OCTOBER 2019 BANCSERVE PRESS...OCTOBER 2019 BANCSERVE PRESS Page 2 Visit us on the web at Or call:...

BANCSERVE PRESSMONTANA BANKERS

ASSOCIATION OFFICERS

Chairman: Bob Galt, President/CEOFirst State Bank of MaltaMalta, MT

Vice Chairman:Bill Bickle, Chief Credit OfficerStockman Bank of MontanaMiles City, MT

Secretary/Treasurer:Jake Pelczar, Vice PresidentBank of Montana Missoula, MT

Immediate Past Chairman:Bill Lucas, Market President - BillingsU.S. BankBillings, MT

President/CEO:Cary HegrebergHelena, MT

BOARD OF DIRECTORSWestern:

Greg Yockey, CEOFarmers State BankVictor, MT

Jake Pelczar, Vice PresidentBank of Montana Missoula, MT

Southwestern:

Gordon Johnson, PresidentAmerican BankLivingston, MT

Northcentral:

Bruce Hoyer, President/CEOBelt Valley BankBelt, MT

Southcentral:

K.C. Hickok, Chief Credit OfficerBank of BridgerBridger, MT

Desiree Elkin, EVP, CCOSummit National BankLaurel, MT

Visit us on the web at www.montanabankers.com Or call: 800/541-5126

OCTOBER 2019

MBA’s voice heard in Washington, D.C.MBA Board chair Bob Galt (First State Bank of Malta) was joined by Darrell Grogan (First State Bank of Forsyth), Gil Johnson (First Community Bank) and Cary Hegreberg, MBA’s President/CEO in representing the interests of Montana bankers in Washington, D.C. Sept. 24-26. In addition to meeting with Montana’s congressional delegation, the group visited with Jelena McWilliams, Chair of the FDIC, and Miki Bowman, Governor of the Federal Reserve.Bankers from Nevada, Arizona, Colorado, Wyoming, Utah, and Montana participated in this year’s congressional visits, and were universally impressed that both the FDIC’s McWilliams and Federal Reserve Governor Bowman were not only candid in their remarks, but were eager to hear and respond to concerns raised by bankers. McWilliams even complimented Montana with fond memories of a trip she had made to Kalispell several years ago.She said community banks overall are in strong financial positions and doing a good job with compliance, but the agency has some concern with the stress test protocols for banks with concentrated portfolios. Ag banks around the country are experiencing difficulties, she acknowledged.In terms of the Community Bank Leverage Ratio (CBLR), McWilliams said that Congress authorized FDIC to set a ratio between 8-10 percent, “and 10 would be horrible for banks, while 8 would have been with many caveats, so I know you’re not too pleased, but fine tuning brought us to 9 percent.” She also mentioned CECL (Current Expected Credit

Loss), saying, “There’s not a whole lot we can do, to be blunt.” However, the phase-in period will allow the agency to reassess and possibly “make some tweaks” before small banks have to comply in 2013.McWilliams fielded a number of questions about CRA, credit unions, examination procedures and marijuana/hemp banking. A priority of hers is “to give more credit” under CRA for banks providing investments in rural communities. She acknowledged that “it’s not a level playing field between

Cary Hegreberg, Rep. Gianforte and Gil Johnson of First Community Bank

Bob Galt of First State Bank of Malta and Darrell Grogan of First State Bank of Forsyth at the FDIC Headquarters.

OCTOBER 2019 BANCSERVE PRESS

Or call: 800/541-5126Visit us on the web at www.montanabankers.com

BOARD OF DIRECTORS

Northeastern:

Gil Johnson, SVPFirst Community BankGlasgow, MT

Bob Galt, President/CEOFirst State Bank of MaltaMalta, MT

Southeastern:

Rex Phipps, CEOGarfield County BankJordan, MT

Scott Klein, Vice PresidentFirst State Bank of ForsythForsyth, MT

Large Banks:

