MBA News July August 2022

Registration is Open! SBA Minnesota Lenders Conference September 15, 2022 • Minneapolis Marriott Northwest, Brooklyn Park, MN Join SBA staff, partners and your lending colleagues for networking, workshops from industry experts, and to celebrate SBA lending award winners. Visit the registration site for conference information and details. Cosponsorship Authorization # 22-29-C. SBA’s participation in this Cosponsored Activity is not an endorsement of the views, opinions, products or services of any Cosponsor or other person or entity. All SBA programs and services are extended to the public on a nondiscriminatory basis. Reasonable arrangements for persons with disabilities will be made if requested at least two weeks in advance. RegistratRieognisLtirnakt:iownwLwin.2k0: 2w1wLewn.sdbearlseCnodnifnegrceonncfeeMreNn.ecev.ecnotmbrite.com

CONTENTS MBA News The Chair’s Message Published six times a year, MBA News is the official publication of the MBA. Articles focus exclusively on the commercial 4 banking community in Minnesota. Carla Bush, Managing Editor My Personal Mt. Rushmore 952-857-2605 • [email protected] Questions or comments about MBA News should be directed Cover Focus to the Managing Editor, Carla Bush. 9 MBA Staff Minnesota Bankers Association Annual Report Executive • Joe Witt, President/CEO Features • Roy Terwilliger, Director of Member Relations • Kim Philipson, Senior Executive & Education Coordinator 8 Education & Communications • Carla Bush, Director of Education/Communications GetTo KnowYour 2022-2023 Board Chair • Kim Philipson, Senior Executive & Education Coordinator • Chris Harrison, Senior Education Coordinator 20 • Renee Lawler, Education & Marketing Coordinator • Kathie Babcock, Graphic Designer/Website Coordinator Five Ways to Improve Efficiency inYour Bank • Mary Henriksen, Registrar 22 Finance & Group Insurance • Brent Stokesbary, Controller The Battle for Deposits Is Heating Up: AreYou Ready? • Antonina Drozdov, Staff Accountant • Stacy Meyer, Group Insurance Manager 29 • Ashley Reetz, Plan Administrator/Insurance Agent • Barbara Markus, Senior Plan Administrator No Deal: States Slam on Brakes for CU Acquisitions of Community Banks Human Resources • Diane Brower, Director of Human Resources 30 • Cindy Meyer, IT Manager • Martha Kooiman, Receptionist Diversity, Equity and Inclusion:The Next Challenge for Legal/Compliance/Government Relations Community Banks • Tess Rice, General Counsel/Director of Government Relations 32 • Keith Johnson, Associate Counsel • Therese Kuvaas, Government Relations Manager MBA Leadership Development Academy • Margaret Schade, Legal Administrative Assistant 34 • Tom Boswell-Healey, Associate Counsel/ Senior Compliance Consultant Congratulations Pioneer Bankers Club Inductees • Jay Tambornino, IT Consultant 36 IMnIsDuWr aEnScTeBSAeNrKv iEcReSs 2022 MBA Annual Summit • Daryll Lund, President • Jeff Otteson, Vice President - Sales 6 Calendar of Events 25 Compliance Query • Adam Dawson, Regional Sales Manager 26 Bankers On the Move • Melissa Noonan, Account Manager 7 Education and 28 New Associate Members • Carla Lopez, Account Manager Communications News • Becky Gatzke, Insurance Assistant 24 Counsel’s Corner www.minnbankers.com 24 Ask the Agent The official publication of the Minnesota Bankers Association 3

THE CHAIR’S MESSAGE My Personal Mt. Rushmore Rich Hoban Vice Chairman and Director of Corporate Development Frandsen Financial Corp., Arden Hills The following is a transcript of Rich Hoban’s remarks from the owners of those businesses, and get exposed to a wide range of MBA’s Annual Summit Celebration Luncheon on June 14, 2022. business models (some good and some not so good!)? What an awesome industry to be a part of! On top of that, we get to see Good afternoon. I am extremely honored to be the incoming our work and advice reflected in our customer’s success, and our Chair of this great association. Thank you, David Krause of community’s prosperity. That’s why we are all here. To me, there Pioneer Bank and the rest of the nominating committee, for your is no greater job satisfaction than helping a business or a family confidence in me. I will do my best to follow in Ken Johnson’s achieve their financial goals. Thank you to each of you in this footsteps in being a great leader for the board of directors. With room that make that happen in your bank every single day. over 95% of the chartered banks in Minnesota as members, the I am not sure if any of you have had the pleasure of hearing Joe MBA truly is the Champion of Minnesota Bankers. CEO Joe Witt Schmit, the KSTP sportscaster, speak professionally. Joe is a great and his entire team at the MBA know exactly why they exist…to speaker, and one of his key topics is showing gratitude to the help Minnesota banks and bankers grow and flourish. I have had people who have truly impacted your path in life. Joe calls this the pleasure of being around the staff and getting to know them your personal Mt. Rushmore. So, I want to take this opportunity over my four years of being involved with the board. They are a to publicly thank my Mt. Rushmore. great team! First is my family. My wife Sarah, who I have been married to for 41 years, and our three boys, Bryan, Mark, and Dan. They have When big career events like this happen to you, I think it’s been my biggest supporters and have had the patience to put up healthy to reflect on how you got here and the people who with weekends and family vacations getting interrupted because impacted your path. So, let’s go back in time to about 1971. I of work. am depositing my lawn mowing money and my caddie tips at Second is my mom and dad. They count as one as they were the State Bank of Excelsior. I have to admit, I always really liked married for 64 years. They’re gone now, but I know they would going into the bank. I thought it was a cool place. Maybe that was have been pretty proud today. a premonition of things to come. Fast forward to the fall of 1979, Third is Chuck Mausbach who has been my partner in running and I am taking a Money and Banking Econ class at St. John’s Frandsen Financial for the past 16 years. I have learned a lot University from Professor Joe Friedrich. That class inspired me about leadership and creating a strong company culture from to seriously look into banking as a career. You see I did not want Chuck. Chuck, thank you for your wisdom and guidance. to get pigeon-holed into one industry where that was all I knew. Banking provided variety. Where else can you learn about many different types of businesses, create great relationships with the 2021/22 BOARD OF DIRECTORS Chair Immediate Past Chair District 1 District 3 Rich Hoban, Vice Chairman and Director Ken Johnson, President/CEO Greg Evans, President & CEO Troy Rosenbrook, President of Corporate Development North Shore Bank of Commerce, Merchants Bank, Winona Highland Bank, St. Paul Frandsen Bank & Trust, Arden Hills Duluth District 2 District 4 Vice Chair/Treasurer President/CEO Adam Dittrich, CEO Erin Procko, President-Minneapolis Doug Tate, President/CEO Joe Witt, President/CEO Americana Community Bank, Bell Bank Worthington Federal Savings Bank, Minnesota Bankers Association Sleepy Eye Worthington 4 MBA News | July/August 2022 | www.minnbankers.com

Finally, Dennis Frandsen, the founder of our company, who MINNESOTA BANKERS took a flyer on hiring a 30-year-old to run his five office, $125 A S S O C I AT I O N million banking organization 33 years ago. Thank you for having the confidence in me, and for teaching me the simple business COMMUNITY principal that if we take care of the customer and our employees, everything else will fall into place. IMPACT MONTH In closing, I would like to encourage all of you in this room to get more involved in our association. Serve on a committee. September Enroll team members in our education programs. Utilize our IT and compliance consultants. Look into our employee benefit offerings. Take in our e-mail bulletins and social media posts. Like I said before, the MBA team is here to help you grow and flourish. Take full advantage of your membership! Rich Hoban, MBA Chair Congratulations to our 2022-2023 Minnesota Bankers Association Board of Directors! Rich Hoban Ken Johnson Doug Tate Joe Witt Greg Evans Adam Dittrich Chair Past Chair Vice Chair/ President/ District 1 District 2 Treasurer CEO Troy Erin Procko John Ohlin Sue Black Ralph Pace Jim Boerjan Rosenbrook District 4 District 5 District 6 Director At- Director At- Large Large District 3 District 5 At-Large Minnesota Bankers Association 8050 Washington Avenue South, Suite 150, Eden Prairie, MN 55344 John Ohlin, President/CEO Ralph Pace, EVP, Central Region Manager Deerwood Bank, Baxter U.S. Bank Commercial Real Estate, Minneapolis 952-835-3900 • MN Toll Free 866-835-3900 • Fax 952-896-1100 [email protected] • www.minnbankers.com District 6 At-Large MBA News is published six times per year by the Minnesota Bankers Susan Black, EVP, Director of Human Jim Boerjan Association. © 2022, Minnesota Bankers Association. All rights reserved. Resources Wells Fargo Bank Minnesota, NA, Saint Paul No part of this newsletter may be reproduced in any form or incorporated The Bank of Elk River into any information retrieval system without the written permission of the copyright owner. The Champion for Minnesota Bankers 5

