February2014_Layout 1 - South Dakota Bankers Association

South Dakota Banker
Your Premier Source to South Dakota’s Financial Services Industry | February 2014
INSIDE . . .
Are We Any Closer to Housing Finance Reform? Page 8
Making a Difference Beyond Banking: Meet
Dave Rozenboom, First PREMIER Bank, Sioux Falls Page 12
Target Breach: What You Should Know Page 16
Official Publication of the South Dakota Bankers Association | www.sdba.com
2014 ABA
GOVERNMENT
RELATIONS
SUMMIT
MARCH 24–26
WASHINGTON, DC
LINKING PRINCIPLES TO POLICY
Visit aba.com/Summit
SDBA Board of Directors
Kevin Tetzlaff, Chairman
First Bank & Trust, Brookings
South Dakota Banker
Your Premier Source to South Dakota’s Financial Services Industry
February 2014 | www.sdba.com
George Kenzy, Chairman-Elect
First Fidelity Bank, Burke
Rick Rylance, Vice Chairman
Dacotah Bank, Rapid City
Steve Hayes, Immediate Past Chairman
Dakota Prairie Bank, Fort Pierre
Term Ending April 30, 2014
Bob Clair, American State Bank, Pierre
Kevin Whitelock, Pioneer Bank & Trust, Spearfish
Term Ending April 30, 2015
Paul Domke, Heartland State Bank, Redfield
Monte Troske, Farmers State Bank, Turton
Ken Karels, Great Western Bank, Sioux Falls
Term Ending April 30, 2016
Dave Rozenboom, First PREMIER Bank, Sioux Falls
Ron Kristensen, Farmers and Merchants State Bank,
Plankinton
Dave Zimbeck, Citibank, N.A., Sioux Falls
SDBA Staff
Contents
Message from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . .4
Governor Calls for Legislation to
‘Modernize’ and ‘Stabilize’ Bank Franchise Tax
From the Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SDBA’s Taxation Equality Campaign Aims to Educate
South Dakota Bankers Insurance & Services Update . . . . .6
SDBA Goes Self Insured with Health Plan
SDBA Board News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
SDBA Seeks Candidates for 2014-2015 Officers
Regulatory Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Are We Any Closer to Housing Finance Reform?
Curt Everson, SDBA President
[email protected]
2014 National School for Experienced Ag Lenders . . . . . . .9
Mike Feimer, President of Insurance and Services
[email protected]
Ag Banking News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Deb Gates, Administrative Vice President
[email protected]
Don’t Miss the SDBA’s Spring Ag Credit Conference
SDBA News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Alisa DeMers, Communications Coordinator
[email protected]
2014 SD Bank Directory Available, Banking School Scholarships
Nadine Kepford, IS/Business Manager
[email protected]
Making A Difference Beyond Banking . . . . . . . . . . . . . . . . .12
Jeanine Dyce, Administrative Assistant
[email protected]
Joan Deal, Marketing Director of Education
[email protected]
Michelle Guthmiller, Insurance Specialist
[email protected]
Meet Dave Rozenboom, First PREMIER Bank, Sioux Falls
Endorsed Vendor Spotlight: Secure Banking Solutions . .16
Target Breach: What You Should Know
Washington Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
A Case Study in Effective Advocacy
Mike Zolnowsky, CIC, Commercial Lines Specialist
[email protected]
Ask the Appraiser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Editor: Alisa DeMers
Bank Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Advertising: If you would like to advertise in South
Dakota Banker, contact Alisa DeMers at
[email protected].
Classifieds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
South Dakota Banker is a monthly magazine
published by the South Dakota Bankers Association
that is dedicated to enhancing the banking profession
by providing useful and timely information on important
events and trends in the banking industry. Members are
invited to submit news and information.
The advertisements within this publication do not
necessarily represent endorsed vendors of the SDBA.
With the exception of official announcements, the
SDBA disclaims responsibility for the opinions
expressed and statements made. The editor reserves
the right to refuse any advertisement or editorial copy.
Advertising rates are available upon request.
Member banks, branches and associate members
receive one complimentary subscription. Additional
subscriptions are available to members at a rate of $45
per year. The non-member rate is $90 per year.
Serving Bankers Since 1884
Ethics Rule – Conduct
Educational Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
SDBA 2014 State Legislative Day . . . . . . . . . . . . . . . . . . . . .24
South Dakota Bankers Association
109 West Missouri Avenue, PO Box 1081
Pierre, SD 57501
Phone: (605) 224-1653 Fax: (605) 224-7835
Web site: www.sdba.com
Message from the Chairman
Governor Calls for Legislation to
‘Modernize’ and ‘Stabilize’ Bank Franchise Tax
By Kevin Tetzlaff
President/CEO, First Bank & Trust, Brookings
A
s you read this, the 2014 South
Dakota Legislative Session will
be well under way. However,
my comments for this month’s column
come on the heels of listening to the
Governor’s State of the State Address.
Overall, the message seemed
upbeat – great economy, great business
climate, low unemployment and a balanced budget. In
looking ahead, the Governor stressed the idea of building
momentum on current strengths for South Dakota rather
than specific, bold new initiatives. However, Gov.
Daugaard did suggest potential legislative changes to the
state’s bank franchise tax (BFT).
Unfortunately, he wasn’t referencing BFT as it relates
to our Taxation Equality Awareness Campaign, which of
course would bring in a new, untapped source of revenue
to state and local government budgets. Rather, the
Governor focused his concern on the volatility and
general decline in state BFT collections. He announced
plans for legislation which would “modernize” the
formula and “stabilize” South Dakota’s BFT collections
from credit card and interstate banks.
The Governor was empathetic in that his goal was not
to increase taxes, but rather stabilize revenues which
would assist in the state’s budgeting process. Volatility in
BFT receipts cannot be disputed and can be easily seen in
a review of collections over the last 20 years. I am sure the
Governor’s intentions are noble, however, the fact remains
that BFT is an income tax, and market volatility is an
inherent component of any income tax. In the years
leading up to 2007-2008, banking and the economy in
general were on fairly solid footing. BFT receipts were
generally on the upswing until the recession and the
Dodd Frank legislation hit. Income for banks, especially
credit card banks, tanked, and BFT receipts mirrored that
decline.
All banks pay 6 percent of their net income to the
South Dakota Department of Revenue in the form of BFT.
The actual calculation is quite straightforward for banks
that primarily do their business in South Dakota, but for
banks which have a significant presence outside of South
Dakota (i.e. credit card banks and interstate banks)
determining the appropriate net income becomes much
more complicated. For these banks, the BFT is calculated
using a three-pronged apportionment factor.
l The first factor is property. The amount of
physical property (branches, service centers, data centers,
etc.) for the interstate bank held in South Dakota
compared to property held outside the state. This factor is
n 4 n
pretty straightforward.
l The second component is payroll. This calculation
is based on what percentage of payroll is paid to South
Dakotans. Again, this is fairly straightforward.
l Finally, the bank’s receipts are reviewed. This
factor takes into consideration the entire process of a
financial transaction which may include multiple steps,
(marketing, underwriting, administration, payments,
servicing, collections, data storage, etc.) some of which
may be performed in South Dakota, while other steps may
be completed outside the state. Undoubtedly, this is a
difficult piece to calculate and even tougher to audit.
The Administration and Department of Revenue
(DOR) actually started this discussion during the 2013
Legislative Session. After much dialog, the prudent
decision was made to not rush any legislation, but rather
have an out-of-session review. A Bank Franchise Tax
Working Group was formed consisting of the DOR, state
legislators, representatives of the SDBA and
representatives from member credit card and interstate
banks. A number of different scenarios were thoroughly
examined, including some which had unintended
consequences of potentially increasing the BFT on a
number of traditional community banks. Those
alternatives were, of course, dead on arrival from the
bankers’ perspective.
In the end, the working group, supported by the
SDBA Legislative Committee and Board of Directors,
agreed to modernize the receipts portion of the threefactor apportionment formula, moving away from
activity-based sourcing to market-based sourcing of bank
receipts. While the agreed-upon adjustments may actually
bring more potential BFT to the state from those banks
utilizing the apportionment calculation, it may not have
met the Administration’s goal of “stabilizing” BFT
receipts.
The Governor was very specific in his comments
suggesting proposed legislation to stabilize BFT receipts
to historical averages could be accomplished in a manner
that “does not impact our South Dakota community
banks. It will impact nine very large interstate banks
doing business in South Dakota, but it will not – it will
not – increase the total taxes paid by these nine banks
collectively over historical averages.”
