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Inflation Very Strong Again in June, Biggest Price Increases Tied to Reopening; Inflation Will Slow Dramatically in Second Half of Year

  • The CPI jumped 0.9% in June, with the core CPI also up 0.9% over the month. A few categories experiencing strong demand and limited supplies coming out of the pandemic boosted inflation over the month.
  • Inflation as measured on a year-ago basis was at the highest levels in decades. However, this is overstated because of comparisons with the period of weak prices at the beginning of the pandemic.
  • Inflation will slow in the second half of 2021 as supply starts to catch up with demand.
  • With the current pickup in inflation due largely to one-time factors, the Federal Reserve is not expected to raise the federal funds rate until mid-2023.

The consumer price index for urban consumers jumped 0.9% in June from May, the biggest one-month increase since June 2008. The consensus expectation was for a 0.5% increase. The core CPI, excluding food and energy prices, was also up 0.9% over the month. This was the strongest one month of core inflation since the early 1980s. Overall CPI inflation was 0.6% in May, with core inflation at 0.7%.

Prices once again rose quickly for goods and services that are experiencing strong demand, but also supply disruptions, coming out of the pandemic. Used car and truck prices jumped 10.5% over the month, the biggest one-month gain ever (going back to 1953), after increases of 10.0% in April and 7.3% in May. The increase in used car prices alone accounted for more than one-third of overall inflation in June. New car prices were up 2.0% in June, lodging away from home costs were up 7.0% over the month, and airfares rose 2.7%, after a 7.0% increase in May. Energy prices rose 1.5% in June, including a 2.5% increase in gasoline prices. Food prices rose 0.8% over the month.

On a year-ago basis overall inflation was 5.4% in June, with core inflation of 4.5%, the fastest pace since 1991. However, this overstates inflation, because prices declined in March and April of 2020 when the pandemic came to the U.S. The overall CPI was up 4.7% in June from February 2020, before the pandemic, with the core CPI up 4.2% over the same period. Used car prices were up an astonishing 45% in June from a year earlier, rental car prices were up 88%, and auto insurance was up 11%. On the flip side, medical care costs were up a scant 0.4% in June from a year ago.

The headline inflation numbers have been eye-popping in recent months, but underlying inflation remains under control. Once again a few categories—used vehicles, airfares, rental cars, hotels—are experiencing huge price gains because of the recovery from the pandemic, and once again comparisons with weak prices a year earlier are overstating inflation. Both factors will wash out of the data in the near term. Used car prices are temporarily elevated because of very strong demand from stimulus payments, people returning to work, and limited supplies of new cars; used car supplies are also very low. Used car prices will fall back to earth later this year as new car production picks back up.

Similarly, airfares will decline as the airlines add capacity. And gasoline demand has picked up more quickly than supply as people return to work and start traveling again, but eventually higher prices will induce more oil production, resulting in lower energy prices. Also, comparisons with the period of very weak prices in the early stages of the pandemic will fade from the data, slowing inflation on a year-over-year basis.

Monthly inflation will be much slower in the second half of 2021 than in the first half of the year as demand pressures from the economic reopening fade and supply starts to catch up as businesses increase production. Year-over-year inflation will also be softer in the second half of the year. The Federal Reserve has made it clear that it views the current high inflation as due to transitory factors and will not tighten monetary policy until inflation is consistently at or above 2%, excluding one-time factors. (The Fed uses a different price index, the personal consumption expenditures price index, which tends to run a bit slower than the CPI.) PNC does not expect the next increase in the fed funds rate until mid-2023.

The big concern is that current high inflation gets built into consumers’ and businesses’ expectations, leading to higher long-run inflation, as happened in the 1970s. However, the temporary nature of current inflation pressures, and Fed watchfulness, should prevent this from happening.

Faucher is PNC's Chief Economist.

By, Ally Bates

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Developing an ISAP, ASAP

Five critical steps to maintaining a secure network.

Keeping your network secure in the current climate of internet assault is no small job.

Think back – how little has changed. In 2001, server-based worms were estimated to have cost private industry almost $3 billion. Code Red alone infected 359,000 servers in under 14 hours, and within 24 hours of Nimda, 50 percent of the infected hosts went offline. Fast forward to today and the exponential increase in breaches, how much is really that different?