CALENDAR OF EVENTS AGRICULTURE November 15 EDUCATION FROM OUR Stepping Up to Supervisor • Eden Prairie MBA PARTNERS September 21 & 28 January 23-27 Hedging Topics for Ag Lenders • At Your Desk Member Appreciation Week • At Your Desk WEBINARS November 9 August Properly Documenting and Renewing Ag HUMAN RESOURCES 4 Loans • At Your Desk Customer Service vs. Customer Experience November 21 & December 19 October 6 9 Ag Webcast Series • At Your Desk HR Peer Group • Eden Prairie Advertising Compliance Farm Service Agency Workshops 16 LENDING Regulation DD Update December 5 • Mahnomen 18 December 6 • Alexandria August 24 10 Must-Have Techniques for Engaging December 7 • Marshall Key Ratio Analysis: Calculating the Numbers Training December 8 • Rochester Correctly • At Your Desk 25 December 9 • Mankato September 29 Audit Report Writing December 13 • At Your Desk Accounting Basics: A Refresher • Eden Prairie February 7 October 3-7 ABA Self-Paced Guaranteed Loan Processing Workshop Commercial Lending School • Nisswa Online Training • Mankato November 9 February 8 Credit Conference • Eden Prairie • Best Practices for Managing Remote Guaranteed Loan Processing Workshop • At November 17 Employees Your Desk Understanding Cash Flow - Traditional, Global and UCA • Eden Prairie • Consumer Loan Process BANK MANAGEMENT January 10-11 • Managing Time at Work Credit Analysis Introduction & Fundamentals • Leveraging the Benefits of a Diverse September 8 • At Your Desk Bank Financial Officers Conference • March 7 Workforce Bloomington Properly Structuring Your Client’s Financing • Teller Basics September 29 Needs • Eden Prairie Virtual Regulator Panel • At Your Desk April 25 For more information on all of the classes April 19 Analyzing Financial Statements • Eden Prairie listed here, go to www.minnbankers.com Bank Directors Training • Eden Prairie OPERATIONS and click on the Education tab. COMPLIANCE September 15 Mark Your Calendar! August 9 Basic Operations Course • Eden Prairie Fair Lending: Evolving Risks • Eden Prairie November 1 • Eden Prairie • Bank Day at the Capitol October 25-26 Processing Garnishments, Levies and Writs February 2, 2023 Advanced Compliance Workshop • Mankato • Eden Prairie April 26-27 February 21-22 • Bank Leaders of Tomorrow AML/BSA Workshop • Bloomington Call Report Preparation • At Your Desk Workshop March 28 February 15, 2023 GENERAL BANKING IRA Essentials • Eden Prairie March 29 • MBA & ABA Washington D.C. August 18 Advance IRAs • Eden Prairie Trip Minnesota Matters • At Your Desk March 20-23, 2023 October 12 SECURITY Making Effective Business Development Calls • • Women in Banking Conference Eden Prairie October 3 April 12, 2023 October 13 Bank Security Management Seminar LinkedIn Value Strategies • Eden Prairie • Bloomington • Operations/Technology October 18-19 Conference ABA Principles of Banking TECHNOLOGY May 8-9, 2023 • Eden Prairie October 25 May 8-9 Strategies for Moving Your Bank Forward in a Operations/Technology Conference • Nisswa New Era • Eden Prairie November 3 Death and the Bank Account • At Your Desk 6 MBA News | July/August 2022 | www.minnbankers.com

EDUCATION AND COMMUNICATIONS NEWS JELLUM | by Carla Bush LAW Here we are again. We’ve just come off the long Independence Day weekend and we’re all YOUR LEGAL amazed about how fast the summer is going. Back to school supplies are indeed back in DEPARTMENT® stock at Target and garden supplies are already on clearance. We’re in the back-half of 2022 and to quote my mom, “just where does the time go?” • Regulatory In the MBA world, though, we are right back at the beginning – of a new fiscal year that Compliance is. Starting on page nine, you’ll find our 2022 Annual Report detailing the association’s activities over the last twelve months. I’m an admitted data nerd and one of my favorite • Financial Institution parts of the report is the chart on page ten right under Joe’s comments. This chart details Operations how many member banks used each of our major services during the year. When we see that 94% subscribe to our legal manuals, 70% have contacted our legal department with a • Commercial Loan question and more than 93% had someone attend at least one education program, we know Documentation that we are on the right track providing the services that you need. It’s also really exciting to see that a full 72% of member banks have a staff member (or more) who volunteer on an • SBA Compliance, MBA committee. Committees are where so many great ideas originate from and the more Loan Documentation bankers that get involved, the better! and Liquidations Another MBA event that we would love to have every bank participate in is coming soon. September is Community Impact Month and registration is open now. Now in it’s sixth • USDA Loans year, the idea behind CIM is to give member banks a focused period within which to engage employees in one or more community service activities. The campaign helps to showcase • Litigation the vital role that banks play in their communities throughout the year. The MBA and fellow banks/bankers will then highlight the work being done through social and print media. Last • Workouts and year Chris Harrison and I were able to go Facebook live with several banks during their Collections activities. It was a ton of fun and helped to really highlight the great work being done. Let us know when your activities are planned and we’ll add you to our list to visit, either in person • Foreclosures or virtually! Make sure you register your bank by August 15th to be entered into a drawing for a free branch lunch and get your t-shirt orders in by July 25th. This year you can even • Creditor customize your shirts with your bank logo. Learn everything you need to know at register Bankruptcy Rights at minnbankers.com/communityimpact. On October 25th we are hosting a brand-new program specifically tailored to human JellumLaw.com resources, branch management and the c-suite. Strategies for Moving Your Bank Forward will help you truly understand the positive impact that diversity and inclusion can have on 14985 60th Street North your business. Even for those banks whose communities may seem homogenous, having Stillwater, MN 55082 your finger on the pulse of diversity and inclusion is good business and is a need that will 651-439-2951 7 not go away. Brought to you in partnership with ABA, our distinguished speakers include Kenneth Kelly, Chairman and CEO of First Independence Bank, the first Black owned bank in Minnesota and Naomi Mercer, ABA’s Senior Vice President, Diversity, Equity & Inclusion. Of course, there is a lot more to come in this last half of 2022 so make sure you’re receiving our emails. Did you know you can choose which emails you receive from us? Simply log into your account at minnbankers.com and then click on your name. That will take you to the page where you can choose your preferences. You’ll also soon see a brand-new look to our website as we are hard at work on a full redesign. Stay tuned for the launch in August. In the meantime, enjoy what’s left of summer!  Carla Bush Director of Education/Communications 952-857-2605 [email protected]

Get To Know Your 2022-2023 Board Chair Rich Hoban, Vice Chairman and Director of Corporate Development Frandsen Bank & Trust, Arden Hills How did you get started in banking? What do you enjoy most about being the leader of a community bank? Right out of college, I have been in banking my whole career! Seeing customers and employees succeed and reach their financial and career goals. What will be the biggest challenges facing Minnesota banks in the next year? What do you look forward to in your year as the MBA’s Board Chair? Trying to manage net interest margins off of historical lows and dealing with personnel I’m excited to help Joe and the rest of the team shortages. continue to provide high quality service, programs, and benefits to our community bank members. I relax and recharge by... going on The trick to staying on top of things is a long mountain bike ride or cross- to have a great “To Do” list and manage country skiing. My dream vacation it. I plan out my week and review my list would be doing both in Europe. every Sunday evening. One thing that can instantly make my day better is being greeted by my dog Mikko when I get home. He never has a bad day – don’t underestimate the power a dog has over its owner! Great words to live by.... If you aren’t feeling When I pick where we’re eating, we go to uncomfortable, you aren’t growing. Lolito in Stillwater. 8 MBA News | July/August 2022 | www.minnbankers.com

