Farming is both a specialized industry and high risk when it comes to financials. That’s why the Agricultural Lending School is a key educational offering of the Wisconsin Bankers Association. This is a hands-on seminar for members to get a handle on today’s ag markets and farm balance sheets. WBA Director of Education Lori Kalscheuer tells Mid-West Farm Report about enrollment numbers and curriculum for this year’s cohort.
Archive for month: August, 2022
PremierBank’s Bilingual Initiatives Committee helps bank serve Hispanic community
By Kathleen Rolfs
Between 2000 and 2015, the Hispanic population in Wisconsin doubled in size with an increase of 95%, according to a demographic summary conducted by the Wisconsin Department of Health Services. This was the most rapid population increase of any of Wisconsin’s various racial groups (White, Black/African American, American Indian, and Hispanic).
During this span of time, Wisconsin’s overall population increased by roughly 400,000 residents, with Hispanics making up 46% of this increase. With Hispanics being the fastest growing minority population in Wisconsin, it is important that community banks thoughtfully consider how they are best meeting the financial needs of this influential consumer base.
Although individual desires and product requirements are as diverse for the Hispanic community as any other demographic, one way that PremierBank is successfully serving our Hispanic friends and neighbors is through our unique Bilingual Initiatives Committee. This group is comprised of several bilingual bankers along with marketing and retail banking officers. The goals of the committee include identifying opportunities that exist within our communities for strategic community partnerships, and collaborative education within our organization to ensure all our bankers are equipped to understand and anticipate the needs of the rapidly growing, ethnically diverse Hispanic community.
Bilingual Bankers Share Their Heritage
At a minimum, having bankers on staff who speak the same native language of those who live and work in our communities is one of the most obvious ways that we can reduce or eliminate language barriers with our Hispanic customers and successfully deliver the most appropriate financial solutions to them.
Guided by our Bilingual Initiatives Committee, our bilingual bankers help provide education within our organization about the Hispanic community. Peer-to-peer learning is a powerful tool that helps break through biases and promulgates understanding. As such, we have found that giving our bilingual bankers many opportunities throughout the year to share their heritage with their colleagues encourages a much deeper understanding of our local Hispanic population, while simultaneously building community within our own organization.
During last year’s Hispanic Heritage month, PremierBank treated all employees to traditional pan dulce or “sweet bread” served fresh from a local Mexican baker. These were personally delivered by members who serve on the Bilingual Initiative Committee, some of whom were dressed in traditional Mexican apparel, with an explanation of the history of these tasty treats! Inexpensive activities encourage understanding and respect among a diverse workforce, while providing education about this important segment of banking prospects and customers.
Bilingual Banking Community Outreach
Whether through financial contributions, sponsoring a resource fair that targets the Hispanic community, or creating our own event that caters to the Hispanic community, PremierBank’s Bilingual Initiative Committee is intentional in the quest to find new events to support within our footprint area.
In September 2022, a “Hispanic Heritage Celebration” is being planned at one of our banking locations complete with food trucks, traditional Central and South American dancers, and a lively mariachi band. After working with the local convention and visitor’s bureau and receiving advice from the city parks and recreation department, our Bilingual Initiatives Committee has found enthusiastic community support in our efforts to plan this upcoming community event that will celebrate Hispanic customs, cuisine, and heritage.
Building Long-Term Relationships
As marketers, we know that the Hispanic segment is an incredibly valuable consumer group. With an annual purchasing power of over $1.5 trillion, this powerhouse community is more likely to start a new business than any other demographic and it accounts for a larger percentage of home purchases than ever before, according to an article published by Forbes. However, we cannot simply make token efforts to attract their business.
To reach this audience, cater to their actual needs, and stand out from our competitors, banks need to establish an authentic connection in an honest and respectful way. Our Bilingual Initiatives Committee is making a difference at PremierBank by helping us to build authentic, meaningful relationships both inside and outside of our bank. Because of this, the business relationships we have formed with our Hispanic customers and community partners are based on understanding and respect and will endure long into the future.
Rolfs, vice president – director of marketing at PremierBank in Fort Atkinson, is a member of the 2022–2023 WBA Marketing Committee.
