Archive for month: December, 2023

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Committee Chair Spotlight: Mark Oldenberg

The following is a brief interview with Mark Oldenberg, president and CEO at Security Financial Bank, Eua Claire. Oldenberg is chair of the 2023–2024 Government Relations Committee.

How did you first get into the banking industry?

I always had an interest in finance. After graduating college, a family friend who worked for a local bank was able to arrange an interview for a lending position and I was fortunate enough to be hired.

Why did you decide to join a WBA committee? Why should others consider lending their time and expertise to shaping Wisconsin’s banking industry?

After a few years of attending conferences there was an opportunity to join a committee, I saw this as an opportunity to help bring resources to other bankers and build my network. Since then, I have been on several committees and have grown to recognize how WBA works to help community banking and how much the industry needs them.

How has WBA facilitated the growth you have seen in your career and as a leader?

In addition to the networking opportunities, I have had the chance to chair the GR Committee and present at the Bank Executive and Management Conferences, which have improved my leadership and presentation skills, while helping me become a better public speaker.

As a banker, and as a leader, what is the most important lesson that you have learned?

I have learned how important it is to be a good listener and the importance of good communication.

Who (or what) motivates you to succeed?

I am motivated through my experiences with both our employees and customers. Getting to be part of the accomplishments of both of these groups is incredibly rewarding.

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From The Fields: The Ups and Downs of 2023

By Lance Lansing

2023 certainly felt like a rollercoaster ride for the ag economy. After two consecutive years of record or near-record high market prices, the outlook for 2023 was not as rosy. Then we had drought conditions in the corn belt and upper Midwest that caused more production and market uncertainty. Market prices continued to steadily go lower with few exceptions. With increases in land values, rent, interest rates, and questionable yields, 2023 brought up the old proverb that we are “living in interesting times.” All in all, we never felt secure about having decent profits in 2023 like we did in 2022. As ag lenders, we are used to seeing income and profit in cycles with some years leaner than others but, in my opinion, this year had more question marks than usual.

So, let’s look at the farm sector profits forecast put out by USDA in November of 2023.

“Net cash farm income is forecast at $157.9 billion in 2023, a decrease of $42.5 billion (21.2%) relative to 2022 (not adjusted for inflation). This follows an increase of $51.1 billion (34.2%) from 2021 to 2022. When adjusted for inflation, 2023 net cash farm income is forecast to decrease by $49.2 billion (23.8%) from a record high of $207.1 billion in 2022. Despite the decrease, net cash farm income in 2023 would be 15.0% above its 2003–2022 average of $137.3 billion. Net cash farm income encompasses cash receipts from farming as well as cash farm-related income (including Federal Government payments) minus cash expenses. It does not include noncash items (including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings) reflected in the net farm income measure.” Excerpt taken from Farm Sector Income Forecast published by USDA November 30, 2023.

As you can see from the USDA’s 2023 income forecast, the ag sector is way down from last year but still above the average from 2003–2022. With the reduction in net income, my first thought was that we would see some serious red ink, but income was high enough that our well-run operations will still be operating in the black. Many came into 2023 in a good liquidity position due to the high net profits in 2022 and land value continued to appreciate throughout the year. Another contributing factor to good liquidity was the lack of availability for expansion due to shortages in supplies and labor. Keeping cash on the balance sheet is always a good idea during uncertain times.

Agricultural land values increased by 8.1% from 2022 but even more impressive is that from 2009 to 2023 cropland value increased 107%. Pastureland increased from 2009 by 66%. This cost increase with higher interest rates is creating a high barrier of entry for young farmers and limiting expansions for many operations. In Wisconsin we saw the average value per acre go from $5,700 to $6,200 per acre. That is an 8.8% increase from 2022 to 2023. The more impressive increase though is the average value in 2019 was $4,950 making the last four-year increase over 20%. This kind of increase with the prime rate going from 4.75% in October of 2019 to 8.5% in July of 2023 has created a market that has slowed some operations from investing in cropland for expansion.

