The Bottom Line Winter 2020

Page 1

2020

The

Independent and proud of it!

Bottom Line

Relationships Rule President’s Message

Flourish What Recent Trade Wins Mean for South Dakota New Year, Same Commitment to Fighting for South Dakota

Community Banking Month Governor Noem proclaims April 2020 as Community Banking Month

Mortgage Bonds Keep Gaining Fans

Keeping the Community alive farmers state bank of turton

www.icbsd.com


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EST. 1983

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JULY 25 - 27, 2019

To Deadwood From My Location

ICBSD Annual Retreat July 30 - August 1, 2020

GO

New Location

The Deadwood Lodge 100 Pine Crest Lane Deadwood, SD 57732

Car

www.icbsd.com

Horse

Wagon

Foot


contents FROM THE DESK OF

INSIDE This Issue ICBSD 2020

2 President’s Message Relationships Rule by Megan Olson, President & CEO of ICBSD

3 Rebeca’s Remarks

Flourish by Rebeca Romero Rainey, President & CEO of ICBA

4

From the Chairman Staying True to Rural America by Monte Troske, Chairman of ICBSD, President/CEO of Farmers State Bank of Turton

5

From the Chairman From the Top by Preston Kennedy, Chairman of ICBA Legislative

7 Federal Delegate’s

10 Rounds’ Report

Improving Life in Rural America by Senator Mike Rounds

11 A Tale of Two Economies by Senator John Thune

Community spirit

12 Keeping the

Community Alive: Farmers State Bank of Turton by Twila Schmitt, ICBSD Correspondent Powered by UBB

In the news

14 Directors’ College May 6, 2020

16 Webinar Schedule 18 In The News

Report by Emily Hofer

Join us in congratulating our fellow community bankers on their recent accomplishments!

FROM CAPITOL HILL

22 Mortgage Bonds Keep

8 Progress Report

Dignity in Aging Act by Representative Dusty Johnson

9 ICBSD PAC:

Contribute Today!

Gaining Fans Community Banks Add Weighting to Loan Surrogates by Jim Reber, President and CEO of ICBA Securities

Welcome to our Newest associate Member: www.icbsd.com P.O. Box 615, Watertown, SD 57201 605.878.3040

megan@icbsd.com

FPS GOLD provides a core banking system to help community banks cut processing costs, add greater flexibility, improve productivity, and integrate systems for greater profitability. Core Banking applications include all deposit, lending, on-line banking, website management, wire transfer and many other services necessary for a community bank to profit and thrive. FPS GOLD offers Big Bank Processing at Community Bank Prices.

ICBSD 2020 1


President’s Message From the president

Megan Olson, President & CEO of ICBSD

Relationships Rule When asked to identify the quintessential ingredient that makes community banking special,

“This dedication to creating healthy, strong communities has helped the community banking industry flourish and maintained our wellearned reputation as true relationship lenders.”

I don’t hesitate to answer, “Relationships.” Independent community bankers focus exclusively on delivering the products and services their customers want, while their local roots and accountability ensure their interests remain tied to their neighbors. Independent community banks across our state work with their customers to help them realize their financial dreams, whether opening a business, purchasing a home or planning for retirement. They nurture their communities by donating time and money to important causes and contributing tax dollars that help maintain local municipalities – all of which helps keep local neighborhoods viable and vibrant. They work hard to stay attuned to the needs of their community and relevant to their customers by remaining on their corner and in their corner. This dedication to creating healthy, strong communities has helped the community banking industry flourish and maintained our well-earned reputation as true relationship lenders. Here are the facts: • Community banks outpace large banks in their average number of banks operating in both rural and urban markets by a 3:1 ratio. • Community banks are preferred small business lenders, with a 79 percent net satisfaction score, compared with 67 percent for large banks and 49 percent for online lenders. • Community banks have consistently demonstrated their safety and soundness with higher capital ratios and better loan quality than the largest institutions. • Community banks operate in areas abandoned by others – serving as the only physical banking presence in nearly one in three U.S. counties. • Community banks focus a relatively large share of their resources on low- and moderateincome tracts. But, it’s not just about stats. When customers walk into or call an independent community bank, they are greeted by a talented team member who is attuned to their needs and empowered to act on their behalf. And when their employees log volunteer hours in support of local non-profit organizations, they’re working toward their ultimate goal to ensure economic prosperity for the community we call home.

megan@icbsd.com

2 The bottom line

In an era where bigger isn’t always better, and high-tech doesn’t necessarily equate to high touch, the Independent Community Bankers of South Dakota pledge to never lose sight of the all-important “relationship”. It’s been integral to our banks’ success for years and is how we’ll continue to build a legacy that lives on.


Rebeca’s Remarks Flourish From the president

Rebeca Romero Rainey, President & CEO of ICBA

As a child, the concept of the year 2020 seemed so far-fetched. Fueled by visions of flying cars and robot maids courtesy of The Jetsons, I was sure technology would dominate the landscape.

“Today’s technology environment opens the door to a world of opportunity for community bankers.”