Mike Seppala, President/CEOWestern Security BankBillings, MT

VacantWells Fargo, N.A. Bozeman, MT

Bill Bickle Sr. Banking Exec., Stockman Bank of Montana Miles City, MT

Bill Lucas, Market President - BillingsU.S. BankBillings, MT

Tom Severson, Msla Mkt Pres.First Interstate BancSystem, Inc.Missoula, MT

BANCSERVE BOARDChairman:Bob Galt, President/CEOFirst State Bank of MaltaMalta, MT

President/CEO:Cary HegrebergHelena, MT

Director:Vacant

Director:Mike Grove, PresidentBank of the Rockies, N.A.White Sulphur Springs, MT

Director:Darrell Grogan, PresidentFirst State Bank of ForsythForsyth, MT

credit unions and banks,” but Congress set it up that way, and it is an issue Congress should address. FDIC is looking to reduce the number of staff it sends for exams, but no intention whatsoever to eliminate physical exams. “We need that human interaction,” she said, and it helps examiners gain perspective on the issues and communities various banks deal with. FDIC will be issuing guidance on banking hemp-related businesses, “soon,” McWilliams stated, because Congress legalized hemp in the Farm Bill. Marijuana, however, is still an illegal substance at the federal level, meaning FDIC is precluded from developing guidance to banks.

Montana bankers emphasize strained ag economyIn the session with Federal Reserve Governor Bowman, both Bob Galt and Darrell Grogan took the opportunity to emphasize the extreme stress being felt in the agricultural sector, and the negative impact it is having on rural community banks. Galt mentioned the level of “carry-over debt” some farmers are incurring because they resist selling grain at depressed prices, as well as weather-related problems leading to low quality crops. Grogan put the situation in terms anyone could understand: “We’re lending them the money, but they’re not bringing it back.”

Throughout the sessions, a common theme seemed to arise that is also evident in Montana—most urban areas seem healthy and prosperous, while a dwindling retail sector and depressed commodity prices are putting strain on rural areas and their banks.In meetings with our congressional delegation and their staffs, MBA reps continued to emphasize stress in the ag economy as well as requesting support for CRA reform, BSA/AML legislation, cannabis banking

clarification and a level playing field with credit unions. Sen. Jon Tester’s new banking staffer, Elizabeth Connolly, told MBA reps there is a possibility Congress could address the request for a federal “beneficial ownership registry.” She has a solid background in banking issues and was anxious to work with MBA as she advises Sen. Tester on his role on the Banking Committee.Other elements of the annual “fly in” included briefings by CFPB (Consumer Finance Protection Bureau), CSBS (Council of State Banking Supervisors) and the White House. Many bankers who have attended these events in prior years remarked at how the agencies were more receptive, open-minded, and accessible than in the recent past. Overall, participants seemed to feel their time and efforts were worthwhile.Special thanks to Galt, Grogan, and Johnson for taking time away from their banks to represent the industry in Washington, D.C.—which Sen. Conrad Burns always characterized as, “a logic-free zone.”

Senator Daines and Gil Johnson of First Community Bank

BANCSERVE PRESSABA DELEGATES

ABA Foundation BOD:Mike Grove, PresidentBank of the Rockies.NA White Sulphur Springs, MT

Community Bankers Council:Scott Klein, Vice President First State Bank of Forsyth Forsyth, MT

Agricultural and Rural Bankers Committee: Heather Malcolm, VP Bank of the Rockies, N.A. Livingston, MT

Government Relations CouncilRex Phipps, PresidentGarfield County Bank Jordan, MT

Taxation Administrative CommitteeWilliam Schrock, Tax DirectorFirst Interstate Bank Billings, MT

Membership CouncilSam Waters, President/ChairmanFirst Community Bank Glasgow, MT

OCTOBER 2019


MBA/BANCSERVE STAFF

Cary Hegreberg President/CEO

Pam O’Reilly Association Services Director

Tempi Ruth, CIC, CAE, CISRSales Director, BANCSERVE Insurance Agency

Karmen MillhouseAccounting Technician

MBA/BANCSERVE, Inc.1 N. Last Chance Gulch, Ste.4Helena, MT 59601Telephone:800/541-5126406/443-4121Fax: 406/443-7850

Bob DeWit retires after three decadesDiana Setterberg, staff writer with Belgrade News, September 12, 2019

After looking ahead to his retirement for some time, Manhattan Bank President Bob DeWit now finds himself looking back and reminiscing during his last days of the job.