Rents have also been cost prohibitive to some operations. Landlords seeing 2022 market prices have been asking for more rent. Higher market prices have sparked more competition and bidding wars between producers for the available tillable soil. The rent market will adjust faster than other inputs, but it is continuing to creep up year on year.

Lastly, we will look at the yields for 2023. Overall, Wisconsin crop production declined in 2023. If you had asked me in June about the harvest, I would have categorially said we will have little to no yield in our area, but 2023 kept surprising us. Corn production is forecast to be down 5%. Yields are expected to average 171 bushels per acre, down 9 bushels from last year. To me, that is incredible for how we started the year. The yield was down due to several factors including the dry weather conditions. Soybean production is forecast to be down 9% from the previous year. The average forecasted yield is 49 bu. per acre. Still an incredible outcome considering how the year started.

The takeaways of 2023 for me include the following:

  • Our state’s agriculture economy is still going strong and may have dodged a bullet in 2023
  • Stronger yields than expected and some decline in input costs will help our strong credits remain profitable
  • Our marginal and weaker credits will struggle in years like 2023 but should have fared better than expected with better yields and carful marketing

I have not touched on the livestock or the dairy markets because they would need their own articles this year. Milk prices from July of 2022 to July of 2023 dropped $8.90. That market saw its own rollercoaster ride. The beef market has seen new highs and continues to remain strong. We have seen our cow/calf operations make very good profits this year and this trend looks to continue for the near future.

From the way this year started, I think we can all breathe a sigh of relief that we continue to work in a great industry that will persevere another year. Happy New Year! I can’t wait to see what 2024 brings.

Lansing is vice president – lending at Apple River State Bank in Darlington. Lansing also currently serves on the WBA Agricultural Bankers Section Board of Directors.

 

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Executive Letter: Looking Back at 2023

By Rose Oswald Poels

For many of us, the end of the calendar year is a time to pause and reflect upon all we have achieved. As a member-driven association, the Wisconsin Bankers Association (WBA) relies on the valuable insight and active engagement of our membership. With your help, 2023 resulted in monumental success for Wisconsin’s banking industry and reaffirmed the Association’s commitment to our members.

A top priority for the Association has long been advocating for fairness between banks and credit unions, and this year — with the help of many bankers — WBA led the historic step towards parity. The unprecedented state tax law provides all banks (C-corp and S-corp) with an income tax deduction beginning in 2023 on income earned from commercial loans for business or agricultural purposes of $5 million or less where the borrower resides, or is located, in the state of Wisconsin. It is because of the grassroots advocacy and political engagement of unified bankers that we see such success.

In addition, WBA has continued to support and educate bankers as they serve communities throughout the state. In 2023, WBA developed a range of consumer resources for banks to utilize, made available new best practice resources informed by WBA committee and section members, offered opportunities — such as peer groups and an employee resource group — for bankers to connect and share ideas, and provided a wide range of in-person and virtual educational programs. These initiatives are just a handful of the ways WBA stands to benefit bankers in Wisconsin, and without the participation of our membership to inform and shape them, our Association would be nowhere near as relevant nor impactful.

As always, thank you for your continued involvement in and support of the WBA; I am grateful to work alongside so many individuals who take extensive pride in promoting Wisconsin’s banking industry and the financial success of communities across the state. In turning the page on yet another accomplished year, I — and the dedicated team at WBA — look forward to what is in store for our Association, our industry, and our communities in the year ahead. I wish you all a happy and successful New Year!

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December 2023 Compliance Journal

The December 2023 WBA Compliance Journal is now available. In this edition, WBA Legal provides the DFI established escrow rate for 2024 and other thresholds for 2024 that were available at time the publication was created. The “Regulatory Spotlight” section once again provides a summary of rules, proposals, and notices issued by federal agencies, and the “Compliance Notes” section reports on other important compliance-related updates for bankers. As we near 2024, we wish everyone a Happy New Year!