As of this writing, the SDBA has not seen what the
proposed legislation looks like and, therefore, the SDBA
has not established any position on the bill. At this point,
we are left with more questions than answers. So what
does this mean going forward? Stay tuned and be ready
continued on page 21
South Dakota Banker n February 2014 n www.sdba.com
From the Executive Office
SDBA’s Taxation Equality Campaign Aims to Educate
By Curt Everson
President, South Dakota Bankers Association
T
he SDBA’s Taxation Equality
Awareness campaign is officially
six months young. We developed
comprehensive education materials. We
recruited and trained bankers to engage
local stakeholders in a discussion about
the history and current-day costs
associated with old tax exemptions
enjoyed by credit union and Farm Credit System lenders.
We held news conferences across the state to raise public
policy questions about archaic tax exemptions in the
minds of radio, television and newspaper reporters.
Because these old federal tax
laws restrict the ability of the
South Dakota Legislature to
apply South Dakota’s bank
franchise tax uniformly to all
financial service providers,
bankers engaged groups of local
government officials in their
home communities to talk about the ongoing costs
associated with Congress’ failure to examine the
exemptions in a current-day context. More recently, we
have been educating state legislators about the changes
that have taken place over time in the size and business
scope of today’s credit unions and Farm Credit System
lenders.
The credit union industry’s response to our awareness
building campaign has been interesting. Credit unions
and their associations have spent lots of money on radio
ads aimed at vilifying big, profit-hungry banks who
allegedly want to close credit unions. In my 11 years at
the SDBA, our public policy agenda has never been
driven by “big” banks. It has been driven to support
policies that are positive and to oppose policies that are
harmful for the industry as whole.
They have chided bankers for wasting the valuable
time of South Dakota’s elected officials. Funny, I haven’t
met an elected state or local government official who
didn’t want to learn about who pays taxes to help fund
valuable government services, who doesn’t pay those
taxes and why.
They have tried to convince government officials that
their tax-exempt status is tied directly to their status as
not-for-profit, cooperatively-owned institutions. Tell that
to tax-paying mutual insurance companies and especially
to tax-paying mutual savings banks. Congress repealed
the income tax exemptions of mutual insurance
companies in 1942 and mutual savings banks back in
1951. In the case of mutual savings banks, Congress
determined that these cooperative and mutual institutions
were in active competition with taxable institutions and
continuing their tax exemption would be
“discriminatory.” Maybe those words strike just a bit too
close to home with today’s aggressive, fast-growing credit
unions.
They are quick to point out that their exemption has
been reviewed periodically by Congress, most recently in
1998. They fail to point out that 1998 was also the year
that Congress created the “community credit union
charter.” Many state and local government elected
officials that I have talked to agree that Congress owes an
obligation to every tax-paying American wage earner and
small business owner who pays more income tax in a year
than a $53-billion Navy Federal Credit Union or a $970million Black Hills Federal Credit Union (BHFCU).
Speaking of South Dakota’s largest community
chartered credit union, BHFCU is moving closer to
completing its newest branch in Pierre. On its street-side
signage, below the BHFCU logo, I noticed a secondary
sign advertising “Midwest Business Solutions –
Commercial and Agricultural Lending.”
According to its website, “Midwest Business Solutions
(MWBS) is a credit union service organization (CUSO)
focused on providing underwriting and portfolio
management services for commercial and agricultural
loans.” The next paragraph contains the following:
“MWBS assists credit unions in building viable policies
for business and agricultural lending, educating credit
union staff and partnering with them in credit analysis.
MWBS will underwrite the credit request and provide
recommendations of structure and pricing for the credit
request.”
Midwest Business Solutions’ website contains a list of
“partners” that includes 10 credit unions, including
BHFCU plus the Credit Union Association of the Dakotas.
How does a credit union business model that includes
business partnerships designed to increase the
agricultural and commercial lending activities of credit
unions comport with the single, common-bond credit
union created by Congress back in 1934? I have talked to
quite a few members of the South Dakota Legislature who
would like Congress to answer that question and plenty
more.
The Farm Credit System response to our campaign is
more measured. To be sure, Farm Credit doesn’t welcome
the prospect of full-blown Congressional hearings on its
nearly 100-year-old exemption from paying federal and
state income taxes on income earned from loans secured
by ag real estate. It also doesn’t like it when we point out
its interest in making loans on posh Black Hills vacation
getaway estates for Hollywood producers or in funding a
$725-million piece of Verizon Telecommunications’
continued on page 21
South Dakota Banker n February 2014 n www.sdba.com
n 5 n
South Dakota Bankers Insurance & Services Update
SDBA Goes Self Insured with Health Plan
By Mike Feimer
President, South Dakota Bankers Insurance & Services Inc.
W
e are starting 2014 with a
newly-formed board of
trustees to govern our selfinsured SDBA Health Plan. All aspects
of our health insurance plan will be
governed by this very important board.
Each member of this board was chosen
because of their vested interest and
knowledge they bring to the decision making process of
running our multiple employer trust (MET).
In late December, the board had an initial phone
conference call, and first on the agenda was the election
(appointment) of officers.
l Chairman: David King, ONE AMERICAN BANK,
Sioux Falls
l Vice Chairman: Hugh Bartels, Reliabank Dakota,
Watertown
l Secretary: Dean Dreessen, Merchants State Bank,
Freeman
l Mark Law, DNB National Bank, Clear Lake
l Steve Hayes, Dakota Prairie Bank, Fort Pierre
After the election, we ratified a number of decisions
that were made last year and set a Jan. 6 meeting in Sioux
Falls at ONE AMERICAN BANK. The meeting was
postponed to Jan. 9 due to subzero temperatures. In
addition to board members and me, also in attendance
were SDBA President Curt Everson, SDBA Legal Counsel
Brett Koenecke, SDBIS Insurance Specialist Michelle
Guthmiller and SDBA Business Manager Nadine Kepford.
This was a perfect time to take everyone through the
monumental task of producing all the documents,
actuarial projections, state mandatory requirements and
funding requirements necessary in forming a health
insurance self-insured entity. Many of the presentations
that I have shared in the past came in handy to bring
everyone up-to-speed on why we went with the selfinsured structure. One very important reason was the
ability to keep our risk pool together, and of course the
savings of more than $600,000 in ObamaCare taxes was
not overlooked.
Elizabeth Mendelson, director of sales for Blue Cross
Blue Shield, join us for the last half of the meeting. She is
the SDBA’s point person and has played an important
role in the formation of our product offerings and
continued support of our efforts to bring the best health
insurance products for all our member banks. A special
thanks for her efforts and continued support.
Throughout this complex process, we accessed a lot of
expertise in numerous disciplines to bring this project
together. A special thanks go out to the South Dakota
Department of Insurance as Director Merle D. Scheiber
and his staff were an absolute pleasure with whom to
n 6 n
work. They were always ready to help explain complex
legal, monetary and reporting requirements that had to be
established and in place.
As we worked through the requirements, my point
person was Frank Marnell, counsel for the Division of
Insurance. Our timeframe was very short, and Frank’s
ability to access all relevant parties within the Division
and respond back with directives and recommendation
was essential in meeting this deadline. As we progressed
to the MET’s economic demands, we had the pleasure of
working with Johanna Nickelson, assistant director of the
South Dakota Division of Insurance’s Solvency and
Licensing. Johanna was very helpful in establishing the
funding requirements and defining options for our
reserve funds. I know Melissa Klemann and Joshua
Anderson with the Division of Insurance also spent time
working on our behalf to accomplish our goal.
Because this is the only MET in South Dakota, there
were a lot of guidelines and rules that had to be
committed to print, and we utilized Iowa Bankers
Association’s long-standing guidelines as a prototype to
help establish South Dakota’s rules. A special thanks to
Merritt Krause with the Iowa Bankers Association for
sharing his documents that allowed us to expedite this
entire progress.
Brett, Curt and I spent a great deal of time wading
through Iowa Bankers Association’s documents and
applying South Dakota’s newly-formed requirements to
come up with our set of “best practices” rules. Brett and
his team did an exemplary job of modifying and
producing an end product that would permit the
functioning of our self-insured MET.
SDBIS’ Michelle Guthmiller has worked with all the
banks on their health insurance questions and will
continue to be a vital part of this process especially when
there are enrollment discrepancies. SDBA’s Nadine
Kepford has set up a premium billing process to calculate
monthly premiums, automatically debit premium from
each bank and remit payments to BCBS for claims. This is
all accomplished via EFT, allowing us to manage the
entire process without additional staff.
This was an excellent meeting with great participation
and exchange of ideas by all involved. I am pleased with
everyone’s willingness to participate and genuine interest
in helping promote the MET as the best alternative to
supply health insurance to your employees. n
Mike Feimer is president of South Dakota Bankers Insurance
and Services (SDBIS) Inc. He can be reached at
605.660.2341 or [email protected].