These attacks reinforced the need for every organization to develop an information security action plan (ISAP). Doing this first involves evaluating, assessing, and auditing the existing security environment to identify major and minor problems (your inventory). Without knowing and understanding the current security posture, it is impossible to identify the most cost-effective solutions to deploy.

Veteran and well-trained security professionals realize there is no ‘silver bullet’ in information security. Following and adjusting to an industry security framework will keep you secure today and into the future. Using proper diligence to understand an organization’s security needs goes a long way in improving protection.

The following are critical first steps for building an ISAP to create a better defense in an increasingly dangerous cyberworld.

Creating Security Policy

First, create a clearly defined security policy that is strictly enforced. Understand that security goes beyond desktop PCs and ensure that the use of all laptops, copiers, fax machines, modems, and even printed information is included in the policy. Supply the policy to everyone in the organization, educate all employees about it, and enforce it consistently.

The policy is the roadmap to good security, and every employee should review it annually, be provided with opportunities to ask questions, and fully understand the policy. They should acknowledge their understanding of the policy in writing. The policy must become a standard part of the company culture and be enforced at the highest level. Not consistently enforcing policy can be worse than having no policy at all, because it could be used against the company (in litigation) to show that policy is not taken seriously in all cases.

Identifying Risk, Deploying Security

Second, identify an acceptable level of risk and deploy the appropriate level of security. It is no longer adequate for management to proclaim ignorance about potential vulnerabilities in the environment. Due diligence requires management to exercise sound judgment in protecting the environment consistent with the information being processed (i.e., the more sensitive the information, the more safeguards need to put in place).

After assessments have been performed, there are essentially three measures that can be taken. They are to reduce the risk (perform remediation), transfer the risk (take out insurance), or accept the risk (identify cost justification).

If overall risk reaches an unacceptable level, appropriate remediation steps must be taken to get the exposures reduced in severity. If that cannot be done, documentation must be created to identify justification for accepting the risk, or possibly insurance can be purchased to transfer the losses associated with the risk to another organization.

Implementing Verification

Third, access to internal hosts must be controlled and monitored. Are employees only given access to what they need to perform their specific job? Are logs reviewed daily for inconsistencies and abnormalities?

Since many security breaches can be attributed to ‘insiders,’ or exploit by a bad actor of an insider, trust no one. “Zero Trust”; it is important to live by an access philosophy of ‘least privilege’. Verify everyone and everything. Only give users the access they need to do their job. Not only must the data be protected and accountability of who is accessing it be maintained to ensure privacy, but simply tracking problems and events that occur in an environment are easier if it is possible to determine who has access to specific information. Even though incidents of access from outside a company get all the publicity, the most critical protection remains inside. Insider abuse of email or unmonitored internet access can cost in several ways beyond the lost employee time, bandwidth, and potential for viruses or worms.

Supplement the authentication and authorization system with audit trails and intrusion detection systems and use an incident response plan to follow up on suspicious activities and anomalies. Logs can be very large and contain enormous amounts of extraneous information. It is important to install tools that help sift through the abnormalities or make it possible to identify what a normal log looks like and flag unusual activity. Regular review of system logs can mitigate risk. This can include the implementation of modern extended endpoint detection and response solutions.

Testing Upgrades and Patches

Fourth, vendor upgrades and software/hardware patches should be tested adequately before migrating to production. Anti-virus tools should be deployed and automatically updated with new signature files.

Changes are constantly occurring in the environment. New software can introduce new vulnerabilities and it is well-known that some software companies do not create secure applications or operating systems. Be sure to have clear documentation to migrate all changes to production and a contingency plan should problems occur.

Malicious code continues to be a major problem for organizations. It is no longer adequate to simply install an antivirus tool and assume your problems are alleviated. It is not adequate to assume the user will behave properly to protect their desktop and company data. Today’s generation of protection must not be dependent on signatures and needs to consider other layers of information: users, files, hosts, and the network. Throw in deception technology and you have a robust solution.

Handling Any Defaults

Fifth, be sure default accounts, passwords, and settings have been appropriately handled in operating systems, routers, databases, and applications.