There may be a nugget of truth in those childhood musings. We may not be benefactors of self-preparing meals and hovercraft transportation, but all the same, technology plays a major role in our daily lives – and in the banking business. Burgeoning customer expectations demand that technology plays a pivotal role in community banks’ strategies. And community banks continue to rise to that very request, evolving our organizations and introducing solutions that create a better customer experience. In fact, today’s technology environment opens the door to a world of opportunity for community bankers. Efficient, cost-effective, technology-forward product options have arrived, making them viable choices for our institutions. Fintech collaborators are bringing to market the products and services that fuel achievable community bank innovation. From addressing internal operational hurdles to removing friction from front-end solutions, these new offerings help us take community banking to the next level. While these may not fulfill the bleeding-edge vision of sci-fi movies, is that really what we hope to achieve? As my father always said, the bleeding edge is where you feel the pain of the cut; the cutting edge is where you want to be. I believe that’s the sweet spot for community bankers and it’s where our work lies today. For example, the ICBA ThinkTECH Accelerator features early stage companies that are working to bring the latest technologies to community bankers. We’re fortunate to have these companies at ICBA LIVE this month, and I hope you’ll stop by the ICBA ThinkTECH Showcase to learn how they may address your bank’s pain points. In fact, whether attending convention sessions or perusing this issue, keep an eye out for technologies that can help you continue to deliver that incredible personal touch in a way that aligns with your customers’ emerging digital needs. Even with technology driving progress, our goal for 2020 should be to maintain our clear focus on serving our communities to our best ability. And, as the decade – and technology – advances, we will continue to be bold in establishing the services that allow us to do just that.

Where I’ll Be This Month @romerorainey

I’ll be traveling to La Jolla, Calif., to deliver remarks at the Association for Financial Technology Spring Summit and hearing final pitches at the ThinkTECH Accelerator Demo Day in Little Rock, Ark. ICBSD 2020 3


fsbmonte@nvc.net 605-897-6532

Staying True to Rural America

From the Chairman Monte Troske, Chairman of ICBSD, President/CEO of Farmers State Bank of Turton

“When the going gets tough, megabanks head for greener pastures. This harmful exodus not only hurts the agricultural community, but small businesses, hospitals, schools and rural municipalities that support the agricultural economy.” I am usually not patting myself or ourselves on the backs. But here are some

these sectors, according to the Food and Marketing Institute. This activity contributes nearly $7 trillion of U.S. economic output and accounts for more than 43 million full- and parttime jobs. Fortunately for America’s farmers and ranchers, there’s another great option close by – their local neighborhood community bank. The largest financial institutions themselves have reported that community banks are more than tripling the deposit growth of their larger competitors in rural communities.

facts that may change that. Here goes

In contrast to their larger brethren,

some patting.

community banks faithfully serve their

When I learned that the nation’s “biggest bank lender to the U.S. agriculture sector”

customers and communities in good times and bad.

was cutting its ag force in rural areas

Accounting for more than 60 percent of

such as our state and our neighbors to

small-business loans under $1 million

the north, I wasn’t surprised. This news

and 80 percent of agricultural loans from

reinforces a disturbing trend, and follows

the banking sector, community banks are

other large U.S. banks in scaling back

the only physical banking presence for

exposure to farmers, paring its farm-loan

more than one in three U.S. counties, and

holdings by more than 15 percent since

use their more than 50,000 locations as

December 2016. When the going gets

economic lifelines for areas most in need

tough, megabanks head for greener

of financial services.

pastures. This harmful exodus not only hurts the agricultural community, but small businesses, hospitals, schools and rural municipalities that support the agricultural economy.

I’m proud of the work our independent community banks have done in service to the agricultural community for the past

FOOD FACTS 1.

The typical American farmer feeds

2.

nearly 144 people worldwide.  Food costs account for only 12.6

percent of American households’ disposable income, leaving approximately 90 percent of their income for other consumer

3.

purchases and expenses. Less than one dime of every dollar spent on food goes to farmers for producing food; the remainder goes towards processing, packaging, advertising, transportation and other wholesale and retail activities.

few years. Our independent community bankers look forward to continuing that

Food and agricultural enterprises drive

relationship – in the good times when the

more than 20 percent of the nation’s

bounty is plentiful and in the lean years

economy, and 28 percent of American

where access to credit offers support to

jobs are either directly or indirectly tied to

press forward.

4 The bottom line

FARM

Great job community banks. Let’s all pat ourselves on the back.


@BankPres

From the Top

From the Chairman Preston Kennedy, Chairman of ICBA

“As community bankers, our bars are set high. We’re not OK with just being OK.”

customer expectations evolve, our payments system needs to progress with them. That’s why the community banking industry has taken up the

A television commercial debuted late last year in which a patient

faster payments initiative. In today’s culture of 24/7 immediate

in a hospital bed asks a nurse about his doctor’s credentials.

gratification, our customers expect their money to move as fast

With a shrug of her shoulders, she responds, “He’s OK.” The look of horror on the patient’s face reveals that just “OK” is clearly not OK.

as their text messages and social posts. That’s why real-time payments are crucial to banking’s future. I’ve heard a community banker or two talk about how their

Our industry is another in which average isn’t acceptable. As community bankers, we strive to exceed customer expectations, offering best-in-class service.

customers aren’t yet demanding faster or real-time payments. That might reflect most community banks’ realities today, but while customers may not be clamoring for real-time payments just yet, the time will come when they will be, particularly if the

Take payments. Our current suite of offerings, which has been enhanced, upgraded and expanded throughout the years,

big banks are offering them. And we don’t want to be backed into a corner and have to jump on board at the last minute.

meets the needs of today’s marketplace. We offer products and

Thankfully, that doesn’t have to be the case. Community

services that get the job done, but as technology changes and

bankers brokered a big victory in 2019 as the Federal Reserve threw its hat in the real-time payments ring via the FedNow Service. Through years of advocacy efforts, ICBA and community banks were able to thwart a mega-bank monopoly and encourage a solution that will support a more level playing

myTOP3

field for all. There are so many highlights from my time as chair, but here are the top three:

1. H aving nearly my whole family in Nashville for ICBA LIVE 2019

2. S haring the podium with Fed governor Miki Bowman in her home state of Kansas

3. T ie: Cowboy boots from IBAT and Cornhusker football in Nebraska

But, while this first battle is won, the war is far from over. We need community bankers to insist that the Fed develop its system as quickly as possible to maximize adoption among community banks and facilitate nationwide faster payments. In addition, we should begin speaking with our core processors about the impact of FedNow on the availability and timing of the faster payments services they provide. As soon as FedNow is operable, my community bank will be at the front of the line to take advantage of it. And I know you feel the same, because as community bankers, our bars are set high. We’re not OK with just being OK. ICBSD 2020 5


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Learn more from the professionals community banks trust. Visit us at icbasecurities.com or contact us at 800-422-6442. 6 The bottom line

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ehofer@msb-sd.com 605-660-4790

“As we continue to fight the cold and snow and to work through a rough renewal season, remember that ICBA has many tools to help you succeed, and its staff is working to help our industry every day. I encourage you to get involved at a level that is comfortable for you.”

Federal Delegate’s Report by Emily Hofer, ICBA National Director, Merchants State Bank, Freeman, SD

to Take Grassroots Action in 2020,”

The most meaningful and impactful tactic

was posted by ICBA. Coleman is ICBA’s

with lawmakers is to make the trip to

Director of Advocacy, and his office

Washington, DC, to meet with them in

reviewed a survey of the hundreds of

their offices. In my last newsletter column

Capitol Hill staffers over the past decade

I asked you to consider budgeting the

regarding tactics to help make your

necessary funds to send staff from your

priority a reality with lawmakers.

bank to the ICBA Capital Summit in

Coleman’s blog is a fantastic reminder of the helpful resources that ICBA has for us members to use that help educate and influence our legislators. The “Be Heard” Action Center online has all

Wow... the first quarter of 2020 has come and gone already. Where does the time

of the hot topics that ICBA is working on at any time. It helps you customize

go? I have the same sense of time flying

letters and emails to your specific elected

by every January. We are busy wrapping

legislators. It even allows you to set up

up year-end issues, working through farm

alerts for real-time reminders to take

renewals, and planning for the year that

action when it counts. Believe it or not,

is upon us.

Congressional staffers count the number

Did you make any New Year’s resolutions? I always have a list of things I need to do better. Personally, I’d like to read more, relax more, spend more time with family, do one activity that takes me out of my comfort zone, and travel to

important to our industry. A strong show of support will make a critical difference on the issues we care most about. I’m proud to say that each year our feet-onthe-ground group of SD bankers in DC has grown. I think I speak for most the past attendees to the Capital Summit when I say it is a great experience.

and to work through a rough renewal

communications to move the dial on

season, remember that ICBA has many

action. However, they are quick and

tools to help you succeed, and its staff is

easy to do and are an important part of

working to help our industry every day. I

grassroots efforts.

encourage you to get involved at a level

and get the attention of our lawmakers

with customers, educate myself on a new

is still the face-to-face meeting. Holding

those resolutions.

face-to-face and advocate for issues

It takes a significant number of these

Professionally, I’d like to engage more

New Year, and it’s time for a gut-check of

opportunity to meet with our lawmakers

As we continue to fight the cold and snow

The best way to build solid relationships

for that industry. One month into the

event is an invaluable experience and an

of letters and emails on certain topics.

at least one new place I’ve never been.

topic in our industry, and advocate harder

Washington April 28 – May 1, 2020. This

an in-district meeting at your bank during session breaks is an excellent way to pass on your insight to our delegation. Legislators like the opportunity to be

that is comfortable for you. Maybe you’ll join our group in DC this year? If not, can we count on you for letters to Congress when called upon? Maybe you have a personal story to share regarding the current top priorities for us at this time – abuses by credit unions and Farm Credit Services, cannabis banking, or BSA and

It was just a coincidence that I was

“present on the ground.” The ICBA

thinking about resolutions as the topic for

Advocacy team is always happy to assist

this newsletter column at the same time

with making these connections and

that John Coleman’s January 23, 2020,

providing tips and talking points to make

stories to share, I can be reached at

“Main State Matters” blog piece, “Resolve

these meetings successful.

ehofer@msb-sd.com or 605-660-4790.

CRA modernization. If you have any questions, comments, or

ICBSD 2020 7


FROM CAPITOL HILL

Dignity in Aging Act

Dusty Johnson

“This is a policy win. The Dignity in Aging Act takes important steps to support caregivers, puts a greater focus on combating senior social isolation, and promotes the ability of older citizens to remain in their homes as they age.”

United States Representative (R-S.D.)

It didn’t make many national headlines, but the House passed the Dignity in Aging Act this Congress. As someone who helped introduce this bipartisan bill, I’m proud to support the reauthorization of many critical social and nutrition services – like Meals on Wheels – to older Americans. The Older Americans Act (OAA) has served our seniors since the early ‘60s – that’s why it was an easy decision to support the Dignity in Aging Act of 2019, which reauthorizes and updates the OAA. For years, the OAA has provided a diverse range of services for older Americans with the greatest social or economic needs. As our nation and society have evolved, so have the needs of America’s older population. The critical programs included in the OAA help more than 41 million Americans over the age of sixty-five maintain their independence. If the government is going to get involved, the program better work – and the OAA has proven its worth. The data is clear and reveals the OAA helps prevent costly hospitalizations and institutional care for our seniors. Nowadays, we have the tools to examine if a program is working or not. The Dignity in Aging Act adds important accountability measures – if a program isn’t proving to be effective, then it won’t continue. I say it often – there is a lot of noise coming out of Washington and many of the policy wins don’t make the evening news. This is a policy win. The Dignity in Aging Act takes important steps to support caregivers, puts a greater focus on combating senior social isolation, and promotes the ability of older citizens to remain in their homes as they age. This reauthorization empowers older Americans to live longer in the comfort of their homes instead of moving to a long-term care facility, which, in cases involving Medicare, reduces costs to American taxpayers. Unlike many of the government’s rigid policies and guidelines that are riddled with red tape, this bill will provide flexibility to states to address specific issues impacting their individual senior communities. After all, states know what they need more than the federal government ever will. South Dakota’s Native American population is nearly ten percent of the state’s total population and those seniors shouldn’t be left out. This bill recognizes this need and authorizes funding specifically for Native American tribes to benefit from OAA programs such as nutrition services, home care, and transportation assistance. This is a big win for South Dakota’s seniors and their families, and I’m proud to be a part of it.

8 The bottom line


Contribute

Today!

The ICBSD Political Action Committee helps... provide South Dakota community banks with a strong voice in state politics through contributions to candidates for state elected offices. These contributions help ensure we have a seat at the table when issues affecting your bank are being discussed in Pierre.

Thank you for supporting the ICBSD Political Action Committee!

Together, let ’s make it happen.

Todd Holzwarth Call me at 605.321.9197

2020 Pac 100 Club Josh Houge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Jane Swenson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank David Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Jan Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Bob Smithback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Jeremy Keizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank David Ebbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Hugh Bartels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Mark Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank Reid Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliabank

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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.

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ICBSD 2020 9


FROM CAPITOL HILL

Rounds’ Report

Improving Life in Rural America

Mike Rounds

United States Senator (R-S.D.)

“Our working group recently held our first meeting with groups that represent a wide range of rural priorities and topics. Our plan is to continue to partner with these groups so we can address the most challenging issues facing rural America, including reliable energy sources, adequate rural water systems, safe roads and bridges and access to services such as highspeed internet, essential air service, quality education, health care and lending services.” The majority of South Dakota is rural. We’re a large state with a

plan is to continue to partner with these groups so we can

small population – we average just under 11 people per square

address the most challenging issues facing rural America,

mile. Comparatively, New York’s population density is nearly

including reliable energy sources, adequate rural water systems,

40 times that, with approximately 421 people living per square

safe roads and bridges and access to services such as high-

mile. In New York City, the population jumps to more than

speed internet, essential air service, quality education, health

26,000 people per square mile. As Americans, we celebrate our

care and lending services. We’ll also focus on affordable rural

country’s diversity and differences. But it also means we have

housing, veterans’ issues and tribal issues in rural areas.

unique challenges in different parts of the country. Rural and urban areas have different needs. Working as a senator from

While it may seem like a lot to tackle – and it’s true, there’s

one of the most rural states, I’ve taken steps to shine a light on

plenty of work to do – many of these issues are interconnected.

issues important to rural America and make sure the needs of

We can work to expand broadband and create incentives for

rural communities are at the forefront of policy discussions in

medical professionals to set up practices in rural areas, but we

Washington.

must also make sure local businesses have access to capital

I recently partnered with Senators Tina Smith (D-Minn.), Deb Fischer (R-Neb.) and Tammy Baldwin (D-Wis.) to form the Bipartisan Senate Rural Working Group. Our group’s focus is to highlight what’s working in rural parts of the country, listen to people from our states about their concerns and find commonsense solutions to the unique challenges facing rural areas. My Senate office has been working on issues in rural areas since I took office, but collaborating with senators from other states and other political parties about what’s working and not working in their states can help us find the best possible solutions for South Dakota.

so they can grow and provide jobs for community members who will raise families in our small towns. We need to create opportunities for the next generation so that they have the ability to make a good living and raise their own families in their hometown. South Dakota is the best place in the world to live and raise a family. We want to make sure it remains the best place in the world so our grandkids, great-grandkids and great-great grandkids get to enjoy it like we do. The success of rural America is vital for our state’s long-term economic health, as well as the prosperity of our nation. I’m looking forward to

Our working group recently held our first meeting with groups

partnering with the other members of the working group to

that represent a wide range of rural priorities and topics. Our

make changes that will benefit South Dakota.

10 The Bottom bottom Line line


FROM CAPITOL HILL

A Tale of Two Economies john Thune

United States Senator (R-S.D.)

“While this is good news for American workers, they’re merely words on a page for producers who are worried about what steps they might have to take to make ends meet ahead of what could be another difficult planting season.” It’s no secret that the agriculture economy has seen better days. Bad weather, low commodity prices, and protracted trade disputes have created an untenable situation for many folks in the heartland. What’s flyover country to some is home to others, particularly those who help feed the world, and I’ll never stop fighting for them or their way of life. In 2018, we passed a pro-farmer, pro-agriculture farm bill that made meaningful improvements to existing agriculture policy, including by strengthening critical safety net programs. It also created new policy like my Soil Health and Income Protection Program, a pilot program for states like South Dakota that will serve as a short-term alternative to the popular Conservation Reserve Program. As important as farm bills are, agriculture policy doesn’t begin and end once the bill is signed into law. It would be a lot easier if that were true, but the issues that are important to the agriculture community can evolve quickly, and it requires policymakers to stay focused and forward-thinking. One of the most important things we can do to help the agriculture economy thrive is to continue negotiating good trade deals. I was a strong advocate for the United States-Mexico-Canada Agreement (USMCA), a 21st century

update to the decades-old North American Free Trade Agreement. USMCA, which was signed into law in January, maintains and expands access to the two biggest markets for American agriculture products and provides certainty about what these markets will look like in the foreseeable future.

401ks and pensions are, too. If you

The president also recently signed phase one of a trade agreement the administration has been negotiating with China. While we must ensure China maintains its end of the deal – something I’m committed to doing – increased U.S. agriculture exports would be a boon to producers in South Dakota and around the country.

make ends meet ahead of what could

In what can best be described as a tale of two economies, the agriculture economy has lagged far behind the broader U.S. economy. In fact, today’s economy is one of the strongest I’ve ever seen, thanks, in large part, to policies like tax reform. The unemployment rate is near its lowest level in 50 years and has been below 4 percent for the past 12 months. The labor force participation rate – a reflection of the number of people who have found a job or decided to start looking again – is at its highest level in seven years. The economy has created an average of 171,000 jobs per month over the last year. Wages are growing. The stock market is up, which means

could create a blueprint for a booming economy, this would be it. While this is good news for American workers, they’re merely words on a page for producers who are worried about what steps they might have to take to be another difficult planting season. Others are anxious that further trade disputes could close or further restrict market access around the globe. They crave certainty in what has been a highly uncertain time. Farming and ranching is a tough business, and it always seems like the hardest day is yet to come. Thankfully, South Dakota is full tough men and women who always seem to make it look a lot easier than it is, especially during hard times like these. That’s why we can’t let the strong economy overshadow what’s happening in farm country or cause lawmakers to overlook this reality. As someone who is proud to represent America’s heartland and the hardworking people who help feed the world, farm country’s priorities are my priorities, and I stand ready to fight for them day in and day out. ICBSD 2020 11


Powered by

“As chairman, it’s my role to ensure that ICBSD continues to educate South Dakotans on the power of banking local and the positive impact that it has within the community by keeping the money close to home.”

Keeping the Community Alive:

Farmers State Bank of Turton

Monte Troske, Chairman of ICBSD, President/CEO of Farmers State Bank of Turton

by Twila SchMitt ICBSD Correspondent

Monte Troske knows the meaning of community. As a third-generation banker in Turton and current ICBSD Chairman, Troske’s roots run deep in South Dakota. “Community banks are all working to make the communities we

Farmers State Bank of Turton has been run by three generations of the Troske family. In 1921, Frank Troske became cashier of the bank. The bank survived the Great Depression, but still suffered from financial hardship. In 1940, Frank Troske took over the sole operation of the bank.

serve stronger,” said Troske. In 1954, Frank’s son, Ron Troske, joined his father at the bank What Turton may lack in population (now estimated at “around

after serving in the Navy. In 1962, Ron took over for his father

50”), it more than makes up for in sense of community. Farmers

as cashier. Nine years later, Ron purchased controlling interest

State Bank, located at 123 E Center St., has been a fixture in

of the bank; Frank was elected Chairman of the Board and Ron

Turton since local investors founded the bank in August 1915.

was named President and CEO.

“We’ve all adapted to change,” said Troske. “Despite centuries

In 1982, Monte (Ron’s son) began working at the bank. In

passing, our institutions remain the cornerstone of our rural

1996, Monte was named President and CEO. In 2019, Monte

communities.”

was also named Chairman of the Board.

12 The bottom line


105 Years

of Farmers State Bank of Turton

On July 24, 1915, a group of stockholders met to organize the Farmers State Bank of Turton. The bank purchased a lot on the corner of Center and Second Street, where the bank still stands today. Throughout its history, Farmers State Bank has aimed to provide constant and superior customer service to the individuals who trust in their service. In 1973, the bank had experienced enough growth to warrant building an addition and the organizations first computer was purchased in 1974. With the purchase of the next computer in 1980, additional space was required, so more square footage was added to the south side of the building.

Monte Troske recently said he always knew he wanted to be a banker. Following graduation from Northern State University, he did interviews with “bigger city banks.” But the call back to Turton was stronger. When he first started out, he said a typical week might find him mowing the lawn, trimming the bushes near the bank or scooping snow, depending on the season.

Board for about 23 years. He has held positions on the Doland School Board and served his church as its business manager for the past 24 years. While Troske was born and raised in Turton, the nearby community of Doland was where he attended most of his school years, graduating from high school in 1978.

“It was not luxurious,” he laughed. “Come to think of it, some of that still happens today.”

“I went to first grade in Turton – and that was the final year of school in Turton,” he said. “I consider Doland my community as well.”

Folks in Turton would certainly not be surprised to see their banker shoveling the sidewalk – or fighting fires. Troske was a volunteer firefighter for 37 years and served on the Turton Town

School consolidations over the past decades have been a reality for many of South Dakota’s small towns. Others have seen the loss of many of their businesses, as well as their financial ICBSD 2020 13


D ONE P T S O P

ater for a l on. t n e v is e tuti ling th o your insti u d e h esc ly t e are r iled direct w , s u a em avir coron tails will b e h t o Due t ditional de d date. A

14 The bottom line


“We have to continue to do everything we can to make sure community banks stay alive in these communities.”

institutions. Troske is proud that Farmers State Bank has strongly stood the test of time. As the bank’s name indicates, farmers have always been an important part of the community. Troske estimates that 90 percent or more of the bank’s business is related to the ag economy. “To our benefit, we’re also working with third-generation farm families,” he said. “Local deposits within our communities are used here at home to make loans needed to help support small local businesses, families and agribusinesses,” he said. “Our loans are likely to purchase grain trailers or new livestock trailers.”

Now in his role as ICBSD Chairman, Troske has found an opportunity to share his experience with the next generation of community bankers. “We have to continue to do everything we can to make sure community banks stay alive in these communities.” Farmers State Bank employs six individuals who are all from the local area. There is also an affiliated insurance agency on site, Troske-Vogel Agency, that employs two more individuals from the area. In addition to the bank, Troske’s hometown still boasts a recently remodeled church, community center, fire hall and newer post office. Just 11 miles down the road in Doland, Troske has served on the school board, helped direct funds for alumni scholarships and enjoyed watching and playing many sports over the years. (He was quick to add, however, that he now spends more time watching than playing them.) He and his wife, JoAnn, have been married for 38 years and have three daughters and six grandchildren. Troske said his family’s lifelong commitment to banking has truly shaped the person he is today. His involvement in ICBSD has been an on-going learning experience and Troske said he looks forward to hearing and seeing how other banks are involved in – and engaged in – their communities. “As chairman, it’s my role to ensure that ICBSD continues to educate South Dakotans on the power of banking local and the positive impact that it has within the community by keeping the money close to home.”

ICBSD 2020 15


u n e m r a webin R BENEFIT

E MEMBE N EXCLUSIV

A

Powered by

OF ICBSD

bina e W g n i m Upco

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March 3/19/20 Consumer Loan Flood Insurance Forms Line-by-Line Molly Stull, Brode Consulting Services, Inc.

3/23/20 Deposit Account Series: Advanced New Account Issues: POAs, Trusts, Estates & More Deborah Crawford, Gettechnical Inc.

3/24/20 Commercial Lending Series: Commercial Flood Insurance Rules & Best Practices Susan Costonis, Compliance Consulting and

4/21/2020 New FFIEC Procedures for Business Continuity Management & Resilience Molly Stull, Brode Consulting Services, Inc.

4/22/2020 10 Strategies for Remaining Independent in a Consolidating Environment Phillip K. Smith, Gerrish Smith Tuck, PC, Consultants & Attorneys

4/23/2020 Countdown to Reg CC Rule Changes Effective July 1, 2020 Dawn Kincaid, Brode Consulting Services, Inc.

Training for Financial Institutions

3/25/20 Collecting SBA Loans: Critical Steps in Protecting the SBA Guaranty

4/28/2020 Commercial Lending Series: Commercial Loans Secured by Real Estate

Elizabeth Fast, Spencer Fane LLP

3/31/20 New Technology: Cash Recyclers, Pod Banking & Interactive ATMs Barry Thompson, Thompson Consulting Group, LLC

Susan Costonis, Compliance Consulting and Training for Financial Institutions

4/29/2020 Consumer Bankruptcy: Compliance, Cramdowns & More Elizabeth Fast, Spencer Fane LLP

April 4/1/2020 Commercial Lending Series: Commercial Loan Workouts, Restructuring & Loss Mitigation Elizabeth Fast, Spencer Fane LLP

4/2/2020 Mastercard Dispute Resolution for Chargebacks Diana Kern, SHAZAM, Inc.

4/7/2020 Deposit Account Series: 10 Overdraft Hotspots, Including Regulations, Lawsuits & Guidance Deborah Crawford, Gettechnical Inc.

4/8/2020 Board Secretary Training: Documenting Board Training, Minutes, Corrections & More Dawn Kincaid, Brode Consulting Services, Inc.

4/14/2020 Advertising Compliance Part 1: Print, Radio & TV Steven Van Beek, Howard & Howard Attorneys PLLC

4/15/2020 FCRA Compliance: From Delinquent Loans to New Hires David A. Reed, Reed & Jolly, PLLC

4/30/2020 Advertising Compliance Part 2: Website, Online & Social Media Steven Van Beek, Howard & Howard Attorneys PLLC

May 5/5/2020 Writing Compelling Credit Memos & Loan Narratives with Confidence Ann Brode-Harner, Brode Consulting Services, Inc.

5/6/2020 New Uniform Residential Loan Application Deadline November 1, 2020: Updating Policies & Testing Readiness Molly Stull, Brode Consulting Services, Inc.

5/7/2020 E-SIGN for Lenders: Technicalities, Consumer Expectations & Risk Susan Costonis, Compliance Consulting and Training for Financial Institutions

5/12/2020 Visa Claims Resolution for Chargebacks Diana Kern, SHAZAM, Inc.

4/16/2020 Establishing & Amending Traditional & Roth IRAs, Including Secure Act Impact Frank J. LaLoggia, LaLoggia Consulting, Inc. Title Modification 2/24/20

5/13/2020 Leveraging BSA Controls for More Effective OFAC Compliance Carl Goss & Gustavo Membiela, Hunton Andrews Kurth LLP

Register today at ICBSD.com on the events page! 16 The bottom line


5/14/2020 Commercial Lending Series: Analyzing Commercial Tax Returns: Forms 1065, 1120, 1120S & K-1s Aaron Lewis, Young & Associates, Inc.

5/18/2020 Demystifying TRID for Construction Loans Using the New CFPB Guides Monday Bill Elliott, Young & Associates, Inc.

5/19/2020 Credit Reporting & Delinquent Accounts: Disputes, Revisions & Guidance David A. Reed, Reed & Jolly, PLLC

5/20/2020 Updating Your CDD Program: Beneficial Ownership, Triggering Events & New SSN Verification

6/17/2020 Handling ACH Exceptions & Returns Shelly Sipple, EPCOR

6/18/2020 Fair Lending Comparative File Review That Meets Regulator Expectations Ann Brode-Harner, Brode Consulting Services, Inc.

6/23/2020 Comparing Regulation E with Visa & Mastercard Rules Diana Kern, SHAZAM, Inc.

6/24/2020 Managing In-House Real Estate Evaluations Aaron Lewis, Young & Associates, Inc.

6/25/2020 20 Common Mistakes in Consumer Collections Elizabeth Fast, Spencer Fane LLP

Dawn Kincaid, Brode Consulting Services, Inc.

5/21/2020 Documenting & Perfecting Farm & Livestock Loans Elizabeth Fast, Spencer Fane LLP

5/27/2020 Growth & Transformation Series: Driving Engagement with Facebook, Twitter & Instagram Eric C. Cook, WSI Internet Consulting

5/28/2020 Branch Manager Guide to Success Molly Stull, Brode Consulting Services, Inc.

June 6/2/2020 Consumer Loan Underwriting Fundamentals: Interviews, Credit Reports, Compliance & Debt Ratios Larry Williams, Financial Education & Development, Inc.

6/3/2020 UCC Article 9: Perfection Pitfalls & Proper Enforcement Elizabeth Fast, Spencer Fane LLP

6/4/2020 TDRs: Defining, Examples, Financial Reporting & Best Practices Stephen J.M. Schiltz, CliftonLarsonAllen LLP

6/9/2020 Debit & Prepaid Card Compliance: Disclosures, Fee Changes & More Steven Van Beek, Howard & Howard Attorneys PLLC

6/10/2020 Completing the TRID Loan Estimate Line-by-Line Dawn Kincaid, Brode Consulting Services, Inc.

6/11/2020 Three Key Risk Assessments in Enterprise Risk Management Marcia Malzahn, Malzahn Strategic

6/16/2020 Growth & Transformation Series: Banking Millennials: The Next Generation of Revenue Diane Pape Reed, CU Doctor

July 7/1/2020 Growth & Transformation Series: Digital Marketing Strategies: What’s Working in 2020? Eric C. Cook, WSI Internet Consulting

7/7/2020 HR Compliance: Lessons Learned from Massive HR Failures Diane Pape Reed, CU Doctor

7/8/2020 Annual Training for the Branch: BSA, Identity Theft & Regs CC, D, E & DD Deborah Crawford, Gettechnical Inc.

7/9/2020 Top 10 Consumer Loan Documentation Mistakes Dawn Kincaid, Brode Consulting Services, Inc.

7/13/2020 Completing the TRID Closing Disclosure Line-by-Line Monday Dawn Kincaid, Brode Consulting Services, Inc.

7/15/2020 HMDA: Still a Four-Letter Word? Michael Christians, Michael Christians Consulting, LLC

7/22/2020 Responding to Garnishment & Levy Demands Elizabeth Fast, Spencer Fane LLP

7/23/2020 Call Report Basic Lending Schedules: Coding, Classifications & Loan Loss Allowance Amanda C. Garnett, CliftonLarsonAllen LLP

7/28/2020 Beneficial Ownership Rules for Business Accounts & Loans Susan Costonis, Compliance Consulting and Training for Financial Institutions 7/29/2020 Lending to Self-Employed Borrowers Aaron Lewis, Young & Associates, Inc.

7/30/2020 Handling Consumer Complaints & Disputes Mary-Lou Heighes, Compliance Plus, Inc.

Most webinars are scheduled from 2:00-3:30 PM Central Time unless otherwise indicated. Please check the brochure copy to confirm the time. ICBSD 2020 17


After 49 years of service as president of The First National Bank in Sioux Falls, Bill Baker has retired.

IN the

NEWS Join us in congratulating our fellow community bankers on their recent accomplishments!

send your happenings to:

hannah@icbsd.com

18 The bottom line

First National Bank in Sioux Falls Brian Gilbert, senior vice president of The First National Bank in Sioux Falls and ICBSD board member, was recognized by the Sioux Falls Area Chamber of Commerce as the 2020 Agri-Business Citizen of the Year!

BankWest Congratulations to Becky Burke of BankWest, the recipient of the 2019 Charles H. Burke Community Leadership Award! This award recognizes BankWest employees who are willing to get involved, work for causes bigger than themselves, and donate their time and talents to benefit others.


CorTrust Bank Left: Jack Hopkins, president and CEO, of CorTrust Bank NA was recognized by BankBeat Magazine as the 2020 Banker of the Year.

Dacotah Bank Right: Peggy Ritter recently celebrated 35 years of service with Dacotah Bank at their Mobridge branch.

Reliabank was recognized by the Public Opinion of Watertown as “Best of the Glacial Lakes 2019” for their banking services. Reliabank received the “Friend of Education” award from BankBeat’s West Central School District! Jack Hopkins, 2020 Banker of the Year Pictured are Superintendent Brad Berens, David W. Johnson, David Painter, Reid Johnson and School Board President, Craig Habben

Congratulations, Jack!

You’ve set the standard in what it means to be independently owned and operated.

American Bank & Trust Heartland State Bank Heartland State Bank recently celebrated 26 years of serving the Highmore community!

American Bank & Trust Wessington Springs staff handmade and donated 17 fleece tie blankets to the FCCLA Angel Tree. Blake Willman with AB&T said, “A blanket brings on feelings of comfort, warmth and kindness. Our team is thankful for the opportunity to give in this special way to kids in our community.” ICBSD 2020 19


2020vision

A Focus on Community Banking COMMUNITY BANKING MONTH:

Let ICBSD Help Your Bank Celebrate! April is Community Banking Month and ICBSD and independent community banks across South Dakota are recognizing the unique spirit that makes community banks the foundation of their communities. Governor Kristi Noem recently declared April 2020 as Community Banking Month in South Dakota.

“Declaring April 2020 as Community Banking Month proves the significant role community banks play in stimulating their local economies. We appreciate Governor Noem for recognizing the significant impact independent community banks are making across South Dakota,” said Megan Olson, ICBSD President and CEO. Take advantage of these FREE resources: • Press release for bank members to distribute to local media • Signed proclamation from Governor Kristi Noem • Community Banking Month banner ads for your website • Social media imagery from your social profiles ICBSD has produced these materials for your use. For more information, email Hannah at Hannah@icbsd.com

Visit us at www.ICBSD.com 20 The bottom line

claims em Pro o N th ti is g Mon nor Kr Bankin Gover y it n u m s Com April a


F

O

R

N

K

S

INFORM. IMPACT. INSPIRE

CO

MMUNIT

Y

B

A

APRIL 28 TO MAY 1, 2020

Make your voice heard and join ICBA in Washington, D.C. Registration is free for all of our nation’s community bankers.

REGISTER TODAY! WWW.ICBA.ORG/CAPITALSUMMIT ICBSD 2020 21


Mortgage bonds keep gaining fans Community banks add weighting to loan surrogates If your community bank’s bond portfolio looks like the rest of the industry’s, you own more mortgage-backed securities (MBS) than ever. There are a bunch of reasons for this, most of which you’re aware of, but some you may not be. The MBS that community banks tend to own are a small piece of the overall mortgage pie. Around 88% of all mortgage securities are backed by 30-year fixed rate loans, which have scant appeal to bank portfolio managers. Thirty-year fixed rate pools long durations, back-loaded cash flows and price volatility profiles are outside of policy limits for most community banks. Nevertheless, there are enough mortgage bonds that do fit these risk/reward profiles to go around. We will discuss some of the more popular items, and where the current opportunities reside. Perhaps it’s time for a ride on the MBS Express.

BY JIM REBER

President and CEO of ICBA Securities ICBA’s institutional, fixed-income broker-dealer for community banks

Growing trend The average community bank has around 60% of its bonds in some type of amortizing securities. These include the garden variety straight pass-thrus, adjustable rate MBS, collateralized mortgage obligations (CMOs) and Small Business Administration (SBA) pools. They are almost all issued by the federal government or its agencies, have good liquidity and low risk weights. And, since they act like loans, bankers can get their minds around the cash flows. That’s not to say they can totally control them. One of the drawbacks of MBS is that the repayment of principal is almost entirely in the hands of the property owners. Nevertheless, it’s easy to understand why a community bank would own a lot of pools.

Market machinations Over the past decade, there has been a supply shift in the mortgage bond market. The overall MBS market has barely grown since 2008, when total outstanding balances were about $9.5 trillion. Today, they are right at $10 trillion outstanding, which is only a 4% increase in more than 10 years. Also different is the noticeable growth in the multifamily MBS sector. Fannie Mae and Freddie Mac have issued around $140 billion in multifamily bonds annually in recent 22 The bottom line


years, more than twice that of a decade ago. While they are still a minority of all outstanding MBS, they represent most of the overall mortgage market’s growth. They also have different cash flow characteristics, as there are principal lockouts and prepayment penalties attached to many of these pools that can help stabilize the overall portfolio’s duration swings.

Value investing Yet another reason to consider adding MBS is the Fed’s stillactive management of its still-large balance sheet. Since 2017, it has shed more than $350 billion of MBS and will continue to do so, even as it attempts to get down to an equilibrium level. All its recent additions to its balance sheet for the purpose of stabilizing the overnight repo market were in Treasury securities and were expressly not quantitative easing (QE), according to Chairman Jay Powell. The Fed is not adding any MBS to its holdings and has no plans to do so. In the second half of 2019, the combination of the Fed being a net seller of MBS and the cash flow volatility produced by three rate cuts caused yield spreads to widen, if not dramatically, then at least noticeably. Recently, 15-year fixed rate pools, which are the product of choice for many community banks, were available at spreads of around 60 basis points (.60%) over Treasuries. That may not sound like much, but that is around 15 basis point better than the beginning of the year; further, spreads on many of the other products that community banks own actually narrowed on the year. The skeptics of this sector (you know who you are) would possibly assume that the spread widening has caused the

market value of their currently held MBS to crater. They, on balance, would be wrong. The Fed’s rate cuts produced enough of a tailwind to all investment sectors so that prices actually rose in 2019; it’s just that mortgage bonds’ prices didn’t rise as much as others. That would seem to indicate relative value. In sum, there are several back stories to the mortgage security market going on that have created “opportunities.” One need not step out of his or her comfort zone within the MBS market to take advantage. Maybe 2020 will be a year of relative stability with interest rates, which could cause yield spreads to return to historical levels. All these are reasons for your community bank to be a fan of mortgage-backed securities.

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

ICBSD 2020 23


Jack Hopkins, BankBeat’s 2020 Banker of the Year

Congratulations, Jack! You’ve set the standard in what it means to be independently owned and operated.

24 The bottom 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


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