Volume III 2021
The
Independent and proud of it!
Bottom Line
South Dakota Strong:
A Preview of the 2021 ICBSD Fall Directors & Management Conference
Portfolios Morph:
2021-2022 ICBSD Board of Directors IRS Reporting Mandates
Investment Securities Have Undergone Big Changes This Year 2021 Black Hills Retreat in Review
www.icbsd.comwww.icbsd.com
THE
BHG LOAN HUB #1 Source for Top-Performing Loans
Gain exclusive access to our secure, state-of-the-art loan delivery platform and learn how more than 1,200 community banks have earned over $750MM in interest income since 2001.
HOW DOES IT WORK?
1.
2.
Log in to BHG’s state-of-the-art loan delivery platform — The BHG Loan Hub
Review and underwrite complete loan packages to make informed decisions with ease
3. Bid on or purchase loans with the click of a button
Visit BHGLoanHub.com/ICBSD to gain access.
contents
INSIDE This Issue ICBSD 2021
FROM THE DESK OF 2 President’s Message by Megan Olson, President & CEO of ICBSD
5 Rebeca’s Remarks
Flourish by Rebeca Romero Rainey, President & CEO of ICBA
6 From the ICBSD
9
Chairman by Brian Gilbert, Senior Vice President, First National Bank in Sioux Falls
From the ICBA Chairman From the Top by Robert M. Fisher, Chairman of ICBA FROM CAPITOL HILL
11 Federal Delegate’s
12
18
outh Dakota Strong: S 2021 Fall Directors & Management Conference
22 Steven Bumann Elected to Federal Home Loan Bank of Des Moines Board of Directors Federal Home Loan Bank of Des Moines
23 Best Lawyers
® 2022 Recognized 17 Davenport Evans Lawyers Davenport Evans
24 Casey Derflinger Joins
BankWest as Northern Hills Manager BankWest
ICBSD PAC: Contribute Today!
26 Portfolios Morph
15 Help Wanted
by Senator John Thune
megan@icbsd.com
Tradition & Rich History at the 2021 Black Hills Retreat
25 Kelly Harnett Named
Rounds, Thune, Colleagues Announce Bipartisan American Beef Labeling Act to Reinstate Mandatory Country of Origin Labeling by Senator Mike Rounds
P.O. Box 615, Watertown, SD 57201 605.878.3040
16 Celebrating Deep
Report by Emily Hofer, CFO, Merchants State Bank, Freeman, SD, ICBA National Director
13 ICBSD Board of Directors 14 Rounds’ Report
www.icbsd.com
Community spirit
BankWest’s Newest Mortgage Originator BankWest
Investment Securities have Undergone Big Changes this Year by Jim Reber, President and CEO, ICBA Securities
28 United Bankers’ Bank’s
and J Outlaw Consulting Announce Partnership to Provide Check Vendor Contract Negotiation Services United Bankers’ Bank
President’s Message From the president
Megan Olson, President & CEO of ICBSD
Community Bankers,
“I urge you to join this grassroots effort by sending notice of this resource to your colleagues and customers. This resource is a customizable letter that can be sent on your behalf to your members of congress opposing this proposal.”
megan@icbsd.com
2 The bottom line
As you are no doubt aware, policymakers in Washington are pushing a proposal to impose new IRS reporting mandates on all consumer and business bank accounts. This reporting would require your bank to report all transactions $600 or greater to the IRS regardless of account holder consent and their tax liability. ICBSD and ICBA vigorously oppose this proposal and, in an effort to counter this plan, I am sharing details of the new grassroots advocacy campaign ICBA recently launched that encourages community banks – and their customers – to weigh in directly with their members of Congress and voice their opposition. In response to this proposal, I am sharing with you a complimentary resource available to you as bankers and your customers. I urge you to join this grassroots effort by sending notice of this resource to your colleagues and customers. This resource is a customizable letter that can be sent on your behalf to your members of congress opposing this proposal. Simply go to the link below, sign your name and the letter will be sent to your members of congress based on your zip code. Customizable Resource: https://www.icba.org/bank-locally/consumer-alert-from-icba. We have had a strong response so far from both community bankers and their customers. We hope, with your assistance, to reach an even larger audience. Thank you in advance for your efforts and support!
JOIN THE GRASSROOTS EFFORT
www.icba.org/bank-locally/consumer-alert-from-icba.
D IRECTOR S & M A NAG E M E N T CO N F E RE NC E GOL F & GATHER
CO NFE RE NC E
Wednesday, October 6th Great Shots Sioux Falls, SD 5:00 pm - 8:00 pm Central
Thursday, October 7th Sioux Falls Convention Center Sioux Falls, SD 9:00 am - 4:00 pm Central
ICBS D Members - $275.0 0
○
No n-Me m be rs - $ 350.0 0
*pricing includes the golf and gather social and the fall conference
ICBSD 2021 3
MOVE YOUR BANK
FORWARD With local service and regional expertise. • EFT services • Customer service and support • Correspondent banking CALL US TO LEARN MORE
TERESA THILL (605) 335-5112
MICHAEL HAHN (605) 335-5117 Please join us for the 2021 ICBSD PAC golf scramble. Boulder Canyon Country Club 12312 US Highway 14A, Sturgis, SD 57785 1PM Shotgun Start.
4 The bottom line
Rebeca’s Remarks Flourish From the president
Rebeca Romero Rainey, President & CEO of ICBA
A 2020 U.S. Government Accountability Office report concluded that a “very small” community bank could spend up to 2.4% of operating expenses on Bank Secrecy Act (BSA) work alone. And costs are rising, with more than half of compliance officers expecting to
“There is a need for strong voices to weigh in on how new regulation will affect our communities and the customers we serve.”
make an increase in their budgets. This doesn’t seem to match up with what makes community banking different. Being relationship bankers, we pride ourselves and our industry on going the extra mile – or miles, as proven by your heroic efforts during the Paycheck Protection Program – to serve our customers and communities. Now we’re facing a wave of potential new regulations. A Thomson Reuters survey indicated that 78% of bankers expect an additional barrage of regulatory information to hit the scene in the next year. This would mean more staff time would be absorbed into analyzing, assessing and implementing new guidance. This points to the need for strong voices to weigh in on how new regulation will affect our communities and the customers we serve. As we get wind of the conversations circulating on Capitol Hill, know that ICBA will be here for our industry every step of the way. We, as community bankers, must speak up on behalf of a regulatory framework that is reasonable, facilitates strong commerce and allows for flexibility for community banks and their customers. Know that ICBA will continue to advocate on your behalf. We encourage you to join ICBA in this fight. Speak to your representatives and senators and let them know what you need to better serve your communities. Take advantage of the resources in our Take Action Be Heard Action Center (icba.org/beheard). Reach out to ICBA staff to ensure you have support in addressing the most pressing issues of the day. And read on to get the latest on compliance and regulatory developments and advances in technology that may help you mitigate their effects. I’m a firm believer that our perspective shapes the outcome of a situation. It’s our job to remain positive while working to move the needle in the right direction. We have a strong track record in advocating for shifts that support the greater good of our customers and our communities, and we have the benefit of leading from a place of mission: serving our communities. By keeping that perspective at the front of our efforts, we will prevail.