Minnesota Bankers Association ANNUAL REPORT 2022 9

2022 Annual Report Minnesota Bankers Association The MBA has just ended another fiscal year. We are pleased to share this Annual Report which provides a summary of the MBA’s activities from July 2021 through June 2022. Even as we continued dealing with the COVID pandemic, the MBA staff carried on providing excellent products and services to our member banks. If that sounds familiar to you, it is probably because you and your bankers did the exact same thing. It has been amazing to watch everything that our member banks accomplished during these complicated times. Minnesota banks are the heart and soul of their communities, and this has never been truer than during the last year. You helped thousands of small businesses stay afloat. You supported the individuals and families that were most affected by COVID-19. Throughout Minnesota, local bankers provided dynamic leadership and acted as a steadying influence. It truly is an honor to represent the men and women of the banking industry and to support the great work you all do for our state. The MBA, too, must give all our member banks a huge “THANK YOU!” Because of your involvement, the MBA came through the pandemic in great shape in terms of its programming, its governance, and its finances. As you will see in the chart below, during the last year 100% of member banks utilized at least one of the major services the MBA provides. The Board of Directors continues to give solid leadership and thoughtful strategic direction for the association. Our committees contribute excellent ideas, and the MBA staff is a talented group of professionals, consistently doing a fantastic job of turning these ideas and visions into workable solutions for our member banks. The banking industry continues to face some challenges. Know that the MBA works tirelessly to provide the products and services our bankers need to address those challenges. The MBA is the Champion for Minnesota Bankers, and no one does a better job of representing and supporting this great industry. We are a member-focused organization, and you are the reason that we exist. As always, we thank you very much for your bank’s membership in the MBA and for all your support! Your active involvement helps ensure that this association is successful. If there is ever anything we can do for you, please give us a call. We want to help you in any way that we can. Have a great Minnesota summer. Joe Witt MBA President/CEO 10 MBA News | July/August 2022 | www.minnbankers.com

Advocacy & Government Relations State Advocacy After five years of the MBA advocating for a fully in Minnesota while marijuana is illegal under federal funded Financial Institutions Special Revenue Fund (FI law creates significant risks for Minnesota banks with SRF), the legislature passed the Commerce Omnibus customers that are marijuana-related businesses.  Only bill the last night of session with this language Congress can resolve the issue by changing federal law.  included. The MBA has consistently introduced a bill The House passed the SAFE Banking Act numerous the past five years that would redirect the remaining times this past year only to have the Senate not take fees from the General Fund to the SRF to ensure that the bill up for a vote.  The bill continues to pass with all entities within the FI Division are adequately funding broad bipartisan support.  Senate leadership has stated the SRF. This year was the first time the Department they would like to go further than just addressing the of Commerce also included this language in their bill, banking issues with marijuana, however, the likelihood along with language to assess non-depositories. In of that happening is extremely slim. a session where very little happened, this is a HUGE achievement. This Spring, the MBA returned to Washington, D.C. for the first time since 2019. The group met with U.S. During the interim last fall, the House Commerce Senators Tina Smith and Amy Klobuchar and the offices Finance and Policy Committee held an informational of U.S. Representatives Angie Craig (CD-2), Dean hearing on the privacy bill. The MBA testified explaining Phillips (CD-3), Betty McCollum (CD-4), Tom Emmer all the regulations that banks already follow around (CD-6), Michelle Fischbach (CD-7) and Pete Stauber privacy and asking for a full Gramm Leach Bliley Act (CD-8). Over 30 bankers attended these meetings to exemption for entities. The bill did not receive another discuss important banking issues. Some of the topics hearing during the legislative session. discussed included taxation and credit unions, the Community Bank Leverage Ratio, the SAFE Banking Act, Other bills of interest that the MBA focused on this postal banking, the Enhanced Credit Opportunities in session dealt with the unemployment insurance Rural America Act (ECORA), and crypto bank charters. trust fund, student loan advocate, green bank/ Along with the Capitol Hill visits, the group met with finance innovation authority, Safe at Home, first- CFPB Director Rohit Chopra, OCC Acting Comptroller time homebuyer down payment assistance, C-PACE Michael Hsu and FDIC staff for updates and discussion legislation with language advocated by the MBA that on numerous important topics, such as overdraft fees, would have included written notice and consent from cryptocurrency, credit unions buying banks, climate lenders, forced access/ESG language, and retail theft.  issues, bank mergers and CRA modernization. In In all, staff reviewed 9,515 bills over the biennium for addition to these meetings, the MBA worked closely their impact on the banking industry. With the help of with all the D.C. and local offices as issues arose and the lobbying firm of Cook Girard and guidance from the attended U.S. Representative Tom Emmer’s Financial MBA Government Relations Council, the MBA was able Services Roundtable throughout the year. to protect banks from multiple pieces of legislation that would have negatively impacted their businesses.  Federal Advocacy Last fall, the Biden Administration proposed a sweeping expansion of tax information reporting aimed at raising revenue to help offset the cost of additional spending programs. The proposal would have required banks to report to the IRS detailed information on customer account inflows and outflows. The MBA, along with bankers, reached out to both Minnesota Senators and all our members of Congress expressing concerns and objections with this proposal. Thankfully, the proposal was not included in the final bill. MBA continued to work on the marijuana banking issue this past year.  The fact that medical marijuana is legal The Champion for Minnesota Bankers 11

Communications The MBA is committed to engaging with our member bankers through a variety of communications channels. Members may choose their personal communication preferences by signing into their account at www.minnbankers.com. MBA News published six times a year @MinnesotaBankers @minnbankers 933 followers 901 followers Legal, Compliance MBA Website Political & Regulatory Insight Bulletins Bulletins www.minnbankers.com emailed weekly during emailed as necessary legislative session 6,753 video views 3,415 followers The Voice Education Flyers emailed every mailed bi-monthly Thursday 12 MBA News | July/August 2022 | www.minnbankers.com

MINNESOTA BANKERS September is… A S S O C I AT I O N Once again Minnesota bankers stepped up their efforts to give COMMUNITY back to their communities and citizens during Community Impact Month. Banks served hundreds of organizations in IMPACT MONTH their communities by providing funding, volunteers, materials, supplies, and/or food. Well done! Each year, the MBA celebrates banks 88 Banks for their contributions, service, and 342 Branches support of their local communities through the Community Champion 243 Communities Impacted Recognition. Every bank who partici- 500+ Organizations Helped pates in Community Impact Month is recognized as a Community Cham- $3M+ Donated pion. We hope these banks proudly display their certificates for all to see. 90,000+ Volunteer Hours #BeABanker MBA offers two websites as part of a comprehensive toolkit to assist banks in attracting the next generation of talent. Beabanker.com showcases banking as a vibrant and healthy industry with fantastic career opportunities in many different areas. Iamabanker.com serves as a toolkit to you, providing resources, events, and sample social media posts to assist in your bank’s recruiting efforts. In addition, the MBA produced a series of five video shorts that appeared in paid social media spots throughout the year. These videos have already garnered more than 55,300 views. Bankers are encouraged to share the videos and to use #beabanker in employment ads and social media posts. Additionally, this year the MBA joined forces with BankTalentHQ.com, a talent management resource specifically for the financial industry. Adding the site to your arsenal can help connect you to great people, including candidates who currently are outside the state and/or industry. The Champion for Minnesota Bankers 13