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Executive Letter: Your Judicial Advocate

By Rose Oswald Poels

For the last 18 months, many Wisconsin financial institutions have been fighting class action lawsuits on the issue of represented items and fees. These lawsuits are occurring across the country against banks and credit unions and appear to be generated from the same few class action law firms.

While WBA does not normally get involved in bank litigation until it reaches an appellate level, in these cases, however, it is helpful for WBA to know whether your bank is involved in such litigation, so we can help share what we know about others facing the same class action suit. There is value in similarly situated banks, along with their legal counsel, talking with others so they can help each other respond in these cases. In just the last two months, two more banks were newly served with their own respective summons and complaint on these same issues. Many of these lawsuits occurred in 2022 and while WBA does not know the resolution of every case, many were successfully dismissed, in favor of the bank, on a motion to dismiss. The goal, of course, of these class action lawsuits is to force a settlement from the bank.

WBA will collect bank name and contact information, venue, issue at hand, and the name and contact information for bank’s counsel involved in the matter. WBA will share the collected information with member banks requesting the information; however, this information will not be published. My hope is to help connect banks, and their counsels, with each other to discuss experiences and help find resolutions.

In addition to serving as a central repository of these class action suits against banks, as mentioned above, WBA does get involved as a friend of the court in cases at an appellate level where a bank is involved as a party. WBA may get involved as a friend of the court in cases of widespread importance to Wisconsin banks generally and where the banking industry is in general agreement on the issues. If requested by a member to participate, the facts of the case are defensible, and WBA’s counsel believes a reasonable chance of being persuasive exists, a recommendation is made to the WBA Board of Directors for their approval of involvement. If approved, WBA will collaborate with its outside counsel to get involved as a friend of the court. WBA will not participate in cases involving two or more member banks as opposing parties.

If your bank is facing a suit, please assist WBA in assisting other Wisconsin banks facing similar cases by letting me or WBA’s VP – Legal Heather MacKinnon know.

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Committee Chair Spotlight: Shannon Grunewald

The following is a brief interview with Shannon Grunewald, loan operations officer at Waldo State Bank. Grunewald is chair of the 2023–2024 FIPCO Software Users’ Committee.

How did you first get into the banking industry?

I had just graduated from high school, working a part time job, trying to decide what I wanted to be when I grew up and an opportunity came up to work for a large bank in their post-closing department. After 14 years working in large banks, I decided that taking on a position at a small community bank was more my style. Who knew someday I would find Waldo.

Why did you decide to join a WBA committee? Why should others consider lending their time and expertise to shaping Wisconsin’s banking industry?

My supervisor at the time was ending his term on the committee and continuously expressed how important the connections he made were and how much fun he had. I loved the idea of being a part of suggesting enhancements to make all our lives easier. I now have a network of peers (I now consider friends) that I can bounce ideas off of or get suggestions for new products.

How has WBA facilitated the growth you have seen in your career and as a leader?

Ahead of the 2023 FIPCO Compliance Concierge Software & Compliance Forum this past October, FIPCO contacted me, as this year’s chair of the user committee, asking if I would be willing to do an opening speech and committee member introduction. I couldn’t say no, but as someone that has a fear of public speaking this was one of the hardest things I did this year. But the encouragement that FIPCO staff, my fellow committee members, and my coworkers showed me, made it in the end one of the easier things I’ve done.

As a banker, and as a leader, what is the most important lesson that you have learned?

That with the right people around you, anything can be accomplished. Regulations and HMDA will always be the death of me, but as long as I have a great team surrounding me, I will go on. Choose a job you love, and you will never have to work a day in your life. –Confucius.

Who (or what) motivates you to succeed?

Seeing my team learn and grow. If I have shared knowledge with someone and later see them share it with another, it’s the best feeling around.