What You Need to Know @romerorainey
Understanding new developments in regulation readies you to better respond to evolving compliance requirements and expectations. Join us virtually in October for the Compliance Institute to learn more. icba.org/events ICBSD 2021 5
bdgilbert@fnbsf.com
From the Chairman’s Desk
From the Chairman
rian Gilbert, Senior Vice President B First National Bank in Sioux Falls
It is an exciting time to be part of South Dakota community banking! Looking back at the past year and a half, I am reminded “the more things change, the more they stay the same.” COIVD-19 changed all aspects of our lives and the ways in which we conduct business. Yet, despite these changes community banks have remained focused on their number one priority – their communities. When the ground was shifting below our customers, our foundations remained deeply rooted in our commitment to helping those around us succeed. As a community banker myself, I recognize the success of independent community banks is vital for the growth of South Dakota families, farmers and ranchers and businesses now and for future generations to come. I am humbled and proud to have the opportunity to serve on the ICBSD board, and work alongside you all! I grew up on a farm outside of Hitchcock where I still play an active role within the operation. As a kid, witnessing the synergetic relationship between our farm family and our local community bank sparked an interest that has turned into a fulfilling, twenty year career in community banking. Most recently, I have spent the last fourteen years with First National Bank in Sioux Falls. It is an honor to serve as the 20212022 chairman of the board, and I look forward to working with you all in the upcoming year! I would also like to express my gratitude for Roger Weber, immediate past chairman of the board, 6 The bottom line
for his commitment to community banking and service within the ICBSD. Advocating and promoting an environment where South Dakota’s community banks can thrive is at the forefront of everything we do at the ICBSD. It is our job to monitor policy changes and understand how they will impact South Dakota community banks, customers and the communities we serve. While there are many ‘hot topics’ within policy changes, here are three we are keeping a close watch on: 1. IRS Mandated Reporting – As you already know, a proposal from the Biden administration has advanced that would require community banks and other financial institutions to report transactions of all business and personal accounts worth more than $600.00 to the Internal Revenue Service. Account holder consent is not required. This is problematic for both consumers and community banks. Not only is this an unprecedented invasion of privacy, this proposal will push consumers away from relationship banking. It will also create a backlog of reporting responsibilities on already strained bank staff, and overload the IRS with sensitive, personally identifiable information making it a desirable target for data hackers. 2. Stepped-up Basis – Another recent proposal from the Biden administration includes the possibility of eliminating the stepped-up basis. The stepped-up basis allows families to leave certain assets to their heirs and allows them to pay capital gains
FASTFACTS n H ometown: Hitchcock, SD n F amily: Brian married his high school sweetheart, Ann! They have been married for 19 years and have three children: Addy (senior), Camden (sophomore), Natalie (sixth grade) n E ducation: • 2002 graduate of SDSU, BS in Ag Business and Economics raduate School of Banking •G •S outh Dakota Agriculture and Rural Leadership Program n Goals for Association: Continue to be a leader and partner with our state and national elected officials to help push issues that will allow community banks to thrive and ultimately help our South Dakota communities flourish. n Community involvement: •S outh Dakota Cattlemen’s Foundation board • Dakota Business Finance board •S ioux Falls Stockyards Experience board • I ndependent Community Bankers of South Dakota board. He is also an active volunteer in the Sioux Falls and Dell Rapids communities, and an active member of a community committee that is responsible for helping build a new school for St. Mary’s in Dell Rapids.
taxes only on the property’s increase in value since it was inherited. If this proposal is signed into law, its impact would be detrimental to rural Americans including South Dakota’s farm families, ranchers and business owners. The goal of many farm and ranch families is to keep the land in the family in hopes that it will continue to prosper enough that future family members have the opportunity to partake. Eliminating stepped-up basis would result in a massive tax burden on families which may prevent them from continuing the tradition and legacy of their family business. 3. ECORA (Enhancing Credit Opportunities in Rural America Act) – ECORA is intended to lower the cost for farmers and ranchers to acquire credit in rural America. It would create equity in agricultural real estate and lower costs
for farmers to acquire credit. With Ag commodities being very volatile and profitability being very cyclical, and with the cost of land and inputs on the rise, ECORA would help level the playing field for South Dakota farmers and ranchers. It will help them to do more with less, narrow profit margins. As community bankers, we must all speak out on behalf of our industry. We must help our lawmakers understand the effects these proposals (good, bad or otherwise) have on our institutions and the customers we serve. I strongly believe that with a positive approach and an open mind we can have a positive influence on the outcome of these proposals. To find contact information for local and national legislators, visit ICBSD.com/contact-your-legislator. ICBSD 2021 2021 7
8 The bottom line
@ RobertMFisher
From the Top
From the Chairman Robert M. Fisher, Chairman of ICBA
“It’s our responsibility to help make our communities better places to live, to help pull people out of poverty and address issues they’re facing.” When I consider what differentiates us as community bankers,
directly to its projects. This formalizes our philanthropic efforts
I’m immediately drawn to the legacy of good we create. We
and creates continuity in our approach. No matter what shifts
care for those in our communities not because we have to,
or changes in our landscape, the foundation helps to shore up
but because they are our friends, neighbors and relatives. It’s
the good we will do in the future and establishes the bar for
our responsibility to help make our communities better places
continuing this work in perpetuity.
to live, to help pull people out of poverty and address issues they’re facing. And we build a long-lasting positive impact,
I’m pleased to report that in our first fully operational year,
because that’s what community banking is all about.
we’ve been able to back a number of critical community programs with foundation grants. We supported summer school
At Tioga State Bank, we have formalized this process and solidified our commitment to our community through our foundation. We have always been a bank that gives back, but a few years ago, we decided to institutionalize our giving. Now, we have a foundation where 5% of our annual net income goes
programs for kids in need. We assisted theater and fine arts programs that were hit hard by COVID-19. We helped our local libraries provide deeper reading and learning opportunities. And, closest to my heart, we have been providing ongoing support to our local hospice center, Mercy House. One of our directors had an aggressive form of prostate cancer and spent his last days there. For the past few years, we’ve partnered with the Buffalo Bills Alumni Foundation to host an annual 5K for
myTOP3
Community banks can raise awareness of how they give back in three ways:
prostate cancer awareness, benefiting the center. As a team, we find it so rewarding to personally honor his memory through our support of these efforts. But I know I’m not alone in this. Every community banker has these impactful narratives to share. These banks have gone above and beyond to serve their communities in times of need.