Education The MBA’s Education department offers a wide variety Learning, ABA, and The Graduate School of Banking of classes, workshops, schools, and conferences - Madison allow us to offer high quality live and on- designed to assist bankers at every level in developing demand webinars on hundreds of topics. In fiscal their professional and technical skills. Our education year 2022, about 500 bankers took virtual courses programs are designed by bankers for bankers. The through one of our partner organizations. MBA staff works closely with committee and volunteer members to provide feedback and guidance on • WeproudlyjoinedwiththeUtahBankersAssociation relevant topics. on a brand-new program specifically for C-suite bankers that will roll out in the fall of 2022. The Fiscal year 2021-2022 was an excellent one for MBA Society of Bank Executives is an organization education. An incredible 2,759 bankers attended at that will provide bank leaders with opportunities least one educational program culminating in a total of to enhance critical leadership competencies and 4,738 distinct registrations and representing over 93% build a vibrant peer network so they can thrive in of member banks. Some of the most popular programs the rapidly changing banking landscape. included long-standing classes such as Principals of Banking as well as many of the brand-new programs offered during the year. Highlights… • The association offered more than 70 educational programs in the last fiscal year. These classes covered everything from ag lending to marketing to compliance and more. Several programs were free to members, including the quarterly webcast, MN Matters, which covers legal, legislative, and regulatory updates by our legal team. • The second annual Member Appreciation Week took place in January. The week was full of free webinars and prize giveaways. Classes included topics for every bank department as well as an assortment of fun diversions. Members embraced the free education with more than 700 bankers registered to take at least one webinar. Forty-eight bankers also walked away with $2,500 in prizes thanks to our generous sponsors. The 3rd Annual Member Appreciation Week is scheduled for January 23-27, 2023. • We fully returned to in-person schools and conferences including, for the first time since 2019, the Bank Leaders of Tomorrow and the Women in Banking conferences. • Our educational partnerships with the Small Business Administration (SBA) and the Farm Service Agency (FSA) continued to prove very popular. The SBA webinars attracted nearly 200 bankers from across the state, while the FSA trained over 300 bankers on FSA lending. • Online learning continues to be an integral part of banker education. Our partnerships with OnCourse 14 MBA News | July/August 2022 | www.minnbankers.com

Legal & Compliance The MBA’s legal department is focused on helping our members navigate the industry’s complex and ever-changing legal and regulatory environment. Led by General Counsel Tess Rice, the department has had a busy and productive year answering legal inquiries, monitoring regulatory changes, and communicating essential information to member banks. As a key benefit, members can email [email protected] anytime and/or call up to six times per year at no charge. 1,900+ 36 Legal & Legal Compliance Compliance Inquiries Articles 23 12 Regional Regulatory Watch Compliance Group Bulletins Meetings Compliance Consulting The MBA offers compliance consulting services including deposit, real estate loan and privacy reviews, HMDA scrubs, advertising/website reviews, custom policy creation, compliance risk assessments, and independent testing of ACH and BSA programs. Personalized training and policy and procedure development are also offered. The MBA’s consultant, Associate Counsel Tom Boswell-Healey, is an attorney with over 20 years of industry experience. He leverages his knowledge and experience to help member banks identify and mitigate risks from changing regulatory demands at both the state and federal level. The Champion for Minnesota Bankers 15

Insurance & Consulting MI nIsDuWr aEnScTeBSAeNrKv iEcReSs in 2014. In addition to the core employee benefit products, we also offer a vision plan that covers exams, Commercial Insurance – contacts, and eyeglasses on an annual renewable Midwest Bankers Insurance basis. This plan has grown dramatically thanks to the Services (MBIS) low premiums and solid benefits. MBIS is a jointly owned subsidiary of the MBA and the CONSULTING Wisconsin Bankers Association operating in Minnesota, GROUP Wisconsin, and North Dakota. MBIS specializes in providing insurance policy education, internal control IT Consulting consultation, best practices, and insurance placement for the following insurances: MBA’s IT consulting is designed exclusively for MBA member banks and we continued to expand our • Cyber Liability services this past year. We worked with banks on comprehensive strategic technology plans, business • Directors & Officers Liability continuity plans, information security testing, audits, and assessments to ensure banks are following • Financial Institution Bond industry best practices. The MBA’s consulting group assisted member banks with the following services: • Excess Deposit Bond • External Network Vulnerability Assessment • Civil Money Penalty • Information Security Assessment and Audit • Property and Casualty • Internal Vulnerability Assessment • Workers Compensation • Social Engineering Assessment • Mortgage Hazard • Vendor Management • Mortgage Impairment • Technology Strategic Planning • Flood Solutions • TRAC™ Implementation We are pleased to report that MBIS now works with over 200 community banks ranging in size from $20 • Security Training and Board Education million to over $8 billion in assets. • Customer Education • Core Banking System Vendor Evaluation and Contract Management Group Insurance Finance For over 60 years, the MBA Employee Benefits Trust Our Finance Department manages the accounting and (EBT) has provided high quality dental, life, and investments for MBA as well as our subsidiaries and disability products to Minnesota banks. As specialists affiliates including MBA Employee Benefits Trust, MBA in the banking industry, the EBT fully understands the Insurance and Services, Midwest Bankers Insurance needs of today’s bankers. By grouping together more Services, and Bankers Building LLC. Most of our than 5,000 Minnesota employees, the EBT secures funds are invested in CDs at member banks. Bids are lower premium rates for all. This results in lower solicited periodically through announcements in MBA costs and gives your bank a valuable tool in hiring and News, our website, and via email. It is likely that each retaining talented staff. entity will report year end net income in excess of both budget and the prior year end. MBA and affiliates are Additionally, we now have 44 banks and nearly 1,700 financially strong. We have no debt, and our net worth Minnesota bank employees enrolled in the Iowa exceeds policy guidelines. Bankers Benefit Plan, our health insurance brokerage, which we began marketing on an exclusive basis 16 MBA News | July/August 2022 | www.minnbankers.com

Associate Members & Sponsors The MBA is very proud to partner with the many companies Emergent Software that make up our Associate Members, Endorsed Vendors Executive Benefits Network and Partners. These companies specialize in providing Federal Home Loan Bank Des Moines valuable services to our member banks. FIPCO Fiserv Associate Members Fredrikson & Byron Gislason & Hunter LLP The MBA counts 116 companies as Associate Graduate School of Banking at Colorado Members. These firms provide a wide range of Graduate School of Banking-Madison products and services to Minnesota banks, including Haberfeld accounting, legal counsel, investment services, branch HTG Architects redesign and architecture, technology solutions, IntraFi Network insurance products, cash management solutions and Jellum Law, P.A. enterprise risk management. Kasasa Locknet Managed IT Associate Members also provide valuable educational Loffler Companies, Inc. content to MBA member banks through articles M | J | B Law published in MBA News, free webinars and as faculty Midwest Bankers Insurance Services for some MBA educational programs. MoneyGram International Ncontracts Thank You to Our 2021-2022 Network Center, Inc. Sponsors! Northland Securities, Inc. PCBB The MBA is very grateful for the sponsorship we Promontory MortgagePath receive for MBA schools and conferences, including PULSE, a Discover Company the Annual Summit, Women in Banking Conference, Purple Wave Auction Commercial Lending School, CFO Conference, Reich & Tang Leadership Development Academy, and the Operations Remedy Consulting & Technology Conference. Their support is critical to RSM US LLP ensure that we offer the best possible experiences and SBS CyberSecurity, LLC greatest value to MBA member bankers. Scantron Technology Solutions SDN Communications Abrigo SHAZAM American Bankers Association Stifel Financial Anastasi Jellum Strategic Resource Management (SRM) Ascensus Superior IRA & HSA BancAlliance The Baker Group Bell Bank Travelers BHG Financial UFS LLC BMO Harris Bank - Correspondent Banking UMB Bank ByteSpeed Union Bank & Trust CASE Financial United Bankers’ Bank CliftonLarsonAllen LLP Vantage Point Solutions Computer Integration Technologies, Inc. wild | crg CoNetrix Winthrop & Weinstine, P.A. Consolidated Communications Wipfli LLP Country Club Bank Cyber Advisors, LLC Dakota Carrier Network (DCN) Edge One Eide Bailly LLP The Champion for Minnesota Bankers 17