Keep in mind that almost all operating systems, including third-party applications, come with sample files, many of which are extremely dangerous. Almost any operating system and many application system installations require a powerful ‘administrative’ or privileged account to complete installation. This account is shipped with a default password, which often is not changed by the network, system, or application administrator. It should be changed immediately at initial installation even on test systems. If the account needs to remain in existence, it should be tightly locked down, audited, and, if possible, have its default name changed. In addition, it should not be used on a routine basis for administration. Individual administrative accounts should be assigned to authorized users with proper access requirements granted, training provided, and responsibilities understood.

In summary, there are numerous measures that can be taken to ensure a company’s infrastructure can protect its information assets. This all creates the requirement for a thorough information security action plan. A certified, qualified, well-trained chief information security officer can usually lead a corporation along a path to protected information assets and a secure business environment.

To learn more, call or email Ken Shaurette, FIPCO's Director – Information Security and Audit, at 800-722-3498 ext. 251 or itservices@fipco.com today.

 

By, Ally Bates

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Fifty Years and Counting: Reflections on a Lifetime Career in Banking

Dedicating decades of knowledge and experience to the industry is viewed differently depending not only what the worker gives to the role, but what the role provides the worker in return — to put it in the words of Mark Twain, “Find a job you enjoy doing, and you will never have to work a day in your life.” The WBA-member bankers who have been honored in the 50-Year Club have a perspective on this that can only be had as a result of over half a century in banking. We spoke with some to gather their insights on the industry, their expectations for the future, and how their career may have looked different if they had not followed the path they did.  

Fifty Years and Counting 

For Bill Censky, co-founder and former president of Investors Community Bank, Manitowoc, a lot has changed in recent decades. From an evolution in technology to an increase in mergers and acquisitions, he noted he feels as though he has seen it all since his start in 1969. 

“A major part of an any line of work is about changing as you see things change in your industry,” said Censky. “The economy, business operations, and any other situational things have to change. Banking is no exception.”  

Censky retired from his role as president of Investors Community bank in 2016 and as board chair last year, but his involvement at the bank and in his community has certainly not taken a rest. As of now, he is still a board member at the bank and treasurer of a men’s homeless shelter. All of this, he says, ties back to the reason he got involved in banking in the first place. 

“I don’t particularly like doing the mundane jobs,” he said. “I like actively working toward making a difference.” 

Mark Schowalter, former EVP/COO of Port Washington State Bank (PWSB), enjoys making a difference in many of the same ways and has always been drawn to building customer relations. When he started his career back in 1970, he recalled Friday nights, pre-Automated Clearing House, before direct deposit and electronic banking. He described what he said felt like each and every customer in the bank lobby. The lines were hectic, the driving lanes were always backed up, and it was one of his favorite experiences.   

“You got to meet everyone, see everybody, and catch up with them,” Schowalter said, “and it was a good way to build relationships with customers. It’s quite a bit different now, the way banking is conducted. But back then, it was very much face to face.”  

When I spoke with Schowalter, he was preparing for a board meeting later that afternoon. Although he has also retired, remaining part of the industry is something he could not imagine otherwise. He is still the director and vice chair of PWSB, and serves on the bank’s board of directors.  

“I’ve volunteered for many organizations over the years, civic and nonprofit, to help support the quality of life in our communities,” he continued. “So, my working at the bank has really fueled that. I continue to do this today, and you really appreciate how everything works in our markets and how so many things depend on each other. My present involvement with our communities has just been continuing to help where I can.” 

While many bankers who have dedicated over 50 years to the industry continue to offer their knowledge and skills however they can, not all of them have entered retirement. Rita Derks still serves as the assistant vice president at the Thorp branch for Northwestern Bank, where she has worked since 1989. She said she has probably worked in the banking industry for another “15-or-so years” on top of that, but time just flies when you enjoy your job and the people around you. When asked what her favorite part of her position is, it isn’t hard to see why. 

“The best part is being able to help people,” said Derks. “You gain so many friends and customers, people you know and people you don’t know. This is an industry where you get to be there for people when they need you, and that’s been one of the greatest parts of my career.” 

Expectations for the Future of Banking 

After spending over 50 years in banking, there are many industry achievements these individuals are proud of. Looking ahead, there are a few things they expect to see accomplished at some point in the next 50 years, too. Schowalter’s hope is short, simple, and shared with countless others: keep the community bank relevant. 

“Anything that would ensure that community banks continue to be relevant and valued is what I’d like to see,” said Schowalter. “We are the financial engines of the communities. Things like regulations, how the public perceives what we do, our access to different resources, they all play a part in being successful and keeping the community bank relevant.” 