1. P ost these activities on social
So, as you read their stories, I invite you to consider your own
2. I ssue a press release with event
to be remembered, let’s ask ourselves: What better way is
media
photos to local media
3. H ighlight these efforts in customer newsletters
legacy of good and think about how you can share these experiences more broadly. As we contemplate how we want there than being identified as caregivers of our customers and communities? I think that’s a community bank distinction worth celebrating. ICBSD 2021 9
A Leader in Banking & Regulatory Law Davenport Evans provides the sophisticated legal guidance you need to protect your interests in today’s evolving financial services industry. • Prepaid and Credit Card Products • State and Federal Regulatory Compliance • Commercial Litigation • Employment Law • Mergers and Acquisitions • Loan Documentation
• Creditors’ Rights and Bankruptcy • Trust Administration • Estate Planning • Real Estate Law • e-Commerce, Internet and Technology
Call your Davenport Evans lawyer to stay ahead of risk and ready for innovation.
Contact a lawyer: (605) 336-2880 info@dehs.com Davenport, Evans, Hurwitz & Smith, LLP
10 The bottom line
davenportevans.com
ehofer@msb-sd.com 605-660-4790
“If all goes as planned, ICBA will hold its first in-person meetings in over a year in Scottsdale, AZ, in October. I’m looking forward to traveling again, and I’m looking forward to representing all of you – the Community Bankers of South Dakota – at those meetings.”
Federal Delegate’s Report by Emily Hofer, ICBA National Director, Merchants State Bank, Freeman, SD Summer has certainly flown by for me. After the July 4th holiday, summer seems to be done in the blink of an eye. Football and volleyball seasons are now well underway for our local schools, and I have been enjoying the cooler nights after the hot days. It was such a pleasure to gather with many of you at ICBSD’s Annual Retreat – “All-in for Community Banking” – in Deadwood in July. Megan and Hannah did a great job of organizing the Retreat this year, after a year’s hiatus. The format was similar to years past, and I enjoyed the change in location – with its more modern accommodations and variety of entertainment options. The best part of the Retreat, as always, is networking with peers, colleagues, and friends in the industry. I will take face-to-face meetings any day over virtual events! I would also like to extend our thanks to Russell and Susie Laffitte for joining us from the great state of South Carolina. Russell is currently serving as the ICBA Vice Chairman and has had a busy travel
schedule since COVID restrictions have eased. Like all of the Leadership Bankers at ICBA, Russell’s passion for Community Banking is steadfast and contagious. Just like ICBSD’s Retreat theme of “All-in for Community Banking,” ICBA is always “All-in” for our industry as well. In my last Federal Delegate’s Report, I touched briefly on some of ICBA’s key priorities at that time, including the “WAKE UP” Campaign on credit unions, the Association’s support of tax incentives for ag lenders, the preservation of tax cuts, the restriction of HMDA-like reporting on small businesses, and the evolution of cannabis banking. These issues remain on ICBA’s radar. However, there are a few legislative issues that have risen to the top. Some of these issues are tied up in an over $1 trillion bi-partisan infrastructure bill and a reportedly more than $3.5 trillion Build Back Better budget reconciliation bill. ICBA is specifically playing defense on a number of issues such as the removal of the military lending cap, the creation of postal banking, the retailers’ request to limit interchange fees, and the credit union industry’s rampage through acquisition of the banking industry.
CALL TO ACTION Another issue that ICBA is highly focused on at this time is a proposal in the Build Back Better measure to require all financial institutions, regardless of size, to report gross deposit and withdrawal activity for all accounts – consumer and business – with a balance of $600 or greater. I know we all know the compliance headaches that will come
if this provision is enacted. Due to the fact that this is a reporting item, not a tax increase, legislators will support this provision. ICBA and other financial trade associations are fighting this provision. However, it will take broad, grassroots action to get this provision stopped. Please educate your customers about this bill. It essentially mandates banks to hand over the bank statements of its customers without authorization. It will likely drive more commerce underground and back to cash-basis. It will also further bog down the IRS with information that it doesn’t have the capacity to handle or protect. To help you educate your customers, ICBA has created a site with an informative video and links to customizable media information and customizable letters to legislators that you, your staff, and your customers may use to oppose this provision. This information can be found at banklocally.org/privacy. Please help spread this word as loudly and quickly as possible. If all goes as planned, ICBA will hold its first in-person meetings in over a year in Scottsdale, AZ, in October. I’m looking forward to traveling again, and I’m looking forward to representing all of you – the Community Bankers of South Dakota – at those meetings. Plans are underway to hold the ICBA LIVE 2022 in beautiful San Francisco March 14-18. I hope many of you will save that date! As always, feel free to reach out to me with questions, comments, concerns, etc. regarding our industry or ICBA. I can be reached at ehofer@msb-sd.com or 605-660-4790. ICBSD 2021 11
Contribute
Today!
Thank you for supporting the ICBSD Political Action Committee!
The ICBSD Political Action Committee...
2021 Pac 100 Club
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.
Farmers State Bank, Turton Monte Troske, Mark Troske, Rory Troske, Wayne Board, Terry Vogel, Kevin Teigen
First Western Federal Savings Bank Jeffery Fullerton, Nicholas Conway, Dean Zubke, Ted Grooms, Leroy Christianson, Peter Molitor Jr.