South Dakota Banker n February 2014 n www.sdba.com
SDBA Board News
SDBA Seeks Candidates for 2014-2015 Officers
A
re you interested in
becoming an officer of
the South Dakota
Bankers Association?
SDBA officers include the
chairman, chairman-elect, vice
chairman and immediate past
chairman. The SDBA is currently seeking people
interested in running for the vice chairman position,
which will be elected at the Annual Convention on June
10, 2014, in Fargo.
The current chairman-elect, George Kenzy (First
Fidelity Bank, Burke), will automatically assume the
chairman position on June 10, 2014. The current vice
chairman, Rick Rylance (Dacotah Bank, Rapid City), will
be eligible to run for chairman-elect. The position of vice
chairman will be up for election. Current Chairman Kevin
Tetzlaff (First Bank & Trust, Brookings) will automatically
become the immediate past chairman.
Executive officers of any SDBA member bank are
eligible to run for vice chairman. If you are interested in
running for the position, contact a member of the
nominating committee listed to the right for more
information and submit a letter of intent to SDBA
President Curt Everson. n
Officer Election Nominating
Committee
Chairman Steve Hayes
Dakota Prairie Bank
PO Box 790
Fort Pierre, SD 57532
Phone: 605.223.2337
Email: [email protected]
Bruce Byrum
First Interstate Bank
PO Box 188
Spearfish, SD 57783
Phone: 605.642.2734
Email: [email protected]
Dave Zimbeck
Citibank (South Dakota), NA
PO Box 6000
Sioux Falls, SD 57117-6000
Phone: 605.331.1630
Email: [email protected]
South Dakota Banker n February 2014 n www.sdba.com
n 7 n
Regulatory Reform
Are We Any Closer to Housing Finance Reform?
By Van D. Fishback
Vice Chairman, First Bank & Trust, Brookings
O
ne of SDBA Chairman Kevin
Tetzlaff’s position planks for his
term has been to address the
housing finance issue in the U.S. All
would agree it is a many headed
monster. All would feel the system is
broken in one or more ways – too much
paperwork, the threat of compliance
violations, what will the Consumer Financial Protection
Bureau do next, how will it manage the QM rule, etc., etc.
Each concern is legitimate and eventually needs to be
appropriately dealt with.
Admittedly, I’m going to address only a piece of the
landscape. In doing so, I’m speaking both as a private
banker and South Dakota’s lone member on the Board of
Directors of the Federal Home Loan Bank of Des Moines.
Since these comments have not been reviewed and
approved by the FHLBDM, I take full responsibility for
them.
So what’s going on with congressional reform? Cynics
and pessimists say nothing material will happen until
2017 or 2018. I choose to be more optimistic; in any event,
I feel we should continue to forge ahead. More
specifically, I think we should watch the Housing Finance
Reform and Taxpayer Protection Act (commonly referred
to as the Corker-Warner bill, S. 1217) first proposed June
25, 2013. There are other proposals floating around, but at
this time, I think most attention is on Corker-Warner
because it has at least some measure of bipartisan
support.
As originally introduced, it seems longer on concept
(the future of Fannie and Freddie, creation of the Federal
Mortgage Insurance Corporation (FMIC), improved
functionality of the housing finance market, etc.) and
shorter on detail. However, it is being actively reviewed
and fleshed out by the Senate Banking Committee under
the watchful eyes of Chairman Tim Johnson (D-S.D.) and
Ranking Committee Member Sen. Mike Crapo (R-Idaho).
There is some good news, or at least reason to be hopeful.
First, both senators and their offices work well
together. A sense of bilateral collaboration is good,
especially in today’s environment. There is a possibility a
more complete bill will come forward in the first half of
2014, before we enter the campaign season. Second, both
senators represent similar constituencies at least with
respect to community banking and largely rural, agrarian
sectors. Third, we in South Dakota have an excellent
opportunity to “weigh in” on any issues we deem
important because we know the chairman and his staff.
As I mentioned publically in a bankers’ meeting a couple
months ago, they are eager to hear from us. Rather than
complain about the sorry state of affairs, let’s speak up.
n 8 n
A full commentary on Corker-Warner would take
much longer than the space allowed here, so the following
are a few of the points particularly germane to South
Dakota that I’ve tried (with the assistance of the
FHLBDM) to make to the committee.
First, the community banking structure is already in
place – we are everywhere and we know our customers.
We are the “boots on the ground” and are willing to
initiate the financing process. Even if we are wrong on
occasion, there is no chance we would bring the country
to its financial knees as Countrywide and others did. The
message of community banking as the foundation of
finance reform has been strongly emphasized by the
FHLBDM, too, when its representatives, particularity
President Richard Swanson, have testified.
Second, access to the secondary market is critical, and
flexibility is an absolute requirement. A common
securitization platform may work, but only if it can adapt
to at least two realities in our world: one size does not fit
all when it comes to appraisals, particularly with regard
to comparables. As I said earlier, we know our customers
and they do not represent a significant source of risk or
loss, so we need some sort of flexibility in this area.
Solutions do exist, and we should ask Congress to take
bold steps to provide them. In like fashion, we need more
boldness in solving the bottleneck often encountered with
our farm producers and sole proprietors. Many are far
more financially responsible than a W-2 wage earner, but
that’s not often the way the system views them.
A final observation, actually a request. In
conversations SDBA President Curt Everson and I have
had with the Senate Banking Committee, they have asked
if there is any way we could estimate how much
additional housing loan production could be generated on
the secondary market (not “hidden” in some other place
like a line of credit or using ag land) if we didn’t face the
above obstacles. If any member has experienced this pinch
once, Curt or I would like to hear about it. We will see
that information gets passed on anonymously to the
committee.
If not before, I look forward to hearing from you at
the SDBA’s 2014 State Legislative Day Feb. 12 in Pierre. n
Van D. Fishback is vice chairman of First Bank & Trust,
Brookings. He represents South Dakota on Federal Home
Loan Bank of Des Moines’ Board of Directors. Fishback can
be reached at 605.696.2200 or [email protected].
South Dakota Banker n February 2014 n www.sdba.com
Beyond the Fundamentals
2014 National School
for Experienced Ag Lenders
June 23-26, 2014
Black Hills State University
Spearfish, South Dakota
This school will be limited to 60 students. Visit www.sdba.com.
The SDBA’s 2014 National School for Experienced Ag Lenders targets ag lenders
with a good knowledge of financial analysis in ag lending who desire further
training in analyzing and troubleshooting more complex and problem credits.
“Simply the best, most practical bank school I’ve ever been to.
The real case studies have been a learning tool that I can put to use
with our entire ag portfolio. What you’ll take home will make you
look at difficult situations and say, ‘It can be done! The right way!’”
– Darwin Bitz, Heartland State Bank, Edgeley, N.D.
South Dakota Banker n August 2013 n www.sdba.com
n
Ag Banking News
Dr. Kohl and Dr. Flinchbaugh Are Coming to Pierre
Don’t Miss the SDBA’s Spring Ag Credit Conference
T
he SDBA has another “barnburner’” event planned.
Topics and speakers for the SDBA’s 2014
Agricultural Credit Conference on April 9-11 in
Pierre are geared to give bankers one of the best training
events of the coming year.
Dr. Dave Kohl was unable to attend
the 2013 conference which was
rescheduled due to an April blizzard,
but he is returning this spring to present
“Straight Talk About Agriculture and
the Economy.” Kohl will also moderate
a panel of attorneys and producers to
discuss estate planning. Everyone
Dr. David Kohl agrees it’s necessary, but what is the
reality of getting it done?
Kansas State University wildcat Barry Flinchbaugh,
one of the most widely-respected practitioners of farm
policy in a generation, is sure to entertain when he shares
his thoughts about the Farm Bill and farm policy.
Other program presenters include John Blanchfield,
ABA’s Center for Ag & Rural Banking, another crowd-
Dr. Barry
Flinchbaugh
Elaine Kub
June 8-10, 2014
Ramada Plaza Suites
Fargo ND
pleaser who will bring ag bankers up to
speed on “Hill Happenings in D.C.”
Elaine Kub with Paragon
Investments will share her thoughts on
how profits are really made in the grain
markets, and Kansas State University
professor of agricultural economics Dr.
Allen Featherstone will share his
thoughts about the land bubble.
The conference will be held at the
Ramkota RiverCentre in Pierre. Be
watching for the complete program and
registration form in the mail and at
www.sdba.com.
