VOLUME 1 | 2022
INDEPENDENT AND PROUD OF IT
CREDIT UNION BANK PURCHASES POSE CONSUMER HARM PAGE 4
MEET THE 2022 ICBSD PREFERRED PARTNERS PAGE 9
AN ICBSD EXCLUSIVE MEMBER BENEFIT: BANKERS HELPING BANKERS PAGE 22
PEOPLE YOU SHOULD KNOW: BRENT J. KLANDERUD, FDIC, REGIONAL OMBUDSMAN PAGE 26
WEBINAR TIMES MOST WEBINARS ARE HELD AT 2:00 P.M. CENTRAL. MORNING WEBINARS ARE HELD AT 10:00 A.M. CENTRAL. CHECK BROCHURE COPY FOR TIMES.
2022 APRIL TO JUNE WEBINAR SCHEDULE 4/4/22 MON AM
New Beneficial Ownership Rules: Update & Implications, Deborah L. Crawford, Gettechnical Inc. Added Hot Topic 12/20/21
5/17/22
CONSUMER LENDING SERIES: Consumer Underwriting 101: From Application to Approval, Jeffery W. Johnson, Bankers Insight Group, LLC
4/5/22
DEPOSIT OPS SERIES: Payment Systems Bootcamp, Kimberly Ellis, UMACHA
5/18/22 MORNING
DEPOSIT OPS SERIES: Handling Trusts & Other Fiduciary Accounts Elizabeth Fast, Spencer Fane LLP
4/6/22
FRONTLINE SERIES: Minor Accounts: Ownership, CIP, Access, Changes & Transactions, Deborah L. Crawford, Gettechnical Inc.
5/19/22 60 MIN
The New ACH Rules on Prenotification & Micro-Entries Michele L. Barlow, Macha/PAR
4/12/22 MORNING
Surviving a BSA Exam: Recent Hot Spots Dawn Kincaid, Brode Consulting Services, Inc.
5/19/22
Building a Successful Cross-Selling Platform Tim Tivis, Pinnacle Training Group
4/12/22
ACH SERIES: ACH Origination: Internal, Loans, Transfers & More Michele L. Barlow, Macha/PAR
5/24/22
Community Reinvestment Act: Preparing for Regulatory Changes, Dawn Kincaid, Brode Consulting Services, Inc.
4/13/22
The Latest in Social Engineering Attacks – How to Protect Against Complex Threats, John Moeller, CLA
5/25/22 MORNING
Enhanced Due Diligence & Risk Assessment of ACH Customers Elizabeth Fast, Spencer Fane LLP
4/14/22
CALL REPORT SERIES: Call Reporting Basics, Michael Gordon & Kris Trainor, Mauldin & Jenkins, LLC
6/1/22 MORNING
When a Business Owner Dies, Sells, or Delegates Authority Elizabeth Fast, Spencer Fane LLP
4/19/22 MORNING
IRA & HSA: 2022’s Hottest Issues & Answers Frank J. LaLoggia, LaLoggia Consulting, Inc.
6/1/22 60 MIN
Faster Payments Basics, Kimberly Ellis, UMACHA
4/20/22
Writing Effective Credit Memos & Loan Narratives Molly Stull, Brode Consulting Services, Inc.
6/2/22
Interpreting Call Reports for the Board, Kira Sexton, CLA
4/20/22
Board-Level Policies: What Is Required & Why David A. Reed, Reed & Jolly, PLLC
6/7/22
Measure It to Manage It: Understanding Analytics & How to Determine Online Success, Eric C. Cook, WSI Internet Consulting
4/22/22 FRI AM
New FDIC Rule Changes for Trusts & Mortgage Servicing Accounts, Deborah L. Crawford, Gettechnical Inc. Added Hot Topic 1/27/22
6/8/22 60 MIN
Building a Better Board, Philip K. Smith, Gerrish Smith Tuck
6/9/22 MORNING
ACH SERIES: Electronic Payment Fraud: When Is Your Institution Liable? Elizabeth Fast, Spencer Fane LLP
6/15/22
FRONTLINE SERIES: Maintaining Business Accounts: Changing Principals, Changing Signers, Resolutions, Changing Products & More, Deborah L. Crawford, Gettechnical Inc.
4/26/22 MORNING
Compliance Training for the Frontline Dawn Kincaid, Brode Consulting Services, Inc.
4/27/22
Ag Lending Compliance Molly Stull, Brode Consulting Services, Inc.
5/4/22
DEI: Keeping It Compliant Diane Pape Reed, HR Doc
6/16/22
Decoding the Examination Process: 10 Essential Techniques to Thrive During Your Next Exam David A. Reed, Reed & Jolly, PLLC
5/4/22
BSA Compliance for Commercial Accounts: Beneficial Ownership & Beyond, David A. Reed, Reed & Jolly, PLLC
6/21/22
CONSUMER LENDING SERIES: Consumer Lending Collateral Considerations & Documentation, Elizabeth Fast, Spencer Fane LLP
5/5/22 MORNING
FRONTLINE SERIES: Maintaining Consumer Accounts: Adding Names, Changing Names, Removing Owners, Changing Product Types & More, Deborah L. Crawford, Gettechnical Inc.
6/22/22
Commercial Lending: Risks, Rewards, Controls & Common Mistakes, Jeffery W. Johnson, Bankers Insight Group, LLC
6/23/22
Identity Theft Red Flags & FACT Act Compliance David A. Reed, Reed & Jolly, PLLC
6/28/22
Mortgage Loan Origination: Critical Timing Requirements Molly Stull, Brode Consulting Services, Inc.
6/30/22 MORNING
Overdrafts Under Fire: Clarifying the Confusion Dawn Kincaid, Brode Consulting Services, Inc.
5/10/22
Reducing Mortgage Delinquency: Proactive Protection of the Bottom Line, David A. Reed, Reed & Jolly, PLLC
5/11/22 MORNING
ACH SERIES: Decoding ACH Return Reason Codes, Michele L. Barlow, Macha/PA
5/17/22 MORNING
Construction Loan Nuts & Bolts: Documentation, Sample Scenarios & Avoiding Errors, Dawn Kincaid, Brode Consulting Services, Inc.
2 | THE BOTTOM LINE
Updated 2/4/22
INSIDE THIS ISSUE
CONTENTS FROM THE DESK OF 4
President’s Message Credit Union Bank Purchases Pose Consumer Harm by Megan Olson
7
Rebeca’s Remarks Flourish by Rebeca Romero Rainery
9
Chairman’s Message Meet the 2022 ICBSD Preferred Partners by Brian Gilbert
10
Preferred Partner Spotlight
16
Chairman’s Message From the Top by Robert Fisher
VOLUME 1 | 2022
FROM CAPITOL HILL 18
Federal Delegate’s Report by Emily Hofer
19
2022 PAC 100 Contributors
COMMUNITY 20
Treasuries for the Win by Jim Reber
22
MEMBER BENEFIT Bankers Helping Bankers
26
People You Should Know by Hannah Merritt
28
Remote Work Considerations for South Dakota Banks by Tiffany Miller
IN THE NEWS 30
ICBSD Scholarship Recipients
34
Bankwest Named Apex Award Winner for Superior Employee Training
36
South Dakota Division of Banking Promotion Announcement
ICBSD 2022 | 3
FROM THE PRESIDENT’S DESK
CREDIT UNION BANK PURCHASES POSE CONSUMER HARM — Megan Olson, President & CEO of ICBSD
The dangerous trend of large credit unions using their federal tax exemption to acquire taxpaying community banks has resumed as the economy recovers from the coronavirus pandemic. The latest acquisition is the largest yet, with $11 billion-asset VyStar Credit Union in Jacksonville, Fla., using its tax subsidy to purchase a $1.6 billion community bank in Jonesboro, GA. While this trend might not have reached South Dakota just yet, it is cause for concern. Because these acquisitions diminish access to financial services in local communities, the ICBSD and other community banks are urging policymakers in Washington and Pierre to respond with hearings investigating this growing trend.