Campbell County Bank Robert Huber, Troy Beck, John Wiest, Myron Rieker, Roy Dean Schwartz, Bruce Brandner, Scott Nuzs
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
Reliabank David Johnson, Jan Johnson, David Ebers, Josh Houge, Jane Swenson, Bob Smithback, Hugh Bartels, Mark Lee, Jermey Keizer, Reid Johnson
BankStar Financial Charles Hagerfeld, Harold Schoeneman, John Heylens, Craig Steen, Greg Fargen, Fredrick Hegerfeld
Rivers Edge Bank Cameron Becker, Jodi Eich, Don Nolan, James Viet, Tony Lauters
First State Bank of Roscoe Joell Bieber, Toni Bukaske, Kelly Eiseman, Lori Faw, Phillip Hettick, Brittany Hoff, Jessica Holscher, Sandra Kirschenmann, Kim Oster, Cindy Rohrbach, Clay Spielman, Patty Beyers, Robert Kaul, Chad Lang, Reed Swenson, Mary Jo Grismer
CorTrust Bank Roger Weber, Jack Hopkins, B. D. Hopkins, Mark Hahler, James Grotenhuis, Robert Hopkins, Jeff Smith, Troy Olson, Donald Threadgold, Terry Torgerson
12 The bottom line
Board of Directors 2021-2022
Brian Gilbert Chairman
Roger Weber Immediate Past Chairman
Monte J. Troske Honorary Past Chairman
Dillon Kjerstad Chairman Elect
Senior Vice President, The First National Bank
Market President, CorTrust Bank
President, Farmers State Bank
Vice President, First National Bank
Si oux Fall s
Si ou x Fa lls
Turton
P hilli p
Josh Hogue Secretary / Treasurer
Emily Hofer ICBA Federal Delegate
Greg Fargen Director
Valerie Anderson Director
President Reliabank Dakota
Chief Financial Officer, Merchants State Bank
President, BankStar Financial
President, Farmers State Bank
Water tow n
Fre e man
Brooking s
Canton
Jodi Eich Director
Nate Engbers Director
Nick Conway Director
Michael Behl Director
Chief Operating Officer, Rivers Edge Bank
President, Security Savings Bank
Executive Vice President, First Western Federal Savings Bank
Compliance Officer/IT, The Farmers and Merchants State Bank
H owa rd
si ou x Fa lls
Rap id Cit y
Scotl a n d
ICBSD 2021 13
FROM CAPITOL HILL
Rounds’ Report Rounds, Thune, Colleagues Announce Bipartisan American Beef Labeling Act to Reinstate Mandatory Country of Origin Labeling
Board of Directors
2019-2020 Mike Rounds United States Senator (R-S.D.) WASHINGTON — U.S. Sens. Mike Rounds (R-S.D.), John Thune (R-S.D.), Jon Tester (D-Mont.) and Cory Booker (D-N.J.), today announced the American Beef Labeling Act, legislation that would reinstate mandatory country of origin labeling (MCOOL) for beef. This legislation, which will be formally introduced next week, would require the U.S. Trade Representative (USTR), in consultation with the U.S. Secretary of Agriculture, to develop a World Trade Organizationcompliant means of reinstating MCOOL for beef within one year of enactment. USTR would have six months to develop a reinstatement plan followed by a six-month window to implement it. If USTR fails to reinstate MCOOL for beef within one year of enactment, it would automatically be reinstated for beef only. “It’s time to restore Mandatory Country of Origin Labeling (MCOOL) once and for all,” said Rounds. “This is an important step in restoring market integrity for consumers and cattle producers. For too long, the packers have skewed this market in their favor. Now, we take it back. I’m thankful to my colleagues for helping carry this important issue for consumers and cattle producers. I’ve long said that consumers will need to drive and help carry this policy debate. For those of us who support MCOOL for beef, this is just the start. The nine major cattle producing states won’t get this done alone. We need a national campaign to see this over the finish line.” “Transparency in labeling benefits both producers and consumers,” said Thune. “Unfortunately, the current beef labeling system in this country allows imported beef that is neither born nor raised in the United States, but simply finished here, to be labeled as a product of the USA. This process is unfair to cattle producers and misleading for consumers. When you see a ‘product of the USA’ label on the grocery store shelf, it should mean just that. South Dakota cattle producers work tirelessly to produce some of the highest quality beef in the world. The pandemic has only highlighted their important role in our domestic food supply and the urgent need to strengthen it. To ensure the viability of cattle ranching in this country, the system in which producers operate must be fair and transparent. As a long-time supporter of MCOOL, I am proud to introduce this legislation, which will move us one step closer to making that a reality.” “Montana ranchers raise the best cattle in the world, and it’s time American families are guaranteed the right to know whether their beef is from Broadus or Brazil,” said Tester. “This bipartisan legislation will make sure consumers know when they’re buying American beef at the supermarket, and it will defend Montana’s family farmers and ranchers by leveling the playing field.” 14 The bottom line
“Americans should know exactly where their beef is coming from, but current USDA labeling practices allow big meatpacking companies to falsely label imported beef as being a product of the USA,” said Booker. “I’m proud to join colleagues in this bipartisan legislation that will restore mandatory country of origin labeling of for all beef products and provide fairness for our family farmers and ranchers.” “Mandatory Country of Origin Labeling (MCOOL) has long been a top priority for the South Dakota Stockgrowers,” said James Halverson, executive director of the South Dakota Stockgrowers Association. “MCOOL is the only way every single American producer can differentiate their beef from foreign products without leaving it up to some arbitrary program. We greatly appreciate working with Senator Thune on this legislation and hope we can continue to work together to get this across the finish line. The American consumer deserves to know where the center of their plate was born, raised, and harvested. American farmers and ranchers have invested countless amounts of time and treasure meeting consumer demand with the best beef in the world. It’s time we market all American beef that way.” “During the nearly seven years since MCOOL for beef was repealed, U.S. cattle producers experienced lower cattle prices and were deprived the means to build demand for their U.S.-produced cattle,” said Bill Bullard, chief executive officer of R-CALF USA. “Senators Thune and Tester’s bill to restore MCOOL for beef will now provide that means, and for that we are extremely grateful.” “We greatly appreciate the work of Senators Thune and Tester in continuing to push forward solutions to define what constitutes a U.S. beef product,” said Justin Tupper, vice president of the U.S. Cattlemen’s Association. “From the perspective of the U.S. Cattlemen’s Association, that label should pertain only to beef that was born, raised, and harvested in the U.S.A. This legislation provides a pathway for achieving clear, accurate labels so that consumers can continue choosing to put high quality American beef on their plates.” “On behalf of America’s family farmers and ranchers, we applaud Senators Thune and Tester for introducing common sense legislation to help consumers know where their food comes from,“ said Rob Larew, president of National Farmers Union. “We have long fought for mandatory Country of Origin labeling for food products, recognizing consumers want this information so they can make educated decisions in grocery store aisles.”
FROM CAPITOL HILL
Help Wanted john Thune
United States Senator (R-S.D.)