Booth space will be available at the
conference for companies looking to
promote their products or services to ag
bankers. Thank you to Federal Home
Loan Bank of Des Moines for
sponsoring Dr. Kohl and Farmer Mac
for sponsoring the Friday breakfast. n
Registr
ation
availab materials
le Marc
h5
VIP TICKETS ARRIVING SOON!
n 10 n
South Dakota Banker n February 2014 n www.sdba.com
SDBA News
2014 SD Bank Directory Available
Banking School Scholarships
The 2014 South Dakota Bank
Directory is now available. Each
SDBA member bank and branch
receive one complimentary directory.
Associate members also receive a
complimentary directory once they
have renewed their membership for
2014.
The South Dakota Bank Directory
provides detailed information on all
South Dakota banks, including
addresses, telephone and fax
numbers, important contact names
and additional pertinent information. The directory also
contains information on regulatory agencies, endorsed
vendors, associate members and South Dakota officials.
Additional copies may be purchased from the SDBA.
The cost for SDBA members is $25 per directory, plus tax
and shipping, or $20 a copy if ordering multiple copies.
The non-member cost is $40 per directory plus tax and
shipping, or $35 a copy for multiple copies.
To order additional copies, visit www.sdba.com and
click on Publications, Bank Directory or call the SDBA
Office at 800.726.7322. n
n Graduate School of Banking
at the University of Wisconsin - Madison
Two Prochnow Education Foundation/SDBA
Scholarships are available to the Graduate School of
Banking at the University of Wisconsin - Madison for the
2014 school session.
Each scholarship recipient will receive a $1,300
discount for each of the three sessions they attend at GSB.
The 2014 session is Aug. 3-15. The deadline to apply for
the scholarship is May 1, 2014.
n Graduate School of Banking at Colorado
The SDBA is partnering with the Graduate School of
Banking at Colorado to offer the GSBC Future Leaders
Scholarship to a South Dakota banker for 2014.
Recipients receive $1,250 per year for three
consecutive years and must enter as a first-year student.
Interested applicants should apply online by March 1,
2014, for full consideration for the 64th annual school
session July 13-25, 2014.
For more information on the schools, scholarships and
to apply, visit www.sdba.com and click on Education,
Graduate Banking Schools or contact Deb Gates at
800.726.7322 or [email protected]. n
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n 11 n
Making a Difference Beyond Banking
Meet Dave Rozenboom
First PREMIER Bank, Sioux Falls
By Alisa DeMers, Editor
D
uring the first 26 years of his
banking career, Dave
Rozenboom worked his way
through the various departments of
one banking organization until he
became a regional president. Then in
2011, he was presented with a unique
opportunity to help lead a privatelyowned community bank in South
Dakota.
Rozenboom currently serves as
president of First PREMIER Bank in
Sioux Falls. He is also serving his
first term on the SDBA Board of
Directors. He listened to advice early
in his banking career to be involved
in organizations for which he has a
passion.
n 12 n
“Our family was always taught
the importance of serving others and
that it is really important to be part
of something that is bigger than
yourself,” Rozenboom said. “That
can manifest in many ways – some
professionally, some civically, some
faith based. In many ways, we have
an obligation in each of these areas.”
The Youngest in His Family
Rozenboom grew up the
youngest of six children on a farm
eight miles east of Oskaloosa, Iowa.
The city of around 12,000 is located
about 65 miles southeast of Des
Moines. The family grew corn and
soybeans and operated a farrow-tofinish hog operation.
Growing up, Rozenboom
enjoyed playing baseball and
basketball. He attended Oskaloosa
Christian Grade School and Pella
Christian High School, which was 26
miles from the family farm.
Rozenboom’s parents were in
their early 40s when he was born,
and eight years separated him in age
from his next oldest sibling. While in
many ways Rozenboom grew up like
an only child, he said his older
brothers were involved in the farm,
so in the evenings he always had
someone with whom to play sports,
fish or hunt.
“Although my brothers may tell
you differently, my version of the
story is that I always got stuck with
South Dakota Banker n February 2014 n www.sdba.com
the labor-intensive jobs – more in
labor and less in management,”
Rozenboom joked about being the
youngest in his family. “I didn’t have
a burning desire to stay on the farm,
though I have a great appreciation
for growing up there. I knew I was
going to go on to college and was
very open to where the future might
lead.”
After graduating from high
school in 1981, Rozenboom attended
and played baseball at Dordt College,
which is affiliated with the Christian
Reformed denomination. The college
is located in Sioux Center, Iowa,
which is an hour’s drive from Sioux
Falls.
A high school test showed that
Rozenboom had an aptitude for
finance, accounting and business, so
he decided to major in business
administration.
“I grew up with an agriculture
background, so I didn’t have a lot of
exposure to what opportunities
might exist in business. I enjoyed
accounting and finance, but I also
enjoyed relationship development
and working with people,”
Rozenboom reflected. “A business
administration degree is general
enough that you get some
accounting, finance, marketing and
economics, so it was a really good,
broad exposure to what it takes to be
successful in a business.”
Rozenboom had an opportunity
to intern at Northwestern State Bank
in Orange City, Iowa, during his
senior year of college. He worked
part time at the bank for a semester
at tasks such as manual check filing
and monthly statement stuffing to
gaining exposure to business, ag and
retail banking.
“It didn’t take me long to get a
good sense that banking was of
interest to me,” said Rozenboom. “I
was attracted to the quantitative side
of risk management and financial
analysis but also to developing
relationships with fellow employees
and customers and interaction with
organizations in the community.”
A Career in Banking
Rozenboom and his wife,
Tammy, were married between their
junior and senior years of college.
Tammy was from Sioux Center and
graduated with her elementary
education degree from Dordt.
Upon graduating from Dordt in
1985 with a degree in business
administration, Rozenboom had job
offers at banks in Pella and Orange
City, Iowa, and at First Bank of South
Dakota (now U.S. Bank) in Aberdeen.
“At the end of the day, we knew
that if we didn’t leave our home area
now, we probably never would,”
explained Rozenboom. “It struck us
both that we wanted to pursue
opportunities and see where it might
lead, and we were open to exploring
other areas of the country.”
Rozenboom accepted the job at
U.S. Bank in an entry-level
professional development program.
The program was designed to bring
in a group of college graduates to
give them a broad exposure to the
entire operation of the bank.
During an eight-month rotation,
Rozenboom spent time in consumer,
business and ag banking, as well as
customer service, operations, teller
services and trust services. He then
spent the remainder of the year in a
commercial lending academy in
Minneapolis. When Rozenboom
returned to the bank in Aberdeen, he
was placed in commercial and ag
banking.
“That was the start of preparing
me for a broader role where you
have an appreciation and
understanding for the wide array of
services that we provide for our
customers,” he said.
Rozenboom worked in
commercial and ag banking until
1989 when he was promoted to
relationship manager in business
banking at U.S. Bank in Sioux Falls.
There, he was responsible for a
portfolio of business banking clients
and handled all of their banking
needs.
In 1994, Rozenboom moved up
to business banking manager. He
managed the business banking team
for U.S. Bank in Sioux Falls until
2001, when he was named U.S.
Bank’s regional president of eastern
South Dakota and northwest Iowa. In
this role, he was responsible for all
aspects of 14 U.S. Bank locations
including major markets in Sioux
Falls, Sioux City, Aberdeen, Mitchell
and Jamestown.
“As I was growing in my career,
I felt well suited and challenged in
each of my roles. I was very
fortunate to have opportunities to
continue to develop in my career
through promotions,” recalled
Dave Rozenboom works at First PREMIER Bank’s main location at 601 S. Minnesota
Ave. in Sioux Falls.
South Dakota Banker n February 2014 n www.sdba.com
n 13 n
Rozenboom.
The roles Rozenboom enjoyed
most were in leadership positions
because he was able to both interact
with customers and deal with the
business of running the bank.
The opportunity to work for First
PREMIER Bank in Sioux Falls came
in 2011. Rozenboom and First
PREMIER Bank CEO Dana Dykhouse
had previously worked together on a
number of community and statewide
organizations, such as Forward Sioux
Falls and Junior Achievement.
First PREMIER Bank had grown
from around $200 million in assets
when Dykhouse joined the bank in
1995 to more than $1.2 billion in
assets. For continued growth,
Dykhouse recognized that it would
be wise to split the roles of CEO and
president, which he had both filled
since joining the bank.
“For me personally, it was an
opportunity to be part of a leadership
team at a privately-owned, highlysuccessful organization,” Rozenboom
explained. “When you are part of a
large bank system, it is different than
being part of a smaller leadership
team for the entirety of the
organization where you are right at
the table when it comes to strategic
direction and business planning.”