Vendors & Partners Endorsed Vendors ensuring safe, secure environments in nursing homes, HUD communities, and veterans homes. Through our Endorsed Vendor program, the MBA and With hundreds of banks already participating in our its for-profit affiliate – MBA Insurance & Services, Inc. program, we are protecting thousands of seniors and (MBA ISI) – selectively identify and vet products and veterans across America. services that have a significant potential to strengthen the business of banking in Minnesota. MBA member KeyState Captive Insurance Program banks also receive discounts on these products and KeyState Companies is a leader in helping banks services, putting the combined buying power of all form and manage a captive insurance company. Minnesota banks to work for you. Their captive insurance company program works in conjunction with each bank’s existing bank insurance The MBA proudly endorses the following products and coverages, giving the bank an effective way to manage services and we encourage you to learn more about some of the bank’s business risks. them by clicking on the Vendor Relationships tab at www.minnbankers.com. Ascensus Fully-Administered and Ncontracts Third-party Vendor Management Self-Administered IRAdirect Ncontracts is a leading provider of vendor and contract The MBA endorsement covers the Ascensus Fully- management services for the financial institution Administered and Self-Administered IRAdirect industry. Ncontracts combines turnkey vendor program. This fully supported, web-based program has management services with a comprehensive and built-in compliance systems that help ensure your bank fully-customizable vendor and contract management properly establishes its IRA, HSA and ESA accounts, application. Insightful summaries of vendor contracts cutting back the number of technical errors that can and alert notifications assist clients in proactively occur using paper forms. Banks can choose to continue managing vendor relationships. administering these accounts, or they can outsource the tax reporting and other administration functions to Ascensus by choosing the Fully-Administered option. Turnkey CRA Compliance Program ODP Business Solutions Bank-specific Discount Program CRA Partners is a turnkey CRA compliance program established to create safe and secure living As an Office Depot customer, you will have access to environments for the elderly with help from local Office Depot’s exclusive Business Solutions Division banks. We have helped hundreds of community banks website, strategic brand name partnerships, multi- across the country protect residents of low-income billion dollar buying power, and ease in economizing senior housing facilities through our trusted Senior your operations. Enjoy customer service from Office Crimestoppers program. Depot that is unmatched in the industry. If you are an employee of an MBA member organization, you can Partner with us and you will satisfy your bank’s register for an Employee Discount Account at the link CRA requirements, boost your community relations found in the Endorsed Vendor section of the MBA’s profile and develop new business relationships, while website. 18 MBA News | July/August 2022 | www.minnbankers.com

Shred-It In FY 2016-17, the MBA entered into a co-marketing partnership with Discover Debit to promote this Shred-it specializes in providing a tailored document product as a preferred debit card solution for and media destruction service that allows businesses community banks. to comply with legislation and ensure that the client, employee and confidential business information is kept secure at all times. Through their strict chain- of-custody processes, reliable on-time service and a global network of local service centers, Shred-it provides the most secure and efficient confidential information destruction service in the industry. Partners Secure Banking Solutions TRAC™ Software In addition to our Endorsed Vendors, the MBA very The MBA continues its partnership with TRAC, an selectively enters into co-marketing partnerships with integrated cybersecurity risk management software, vendors offering unique technology products that provided by Secure Banking Solutions. This web-based benefit Minnesota banks and where co-marketing software simplifies the risk management process provides the best solution to educate MBA members and allows the user to make more informed security about the product and its benefits. decisions. Minnesota banks are using over 400 modules of the TRAC software. Trusted, Regulatory Compliance Experienced Lending Documentation Legal Advisors SBA Advisory Collections for Banking and Financial Foreclosures Services Companies Loan Restructures & Workouts Litigation Lender Rights & Remedies Contact Our Banking & Finance Team Scan the QR code, call 651-439-2878 or email [email protected]

Five Ways to Improve Efficiency in Your Bank | by Loren Prairie With the current pressure on margins and profitability, operating efficiency is increasingly important. A culture of continual process improvement is a key component to achieving optimal efficiency. 5 WAYS TO IMPROVE WORKFLOW EFFICIENCY 1. Standardization – is everyone doing the same job and doing it the same way? • Is there a defined process? “The first rule of any • Is there a written procedure? technology used in a • Do we train staff on the right way to do the function? business is that automation • Is there tracking to assure that the process is followed? applied to an efficient 2. Automation – are we fully utilizing the capabilities of automation? operation will magnify the • Are there features and functions of automation that we have but don’t use? • Do we have “owners” of our technology who are our in-house experts? efficiency. • Is there new/better technology that we can cost-justify? The second is that 3. Elimination – Are there tasks that we can simply stop doing? automation applied to an inefficient operation will magnify the inefficiency.” -Bill Gates • Are we duplicating on paper what is done electronically? • Is there more dual control and check back than we need for the risk? • Is it necessary to review every item? • Can we reduce the number of items that are reviewed? “Continual improvement is 4. Workflow – Do we have the right work on the right desk? an unending journey.” • Should some functions be centralized? -Lloyd Dobens • Are the administrative and processing functions in the right place? 5. Productivity – Do we have the right staff doing the right things? • Do we have the right skills in our staff? • Do we measure activity volumes / by department / by staff member? • Do we have standards? • Do we track errors (quality)? • Do we provide feedback to our employees on their performance? While those seem straightforward, implementation is more difficult. All banks have defined processes for completing a loan, but few banks have a process for review and improvement of workflow. Various tasks and functions seem to get done and very few banks have someone tasked with workflow improvement or analyzing the way we work – and what’s behind it. The concept of continuous process improvement is something many community banks are just beginning to focus time and resources on.  20 MBA News | July/August 2022 | www.minnbankers.com

ConferenceBank Financial Officers September 8, 2022 Loren Prairie President PCI Performance Management The Champion for Minnesota Bankers 21

The Battle for Deposits is Heating Up: Are you Ready? | by Achim Griesel and Dr. Sean Payant Core deposits, especially low-cost core deposits, have long been deposit betas in the 25-50% range over the next two to three years. the key driver for franchise value in the financial services industry. For financial institutions, that means passing 25-50% of these rate That said, with the start of the pandemic and the ensuing influx increases on to our depositors. That is significant, and the response of cash from stimulus checks and increased personal saving rates, will not be the same for all institutions. financial institutions saw so much excess liquidity that bankers Given this variety of possible responses, we anticipate seeing began to question the value of any deposits, including low-cost rate offers from financial institutions—most likely led by online core deposits. and digital banks, with community-based financial institutions Total deposits in FDIC-insured banks grew by over five trillion following at a slower pace and on a smaller scale. Assuming the from the end of 2019 to the end of 2021. In the two years prior, bulk of this effort won’t happen until 2023 and beyond, the question deposits had grown just over one trillion. These same trends on a financial institutions must ask themselves is, “What should we do smaller scale held true for credit unions. now?” Peak deposit growth happened in 2020. By September 2021, the Institutions with low-cost and less rate-sensitive funding are well personal saving rate was back at pre-pandemic levels. Deposits at positioned for any rate environment, but especially for the one financial institutions continued to grow, but at a much slower rate we are about to enter. The chart on the next page illustrates what than in 2020. Finally, in March 2022, the data showed personal the deposit cost advantage looks like when a financial institution checking account balances dropped for the first time since Q3 2021. has a lower cost of funding. The rate environment we are entering Personal Saving Rate 35 30 25 Percent 20 15 10 5 May 2019 Sep 2019 Jan 2020 May 2020 Sep 2020 Jan 2021 May 2021 Sep 2021 Source: U.S. Bureau of Economic Analysis (fred.stlouisfed.org) In addition, consumer spend is now soaring. According to a recent is similar to what we saw in 2016–2018. As rates were rising, the article in Bloomberg, the top four banks in the nation have seen a deposit cost advantage over peers dramatically changed. In a low- 27% average increase in consumer credit card spending for Q1 of rate environment, it was small, but grew to 63bp when rates were 2022 vs. Q1 of 2021. at the level we expect to see again in 2023–2024. Inflation is at record highs, and Federal Reserve Chairman Jerome Strategically growing low-cost funding today is the key to Powell indicated in his most recent speech that multiple 50bp rate successfully positioning your organization for tomorrow. Even if hikes should be expected in the remainder of the year, and as early you have excess liquidity at the moment, there isn’t a better time as June and July. to grow low-cost funding by growing your customer base and Unlike in previous rising-rate environments, financial institutions increasing your checking and savings deposits. The majority of haven’t felt the same pressure to raise rates yet in light of the excess these funds will be non-interest bearing, and those that are interest liquidity in the system. That said, financial services analysts expect bearing will be at the lowest rates. 22 MBA News | July/August 2022 | www.minnbankers.com