A GROWING TREND Unlike community banks, which contributed over $12 billion in tax revenue in 2020, the $1.7 trillion credit union industry enjoys a tax exemption worth at least $2 billion per year and rising, according to the Joint Committee on Taxation. This subsidy grows with each credit union acquisition of a community bank because the bank’s assets become tax-exempt. According to S&P Global data, there have been 93 acquisitions in the past 19 years—peaking at 21 in 2019— amounting to a loss of more than $264 million annually in federal income taxes.
CONSUMER HARM While nurses and teachers last year had a total tax liability of more than $56.6 billion and $19.8
4 | THE BOTTOM LINE
billion, respectively, these credit union acquisitions are about more than tax equity. This trend also affects consumers by increasing the portion of the financial services industry exempt from the Community Reinvestment Act, which assesses whether institutions are meeting the needs of low- and moderate-income communities. While the CRA applies to community banks and virtually every other depository institution, credit unions are fully exempt. Further, the credit union industry’s regulator—the National Credit Union Administration—continues expanding the powers of the industry it is charged with regulating without adequately examining compliance with consumer protection directives. For instance, the NCUA has allowed outside investors to profit from the credit union tax subsidy, repeatedly delayed capital requirements more than a decade after the financial crisis, and permitted credit unions to include wealthy suburbs of metropolitan areas in their fields of membership while leaving out their urban cores. These rules raise further questions about the justification for the tax exemption.
INDUSTRY CONSOLIDATION Ultimately, consolidation in the financial services industry reduces the availability of locally based financial institutions in communities most in need of them. According to the Independent Community Bankers of America, less than 10 percent of credit unions are physically located in economically
distressed communities. Community banks outnumber credit unions in low-income or distressed communities by a 2-1 margin. Traditional credit unions themselves are declining as larger credit unions expand. Credit unions in every asset category under $500 million lost both members and loans in 2020. Meanwhile, credit unions with over $1 billion in assets comprise 6 percent of the industry but 75 percent of its tax exemption.
CONGRESSIONAL REVIEW Community banks across the nation have led the financial response to the coronavirus pandemic, accounting for roughly 60 percent of Paycheck Protection Program loans and saving an estimated 33.7 million jobs in the first round alone. By contrast, these acquisitions run counter to the credit union industry’s founding mission of serving people of modest means with a common bond, which Congress established to justify its tax exemption.
BANKING CHANGES. OUR COMMITMENT TO YOU NEVER DOES.
With acquisitions likely to further increase as the economy reopens, South Dakota Legislature and Congress should hold hearings to investigate this trend and the and the credit union tax exemption role. Requesting a Government Accountability Office study on the evolution of the credit union industry and NCUA supervision would provide further insights into this growing trend. It would not be the first time Congress reconsidered a tax exemption in the financial services industry. In 1951, lawmakers revoked the tax exemption for building and loan associations, cooperative banks, and mutual savings banks, finding that these institutions operated much like commercial banks and should be taxed accordingly. As credit union acquisitions continue affecting local communities across the nation, now is the time for policymakers to investigate this troubling trend.
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2011
2021
Travelers becomes one of the first domestic markets to write Directors & Officers Liability insurance
Travelers CyberRisk coverage is introduced to the market
Travelers distributes more than $4 million to ICBA members participating in the policyholder dividend program
Throughout our long history, we’ve stayed focused on keeping community banks on the cutting edge. We do this with industry-leading specialists, expertise and offerings – all backed with local banking knowledge. Learn more at travelers.com/business-insurance/financial-institutions travelers.com Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183 This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverages referenced in this document may depend on underwriting qualifications and state regulations. © 2022 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. CP-9620 New 2-22
ICBSD 2022 | 5
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100 South Phillips Avenue, Sioux Falls (605) 335-5112 advantage-network.com
6 | THE BOTTOM LINE
FROM THE PRESIDENT’S DESK “In a world that’s so full of noise, the story we’re telling is compelling and resonates with our customers because it’s one of work centered around human connection, care and community.”
FLOURISH — Rebeca Romero Rainey, President & CEO of ICBA Harvard University education professor Dr. Howard Gardner said, “Stories constitute the single most powerful weapon in a leader’s arsenal.” As community bankers, we recognize the truth in that statement because our stories differentiate us, shape public perceptions and allow us to thrive in our roles as community caretakers. Right now, an unprecedented number of parties want to either be defined as banks or provide banking services. This competition has mounted over the past couple of years, making our unique stories more important than ever before. Our community-based missions and customer-first relationships distinguish us in today’s crowded marketplace. That’s why we must keep working at telling the story of who we are. We need to ensure that customers know and understand what makes us different, because what we stand for matters. Once, when my youngest daughter was about seven years old, a megabank was running a largescale ad campaign focusing on
how it served its “community.” When my daughter heard the commercial, a look of horror washed over her face. She turned to me and asked, “How can they say that? They’re not a community bank!” My first thought was that she had been listening to too many of my speeches, but at a second pass, I realized it was her experiences with her community bank— fiestas, county fairs, school fairs, holiday gatherings and more— that created that emotional connection for her. Those collective encounters shaped her perception of what it means to be a community bank. This proves that it’s not only the stories we tell, but the actions behind them, that make the impact. As relationship bankers, we go far beyond our financial offerings to create a connection with our customers. And we need to find a way to amplify that message. As you read this issue of Independent Banker, I hope you will consider how you can better
tell your stories to demonstrate that we are different—not just in words but, more importantly, in deeds. In a world that’s so full of noise, the story we’re telling is compelling and resonates with our customers, because it’s one of work centered around human connection, care and community. We have an incredible opportunity to show that what we do matters to the day-to-day workings of the communities we serve. So, let’s arm ourselves with the stories of our leadership to help stake a claim on the future of banking. Our customers deserve it.
CONNECT WITH REBECA @ROMERORAINEY
WHERE I’LL BE THIS MONTH I’ll be wrapping up ICBA LIVE in San Antonio, Texas, and then joining our friends at Independent Bankers Association of Texas (IBAT) for the annual Tour de Texas.