A Move to First PREMIER Bank
First PREMIER Bank was formed
from the combination of six bank
charters. T. Denny Sanford
purchased United National Bank
(now First PREMIER Bank), along
with a newly-formed credit card
company (PREMIER Bankcard) in
1987. While First PREMIER Bank and
PREMIER Bankcard are sister
organizations under the same
holding company, United National
Corporation, they operate
independently. Miles Beacom serves
as PREMIER Bankcard’s CEO and
president.
Rozenboom joined First
PREMIER Bank in 2011, and as
president his responsibilities are
internal oversight and leadership in
all areas of the bank. Dykhouse’s
primary focus as CEO is on longterm strategic positioning and
significant involvement in
community and state organizations.
n 14 n
There are, of course, crossovers in
their jobs as Rozenboom is also
heavily involved in several
community organizations, and
Dykhouse remains actively involved
in growing the bank.
In many ways, Rozenboom said,
First PREMIER is a traditional
community bank with an $850
million loan portfolio that includes
consumer, commercial, ag, and
commercial and residential real
estate lending. In addition to an
operations center, the bank has 17
branches – 10 in Sioux Falls, three in
Watertown and one each in
Castlewood, Kranzburg, Lake
Norden and Wakonda.
While a traditional bank in many
ways, First PREMIER Bank also
provides several unique services,
such as a trust department with $2.1
billion in assets under management.
The bank is the 20th largest
processor of ACH transactions in the
United States, mainly direct deposit
and payroll processing, and provides
ATM funding for 10 customers who
independently own 5,000 ATM
machines around the U.S.
First PREMIER also has a $290
million indirect lending portfolio.
The bank works with a network of
150 dealers who provide RV, marine,
car and motorcycle loans, which it
then buys.
Rozenboom said the bank’s
tremendous growth since 1995 has
not been through acquisition but
core, organic growth – one customer
at a time.
In total, First PREMIER Bank
and PREMIER Bankcard employ
more than 2,000 people, of which
around 330 work for the bank. First
PREMIER’s employees are known for
their volunteer work and the impact
they make in their communities
through organizations such as the
United Way.
“We owe all of our success to our
tremendous team of people here at
PREMIER,” Rozenboom said. “The
single greatest factor in getting us
where we are today is from the
collective contributions of our
employees – everyone performing
their roles to the best of their ability.”
PREMIER’s vision is “to be the
leader in the markets we serve
through employees who are
dedicated to PREMIER service, who
are proactive, who reflect a unity of
vision and culture, and who are
From left are PREMIER BankCard President/CEO Miles Beacom, First PREMIER
Bank CEO Dana Dykhouse and First PREMIER Bank President Dave Rozenboom
practicing for a skit they performed at a staff meeting.
South Dakota Banker n February 2014 n www.sdba.com
committed to the pursuit of
excellence.” Employees follow the
organization’s views and values,
which spell out “The PREMIER
Way.”
“Our employees came up with
‘The PREMIER Way,’” Rozenboom
explained. “When asked why they do
what they do or how they do it, they
say it is just ‘The PREMIER Way.’ It
is how we do things. We took that
feedback from our employees and
rebranded our views and values to
reflect that.”
A Proper Balance in Life
Soon after moving to Sioux Falls,
Rozenboom became involved in a
number of organizations such as
Sioux Empire United Way, Junior
Achievement of South Dakota and
the Sioux Falls Area Chamber of
Commerce. He has served in
leadership positions with all three
organizations including chairman of
the Chamber of Commerce’s Board
of Directors in 2009-2010. He has also
been involved in Forward Sioux
Falls, a joint venture economic
development partnership between
the Chamber of Commerce and the
Sioux Falls Development Foundation.
Rozenboom is currently serving
his first term on the SDBA Board of
Directors representing banks in
Group 1.
“I think it is important for us all
as bankers to be advocates for our
industry because we genuinely know
that we are in it for the right reasons
and that what we do every day is
focused on making a positive
difference for our customers and our
communities,” Rozenboom stressed.
“It is a job that we cannot leave to
someone else. It is one that we all
need to take up and do our part.”
An important mentor during
Rozenboom’s career was David
Birkeland, president/CEO of First
Bank of South Dakota (now U.S.
Bank) and past SDBA chairman who
died in the 1993 plane crash with
Gov. George S. Mickelson.
“Dave inspired me, and many
others, to keep everything in life in
proper balance and it started with
faith and family,” recalled
Rozenboom. “He also encouraged all
of us as employees to be actively
Dave and Tammy Rozenboom have four children. From left are Mike Rozenboom, Josh
and Katie Soodsma and their son Levi, Dave and Tammy, Heidi and Jon Vogel and
Brett Rozenboom.
involved in our communities,
especially in organizations that you
had a passion for and to be willing to
take on a leadership role whenever
called upon.”
Rozenboom is currently vice
chair of council at his church, First
Christian Reformed Church of Sioux
Falls. One project he has been most
honored to be a part was Sioux Falls
Christian Schools’ new campus
development. He chaired the school’s
board for a number of years and cochaired the capital campaign. All of
the Rozenbooms’ four children also
attended the school, and his wife
taught third grade there for 15 years.
The Rozenbooms’ oldest
daughter Katie is completing her
nurse practioner degree through
Creighton University and working as
an RN at Sanford in Sioux Falls. Her
husband Josh Soodsma is a CPA and
manager at Eide Bailly. The couple
has a seven-month-old son, Levi.
Daughter Heidi is completing her
physician assistant degree and doing
her rotations through Avera. She is
married to Jon Vogel, a chemistry
graduate student at USD.
Son Mike is a senior at the
University of Sioux Falls studying
theology, and son Brett is a
sophomore at Dordt College
studying finance and accounting.
In his free time, Rozenboom
plays basketball a couple of
mornings a week before work with a
group of guys at the YMCA. He also
enjoys getting out on the golf course.
Part of a Bigger Picture
Rozenboom said he has
thoroughly enjoyed every aspect of
his career as a banker, which has
allowed him the opportunity to work
alongside remarkable people and to
be a part of many special aspects of
his community. He said he finds it
rewarding to facilitate between
depositors and borrowers, employers
and employees, and organizations
and his community.
Joining First PREMIER Bank, he
said, was a unique job opportunity to
be a part of something bigger. Owner
T. Denny Sanford is known through
the state for his philanthropic gifts,
such as his most recent $125 million
donation to establish a program to
combine genomic medicine with
primary care for adults.
“Our owner is a remarkable
visionary and has literally made
transformational gifts throughout the
state of South Dakota,” Rozenboom
reflected. “It is rewarding to know
that you have a chance to play a part
in the continued growth and success
of this organization and in the end
knowing the kind of difference it will
make as a result of his generosity.” n
South Dakota Banker n February 2014 n www.sdba.com
n 15 n
Endorsed Vendor Spotlight
Target Breach: What You Should Know
By Jon Waldman, CISA, CRISC
VP of Professional Services, Secure Banking Solutions, Madison, S.D.
B
y now you’ve heard that from
around Black Friday and Dec. 15,
retail giant Target experienced a
breach that has (thus far) resulted in the
compromise of more than 40 million
credit and debit cards. To help better
understand how to handle this breach,
we have put together Target FAQs in
regards to how your bank can handle this and how you
can respond to your customers.
What exactly happened?
As time goes on, we’re finding out more information.
Long story short, it has been reported that the “bad guys”
got access to Target networks somehow and infected them
with malicious software. That malicious software affected
Target’s point-of-sale systems by collecting the magnetic
stripe data stored on any card swiped at a U.S.-based
brick-and-mortar store between the dates of Nov. 27 and
Dec. 15, 2013.
Who was affected?
As mentioned above, if you or one of your customers
swiped ANY card, be it credit or debit, from ANY
financial institution (Target RedCard or your own bank’s
card), your card information could have been
compromised. This breach was not limited to Target cards
only.
What sort of information is contained on those
magnetic stripes?
The EXACT information varies a little bit by
institution, but from what we know and what we’ve seen,
you can assume that the following information on any
card that was compromised will be included in this
breach: your name, account number, card expiration date,
PIN number and bank identification number (BIN). From
our understanding (at this time), the CVV2 number,
which is the 3-4 digit “security code” number physically
printed on the back of your card that is used for card-notpresent transactions (i.e. online transactions) to prove that
you physically possess the card, was NOT compromised.
What can the bad guys do with this information?
Under the assumption that they do not have the
CVV2 number, it’s not likely that your card will be used
for online transactions; however, since they have all of the
information listed above, your card will likely be cloned
(physically copied). The bad guys use cloned cards to
withdraw money from ATMs, purchase fuel from gas
pumps or make in-store purchases. Monitor your
transactions!
n 16 n
What should we tell our customers?