DeWit officially retires Tuesday 9/17/19 from the bank, where he has worked for nearly 30 years, almost 17 of them as its president. His last day will be his 65th birthday.

“It’s time,” DeWit said this week, while taking a break from cleaning out his office at the bank’s main branch on South Broadway in Manhattan. “It’s been a good run for me.”

Though he cites health issues as among his reasons for retiring now, it’s obvious even on short acquaintance that DeWit doesn’t intend to slow down anytime soon. Professionally, he will help with the bank’s efforts to build a new home for its Bozeman branch, which will be located just a few blocks from the bank’s current leased site on West Main Street. A consummate community volunteer, he will continue to advocate for the development of the local trail system, a

Cybersecurity: From the Basement to the BoardroomFor the first year, MBA separated out the Security Conference into a Physical Security Conference held last May and here in September, we had our IT CyberSecurity Conference. Seventeen bankers from eleven different banks attended. The topics that were covered were:

• Trending Fraud • Vender Management Essentials• Tech Fraud: A Virtual Minefield • Business Email Compromise• Taking Cybersecurity from the Basement to the Boardroom

Our speakers were Randy Phillips, Vice President of Security Management of Thompson Consulting and Nick Podhradsky, Senior Vice President of SBS CyberSecurity, LLC. Attendees especially liked the CAT Tool and Cybersecurity Risk Assessment process. The program that seemed to stand out from the evaluations was “Taking Cybersecurity from the Basement to the Boardroom”

“Provided some great ideas for reporting and presenting cyber info to the Board of Directors. I also liked the idea of asking the Board what their expectations are.”

Other topics the attendees want us to include in next year’s IT Cybersecurity Conference: Mobile Device Management and other Technical Controls; Vendor Management; Forensics; Advanced Internal Audit topics and more cyber training.

MBA thanks all bankers who attended, not only for their support of the MBA but also in their feedback via the class evaluations as that is how we improve the conferences to better meet the needs of you, the member.

BANCSERVE PRESSOCTOBER 2019


portion of which he volunteers to maintain year-round by mowing and snowplowing. And he is in the process of refurbishing the Little Free Libraries, or wooden kiosks, that he built five years ago to enable free book-sharing all over the community.

Such civic-mindedness seems to govern not only DeWit’s service ambitions, but also his professional ones. He says he decided to go into banking because, after earning his degree in agricultural business from Montana State University, because he was “going broke as a farmer” in his native Opheim in the 1980s. During that period in Valley County, DeWit says, there were a couple of years when it was drier there than it was during the Dust Bowl of the 1930s. Two-thirds of his income came from crop insurance payments or federal subsidies.

He switched careers, and spent eight years as a banker in Great Falls, while earning a master’s degree in business administration from the University of Montana through a satellite program at Malmstrom Air Force Base, as well as a banking administration degree through the Pacific Coast Banking School. But his dissatisfaction with the way the bank’s corporate, out-of-state parent company handed down policies led him to community banking.

“People three states away made sweeping changes to the organization that just killed us in Montana – that’s basically what brought me here,” he said.

“The people who make decision in those big organizations don’t have the community concern,” he added. “If you’re a community bank and the community isn’t doing well, you’re not doing well.”

DeWit found his niche in 1990 at Manhattan Bank, where he started as a loan officer for the institution that understood the needs of its local customers.

“Manhattan Bank’s mission is customer-based,” DeWit said. “We try to focus on customer relations, and making them the best they can be.”

DeWit acknowledges that there is only so much a community bank can do it times of economic downtown, but he said the local economy has made the boom-and-bust cycles to be easier to manage.

“Everything cycles – ag cycles, real estate cycles – but it’s easier to take here than in eastern Montana,” he said. “We’re very blessed to have as diverse an economy here as we do. It’s easier to be a good banker in a healthy economy.”