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Challenged to Grow

By Tisha Kenfield

Meeting with other bankers at networking events I heard the term “accidental banker” used often and it really resonated with me. I did not grow up or go to school intending on going into the banking industry, but after falling into it I can’t imagine doing anything else. I applied for a position as a teller as a way to get out of the world of retail sales, looking for something with consistent hours and the opportunity for me to grow. When I first started, I didn’t fully understand how much depth there was in the world of banking, that it was more than just opening checking accounts and cashing checks.

I was lucky enough though to find myself working on a team and in a company that supported me and encouraged me to learn as much as possible about every aspect of banking as well as grow personally to be prepared to take the next step in my career. Without a bank and managers who believed in my potential and invested in my future, I would never have taken the first steps into building a career in the banking industry.

One constant through my five and a half years in banking was the encouragement to take on challenges that were outside of my comfort zone, with the first being networking. I have always considered myself introverted so the idea of representing my bank in a room of people much more experienced than myself was terrifying. But when I was asked to take over our branch’s spot in a local Helping Businesses Build Assets chapter as I moved into a personal banker position, I said yes.

Not having any experience with business networking, still being in my mid 20’s, and going into a room of established business owners was leaps and bounds outside of my comfort zone. It ended up being an amazing experience that helped me become more confident in not only my networking abilities, but my communication skills as well.

It took quite a few meetings to gain my footing, voice, and confidence in that room but it allowed me to open up to the possibility of other networking and leadership activities I would not have considered myself qualified for in the past. Being young and not having the professional and leadership experience I considered to be required to enter those spaces, it was eye opening and empowering to be thrown into it and understand I was able to hold my own.

As I have moved into different roles in the branch, taking on more responsibility and leadership, the impact of having connections both internally and externally was clear. Joining an internal emerging leaders group has given me opportunities to learn and grow with my colleagues and create connections across departments and regions that I may not interact with on a regular basis.

Every opportunity I have been given to grow as a leader and expand my network has taught me different lessons and helped me grow different parts of myself personally and professionally. The one that has been most impactful has been attending my first two Building Our Leaders of Tomorrow (BOLT) Summits and joining the BOLT Section Board. Being in a room with like-minded bankers who were there to learn and grow and collaborate left me energized and ready to take on new challenges.

Through all of those opportunities the consistent driver was a manager and colleagues who believed in me and pushed me to take steps that I may not have considered myself ready for, but they knew I could handle. I will forever be grateful for entering the world of banking with a company that emphasized growth and provides opportunities for both internal learning as well as encourages continued education and networking externally. Without those factors I would not be where I am today or have the confidence and drive to continue to grow in my career in the banking industry.

If I could go back and give advice to my younger self, or anyone just starting out in banking, it would be to research and partner with your manager to take advantage of every opportunity your company offers to help yourself grow. Whether it is continuing education, joining emerging leaders groups, job shadowing, or taking advantage of networking opportunities, being present and learning from others around you can be career-changing. I had limits set for myself on what I thought was capable of, but each new experience has extended those limits and challenged me to grow.

Kenfield is assistant branch manager at North Shore Bank in Appleton and member of the 2023–2024 BOLT Section Board.

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Executive Letter: 2023 Agencies Risk Perspectives

By Rose Oswald Poels

This year was a very busy one from a banking regulatory perspective with WBA and the industry engaging regulators on many different issues. As you look ahead to the new year, it is helpful to understand from the banking agencies’ perspectives the key issues they identify that are facing the industry.

The following summarizes the most recent risk perspective reports from the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), and the Federal Deposit Insurance Corporation (FDIC), and will offer insight to bankers as you evaluate and revise risk strategies for the upcoming year:

OCC Semiannual Risk Perspective, Fall 2023

The OCC’s Fall 2023 Semiannual Risk Perspective presents data in five main areas — the operating environment, bank performance, special topics in emerging risks, trends in key risks, and supervisory actions. OCC reported that the overall strength of the federal banking system remains sound and that OCC expects banks to remain diligent and adhere to prudent risk management practices across all risk areas. Additionally, OCC stated that banks should continue to guard against complacency to ensure each maintains the ability to withstand potential future economic challenges.