Our opinion is that honesty and transparency are the
best policies. Most financial institutions have notified their
customers of the breach (and made sure that the customer
knows the breach had nothing to do with the institution,
mind you) via statement stuffers, informational posts on
their websites, emails, etc. Additionally, many of our
customers have mined their data specifically looking for
transactions made on their bank cards during the Nov. 27
to Dec. 15 timeframe, then contacted those customers
directly and warned them of this breach.
What should we do for our customers that have been
affected?
The quick answer is to re-issue cards to those
customers affected by the breach. Some institutions have
passed the cost for re-issuing the cards onto the
customers, but (from what we’ve seen) most absorb that
cost, as usual. Regardless, Secure Banking Solutions (SBS)
would encourage you to advise your customers to
monitor their accounts very closely for any fraud.
Additionally, we’ve seen some institutions place
transaction limits on accounts potentially affected as to
limit potential fraud, but that’s going to have to be up to
you and your customers.
If you really want to dig into this breach, we have
talked to a few banks that have gone out to online “card
shops” in an attempt to re-purchase their customers’ card
numbers from the bad guys that are selling said card
information, but this is not something that SBS would
recommend you pursue, as these are some shady
characters to begin with.
South Dakota Banker n February 2014 n www.sdba.com
continued on next page
Was PIN information included in this breach?
It has been reported that PIN information was
included in the breach. Target has recently come forth and
confirmed that PIN numbers were indeed included, after
initially speculating that they were not included in the
breach. But as with all incidents like this, information
changes over time, and more information is bound to be
released as we continue along.
What can my bank do to prevent this going forward?
Unfortunately, this was out of any financial
institution’s control, as a retail store was compromised.
No third-party payment processor or data center that
banks work with directly was involved. One thing banks
can keep in mind going forward is to keep monitoring
customer accounts for suspicious activity, or potentially
look at additional fraud monitoring on accounts to
(hopefully) catch some of this fraud before it affects your
institution and your customers.
What lessons can my bank learn from this breach?
Since there’s not much you can do to prevent this sort
of breach, we would certainly recommend that you
update your incident response plans to include provisions
for this sort of incident, as well as customer notification
procedures for how your institution would handle
something like this next time. You should also evaluate
your vendor management program and update your risk
assessment to adequately represent this risk to your
financial institution. You will also want to present
accurate information to your employees and customers on
what happened and what they can do moving forward.
If you have any questions regarding this article, or
any other security issues you may encounter, please feel
free to contact me at any time. n
Jon Waldman, CISA, CRISC, is vice president of professional
services at Secure Banking Solutions (SBS) in Madison, S.D.
An SDBA endorsed vendor, SBS is the Midwest’s leading
information security consulting firm. Waldman can be
contacted at [email protected] or
605.923.8722. Or visit www.protectmybank.com.
Banks Should Be
Compensated for Costs
of Retailer Breaches
T
he high visibility and extensive reach of the
Target data breach should force all
policymakers, networks, retailers and banks to
revisit who bears responsibility for all the costs
associated with breaches and figure out ways to better
secure the system for the benefit of everyone
involved, ABA Chairman Jeff Plagge said in an email
to all bank CEOs following the Target data breach.
ABA’s team of payments and security experts
have been researching the Target breach to assess the
manner in which it occurred and understand who
should be held accountable for the clean-up. Plagge,
who is president and CEO of Northwest Financial
Corp. in Arnolds Park, Iowa, said the payments
infrastructure is complex, involves multiple parties
and includes vulnerabilities at every point. Identifying
the guilty party and connecting fraudulent
transactions to a specific breach can be challenging.
“I’ve asked ABA to explore all options for
ensuring that you and others who have had to cover
losses or incur expenses as a result of a retailer breach
are compensated for those costs,” he said. “Today’s
system of passing much of the card reissuing
expenses and fraud losses back to the issuers of the
cards is patently wrong.”
Options available could include legal action,
changes to network reimbursement rules and
legislation that imposes liability on responsible
parties. Plagge asked bankers to share their data
breach experiences at [email protected].
“Ultimately, our goal is to ensure the retail
industry does its part to provide a secure card
environment for our customers,” Plagge said. “Banks
are already willing, and will continue to be willing, to
go to the next level to improve the security of our
card systems to benefit consumers.”
He said merchants must invest in new EMV card
readers and the other changes required to accept these
EVM cards or their customers and banks’ customers
will not be well served.
“The Target breach is a great reminder of why
interchange fees are important,” said Plagge. “A good
portion of these revenues are devoted to innovation,
fraud prevention and improved security.”
ABA is offering its members new communications
resources on phishing scams. These include sample
tweets, a sample Facebook post and a sample press
release that banks can use to communicate with
customers and their communities about how to
protect their data. Visit www.aba.com. n
South Dakota Banker n February 2014 n www.sdba.com
n 17 n
Washington Update
A Case Study in Effective Advocacy
By Frank Keating
President/CEO, American Bankers Association
L
ife in the post-Dodd-Frank era has
left many a banker feeling
helpless. The 2010 law continues
to spew new regulations, and the most a
bank compliance officer dares hope for
is a month or week without a new rule,
addendum or guidance. Few, I’m
guessing, would imagine that any kind
of rule reversal is possible in the current environment.
But what ABA and others learned during one long
month this winter is that with effective advocacy, positive
change can happen. Regulators are, indeed, willing to
change their minds – and their rules – when presented
with a compelling case.
The experience I am referring to is the battle over the
final Volcker Rule regulation’s treatment of trust preferred
securities.
The Volcker Rule may not have been on community
banks’ radar screen when the regulations were under
development. They were, after all, intended to ban
proprietary trading – something in which most smaller
institutions do not engage.
But ABA has long been concerned that all banks
suffer collateral damage when Washington takes aim at
large banks. That concern proved valid in December when
final Volcker regulations came out that would have forced
many banks – large and small – to suddenly write down
millions in trust preferred securities held in collateralized
debt obligations and take severe hits to capital.
Bank investments in TruPS CDOs do not pose a
systemic threat and had no business being captured by
the Volcker Rule. But this was just one of many challenges
regulators had in putting a vague law into practice.
When the severity of this unintended consequence
became clear, ABA and the state associations leaped into
action. We alerted regulators to the urgent need for
guidance and kept a continuous string of communications
flowing about the specific impact this would have not
only on the affected banks’ bottom lines but – more
importantly – on their ability to lend.
Working together, ABA, state associations and
bankers engaged members of Congress, who weighed in
with regulators and encouraged them to address our
shared concerns.
When it seemed that wasn’t enough to sway the
agencies, ABA did the only thing that was left – we sued.
This was a radical step, but appropriate for the situation.
We estimated that around 300 banks would realize $600
million in capital losses if relief was not provided. Such
precipitous write-downs were not only unjustified by any
safety and soundness concerns, they would actually create
safety and soundness concerns. The calendar was also a
n 18 n
Sen. Heitkamp Added as
ABA 2014 GR Summit Speaker
Sen. Heidi Heitkamp (D-N.D.), a member of the
Senate Banking Committee, has been added as a
keynote speaker at the ABA Government Relations
Summit on March 24-26 in Washington, D.C.
Heitkamp joins House Majority Leader Eric Cantor (RVa.), Rep. Shelley Moore Capito (R-W.Va.), political
trend-watcher Charlie Cook and Wall Street Journal
columnist Peggy Noonan on the speaker roster.
Bank CEOs, employees, directors and trustees are
invited to register now. The summit – the largest
gathering of banking industry leaders in the nation’s
capital – offers bankers an opportunity to meet with
Congress and regulatory agencies to ensure they
understand the principles behind the banking industry
and can incorporate them into policy.
Registration for the summit is free. Learn more
and register at www.aba.com. n
factor in the decision to sue. There was little time before
serious damage would have been felt by banks, which had
to prepare financial statements as of Dec. 31.
Ultimately, the regulatory agencies were persuaded.
They announced their intention to fix the problem on Dec.
27, and they issued a new regulation Jan. 14. The new rule
exempted CDOs made up primarily of TruPS issued by
community banks and in so doing covered 95 percent of
TruPS CDOs by assets.
Though this issue directly affected only a few
hundred banks, the significance of this victory is broader.
It demonstrates that with the right combination of facts
and force, we can successfully defend our industry from
irrational, unfair regulation.
Ideally, a lawsuit won’t be needed to create future
positive change. It’s far preferable to have banks and
regulators engaged in an ongoing, candid dialogue – as
occurred in December and January, albeit under duress –
about how best to implement laws to the betterment, not
detriment, of bank customers and communities.
You can be sure ABA will continue that dialogue and
our work to create a better policy environment for
banking. n
Frank Keating is president and CEO of the American
Bankers Association (ABA). You can reach Keating at
[email protected].
