Triangle Background

By Jennifer Sobotta

Attending and enjoying the June BOLT Summer Leadership Summit, listening to the speakers, and connecting with old and now new friends makes me think of how I got to be where I am today. This year’s BOLT Summer Leadership Summit made me think of it even more as we talked about career pathing. So much so, that during my next turn at the podium I introduced myself as “Jen, the Accidental Banker.”

During my studies at the University of Wisconsin-Stevens Point back in the 90s, I had no intention of going into banking. I wanted to be a marketer after all and didn’t (and still don’t) care for numbers enough to be a lender. That was how I looked at banking back then — only the positions that you would see walking in as a customer.

My senior year, with the help of UWSP Career Services, I sent over 80 resumes, had 30 interviews, nine second interviews, and three job offers. Not one was in the financial services industry.

My first real job was on a marketing team at a rural hospital/nursing home. It was very community focused and located in a lovely rural area. I had the chance to learn from an experienced leader more than tactical marketing, but the art of navigating internal meetings, public relations, and community events.

When it came time to look for more growth with another company, a friend recommended a local bank that was expanding. I took a chance and happily joined the team at the end of 1998 with a lot to learn. My mentor there had led teams at a few other banks previously and shared her expertise constantly. My path to where I am today wasn’t straight, but it was paved by leaders willing to share. That’s an important lesson.

Within two years, that mentor retired, and I took a leap of faith that I could be the next marketing director. The bank took a chance on me and invested in me as I grew as a leader. They sent me on to the ABA School of Bank Marketing & Management and countless other conferences and seminars to learn new methods and software to fine-tune my craft. Through the years, I built my team up to three in the marketing department, and the bank grew to $500 Million in assets and 14 locations. Yet, it was again time to move on to the next challenge.

I received a call from an old colleague, a lender who I didn’t always have a chance to talk with much. He told me about the opening at Forward and encouraged me to apply. That gentleman has risen to the role of president and is the leader I now report to. A great lesson that every interaction with people is important — you don’t know when and what is noticed.

The past 12 years have been a blur, much like when you are speeding down a highway. I’ve seen the same level of investment in me as a team member and more in all of us as leaders. We all challenge each other to innovate, to remove the traditional roadblocks, and push back at the naysayer mindset sometimes found in financial services. We understand that banking isn’t a transaction, it’s now an experience.

Forward is now approaching $1 billion in assets with 12 locations, seven insurance offices, and three investment offices. When I look around, there are many accidental bankers like me with the list growing each year.

As the current Building Our Leaders of Tomorrow (BOLT) Board chair and thinking of the time spent working with and learning from the Wisconsin Bankers Association (WBA), we are all lucky to have this resource. From serving on the Marketing Committee, then as its chair to being part of BOLT and now proud to be this year’s chair, I wonder what will be next. Where else can I continue to learn and lead through that process?

One final lesson that has stayed with me for over 20 years. My 90-year-old grandfather swung a golf club for the first time as I was practicing in the yard after his birthday party. Knowing he would never play a course, I asked him why even learn to swing the club. He told me, “you never stop learning until you leave this earth.” Best lesson ever.

I may not have chosen initially to be a banker, but the path I’ve taken has been created by the lessons of leaders around me. Good luck on your journey.

Interested in attending the next BOLT Summit?

Rose Oswald PoelsBy Rose Oswald Poels

The Society of Bank Executives, a nationwide organization for building new connections and accessing accelerated programing related to leadership, is looking ahead to the official launch in January 2023. Currently, the Society is comprised of over 120 executives from 15 states, including several from Wisconsin, and these bankers are participating in the pre-launch cohort this fall.

As I have announced in previous publications, the Society was established by several banking trade groups across the country — including WBA — to promote individual professional development. The initiative focuses specifically on granting C-suite bankers the opportunity to network among peers, attend relevant and flexible education seminars by experts, and enhance critical leadership competencies and skills.