ICBSD 2022 | 7
8 | THE BOTTOM LINE
FROM THE CHAIRMAN’S DESK
2022 ICBSD PREFERRED PARTNERS — Brian Gilbert, Chairman of ICBSD Senior Vice President, The First National Bank of Sioux Falls
The mission of the ICBSD is to “exclusively promote and defend the common interests of independently owned and locally controlled South Dakota community banks whose services are vital to the preservation of economic diversity in rural America.” The successful execution of our mission would not be possible without the support of our bank and associate members. By attending ICBSD events and conferences, remitting membership dues, contributing to the PAC, and participating in grassroots campaigns, you are helping us ensure the future of community banking in the state remains alive and well! There is another group of members whose support is equally vital to the success of the association and our mission– the ICBSD 2022 Preferred Partners. Launched in 2019, the ICBSD Preferred Partnership
Program was designed to foster mutually beneficial relationships between South Dakota community bankers and the first-in-class businesses that support our great industry. These are the folks who are alongside us in the trenches day in and day out and arm us with resources and information necessary for our bankers to overcome challenges, stay on top of trends and regulations, and push the legislative needle forward. Their support gives us the ability to further advance the cause for community banks. Most community banks in South Dakota are lean operations with only a handful of full-time employees on staff. The day-to-day operation of the bank is a team effort requiring employees to wear multiple hats. ICBSD Preferred Partners are a resource we can count on for industry knowledge
and expertise. They offer bank members fantastic information whether on an impromptu phone call or at different conferences and retreats we attend. It’s not just their financial support that is important. It is their commitment and willingness to make us all better bankers, better organizations and better for our customers that is important! Our Preferred Partners make a tremendous time and financial commitment to our association and to the advancement of community banks in South Dakota. For this reason, when First National is looking for a new service provider or has an industry related question, we turn to our Preferred Partners first for a solution. I encourage you do to the same and show your support for those who support us!
2022 ICBSD PREFERRED PARTNERS: Bankers Healthcare Group | bankershealthcaregroup.com United Bankers’ Bank | ubb.com Bell Bank | bell.bank The Advantage Network | advantage-network.com Eide Bailly | eidebailly.com Federal Home Loan Bank of Des Moines | fhlbdm.com Shazam | shazam.net SBS CyberSecurity | sbscyber.com ICBA Securities | icbasecurities.com
ICBA Bancard | icba.org ICBM Insurance | minnesota.bank/ICBMInsurance Bankers’ Bank of the West | bbwest.com Travelers Insurance | travelers.com First District Development Company | fddc.1stdistrict.org Spectrum Financial West Gate Bank | westgate.bank SDN Communications | sdncommunications.com Davenport Evans Law Firm | dehs.com
ICBSD 2022 | 9
Preferred Partner
SPOTLIGHT BANKER HEALTHCARE GROUP Since 2001, BHG has been the #1 source for high-quality loans across the country. Today, over 1,400 banks have partnered with BHG to buy these superior loans through our online loan hub. BHG is originating record volume from high-earning borrowers with top-tier credit profiles. By partnering with BHG, community banks get access to phenomenal credit quality loans, earning a very strong return. Over the course of 20 years, no bank has ever taken a loss on the BHG Core Loan portfolio! Keith Gruebele • 954.263.6399 • bhgloanhub.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? Supporting the ICBSD and SD Bankers is a priority for BHG because we understand the challenges bankers face and the need for strategic partners that allow them to rise to these challenges. Our products, programs, technology and tools empower community banks to grow their bottom line and better serve their communities.
UNITED BANKERS’ BANK United Bankers’ Bank (UBB), the Nation’s First Bankers’ Bank is a trusted correspondent partner to more than 1,000 community banks. Since 1975, UBB has been an industry-leading source for innovative products, services and technologies to help community banks compete and serve the evolving needs of their customers. Our full-service approach establishes UBB as the central location for all of your correspondent banking needs. Jay Syverson • jays@ubb.com 952-885-9497 • ubb.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? UBB’s success is directly tied to the health and success of the community banks we serve. We have been a longtime, loyal partner and supporter of the ICBSD because of our shared commitment to ensuring that South Dakota community banks have the resources and solutions needed to be successful.
10 | THE BOTTOM LINE
BELL BANK Founded in 1966 in Fargo, N.D., Bell Bank (Member FDIC) is one of the nation’s largest and fastest growing independent, family- and employee-owned banks, with full-service banking locations in Minnesota, North Dakota and Arizona and more than $10 billion in assets. The company provides a broad range of financial services, including personal and commercial banking, wealth management, mortgage and insurance. Todd Holzwarth • 605.321.9197 • tholzwarth@bell.bank • bell.bank Why is supporting ICBSD and South Dakota community banks a priority for your organization? South Dakota community banks are the heart and soul of cities and towns all across the state. Here at Bell Bank, and as an associate member of ICBSD, I have the tools and resources to help community bankers make a difference where they live and work. It feels great!
THE ADVANTAGE NETWORK The Advantage Network is a regional leader in providing electronic funds transfer (EFT) services to financial institutions through FIS Global, Inc., one of the world’s leading technology providers. Through this partnership, we offer debit card services, card production, marketing support, ATM services, fraud monitoring, and more to help our member institutions grow their non-interest income. Teresa Thill • 605.335.5112 • advantage-network.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? Advantage loves supporting ICBSD because we are a community bank too! Whatever struggles or obstacles community banks in South Dakota are facing — or overcoming — we are likely encountering the same thing. We believe that local banks are better together.
EIDE BAILLEY We are a CPA and consulting firm dedicated to helping our clients grow, thrive and embrace opportunities and innovation. We’ll help you gain a new perspective of what’s possible and work with you to make that vision into reality. You’ll work with talented, down-to-earth people who are inspired to deliver outstanding expertise, care and results. In an ever-changing and evolving environment, we’ll be there with inspired ideas and solutions to tackle risk and propel you forward. Tom Fogarty • 605.367.6719 • eidebailly.com
ICBSD 2022 | 11
SBS CYBER SECURITY
CyberSecurity
SBS CyberSecurity helps business leaders identify and understand cybersecurity risks to make more informed and proactive business decisions. Since 2004, SBS has been dedicated to assisting organizations with the implementation of valuable risk management programs and mitigating cybersecurity risks. SBS provides turnkey offerings tailored to each client’s needs, including risk management solutions, network security, consulting, auditing, and education. The company has worked with thousands of organizations globally, including financial institutions ranging in asset size from $12 million to over $130 billion. Robb Nielsen • 605.251.7375 • sbscyber.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? SBS was founded in 2004 due to the need for assistance from South Dakota community banks in creating tailored Information Security Programs and meeting regulatory requirements. While the reach of SBS has grown beyond the South Dakota borders, continuing to support community banks at home is always our top priority.
FIRST DISTRICT DEVELOPMENT COMPANY First District Development Company offers affordable financing for small businesses. Working in partnership with community lenders, our loans are designed to fuel small businesses across South Dakota by offering favorable terms and rates that benefit borrowers and lenders. Operating since 1983, FDDC is committed to job growth and community economic development in our state. Paula Hulscher • 605.882.5115 • fddc.1stdistrict.org Why is supporting ICBSD and South Dakota community banks a priority for your organization? As lenders, we are concerned about our changing business environment and finding ways to make financing affordable to keep our South Dakota businesses and communities vibrant. This aligns with ICBSD and community banks interests as advocates for their communities and customers. Together, FDDC and community banks, can have a larger impact.
12 | THE BOTTOM LINE
BANKERS’ BANK OF THE WEST We champion community banking. A non-competing provider of correspondent solutions since 1980, Bankers’ Bank of the West (Member FDIC) supports community banks with high-quality, affordable solutions needed to compete in today’s marketplace—backed by deep expertise, superior customer service, and problem-solving assistance. 303.291.3700 • bbwest.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? Bankers’ Bank of the West’s mission is to: Champion Community Banks. The alignment of our mission-driven industry-leading products and services provides unparalleled support for enhancing the success of South Dakota Community Banks and the Independent Community Bankers of South Dakota.