The OCC highlighted credit, market, operational, and compliance risks, as the key risk themes. Highlights from the report include that:

  • Credit risk is increasing due to higher interest rates, increasing risk in CRE lending, prolonged inflation, declining corporate profitability, and the potential for slower economic growth. Key performance indicators are beginning to show signs of borrower stress across asset classes.
  • Rising deposit rates, broader market liquidity contraction, and increased reliance on wholesale funding started to impact net interest margins through the first half of 2023. Competition for deposits and higher interest rates are raising deposit rates. OCC reported deposit and liquid asset trends stabilized in the latter half of 2023, but the levels were supported by increased reliance on wholesale funding. Increases in interest rates are negatively impacting investment portfolio values.
  • Operational risk is elevated. Cyber threats continue. Banks continue to leverage new technology to further digitalization efforts, offering innovative products and services to meet customer demands. OCC warned that increasing digitalization efforts can also heighten risk of fraud and error, including fraud targeting peer-to-peer and other faster payment platforms.
  • Compliance risk remains elevated. OCC believes this is due to the heightened focus on ensuring equal access to credit and fair treatment of consumers, the expanded use of innovative technologies for product and service delivery, and expanded partnerships with third parties, such as financial technology firms, and increases in BSA/AML risk.

Federal Reserve Financial Stability Report, October 2023

The FRB’s latest Financial Stability Report was released in October in which FRB reports conditions affecting the stability of the U.S. financial system by analyzing vulnerabilities related to valuation pressures, borrowings by business and households, financial-sector leverage, and funding risks. Similar to the OCC, FRB reported that the banking sector remains sound overall, and that most banks continue to report capital levels above regulatory requirements. Nevertheless, FRB reports a subset of banks continued to face funding pressures.

The FRB’s report includes a discussion which considers possible interactions of existing domestic vulnerabilities with several potential near-term risks, including international risks. Survey contacts reflect the effect of persistent inflation and monetary tightening, insights regarding CRE, the reemergence of banking-sector stress, market liquidity strains and volatility, fiscal debt sustainability, and climate-related financial risks.

FDIC Risk Review 2023 Report

The latest FDIC Risk Review report incorporates data for 2022 through first quarter 2023, with insights related to the stress to the banking sector that emerged in March 2023. The report reflects risks on the key credit, market, operational, crypto-asset, and climate-related financial risks facing banks.

Regarding key credit risks, FDIC reported asset quality remained generally favorable as of first quarter 2023 despite modest deterioration. FDIC believes weaker economic conditions and higher interest rates may challenge bank loan portfolios, including credit card, C&I, residential real estate, and CRE loans.

From a markets perspective, FDIC reported market risks were primarily related to the effects of higher interest rates. Also, deposit outflows along with high levels of unrealized losses could pressure liquidity for some banks. FDIC reported the banking industry benefited from strong loan growth and higher NIMs in 2022, but higher funding costs reduced NIMs.

FDIC also reported that operational risks, including cybersecurity risks and risks related to illicit financial activity, remained elevated across the banking industry. FDIC also reported that crypto assets continue to present novel and complex risks that FDIC believes are difficult to fully assess. From FDIC’s perspective, climate-related financial risks include physical risk and transition risk, and FDIC’s report focuses on physical risk from severe weather and climate events.

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Committee Chair Spotlight: Terry Chier

The following is a brief interview with Terry Chier, director – personal trust & estate settlement at Thrivent Trust Company in Appleton. Chier is past chair of the 2023–2024 Trust Banking Section.

How did you first get into the banking industry?

I started in commercial lending right out of college with a finance degree, working for a national transportation financing group. This eventually led to working for a national automotive captive finance company offering lending for consumers and automobile dealers alike.

Why did you decide to join a WBA committee? Why should others consider lending their time and expertise to shaping Wisconsin’s banking industry?