As we all work to navigate within our ever-evolving industry, I encourage you to consider the importance of taking part in opportunities such as the Society of Bank Executives. Unlike other leadership seminars, the program offers bankers not just the education, but the relationships and soft skills necessary to masterfully lead our banks. In addition to studying, analyzing, and applying knowledge learned during the four-month program, bank executives will form invaluable networks among peers outside of our markets.

Although the pre-launch session is in full swing, Wisconsin bankers are invited to join the Society during its third meeting in Sun Valley, Idaho. The three-day event focuses specifically on the power of peer groups, and will kick off on October 19. I encourage bank executives who have not already registered for Society membership to consider utilizing this opportunity to garner a sneak peek of what’s in store for programing as the initiative formally launches in January.

Thank you to those Wisconsin bankers who have already registered as a member the Society. If you would like to learn more about the Society and how its program could impact your bank, please visit executives.bank/home. Additionally, if you are interested in taking part in the Society’s upcoming in-person educational event in Sun Valley, please click here for details on how to register.

The September 2022 WBA Compliance Journal is now available. In this edition, WBA Legal covers Part 1 of a two-part series regarding contracting with minors. In this first part, readers will find a series of Q&As regarding WUTMA accounts and a new reference chart. The publication also includes a summary of recently published agency rules and notices and other important compliance-related updates for bankers.    

Responsibilities, benefits new board members can expect

By Hannah Flanders

Community banks serve a unique and important purpose in every Wisconsin community by directly supporting the growth and stability of small businesses and families. With a mission of reinvestment, it is critical that Wisconsin’s community banks are led by individuals who share similar values to the institution, are knowledgeable of the community, and have experience in banking or local business.

As community banks across the state look to recruit new board members and enhance their strategic planning for the coming year, an increasing number of community leaders who are recruited for their knowledge and skills are curious — and rightfully so — of what responsibilities they will take on as a member of the board.

Key Responsibilities

Like any commitment, joining a bank board leaves individuals to consider many aspects of their willingness to engage with the organization, its shareholders, and bank employees; their understanding of (or desire to learn about) bank policy and regulation as well as the national and local economy; and what skills or experiences make them a qualified leader.

A strong board member adds diversity to the table — be it through their experience or their perspective — and ultimately aids in the growth of the bank.

According to the Federal Deposit Insurance Corporation (FDIC), a bank’s board of directors is responsible for overseeing the institution’s business performance, selecting and retaining competent management, establishing the institution’s long- and short-term business objectives, adopting operating policies to achieve objectives in a legal and sound manner, monitoring operations to ensure that they are controlled adequately and are in compliance with laws and policies, and ensuring the institution helps to meet its community’s credit needs.

Joining a community bank’s board is a substantial commitment to not only the bank, but the community as well. It is essential that responsibilities, such as regularly attending board and board committee meetings, are a top priority of every member of the board.

Benefits for Community Leaders

The benefits new members experience upon joining the board of directors for a community bank range from building connections within the banking industry and expanding skills and knowledge to staying updated on local and national issues. In addition, this unique opportunity allows leaders to give back to their communities and promote economic growth and prosperity.

To many, being elected as a community bank’s board member highlights those who have proven themselves as trustworthy, knowledgeable, and active leaders both in their business and throughout the community. By joining as a board member, community leaders contribute significantly to shaping the local economy and expanding the legacy of Wisconsin’s community banks.

 

What to Consider Before Joining a Bank’s Board of Directors

  • Commitment to:
    • Professional development
    • Community growth
  • Engagement with:
    • The bank (shareholders, other directors, committee members, staff)
    • The community
  • Experience in:
    • Business, banking,
      or leadership
    • Also includes education or financial/business connections
  • Desire to learn about:
    • Bank regulations
    • National and local economy
  • Fiduciary responsibility:
    • Trustworthy, objective, responsible, and efficient

Bank Director Resources:

Rose Oswald PoelsBy Rose Oswald Poels

When WBA’s charitable arm, the Wisconsin Bankers Foundation (WBF), was founded in 2015, education remained a top priority to aid the public in increasing their financial literacy and responsibility.