TRAVELERS INSURANCE Travelers insurance products for banks include property, general liability, auto, umbrella, workers’ compensation, D&O, financial institution bonds, professional liability, kidnap and ransom, fiduciary liability, employment practices liability, identity fraud, and CyberRisk. travelers.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? Throughout our long history, we’ve stayed focused on keeping community banks on the cutting edge. We do this with industry-leading specialists, expertise and offerings – all backed with local banking knowledge.
ICBSD 2022 | 13
DAVENPORT EVANS Davenport Evans provides sophisticated legal guidance to protect your interests in today’s evolving financial services industry. 605.336.2880 • info@dehs.com • dehs.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? Community banks are the backbone of South Dakota’s hometowns. Their involvement in supporting local businesses and farms is critical to the ongoing vitality of our communities. They also provide leadership to important local organizations. ICBSD provides essential support in these efforts. Davenport Evans Law Firm is proud to support the ICBSD and our state’s community bankers.
ICBM INSURANCE Formed in 1997 with a vision to match each bank with the best coverage and pricing available in the market, ICBM Insurance is an independent insurance agency owned by ICBM. We focus on the success of ICBSD members. Through relationships with major insurance companies, ICBSD members are provided with a wide variety of valuable insurance resources. kburr@minnesota.bank • 320.248.5039 • minnesota.bank/icbminsurance Why is supporting ICBSD and South Dakota community banks a priority for your organization? The success of community banking is priority one! As previous bankers, we structure your coverage from a banker’s standpoint, which means you receive specialized coverage and not just a boiler-plate product. Our goal is to always put you in a position to make an informed decision about your coverage.
WEST GATE BANK For over 10 years West Gate Bank Correspondent Mortgage has aided community banks in providing homeownership opportunities to their customers by offering the right products, at the right price, in a fast and efficient manner. Partner with us in making the complex, simpler. We offer; delegated & Non-Delegated relationships, “Full Service” Broker relationships, providing end-to-end fulfillment, FNMA, FHA, VA, USDA, and Portfolios Solutions (such as Jumbo) to serve your borrower’s needs. Stacy Hall • shall@westgate.bank • 402.853.7318 Why is supporting ICBSD and South Dakota community banks a priority for your organization? Recognized as a top ICB in 2020, WGB understands pivotal issues and emerging needs of community banks like those in South Dakota. We look forward to providing a mortgage solution for your customers and growing your communities.
14 | THE BOTTOM LINE
ICBA SECURITIES ICBA Securities Corporation (ICBA Securities)is a subsidiary of the ICBA (Independent Community Bankers of America) that was founded in 1989 following two years of intensive research by ICBA’s Bank Services Committee. Based on the proposals submitted and lengthy interviews, the Committee selected Vining Sparks to serve as ICBA Securities’ exclusively endorsed broker. jreber@icbasecurities.com • 800.422.6442 • icbasecurities.com Why is supporting ICBSD and South Dakota community banks a priority for your organization? Bond portfolios are more important to a community bank’s earnings than ever before, and we take very seriously our role in helping the members create a wellstructured collection of investments. We are also privileged to be a Preferred Partner of ICBSD, and to return a portion of our earnings to our affiliates in the form of royalties.
ICBA BANCARD ICBA Bancard® is the payment services subsidiary of the Independent Community Bankers of America and has been providing payments solutions to the nation’s community banks since 1985. ICBA Bancard offers community banks comprehensive and affordable payments solutions (credit, debit, merchant, and small-business payments solutions) with the best group pricing, service levels, and unique benefits that would otherwise not be available to individual banks, including its Fraud Loss Protection Plan. ICBA Bancard’s advocacy, education, and marketing support are valued benefits to clients of all sizes that trust ICBA Bancard for their payments needs. tinagiorgio • 800.242.4770 • icba.org/bancard/about-us Why is supporting ICBSD and South Dakota community banks a priority for your organization? Community banks are the engines that drive local economies; ICBA Bancard’s programs and services are designed to help South Dakota’s community banks flourish in the payments space.
ICBSD 2022 | 15
FROM THE CHAIRMAN’S DESK
FROM THE TOP — Robert Fisher, Chairman of ICBA President, CEO and chairman of Tioga State Bank in Spencer, N.Y.
Our financial system is unique in the world. No other country has such a diversified financial services network. And the role we play as community banks is important to our local communities and vital to the economy of this country. We represent a critical part of the nation’s infrastructure for four key reasons:
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We are here for customers in good times and bad. For example, my bank had a business customer who left for the (allegedly) greener pastures of a larger, multinational bank. During their time with the megabank, they experienced financial difficulties and found their bank to be decidedly absent. So, they brought their business back to us, and as a community bank, we worked with them to help them get back on their feet—because, as community bankers, we do what is right for our customers and the community.
We are the lifeblood of small businesses. Small business is what drives our national economy, and without community banks, these businesses would not be able to flourish. Take our actions around the Paycheck Protection Program (PPP), where community banks took a leap of faith to provide a much-needed lifeline to small businesses nationwide. While we represent less than a quarter of total banking assets in the U.S., we made nearly 60% of the total PPP loan amount.
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We are the economic engines that make our communities hum. Money that is deposited in a community bank gets reinvested back into that community through commercial loans, consumer mortgage loans and even municipal bonds. Money stays local and amplifies the financial standing of the community.
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We work from a longer-term perspective, not the latest quarterly results. We want to improve our communities, because that is where we live and work. We give generously and support nonprofits with donations of money, leadership and volunteers.
16 | THE BOTTOM LINE
MY TOP 4 My closing advice as chairman: Don’t put off your bucket list items. Here are mine: 1 Travel more globally. 2 Go parachuting. 3 Learn to play the guitar. 4 Drive as many cool cars as possible.
In today’s environment, our industry is under assault from overzealous regulators, lawmakers, subsidized competitors and other companies looking to enter the banking space. Now more than ever, it is essential that we come together to fight for community banking. One way to bolster our efforts is to support the Independent Community Bankers Political Action Committee, or ICBPAC. Community banks have an amazing reputation on Capitol Hill, and we need to leverage it to have our voices heard and drive necessary change. In short, we need more bankers involved and giving. I encourage you to get engaged in whatever way you can with ICBA this year. Working together, we can protect our communities and make a positive difference in every area we serve.
“Community banks have an amazing reputation on Capitol Hill, and we need to leverage it to have our voices heard and drive necessary change.”
CONNECT WITH ROBERT @ROBERTMFISHER
ICBSD 2022 | 17
FROM THE FEDERAL DELEGATE
FEDERAL DELEGATE’S REPORT — Emily Hofer, ICBA National Director Merchants State Bank, Freeman, SD
This will be my last report to you, as my term as Federal Delegate will end with this year’s ICBA LIVE 2022 event in San Antonio, TX. ICBA LIVE 2022 was March 27, and I enjoyed my time networking with Community Bankers from across the country, hearing and learning from industry experts, and refreshing my passion for Community Banking! With the convention behind us, I am now starting another role with ICBA after this year’s convention, as I’ve been asked to serve on the ICB Political Action Committee. So…you will most likely hear from me again in the future. It has been a wonderful experience to serve on the Federal Delegate Board. In addition to advocating for our industry and helping to steer
ICBA’s policy and regulatory priorities, I have had some fantastic opportunities over the years, including an invitation to the White House during President Trump’s administration, meetings at the Federal Reserve in the Governors’ Boardroom in Washington, DC, and discussions with many regulators and policy-makers. I have always considered serving our state and national associations as one of the best parts of my job as a Community Banker. The best part of being a leadership banker with ICBA is meeting and learning from Community Bankers from across the country. The depth of knowledge, shared experiences, sense of community, and passion for our industry is always amazing to me, when I visit with these bankers. Thank you for selecting me to fill this role for the last six years. Val Anderson-Boudaka, President of the Farmers State Bank of Canton, has taken over this role. I have worked alongside Val at several ICBSD meetings over the past few years, and I know she shares my passion and enthusiasm for our great industry. Val will represent us South Dakota Community Bankers very well!