By Lorenzo Cruz
The credit card swipe fee debate could reignite as interest rates rise and inflationary pressures persist into 2023. If the sparks fly and catch fire, retailers could reunite to advocate for interchange fee reform, which has severe negative financial consequences for banks, the electronic payments ecosystem, and consumers alike.
The Importance of Interchange Fee
During the last legislative session, a retail coalition led efforts to introduce legislation that would have prevented banks from applying interchange fees on the tax portion of a credit card transaction and would impose a $200 fine per transaction for any entity that violates the law. Similar legislation has been offered across the nation more than forty times over the last 16 years. To date, no state has enacted the legislation, nor has this model legislation made it out of any committee.
Retailers contend this change would provide some relief for tax collection and would lower their second highest expense — credit card swipe fees. Members of the Wisconsin Bankers Association (WBA) empathize with retailers’ concerns, but there are other ways retailers could receive vendor compensation as payment for that work.
Interchange fees remain a critical revenue stream for banks of all sizes in rural and urban markets. The fees allow banks to recover the cost for fraud protection and for cybersecurity that card issuing banks provide to their customers. Retailers and consumers enjoy the credit card fee benefits of a seamless globally accepted transaction and a guaranteed payment that is secure, convenient, and affordable. Retailers also see higher volume and sales from credit card use, faster transactions, lower costs than those associated with handling checks and cash, and more sales channels.
Negative Impacts on Wisconsin
Passage of interchange fee legislation would have negative and impractical implications for the electronic payment system and consumers. Consumers would have to undergo a split tender transaction, being forced to use the credit card for the total sum of goods or services purchased in the first transaction but then would pay in cash or check for the remaining tax portion in a separate transaction. Retailers could see an increase in customer confusion and frustration as the speedy checkout line becomes a distant memory.
Currently, the electronic payment system has no way of separating out the tax piece of the transaction. Financial institutions and card networks only see the full transaction sum when approving, routing, and settling electronic payments. This design protects consumers’ privacy and allows for lightning speed transactions.
Visa’s network alone processes over $12 trillion in transactions annually. Visa has the capacity to handle over 65,000 transactions a second, however, the proposed special tax treatment change would require a major, costly overhaul of the system. The chip conversion for credit cards took over 25 years to research, test, and implement, which goes to show there is nothing simple about making changes to these networks. Wisconsin could easily become an island in the electronic payment space if the legislation passes.
With prices of gas and food increasing and talks of recession afoot, the last thing consumers would want is a legislative change that makes it potentially more difficult to use their card during these challenging times. WBA urges our retail partners and customers to pursue vendor compensation alternatives rather than tinker with the interchange fee in a harmful manner. Additionally, WBA members are encouraged to continue to educate customers and policymakers on the importance of interchange fees to banks and the communities they serve.
Workers return in droves to businesses across the U.S.
By Hannah Flanders
Across the U.S., employers are seeing workers return following a mass reshuffle in employment. Beginning in 2021, the year following the initial shock of the COVID-19 pandemic, millions of employees began seeking new opportunities with different companies or shifting entirely to different industries. However, as competition continues to grow and COVID precautions subside, many are beginning to return to their previous employers.
COVID Gives Way to New Opportunities
The Great Resignation, spurred by aspects of the pandemic, gave individuals a push to reconsider their employment. The combination of COVID stimulus checks, early retirement, lack of childcare, and reluctance to return to the office caused many — over 47 million, according to the U.S. Bureau of Labor Statistics — to voluntarily quit their jobs in 2021.
While many of these individuals — 53%, according to Pew Research Center — did not completely exit the workforce, workers seeking higher pay orgreater benefits — including remote options — were presented with a greater opportunity to find a new employer.
Not What They Expected
The beginning of 2022 marked a new wave for employees — the Great Regret — or the reversal of the Great Resignation. Some in client-facing, technology, and consumer industries quickly realized that new roles or companies may not have been the best fit. With increasing turnover, onboarding within many companies became less personal and individuals were often not allotted enough time to get comfortable in their new environment. In addition, remote work offered fewer social interactions and work-life balance sometimes took a backseat.
