTA might impact financial institution’s obligations under the CDD rule. However, until FinCEN’s CTA regulations go into effect, and until FinCEN acts on the NDAA directive to revise the CDD rule to conform to the CTA, the CTA will have little immediate impact on financial institution’s beneficial ownership obligations.
written by Tiffany M. Miller
Miller is a partner at Davenport, Evans, Hurwitz & Smith, LLP Contact Tiffany at 605-357-1218 or tmiller@dehs.com
www.dehs.com ICBSD ICBSD 2021 2021 23
ATM THEFT On the Rise by Travelers, an ICBSD Preferred Partner
In addition to all of the everyday risks banks and credit unions need to guard against, the COVID-19 pandemic has resulted in a significant increase in the number of ATM thefts across the country. The spike hasn’t been surprising due to a number of factors, but the costs and damage resulting from these attacks are often considerable. Fortunately, there are steps banks and credit unions can take to help prevent becoming a victim of ATM theft. During challenging financial times when people are facing desperate situations, there is usually an uptick in bank robberies. There was an increase throughout the 2009 recession, for instance. With the pandemic in 2020, there was an increase in the U.S. unemployment rate, with more people out of work and ample time on their hands. Because COVID limited the number of people permitted in indoor facilities – or prevented them from entering altogether – bank lobby access was impacted, forcing more customers to use the ATM, which is often outside or in an entryway. Since more of a bank’s customers are not going into the lobby but instead are using the bank’s ATM, more money is being placed in the machines to meet demand. Thieves were quick to catch on to this practice, and began targeting ATMs with more frequency. Often, a vehicle or piece of construction equipment is used to dislodge and remove the entire ATM. 24 The bottom line
Travelers is committed to managing and mitigating risks and exposures, and does so backed by financial stability and a dedicated team – from underwriters to claim professionals – whose mission is to insure and protect a company’s assets. For more information, visit www.travelers.com or talk to your independent insurance agent about social engineering coverage. “Smash-and-grab events have become quite common, and they can be rather costly because in addition to the money lost, there is often physical damage to the building,” said Tracey Santor, Product Manager for Financial Institution Bonds at Travelers. “There are a number of steps banks should strongly consider taking to reduce this risk, including purchasing ATM insurance coverage.” Deterrents include: • Installing concrete barriers or bollards around the ATM to make it more difficult for thieves to access the machine using a vehicle or machinery. • Adding lighting and surveillance cameras. • Placing dye packs and GPS devices inside an ATM so if the machine is jostled or removed, the packs explode and the location can be tracked. Even though FI bond crime insurance coverage is required by regulators, ATM coverage is not mandatory, and it can
be added to the bond and P&C policy as an endorsement, even if the machine is not located on the premises. Without it, an ATM theft wouldn’t be a covered event. Insurance carriers such as Travelers have products and resources available so banks and credit unions have coverage when a crime occurs. According to a recent article from The Wall Street Journal, the number of attempted ATM smash-and-grabs increased by 150% from 2019 to 2020. Now is the time to ensure your bank has done everything possible to protect against this type of incident. To learn more, have a conversation with your insurance broker or agent, or reach out to an insurance carrier.
How to Maximize New PPP Loan Relationships Over the course of the past year, community banks took the spotlight for dedicating countless hours to ensure the survival of communities across the nation. You seamlessly adjusted operations to best serve your communities in safe and healthy ways. You maintained and excelled at constant communication with your account holders. The Onovative team applauds you and your teams for all the tremendous efforts over this tumultuous time. Through news outlets and personal stories, the world got a preview of what we have known for years serving this industry — community financial institutions are the backbone for many towns and neighborhoods across the United States.
Small Business Impact When mega banks failed them in their time of need, many small businesses recognized the value in the commitment and service from community financial institutions. Your teams leaped to secure funding for small businesses from the Personal Paycheck Protection (PPP) loan program. According to the Federal Reserve, 91% of small businesses applied for some type of emergency funding, and almost half of those requests were handled by small banks. An overwhelming 40% of loan dollars and 32% of loans approved for PPP round 2 so far were generated from community banks. Not only did you deliver, but you also provided a superior customer experience to both your new and existing relationships. A recent Federal Reserve report cites that 79% of independent businesses that used community banks to process their PPP loan report they were satisfied with their overall experience, compared with 67% for large banks and just 49% for online lenders. The Federal Reserve also reported that 95% of borrowers who went to a large bank for their PPP loan were existing customers of the institution, while nearly 20% of small banks’ PPP borrowers were net new to their institutions.