As part of this, the Foundation is proud to offer well-known programs such as Reading Raises Interest Kits that assist bankers in coordinating curriculum used during Teach Children to Save Day in April and scholarships awarded to students throughout the state for their demonstration of excellent financial capabilities. Involvement in these programs brings the Foundation one step closer to ensuring the financial knowledge and responsibility of every youth in our state.

Now through November 15, the Foundation will be accepting applications for the third annual Agricultural Banking Scholarship!

Students who will be enrolled in an accredited Wisconsin college, university, or technical college during the Spring of 2023 and are pursuing a career related to agricultural banking are encouraged to apply.

With agriculture serving as one of Wisconsin’s largest economic drivers, it is critical that we invest now in the students that are interested in driving this critical sector of our state.

The Foundation is also excited to announce this year’s Agricultural Banking Scholarship award has been increased to $1,500 each for the two qualified winners in order to help combat rising tuition costs, assist individuals in reaching their goals, and promote financial literacy in every consumer.

I encourage you to share this exciting opportunity widely within your networks — current and past ag interns, parents of college-aged children, and educators at the many ag programs throughout the state. By aiding us in spreading the word to qualified students, you play a significant part in assisting the Foundation to serve its mission as well as provide new opportunities for your community!

Please visit wisbankfoundation.org/scholarships to learn more or contact WBF’s Foundation Coordinator Hannah Flanders with any questions.

Rose Oswald PoelsBy Rose Oswald Poels

As our Association continues its efforts to support bankers of historically underrepresented backgrounds, finding new ways to invest in the personal and professional development of every one of our employees is top of mind.

WBA’s employee resource group (ERG), which launched in June, continues to provide a safe space for our colleagues of color and individuals of underrepresented backgrounds to engage in employee-led conversations once a month related to their identity or feelings, ideas, and developments in the diversity, equity, and inclusion (DEI) space.

The next meeting will be held Thursday, September 22 at 10:00 a.m. The conversation will include the topic of professionalism and an open discussion with staff from Peoples State Bank, Wausau regarding their involvement with the local Hmong community. Bank leaders, managers, and HR professionals are encouraged to forward this opportunity on to bankers who may benefit from this inclusive forum.

Additionally, in conjunction with WBA’s DEI Plan to provide professional development opportunities and foster a welcoming, inclusive culture, I am excited to announce that WBA will be offering three educational scholarships to select WBA events this fall.

These scholarships, offered in partnership with the Federal Home Loan Bank of Chicago, will be presented to bankers of historically underrepresented backgrounds — including, but not limited to, individuals of African American/Black, Asian/Asian American/Desi, Indigenous, Hispanic/Latinx/Spanish origin; members of the LGBTQ+ community, people with disabilities, and those part of a religious minority. Please share this scholarship opportunity with members of your staff as they look to expand their career within the banking industry.

WBA’s three educational scholarships will cover the registration fee of the selected program along with any overnight accommodation, as needed.

Scholarships are available for:

I encourage bankers to take this chance to invest in their professional development and share these various opportunities with members of their staff. It is ever so important for the prosperity of our banks and the communities in which they serve that individuals of all backgrounds and experience levels are supported in their pursuit of new degrees of leadership and opportunities to expand their career and network.

Triangle Background

Interactive teller machines (ITMs): the convenience of an ATM plus personal service

By Paul Gores

While some financial institutions still are considering whether to install interactive teller machines, Wisconsin banks that already have invested in ITMs say they’re becoming an increasingly important part of their business strategy.

ITMs — essentially enhanced-function ATMs that let a customer speak with a teller via a video screen — allow in-branch employees to focus on higher-level interactions with customers while the technology handles routine transactions, bankers say.

Wisconsin bankers using ITMs say their customers, in an increasingly video-driven world, want them and quickly become accustomed to them. And they note that when the coronavirus pandemic shut down branches in 2020, they were a godsend.

“It can do deposits, withdrawals. It has the convenience of having more than just $20s,” said Lisa Schwalen, retail market manager for Bank of Luxemburg. “It can change the PIN on your debit card. Loan payments. Really, anything you can pretty much do over the teller line, you can do at the ITM.”

Banking equipment vendor NCR Corporation calls the ITM a “branch in a box.” Among its functions, according to NCR, an ITM can be used to: get cash, deposit checks, cash checks to the penny, handle bill and loan payments, transfer funds to any account, order replacement cards, process savings bonds and redemptions, process CD renewals and inquiries, and issue money orders.

Bank of Luxemburg placed its first ITM in a local grocery store in January of 2021.

“Ultimately it’s the flexibility that we are hoping to bring to our customers to allow them to do some banking not only outside the traditional banking business hours per se, but also to give them the convenience — going to the grocery store and having it there,” Schwalen said.

Bank of Luxemburg now has two other ITMs, including in a branch drive-through lane, which is how many banks are using them. The ITM essentially replaces the old tube system for exchanging checks and cash between a driver and a teller inside the branch.

At Madison’s Park Bank, ITMs are in the drive-through lanes.

“We’ve ripped out the tubes and put them in our drive-ups,” said Jeff Kurek, vice president of information and cyber security for Park Bank.

Park Bank had ITMs in place before the word “COVID” became part of everyday life.

“They were great during the pandemic,” Kurek said. “During the pandemic, the lobbies were all shut down. We were told to shut down. And we had employees who still had jobs to do. So the customers went up to the ITM. They could open up a bank account if they’d so choose. They were a lifesaver during the pandemic. We had full-service branches because of them.”

Kurek said Park Bank invested in ITMs, in part, because customers indicated they wanted them.

“The customer is always asking for the latest and greatest technology,” Kurek said.

The Stephenson National Bank & Trust in Marinette also was ahead of the COVID curve, installing ITMs starting in 2017. Elisa Rollo, senior vice president and chief retail officer, said the bank was looking to modernize its technology offerings for customers, and, among other factors, consider future staffing needs.

The Stephenson National Bank & Trust has 16 ITMs.

“We have three dedicated people to those 16 machines,” Rollo said. “If and when we decide to put more machines in, we would probably not add staff right away. I’m assuming they can do up to eight [ITMs each], and they’ve got it timed so well to where they know their customers’ traffic flow and the items that they’re handling.”

According to a survey last year by the branding firm Adrenaline, even though ITMs entered the market in the 2010s, most ITMs have been put into operation in just the last five years. Juliet D’Ambrosio, Adrenaline’s managing director of strategy, said in a report that ITMs were a self-service technology that “serves as a bridge between the physical and digital, improving customer experience and increasing revenue per customer.”

“It can serve dual purposes — automating routine banking activity while providing access to bankers for higher-value consultations,” she said.

John Kaprelian, vice president and retail manager for Marshfield-based Forward Bank, shares that view.

“I think what we’re going to see is a continued shift toward branch staff being used primarily for the value-add activities that require humans — that people are better at than machines. Giving advice, opening accounts, answering questions, lending — those sorts of things,” said Kaprelian, whose institution began using ITMs a year ago. “And the teller work is really going to become a secondary responsibility of that staff and will be an increasingly small part of their day-to-day activities.”

Some banks have reported that once customers become comfortable with ITMs, they often don’t need to contact the teller who is staffing the ITM to conduct a transaction.

Customer adoption and price are two of the main concerns of banks considering an investment in ITMs.

To encourage adoption, Bank of Luxemburg temporarily posted a banker near its grocery store ITM to show customers how to use it. The bank also filmed a YouTube video explaining the ITM.

Rollo said those monitoring usage at The Stephenson National Bank & Trust’s ITMs were a little surprised at how quickly older customers took to the new technology.

“We thought the older people aren’t going to adopt as quickly. Well, those now are some of our biggest advocates for the technology,” Rollo said. “They love to walk up and press a button, or never get out of their car, and they don’t have to see a person face to face. They can hear better with them, see a person better than you can in a drive-through through window.”

Kurek said customers needed some assistance at first.

“They needed some help, like with all change,” Kurek said. “We helped and we assisted, and I would say the pandemic escalated that. It changed the way people were doing things.”

Said Karen Berg, customer support manager for Forward Bank: “Actually, our customers have been really accepting of the ITMs and they have caught on pretty fast.”

An Adrenaline report from 2021 found that large majorities in all generations thought they would be extremely or very comfortable using an ITM: Millennials, 86%; Gen X, 85%; Gen Z, 80%; and those 55 and older, 72%.

The issue of price may be what’s holding some banks back on an ITM investment, although Adrenaline found that 60% of banks plan to deploy them by 2024.

A report last year by the financial institutions consulting firm Bancography explained the potential cost of that first ITM.

The report said if a bank already operates ITMs, the marginal cost of adding another probably would be less than $100,000.

“However, a critical challenge of implementing ITMs lies in the initial setup cost,” the Bancography report stated. “The back office infrastructure required to establish an initial ITM (building connectivity to the call center, systems integration, etc.) can cost $300,000– $500,000. So, assuming the midpoint and $85,000 for the machine itself, the first ITM costs $485,000.”

But if the initial rollout is bigger, the fixed infrastructure cost is amortized to a more reasonable level, Bancography said.

“The first one you put in definitely is costly just because you’re not only buying the machine, but the bank also has to build the parameters and the data input and the software to run the machine,” said Bank of Luxemburg’s Schwalen. “That usually is about three times the cost of the actual ITM. Once you get the first one down, the second ones obviously are a lot more reasonable. The average ITM, depending on the company — there’s different vendors out there — I would say they are in the neighborhood of $60,000 to $80,000.”

Rollo said when The Stephenson National Bank & Trust was making the decision about ITMs, its ATMs were getting to the point where they needed to be replaced anyway.

“The opportunity to do it — and do it the right way — was there,” she said. “They do cost — probably I want to say — double what our normal ATM would cost. That includes the infrastructure to make the system work.”

Bankers using ITMs in Wisconsin said the machines provide additional opportunities for local bank employees who want to be involved with the new technology.

“When we started converting the drive-ups, we never eliminated any positions. We didn’t know how many people we were going to have to have behind the scenes and running these drive-ups,” Rollo said. “We started out slower and had four of the drive-up people converted — we call them interactive service agents. They were universal bankers and tellers that transitioned into this role. We didn’t hire anybody specifically for the role.”

The bank still has two of those four original interactive service agents — “They’re really good at what they do,” Rollo said — and the bank also has cross-trained some other universal bankers and contact center employees as back-up.

Even as ITMs catch on, bank leaders don’t foresee a day when traditional face-to- face tellers and front-line bankers will disappear.

“Technology is not perfect. Technology will not replace our people,” said Park Bank’s Kurek. “It’s only going to enhance our customer experience. The technology is a response to needs, to us listening to what they’re asking for.”

Forward Bank’s Kaprelian said he doesn’t think tellers are going away.

“There are certain activities that ITMs just aren’t very good at handling, and you’re going to require staff — humans — to actually do it,” he said. “I don’t think that’s going to change for quite a while, if ever.”

Gores is a journalist who covered business news for the Milwaukee Journal Sentinel for 20 years.

Solar investment tax credits are now more accessible

By Josh Miller

For more than a decade, large financial institutions like U.S. Bank and Wells Fargo, joined by Fortune 500 giants like Apple and Google, have been the dominant players in solar investment tax credits (ITC). Driven by federal incentives, these companies have provided funding for the largest solar projects in the country, collecting healthy returns while raising their corporate profiles as environmental, social, governance (ESG) leaders.

The benefits of solar ITCs are hard to ignore. Tax credit investors funding renewable energy projects can significantly offset their federal tax liability and recognize a meaningful annual GAAP earnings benefit. From 2005–2020, renewable energy tax credits have fueled the explosive growth of solar and wind power production nearly 18-fold.

The recently passed Inflation Reduction Act is a transformational bill with provisions that will entice large numbers of mid-size businesses and community banks to deploy capital into renewable energy projects across the U.S. It extends solar ITCs for at least ten more years (until greenhouse gas emissions are reduced by 70%) and retroactively increases the ITC from 26% to 30%, effective January 1, 2022. This extension and expansion of ITCs, along with other meaningful incentives included in the bill, will result in a significant increase in renewable energy projects being developed and constructed over the next decade.

Community banks are the logical source of financing for solar ITCs and traditional loans in response to this expected flood of mid-size renewable projects. Solar ITCs have a notably better return profile than other types of tax credit investments commonly made by banks. Solar ITCs and the accelerated depreciation associated with a solar power project are fully recognized once it is built and begins producing power. This is quite different from other tax credit investments, such as new markets tax credits (NMTC), low-income housing tax credits (LIHTC) and historic rehabilitation tax credits (HTC), where credits are recognized over the holding period of the investment (5, 7, 10, or 15 years).

Like other tax equity investments, solar tax equity investments require complex deal structures, specialized project diligence and underwriting, and active ongoing monitoring. Specialty investment management firms like KeyState provide support to community banks hoping to make solar tax credit (i.e., “solar tax equity”) investments by syndicating the investments across small groups of community banks. Without support, community banks may struggle to consistently identify suitable solar project investment opportunities built by qualified solar development partners.

Beyond the compelling return profile and stable and predictable cash flows offered by conservative, investment-grade solar projects, achieving energy independence, and reducing carbon emissions are critical goals in and of themselves. Solar tax credit investments can be a key component to a bank’s broader ESG strategy. The bank can monitor and report the amount of clean energy generation being produced by the projects it has financed and include this information in an annual renewable energy finance impact report or a broader annual sustainability report.

Miller is CEO of KeyState Renewables, LLC., a KeyState Company.

The KeyState Companies is a WBA Associate Member

By Jeff Wilke, Bank First

The 2022 inflationary pressures on a milk producer’s costs to produce milk have made the need to manage milk price risk/volatility that much more important. Two relatively economical and user-friendly milk price risk management tools available to dairy producers are the USDA’s Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP) programs.

DMC provides dairy operations with risk management coverage that will pay producers when the difference (the margin) between the national price of milk and the average cost of feed falls below a certain level selected by the program participants. The only cost for $4.00 margin “catastrophic” coverage is a $100 administrative fee. For coverage from the $4.00 margin to $9.50 margin levels (in $.50 increments), there is also a premium payment of only $.0025 to $.15 per hundredweight of milk, respectively, on up to 95% of a producer’s recent average of historical milk production (up to a maximum of five million pounds of milk at those premium costs). Coverage for milk production over five million pounds of milk is available at the $4.50 margin to $9.50 margin levels (in $.50 increments), with premiums from $.0025 to $1.813, respectively. Sign up for the program is through the USDA’s Farm Service Agency.

DRP is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level (“price protection”). The expected revenue is based on futures prices for milk and dairy commodities, and the amount of covered milk production elected by the dairy producer.

DRP offers two revenue pricing options: The Class Pricing Option, which uses a combination of Class III (milk primarily used for cheese production) and Class IV (milk primarily used for butter and non-fat dry milk production) milk prices as a basis for determining coverage and indemnities. The Component Pricing Option, which uses the component milk prices for butterfat, protein and other solids as a basis for determining coverage and indemnities. Under this option the producer may select the butterfat test percentage and protein test percentage to establish their insured milk price.

Through DRP, 80-95% of expected quarterly milk revenue may be covered (in 5% increments). A premium subsidy of 44-55% is provided through the program, depending on the coverage level selected. DRP insurance is available through authorized crop insurance agents.

For more information on the DMC and DRP programs, visit usda.gov.

Jeff Wilke is vice president-business and ag banker with Bank First in Denmark. Wilke currently serves on the WBA Ag Section Board of Directors.