Looking back, DeWit says the decision to move to Manhattan was satisfying not just professionally, but also personally. His wife worked as a music teacher for the Manhattan schools, and here they raised their son and daughter, who have remained in the valley and now have children of their own. DeWit served on the Manhattan City-County Planning Board for 25 years, during which developing a growth plan was the body’s focus. He also was active in Rotary for many years because he wanted to be part of a local service organization.

“It’s rewarding,” DeWit said of both his personal and professional efforts, and when asked for specific examples, he again turned to the theme of “community” while telling a personal story about the generosity of Manhattan’s citizens.

In 2004, he was misdiagnosed with Lou Gehrig’s disease. DeWit and his wife prepared to move from their split-level into a more accessible house nearby, and on the appointed Saturday morning, 50 community members showed up to help. As he enters retirement now, he said he wishes to extend his thanks to people of Manhattan not only for that, but for making his very rewarding career possible.

In retirement, DeWit says that while he might have some more time to pursue his motorcycling hobby or travel a bit, he has no wish to move out of the community where he has given and received much.

“It’s a great place to live,” he said.



ABA offers discounted registration for Seattle Convention to Emerging Leaders

As a way of encouraging banks to identify and help early to mid-career professionals gain leadership/management skills, ABA is offering a discounted registration to “emerging leaders” for the annual convention Oct. 27-29 in Seattle, WA. Especially considering the easy, affordable transportation options from Montana to Seattle, this is an enticing offer MBA members should strongly consider.

Several young Montana bankers have attended previous ABA Emerging Leader programs and report the events are top-notch professional development sessions that provide them with useful information and leadership skills they can implement “back home” in Montana banks.

Among the numerous informative sessions during the event, a featured keynote speaker is Jill Ellis, Head Coach of the U.S. Women’s Soccer Team. Another session highlights the Farm Bill and a discussion on hemp banking, which may be of interest to Montana bankers.

The venue for this year’s convention is Washington State Convention Center located at 705 Pike Street in the heart of downtown Seattle. Anyone interested in learning more about the ABA’s convention agenda and registration details can click here and register under “Emerging Leaders”.



Our Mission Statement: Enriching the lives of all Montanans through strong community-focused banks.

MBA hosts FDIC Community Banker Workshop

MBA cosponsored with MIB the FDIC Community Banker Workshop in Billings, September 18th at the Billings Hotel and Convention Center. There were eighteen bankers and bank directors, representing American Bank, Bank of Bridger, First Security Bank of Roundup, First State Bank of Forsyth, Garfield County Bank, Glacier Bancorp, Little Horn State Bank, Opporunity Bank of Montana, Stockman Bank, and Western Security Bank. FDIC presenters were Bob Preite, Scot Godfredson, Steve Hale, Bob McGibbon and John McGee. Topics covered were Liquidity, Community Reinvestment Act and Current Expected Credit Losses.

Dallas Herron, Chairman of Glacier Bancorp Holding Company and Randy Chesler, President/CEO Glacier Bancorp

Curt Kelley, President/CEO of Little Horn State Bank and Rex Phipps, President/CEO of Garfield County Bank

Lori Forseth, Director of Western Security Bank, Lance Egan, Director of Western Security Bank and

Mike Seppala, President/CEO of Western Security Bank

Scott Klein of First State Bank of Forsyth andMichael Phillips of Opportunity Bank



Did Everyone Take Their Vacation This Summer?By Craig M. Collins - President, OneBeacon Financial Services

va∙ca∙tion, noun1) a period spent away from home or business in travel or recreation2) a. a scheduled period during which activity (as of a business, court, or school) is suspended b. a period of exemption from work granted to an employee

Why worry about vacations? Vacations provide several benefits to both employees and employers. Employees come back from vacation refocused on the tasks at hand, while the employer benefits by having motivated and refreshed employees. Vacations are necessary for all parties involved.

What’s common in the banking industry is temptation. Bank employees are surrounded by opportunities for dishonest acts, teller shortages, CD documentation fraud, fictitious loans, and unauthorized account transfers are all exposures that are unique to the banking industry.

Internal controls such as segregation of duties, job rotations, and internal audits are great methods of both discovering and preventing these acts, but the best control to prevent and discover employee dishonesty is a vacation.