The high level of customer service provided by community banks during the pandemic led to referrals for PPP loans and new account openings. Through all the uncertainty of COVID-19, PPP loans allowed community banks to prove to both new and existing small business customers that you can be relied on.
Small Business Growth As PPP loan round 2 availability dwindles, or in many cases is exhausted, what’s next? Small business growth is trending optimistically with 41% of small business owners expecting to grow their revenue in 2021 and 37% considering expanding products and services. Community banks have a timely opportunity to build strong, long-lasting relationships with small businesses in the communities you serve. The time is now to position yourself as their financial institution for all their business needs beyond PPP.
Engage Business Account Holders Community banks have a unique opportunity to increase your engagement with your PPP loan account holders to further expand your relationships. Here are six key strategies to boost your communication touchpoints: 1. Onboarding – Communicate with account holders within 3 days of opening a new account. According to J.D. Power research, doing so has a significant impact on satisfaction. Onboarding your business relationships is just as important as any new consumer relationships. Any new business relationships gained through your PPP loan efforts should receive the full welcome experience into your bank. A simple phone call, email or letter can leave a lasting impression. 2. Personalization – Leverage the information attained through the PPP loan process. Make offers specific to those that
were existing account holders versus those that are brand new account holders. Use language specifically tailored to businesses with a professional tone rather than re-using general account holder language. 3. Nurture the Relationship – Schedule phone calls for relationship bankers to follow up and personally connect with your PPP loan account holders. 4. Multi-Channel Integration – Utilize email, postcards, letters, surveys, and phone calls to stay engaged and top of mind with your small business account holders. Don’t be afraid to “overcommunicate” - small businesses owners have limited time but want to stay in the know and appreciate the information. Ensure your messages are received by communicating several times using multiple mediums. 5. Business Financial Needs Assessment – Take into account the specific needs of the business you are engaging: Did they receive all the funds requested? More loan funds might be needed. Consider surveying your PPP relationships for what’s needed next. 6. Expand the Relationship – Incentivize your business accounts to expand the products and services they have with your bank. Cross-selling to your current business relationships is shown to produce positive ROI. With our Core iQ software, we have seen customers implement our automated cross-sell framework that has proven effective in expanding relationships. As you begin to crosssell to your new PPP loan relationships, promoting business checking accounts with a 90-day tracking window is recommended to allow business accounts time to convert.
To help you get started, we’ve provided a letter template for you to use to engage your PPP relationships with a cross-sell offer for a business checking account. Access this free template by scanning the QR code. ICBSD ICBSD 2021 2021 25
SOUTH DAKOTA'S INDEPENDENT COMMUNITY BANKERS
Hometown
Community Banking
heroes Month in Review
In celebration of Community Banking Month this past April, we gave a shout out to all of our friends in the banking industry especially local commercial officers - who went above and beyond to help support our local businesses during the pandemic. While our healthcare professionals were called upon to respond to the health crisis, our community banks were, and continue to be, the lifeline for struggling small businesses. We recognize your hard work, long hours and endless commitment to the customers and communities you serve. While April is Community Banking Month, we celebrate you all year long! Thank you!
KEEPING SOUTH DAKOTA'S MAIN STREETS STRONG During April Community Banking Month celebration, our bankers spoke with students at Northern State University and Lake Area Tech on the importance of community banks, why it is important to bank local and career opportunities within community banking.
26 The bottom line
ARE YOU READY TO GO DIGITAL? BUILD A POWERFUL E-COMMERCE STRATEGY Make online shopping and digital payments quick and easy for your customers and grow non-interest income for your institution. • Marketing support • Digital wallet implementation • Local customer service CALL ME TO LEARN MORE
TERESA THILL (605) 335-5112
ICBSD 2021 27
Munis
for the many Taxable municipal bonds have appeal for nearly all community banks.