To position your financial institution for the coming battle for If your strategic goals include low-cost funding and a strong deposits, it is imperative that you: (1) offer compelling retail and position in any rate environment, you have to be intentional about business deposit products; (2) remove barriers to growth (e.g., growth. If you focus on growing core relationships, you will not evaluate your Customer Identification Program); (3) use data- have to follow other institutions up and down the rate cycles.  driven targeted marketing to reach high-probability conversion prospects; and (4) equip your employees with the skills to capitalize on every opportunity every time. Achim Griesel Dr. Sean Payant President Chief Strategy Officer Haberfeld Haberfeld The Champion for Minnesota Bankers 23

Q&A - LEGAL, DENTAL Counsel’s Corner Q: We’ve got a customer who wants to purchase a lake home, but they asked if they could purchase it under an LLC. Can they Keith Johnson do that? MBA Associate Counsel A: Yes, an LLC can purchase property in Minnesota. This is not [email protected] unheard of to be done by wealthy individuals. The reasons for doing this vary, and there may be more than one reason. The LLC Q: Should an account be jointly owned by two business entities, member may desire to rent out the lake home, or the member like two corporations or two LLCs, when the business entities may desire to maintain it as a second home that only they occupy. are closely held by the same individual? Another possible reason that this person wants to purchase a lake A: We get this question quite often here. Usually, we just give a home under an LLC is to attempt to shield that particular asset simple answer—no. An account for a business organization, like a from any creditor claims that person may have individually or corporation or an LLC, is by its very nature an individual account. from other business ventures. There may also be some tax reasons The only “person” listed on the account title is the business entity. involved as well, although that’s a question best left to the CPAs. If this were possible it would create a number of issues. One such But to the question itself, yes, LLCs can purchase these assets the issue could be the liability each business would have to its own same as they can for other buildings and assets. Regardless of what shareholders or members. The very moment a bank would make they do with it (like if the owner plans to occupy it as a primary an account jointly held, each respective business could be liable to residence), the important thing for the bank is that it can make that its respective shareholders and members for allowing access to the loan. It would not be subject to TRID. Regulation Z in 12 C.F.R. § entities’ assets like this. On the bank’s side, the bank might even be 1026.3(a)(2), and 12 C.F.R. § 1026.3(a) comments 9 and 10 cover held liable for knowingly allowing the business entities to do this. this situation and states that it is an exempt transaction as business, This often arises when the lines between owner and business are commercial, agricultural, or organizational credit.  blurred because it is closely held by one person. From the bank’s point-of-view, the “customer” is the corporation or LLC, not the For more information and members only information on legal shareholder or member opening it. These business owners often matters in banking, log onto minnbankers.com, and click on want to do this out of convenience. The entire reason for establishing “Legal and Compliance.” a corporation or LLC is to limit the owner’s liability. Ignoring the separate nature of the business entity is one reason why a court Ask the Agent may decide to disregard the corporate nature and “pierce the corporate veil” to hold a shareholder or member liable for a debt Ashley Reetz or obligation of the business entity. In short, banks should always Plan Administrator/Insurance Agent refuse to do this. It is important that business owners respect the corporate formalities and responsibilities that come with owning a [email protected] business, or multiple businesses. Q: Are the bank’s employees, like tellers and personal bankers, Q: An employee is inquiring about COBRA, due to termination eligible for the frontline worker pay bonus in Minnesota? of their employment. If they choose the COBRA option, when A: Unfortunately, no, bank employees are not eligible for this. The does COBRA start and how long are they eligible to stay on definition of “frontline sector” does not include banks under S.F. COBRA? 2677 Art. 2 Sec. 2. The financial services sector, like the insurance A: Assuming the employee pays all required premiums, COBRA sector, was not part of the definition here. Some banks have coverage starts on the date of the qualifying event, and the length questioned whether the bank may fall under “retail.” A reasonable of the period of COBRA coverage will depend on the type of question, after all people walk into bank branches for various qualifying event which caused the qualified beneficiary to lose services and products, not unlike a retail store. The problem is that group health plan coverage. financial services is a specifically named sector, so it’s not under For “covered employees,” the only qualifying event is termination of retail. The decision to not include banks is even more unfortunate employment (whether the termination is voluntary or involuntary) in light of the obvious need for people to have had access to money including by retirement, or reduction of employment hours. In and credit during the pandemic, and the fact that many banks had that case, COBRA lasts for eighteen months. to deal with much of the same risks and difficulties as other types If the qualifying event is the death of the covered employee, divorce of businesses that are eligible for the frontline worker pay. or legal separation of the covered employee from the covered employee’s spouse, or the covered employee becoming entitled to Medicare, COBRA for the spouse or dependent child lasts for 36 months.  24 MBA News | July/August 2022 | www.minnbankers.com

Q&A COMPLIANCE Compliance Query XVI. Requirement to Escrow Flood Insurance Premiums and Fees–Loan Exceptions Tom Boswell-Healey XVII. Force Placement of Flood Insurance Associate Counsel/Compliance Consultant XVIII. Flood Insurance Requirements in the Event of the Sale or Transfer of a Designated Loan and/or Its Servicing [email protected] Rights XIX. Mandatory Civil Money Penalties Q: What is different in the revised Interagency Questions and The revised Flood Q&As include only three new Q&As. I. Answers Regarding Flood Insurance? Applicability 13 is the first new Q&A and addresses triggering A: On May 11, 2022, the Federal Deposit Insurance Corporation events. Applicability 13 states that a triggering event occurs when (FDIC), the Office of the Comptroller of the Currency (OCC), a designated loan is made, increased, extended, or renewed (MIER the Board of Governors of the Federal Reserve System (FRB), and or MIRE) and banks must follow the regulation as applicable. other agencies issued revised Interagency Questions and Answers Applicability 13 provides examples that are not triggering events, Regarding Flood Insurance (Flood Q&As). The revised Flood including: Q&As reflect changes to federal law regarding flood insurance in 1. Purchasing a loan from another lender (including partial recent years and consolidate proposals from July 2020 and March 2021. The revised Flood Q&As replace and rescind the prior final interest by participation or syndication) Q&As from 2009 and updates from 2011. The revised Flood Q&As 2. Loan modification that does not increase the loan amount or also reorganize the Q&As by topic, instead of solely a numerical list, to aid readers in finding and reviewing flood insurance extend/renew the loan terms information. The reorganized topical headings are: 3. Assumption of a loan by another borrower I. Determining the Applicability of Flood Insurance 4. Remapping a building securing a loan into a SFHA Requirements for Certain Loans (Appliability) X. Amount 10 is the second new Q&A and addresses blanket II. Exemptions From the Mandatory Flood Insurance policies covering multiple buildings with a deductible that may Purchase Requirements be higher than the insurable value of a covered building. Amount III. Private Flood Insurance–Mandatory Acceptance 10 clarifies that any blanket flood insurance or blanket multi- IV. Private Flood Insurance–Discretionary Acceptance peril policy is acceptable, regardless of whether a per-occurrence V. Private Flood Insurance–General Compliance deductible exceeds the insurable value of any single building. XII. VI. Required Use of Standard Flood Hazard Determination Condo and Co-Op 9 is the final new Q&A and addresses NFIP Form coverage of non-residential condo units and residential condo VII. Flood Insurance Determination Fees units in a non-residential condo building. Condo and Co-Op 9 VIII. Flood Zone Discrepancies clarifies that NFIP coverage is not available for either condo type; IX. Notice of Special Flood Hazards and Availability of therefore, loans secured by one will not be a designated loan. You Federal Disaster Relief can find the revised Flood Q&As in FDIC FIL-20-2022, OCC X. Determining the Appropriate Amount of Flood Bulletin 2022-16, and FRB’s May 11, 2022 press release. Insurance Required (Amount) XI. Flood Insurance Requirements for Construction Loans Q: Will the Department of Housing and Urban Development XII. Flood Insurance Requirements for Residential (HUD) ever update its Servicemembers Civil Relief Act Notice Condominiums and Co-Ops (Condo and Co-Op) Disclosure, which has an expiration date of 3/31/2021? XIII. Flood Insurance Requirements for Home Equity Loans, A: Yes, HUD has recently updated this form. There are no Lines of Credit, Subordinate Liens, and Other Security substantive changes to the form, which is why the updated form Interests in Collateral Located in an SFHA continues to show the 6/2017 revision date. This form is required XIV. Requirement to Escrow Flood Insurance Premiums and each time that a borrower, on a principal residence secured home Fees–General loan, becomes delinquent on payments. The notice must be XV. Requirement to Escrow Flood Insurance Premiums and provided prior by the time that the homeowner becomes 45 days Fees–Small Lender Exception delinquent on the home loan. You can find the updated form in PDF as HUD-92070 online at: https://www.hud.gov/program_ offices/administration/hudclips/forms/hud9#group2.  The Champion for Minnesota Bankers 25