Why is it important?Most dishonest schemes start out relatively small. In fact, the dollar amount remains relatively stable for the first couple of years. As time passes, however, a dishonest employee becomes emboldened since he/she has not been caught and starts to increase the amount taken from the bank - sometimes dramatically. The amount can grow to millions of dollars over a relatively short period of time.

During my thirty-two years of underwriting fidelity insurance for banks, I have seen many employee dishonesty losses. The largest ones have been discovered while the employee was on a mandated vacation (dishonest employees do not like to take long vacations), or on an unplanned leave from the bank (perhaps due to a serious illness). The scheme will start to unravel when the employee is cut off from access to the bank’s systems and is not able to continue covering his/her tracks. Customers that normally only speak with the dishonest employee ask account questions of another employee, who starts to investigate and the scheme unwinds.

Employee Warning Signs1. Employee is resistant to taking vacations lasting more than 2-3 days. 2. Employee is highly protective of their work product. 3. Employee resists change to their work process or job duties. 4. Employee comes into their working environment during their vacation. 5. Employee directs customers to channel their questions only to them.

Vacation Policy Suggestions1. Require that all employees take a vacation that spans 5 consecutive work days and two weekends on each side (9 days total out of the bank). 2. Do not allow employees to enter their work area during their vacation. Any banking transaction can be done via the drive thru or ATM. 3. Disable VPN or any “work at home” technology that the employee may be using during the vacation period. 4. Disable the access card or key that the employee uses for the duration of the vacation period.



It is understood that in today’s workplace there is a need for flexibility in work schedules for employees. However, the banking industry has unique risk factors that must be addressed. Vacation has tremendous benefit to the well-being of employees, but serves as the best deterrent and early detection of employee dishonesty.

Enjoy your time off.

About OneBeacon Financial ServicesOneBeacon Financial Services offers property and casualty coverages for commercial banks, savings banks and savings and loan institutions, security broker-dealers, investment advisors, insurance companies and credit unions. Specialty coverages, including professional liability, trust errors & omissions, cyber liability and financial institution bond are additionally available for institutions with less than $3 billion in assets.

Contact UsTo learn more about how OneBeacon Financial Services can help you manage your unique risks, please contact Tempi Ruth, Sales Director, BANCSERVE insurance Agency at 406.861.3811 or [email protected]. You can also visit our website at www.onebeaconfs.com.

Register now for the 2020 Executive Development ProgramWe currently have 8 registrants representing 5 banks - American Bank, Bank of the Rockies, N.A., First Community Bank, Independence Bank and Madison Valley Bank.

The EDP program is a 12 month series of workshops developed by the Washington Bankers Association, and is offered to MBA members under a contractual agreement with the WBA. It is designed to motivate and accelerate the professional growth and development of bankers. Topics include: leadership and management, understanding financial statements, bank profitability, asset liability management, audit and compliance, credit and risk review, legislation and politics, negotiation and conflict resolution, ethics, communication skills, and other themes as well.

The next program begins Jan 8, 2020, and MBA members are encouraged to start identifying the motivated, high-potential employees who are poised to move into higher management positions. Anyone considering the Pacific Coast Banking School or Graduate School of Banking at Colorado would find the EDP program an excellent “warm-up.” The cost of the program is $3,500 and registrations must be received by December 14, 2019.

For more information on the Executive Development Program, contact Pam O’Reilly: [email protected], or check the MBA website: www.montanabankers.com.



Malcolm attends Most Powerful Women in Banking EventABA is one of the sponsors of American Banker’s Most Powerful Women in Banking – an annual program that recognizes the professional achievements and influence of top-performing female executives in banking and financial services.

Now in its seventeenth year, the Most Powerful Women in Banking program has from the beginning been focused on identifying a community of influential women in financial services - honoring their business acumen, professional achievements and personal tenacity. It embraces more than performance; it is dedicated to the professional development of women executives across the banking and financial services industry. Past and present honorees give special attention to extending their influence - to those they mentor, to those in the home and work communities, and to those who have yet to begin their careers.