Fairness was another theme that came up regarding future objectives. As Censky put it, it’s not only something he wants to see in the next few decades — it’s something he believes should have happened decades in the past. 

“A level regulatory playing field has been near the top of all banking lists since deregulation of the 1980s,” Censky said. “This will become even more important if tax rates go up…The level playing field is not just about credit union or Farm Credit System taxation — the need for banks to have regulations dropped that are out of date are stopping us from competing with fintech companies, who have little interest in communities.” 

For others, the answer is not a simple one. Derks began her response by stating this would be a question she was unable to speak on. Still, her follow-up emphasized how a lot of people feel about the industry’s expectations. With so many recent advancements, the rapid pace at which they’ve come, and a global pandemic that has pushed everything even further, expecting anything right now can feel strange.  

“What do we need to do in the future?” Derks asked. “I don’t know. I don’t know what’s coming, but if it’s anything like the change we’ve seen in the past few decades, it’s a completely different world. Life happens quickly, and there’s not an industry that exists where you can just sit back for the ride; you have to keep up with the pace. Good or bad, it seems that’s just how it goes.” 

If Not Banking – What Else? 

Imagining 50 years in any position can seem daunting, but I was assured the accomplishment is worth each moment once that time and energy has been dedicated to a community you truly care for. To place their lifetime in banking into a new perspective, I was curious to know — if not banking — what other career would they have considered spending their 50 years in. Unsurprisingly enough, none of the answers strayed too far from the significant roles they have played the industry.  

“I have always loved technology,” Censky said. “I enjoyed my IT-related classes in school and the IT-related projects at the bank, whether it was learning how to use the bank’s first computer, an Apple II+ in the early 80s, or selecting and purchasing new banking terminals or networks or selecting a new core system or managing a conversion or using MCIF to extract data to drive sales. I love being efficient and getting rid of the unproductive and mundane parts of our work.” 

In many ways, some bankers have spent more than their own lifetime in their career — family-owned and closely held banks have multiple generations of a family establishing and building the bank. It can be challenging to envision another role outside of the family business. 

“It’s a hard question,” Schowalter admitted. “I’m a fourth-generation banker along with my brother Steve. He and I grew up in the business. I can say that along the way, I never really considered anything else. All the years I worked with the bank, I volunteered with nonprofits, and you come to appreciate the work they do. I think the nonprofit sector would have really appealed to me as something I would have liked to be more involved in.” 

Derks had a rough idea of what else she would have liked to do, but raised an excellent point in the process: if the jobs that have become so widespread today were available decades ago, would you be performing a completely different task right now?  

“Probably something in the accounting or investment areas, because that’s what I’m used to doing,” said Derks. “It’s strange because there is so much more to offer in terms of a career nowadays, and so many of the major jobs today weren’t even prevalent back when I was starting out. If some of these jobs today had been around back then, I probably would have been interested so long as it had numbers involved.”  

Even with hypotheticals, each banker said they are more than happy with the time they have spent with the banking industry and couldn’t imagine a career spent anywhere else. Although the trend of staying in one position for an extensive period has declined, they have high hopes for the future of banking and the lifetimes that will be dedicated to the achievements and changes of Wisconsin’s financial services. 

“It’s a little different today,” said Schowalter. “I don’t know if we’ll see as much [tenure] as we used to. People don’t seem to stay in one place or one career for that long, but bankers are part of great communities and the chance to grow with them is rewarding. I’d like to think longevity speaks to the strengths of the industry, and I hope that continues another 50 years from now.”  

By, Alex Paniagua

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Calculator and hundred dollar bills sitting on pile of wheat grain

2021 Is Looking up for Farmers, Ag Bankers

Wisconsin farms generally have fared well through the first half of 2021, as higher prices for products, increased exports to China, and pandemic payments have provided a financial boost.

Although a dearth of precipitation during spring and much of early summer has caused some nervousness in the southern half of the state, recent and expected rain could lessen those concerns.

As always, Wisconsin bankers said, it’s important to stay well-connected to their ag clients to monitor the ebb and flow of farming – even when things are mostly looking up.

“Overall the farm economy is what I would call steady and improved,” said Amber Keller, senior vice president and director of ag banking for Town Bank in Clinton. “It’s improved from the standpoint that we have a lot of opportunity to lock in a profit this year, even into ’22.”