“These bills are just the tip of the iceberg when it comes to addressing the workforce shortages in our state. There is certainly more work to be done, and I will continue to look for light-touch ways to help South Dakota businesses find workers.” This summer, as I’ve visited small and big towns across South Dakota, there have been a lot of issues on the top of people’s minds – from Afghanistan to border security to keeping our communities safe. As I visited local businesses, though, one issue stood out above all else: worker shortages. No one can seem to find enough workers to meet the growing demand as our economy continues to get stronger. In some cases, unfortunately, the inability to find workers has led to reduced capacity or hours of operation. Fewer employees means fewer people to serve customers. These worker shortages are not just an illusion. At the end of June, job openings in the United States had reached 10.1 million – a record high. The national employment rate currently stands at 5.2 percent. In South Dakota, our unemployment rate is even lower. This low rate, which means the available workforce is small, paired with our booming economy in South Dakota, which means consumer demand is high, has created the workforce shortages that South Dakotans are seeing and feeling. To be clear, an expanding economy and near record-low unemployment are good things. They are positive signs of a strong economy. That said, they are not without their challenges, which is why it is so important to keep our eye on the ball and implement positive solutions so these resulting workforce shortages don’t stunt economic growth. I support
allowing free market forces to adapt and address these shortages over heavyhanded government intervention, but we can implement common-sense changes to help specific areas that have been hit particularly hard. That’s why I’ve made expanding the H-2B visa program a priority. Many South Dakota businesses rely on workers who temporarily come to the United States through this program. South Dakota businesses in industries from tourism and hospitality to construction and forestry have benefited tremendously from it. A low unemployment rate like we have now means a high number of South Dakotans who want to work have jobs, but it can present challenges for states like ours that rely on a seasonal, supplemental workforce. The H-2B visa program gives our businesses an additional employment pool to pull from when there is a high seasonal demand. I’ve introduced multiple bills that would help raise the cap on this program. My Prioritizing Help to Businesses Act would set aside up to 2,500 H-2B visas for states like South Dakota that are at or below 3.5 percent unemployment with a capped increase of 25 percent over the previous year’s H-2B total. It’s a new approach that I hope will be considered as we evaluate ways to improve the worker shortage in South Dakota’s seasonal industries. Another industry that has struggled to find workers, even before the current
shortage, is telecommunications. South Dakota is helping to lead the way in these technological advancements. As we work to deploy 5G technology and provide more of rural South Dakota with a reliable internet connection, we cannot afford a lack of qualified workers to hold us back. My Telecommunications Skilled Workforce Act, which recently passed the Senate, would help address the shortage of trained workers who will be necessary to fill next-generation jobs in the telecommunications industry. These bills are just the tip of the iceberg when it comes to addressing the workforce shortages in our state. There is certainly more work to be done, and I will continue to look for light-touch ways to help South Dakota businesses find workers. All things considered, I would rather see “help wanted” signs posted in shop windows than long lines at the unemployment office. A low unemployment rate means that more South Dakotans have a steady paycheck to support themselves and their families. But we cannot ignore these workforce shortages. I am focused on continuing to develop solutions in Washington to address the side effects of low unemployment so our economy can continue to grow and create more opportunities for South Dakotans. ICBSD 2021 15
D S ODA K
W AD THE DE
OO
D
OO
AN
L r et r t ea
A NU
EST. 1983
LO D
A GE • DE
DW
CELEBRATING DEEP TRadITION & RICH HISTORY AT THE 2021 BLACK HILLS RETREAT
JULY 29 - 31, 2021
u
u
u bottom line u 16 The u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
Thank you PREFERRED PARTNERS The Black Hills Retreat wouldn’t be possible without the support of our Preferred Partners! If your bank is looking for a specific product or offering, we encourage you to support these folks who support South Dakota community banks!
n Bell Bank n UBB n BGH
Taking place in iconic Deadwood, SD, the 2021 Black Hills Retreat is the
cornerstone for community banking. The retreat offered attendees and their families the perfect combination of playtime in historic downtown Deadwood during their Days of ‘76 summer celebration, networking with fellow community bankers and educational sessions presented by industry experts. Every year, our education topics are chosen by the ICBSD Education Committee, which is composed entirely of bankers. This ensures our topics are timely, relevant and innovative.
ederal Home n F Loan Bank of Des Moines
n Eide Bailly
n F irst District Development Company
n T he Advantage Network
n N uSource Financial
n Shazam
n B ankers Bank of the West
n S BS CyberSecurity
n Onovative
n Travelers
n ICBA Securities
n ICBM Insurance
n ICBA Bancard
n D avenport Evans Lawyers n Main Street, Inc. n West Gate Bank n SDN Communications
ICBSD 2021 2021 17
u
DI R ECTO RS & MA NAG E ME NT CO NF ERE NC E Join us October 6-7, 2021 On Wednesday, October 6th we are hosting a Golf and Gather event at Great Shots in Sioux Falls from 5:00 - 8:00pm. This social event will include a fun evening of golf, beverages, heavy appetizers, and the opportunity to network. Even if you don’t want to golf, we still encourage you to attend! You don’t want to miss this! Following the Golf & Gather, we will kick off the 2021 Fall Directors and Management Conference on Thursday, October 7th from 9:00am - 4:00pm at the Sioux Falls Convention Center. The Fall Directors and Management Conference is an indepth look at several facets of community banking in South Dakota, discussing the housing landscape, economic development, agriculture economy and more. To make a room reservation at the Sheraton Sioux Falls and Convention Center, call 605-331-0100. We look forward to seeing you there!
AGENDA 9:00 - 10:00am
Welcome & Pitch Perfect
10:15 - 11:00am “The State of Banking in South Dakota” discussion with Bret Afdahl, Director South Dakota Division of Banking and Michael Dummer, Deputy Director of South Dakota Division of Banking 11:00 - 11:45am “The Housing Landscape” Lorraine Polak, Executive Director, South Dakota Housing Development Authority 12:00 - 1:00pm Chris Schilken, Deputy Commissioner and Director of Business Development for the South Dakota Governor’s Office of Economic Development 1:30 - 3:30pm
“Ag in the Afternoon”
“What You Need to Know About the Beef and Meat Packing Industries” Todd Wilkinson, South Dakota Cattlemen’s Association Past President and current Vice President of the National Cattlemen’s Beef Association “South Dakota’s Best Ag Panel” – Q & A with South Dakota Corn Growers Association, South Dakota Cattlemen’s Association, South Dakota Pork Producers, South Dakota Soybean Association
.
18 The bottom line
PRESENTERS
Bret Afdahl
Michael Dummer
Director of the South Dakota Division of Banking
Deputy Director of South Dakota Division of Banking
Bret Afdahl was appointed Director of the South Dakota Division of Banking in May of 2011 after serving as Counsel to the Division since October of 2006. Bret is a Past Chair of the Conference of State Bank Supervisors (CSBS), the nation’s leading advocate for the state banking system, and currently serves on the FDIC Advisory Committee of State Regulators as one of its inaugural members. Bret is a graduate of Northern State University with a degree in political science and business and a graduate of the University of South Dakota School of Law.
Mike was raised on a farm near Lesterville, SD and graduated from Scotland (SD) High School. He attended college at South Dakota State University, graduating in 2003 with a BS in Mass Communications. After working for a large national bank, he started as an examiner with the Division of Banking in 2006. He served as Training Director from 2010 until September 2018, when he was named Deputy Director – Banking. He is a 2015 graduate of the Graduate School of Banking at Colorado and completed the Governor’s Leadership Development Program in 2019. Mike currently resides in Lennox with his wife Lindsay and three children.
Register at ICBSD.com after by landowners (cow-calf, stocker and feeder segments) across the state when they are facing legal challenges.