Seventy-two percent of employees surveyed by Muse in early 2022 stated that they had experienced surprise or regret in connection to what a new job opportunity led them to believe. Of the 2,500 individuals surveyed, 80% stated that it would be acceptable to leave a new job before six months if it didn’t meet initial expectations.
Additionally, as widespread access to COVID-19 vaccination continues, businesses and schools across America have re-opened their doors and many individuals are reconsidering their desire for fully remote work. A survey conducted by PwC reported that around 83% of employees have already returned to the office at least two days of the week.
Boomerang Employees
Each year, the number of boomerang employees — or those who return to a previous employer — continues to rise. In 2021, according to data presented by LinkedIn, 4.3% of all new hires were previous employees whereas 10 years prior, these individuals only represented around 2% of new hires.
Rehiring former employees is strategic for both the employer and the employee, but it’s important to consider why they departed initially. While the business regains knowledgeable talents who may not need extensive onboarding, the employee often returns with a higher salary or new position (given their gained experience during their departure and increased negotiating power) and is familiar with the workplace culture.
According to Glassdoor, recruiting former employees could save organizations up to $20,000 per hire. While of course not every former employee may be the perfect fit for the position, considering boomerang employees could tap Wisconsin businesses into “new” candidates that have the ability to fill important positions and reduce costs in today’s competitive job market.
Returning to the Workforce
As pandemic precautions subside and employees rethink previous career changes, many individuals are returning to their previous employers. According to a study conducted by Joblist, more than one in four people who quit their previous job regret their decision.
Although boomerang employees remain a small but growing percentage of new hires each year, the Great Regret has shown the return of many individuals who had previously left the workforce due to the pandemic, including those lacking childcare or entering early retirement.
Be it to combat rising inflation or to explore new opportunities outside of the home, 2022 has shown millions of individuals returning to work. Just this year, unemployment rates in Wisconsin hit record lows thanks to more individuals feeling comfortable with returning to the office, parents sending their children back to in-person classes, and previously retired Americans rejoining the workforce in droves.
Whether it be considering “boomerang employees” or welcoming back those who exited the workforce as a result of the pandemic, businesses throughout the state are seeing more opportunities to regain workers lost to the Great Resignation and benefit from the growing talent pool.
By Rose Oswald Poels
As we emerge from the pandemic and face historic levels of inflation, people across Wisconsin are experiencing high levels of financial stress and burnout, which is impacting various aspects of their lives and our economy in general. The Wisconsin Department of Financial Institutions (DFI) and the Governor’s Council on Financial Literacy and Capability, on which I serve as a member, have partnered with the Financial Fitness Group to help improve the financial well-being of people who live and work in our state. The program is an expansion of a prior collaboration between DFI and the Wisconsin Department of Employee Trust Funds, which helped educate over 12,000 state employees over the last year.
ELEVATE Wisconsin is an effective and unbiased financial wellness program designed to enhance the lives of Wisconsin employees and their families while generating positive exposure for businesses.
The cost of financial stress impacts more than an individual’s bank account. Economic challenges affect employees’ health, workplace effectiveness and productivity, long-term financial stability, and ultimately an employer’s bottom line. A few key facts:
- 68% of the retiring workforce worry about having enough money to retire.
- 67% of Americans lack the knowledge to make sound financial decisions.
- 64% of the American workforce is living paycheck-to-paycheck. When economic downturns happen, it causes even more stress on them.
- 33% of Americans have minimal to no retirement savings.
Why is ELEVATE Wisconsin Important?
Financial education can positively enhance the lives of Wisconsin employees through financial wellness and improve their financial security while fostering financial confidence.
ELEVATE Wisconsin represents truly unbiased, FINRA-compliant financial education that has been proven to be effective and measurable. ELEVATE Wisconsin focuses on improving the financial aptitude, behaviors, and confidence of Wisconsinites and their families.
What is ELEVATE Wisconsin?
ELEVATE Wisconsin is an online wellness program providing interactive, effective, and unbiased instruction in personal finance and investing fundamentals to Wisconsin employees.