Rob Nichols, President and CEO of the American Bankers Association has recognized Heather Malcolm, Vice President - Ag and Commercial Lender with Bank of the Rockies, and invited her to attend this prestigious event being held on October 3 in New York City at Cipriani Wall Street. Heather will also become chair of the ABA’s Ag Bankers Committee next month. The Montana Bankers Association would like to congratulate Heather on these outstanding achievements.

ABA’s Rob Nichols and Heather Malcolm, Bank of the Rockies, N.A.

Nichols: SAFE Banking Act Is ‘Thoughtful, Commonsense Public Policy’

In an interview with Bloomberg TV on Friday, 9/27/19, ABA President and CEO Rob Nichols commended House lawmakers for passing the bipartisan SAFE Banking Act—a bill that would enable banks to serve customers in states that have legalized cannabis—last week and expressed optimism for the bill’s prospects in the Senate.

Nichols noted that the industry is already engaged in a “thoughtful dialogue” with Senate Banking Committee Chairman Mike Crapo (R-Idaho) and other lawmakers about moving the SAFE Banking Act or a similar bill through the Senate in the coming weeks. “Taking care of that discrepancy between state and federal law, that’s exactly what Chairman Crapo is going to do,” Nichols said. “It’s off to a very bipartisan start.”

Nichols also addressed the recent liquidity crunch in the repo markets, noting that some of the post-crisis regulatory reforms have limited banks’ ability to engage in the capital markets, which contributed to liquidity issues. “The good news is, there is at least an appreciation on the part of the regulatory leaders here in Washington that some tailoring and some tweaks could be achieved here.” Read more about the liquidity crunch in a recent ABA Data Bank article .



2019 MBA Conferences and Workshops

q 2019 Women in Banking, Best Western Gran Tree, Bozeman, October 10 - 11, 2019

q 2019 Basics in Lending: Advanced Cash Flow Analysis & Advanced Tax Return Analysis, Best Western Gran Tree, Bozeman, October 23 - 24, 2019

q 2020 Executive Development Program: Twelve Month Course designed to cultivate the next generation of banking leaders

Watch for upcoming Conferences and Workshops coming in 2019 at www.montanabankers.com or for more information contact Pam O’Reilly, Association Services Director, at 800/541-5126 or pam@montanabankers.

Time is running out...Register Today!2019 Women in Banking Conference - Oct. 10-11, 2019 BozemanWe continue with our sixth year of our Women in Banking Conference. This year we bring you Lisa Demmi, a speaker, trainer, coach and podcaster. She will give us tools for goal setting and making your social media presence work you at work. See the video she made for us at the Women in Banking webpage: https://www.montanabankers.com/mpage/2019WIB. Our Commissioner of Banking and Financial Institutions, Melanie Hall and MBA Lobbyist Aimee Grmoljez will be presenting also. We bring back our Bankers Panel with Renee Newman of First Interstate Bank; Sheri Nicholson of Beartooth Bank; Callan Nagy of Stockman Bank and Tracy Zepeda of Opportunity Bank and continue with our round table discussion. This session will take a unique, brain-based leadership approach, to exploring the importance of building your own leadership brand. Discover effective methods to uncovering your authentic leadership style and how that translates into corporate relevancy. This highly interactive session will provide helpful tools to help guide your path to leadership credibility and meaningful influence among your teams, peers, and superiors in the workplace. So join us at the Best Western Gran Tree on October 10-11 from noon to noon by registering here today.

Basics in Bank Lending: Advanced Cash Flow Analysis & Advanced Tax Return Analysis - Oct. 23-24, 2019 BozemanMBA is offering the third session in our Basics in Bank Lending series. This month, David Osburn will explore multiple models of both business and personal (business owner) cash flow analyses.

The session will begin with the business “traditional” EBITDA cash flow and personal cash flow of the “business owner” (using the 1040 tax return, including tax schedules and K-1s, and the personal financial statement). Additionally, the Global Cash Flow or combined “business & personal” cash flow model will be displayed.