Todd Wilkinson South Dakota Cattlemen’s Association Past President and current Vice President of the National Cattlemen’s Beef Association Todd Wilkinson is a co-owner and operator of a commercial cow-calf operation with his son, Nick Wilkinson in De Smet, SD. He is also a co-owner of Redstone Feeders, a family owned cattle feeding and finishing operation. In addition, Wilkinson has practiced law for more than 35 years, specializing in estate planning and agricultural law. He is a graduate of Augustana College and USD School of Law. His firm, Wilkinson & Schumacher, is sought
Over the years, Wilkinson has been heavily involved in local, state and national leadership roles. During his time on the South Dakota Cattlemen’s Association Board he had many roles including president in 2015-2016. Wilkinson has also served on numerous NCBA committees as well as the Environmental Working Group, Traceability Working Group and Cattle Marketing Working Group. Wilkinson served as NCBA Region VII Policy Vice President for two years. Wilkinson is a founding member and current Vice President of the South Dakota Cattlemen’s Foundation. He is married to Jean and they have three children and seven grandchildren.
ICBSD 2021 19
a hog confinement. They raise and sell club calves – Altena Show Cattle. Steven and Amy Muller live near Agar, SD, they raise cattle on the Sutton Ranch and operate Midwest Sonotech – a cattle ultrasound business. Amy and Steven are active in
Glenn Muller Executive Director of the South Dakota Pork Producers Glenn Muller has been the Executive Director of the South Dakota Pork Producers since August, 2010. Glenn and his wife Joan live on their family farm near Davis, SD. Glenn, a graduate of SDSU in 1973, has always been active in the Ag Industry as an Ag Teacher, Adult Farm & Ranch Management, Ag Loan Officer, and at John Morrell in Hog Procurement. Glenn has been past president of the South Dakota Pork Producers. Glenn enjoys raising show cattle and selling club calves. Muller cattle has enjoyed much success in the Hereford Breed. He also has enjoyed judging cattle and hog shows in the State and also at Little I – Brookings. Glenn was Little I emcee in 2012. Muller was a 4-H leader for 23 years in Turner County. He also was on the Turner County Fair Board for 18 years serving as livestock chairman and was instrumental in starting the open class beef show. Glenn has also been the FFA Livestock superintendent at the SD State Fair.
the Sutton Rodeo business and Amy works for Beck Ag. Glenn and Joan enjoy being grandparents to Cash & Sage Voegele, Kinsley Altena, and Shaden Muller. Joan is a nurse at the Sanford Women’s Clinic. Glenn is the church treasurer at Turner County First Presbyterian Church where they are active members.
Jerry Schmitz Executive Director for the South Dakota Soybean Checkoff and the South Dakota Soybean Association Jerry Schmitz is Executive Director for the South Dakota Soybean Checkoff and the South Dakota Soybean Association. He raises soybeans and
Glenn has volunteered at the Sioux Empire Farm Show helping with livestock judging contests. He has assisted with FFA and open class beef shows as ring man and helped out where needed. In 2009 he was emcee of the Breeding heifer show.
corn with his wife and son on their farm near
Glenn and Joan have four children who were very active in 4-H and are still active in the Ag industry. Sarah and Shannon Voegele live near Lennox. Sara works at Poet Biorefinery, Chancellor in the lab. Shannon is a cattle rep for Breeders World and sells club calves – Voegele Show Cattle. Scott lives near Davis and has a large farming operation and a trucking business. Shelly and Cory Altena live near George, IA. Shelly is a cosmetologist at Your Unique Salon. Cory farms and manages
by all SD Soybean farmers. Checkoff monies
20 The bottom line
Vermillion. About 25% of their farm is conservation reserve grasses for wildlife preservation and water purification. They also have beehives on their farm. The South Dakota Soybean Checkoff is funded are invested in research for new uses, crop improvement, domestic and international market development. The SD Soybean Association is a membership organization that focuses on policies and laws affecting soybean growers. Together the SD Soybean Checkoff and SD Soybean Association work to ensure the economic stability and longterm environmental sustainability for soybean families and the food production system.
Register at
ICBSD.com
Chris Schilken
Lorraine Polak
Deputy Commissioner and Director of Business Development for the South Dakota Governor’s Office of Economic Development
Executive Director of South Dakota Housing Development Authority
Chris Schilken is the deputy commissioner and the director of business development in the South Dakota Governor’s Office of Economic Development. Chris’ dual role assists Commissioner Steve Westra in the overall direction and management of the GOED as well as overseeing the business development representatives across the state. Prior to joining the GOED, Chris served three years as the executive director of Watertown Development Company and more than four years as a credit union loan manager in Minot, N.D. Chris, who holds a degree in business management from Minot State University, has a passion for economic development and is excited to help the GOED team promote the state and help recruit and retain businesses in South Dakota. Chris and his wife Erika live in Watertown and are busy helping to raise their family.
Lorraine Polak is the Executive Director of South Dakota Housing Development Authority (SDHDA). SDHDA is a self-supporting nonprofit entity administering federal and state resources to fund housing programs. Lorraine assumed the position of Executive Director January 2021. Prior to this position, Lorraine was the Director of Rental Housing Development, a position she held since August 2006. The Rental Housing Development department administers finance programs for development of rental and homeownership housing units and is also the lead agency for the statewide Housing for the Homeless Consortium. Lorraine has been with SDHDA since 1998 and had a bachelor’s degree in finance and accounting from Chadron State College, Chadron, NE.
ICBSD 2021 2021 21
Steven Bumann
elected to Federal Home Loan Bank of Des Moines Board of Directors
PIERRE – The Federal Home Loan Bank of Des Moines (FHLB Des Moines) has announced Steven L. Bumann was recently declared elected to the Bank’s board of directors. Bumann will serve as the South Dakota member director, serving a four-year term commencing January 1, 2022. He has been a member of the FHLB Des Moines board since 2015. Bumann has served as the CFO of BankWest, Inc., in Pierre, SD, since 1995 and has 37 years of banking experience and leadership in the industry. “I am honored to be elected to the board of directors for FHLB of Des Moines,” stated Bumann. “It’s an opportunity to use my experience of accounting, auditing and financial management to help guide decisions made by the board.”
Federal Home Loan Bank of Des Moines is one of 11 regional banks that make up the Federal Home Loan Bank (FHLBank) System. Established by Congress in 1932 to support mortgage lending, the FHLBanks are a stable source of funding for more than 7,300 federally insured depository institutions of all sizes and types. FHLB Des Moines board of directors is comprised of both member and independent directorships from 13 states and three U.S. Pacific Territories.