“The best part of being a leadership banker with ICBA is meeting and learning from Community Bankers from across the country. The depth of knowledge, shared experiences, sense of community, and passion for our industry is always amazing to me, when I visit with these bankers.”
18 | THE BOTTOM LINE
SUPPORT THE ICBSD PAC
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PAC 100 CONTRIBUTORS The PAC 100 Club recognizes the individuals who have contributed $100 to the ICBSD PAC. The Century Club recognizes the banks whose entire board of directors has contributed $100 to the ICBSD PAC.
THANK YOU TO THE FOLLOWING INDIVIDUALS AND BANKS FOR YOUR SUPPORT! CENTURY CLUB BANK Farmers State Bank of Canton * Reliabank Dakota *
BRUCE ANDERSON
VALERIE ANDERSON-BOUDAKA
Farmers State Bank of Canton
Farmers State Bank of Canton
BRYAN LAUNDERVILLE
KIRK RIKANSRUD
Farmers State Bank of Canton
Farmers State Bank of Canton
JOHN RIPLEY
DAVID JOHNSON
Farmers State Bank of Canton
Reliabank Dakota
JAN JOHNSON
HUGH BARTELS
Reliabank Dakota
Reliabank Dakota
JOSH HOGUE
JANE SWENSON
Reliabank Dakota
Reliabank Dakota
REID JOHNSON
DAVID EBBERS
Reliabank Dakota
Reliabank Dakota
JEREMEY KEIZER
BOB SMITHBACK
Reliabank Dakota
Reliabank Dakota
MARK LEE Reliabank Dakota
ABOUT PAC The ICBSD Political Action Committee helps provide South Dakota community banks with a strong, united voice in Pierre. Your participation in the PAC helps ensure we have a seat at the table when issues affecting community banking are being discussed in the state capitol.
GET INVOLVED Thank you in advance for your support of the ICBSD PAC. To make a contribution or to learn more, email Megan at Megan@ ICBSD.com. Checks can be mailed to: ICBSD PAC PO Box 615 Watertown, SD 57201.
* DENOTES BANKS WITH 100% BOARD PARTICIPATION
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TREASURIES FOR THE WIN! LOW YIELD SPREADS SEND COMMUNITY BANKS BACK TO THE BASICS — Jim Reber, President ICBA Securities
I’ll let you in on a secret: sometimes your columnist runs out of new ideas to cover. A dearth of new products, no new regs, a stable rate environment— All of these can cause a writer to run aground while sailing the financial seas in search of material. Then it dawns on me: I’ve never covered treasury securities! For the most part, you should be glad. This sector over the past quarter-century has gradually receded into the background of bank portfolio management as community bankers everywhere have been on the hunt for higher returns. For all of the treasuries’ built-in benefits, there’s the fact that they yield less than anything else on your brokers’ offering menus. While the treasury yield curve is the basis from which your entire balance sheet is priced, as investments they’ve at best been an afterthought.
UST’S HISTORICAL ROLE As to why I’m bothering to cover a sector that community banks don’t own, there’s more to this story than meets the eye, and besides, it’s possible the readers have forgotten some of the more salient points. Being the master of the obvious, I’ll point out that treasuries have unmatched credit quality and liquidity. There are other features that portfolio managers prefer, such as the fact that an investor can pick nearly any maturity out to 30 years, and that small block sizes trade at virtually the same prices as large blocks. There was also a
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time and place when bank investment portfolios regularly contained treasuries. If we were to look back a generation, we’d see that mortgage-backed securities (MBS) in particular weren’t highly represented. Several factors working in concert have changed the attitudes and objectives of portfolio managers. First, the long-term trend toward lower interest rates since the 1980’s has contributed to smaller net interest margins, and hence the urgency for incremental yield. Secondly, investors of all stripes, and community banks in particular, have made it their business to be more sophisticated in their understanding of available options. Thirdly, MBS underwriters have continued to bring new products to market, many of which are coveted by bank portfolio managers. Two examples are Collateralized Mortgage Obligations (CMOs) and “prepayment friction” MBS. The typical community bank’s bond portfolio now has the majority of its investments in the mortgage security category.
WHAT CHANGED IN 2021? So why now are community banks reverting to old practices, at a time when nominal rates are still low, and loan demand is tepid at best? As you may have heard, yield spreads on traditional investments are at an all-time low. For example, if a banker were to purchase a simple five-year agency bond, he or she can expect to get three basis points (0.03%) more yield than the five-year Treasury note. In the not-too-
distant past, that spread would have been 15 to 20 basis points. As to why incremental yield is so hard to come by, the simple explanation is that supply/demand is at work. The still-massive amounts of uninvested cash in the banking system, chasing supplies of banksuitable bonds that really aren’t growing much if at all, have resulted in narrowing spreads. I for one certainly wouldn’t relish the notion of buying an agency bond versus a treasury at these levels. In 2021, around 40 percent of the government-backed bonds which community banks purchased were treasuries, according to Vining Sparks. That is by far the highest amount in decades.
HOPED-FOR OUTCOMES What is the endgame for this strategy? Certainly, a bond portfolio stuffed full of zero-percent riskweighted bonds that have no optionality really isn’t a recipe for outperforming one’s peers. There are several possibilities. One is that yield spreads widen, if not to 1990’s levels, then at least to 2010’s. When that happens, the most efficient bonds swaps of all time can be executed: sell a treasury, and buy an identical-duration agency, MBS, or municipal bond. Another outcome is that the yield curve flattens (which nearly always happens when the Fed hikes rates), and the total returns on the longer treasuries in the portfolio actually hold up very well.
Most optimistically, loan demand shows up, and the investor can dump the treasuries in short order and turn them into much higher-yielding credits. So there you have it. If you have recently considered the buying of treasuries in lieu of the more traditional sectors, given the paltry incremental rewards, just know that you’d be in good company. And with any luck, you are finished reading about the wonders of U.S. treasury securities for the next 20 years.
2022 WEBINAR SERIES WILL COMMENCE SOON ICBA Securities and its exclusive broker Vining Sparks will again present a sevenpart webinar series, Community Banking Matters. The first event is Feb.22 at 10 AM Central. CPE credit of one hour is offered for each webinar. For more information visit www.viningsparks.com.
Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks.
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The past several years have been good ones, by and large, for community bankers. The combination of lower federal taxes and robust economic conditions have resulted in record performance for many community banks nationwide. Against the backdrop of the pandemic, community bank performance has been upheld, largely due to fee income from the Paycheck Protection Program. But even as we have enjoyed the good times, every one of us is aware of the storm clouds building on the horizon. The prospect of entering 2022 in a continued low-interest-rate environment is bad enough. Layer on other concerns like challenges from new (and historic) competitors, changing customer expectations, increasing scrutiny from regulators and a bevy of bad ideas from Congress, it’s enough to have any community banker concerned about their future. As an industry, we are at a watershed moment. We can continue the slow decline in the number of charters and watch our communities become worse off for it. Or we can fight for the future and our place in it.