South Dakota Banker n February 2014 n www.sdba.com
Ask the Appraiser
Ethics Rule – Conduct
By Sherry Bren
Executive Director, South Dakota Appraiser Certification Program
Value Opinions that Equal
Contract Prices
Question: I know appraisers who
consistently conclude that the market
value of any property they appraise is
equal to the contract sales price. In
doing so, they facilitate sales and
financing of sales, which is apparently
what keeps their clients happy. Is this a violation of
USPAP?
Response: A contract sale price can be a good
indicator of a property’s market value, and it may be
logical and reasonable for the appraiser to conclude that
they are the same. However, this is not always the case. In
some situations, a contract price will exceed what is
typical in a market. In other situations, a contract price
will be less than what is typical. A contract sale price,
while a significant piece of market data, must not become
a target in an appraisal assignment. Rather, competent
analysis of relevant and credible market data must be the
appraiser’s basis for a market value conclusion.
If an appraiser consistently concludes that the contract
sale price of any property they appraise equals market
value, particularly when a competent analysis of credible
market data indicates otherwise, the appraiser’s
impartiality, objectivity and independence appear to have
been compromised. The ETHICS RULE clearly prohibits
such a practice. The Conduct section of the ETHICS RULE
includes the following statements:
An appraiser must perform assignments with impartiality,
objectivity, and independence, and without accommodation of
personal interests.
2. a direction in assignment results that favors the
cause of the client;
3.
the amount of a value opinion;
4. the attainment of a stipulated result (e.g., that the loan
closes or taxes are reduced); or
5. the occurrence of a subsequent event directly related to
the appraiser’s opinion and specific to the assignment’s purpose.
(Bold added for emphasis)
An appraiser must develop an opinion of market
value impartially and objectively. An appraiser who
selects only data that complements a contract sale price or
analyzes data in a manner to purposefully support a
contact sale price violates the ETHICS RULE.
Notice: South Dakota does not allow an appraisal
management company to prohibit an appraiser from
reporting the fee paid to the appraiser in the body of the
appraisal report. Violation of ARSD 20:77:07:03 is grounds
for disciplinary action against the appraisal management
company.
Notice: Public information regarding disciplinary
action taken against an appraiser is available upon written
request to the South Dakota Department of Labor and
Regulation’s Appraiser Certification Program at the
address or email below. Include in the request for
information the name of the appraiser and the appraiser’s
city and state of residence. (Disciplinary action may
include denial, suspension, censure, reprimand or
revocation of a certificate by the department.) n
An appraiser must not perform an assignment with bias.
An appraiser must not advocate the cause or interest of any
party or issue.
An appraiser must not accept an assignment that includes
the reporting of predetermined opinions and conclusions.
An appraiser must not use or communicate a report that is
known by the appraiser to be misleading or fraudulent.
An appraiser must not knowingly permit an employee or
other person to communicate a misleading or fraudulent report.
The Management section of the ETHICS RULE also
states that:
An appraiser must not accept an assignment, or have a
compensation arrangement for an assignment, that is
contingent on any of the following:
1. the reporting of a predetermined result (e.g.,
opinion of value);
If you have an appraisal related question that you would like
to have answered in the “Ask the Appraiser” column, please
submit it to Sherry Bren, executive director of the Appraiser
Certification Program, 308 S. Pierre St., Pierre, SD 57501,
fax 605.773.5405 or by email at [email protected].
South Dakota Banker n February 2014 n www.sdba.com
n 19 n
Bank Notes
Two Long-Time Employees
of Commercial State Bank Retire
From left,
Marcia
Honomichl
and Ann
Rysavy,
Commercial
State Bank,
Wagner.
After years of service, two long-time employees of
Commercial State Bank (CSB) in Wagner retired Dec. 31,
2013.
Ann Rysavy retired from her position as vice
president and operation manager after 39 years with CSB.
In total, she worked in the banking industry for 41 years.
Rysavy has seen many changes during her years in
banking. Check amounts and account numbers were
posted manually, and monthly service charges were
calculated manually. Much of the accounting work was
done with a typewriter and a calculator. Computers
eventually took over, and in 1993, CSB changed to an
imaging system. This switch created a paradigm shift in
methods of bookkeeping and research of records, which
resulted in a lot of time saved. Changes in technology and
banking regulations keep banking a challenge.
Rysavy enjoyed the many duties of vice president and
operations manager such as keeping the server and
computer network running and applications updated. She
will miss serving the public and has enjoyed the host of
skilled coworkers she has interacted with over the years.
Rysavy and her husband, Dick, who will be retiring
from TNT Enterprises, have four children and eight
grandchildren. They are excited to have more time to
invest in their kids, travel and do home projects.
Marcia Honomichl served Commercial State Bank
(CSB) for 39.8 years and was most recently president of
the bank. She started at the bank as an assistant, and eager
to learn the banking business, she helped everyone she
could from the get go. Her favorite job was learning about
investing the bank’s money and how events in
Washington, D.C., can affect investments. With her love
for numbers, the world of stocks, bonds and interest rates
was a perfect fit for Honomichl.
In 1991, Honomichl attended the Graduate School of
Banking (GSB) through the University of Wisconsin –
Madison. She also served on GSB’s Alumni Advisory
Council. She was the first woman from CSB to attend GSB,
which led to her being the first female loan officer and the
first female president at the bank. Honomichl became
president of CSB in 2006, and continued to serve as the
chief financial officer, senior investment officer, loan
officer and a director.
n 20 n
She served on the Board of Directors of the South
Dakota Bankers Association and chair in 2008-2009.
Honomichl was the second woman to serve in that
position.
Honomichl will miss interacting with the public from
her professional position but is glad her community is
small enough for her to see everyone around town. She
plans on spending more time with her husband Dave,
their two children and four grandchildren. In their spare
time, the couple enjoys driving their Corvettes. After
retiring, Honomichl plans on taking her dream trip to visit
Neuschwanstein, a castle in Germany. n
Two Employees Promoted
at Pioneer Bank & Trust
Pioneer Bank & Trust promoted two
employees in January.
Tim Uhrig has been promoted to
loan processing officer at the Rapid City
West Pioneer Bank & Trust location.
Melissa Rabenberg has been
promoted to operations manager at
Sturgis Pioneer Bank & Trust. n
At left:
Tim Uhrig and Melissa Rabenberg
Scholarship Awarded at BHSU
In center is
BHSU
scholarship
recipient
Kristen
Pace, Belle
Fourche.
Kristen Pace, an economics and finance major from
Belle Fourche, is the recipient of a $1,000 scholarship from
the South Dakota Bankers Foundation at Black Hills State
University (BHSU) in Spearfish. The SD Bankers
Foundation annually awards a scholarship to a junior
majoring in economics and finance at BHSU. n
Submit Your Bank Note
If you are an SDBA member bank or associate
member, tell us about your new employees, promotions,
community service projects, economic development
efforts, honors and landmark anniversaries. Email your
stories and photos to [email protected] or mail to: Alisa
DeMers, SDBA, PO Box 1081, Pierre, SD 57501. n
South Dakota Banker n February 2014 n www.sdba.com
Message from the Chairman...continued from page 4
to get engaged.
First, ensure your bank reviews proposed legislation
and determines how it may affect your institution. Do
your best to understand how it will affect other types of
banking institutions in South Dakota and determine if it is
equitable. Then communicate with SDBA President Curt
Everson, me or other members of the SDBA Board of
Directors as we will need your input to guide the SDBA
position as legislation moves forward.
There is a great opportunity to familiarize yourself on
this and other important legislative topics by attending
the SDBA’s 2014 State Legislative Day in Pierre on Feb. 12.
If you have not yet registered, please do so today at
www.sdba.com.
In regards to the status of our proposed South Dakota
legislative resolution supporting our Taxation Equality
Awareness Campaign, we still have a considerable
amount of work to do. While several legislators have been
approached, the majority have yet to be personally
contacted. To gain support on this controversial topic,
bankers must be willing to educate themselves on this
issue and then take the time to personally educate others,
especially our legislators. We plan to give an update on
the status and direction of the campaign/resolution
during the SDBA Legislative Day program.
Over the past seven months as your chairman, I have
invested a significant amount of time strategizing and
executing our SDBA Taxation Equality Awareness
Campaign. Upon accepting the chairmanship, I did,
From the Executive Office...continued
from page 5
buyout of a European telecommunications
company’s interest in Verizon Wireless. Discussion
about mission creep makes Farm Credit System
anxious.
So what is this campaign really about? Credit
union advocates are crowing about the success of
their counter campaigns, noting that local governing
bodies have been reluctant to take official positions
about federal tax policy matters that they cannot
directly control. The same is true for state legislators
who understand the non-binding nature of a state
resolution urging Congress to examine the current
day factual justifications surrounding these
exemptions.