DFI is a key sponsor of the program and has worked with the Financial Fitness Group to help develop the program. The Financial Fitness group is an industry leader, having already provided financial education to over 2 million users at more than 1,000 major U.S. organizations. Financial Fitness Group’s financial fitness solutions can assess, score, and educate consumers at a quarter of the cost of conventional methods.
ELEVATE Wisconsin Financial Education Includes:
- A personalized financial wellness platform where participants can access tutorials, interactive calculators, videos, and more!
- Pre- and post-lesson quizzes to determine knowledge change and measure program effectiveness.
- Certificates, points, and badges to motivate users to keep on learning.
- Access to the Financial Fitness SCORE™, a Financial Fitness Checkup that allows users to benchmark their overall financial health — aptitude, behavior, and confidence.
- 24/7 online access from any device — smartphone, tablet, or computer.
- A reporting dashboard where administrators can access real-time data on overall organizational metrics, user progress, financial assessments, learning data, and most popular courses.
What Role Can Banks Play?
As employers are trusted partners in financial education, this program is designed to be delivered through the workplace. Banks can join as program sponsors, offering the program to their business customers (for example, small businesses or nonprofit organizations that would like to make the program available to their employees) as well as to the bank’s own employees. The online platform will be co-branded for the sponsor and the business, so users (employees) see the bank’s logo as well as their employer’s.
We look forward to getting the word out on this important financial wellness program that aims to empower more than 100,000 employees and engage over 500 employers throughout Wisconsin by 2025.
The following is a brief interview between WBA President and CEO Rose Oswald Poels and Spring Bank, Brookfield CEO David Schuelke.
Rose: How did you first get into the banking industry?
David: I was born into a banking family. Even though my father, Don Schuelke, was a banker, he didn’t encourage me to pursue a banking career and it wasn’t an original career goal for me. I graduated college with an accounting degree intending to enter public accounting. However, I accepted a good offer from First Wisconsin Bank to start my professional career. At First Wisconsin, I joined an outstanding culture and a talented team of professionals. Those colleagues and that culture led me to want to remain in the banking field.
What is your favorite aspect of your role at your bank?
The most rewarding aspect for me is helping businesses. I’ve always been intrigued and fascinated by different businesses — how they operate, how similar businesses do things differently but all reach success in their own way. It’s also meeting people and the variety. But nothing is better than somebody telling you that you came up with an idea that helped them improve their business.
I also enjoy watching my colleagues advance in their careers and sharing news of our strong financial results with my fellow shareholders. I’m very proud to have played a key role in developing a successful bank — from raising the capital to open to forming a team that executes our business plan of being a locally owned, locally operated bank focused on providing the personal attention our customers deserve.
What do you wish the general public understood about the banking industry?
I wish the public had a better understanding of how banks operate within very narrow interest rate margins and about the costs to maintain the infrastructure needed to deliver high quality service and products. This lack of understanding leads a few clients to expect bank services to be delivered at little or no cost.
Where do you believe the industry’s greatest challenges are in the next three to five years?
Our industry’s greatest challenges include changing technology, a sometimes-oppressive regulatory environment, and potential economic challenges.
Technology will continue to evolve rapidly. Figuring out how to adopt new or changing technologies is a constant challenge. The cost to keep up with regulatory pressures has easily doubled, and possibly tripled or more, since we opened Spring Bank in 2008. Managing these increasing costs and requirements is a big challenge.
Lastly, current levels of inflation, supply chain disruptions, and a shortage of workers have resulted in expectations of a recession after many years of economic growth. When the next recession arrives, banks will need to focus on credit quality and work to resolve problem loan situations that arise. Fortunately, the banking industry is better capitalized today than it was at the start of the last recession.
Every day, bankers serve their local communities by helping their customers achieve their financial dreams. Please describe your current role at your bank and share with us one of your more rewarding experiences.
With regard to community involvement, one of the most impactful days of my life was joining a group of over 100 World War II veterans on a trip to Washington D.C. to view the WWII Memorial as part of the Stars & Stripes Honor Flight program. Spring Bank has supported this effort for many years as part of our pride and appreciation for our nation’s veterans. Speaking with many heroes that day, watching them interact with their peers, and experiencing the welcome home celebration at the end of the day is a memory I will never forget.