In my case, I joined the WBA committee to work with other trust professionals dedicated to supporting and enhancing the trust industry in Wisconsin. I wanted to network with counterparts within the industry to identify and pursue common interests.

How has WBA facilitated the growth you have seen in your career and as a leader?

I have learned an incredible amount by being part of the WBA Trust Section. Having an inside view of legislative initiatives like the Trust Code trailer bill has provided valuable insight and exposure to highly skilled trust professionals. In addition, the content of the WBA Annual Trust Conference provides timely and valuable industry knowledge.

As a banker, and as a leader, what is the most important lesson that you have learned?

That you can’t rest on your laurels. There is always room for improvement and learning. Our industry is undergoing significant changes driven by a wide variety of internal and external factors. Innovation, agility, and a client-centric approach are what is required to succeed in this environment.

Who (or what) motivates you to succeed?

Successfully helping clients carry out their wishes as stated in their estate plans and assisting subsequent generations in doing the same is a real passion for me. Learning something new every day is another motivator for me. This business consistently offers opportunities to learn and grow, which allows you to be a “go to” or value-added resource for clients and colleagues.

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Seeking Partners to Create Equitable Hiring Solutions in Banking

Chytania Brown

By Chytania Brown

As you know, the current labor shortage and looming silver tsunami are making it increasingly difficult for businesses to hire, and keep, skilled workers. In the past year, over 4,000 job listings were posted for bank tellers across Wisconsin, showing the immense need employers have to find, screen, and train professionals who are interested in a career in the financial industry. As the Workforce Development Board serving Milwaukee County, Employ Milwaukee has been working to fill this demand through BankWork$. BankWork$ is an innovative program designed to successfully prepare low-income and minority talent for the retail banking industry, building a more equitable, prepared, and sustainable financial workforce of tomorrow.

BankWork$ was created to open doors for populations who are underrepresented in the prosperous finance industry to help them find and succeed in well-paying jobs that lead to a lasting career. BankWork$ students are often those who would otherwise not be considered a qualified candidate for positions in financial services but are passionate about stepping into the field. Participants in BankWork$ must be 18 or older, have a high school diploma, have basic computer skills, and previous cash handling and customer service experience.

Since its genesis in 2019, BankWork$ has mentored and trained over 130 graduates in financial services, with over 80% obtaining gainful employment at our partner banking institutions and credit unions upon graduation. One such student is Yesenia Delgado, a 2022 BankWork$ graduate.

Yesenia Delgado

After graduating from high school in Milwaukee, Yesenia Delgado was going through a difficult time in her personal life. She had a desire to work in financial services but struggled to find opportunities. After discovering an ad for BankWork$ on Facebook, Delgado knew she was on the path to achieving her dream: “I always had this goal of wanting to work at a bank, but I thought it would require a college degree, but it turns out I was wrong. After I applied for BankWork$, I got a call, and the next thing I knew, I was there doing assessments and an interview,” recalls Delgado.

For Delgado, BankWork$ was nothing short of life changing. After completing the program, Delgado was hired by BMO as a retail relationship banker, where she loves helping customers and impacting her community. When asked what drew her to the banking industry, Delgado stated, “I’m passionate about helping the Hispanic community develop financial skills. I love that I get the opportunity to help customers and be involved with my community. It’s not just a job for me — it’s a passion.”

Stories like Delgado’s are common with BankWork$ graduates. Employ Milwaukee is always looking to expand our BankWork$ employer partners, who can contribute to the expansion and efficacy of BankWork$ through monetary investments or in-kind donations including facilitating mock interviews with students, providing presentations, or assisting with curriculum. This is an investment that returns to employer partners, who receive exclusive access to interviewing and hiring our graduating classes.

If you are interested in partnering with BankWork$ and making the financial industry a more equitable place, please reach out to Jovo Potkonjak, BankWork$ program manager, directly at 414-270-1703 or at jovo.potkonjak@employmilwaukee.org.

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