The state is coming off a year in which many farms saw strong earnings because of a good growing season and government stimulus money intended to aid businesses and farms during the Covid-19 pandemic. The previous five years were a struggle for many farmers.

“It seems like right now for the most part we’re in a demand market,” said Bradley J. Guse, senior vice president/agribusiness banking for BMO Harris Bank in Marshfield. “By that I mean the agriculture products are in demand for various reasons. Part of it is that China has imported a lot of things as they rebuild their hog industry. That is starting to take more and more product, whether it be corn or soybeans."

China also is buying products from dairy farmers, particularly whey protein to feed piglets.

"As that industry rebuilds that pipeline has had to get refilled, so that’s created some excess demand," Guse said.

Pork output in China declined 21% in 2019 after an outbreak of African swine fever hit the country and its breeding stock declined. The downturn lingered into 2020.

As China builds back with a new model, “It appears some of this is going to be pretty sustainable, not just filling the pipeline,” Guse said.

Dairy farms also could benefit from a growing appetite for “cheese tea” in China and elsewhere, Guse said.

According to The Dairy Alliance, cheese tea, also called milk cap tea or cheese mousse tea, is a cold tea topped with a foamy layer of milk, sweet or salty cream cheese, and whipping cream sprinkled with sea salt. The tea itself typically is green or black tea.

Cheese tea was first seen in Taiwan 11 years ago, with market vendors combining powdered cheese, milk, and salt with whipping cream to form a foam to top cold tea, The Dairy Alliance said in an article on its website. In 2012, the trend made its way to China, which swapped the powder for real cream cheese and fresh milk, the dairy organization reported.

Nicholas Felder, vice president of commercial/ag banking for MidWestOne Bank in Lancaster, said farm exports to China have increased, especially since the U.S. elections. In addition, government aid has been helping Wisconsin farmers.

“The federal stimulus funding from last year into the spring, and then higher commodity prices the last half of last year and first half so far this year, has really strengthened some balance sheets,” Felder said.

Keller said low interest rates and stronger land values also are factors in a healthier outlook for farms right now.

“Those low interest rates really keep things stable out there, and the outlook is stable for a while yet, until we know which way our economy is tracking in terms of inflationary concerns,” Keller said.

Keller said land values have been rising.

“That buoys the farmers’ balance sheet so when he goes to his banker to borrow money, he has borrowing power,” she said.

The dry weather in much of spring and June in the southern half of the state has made some farmers wary, but it’s not considered a major hindrance to a good growing season yet, ag bankers said. Rainfall over the weekend and storms expected this week could mitigate that concern.

“As a whole it’s dry but the crops still look pretty good,” Guse said.  "I always feel like the biggest crops we have in Wisconsin usually happen when we have a dry spring because it drives the roots deep, and then if we get some timely rains later on to get the crop going, we get some really good-sized crops.”

A map from the National Drought Mitigation Center showed that as of June 22, more than half of Wisconsin – largely the southern half of the state – was considered to be in a moderate drought. The worst-hit areas were in the extreme southeast and the lower southwest. The precipitation last week and early this week (week of June 27) is expected to reduce short-term dryness, but additional soaking rains are needed to alleviate the drought, the federal weather agency said.

A drought would be particularly concerning to farmers who might not be able to grow their own feed crops, and then would have to buy them at a time when prices are up, Felder said.

“Soybean meal has gone from $290 a ton to $430 a ton. Corn is up from a little over $3 a year ago to $6.50 today,” he said. “You’re seeing the user – the consumer of crops – have a little more furrowed brow because they aren’t sure of what’s next. If they don’t get a crop and they have to buy to replace a short crop, they’re going to be paying significantly higher prices than they would have a year ago.”

The timing of the rainfall is important, ag bankers said.

“Corn is typically pollinating in July and soybeans are typically seeding pods in August – the little bean is filling the pod,” Keller said. “It needs rain during August to fill those pods so that there is a bean of a size that is saleable. So we do need timely rain in July and August to make this crop.”

The dryness this spring and early summer did result in some “hay hoarding” – sellers hanging on to reserves until the weather picture becomes clearer.