All proceeds from the tasting will benefit the ICBSD PAC. Stay tuned for more details and registration information! 22 The bottom line
Best Lawyers® 2022
Recognizes 17 Davenport Evans Lawyers
Mary A. Akkerman Davenport, Evans, Hurwitz & Smith, LLP in Sioux Falls, SD is pleased to announce that 17 Davenport Evans lawyers were listed in Best Lawyers® 2022 for South Dakota, in 24 different practice areas. In addition, three Davenport Evans lawyers were named 2022 Best Lawyers® Lawyers of the Year, and two were named, 2022 Best Lawyers®: Ones to Watch. The following Davenport Evans lawyers were named 2022 Best Lawyers® Lawyers of the Year: Mary A. Akkerman - Trusts and Estates; Thomas M. Frankman - Personal Injury Litigation – Defendants; and Eric C. Schulte - Litigation – Insurance. The following Davenport Evans lawyers were named 2022 Best Lawyers®: Ones to Watch: Elizabeth S. Hertz - Appellate Practice, Commercial Litigation, Litigation – Construction, Litigation Intellectual Property; and Kalen K. Biord – Business Organizations (including LLCs and Partnerships), Mergers and Acquisitions Law, and Tax Law.
Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com. Davenport, Evans, Hurwitz & Smith, LLP, is an ICBSD Preferred Partner.
Thomas M. Frankman
Eric C. Schulte
The following are the Davenport Evans lawyers listed in Best Lawyers® 2022 for South Dakota: Banking and Finance Law • Charles D. Gullickson • Douglas J. Hajek • Dixie K. Hieb Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law • Robert E. Hayes Bet-the-Company Litigation • Robert E. Hayes Business Organizations (including LLCs and Partnerships) • Dixie K. Hieb • Brendan W. Reilly • Catherine A. Tanck Closely Held Companies and Family Businesses Law • Jonathan P. Brown • P. Daniel Donohue • Dixie K. Hieb • Catherine A. Tanck Commercial Litigation • Thomas M. Frankman • Mitchell A. Peterson • Eric C. Schulte Corporate Law • Jonathan P. Brown • Keith A. Gauer • Douglas J. Hajek • Dixie K. Hieb • Terry N. Prendergast
Elder Law • Sarah Richardson Larson Employee Benefits (ERISA) Law • Jean H. Bender • Sarah Richardson Larson Employment Law – Management • Jean H. Bender Financial Services Regulation Law • Charles D. Gullickson • Douglas J. Hajek Government Relations Practice • Douglas J. Hajek Litigation and Controversy – Tax • Catherine A. Tanck Litigation – Banking and Finance • Keith A. Gauer Litigation – Bankruptcy • Robert E. Hayes Litigation – Construction • Eric C. Schulte
Litigation – Trusts and Estates • Vince M. Roche Mergers and Acquisitions Law • Jonathan P. Brown • Douglas J. Hajek • Brendan W. Reilly • Catherine A. Tanck Personal Injury Litigation – Defendants • Thomas M. Frankman – Lawyer of the Year, 2022
Personal Injury Litigation – Plaintiffs • Mitchell A. Peterson Real Estate Law • Jonathan P. Brown • P. Daniel Donohue • Terry N. Prendergast Tax Law • Catherine A. Tanck Trusts and Estates • Mary A. Akkerman – Lawyer of the Year, 2022
• P. Daniel Donohue • Sarah Richardson Larson • Terry N. Prendergast • Catherine A. Tanck
Litigation – Insurance • Mitchell A. Peterson •E ric C. Schulte – Lawyer of the Year, 2022
ICBSD 2021 2021 23
Casey Derflinger Joins BankWest as Northern Hills Manager SPEARFISH – BankWest is pleased to announce the addition of Casey Derflinger, Northern Hills Manager. Prior to joining BankWest, Casey had served in the banking industry for 35 years. Rapid City Regional President Bryan Lutz notes Derflinger’s experience with business, agriculture and financial services will make him an important part of BankWest’s growing team. “Casey is a tremendous addition to BankWest,” Lutz noted. “He understands the local economy and will provide excellent customer service to area residents, businesses and ag producers.” Casey grew up in Hermosa, but has lived in Custer, Hill City, and Hot Springs before settling in Spearfish where he now lives. He received bachelor’s degrees in Ag Business and Commercial Economics from South Dakota State University. He and his wife, Thia, have two sons, one daughter, and six grandchildren. In his free time Casey serves as the current president of Deadwood Lead Economic Development Corp., Treasurer of Deadwood History, Inc., president of the Deadwood Masonic Center Association, and Chairman of the South Dakota Scottish Rite Foundation. He is also involved with the Deadwood Economic Restructuring Committee, Rocky Mountain Elk Foundation, and serves as the secretary for two Naja Shriner Units. “We want to help our customers achieve and maintain success and be advocates of our communities’ continued success,” said Derflinger. “BankWest’s wide array of products and services can help to achieve these successes.”
24 The bottom line
KELLY HARNETT NAMED BANKWEST’S NEWEST MORTGAGE ORIGINATOR SPEARFISH – Kelly Harnett recently joined BankWest
currently working on a master’s degree in Science for
Mortgage, serving as an AVP Mortgage Originator in
Sustainability through Black Hills State University. Her
Spearfish, SD. Prior to joining BankWest, Harnett served
parents and younger brother live in Columbus, Ohio.
for eight years with Sundance State Bank as an AVP
She has two dogs and three rescue cats.
Loan Officer where she originated consumer, real estate, commercial, construction, and small agricultural loans.
Kelly founded and runs two nonprofits: Hobo’s Healing Heart and Beautify Spearfish. She is on the Board of
“I want every customer to leave with a smile and feel
Directors for Black Hills Regional Ski for Light and
confident they received the best customer service
serves as a downhill ski guide for blind, visually, and
possible,” Harnett said. “I strive to help my customers
mobility impaired individuals. She is a volunteer with the
reach their financial goals and love seeing the
Northern Hills Rotary and, for the last 7 years, has been
excitement on their faces when they do.”
a tech team volunteer at her church. She has also served
Kelly is originally from Kettering, OH, and has lived all over Ohio as well as Emigrant, MT; Beulah, WY; Oelrichs, Belle Fourche, and Spearfish, SD. Harnett graduated from Hocking College with two associate degrees in Natural Resource Management and Fish and Wildlife Management and received her bachelor’s
as a respite/emergency foster parent for teens. During her free time Kelly enjoys volunteering, cycling, skiing, hiking, gardening, running, learning about different cultures, working on projects around the house, and traveling.
degree in Fisheries and Wildlife Conservation and
Harnett’s office is located at 1140 N. Main St., Ste. 10 in
Biology from the University of Rio Grande. She is
Spearfish.
BankWest is a full-service, independent community bank with 17 branches in 14 South Dakota communities including: Armour, Delmont, Geddes, Gregory, Kadoka, Kennebec, Madison, Mitchell, Onida, Pierre, Rapid City, Selby, Tripp and Winner. It also has stand-alone insurance offices in Murdo, Philip, Platte, Presho, Salem and Spearfish. For more information, visit the www.bankwest-sd.bank. ICBSD 2021 2021 25
Portfolios morph Investment securities have undergone big changes this year.