BANKERS ONTHE MOVE Molly Jungbauer and James Rogers III United Bankers’ Bank (UBB) is have been elected to the Merchants pleased to announce the addition of Financial Group, Inc. (MFGI) Board Katie Ferrell, CRCM, CAMS, and of Directors. Jungbauer, CPA, has Sandy Panella, CRCM, to the UBB been CEO of Hollstadt Consulting, a Compliance Services Team. Ferrell technology consulting firm based in comes to UBB with nearly 20 years of Eagan, MN, for the past 10 years. Rogers is Chief Business experience supporting financial institutions through regulatory Development Officer for Mayo Clinic, where he has been a compliance, risk management, audit, and retail operations and contributing member of the institution’s leadership team since lending. Panella has been in the community banking industry for joining as its first Patent attorney in 2000. almost 20 years. WNB Financial is pleased to announce that Scott Tom Sanvick has been promoted to Sr. Vice Ulik has joined the Bank as a Mortgage Loan Officer President, Commercial Lending. Tom joined in Holmen, Wisconsin. He brings over 20 years of Northeast Bank in 2014 as a Vice President industry experience, most recently with Altra Commercial Lending. Federal Credit Union. WNB Financial is pleased to announce Zach Neuman has been promoted from Vice the election of Erica Jerowski and President to Senior Vice President, Credit at Matt Becker to serve on the Bank’s Northeast Bank. Since joining the organization in Board of Directors. Jerowski’s career 2010, Zach has continually taken on additional with WNB Financial spans 23 years. responsibilities within the credit function of the She has held the role of Senior Vice bank, consistently performing at the highest levels. President & Chief Operating Officer since 2021. Becker has served BankCherokee has promoted Andrew Gesell to as WNB Financial’s Senior Vice President & Chief Financial Officer President. Gesell has more than 30 years of com- for the last five years. munity banking experience, most recently as SVP United Bankers’ Bancorporation, Inc. is pleased to Commercial Banking. announce the election of Rachelle Nelson to the United Bankers’ Bancorporation, Inc. (UBBI) and BankCherokee welcomes Bryan Frandrup as Chief United Bankers’ Bank (UBB) Boards of Directors. Lending Officer. A long-time community banker Rachelle Nelson is the President and CEO of the and commercial lender, Frandrup will lead the First National Bank of Milaca since January 2021 Commercial Banking Team. and has served on their Board of Directors since 2020. Drake Bank welcomes Bill Miller as Vice President BankCherokee welcomes Scott Beuning as Chief Commercial Banker. Miller, a third-generation Strategy Officer. Beuning started his professional banker, has over 40 years of banking experience and banking career with BankCherokee and is rejoining building relationships, helping businesses grow and them after spending 20 years helping to start and meet their goals. grow a new bank, as well as working in his family- owned bank. Cindy Harrison has been promoted to Senior Vice President/Chief Credit Officer at Merchants Bank. Community Bank Owatonna is Harrison succeeds Mark McGrory, who retired in pleased to announce the addition of May after a 35-year career with Merchants. She Nikki Gieseke and the promotion of will be a member of the Company’s Executive Roxanne Rezac. Gieseke has joined Leadership Team and oversee all credit operations the bank as Project Manager/ for the Company. Information Technology Officer with WNB Financial is pleased to announce that extensive experience in project management, technical support, Christopher Rand has joined the Bank as Vice and computer training/consulting. Rezac has been promoted to President and Trust Manager. Rand brings over 20 Loan Operations. Roxanne has more than 10 years’ experience as a years of experience in the wealth management area. personal banker. She joined Community Bank Owatonna in 2020. 26 MBA News | July/August 2022 | www.minnbankers.com

WNB Financial is pleased to announce that Jason Grossklaus has joined the Bank as Vice President and Business Banking Officer in Holmen, Wisconsin. Grossklaus brings 16 years of commercial lending experience, most recently with United One Credit Union and Altra Federal Credit Union. First National Bank of Moose Lake is pleased to announce Dan Korbel has been promoted to Chief Credit Officer. Dan has been with First National Bank of Moose Lake since March of 2021 as a Senior Commercial Loan Officer. WNB Financial is pleased to announce that Mark Kulig has joined the Bank as Senior Vice President and Chief Retail Officer. Kulig is responsible for the overall leadership of Retail Banking for WNB and is a member of the Senior Leadership Team. ANNOUNCEMENTS Drake Bank announces 20 years of community banking and building better futures. Drake Bank was chartered on May 1, 2002, being the first new bank chartered in St. Paul for 40 years. Since its inception, Drake Bank has focused on building relationships with the community and small businesses to help build better futures. WNB Financial is pleased to announce four $500 donations to humane societies in each of the four communities it serves. These donations were made possible from “Jeans Day” funds, where employees choose to pay $2 each Friday to wear casual jeans during the workday, with the proceeds benefitting non-profit organizations. If you have an announcement you would like to include, please send it to Carla Bush at [email protected]. Also look for Bankers on the Move in the “Human Resources” section of minnbankers.com.

Welcome Our New Associate Members Arctic Wolf Contact: Matt Brei 8939 Columbine Rd [email protected] Suite 150 608.630.9409 Eden Prairie, MN 55347 Blanchard Consulting Group is a national compensation Contact: Logan McAlpin consulting company. Our mission is to deliver independent [email protected] compensation guidance to financial institutions to help them 651.304.0875 attract, motivate and retain their key employees and directors. Arctic Wolf® is a global leader in security operations, delivering the first cloud-native security operations platform to end cyber Emergent Software risk. Now deployed to more than 2,300 customers worldwide, 7650 Edinborough Way the Arctic Wolf® Platform delivers automated threat detection Suite 200 and response at scale, and empowers organizations of any size to Edina, MN 55435 establish world-class security operations with the push of a button. Contact: Jamie Anderson [email protected] Avison Young 612.474.2760 1665 Utica Ave S. Emergent Software provides IT transformation services through Minneapolis MN 55416 custom software development, SQL Server database administra- Contact: Thomas Dunsmore tion, and Microsoft cloud migrations to Azure and M365. [email protected] 612.913.5647 Hawthorn River Software Avison Young is built on the belief that commercial real estate 205 Hawthorn Meadows Ct isn’t just about the buildings and the square footage and the O’Fallon, MO 63366 occupancies. At its best it’s about spaces and places that improve Contact: Jon Rigsby lives and help businesses thrive; for the employees, citizens and [email protected] communities that make impact matter. 314.220.5009 Hawthorn River provides Community bankers an easy to NFR Communications use loan origination solution tailored to their needs. With 250 Prairie Center Dr intelligent workflow and automation tools supporting the Eden Prairie, MN 55344 loan from application through booking, bankers benefit from Contact: Greg McCurry improved efficiencies, reduced regulatory risk, and elevated [email protected] borrower engagement 612.268.8495 NFR Communications is a creative hub offering strategic com- Plansmith munications, full-service marketing, and event management 1827 Walden Office Sq expertise. At NFR, you can tap decades-long experience to Schaumburg, IL 60173 achieve 21st-century solutions to your most vexing challenges. Contact: Dave Schwieder [email protected] EverFi 224.639.3981 2300 N St NW With a unique combination of software and advisory service Washington, DC 20037 offerings, Plansmith provides financial institutions with easier, Contact: Ryan Swift more accurate budgeting, asset-liability management, strategic [email protected] planning – and most recently, CECL. 202.251.2400 EVERFI is an international technology company driving social Verafin Inc. impact through education to address the most challenging 18 Hebron Way issues affecting society ranging from financial wellness to St. John’s NL A1A 0L9 mental health and other critical topics. the most competitive Canada multi-million dollar FDIC insured programs, which are widely Contact: Jamie Edgecombe utilized as smart alternatives to money funds and designed to [email protected] improve yield while decreasing portfolio risk. 877.368.9986 Verafin is the industry leader in enterprise Financial Crime Blanchard Consulting Group Management, providing a cloud-based, secure software plat- 6066 Shingle Creek Pkwy form for Fraud Detection and Management, BSA/AML Com- Minneapolis, MN 55430 pliance and Management, High-Risk Customer Management and Information Sharing. 28 MBA News | July/August 2022 | www.minnbankers.com