How Wisconsin employers can best invest in the security of their team
By Hannah Flanders
As inflation and the cost of living across the country continue to rise, more employees are feeling the increasing strain of financial burden in their day-to-day lives. While some individuals may choose to seek higher paying positions to combat this stress, many are looking to their current employer to assist them in finding new solutions to managing these burdens.
Financial stress is often defined as any emotional tension an individual may experience related to money, debt, or upcoming expenses. According to a survey by Purchasing Power in March 2022, 97% of all full-time employees reported that they experience financial stress.
While monetary stress manifests in many different ways, employers should be concerned that these stressors weaken productivity, negatively impact company culture, and decrease overall talent retention.
What Can Employers Do?
According to the 1,100 full-time employees surveyed by Purchasing Power, 57% say the benefits their employer offers have a major to moderate impact on their decision to stay at their current job. While unemployment rates return to pre-pandemic lows, employers must develop attractive benefit packages that not only meet the needs of incoming talent but set current employees up for success.
These benefits — ranging from health insurance and vacation time to retirement planning and financial wellness programs — impact overall employee satisfaction, both personally and professionally, and save businesses billions of dollars each year.
In a survey conducted by the American Psychological Association (APA), money stress experienced among Americans registered at its highest recorded level since 2015. By regularly reassessing employee benefit plans, businesses are better able to accommodate for common stressors — such as retirement and emergency savings — in relation to current events. Additionally, these opportunities allow greater chances for Wisconsin employers to integrate new, relevant, and cutting-edge tools for members of their team.
The Importance of Financial Wellness Programs
More than ever, employees consider it the employer’s responsibility to help employees with their financial well-being. In addition to providing employees the resources they need to feel secure, businesses that invest in financial wellness programs are more likely to retain current talent and save on the cost of recruiting and training.
Today, wellness is no longer determined solely by physical health. In order to wholly provide for employees, employers must account for all aspects that create tension in one’s life. By promoting resources that help employees stretch their dollar, employers are increasing productivity, engagement, and attendance among those who may otherwise be severely impacted by their financial worries.
PwC’s Employee Financial Wellness Survey, conducted in early 2022 on over 3,200 full-time employees, highlighted that among the 29% of employees currently looking for a new job, 65% cite money as their primary reason. However, both financially stressed and non-stressed individuals surveyed reported being more likely to accept a position or stay with a company that they feel cares about their financial well-being.
Wisconsin employers who are not doing so already should consider adopting financial well-being into benefit packages and adding financial education opportunities such as private coaching as resources for every employee. As housing costs, gas prices, and living necessities skyrocket around the country, individuals are seeking additional initiatives that aid in overcoming the recent additional stress.
A Growing Need for Assistance
Similar to how the nature of work and its demands have evolved over the last three years, workers too are reassessing their financial priorities.
The U.S. Census Bureau states that, according to the most recent census data collected in 2020, Wisconsin’s median household income is $63,293, over $4,000 below the national average. Although the importance of establishing and ensuring a health emergency saving fund has been emphasized even more since the onset of the pandemic, a quarter of consumers still have no savings set aside for emergencies, according to the 2022 Emergency Savings and Financial Security report by the Consumer Financial Protection Bureau (CFPB). Additionally, 39% have less than a month’s worth of income saved for emergencies.
This lack of funds directly originates from, according to the CFPB, an individual’s knowledge on how to save. Whether it be lack of information relating to saving or financial constraints, those without emergency saving funds are nearly three times as likely to “not know how to save” than those who have a fund of some proportion.
The Society for Human Resource Management (SHRM) states that while upwards of 95% of organizations offer retirement savings plans, less than 35% offer financial planning/ coaching, and even less (15%) offer emergency savings funds or payroll advances, causing many individuals facing an emergency to charge a credit card, borrow money, or cut other expenses.
However, as the prices for necessities such as groceries, shelter, and gasoline rise — more Wisconsinites than ever are struggling to set aside funds for emergencies, their future, or even other commodities. In addition to setting a 40-year record for total increasing prices (a 9.1% increase since June 2021), both food and energy prices increased by 10.4% and 41.6% percent, respectively, in the last 12 months. These skyrocketing prices represent the largest price jumps consumers have seen since the early 1980s, according to data presented in the June 2022 Consumer Price Index.