BY JIM REBER President and CEO of ICBA Securities ICBA’s institutional, fixed-income broker-dealer for community banks
If there’s a constant in the world of a community bank investment manager, it’s disappointment. If you buy a bond today and yields go down tomorrow, you wish you’d have bought more; if yields go up, you wish you had bought none. If your overall portfolio has unrealized gains, you lament the poor yields that are available; if you are presented with attractive rates on new offerings, it means you’ve got losses on the balance sheet. As we navigate the volatile rate environment of 2021, I’d like to convey some data that we’ve gathered about community bank portfolios. The motive is expressly not in the vein of misery loves company, but rather to share what your peers’ portfolios, sector weightings and yields look like. I am also pleased that we’ve got two great reference points by which to measure performance: Dec. 31, 2020, and June 30, 2021. That six-month period saw a rise in interest rates and a steepening of the curve, and more than a 50 basis-point shock (0.50%) in the middle of the maturity range. The five-year treasury note started 2021 at 0.36% and six months later was 0.89%.
Crowd favorites Our sample portfolio, which I’ve used often in this space over the years, is the Vining Sparks bond accounting client base. Vining Sparks, which is ICBA Securities’ exclusive broker, provides this service for about 400 community banks with an average portfolio size of $140 million, which is 46% larger than pre-pandemic levels. These portfolios have more than half of their dollars in some type of mortgage security. Fixed-rate mortgage-backed securities (MBSs) comprise 31% of the total, fixed-rate collateralized mortgage obligations (CMOs) are 14% and floating rate MBS 26 The bottom line
are 7%. Right around 29% of the investments are in municipals. The bulk of the remainder, 8%, is in government agency bonds.
Stretched out While the sector weightings are essentially unchanged over the past year, there are two stark differences: duration and market values. On Dec. 31, 2020, the average portfolio had a duration of 3.2 years (Duration is a major yardstick for investment managers, as it affects cash flow and market risk. The higher the duration, the greater the risk). Six short months later, duration had risen to 4.3 years. So, portfolios, at least in theory, have 34% more risk than at year-end. This duration growth was the result of two separate events. The first was the rise in longerterm rates. I think we’ve come to realize that higher rates move average durations out on the curve, as prepayments of amortizing securities tend to slow, and other callable securities don’t get called. The second – and more salient – cause was the very deliberate extension of average maturities as portfolio managers have tried to sop up the excess liquidity residing on community bank balance sheets. Something else that’s changed as a result is the unrealized profit. Back in December 2020, the average portfolio was sitting on a 2.7% gain. By June, that number had shrunk to 1.0%. What this, in effect, means is that most banks currently own some bonds at gains and some at losses, which can be seen as condition that affords maximum flexibility.
Plug the leak Many portfolio managers are now focused on limiting further extension risk. That should not be terribly difficult to do, as most securities that have any seasoning to them have already been repriced to a longer expected maturity. Prepayment “speeds” have slowed from their peaks in the spring, and most models are predicting relatively consistent
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
speeds for the near future. Nonetheless, not all MBSs are created equally. Collateral with 10- to 20-year finals typically can continue to prepay with some consistency even if interest rates rise. Of course, the scheduled principal repayments will be much greater for shorter pools than for 30-year pools, independent of prepays. A variation on this theme is to buy “structure.” This usually means a CMO. Recently issued CMOs have low pass-through rates (“coupons”) relative to the borrowers’ rates on the underlying collateral. This allows investors to keep their book prices closer to par, which will preserve book yields if prepayments were to kick back into high gear. So, there you have a revisiting of the portfolio changes during 2021. By being on top of the changing complexion of your community bank’s investments, you can minimize your disappointments. Avoiding the constant sorrow of portfolio management—with apologies to the Soggy Bottom Boys—can be your milestone accomplishment
Q4 economic update OCT 14, 10am ICBA Securities and Vining Sparks will produce their next Economic Outlook webinar on Oct. 14 at 10 a.m. Central. Economists Craig Dismuke and Dudley Carter will discuss monetary policy, tapering and the economy’s emergence from the pandemic. Visit www.icbasecurities.com to register. One hour of CPE credit is offered. Bond Accounting Solution ICBA Securities’ exclusive broker, Vining Sparks, provides state-of-the-art bond accounting services for nearly 400 community banks at competitive prices. For more information, contact your Vining Sparks sales rep.
of the year. ICBSD 2021 27
United Bankers’ Bank’s and J Outlaw Consulting Announce Partnership to Provide Check Vendor Contract Negotiation Services
“We are excited about our partnership with J Outlaw Consulting. This partnership will add value to the community banks we serve by helping them in reducing costs while adding a new source of non-interest income,...”
BLOOMINGTON, MN – United Bankers’ Bank (UBB) is pleased to announce its partnership with J Outlaw Consulting, experts in vendor contract negotiation. Through this collaboration, UBB will introduce community banks to J Outlaw Consulting for their check vendor agreement negotiations to provide the best possible contract terms. With over 35 years of check printing industry experience, J Outlaw Consulting deals directly with the top-level decision makers that create the contract terms and pricing. Community banks working with the firm can expect lower per product pricing and the addition of a new source of revenue. “We are excited about our partnership with J Outlaw Consulting. This partnership will add value to the community banks we serve by helping them in reducing costs while adding a new source of non-interest income,” commented Executive Vice President and Chief Marketing Officer John Peterson. “We are happy to partner with the UBB and the many banks they serve. Together, community banks will have even more services to benefit from,” said Jimmy Outlaw, President of J Outlaw Consulting. The contract negotiation service partnership will involve direct collaboration between UBB and J Outlaw Consulting and align the needs of UBB’s community bank customers with the negotiation solutions provided by J Outlaw Consulting. Detailed information about this exciting, new, cost-saving service can be found by visiting https://ubb.formstack.com/forms/ check_contract_negotiation_services.
About United Bankers’ Bank Headquartered in Bloomington, MN, United Bankers’ Bank is the nation’s first bankers’ bank, and a full service provider of correspondent banking services to community banks in: Minnesota, North Dakota, South Dakota, Montana, Nebraska, Indiana, Iowa, Wyoming, Idaho, Ohio, Oregon, Washington, Michigan, California, Arizona, South Carolina, Florida, Georgia and Illinois.
For more information please visit www.ubb.comcom
28 The Bottom bottom Line line
Our Preferred Partner program... is designed to foster mutually beneficial relationships between top-notch businesses and our members. Show your support by doing business with the following preferred partners who support our association!
preferred Partners
CyberSecurity
P.O. Box 615, Watertown, SD 57201 605.878.3040
www.icbsd.com