“Farmers will harvest typically four crops of hay in a summer. Corn and soybeans, you harvest once a year, where with hay, we’re taking four cuttings off of that field,” Keller said. “And if we don’t get rain, we don’t get much in a cutting. And if we don’t get much hay in one or two cuttings, now our hay is half of what it was in any other year.”

If a drought is serious and farmers are stressed, bankers have a lot in their tool box to help them get through it. But farmers need to take steps on their own, such as buying crop insurance and marketing their products well, to make sure they succeed.

“Proactive wins,” Guse said. “If were sitting to wait for a loan to go bad before we try to collect it, we’re probably too late.”

Said Keller: “We really look at all remedies that make sense. But at the end of the day, the client still needs to be operating a viable enterprise and using a viable business model where we can say, yes, this operation is going to be successful long-term and they just hit some bumps in the road here.”

Paul Gores is a journalist who covered business news for the Milwaukee Journal Sentinel for 20 years. Have a story idea? Contact him at paul.gores57@gmail.com. 

By, Ally Bates

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Quick Signage Making Juneteenth a Federal Holiday Raising Questions under TILA

President Joe Biden signing a bill into law on June 17, 2021, to create Juneteenth National Independence Day so close to the actual legal holiday date has raised questions for lenders and consumers with scheduled loan closings today. The newly created law is also impacting consumers currently in the midst of a right of rescission waiting period.

Under the TILA and Regulation Z, lenders need to comply with certain timing rules regarding the delivery of key disclosures and for rescission. Those time periods hinge on the definition of “business day” for which there is a general definition and a precise definition of the term.

Under the precise definition, a “business day” is “all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.”

The new law amends 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19” as a specified legal public holiday. As a result, the new date (June 19) is not a business day under Regulation Z.  Because June 19 is a Saturday this year, the holiday will be observed today, June 18, making today a “business day” under the precise definition. The technical result means an extension of the time period for the delivery of key disclosures and for rescission.

Lenders across Wisconsin have loans scheduled for closing today and have loans which require the three-business day right of rescission waiting period to run its course before the bank may allow for loan disbursement.

Until further guidance is issued by CFPB, but based on guidance released late yesterday by the FDIC, WBA believes that banks have discretion to decide whether they will be open today and that if a bank decides to remain open, then loans scheduled for closing and disbursement today may continue as planned since it would be detrimental to the consumers involved in the transactions to postpone the loan closing. For loans that are currently in a rescission period, WBA recommends lenders take the conservative approach and add a day to the rescission period.

WBA also reminds lenders that Regulation Z right of rescission rules provide that “a consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bear the signature of all consumers entitled to rescind.” This may be something to consider if the facts and circumstances warrant, as determined and documented by the consumer.

WBA will update the membership if further instruction regarding TILA is released by CFPB or other regulators.

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Juneteenth flag

Juneteenth Gains Federal Holiday Status

Juneteenth National Independence Day, June 19, has been established as the 12th federal holiday. The bill passed unanimously on Tuesday in the U.S. Senate and in a 415-14 vote on Wednesday in the House of Representatives. It was yesterday signed into law by President Joe Biden. It is the first new holiday since Martin Luther King, Jr. Day was signed into law in 1983. Juneteenth became a legal holiday in Wisconsin in 2009 under then-Governor Doyle, and, after the 2020 murder of George Floyd, a number of banks in Wisconsin have closed their lobbies and given employees time off in observance of the holiday. As the June 19 falls on a Saturday this year, most federal employees will observe the holiday today, June 18, however, when a holiday falls on a Saturday, the Fed does not observe it on the Friday before. U.S. stock markets are scheduled to remain open this year. 

On June 19, 1865, approximately two and a half years after the Emancipation Proclamation and two months after Confederates surrendered in April 1865, federal troops arrived in Galveston, Texas to take control of the state and ensure that all enslaved people be freed. Slavery was outlawed across the nation with the ratification of the 15th Amendment six months later. 

Juneteenth events will be taking place around Wisconsin this weekend. Other ways to commemorate Juneteenth include reading and tuning into dialogue surrounding race and equality, supporting Black-owned businesses, and donating to organizations that make a positive impact on Black communities.