Resources Available
Financial wellness programs, such as America Saves and Wisconsin Saves, not only help employers meet the growing demand for budgeting tools, but these campaigns also build consumer confidence, assist individuals in reaching their financial goals, and save businesses added expenses caused by absenteeism or low productivity.
America Saves and Wisconsin Saves provide individuals with the tools and education needed to effectively approach savings goals such as retirement, debt repayment, or vacations. Be it a long- or short-term goal, America Saves supports low- to moderate-income households in saving money, building wealth, and preparing for the unexpected.
The Wisconsin Saves initiative, brought forth by a coalition of Wisconsin organizations including the Wisconsin Bankers Association (WBA), promotes automatic saving opportunities through split deposit. The program, launched in 2021, encourages small- and medium-sized employers to promote the ease and benefits of saving automatically for emergencies through split deposit.
By promoting the success of these programs, encouraging employees to take the America Saves pledge to access additional resources, or motivating teams to split their deposit into a savings fund — Wisconsin businesses can play an important and impactful role in helping their employees improve their financial well-being.
Finding the best services and products for your bank
By Daryll J. Lund
Each year, the banking industry becomes increasingly more competitive and with new trends, technology, and specialized services emerging at rapid speeds, there is no way for one single business to do it all. WBA’s Associate Member program highlights a broad spectrum of third-party providers from around the country that WBA-member banks may choose to partner with in pursuit of their own strategic goals.
These companies most often specialize in specific products and services related to banks — from data processing to cybersecurity and talent management, to name just a few — and assist banks in enhancing their ability to better serve their customers.
WBA’s Associate Member program offers WBA bank members access to over 150 vetted, dedicated companies that show their support for our industry in various ways. From sharing their expertise through resources published in our publications to presenting on hot topics at WBA events, our Associate Members help us create meaningful, relevant content that informs bankers throughout Wisconsin.
If you have attended any one of WBA’s events, conferences, or outings, you will also know that WBA’s Associate Members play a substantial role in their continued success. On August 18, WBA will host its seventeenth annual Chairman’s Golf Outing. This complimentary event is one of the many programs sponsored by WBA’s Associate Members. In addition to the support of this annual outing for our members, WBA’s Associate Member program ultimately assists WBA in continuing to provide high-value educational opportunities to bankers in their pursuit to support their communities.
It is critical that banks have the ability to form strong partnerships with third-party vendors for the benefit of the bank’s growth and the satisfaction of their customers. WBA’s Associate Member program offers just the place for community banks to locate whatever niche expertise and product specialization they need to stay ahead in our continuously evolving industry.
With the help of Nick Loppnow, who re-joined the Association in June as director – associate membership and business development, WBA stands ready to identify companies that seek to assist Wisconsin’s banking industry and connect banks with the vendor(s) that will meet their needs.
Those seeking a new partnership or looking to refer a company should contact Nick Loppnow.
By Rose Oswald Poels
Since the Wisconsin Bankers Association’s (WBA) inception 130 years ago, advocating on behalf of Wisconsin bankers has been one of our top priorities. WBA reaches across aisles, supporting pro-banking legislators and candidates, with the goal of advocating for and supporting the banking industry.
With Wisconsin’s general election quickly approaching in November and the primary just next week on August 9, I wish to remind all Wisconsin bankers of the importance of not only participating in these two elections, but ultimately making your voice heard on behalf of our industry.
This year, the American Bankers Association (ABA) is once again promoting their “Get Out the Vote” initiative which assists in educating voters on banking issues. I encourage you to visit the ABA’s site to make sure you are registered to vote, know the candidates on your ballot, and where your polling locations are. ABA has also created a toolkit for banks to share with employees to promote voter participation.
As we know, Wisconsin’s election battleground regularly takes the national spotlight and with candidates looking to flip the ballot for several major state offices — Governor, U.S. Senate, and some state Assembly seats, to name a few — little is expected to change this year. In addition to making your voice heard through casting your vote next week (and in November), I encourage bankers to actively participate in our advocacy initiatives in two additional ways.