This will be followed by the Statement of Cash Flows (using the Direct and Indirect Methods), as prepared by the CPA, the UCA Cash Flow (using the Moody’s software spreadsheet), Cash Basis Cash Flow, Fixed-Charge Coverage (FCC), and Free Cash Flow (FCF). Various cash flow projections and sensitivity analyses will also be explored.

Advanced Tax Return will provide the banker with several advanced tax return concepts and related analyses to help them more effectively work with their business customers.

The session will begin with a brief review of analyzing a business owner’s personal “1040” tax return and the return of an LLC, S corporation, and C corporation including Schedules M-1 and M-2, Schedule K-1, pass-through transactions, and other deductions.



Montana Bankers Association Spotlights an

Endorsed Product

Upcoming Events

ABA Annual ConventionOctober 27 - 29, 2019

Seattle, WA

ABA Agricultural Bankers ConferenceNovember 10 - 13, 2019

Dallas, TX

ABA Financial Crimes Enforcement ConferenceDecember 7 - 10, 2019

Washington, DC

Upcoming Events

Women in BankingOctober 10 - 11, 2019

Best Western Gran Tree, Bozeman

Basics in Lending: Adv. Cash Flow Analysis & Adv. Tax Return Analysis

October 23 - 24, 2019Best Western Gran Tree, Bozeman

2020 Executive Development Program12 month program in various cities

around the state of Montana

For more information contact Pam O’Reilly, Association Services Director

800/541-5126or

[email protected].

2020 IRA Basic and UpdateMarch 3-4, 2020

Hilton Garden Inn, Billings

2020 Annual Meeting and ConventionJune 18-20, 2020

The Northern Hotel, Billings, MT



MBA Lending Compliance Conference was held in Bozeman on Sept. 11-13Our Lending Compliance Conference brought 85 bankers with a range of experience from less than one year to 43 years, representing 26 banks together in Bozeman at the Best Western Gran Tree. According to the evaluations, it was a huge success!

MBA brought back Jack Holzknecht from Compliance Resource. Jack has been delivering the word on lending compliance for 43 years and at least over 8 years in Montana. He developed and has presented training programs to bankers in 43 states. Besides training for us and other banking associations, he has developed and delivered compliance training for the FDIC for ten years. Jack has a BA in Business Administration from Bellarmine University, he is a Certified Regulatory Compliance Manager, and a member of the National Speakers Association. In the evaluations, Jack received a 5 out of 5 for his knowledge – can’t get much better than that.

The topics that many found most beneficial: Private Flood insurance update, TRID, Fair Housing Information, Truth in Lending and Payday Lending Regs.

Michael Selander, FDIC Division of Depositor and Consumer Protection Field Supervisor – Rocky Mountain Territory, came to us upon the retirement of Robert Preite. Michael was extremely well received by our bankers and received a 4.62 on his knowledge and a 4.60 (out of 5) that we’d like to see him again. He presented on compliance hot topics which some felt was the most beneficial segment of the two and half days.

MBA continues our partnership with Rebekah Leonard, formerly with First Security Bank of Bozeman & American Bank. Rebekah, also a previous member of MBA’s Compliance Committee, put together the Escape Room Exercise for the second year. Last year’s theme was “VACATION IS ALL I EVER WANTED” with a complicated loan file dropped on your desk just one hour before you were off to your much needed and well deserved vacation in Ireland (this could be Pam’s dream vacation but they were good with that). This year’s theme was “ZOMBIE APOCOLYPSE!” – which had nine individual challenges that revealed puzzle pieces. The puzzle pieces finally led you to a 3 digit code which opened a trunk and brought out the weaponry - - a nerf gun to shoot down each team’s zombie of choice. The winning team completed the challenge in 24:58 minutes:

• Lytaunie Blasdel, Glacier Bancorp, Kalispell, MT• Meagan Foote, Glacier Bancorp, Coeur d’Alene, ID• Tami Jones, Glacier Bancorp, Prescott, AZ• Colene Sachanowski, Bank of the Rockies, N.A., Emigrant, MT• Christy Smith, Independence Bank, Havre, MT

The overall conference received an evaluation of 4.64 out of 5. We thank all of the bankers who attended and we have already booked Carl Pry to be in Bozeman, September 16-18, 2020.