This ICBSD featured article is powered by BHG 22 | THE BOTTOM LINE
FEATURE ARTICLE ICBSD MEMBER BENEFIT
The traditional value of a trade association has always been simple: We can live together or you can die alone. That’s why we come together for legislative and regulatory advocacy. It is why we work together to identify group buying discounts through endorsed providers. We are the embodiment of the simple truth that together we can do more than we could ever accomplish alone. There is no cavalry riding in to save the day. We are the only hope for our own survival and, as such, we must come together like never before. With these thoughts in mind, IBAT is proud to announce the launch of Bankers Helping Bankers (BHB), a collaboration with FedFis, a fintech providing data transformation for financial institutions. The new program is supported by community banking associations nationwide, as well as the Independent Community Bankers of America (ICBA).
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HOW IT ALL STARTED “I’m willing to throw a punch.” Those are the words that began the long march to the launch of Bankers Helping Bankers back in 2019. The willing puncher, IBAT President and CEO Christopher Williston, was commiserating with FedFis CEO Dave Mayo about the plight of community bankers’ access to the latest technology and the confusion associated with selecting the proper tools. The lack of transparency and a preponderance of misinformation in the industry were making technology decisions more challenging than they needed to be. Mayo explained to Williston how FedFis’ bank technology data could be used to help bankers make faster, better decisions when selecting new products and services. “It’s math,” Mayo says. “Not opinion. There is too much opinion in technology discussions and it’s killing the banks. Someone has got to punch back.” So, with IBAT’s support, FedFis got to punching. That led to the development of FinTegration Strategist, a product launched by IBAT and FedFis in 2020 that allows bankers seeking new technology products the ability to see what was running in all of other banks like theirs.
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“After successfully selling FinTegration Strategist for the first half of 2020, we revisited our initial plans and ultimately decided that the best way to help the most bankers as quickly as possible was to offer it without cost,” Williston says. “That led us to expedite plans to launch Bankers Helping Bankers.” “Community bankers need answers,” Mayo says. They’ve confided in Mayo that “misinformation, regulatory burden, changing customer expectations and warp-speed technological evolution are just too much for community banks to weather. We believe bankers can make the right decisions and thrive if they have the right information— period. That’s why IBAT, FedFis and community banking associations around the country have partnered to pioneer an entirely new way for banks to band together—by forming a community of bankers in which conversations are driven by facts and data. The community banking associations have delivered the missing information that bankers needed to unlock the amazing opportunity that only a small number of banks have tapped into. Finally, there is hope for community banking, the backbone of our country.”
WHAT IS BANKERS HELPING BANKERS? Bankers Helping Bankers is much more than a data tool, although data tools are a major deliverable through the platform. “BHB is a collaboration hub online,” Williston notes. “It’s a place where bankers can talk to one another in a safe bankers-only community.” Upon logging in, bankers are put into user groups with: • Every bank in the country that is using their same core provider platform; • Every bank in the country that is using their same online banking platform; • Every bank in their state; and • Every bank in the U.S. “The FedFis data set contains the technology stack data on every bank in the country,” Williston says. “We’re leveraging that to put bankers into discussion in true user groups to have the conversations they need to have for real collaboration.”
WHY MAKE IT FREE? “It’s not free,” Mayo says, “it’s free for bankers. Vendors are supporting community banking with their sponsorship of the BHB program because they know we
INSIDE THE PLATFORM
Bankers Helping Bankers is a social community at its core. Its intelligence layer powers the community engagement, acting as a social engine. BHB achieves this data-driven engagement in these key ways:
are all in this boat together and we’d better work together or we will all fail together. Bankers Helping Bankers is the place to join the fight.”
HELPING COMMUNITY BANKING NATIONWIDE Bankers Helping Bankers may have been born deep in the heart of Texas, but the vision is for it to help bankers far beyond the borders of the Lone Star State. “We have always believed that partnering with state banking associations was the imperative step to distributing BHB to banks around the country,” Williston notes. “State associations are where the rubber meets the road. They have the relationships with the bankers—and they have their trust. If anyone else was delivering BHB, the noble intentions of the platform would be met with suspicion.” IBAT and FedFis are offering participation in BHB to all members of the 26 state trade associations that affiliate with ICBA. Additional states will be brought into the fold through collaboration with ICBA and other partnerships. “This is an opportunity for those state banking associations to add value to their membership,” Williston says, “but we’re not stopping there. We plan for a portion of all income from Bankers Helping Bankers to be distributed back to ICBA-affiliated state trade associations to ensure that we maintain independent voices for community banks throughout the country.”
HOW DO I ACCESS BHB? IBAT member banks now have full access to Bankers Helping Bankers. To learn more, visit www. bankershelpingbankers.com or email Rachel Jeske at rjeske@ibat.org using the subject line “BHB Access.”
SOCIAL PLUS: BHB personalizes the banks experience— recommendations, interactions, digital strategy and even discussions—by grouping banks’ discussions by topics, partners and peers. This is a new, elevated conversation based on information bankers haven’t had before. FINTECH DIRECTORY: All U.S. fintechs that provide a banking function (requires a sponsor bank) are included in the database. It is the only directory built by data, which ensures completeness. Search all of a fintech’s features and app store data (number of installs, age of app and ratings, and view the digital experience of the fintech). VENDOR DUE DILIGENCE: The technology selection process for community banks has long been broken. Community bankers need vendors that integrate with a bank’s current technology and pass the regulatory hurdle of “three live installs.” Using AI algorithms, FinTegration Strategist precisely defines your recommended product shortlist. BANK DIGITAL SNAPSHOT: Find your bank peers, view that community bank’s digital experience through its app(s), financial KPIs and call report financial KPIs. SMART VENDOR DIRECTORY: BHB offers a definitive list of vendors with at least one live bank install. Learn where vendors serve their customers best by asset size and financial KPIs of their install base. EDUCATION: Get data-driven education and thought leadership to stay on top of news, industry trends and cutting-edge innovations.
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BRENT J. KLANDERUD FDIC, REGIONAL OMBUDSMAN — Hannah Merritt
SETTING THE STANDARD FDIC Regional Ombudsman Brent Klanderud has fostered a prosperous career in community bank supervision that spans nearly forty years. While many factors can be attributed to his success, one of the most influential comes from experience he gained at the start of his career examining community banks. “I examined community banks right out of the gate when I first joined the Federal Deposit Insurance Corporation. Like most community bankers that I was interacting with, I found myself using many different skills daily– management, interpersonal, investigative-as well as accounting skills. I also learned something that only the real world could teach me; banking is relational, not transactional,” said Brent. Brent says he learned the value that was created when banks remained loyal to customers in good times and, most importantly, the value of supporting them through the hard times with integrity and a well-thought-out plan. This experience was eyeopening during the formative years of his career and helped prepare him for his role as Regional Ombudsman. From his experience working with those community banks throughout the years, he set a first in class standard for establishing trust and building relationships with everyone he works with. Nearly four decades later, this standard continues to guide him.