Take Your Legislator to Work
As WBA’s over 100 Advocacy Officers can attest, the most effective way of advocating for our industry is to meet with legislators in person. Taking this one step further, “Take Your Legislator to Work Day” visits not only allow decision makers to hear about the great work bankers do each day in their communities but see it for themselves.
Your direct involvement in hosting legislators not only assists our elected government officials in further understanding the community banking industry and the impact legislation has on our operations, but also offers an in-depth perspective into Wisconsin’s economy as well as the successes and challenges many of our communities face.
The WBA Government Relations team stands ready to assist your bank in engaging in advocacy-related events, including working with you to schedule a “Take Your Legislator to Work Day” at your bank. If you would like to host, or learn more about hosting a visit, please contact Lorenzo Cruz, vice president – government relations, or me.
Political Contributions
WBA is not concerned with “D” or “R”, but rather “B” as in the “Banking” party. Donating to WBA’s political action funds in support of pro-banking candidates is an easy and significant way to further promote WBA’s legislative agenda and bankers throughout the state.
Wisbankpac is WBA’s registered political action committee. Wisbankpac supports pro-banking candidates throughout Wisconsin by pooling individual banker contributions in order to maximize the overall impact. The Alliance of Bankers for Wisconsin (ABW) — WBA’s state conduit — allows individuals to direct contributions to the candidate(s) of their choosing.
I greatly appreciate your past support and active involvement in WBA’s various advocacy initiatives; however, as with everything else, we need your engagement to continue at an even higher level. It would be ideal if an additional six to eight “Take Your Legislator to Work Day” visits were scheduled between now and December. Furthermore, WBA has a goal of raising $300,000 in our political accounts this calendar year, which will require greater participation than what has occurred in the past. If you are interested in contributing to WBA’s political action funds — be it Wisbankpac or ABW — or learning more about how to contribute, please visit wisbank.com/Give or contact me. Together we will continue to achieve successes for our industry!
By Paul Gores
Many Wisconsin farmers are headed for a profitable year, but they’re already uneasy about 2023, ag bankers in the state say.
Coming off a strong 2021 that saw rising dairy and commodity prices, farmers entered the year financially fit and, in many cases, with locked-in input expenses that have blunted 2022’s surge in inflation.
But with the cost of fertilizer and diesel fuel ballooning, and livestock feed for those who don’t produce their own feed becoming more expensive, it’s hard to see how the next growing season can be as solid as this one has been so far, bankers said.
“I think there’s more anxiety about what next year looks like than there is over what this year looks like right now,” said Dave Coggins, senior vice president ag banking for Green Bay-based Nicolet National Bank.
With diesel fuel now topping $5 a gallon, and with fertilizer prices up in part because key ingredients come from embattled Ukraine and Russia, input costs are increasing.
“A number of farmers were able to contract prices last fall and early winter before they totally took off and escalated. So some of them have fuel locked in for this year less than $3,” said Jenny Jereczek, director of ag banking for Security Financial Bank in Durand. “So they’re doing all right for this season. What I’m hearing and seeing and in talking with people is 2023. Right now, there is not really a good opportunity to contract good pricing for next year, and will there be? No one has the crystal ball.”
Bradley J. Guse, senior vice president/agribusiness banking for BMO Harris Bank in Marshfield, said many farmers, coming off a good 2021, are having a strong 2022 in spite of the rocky economy. He cited record crop prices in the first three months of the year, when prices typically are low, and the benefit of farmers growing their own feed.
“In Wisconsin, we grow a lot of our feed. That’s a big advantage to our Wisconsin dairy guys,” Guse said. “Because of that, they are feeding feed that they grew last year now, and last year’s cost to grow was a lot cheaper than this year. So we’ve got low feed prices because we grew cheaper last year, and we’re running the into these high milk prices. And we’re seeing margins that are just phenomenal.”
Milk has been selling for about $25 per 100 pounds, hovering near record levels.
But he, too, is concerned about next season.
“I’m not so worried about my clients and my portfolio this year as I am next year,” Guse said.
Ag bankers said international events and circumstances often set the stage for prices farmers pay to produce their goods and the prices they get at market.