Pictured L-R is the winning team: Christy Smith, Meagen Foote, Lytaunie Blasdel, Colene Sachanowski, Tami Jones



Compliance Alliance Questions of the Month

Compliance Alliance offers a comprehensive suite of compliance manaagement solutions. With the ever-changing regulatory environment, banks need a partner they can trust. Compliance Alliance is not only backed, but owned by 22 state bankers associations, including Montana Bankers Association. To learn how to put them to work for your bank, call (888) 353-3933 or email [email protected].

Question:We are in the process of underwriting a Commercial 10 YR Term loan to a church for the purpose of purchasing a single family residence (zoned as single family) that will be used as a place of worship. Is this a HMDA covered transaction or is there an exemption that exists that excludes this loan?

Answer:If the loan will be replaced by permanent financing later, then it's possible that it might fall into the temporary exception:

1. Temporary financing. Section 1003.3(c)(3) provides that closed-end mortgage loans or open-end lines of credit obtained for temporary financing are excluded transactions. A loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time.

Otherwise, if not, the bank may be able to document that this is not in fact used as a residence, and thus, does not fall into the definition of a "dwelling":

3. Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks, and structures originally designed as dwellings but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices.

Question:I have a list of reasons for denial on a loan, but is there a separate list of reasons for denying a deposit that are standard reasons?

Answer: Unfortunately, there is not a model list of reasons for deposit accounts. The bank may be able to modify some of the reasons in the model forms for credit accounts though, and you can find those in Regulation B.



Fort Benton• Orry Fruit, Assistant Branch Manager and Loan Officer of First Bank of Montana has been selected

for Class IV of the Resource Education and Ag Leadership (REAL Montana) program. Orry is among the 20 candidates who were competitively selected for Class IV. The group represents a broad cross-section of natural resource industries across Montana and have demonstrated leadership potential and willingness to serve in decision making roles upon completing the program. Congratulations, Orry! (MBA’s Cary Hegreberg was a founder of the REAL Montana program and spoke at the Class IV Seminar in Bozeman)

Havre• Stockman Bank Havre thanks Chuck Wimmer for his 18 years of service and wishes him nothing but the

best in his retirement. Congratulations, Chuck!• Doug Kallenberger has recently been promoted to Branch President for Stockman Bank Havre. His

responsibilities include overseeing bank operations and focusing on expanding all lending activites within the market. Doug brings over 12 years of banking experience to the position and has been with Stockman Bank since 2009. Kallenberger earned his B.A. degree in agriculture operations technology and an A.S. degree in business technology and agriculture technology from Montana State University Havre.

Lewistown• Bank of the Rockies hosted a free pool day at the Lewistown Aquatic Complex. Approximately 350 people

showed up to take advantage of the free entry and popsicles courtesy of the Bank of the Rockies. Malta• After 43 years as a banker, Gary Howell is retiring from First Security Bank in Malta. Howell started his

financial career at the age of 24 in Anchorage, Alaska after graduating with a degree in business from the University of Montana in Missoula in 1976. Happy retirement, Gary!

Miles City• Troy Peterson has joined Stockman Bank Miles City as Vice President and Ag Loan Officer. His

responsiblities will include developing and servicing agricultural loans and assisting clients with their lending needs. Peterson has been in investment banking for 27 years and brings extensive kowledge to the position.

Missoula• Otis Mitchell has recently joined Stockman Bank Missoula as a consumer lender. He will assist clients

with their financial needs specifically in the areas of installment and home equity loans, personal lines of credit and new accounts. Mitchell brings extensive knowledge in banking and customer service to the position having previously served as a personal banker for a national bank. Mitchell earned his bachelor’s degree in finance from Montana State University.

• Stockman Bank is pleased to announce Kevin Cotner’s recent promotion to Vice President, Branch Manager of the new Missoula Brooks Street location. He will assume a key role in the start-up and growth of this new Stockman Bank branch. Kevin’s commercial banking experience and leadership skills will continue to contribute the bank’s expansion in western Montana.

Banks and Personnel

Contact Karmen Millhouse at MBA with your bank’s community involvement success [email protected]

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