AN INDEPENDENT, NEUTRAL & CONFIDENTIAL RESOURCE Following his time examining community banks, his career with the FDIC led him to several different opportunities throughout Iowa, Nebraska and Missouri ranging from bank examiner, case manager, field supervisor, and everything in-between. Brent even spent two years working at the national level in Washington, D.C. conducting review work. Combined, these experiences helped him have a strong background in a diverse group of disciplines, which further prepared him for his role as Regional Ombudsman.
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Brent was hired to the Ombudsman’s Office in 2020. Relationships and outreach are a large part of Brent’s job. In an average year, he engages with all trade associations (such as ICBSD), seven state banking departments (such as the South Dakota Division of Banking), 80 to 100 banks throughout a seven-state region (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) and internal outreach where he stays on top of examination topics. “The goal of my outreach is to connect with bankers and let them know we are an independent, neutral and confidential resource available to them for questions, concerns, etc. Our job is to understand the challenge, assist in problem resolution when we can, and report industry feedback to senior leadership. Therefore relationships and trust are important. Without both, we wouldn’t be able to do our job successfully,” said Brent. Brent enjoys traveling and meeting with bankers in person, but unfortunately, COVID-19 has limited his outreach to phone calls and virtual meetings. Despite this change, Brent and his team remain committed to being an open line of communication for bankers. The issues that Brent typically works on are wide-ranging but can
include questions about a specific bank exam, regulatory processes, exam scheduling and perceived rating discrepancies, to name a few. Looking to the future, Brent hears of many challenges that banks face not the least of which include having a strong cyber security program and creatively addressing staffing shortages. Other prominent issues conveyed by the industry include earnings challenges and opportunities for regulatory relief. When he is not at work, Brent enjoys golfing, biking and enjoying the outdoors in his vintage Volkswagen camper with his family. For the past sixteen years, Brent has also taught Bank Management Simulation at the Graduate School of Banking at Colorado in Boulder, CO. “It’s a great outlet and a way for me to interact and build relationships with the bankers and regulatory personnel who are coming through the program.”
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REMOTE WORK CONSIDERATIONS FOR SOUTH DAKOTA BANKS — Tiffany Miller, Davenport Evans
Over the past several years, employers have worked to provide flexible work environments in response to the COVID-19 pandemic. Employees have taken advantage of these opportunities and are likely to continue to request flexible work environments in the future, including the option to work remotely. Offering remote work opportunities can be beneficial to banks. In a tight labor market, offering remote work options may help banks recruit and retain talent. However, allowing employees to work remotely can also create business and legal risks for banks. Before banks authorize employees to work remotely, we recommend taking into consideration the following:
1. WHAT ACTIVITIES WILL THE REMOTE EMPLOYEE PERFORM FOR THE BANK? Banks should ensure that an employee’s activities at a remote location do not result in such location being deemed a “branch” or, in the case of South Dakota state banks, a “loan production office.” Under federal law, a branch is typically defined as a place “at which deposits are received, checks paid, or money lent.” Thus, banks should make sure those activities (receiving deposits, paying checks, or disbursing loan proceeds) do not occur at an employee’s remote location to avoid creating a branch under federal law. South Dakota state banks face a slightly broader definition of the term “branch,” which is defined under South Dakota law as a “place of business maintained by a bank to conduct its banking business.” While working remotely, a bank employee would almost certainly be conducting banking business. But, as long as the remote employee’s location is not “maintained” by the bank, there presumably are no branching issues under South Dakota law when employees work remotely. South Dakota state banks also face a regulatory wrinkle in the case of loan production offices (LPOs), which are required to be approved by the Director of the South Dakota Division of Banking. South Dakota law defines an LPO as a
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place “where loans are solicited but not approved or disbursed.” To avoid the risk that a remote employee’s location might be considered an LPO, banks should ensure that: (i) the employee’s location is not open to the public; and (ii) the remote employee does not have in-person interaction with existing or potential loan customers at the remote location. Notably, national banks do not face this LPO issue because federal law does not require prior regulatory approval for a national bank to establish an LPO.
2. DO SOUTH DAKOTA BANKS NEED TO WORRY ABOUT THE LAWS OF ANOTHER STATE WHEN HIRING REMOTE EMPLOYEES? If the remote employee’s workplace is in another state, yes. South Dakota has become a hub for the financial services industry thanks, in part, to its business-friendly laws. For example, South Dakota has no income tax and is an employment-at-will state (i.e., absent a written employment agreement, employment relationships may be terminated without a specific cause). However, if a remote employee’s location is in another state, the laws of that state will apply to the remote employee. Thus, the bank will need to consider whether the laws of the state of the remote employee’s location have tax implications for the bank (i.e., providing a nexus for taxation of bank operations in the state). In addition,
the communication. Therefore, banks obtaining remote employee consent before implementing monitoring systems should be compliant with federal and South Dakota law. However, banks with remote employees in other states will need to consult the laws of such states to determine whether additional monitoring limitations apply. For example, some states require “2 party consent,” meaning that the banks with remote employees in those states would need to obtain consent from both the remote employee and the individual with whom the employee is communicating in order to record communications.
the bank will need to determine whether the state imposes other requirements on employers in that state, including, but not limited to, requirements related to employee leave, employee background checks, worker’s compensation, privacy, and a myriad of other employee protections.
3. DOES THE BANK INTEND TO MONITOR REMOTE EMPLOYEES’ WORK PRODUCTIVITY? Under federal law, it is generally illegal for any person to intentionally intercept electronic communications unless the interception is accomplished in the ordinary course of business or with the prior consent of one of the parties to the communication. As a result, if a bank’s employee monitoring system allows the bank to intercept business and personal activity conducted on a remote employee’s computer, such monitoring could require the consent of the employee to be permissible under federal law. State laws may also apply to limit the bank’s monitoring of remote employees. While South Dakota law generally prohibits intercepting communications via an “eavesdropping device,” this prohibition contains exceptions similar to federal law and does not apply if the interception is conducted in the ordinary course of business or with the consent of the sender or receiver of
4. HAS THE BANK ADOPTED SUFFICIENT POLICIES AND PROCEDURES TO ADDRESS CONFIDENTIALITY OF CUSTOMER INFORMATION? Banks are subject to robust federal and state data security requirements designed to ensure the confidentiality of customer information. Remote locations may lack the privacy that is otherwise afforded at bank locations, and banks’ policies and procedures should require remote employees to maintain customer confidentiality, including during verbal conversations or when printing or reviewing written documents, so that sensitive customer information is not overheard or intercepted by others. Unfortunately, banks are also prime targets for phishing and other malware attacks. If an employee can access the bank’s systems and customer information remotely, the bank will need robust data security procedures in place to address such remote access, including, for example, robust password and dual authentication requirements in the event the remote employee loses bank equipment (e.g., computer or phone) or is hacked via an unsecure internet connection. Establishing remote work options for bank employees requires careful thought and consideration. If your bank has, or is considering hiring, remote employees, the attorneys at Davenport Evans are ready to help you navigate the various issues that arise.
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IN THE NEWS
CONGRATULATIONS TO THE 2021 ICBSD SCHOLARSHIP RECIPIENTS!