The fact is that this taxation education awareness
campaign is not about resolutions. It is about
educating the general citizenry – taxpayers – about
facts: who pays taxes, who has special carve-outs
and why they were granted long ago, and what has
changed. Once educated, the citizenry – voters and
elected official – can make an informed decision
about what needs to occur. What could possibly be
wrong about that? n
however, raise two other areas of concern.
The first is addressing the accelerating regulatory
burden at the federal level. In this regard, we all have an
upcoming opportunity to get directly engaged in this
initiative by attending the ABA Government Relations
Summit in Washington, D.C., on March 24-26. You will
not only hear the latest happenings in Washington, but,
more importantly, you will have the opportunity to visit
with our congressional leaders. Nothing beats a face-toface discussion, and registration is free. I hope you will
consider joining me. Visit www.aba.com to register.
My last platform issue dealt with addressing rural
housing financing concerns. Here also significant work
remains. On a positive note, though, effort and strategies
are being contemplated to address this issue on various
fronts. However, it is vital to coordinate our efforts and
move forward. See the story on page 8 where I have asked
Van Fishback, our Federal Home Loan Bank
representative, to give us an update in this area from his
perspective.
As always, please feel free to reach out to me with any
thoughts, questions or concerns. Together let’s make 2014
a GREAT year to be a South Dakota banker! n
Kevin Tetzlaff is president/CEO of First Bank & Trust in
Brookings. You can contact Tetzlaff at
[email protected] or 605.696.2200.
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South Dakota Banker n February 2014 n www.sdba.com
n 21 n
Classifieds
Agriculture/Commercial Loan
Officer (Security State Bank,
Tyndall & Chancellor,
S.D./Heron Lake, Minn.)
Security State Bank (Tyndall,
Chancellor and Heron Lake), founded
in 1932, is a $125 million independent
community bank and a leading
agricultural and commercial lender in
southeast South Dakota and southwest
Minnesota. SSB is seeking a top
performing agriculture/
commercial loan officer to grow our
market share. The successful candidate
will be responsible for developing new
loan business, in addition to servicing
existing production agricultural and
real estate customers. Strong sales and
credit administration skills are
necessary. Strong knowledge of
accounting I financial systems.
Excellent oral and written skills are
essential. Basic Microsoft Office skill
set required. Bachelor’s degree in
finance or agricultural economics
required. Minimum of 10 years of
experience in like industry preferred.
Family farm background preferred.
The successful candidate should be
well established in the agricultural
industry network. Send cover letter,
resume and salary requirements to
John J. Baumiller at johnbaumiller@
banksecuritystate.com. n
Business Banker (First Bank &
Trust, Sioux Falls, S.D.)
First Bank & Trust is looking for an
individual to fill a business banker
position. This person should have a
bachelor’s degree in a related field and
a minimum of seven years of
experience in business finance or the
equivalent. This person should have
strong experience in credit risk
management, financial management
and building relationships. This person
is to develop and manage business
banking relationships of various sizes.
Emphasis is placed on credit quality
and a “needs based” approach to
financial management. For more
information and to apply online, visit
our website at www.bankeasy.com. n
Business Loan Officer I (First
Bank & Trust, Brookings, S.D.)
First Bank & Trust is looking for an
individual to fill a business loan officer
n 22 n
one position. This person should
possess a bachelor’s degree and two
years of related experience or the
equivalent. Experience recommended
in loan documentation, loan file
compliance, credit analysis, and an indepth understanding of business and
personal financial concepts. This
position’s responsibilities include
underwriting, servicing, and
developing business loan relationships
in a profitable manner while
minimizing risk. Emphasis is placed on
credit quality, loan performance and
client profitability. For more
information and to apply online, please
visit our website at
www.bankeasy.com. n
Regional Business
Development Officer (First
Bank & Trust, Sioux Falls, S.D.)
First Bank & Trust is looking for an
individual to fill a regional business
development officer position. This
person should have an extensive
contact list that may have been
developed over an extended period of
time while working in sales for another
industry within the defined market
territory. A bachelor’s degree is
preferred but not required. This person
is to identify and develop sources of
potential clients within a defined
geographical area comprised mostly of
eastern South Dakota and northwest
Iowa. This person will work closely
with a team of bank professionals to
offer comprehensive and customized
financial solutions for high net worth
and/or high income clients. For more
information and to apply online, please
visit our website at
www.bankeasy.com. n
Place Your Listing
If you have a job opening at your
bank or something to sell, send
your classified listing to
[email protected] and we will
post it in South Dakota Banker
and on the SDBA website. This
service is free to member banks.
The fee is $50 for non-members.
(150 word limit.) Questions, call
Alisa DeMers at 800.726.7322. n
South Dakota Banker n February 2014 n www.sdba.com
Educational Calendar
Seminars and Conferences
SDBA 2014 State Legislative Day
Feb. 12, 2014: Ramkota RiverCentre, Pierre
l
Writing Teller Training and Procedures
l
Do’s and Don’ts on Working Caregivers and
Fiduciaries
l
New Business Account Interview – CIP, CDD and
Legal Issues
l
Bank Call Report Prep – Part Three
l
Motivating and Managing the Teller Line
ABA Government Relations Summit
March 24-26, 2014, Omni Shoreham, Washington, D.C.
l
Call Reports for Banks - Recent Changes, Highlights
and Pitfalls
SDBA 2014 Agricultural Credit Conference
April 9-11, 2014, Ramkota RiverCentre, Pierre
l
Dealing with Casual Days, Dress Codes and Work
Appearance
l
Social Media Ricks – What the Final Guidance Means
and Compliance Tips
NDBA/SDBA Bank Management Conference
Feb. 14-15, 2014: The Westin Kierland Resort & Spa,
Scottsdale, Ariz.
IRA Current Events/Update
March 4, 2014: SDBA Office, Pierre
March 5, 2014: Ramkota Inn, Sioux Falls
Opening New Accounts – Documentation and
Compliance
April 17, 2014, Clubhouse Hotel & Suites, Sioux Falls
Banking Schools
IRA Basics
May 5, 2014: Pierre
May 6, 2014: Sioux Falls
FDIC Bank Directors College
May 6, 2014: Sioux Falls Convention Center, Sioux
Falls
2014 NDBA/SDBA Annual Convention
June 8-10, 2014: Ramada Plaza & Suites, Fargo, N.D.
February Webinars
The following are available as live webinars and/or
recorded seminars. For more information and additional
webinars go to www.sdba.com and click on Education
and then Webinars.
GSB Bank Technology Management School
March 30-April 4, 2014: University of Wisconsin Madison
GSB Human Resource Management School
April 6-11, 2014: University of Wisconsin - Madison
* Scholarship deadline is Feb. 3, 2014.
Dakota School of Lending Principles
April 22-25, 2014: Aberdeen Dakota Event Center,
Aberdeen
SDBA 2014 National School for Experienced Ag Lenders
June 23-26, 2014: Black Hills State University, Spearfish
Graduate School of Banking at Colorado
July 13-25, 2014: University of Colorado - Boulder
* Scholarship deadline is March 1, 2014.
l
Bank Call Report Preparation for Beginners – Five Part
Series
l
What to do When a Customer Dies
l
Health Savings Accounts
Graduate School of Banking at Wisconsin
Aug. 3-15, 2014: University of Wisconsin - Madison
* Scholarship deadline is May 1, 2014.
l
HDMA Reporting Mistakes – Will you be ready for the
March 1, 2014, Deadline?
GSB Financial Managers School
Sept. 21-26, 2014: University of Wisconsin - Madison
l
Bank Call Report Part Two
l
For Sales Managers: Seven Habits of Highly Effective
Sales Teams
GSB Bank Technology Security School
Sept. 28-Oct. 3, 2014: University of Wisconsin Madison
l
Teller Compliance Issues: Reg CC, CTR and UCC 3 & 4
l
Roth IRAs and Conversion Roths
l
BSA/AML & OFAC Compliance – What was old is
new again.
l
Compliance Perspectives
Program and registration information is available six to
eight weeks before each conference. For complete registration
information, visit www.sdba.com.
South Dakota Banker n February 2014 n www.sdba.com
n 23 n
Conference, Reception & Dinner
SDBA 2014 State Legislative Day
February 12, 2014
Ramkota RiverCentre
Pierre, South Dakota
Photo by South Dakota Tourism
The SDBA’s 2014 State Legislative Day is your opportunity
to stay up-to-date on both state and federal legislation which could
affect the banking industry and to visit with state legislators.
Register at www.sdba.com.
Sponsored by: