New tax law may give bankers in S institutions reason to ponder change

As Todd Langenfeld, president of Farmers Trust & Savings Bank in Earling, Iowa, followed the legislative wrangling over tax reform during November and December, he said he “felt like a ping pong ball, going back and forth on remaining a sub-S bank.” Langenfeld engaged in multiple conversations with the bank’s Chief Executive Officer Roger Kenkel about the possibility of converting the bank to a C-corp. “Under the new law, the highest marginal effective rate comes in right at 30 percent with the 20 percent passive income exemption,” Langenfeld said. “Under C-corp tax laws, I would be under a 41 percent effective rate — the 21 percent corporate rate plus the 20 percent dividend rate. I know this is an over-simplification but I am good at math and 30 percent is better than 41 percent.” [Continue]

Restrictive covenants: The view from both sides of the job offer

Most of us are familiar with non-disclosure, non-solicit and non-compete agreements – known to attorneys as “restrictive covenants.” But what exactly do they do, and what distinguishes one from the other? Attorney Ansis Viksnins from Monroe Moxness Berg in Minneapolis, who works with banks on employment law matters, provides clarity. This is part one of a two-part series on restrictive covenants. Part two will look at what happens when disagreements over restrictive covenants arise. [Continue]

Yankton’s First Dakota National is state powerhouse

In the mid-1980s, the majority of South Dakota’s 150 or so banks had assets of $50 million or fewer. One of those banks was the oldest bank in the state, First Dakota National Bank of Yankton, operated by Larry Ness, a former examiner with the Office of the Comptroller of the Currency. Ness was eager to make the most of his experience, which included stints managing two other banks in the state: the Mitchell National Bank and the First National Bank of Volga. Some 30 years later, Ness has grown the Yankton bank to $1.588 billion in assets. [Continue]

Bankers educate lawmakers on industry issues

Chuck Mueller could hardly fault his customers for pulling their deposits from his bank. If the president and CEO of Fidelity Bank, Edina, Minn., had been in their position, he quite possibly would have done the same thing.

Some of the largest depositors at Fidelity Bank were neither upset with its staff nor seeking better rates elsewhere. They had no qualm whatsoever with Mueller’s $435.9 million organization, aside from its state charter within Minnesota and the effect such had regarding residency factors issued by the Department of Revenue.

One of those 26 factors when considering residency status was the “location of any bank accounts, especially the location of the most active checking account.” If one of Mueller’s customers wanted to establish residency in tax-free Florida, for example, their account at Fidelity Bank could be used against them when Minnesota went looking for taxes.

“We had three or four customers walk in and move millions of dollars just because, although it wasn’t a de facto absolute, it was one of those things on the list,” Mueller said. “They just wanted to be really safe because the state is watching this.

“No amount of talking on my part could convince these people to retain those deposit relationships. … [Continue]

SBA Lending Boom

The head of the Small Business Administration knows a thing or two about marketing. SBA Administrator Linda McMahon and her husband, Vince, transformed a small wrestling organization into a global entertainment venture now known as World Wrestling Entertainment. Television deals and merchandising were keys to the company’s promotional success; banks and borrowers are the instruments of visibility for the SBA.

Calling the SBA “the best kept secret in the government,” McMahon, appointed SBA Administrator earlier this year by President Donald Trump, said the agency will unveil a new branding strategy to elevate SBA’s profile. [Continue]

Steady business leads bank to centennial

In 2007, First State Bank of Eastpointe, Mich., was faced with some tough decisions. “Our loans were deteriorating, brought on by large measure by what was becoming a difficult economy in southeast Michigan. I don’t know if the recession hit southeast Michigan earlier than the rest of the country or if we just felt the effects of it. But in 2007, we looked at our balance sheet and could see the need to recognize some losses,” said Gene Lovell, president and CEO of the bank, which has $664 million in assets.

“I remember back then talking to the board, our decision to take a hard look at our loans and identify as many loan losses as possible, recognize them and hope to go forward from there in a positive way. I don’t think we anticipated the depth of the recession that hit us,” Lovell said. [Continue]

Women advised to be proactive to advance in industry

As she wends her way through Illinois calling on banks of many sizes, correspondent banker Marlene Luther, now 66, catalogs the ways the industry has changed for women since she started in banking. In the 1970s, pantyhose and closed-toe shoes were mandated attire and management was homogeneously male. Over time, she saw increasing numbers of women at meetings sponsored by state banking associations, yet many sat doe-eyed and silent. A few still do.

“In some ways the path to leadership for women is easier today, especially at the larger banks that recognize the value of diversity,” said Luther, vice president at Midwest Independent Bank, Jefferson City, Mo., and 2017 chair of the Illinois Bankers Association’s “Women in Banking” Conference, which was conducted in September. “But I still find bank presidents — both men and women — asking, ‘why do we need a Women in Banking conference?’”

This is an easier question to answer after one looks at the gains women have yet to make into C-suite positions in banking and beyond. [Continue]