Annabelle Hlavac South Dakota State University Presented by: Dick & Mike Behl, Farmers and Merchants State Bank
True Thorne South Dakota State University Presented by: Crystal Penn, American Bank and Trust
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Addy Gilbert South Dakota State University Presented by: Joe Miller, First National Bank in Sioux Falls
Riley Benning Lake Area Technical College
Kianna Payer Mount Marty University Presented by: Candyce Mogck, Bank West
Samuel Stroup Northern State University
Presented by: Josh Houge, Reliabank Dakota
Nathan Hulscher University of Sioux Falls
ABOUT THE ICBSD SCHOLARSHIP: Independent community banks and those who work within them are vital to the success and longevity of our communities throughout South Dakota. The ICBSD scholarship was designed to encourage students to pursue a career in community banking, increase public awareness of locally owned banks and their contributions to the community. The ICBSD awarded ten, $1,000.00 scholarships to eligible high school seniors or post-secondary students who are enrolling or are currently enrolled at an accredited two or four year college, university, or community/technical school in South Dakota.
Anna Dargatz South Dakota State University Presented by: Samuel Flakus, First Fidelity Bank
Megan Baloun South Dakota State University Presented by: Pat Watson, Bank West
APPLICANTS WERE REQUIRED TO MEET THE FOLLOWING CRITERIA:
Todd Holzwarth Call me at 605.321.9197
– Based in Sioux Falls, S.D. Serving South Dakota, North Dakota, northwest Iowa, southwest Minnesota
Whatever Loan You Need, We Can Help.
34966
www.bell.bank Applicants must currently attend, or have plans to attend, a Whether your loan is large or small, South Dakota college, university get faster turnaround from our or technical school. experienced correspondent team. Applicants parents/guardians Reg. O loans | Holding company loans & lines of credit must currently be employed | Equipment financing | Participation loans by a community bank, or the applicant has been employed by Member FDIC the bank. Applicants must be enrolled in an eligible school for the 2021- 34966 AD Independent Community Bankers of SD 2022_Todd.indd 3/9/22 1 8:58 AM 2022 school year.
Austin Fawn University of South Dakota Presented by: Cindy Rohrbach, First Bank of Roscoe
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FACES OF BANK VALUE
From left to right: Michael Klinger, Assistant Vice President; Tom Wittenberg, Junior Financial Analyst; Yolanda Gu, Financial Analyst
New loan growth continues to be a challenge as most banks are extremely liquid with excess deposits. Net interest margin compression is at the top of everyone’s mind so finding alternative ways to grow profitability in a low interest rate environment is a challenge all bankers are facing. United Bankers’ Bank provides loan participations as well as comprehensive investment services. Both of these provide opportunities for community banks to deploy excess liquidity into loan growth and increased interest income. We presently have approximately $200MM down-streamed loans to our respondent banks, delivering earnings to their income statements. UBB Securities utilizes a total balance sheet approach to investment portfolio management which ensures banks are adding incremental income in a strategic, cash flow-focused manner to structure balance sheets for success in months and years ahead. UBB BankValue is comprised of experienced valuation advisors. With backgrounds ranging from accredited appraisers to institutional risk management and more, the team is well equipped to help you make important business decisions. From bank stock valuations, shareholder agreements and fairness opinions, to market research, to confidential merger and acquisition assistance, the BankValue team can assist you every step of the way.
With backgrounds ranging from accredited appraisers to institutional risk management and more, the BankValue team is well equipped to help you make important business decisions.
1650 W 82nd Street Suite 1500 Bloomington, MN 55431 Contact: michael.klinger@ubb.com Call: 952-866-9525 Visit: www.ubbbankvalue.com
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2 0 2
J uly
2
e t a Save The D
Born to ROCK
K N BA
GET READY TO ROCK at the 2022 ICBSD Black Hills Retreat!
July 28-30, 2022 Deadwood Mountain Grand Deadwood, SD Registration details coming soon to ICBSD.com
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IN THE NEWS
BANKWEST NAMED APEX AWARD WINNER FOR SUPERIOR EMPLOYEE TRAINING BankWest was recently named an APEX Award honoree for the company’s excellence in employer-sponsored training and development programs. Training magazine, a business publication for Learning and Development professionals, recently announced the winners of the newly rebranded Training APEX Awards (formerly the Training Top 100). “As COVID-19 continues to spark change in our professional (and personal) worlds, we made the decision to rebrand our Training Top 100 to the Training APEX Awards to reflect the winners’ journey to attain peak performance in employee training and development and organizational success,” explains TrainingEditor/Publisher Lorri Freifeld. “We salute these best-in-class organizations for their laser-focused commitment to learning and development, their brilliance in continuing to successfully deliver training despite the ongoing pandemic, and their unwavering belief that Training Matters—and not only can it change the world, but transform it.” The APEX Awards ranking is based on myriad benchmarking statistics and a range of qualitative and quantitative factors, including: total training budget, percentage of payroll, scope of training programs provided, detailed formal and informal training programs, training linked to business goals, and business outcomes resulting from training. “Learning and development in community banks is typically on-thejob training. It is common for a community bank to have a minimal L&D staff focused on technical skills only,” explains Becky Burke, Vice President of Strategic Initiatives for BankWest. “However, BankWest has a robust L&D staff that facilitates training, eLearning and employee development. BankWest takes pride in hiring the best of the best and equipping them with the training to deliver the highest level of customer care.”
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“BankWest takes pride in hiring the best of the best and equipping them with the training to deliver the highest level of customer care.”
IC B SD C H A IRM A N B R I A N GI LBE R T C O R D I ALLY I N V I T E S YO U TO E NJOY A N A F T E R N O O N AT T HE SP O R T I N G C L AY C O UR SE I N S UP P O R T O F T HE I C B SD PAC.
MAY 19, 2 02 2 H UNT E R’ S P O I N T E S H O O T I N G C O M P LE X 45 7 4 3 2 60 T H ST R E E T H UM BO LD T, S O U T H DAKO TA RE G IST R AT I O N • 1 : 00- 2 : 00 P M C ST
SH O O T ING BE G INS AT 2: 00 F O LLOW E D BY D I N N E R AN D R E M AR KS BY SP E C IA L G UE ST, SD SU HE AD F O O T BALL C OAC H JO HN ST I E GE LM E I E R . WE KIND LY AS K YO U TO B R I N G P R O T E C T I V E E YE W E A R AN D A T WE L V E-GA UG E SH O T GUN . AM M UN I T I O N W I LL BE P R OV I DE D. $2 0 0 P E R SH O O T E R, P R O C E E D S W I LL BE N E F I T W I T H I C B SD PAC. P L E ASE R E GI ST E R AT I C B SD.C O M
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IN THE NEWS
SOUTH DAKOTA DIVISION OF BANKING PROMOTION ANNOUNCEMENT THE SOUTH DAKOTA DIVISION OF BANKING IS PROUD TO ANNOUNCE THE PROMOTION OF BRAD PESICKA TO TRAINING DIRECTOR - TRUST. Brad will continue to participate on examinations, but will be assisting more with administrative functions, including oversight of the Division’s Career Enhancement Program. Brad started with the Division in 2014 and works out of Sioux Falls.
Division of Banking South Dakota Department of Labor and Regulation 1601 N. Harrison Avenue, Suite 1, Pierre, SD 57501 • 605.773.3421 • banking@state.sd.us
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THANK YOU
2022 ICBSD PREFERRED PARTNERS FOR YOUR CONTINUED SUPPORT!
CyberSecurity
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P.O. BOX 615 WATERTOWN, SD 57201 605.878.3040
ICBSD.COM
