We have all seen how partisanship has taken hold of national politics and caused many good legislative bills to grind to an unnecessary halt. Community bankers and American citizens are rightfully fed up.
Is an idea, rule, regulation change, nominee or legislative bill good or bad simply based on if it is proposed by a Democrat or Republican? Regardless of the origin of the idea or change, shouldn’t it stand on the merits of how it can make our nation stronger, and most importantly, how it can help spur economic growth and prosperity for all Americans?
We can and have found bipartisan support for community banks. Congressional leaders have a proven track record of wanting to help community banks. During this new session of Congress we are best positioned to break through the gridlock and see meaningful progress towards reform for community banks. Furthermore, we now have a President who
will sign regulatory relief bills.
Regulatory relief has been and remains the number one priority of the ICBSD. The message is simple: Relieve the regulatory burden on all our nation’s community banks and the result will be an increase in the flow of credit directly to the job creators of our economy, small businesses. This will undoubtedly increase economic activity, expand job
opportunities and the opportunity for citizens to prosper.
As a nation, we must put aside the belief that ideas are good or bad based simply on political party and work to break though partisanship. Policymakers of all political beliefs must rally around the goal of economic growth and recognize that community banks are, and will continue to be, the best motor to push that growth.
I invite you to help push our message of regulatory relief forward by attending this year’s ICBA Capitol Summit, April 30 – May 3 at the Grand Hyatt, Washington D.C. If access to capital, regulatory and tax relief, mortgage reform and agricultural lending are at the forefront of your mind, then make plans to join the ICBSD and fellow community bankers as we advocate for change. By coming together and espousing the community bank message, we will make change happen for our business, our customers and our communities.
Make your voice heard and share your unique community banking story with our members of Congress and regulators. Now is the time to engage with policymakers and help them right the ship for local economies nationwide!
As long as I can remember, our nation has had a vocal group calling for a presidential candidate that would run our government as a business. Many have gotten their wish. Now I wonder if this is like the dog trying to catch the car. What happens when the dog bites the bumper? I guess we will all find out soon.
As I travel our state speaking to both community bankers and our elected officials, I am hearing the same sentiment over and over. I am hearing that people are cautiously optimistic. Many questions remain about what we can expect from this new administration as well as the historically strong Republican majorities in both houses of Congress, but if the majority sticks to the promises of the election, regulatory relief is on its way for community banks.
The list for needed reform is long and it includes many topics outside of the much-needed regulatory reform for community banks. My D.C. contacts are sharing the priority list this new administration is developing to include: health care reform, tax reform, trade agreement reform, immigration reform and financial services reform.
While regulatory reform is fifth on the priority list, we are happy to be included in the top five and all indications point to the new administration understanding that you, community bankers, are the economic engine of our small business economy. I am optimistic that over the coming first term of the Trump administration, we will see meaningful regulatory relief.
We are continuing to fight for provisions of the ICBA Plan for Prosperity and continuing to advocate for legislation like the REINS Act. The past year and this election cycle was a difficult one. It is realistic to know that Donald Trump was not the first choice for many, but in the end, was the best choice we had.
I am looking forward to 2017 and to continuing our work for regulatory reform. Stay engaged; change is coming.
Let this sink in for a moment. The fraud committed by Wells Fargo has cost the bank $319 million dollars, made up of a $185 million dollar fine and the Chairman and CEO, John Stumpf’s, parting gift of $134 million. This total of $319 million is more that the total assets of 50 South Dakota community banks! If you only look at the fine of $185 million, this is still more than the total assets of 43 South Dakota community banks!
Yet again the financial services industry has been given a black eye by a too-big-to-manage, too-big-to-fail bank. Yes, this latest case of fraud is an issue that is divisive to the banking industry and especially to community banks. Is the response that we have seen from fellow banking industry representatives of merely condemning dishonest or unethical behavior at “any bank, anywhere, anytime” appropriate? No, this isn’t about “any” bank, and most importantly, this isn’t about community banks.