In the words of Henry Louis Gates, Jr., “Of all Emancipation Day observances, Juneteenth falls closest to the summer solstice. . . the longest day of the year, when the sun, at its zenith, defies the darkness in every state, including those once shadowed by slavery. By choosing to celebrate the last place in the South that freedom touched — reflecting the mystical glow of history and lore, memory and myth, as Ralph Ellison evoked in his posthumous novel, Juneteenth — we remember the shining promise of emancipation, along with the bloody path America took by delaying it and deferring fulfillment of those simple, unanticipating words in Gen. Granger’s original order No. 3: that ‘This involves an absolute equality of personal rights and rights of property between former masters and slaves.’”

By, Cassie Krause

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WBA Meets with OCC, Bankers on Post-Pandemic Industry

On Tuesday, WBA hosted a virtual meeting with bankers and OCC to discuss concerns of the industry and to gather insight of OCC’s perspective as Wisconsin’s banking industry continues moving forward through pandemic recovery. Discussion included: CTR filings for bank cash orders handled by Thillens, continued efforts of CECL implementation, monitoring CRE and the impact of vacancies as office space needs change, thinking through liquidity contingencies, LIBOR, cybersecurity and importance of good business resumption plans, importance of strong underwriting practices, awareness of loan downpayments amounts, and careful review of evaluations due to the current hot real estate market. Bankers shared concerns over exams losing the focus of being risk-based.  

Those attending the meeting included National Bank of Commerce President and CEO Steven Burgess, National Exchange Bank & Trust President and CEO James Chatterton, OCC Assistant Deputy Comptroller Mike Larabee, OCC Associate Deputy Comptroller Ben Lemanski, and OCC Central District Deputy Comptroller Brian James. WBA staff present included Rose Oswald Poels, Daryll Lund, Scott Birrenkott, and Heather MacKinnon.

When asked of their current expectations regarding struggling borrowers, OCC stated they are using the same approach as was taken during the pandemic; banks should continue to work with struggling borrowers, document position taken, and to feel free to have further conversations with the exam team and OCC district office regarding the treatment or classification of a particular borrower. OCC also shared that discussions continue at a high level on the topics of fair lending, climate changes, bank collaborations with fintechs, and OCC’s efforts to work collaboratively on CRA.  

WBA continues to engage in small group virtual meetings with each of the banking regulators over the course of the next few months. Normally, we host these meetings in person in Madison in addition to visiting the industry’s regulators in Washington each fall. If you are interested in participating in a small group virtual conversation with your bank’s regulator, please contact WBA’s VP-Legal Heather MacKinnon at hmackinnon@wisbank.com. In addition to sharing which regulator is your bank’s primary federal regulator, please also provide Heather with any specific topic or issue you’d like to make sure is raised during these conversations.   

By, Alex Paniagua

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Graduating students throwing graduation caps into air in celebration
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Congratulations to the June BankWork$ Graduates!

The June BankWork$ class has now graduated! WBA was proud to partner with Employ Milwaukee to bring this nationwide program to Wisconsin. BankWork$ is a free, eight-week training program to prepare participants in primarily underserved neighborhoods for retail banking careers.

This graduating class of seven students included Asjura Cole, Nakecia Dean, Alpha Jalloh, Lynn Kuester, Tionne Riley, Anthony Smith II, and Josiah Young. WBA’s Daryll Lund attended the ceremony and congratulated the graduates on their achievement. Immediately after the graduation ceremony, a hiring event for students was held. More information on the course can be found here.

Over the eight weeks, these students learned the hard and soft skills necessary for entry-level retail and operations positions. The program began in 2019 with the goal of training 400 students for positions in the banking industry over the next three years.

Thank you to the following banks for sponsoring this program:

Associated Bank, Green Bay
Bank Five Nine, Oconomowoc
The Equitable Bank, Wauwatosa
First Federal Bank of Wisconsin, Waukesha
First Midwest Bank, Milwaukee
Johnson Financial Group
Spring Bank, Brookfield
Waterstone Bank, Milwaukee
Wells Fargo

By, Alex Paniagua

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Sitting area with curved seats facing toward wall display titled Leaders in Banking Excellence
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Leaders in Banking Excellence Honored by WBA

Twelve individuals are being honored by the Wisconsin Bankers Association for their excellence in banking, community service, and civic involvement. A celebration for this inaugural class was held on June 4 at the WBA headquarters in Madison, where a newly-built Leaders in Banking Excellence Wall installation displays a tribute to the selected current and former bankers. The event had been postponed from the fall of 2020 due to the pandemic.