“There was a drought in South America, a pretty serious one. That’s impacted crops — corn, soybeans — that are big crops in South America, especially soybeans,” Coggins said. “So we’ve got really high soybean prices in part because of that. But also, the war in Ukraine has had a serious impact on supplies of grains in general, but basically corn, wheat, barley, sunflower oil. Russia exports a fair amount. Ukraine exports a fair amount. I think the Black Sea region produces about 12% of the world’s calories, and so that’s a big deal.”
That affects the availability of those grains and pushes up the price. In Wisconsin, that means dairy farms that buy their feed pay more. But, in turn, it provides higher prices for the state’s grain producers.
What happens in the Black Sea region also has an impact on fertilizer prices. Coggins said 47% of the world’s phosphate and potash, which are used in fertilizer, come out of Russia and Belarus.
“There’s not a lot of other alternatives for getting that fertilizer. Most farms were in OK shape this year. Might have been able to lock in some prices late last fall or winter,” Coggins said. “But there is a lot of anxiousness about what those prices and availability might look like for 2023.”
The rise and fall of energy prices also is an inescapable fact of life for farmers. According to the Diesel Technology Forum, diesel engines power about 75% of all farm equipment, transport 90%
of farm products, and pump about 20% of agriculture’s irrigation water in the U.S.
Lance Lansing, vice president-commercial and ag loans for Wisconsin Bank & Trust, said the price rise with diesel fuel is mostly a refining capacity issue.
“Investors don’t want to put new refineries up right now,” said Lansing, who works out of Monroe and Platteville. “With electric cars coming out, nobody’s running to put new refineries up and have that sort of investment, not knowing what their return’s going to be.”
Lansing described the current farm economy as “volatile.”
“There’s a lot of moving parts. One saving grace is we have had good commodity prices. The milk price has obviously been up, and futures still look good. Same with the row crops. The row crops are still looking good, and a lot of people are locked in at a profit in 2022,” Lansing said. “2023 might be a different story.”
Although there is worry about next year, many farms today are in a good position financially, Jereczek said. But they are being cautious.
“At least in this area, we’re seeing some expansion, but maybe not like we’ve seen in the past when commodity prices have gotten to these levels,” Jereczek said. “I think farmers and bankers alike are more strategic this go-round, and have learned a lot from the past in regards to now is the time for improving leverage positions, paying down debt, paying down lines of credit and maybe stacking some cash away in savings for liquidity purposes, and those kinds of things.”
Still, some are making strategic equipment purchases they delayed when finances were tighter four or five years ago, she said.
Lansing said he isn’t seeing many farmers interested in spending to expand herds or land right now, even though commodity prices are high.
“I’m just a small section of the state here, but a lot of people aren’t reinvesting as far as in growth mode. They are more in, ‘Let’s find out what’s going to happen, pay down debt, right-size debt type’ mode,” Lansing said.
Higher interest rates might be dampening some spending by farmers, but it’s hard to say how much.
“I think the interest rates are maybe a little bit inhibiting some of that stuff,” Jereczek said.
But she said a lot of operating lines already were done over the winter and early spring.
“So they are not necessarily impacted by the rate increases we’ve see more recently,” Jereczek said.
Ag bankers said crop conditions generally look good around the state, but rain will be needed in early August.
“Rain in July makes corn, rain in August makes beans,” Guse said.
Coggins said it appears soybeans are likely to be a winning crop this year.
“Soybeans are really at all-time highs for price right now, in large part because of what happened in South America,” he said. “And the input costs of soybeans are less than corn, so that’s a crop that has the potential to be a winner this year, absent any major weather events.”
As for how farmers fare next year, much will depend on inflation and its upward pressure on input expenses, ag bankers said.
“Financing of inputs for next year could be a completely different story,” Jereczek said.
A recession might also be looming. While demand for Wisconsin farm products is high right now, a recession could change the outlook.
“I think every ag banker right now is worried about a recession destroying that demand,” Guse said. “I think we’re all concerned about that — what’s on the horizon.”
Gores is a journalist who covered business news for the Milwaukee Journal Sentinel for 20 years.