The community banking industry will not make progress towards removing regulatory burden from your community banks by joining hands with the very institutions that create the problem. Asking for regulatory reform legislation with a megabank at the table would be a good way to be laughed out of the congressional office.
In the first week of October, I visited the congressional offices in Washington D.C. to speak with staffers about the coming lame duck session and the possible regulatory fall out over the Wells Fargo fraud. The message I got after being in Washington D.C. is that a legislative response is coming. We are already seeing municipalities such as Los Angeles introduce legislation that would require banks that work with the city to eliminate sales goals, among other requirements.
As the legislative response progresses, our job at the ICBSD is to ensure that for you, our members, any legislation does not negatively impact your business and makes a clear distinction between too-big-to-manage banks and community banks. As I have stated before, corporate greed and toxic culture of Wall Street always leaves its stain on Main Street. And those who seem to most condemn the big banks inadvertently become their champions by threatening the survival of the community banking industry through added one-size-fits-all regulation.
While issues exist that all banks can work together on such as credit union mission creep, farm credit and unregulated lending, the issue of regulatory reform is one that community banks must take on alone. As your voice for community banking, we will not be quiet, we will not be passive, we will not be relegated to follow the same one-size-fits-all rules and regulations.
100% of bank members recently renewed membership with the ICBSD. Thank you for your continued support of the association. You did not renew your dues to be a member of a passive organization. You want a strong, united voice for community banking and that is what you will continue to get from the ICBSD.
I watched with interest as Wells Fargo CEO John Stumpf went to Congress to face the Senate Banking Committee following the massive account fraud perpetrated by the company’s employees. As an advocate for community banking, I want to urge everyone to recognize the stark differences between community banks and mega-banks.
I have been hearing from many community bankers who are furious that any financial institution would betray the trust of customers by opening accounts without their knowledge. Community banks are built on a model of trust and long-term relationships. To community banks, reputation is everything. As one community banker emailed me this week, “we don’t do business like that, we care about our customers, if they don’t do well, we don’t do well”.
It is a certainty that lawmakers will consider a legislative response to Wells Fargo’s massive consumer fraud. Community bankers are rightfully concerned that the legislative fallout and regulatory reaction to this latest case of fraud will fail to make a distinction between too-big-to-manage banks and community banks. This will, again cause new costly, unnecessary requirements which will continue to impede community banks’ ability to serve their customers and further drive consolidation. Corporate greed and toxic culture of Wall Street always leaves its stain on Main Street. And those who seem to most condemn the big banks inadvertently become their champions by threatening the survival of the community banking industry.
Community Banks will continue to call for targeted regulatory relief to promote fair competition and consumer choice in financial services. I urge members of Congress to let reason prevail. Stop punishing the nation’s community banks for the failings of the mega-banks. The time for real regulatory reform is well past due.
Cam Fine, CEO of the Independent Community Bankers of America, recently wrote “Fix what’s wrong with American financial services by strengthening what’s right with it—community banks.” I could not agree more!
I want you to think for a moment what our country would look like if we did not have community banks? Let that sink in for a moment.
The story of community banking reflects that of the United States as a whole. Both were founded on the principles of independence and decentralization. Like our nation’s economy—the most powerful in world history—community banking has taken root through marketplace competition, entrepreneurship and investment.
I want to remind each of you that Community Banks are a part of a powerful group of 52,000 locations nationwide, community banks employ 700,000 Americans, hold more than $2.9 trillion in deposits, and $2.4 trillion in loans to consumers, small businesses and the agricultural community.
Community banks are exceptional small business lenders. While community banks comprise just 20 percent of the banking industry's assets, A recent study by Harvard Kennedy School, “The State and Fate of Community Banking,” details the risks government overregulation poses to community banks. The study found that America’s community banks, despite the crushing regulatory burden, continue to play a vital role in key lending segments, providing 77% of agricultural loans and more than half of small-business loans. The reality is that viability of our rural communities and small businesses are directly linked to community banks.
As you all know community bank small business lending simply cannot be duplicated by banks based outside the community. The technologies larger institutions can deploy have not proven effective substitute for the skills, knowledge, and interpersonal competencies of your local banker.
Community banking is synonymous with the American traditions of independence, self-reliance and entrepreneurship. Community Banking supports consumers, farmers, small businesses and rural America!
I want to encourage each of you to continue looking for new as of working with each other. Recently I read an op-ed in the Wall Street Journal that stated J.P. Morgan provides correspondent services to 339 community banks. I wondered why? Why would these community banks partner with an organization whose actions have significantly contributed to the regulatory burden you are all facing? Why would these organizations not be working with other community banks?
The community banking industry will be stronger when we work together and partner when needed with other community banks!
I want each of you to remember how important you and all community banks are to the towns you serve. More than ever we need to believe in the community banking model and the power it has to impact our economy.
Challenge your bank to move from a spectator into participant in advocating for this industry. Stand Up, Step Up and Speak Up for Community Banking!
Retreat registrations are coming in, speakers are confirmed and the menu is selected. Will you be joining us this year?
If you have not attended in the past, this is your chance to enjoy the Sylvan Lake Lodge, Custer State Park's "crown jewel." In a spot suggested by architect Frank Lloyd Wright, the hotel sits in a hillside forest of pine and spruce trees, in harmony with the beauty of the rugged landscape. This stone and timber lodge overlooks the sloping hills and the breathtaking beauty of Sylvan Lake.
Along with the beauty of Sylvan Lake and the Black Hills we have put together an outstanding lineup of speakers this year including past ICBA Chairman Jack Hartings from Ohio. Eric Hanson from Eide Bailly, Patrick Dix from Shazam, Lynn Paulson from Bell State Bank & Trust and Dwight Larson from United Bankers Bank.
Concluding our meeting will be our Keynote, Joe Malarkey. Joe Malarkey’s “Exits on the Road to Success” is an energy-packed, fast-paced, laugh-out-loud program that takes a chainsaw to the tried and proven motivational classics.
Through his unique philosophy, Joe will forever change your view on the relationship between success and failure.
Joe has been featured on television shows ranging from 60 Minutes to To Tell the Truth, and has been profiled in several national magazines. And, he is an inductee in the Speaker Hall of Fame.
5 Reason to Attend!
Visit www.icbsd.com and register today.
We are able to keep registration fee’s affordable for our members due to the generosity of our sponsors. We thank them for all the support they provide to the ICBSD. We could not have grown into the association we are today without them. Please show your appreciation by doing business with those that truly support community banking!
Exclusive Golf Tournament Sponsor - ICBA Services
Keynote Speaker Sponsor - United Bankers Bank
Exclusive Retreat Dinner Sponsors
Friday - Shazam
Saturday - First National Bank in Sioux Falls and The Advantage Network
Exclusive Breakfast Sponsor - Bell State Bank & Trust
Exclusive Retreat Lunch Sponsor
Friday Lunch – SDN Communications
Saturday Lunch - Federal Home Loan Bank of Des Moines
Exclusive Evening Reception Sponsors
Thursday Reception - United Bankers Bank
Friday Reception - Eide Bailly
Saturday PAC Auction Reception - United Bankers Bank
Exclusive Name Badge Sponsor - Community Bankers Financial Services (CBFS)
Exclusive Daytime Refreshment Sponsors
Friday Refreshment Sponsor - Federal Home Loan Bank of Des Moines
Saturday Refreshment Sponsor - Secure Banking Solutions
Dakota Homestead Title Insurance
Spectrum Financial Services
Thurman, Comes, Foley & Co, LLP
Secure Banking Solutions
In April of 2012, 4 years ago, I began a conversation with the ICBSD board regarding the need for a new association executive. The conversation revolved around the desire for the ICBSD board to implement a new and better direction for the association. The board through a strategic planning process made the commitment towards an association focused on advocacy and more specifically regulatory reform advocacy, better member communication, higher caliber event speakers and strengthening service partnerships and investigating new partnerships for the benefit community banks in South Dakota. At this time the board of directors also committed to the position of sole affiliation and support of the ICBA, recognizing that legislation and regulations must not be one size fits all and thus community banks must have a voice on issues which impact community banks.
Four years ago the board selected a new path of growth for the ICBSD, this path has transformed your association into a more effective voice for you. I recognize that any organization is dependent upon the premise of, what have you done for me lately? Here are a few wins we have advocated on your behalf.
FASB Reforms to CECL Standard Supporting Community Bank Accounting Methods
The revised Current Expected Credit Loss (CECL) proposal is more flexible and scalable for community banks, which will allow them to continue using their personal understanding of their local markets, instead of complex modeling systems to determine their loan-loss reserves. By allowing community banks to evaluate and adjust their loan-loss amounts using qualitative factors, historical losses, and current systems (such as spreadsheets and narratives), FASB has made important changes to its proposed accounting standard. We were very pleased to see changes being made and feel the changes will significantly reduce the burden on community banks in South Dakota.
Dividends on Federal Reserve Stock Fully Restored for Smaller Community Banks
Higher G-Fees Eliminated. An earlier version of the highway bill contained a steep cut in the dividend paid on Federal Reserve stock, from 6 percent to 1.5 percent, for member banks with assets of more than $1 billion. The bill also would have extended higher guarantee fees on loans sold to Fannie Mae and Freddie Mac. Both of these provisions were included to offset the cost of new transportation spending. As a direct result of ICBSD and ICBA advocacy, an effective grass roots campaign, and the coordinated support of 43 state-based community bank associations, the final bill completely eliminated the higher guarantee fee provision and significantly modified the Federal Reserve stock provision by creating an exemption for banks with assets of less than $10 billion and linking the dividend rate to the 10-year Treasury note.
Community Bank Regulatory Relief and Crop Insurance Funding Authorization Signed into Law
On December 4, the President signed a highway bill into law, which includes four significant community bank regulatory relief provisions: (i) an 18-month exam cycle for CAMELS 1 and 2 banks with assets of less than $1 billion: (ii) easier qualification for “rural lender” status under CFPB mortgage rules by elimination of the requirement that such lenders operate “predominantly” in rural areas; (iii) elimination of annual privacy notice mailings when a bank has not changed its privacy policies; and (iv) new SEC registration and deregistration thresholds for thrift holding companies, equal to those that apply to bank holding companies. All four of these provisions are included in the ICBSD endorsed ICBA Plan for Prosperity. In addition, the new law favorably modifies the application of the $15 billion asset threshold above which a bank may not count the proceeds of trust preferred securities as tier 1 capital. It restores $3 billion in recent cuts to the federal crop insurance program which were included in the recent budget agreement. In addition to these newly enacted provisions, both the Senate and the House have advanced meaningful community bank regulatory relief bills. In May, the Senate Banking Committee reported out the Financial Regulatory Improvement Act (S. 1484), which would provide automatic QM status for mortgages held in portfolio, short form call reports for banks up to $1 billion in assets, and a number of other relief provisions. The House Financial Services Committee has reported out a series of regulatory relief bills. Community banker advocacy during the Washington Policy Summit resulted in a surge of cosponsors for the Clear Relief Act (H.R. 1233 and S. 812), the Community Bank Access to Capital Act (H.R. 1523 and S. 1816), and other priority bills.
Expanded Service, Product and Education Opportunities
Along with our Community Bankers Webinar Network we have expanded our endorsement program to bring the best products and services to our members. I would invite you to utilize, the SBS Institute for your cyber security education, United Bankers Bank Identity Theft Solutions for your customers, utilize the buying power of the ICB Purchasing Exchange for your office product needs. Further we have been working to get you information from ICBA Securities, Bancard & TCM Bank along with the other ICBA Services which not only save your bank money but helps support our association. We also continue to recommend the services of Spectrum Financial who can provide fee income opportunities for your community bank.
Lastly we want to make sure you are getting the best insurance coverage for your bank at a fair price. We have expanded our relationship with Community Bankers Financial Services a subsidiary of the Independent Community bankers of MN. Kevin and I have seen many of you as we are doing joint member bank visits. When your banks insurance is ready for renewal please give Kevin Burr a call for a quote from up to 5 different bank insurance providers. CBFS only deals in community bank insurance and will work hard to find the right solution for your bank.
I want to thank each of you for your support and membership. We have come a long way in 4 years. I am enthused about continuing to be a loud voice for community bankers.
As we all watch the political theatre play out in the race for President, many political hot topics rise and fall. With all the talk about the economy, I hear a deafening silence about one of the greatest threats to our economy — the endangerment of community banks.
Since the financial crisis in 2008, a red line has been drawn between community banks and too-big-to-fail Wall Street banks. Community banks, meaning local banks that invest in local communities and make lending decisions locally, have been burdened with many new regulations as a direct result of the misdeeds of the too-big-to-fail banks.
While lawmakers in Washington, D.C. have proposed many regulatory relief initiatives in the 114th Congress, only a handful of minor measures have been enacted. The need for community bank regulatory relief has garnered bipartisan support, but as often is the case in Washington, behind-the-scenes politics have blocked constituent and industry efforts.
It's ironic that the continuous wave of onerous new banking regulations created to address Wall Street's misdeeds, better known as Dodd-Frank, is actually helping the megabanks gain market share at the expense of the nation's community banks. Community banks are vanishing, which is exactly what the Institute for Local Self-Reliance found in a recent report. This group's research shows that one in four community banks has disappeared since 2008. The report noted that, in 1995, megabanks with assets of $100 billion or more controlled 17 percent of all banking assets. By 2005, their market share reached 41 percent and today, it is an astonishing 59 percent. This is the unintended consequence of Dodd-Frank.
Despite this crushing burden, community banks continue to provide critical local lending support that accounts for more than 60 percent of all small business loans under $1 million and more than 75 percent of all agricultural loans. Community banks strive to serve customers and do so responsibly. Take mortgage loans for example. Between 2009 and 2012, the default rate on home loans across all banks was sixteen times higher than for residential mortgages held by community banks. Why? Because community banks know their customers. They specialize in "relationship banking" as opposed to "transactional banking”. Relationship banking allows bankers to make decisions based on customer needs.
South Dakota has been very blessed with a strong economy and a strong community banking industry that continues to be the backbone of agriculture and local economies. But we have not escaped bank consolidation. Seventeen community banks have disappeared from our state in the last six years. That means many cities and towns are void of a hometown bank.
Policymakers need to pass regulatory reform now and work long-term to abandon the current one-size-fits-all approach to regulatory oversight. We need sensible regulation that protects the safety and soundness of bank depositors consistent with the bank's own risk profile. Or, simply stated, we need proportionate regulations that represent two distinct banking models — one for community banks and one for Wall Street banks.
Our nation's financial system is the best in the world, built largely by the entrepreneurial spirit of local shareholders who understood the importance of starting and preserving independent banks to sustain local economies.
Let's hope our lawmakers in D.C. can put aside the partisan bickering and remove the regulatory shackles from our community banks to allow them to help local folks and small businesses thrive and prosper once again. And that they do it before it is too late to save one of this country's most important institutions.
Thank you for your support of the ICBSD during 2015. We could not be the strong advocate for community banking this association has become without each of you. A special thank you goes out to the ICBSD board of directors and committee members. They are the energy that keeps your association moving forward towards our constant goal of providing more value to our members each year.
In August of this year, the board conducted a strategic planning session with Philip Smith, attorney with Gerrish McCreary Smith out of Memphis, TN. Through pre-meeting surveys and our daylong session, many great opportunities and topics came to the surface. Most importantly was the board’s commitment to strengthen and grow your association for the benefit of our member community banks in South Dakota.
To achieve this objective, we have recently made two strategic changes in our association staffing. We have hired Shelli Anderson to serve as our Finance Manager, and Summer Geraets has transitioned to become our Director of Communications. We are very happy to have them both on our team. These changes will allow me to focus more on our legislative advocacy and on building strategic partnerships for the benefit of our members.
Member education and career development programing was another topic that the board spent considerable time discussing. The board has tasked the ICBSD to create a new offering that we are calling Member Networks. We will be offering the following networks: CEO, Risk Management, Compliance Networks, CFO, Chief Credit Officer, and Leadership Development.
These peer group networks will allow our community bank members to learn, share and create relationships with other community bankers in similar roles through peer sessions that meet 3 times per year. In addition, as part of the Leadership Development network, members will be allowed to attend 3 other network meetings to gain knowledge from a cross section of bank roles.
We have partnered with KPN Consulting from Atlanta, GA, to facility our network meetings during 2016. I encourage you to view more information and to register for the Member Networks on our website at www.icbsd.com/networks.
The last item of focus at the strategic planning session is the revitalization and expansion of the ICBSD committee structure. Below you will find two new committee descriptions. If you or someone from your organization is interested in serving on a committee or our board of directors, please contact me or this year’s Chairman R. Scott Campbell.
Legislative/PAC Committee - Develops policy recommendations on state and federal legislation affecting South Dakota community banks and makes recommendations as to ICBSD PAC contributions to candidates and political parties within South Dakota. In addition, the Committee helps facilitate grassroots political activities.
Career Development & Education Committee - Works to advance the efforts of the ICBSD to enhance the professional development of community bankers and build a strong community banking professional community. Provides recommendations and develops programs and partnerships with education providers to create programing in the areas of bank education, professional development, and leadership training.
As we move into 2016, your association is stronger than ever, and with your continued support, we will continue to increase our value to our members throughout South Dakota.
In 2012, when I accepted the position as your associations’ President and CEO, the last topic I thought I would be working on would be a Federal Highway Bill.
Congress is currently standing on the edge of a slippery slope as it grasps at new and different ways to fund our nation’s highway system while still appeasing the promises they made to get elected. Most notably the promise to, under no circumstances, vote to raise taxes. Now community bankers are facing a “Pay For”, not a tax increase. This “Pay For” will raid the federal reserve dividend payment for all Federal Reserve banks over 1 billion in total assets.
As you are aware, all Federal Reserve member banks and all nationally chartered banks are required to purchase Federal Reserve stock. This stock is effectively “dead capital” because it may not be sold, transferred, or used as collateral. The dividend offsets the cost of setting aside capital that could otherwise be used for lending and other services.
The ICBSD is strongly opposed to any reduction in the Federal Reserve stock dividend rate as a means to pay for the highway transportation bill or any other legislation. This dividend reduction is a backdoor tax increase that will impact community banks and their customers. The prospect of converting the Federal Reserve’s balance sheet into a means of government spending is immensely troubling.
If you’re not concerned because your bank is under the billion dollar
threshold, you should be. At one billion, this will negatively affect many community banks within South Dakota. But let me assure you if we allow this door to be opened, this “Pay For” will slide downwards to negatively affect all Federal Reserve banks.
Reducing the dividend has not been studied or debated before Congress and could result in significant unintended consequences to the Federal Reserve system, member financial institutions and the individuals and businesses they try to serve. A reduction in the stock dividend rate to pay for unrelated spending items sets a terrible precedent.
This convoluted scheme to pay for roads is moving forward while the last time a gas tax increase was implemented was 18 years ago, in November 1997, raising it from 18.3 cents per gallon to 18.4 cents per gallon, which was not really an increase only a return to 1994 levels. The last significant raise occurred in 1993 when the tax was raised from 14.1 to 18.4.
We need to tell Congress enough with the games, schemes
and unstudied “Pay For” language in bills. I never thought community banks would be working to change a highway bill, but then again nothing surprises me anymore coming from our nation’s capital.
McCurry, a native of MN and resident of Mitchell, SD, holds a Bachelor of Arts degree in Communications / Marketing from the Minnesota State University, Mankato. Prior to joining the ICBSD as President and CEO, he directed the marketing, sales and government relations efforts at Santel