BY JIM REBER President and CEO of ICBA Securities ICBA’s institutional, fixed-income broker-dealer for community banks
I have some good news for community bank portfolio managers who have grown weary of some or all of the following conditions that have persisted since 2020:
• declining portfolio returns • erratic cash flows • call option exposure • paltry yield spreads Chances are, your bank’s portfolio has been affected by at least some of these conditions over the past year. The wild ride in interest rates kept producing surprises for the bond portfolio, and, in truth, about the only thing positive to be said is that prices rose—then declined—over that period. So, banks’ positions have lost value in 2021, but current investment yields have improved, which illustrates the mixed blessing. Over time, one of the enduring determinants of investment performance is sector weighting. More specifically, the more a bond portfolio consists of municipal bonds, the more likely it will have above-peer yields. According to Vining Sparks, as of Dec. 31, 2020, municipal bonds made up 53% of top-quartile community bank portfolios. At the other end of the spectrum, the bottom quartile was only 9% invested in munis. Historically, the amount of munis a bank owns in large part has been determined by a bank’s need to avoid tax liability. Some depository balance sheets have simply
28 The bottom line
“The wild ride in interest rates kept producing surprises for the bond portfolio, and, in truth, about the only thing positive to be said is that prices rose—then declined— over that period. So, banks’ positions have lost value in 2021, but current investment yields have improved, which illustrates the mixed blessing.”
not had room for bonds, muni or otherwise. Others haven’t been profitable enough to worry about that option. Still others, such as S Corps, which pass through their earnings to their shareholders, don’t benefit from tax-free earnings.
ICBA Securities’ exclusively endorsed broker, Vining Sparks, is one of the largest SBA 7(a) poolers in the country. Vining Sparks is interested in purchasing guaranteed portions of SBA loans directly from your community bank. To inquire about selling SBA guarantees, and to view its inventory of fixed- and floating-rate SBA pools, contact your Vining Sparks sales rep or
www.viningsparks.com
welcome relief to the issues mentioned in the first paragraph. As supply has grown and the interest rate curve has steepened throughout 2021, taxable munis can serve a number of purposes, not the least of which is respectable return. An investor can also now realistically hope for an issue that’s
Supply shift Fast forward to the Tax Cuts and Jobs Act of 2017. Corporate tax rates were reduced around 40%. That was good news for bottom lines, but it lowered the effective yields on all taxeffected assets, such as traditional munis and bank-owned life insurance. Since that time, banks have shed about one-fifth of their tax-frees. Another subtle, but significant, feature in that legislation was to no longer allow muni issuers to “pre-refinance” their outstanding debt into other, new tax-free issues. These older bonds could only be refinanced into taxable issues going forward. That has had a major impact on the types of munis being issued in the current environment. In the 2020 calendar year, fully 30% of municipal bond issues were of the taxable variety. This is a decade-plus high-water mark. Less than 10 years ago, taxable munis were but a blip on the new issue screen. They’d constitute somewhere between 3% and 7% of total new issuances. In fact, the only year that taxable munis exceeded 2020’s volume was 2010, and that was purely a function of the narrow window for issuing Build America Bonds (BABs), a type of taxable munis only available for issue in 2009–2010.
Crowd pleasers Now to the afore-promised good news. If your community bank isn’t much invested in munis, taxables could bring some
reasonably proximate to its footprint. Speaking of returns, a high-grade general obligation taxable muni will out-yield a bank-qualified (BQ) issue at any point on the yield curve. As of this writing, a 10-year AA-rated BQ bond will have tax-equivalent yield of about 1.85%, whereas a similar-duration taxable will be about 2.10%. There are a number of reasons for this, including the relative lack of supply of BQ paper. Also, it bears mentioning that S Corp banks, if they’re able to have tax-free income, will recognize higher taxequivalent yields than their C Corp brethren. What’s the downside? Just like any other taxable security, municipal bonds will have a higher degree of price volatility than tax-frees. However, the additional price risk is less than it used to be back in the era of 36% marginal rates for C Corps. It’s anyone’s guess what the impact of higher marginal tax rates will be to the tax-free muni market, but on the face of it, higher rates should be supportive of tax-effected assets. In the meantime, the growing supply of taxable munis should continue to produce attractive yields. The supply, both in absolute dollars and for a given issue (which isn’t limited to $10 million per issuer per year that BQs are), should produce more than adequate liquidity. The benefits and availability of taxable munis should appeal to the many community banks looking for the right combination of risk and reward. ICBSD 2021 29
30 The bottom line
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