“These leaders have helped shape Wisconsin’s banking industry into what it is today,” said Rose Oswald Poels, WBA president and CEO. “They exemplify the values of our association:  highest ethics, professionalism, and enthusiastic service to our industry and to our state. It is my privilege to host an honor wall of this type at our WBA headquarters in Madison.”

The honorees in the 2020 Leaders in Banking Excellence are:  Paul C. Adamski, The Pineries Bank, Stevens Point; James K. Caldwell, First Citizens State Bank, Whitewater; the late James S. Dolister, Capitol Bank, Madison; the Eager Family, the former Union Bank & Trust Company, Evansville; Thomas F. Farrell, Peoples State Bank, Prairie du Chien; the late John F. (Jack) Kundert, the former Bank One, Monroe; E. David Locke, the former McFarland State Bank; Richard (Dick) Pamperin, Premier Community Bank, Marion; Steven R. Schowalter, Port Washington State Bank; Frederick F. Schwertfeger, Horicon Bank; Jerry Smith, First Business Bank, Madison; and the late Thomas M. Tubbs, Bank of Sun Prairie.

To learn more about each of the 2020 Leaders in Banking Excellence honorees, please visit www.wisbank.com/excellence2020/.

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About the Wisconsin Bankers Association
Founded in 1892, WBA is the state’s largest financial industry trade association, representing more than 200 commercial banks and savings institutions, their branches, and over 21,000 employees. The Association represents banks of all sizes in Wisconsin, and nearly 98 percent of banks in the state are WBA members.

By, Cassie Krause

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Family with hands cupped together holding up patch of soil with plant growing out of it
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Sen. Baldwin on Wisconsin’s Ag Industry, “Vital to a Strong Rural Economy”

The agricultural industry faces many challenges, and these have only been emphasized as a result of the pandemic. Through necessary reform such as the Enhancing Credit Opportunities in Rural America ECORA Act — legislation authored by Congressman Ron Kind (WI-03) to remove taxation on income from certain farm real estate loans made by FDIC-backed institutions — banks would be able to provide significant help by lowering loan rates and serving these borrowers in a more efficient manner. Advocating for the success of this industry requires a collective effort, and Senator Tammy Baldwin is one of these individuals making a powerful difference in Wisconsin’s ag community.

On April 29, Sen. Baldwin held her first hearing as chair of the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. The hearing, titled “Diversifying On-Farm Income: Opportunities to Strengthen Rural America” focused on how diversifying the operations of agriculture producers can result in more on-farm income as well as the challenges and opportunities of the industry.

“In Wisconsin and across the country, a strong agricultural economy is vital to a strong rural economy. As the pandemic continues to weigh on our rural communities and agriculture sector, we must deliver more support and solutions so our farmers and small businesses have the tools they need to get through this economic crisis,” said Sen. Baldwin.

Accessing newer and fairer markets has been a priority for Baldwin as well. As the discussion around climate change becomes more pressing, there is a growing number of farmers, ranchers, and agricultural workers looking to address this. Being able to assure profitability for these workers, who are also looking at solutions to climate issues, is a critical part of assisting the industry, though it has not come without obstacles.

Following the passage of the Economic Aid Act, farming partnerships were shut out from using a new and more generous loan calculation despite a co-authored provision by Baldwin and Sen. John Thune to allow sole-proprietor and self-employed farmers to use their gross income to calculate their maximum Paycheck Protection Program (PPP) loan. As a result of this, Sen. Baldwin along with several other legislators introduced bipartisan legislation titled PPP Flexibility for Farmers, Ranchers, and the Self-Employed Act to extend more relief to farmers in Wisconsin through PPP changes. This also included a fix that allowed self-employed farmers already receiving loan forgiveness to retroactively apply for another loan. The amount of the loan would be the difference between the former and latter loan, based on gross income.

“I’ve been working to make more resources and funding available for Wisconsin farmers so they can access the relief they need,” said Sen. Baldwin. “And as chair of the Senate Appropriations Subcommittee on Agriculture and Rural Development, I’m going to keep working across the aisle to ensure farmers and agriculture businesses have the tools they need to succeed and strengthen our rural economy.”

WBA looks forward to continuing its work with Sen. Baldwin to support Wisconsin’s agricultural industry by addressing these challenges and push for legislation.

By, Alex Paniagua

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questions@wisbank.com

608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

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