No Deal: States Slam on Brakes for CU Acquisitions of Community Banks | by Rob Nichols It would have been the largest acquisition of a community bank and business lending capacity. The House bill, which we don’t by a credit union—but word came in mid-June that the deal expect to advance in the Senate, was included as part of a broader was off between VyStar Credit Union and Heritage Southeast package of financial inclusion measures, despite the fact that the Bancorporation, after a failure to receive regulatory approvals. If bill contained no language to ensure that these expanded powers completed, the deal would have made Jacksonville, Florida-based would be used by credit unions to serve underserved communities. VyStar the 13th largest credit union in the nation. If credit unions were serious about promoting financial inclusion, The deal was just one of a growing list of mergers that have been they should welcome the opportunity to demonstrate their announced between tax-exempt credit unions and taxpaying commitment to serving low- to moderate-income communities banks in recent months—but states are starting to sour on the idea. by meeting the same Community Reinvestment Act requirements Earlier this year, the Minnesota Department of Commerce banks must meet. But it’s become clear that credit unions aren’t blocked the acquisition of state-chartered Lake Area Bank by interested in that mission—in fact, recent data has shown a general Royal Credit Union, officially clarifying that state law does not pattern of credit unions opening more branches on net in upper- permit the acquisitions of state-chartered banks by credit unions. and middle-income census tracts and closing more branches on Similar actions have taken place in Colorado, Iowa, Tennessee and net in low- to moderate-income census tracts. Nebraska. It’s wrong for credit unions to try and shoehorn self-serving pieces Meanwhile, the Mississippi state legislature succeeded in passing a of legislation through Congress under the guise of promoting law stipulating that only FDIC-insured banks can acquire or merge financial inclusion—just as it’s wrong for them to exploit their tax with Mississippi-chartered state banks. The law, which goes into advantaged status to subsidize acquisitions of taxpaying banks, pay effect this July, puts a halt to any deals in progress that don’t comply for stadium naming rights or private jets, or open multi-million with the new requirement. dollar headquarters. These are encouraging developments. It’s encouraging that states are starting to scrutinize the credit The decision to merge is, of course, a business decision that union industry more closely. Now Congress must do the same.  must be made at the individual level. But states are increasingly acknowledging that allowing tax-exempt credit unions to gobble Rob Nichols up taxpaying banks—taking them off the tax rolls for good—is President & CEO poor public policy that imposes costs on consumers and taxpayers, American Bankers Association and they’re taking sensible steps to prevent it from happening in the future. The fact that states are beginning to take action is due in no small part to banker advocacy—and it’s a good reminder of the importance of speaking up whenever we see the credit union industry pushing the boundaries of the statutory limits imposed on it by Congress. Unfortunately, those attempts are only becoming more brazen. Recently, the industry lobbied to create a new loophole designed to enable credit unions to greatly expand their fields of membership The Champion for Minnesota Bankers 29

Diversity, Equity, and Inclusion: The Next Challenge for Community Banks | by Jeff Thompson, CRCM Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required federal regulatory agencies overseeing the financial sector to establish joint standards for assessing the diversity policies and practices of the institutions they regulate. The Standards were released in 2015, and each of the agencies reports annually to Congress regarding their progress. Over the past several years, this particular section of the Dodd-Frank Act has gone mainly unnoticed. However, with the present administration and the current mood in our culture, the agencies are once again focused on diversity, equity, and inclusion. This makes it a good time to refresh everyone’s memory on what Section 342 is all about and provide some steps that banks of all sizes can take to prepare for their next examination, where this may be a focus for your regulators. Section 342 required all federal financial regulatory agencies to establish an Officer of Minority and Women Inclusion (OMWI). The OMWI at each agency is responsible for all matters relating to diversity in management, employment, and business activities. Also required by Section 342, each OMWI must develop standards for assessing the diversity policies and practices of institutions regulated by that agency. The Standards adopted by the prudential regulators and the CFPB in 2015, include the following five major sections: 1. Organization Commitment to Diversity and Inclusion 2. Workforce Profile and Employment Practices 3. Procurement and Business Practices – Supplier Diversity 4. Practices to Promote Transparency of Organizational Diversity and Inclusion 5. Entities’ Self-Assessment Section 1 is fairly self-explanatory. If an organization is committed to diversity, equity and inclusion, it needs to come from the top. Boards of directors and senior management teams are expected to demonstrate their commitment via policies, hiring practices, training, and regular reporting of the success of the programs implemented. Section 2 speaks directly to how an organization hires and fosters a diverse workforce. Policies and procedures, attention to equal opportunity practices, outreach to women and minority organizations, outreach to educational institutions, participation in events that promote inclusion, quantitative and qualitative measurements, and holding management at all levels accountable for diversity and inclusion efforts are just a few of the ways the Standards promote diversity in the workforce. Section 3 is a bit trickier, because this is mainly about things that are happening outside your own organization. The Standards encourage the use of minority and women owned businesses as suppliers or third-party contractors. They also suggest that institutions should set goals in this regard and measure how those goals are being met.

Section 4 is all about telling the world about your diversity, equity demographic makeup of its market and work toward a workforce and inclusion policies and practices. that reflects those demographics. The results will vary from Utilizing your website and other communications, institutions institution to institution, but it is important that you create your are expected to promote their own diversity programs including own reality through the self-assessment. the publication of your strategic plan, any policies regarding your In conclusion, if you have not already begun a process of commitment to diversity, and reporting on your progress. determining your diversity, equity and inclusion policies and Section 5 may be the most important section of the Standards, practices, now is a good time to start. We recommend beginning particularly for community banks outside urban centers. Each with Section 5 and your own self-assessment and then creating institution is tasked with developing a self-assessment that sets policies, practices, measurements and controls that are reflective goals, periodically measures those goals, and then revisits the goals of your size and other characteristics. based upon the success or failure of its diversity programs. The reason this is so important is that all five of the Standard sections Jeff Thompson, CRCM begins with, “In a manner reflective of the individual entity’s size Vice President, Managing Consultant and other characteristics.” Your self-assessment is the roadmap UBB Compliance Services to your “size and other characteristics” that drives your ability to implement diversity, equity and inclusion policies and practices. This self-assessment can help ensure that you are staying on track with the spirit of diversity and inclusion programs but only within the context of the reality in which you operate. For instance, a community bank near an urban center is much more likely to have a diverse population from which to draw talent, whereas many rural community banks do not. Nothing in these standards would require a rural community bank to “import” talent into the area that does not necessarily exist. Conversely, the bank a little closer to an urban center should have a deeper understanding of the

Minnesota Bankers Association DLAEECVAAEDLDEORPEMSMHENIYPT Congratulations to the graduating class of 2022! 32 MBA News | July/August 2022 | www.minnbankers.com

Leadership Development Academy Class of 2023 Eric Bakken Jennifer Mathistad Alissa Sandholm Universal Banking Officer VP Retail Sales Supervision Director of Products Citizens Independent Bank Pioneer Bank and Innovation St. Louis Park Saint James Star Bank Eden Prairie Kelly J. Barton Vanessa Mauer Vice President, Branch Manager Interim Head of Retail Daniel Scheffler Farmers & Merchants Savings BankCherokee Market President Bank Saint Paul Frandsen Bank & Trust Lino Lakes Dundas Jill R. Molitor Barry M. Belknap Director of Credit and Fraud Danielle Smith Vice President Strategy Operations Manager Harvest Bank Stearns Bank Equipment Falcon National Bank Kimball Finance Division Foley Albany Dan Bighley Marie Stelling President - Roseville Market Dustin P. Morris CFO/COO Community Resource Bank Chief Financial Officer Peoples State Bank Roseville American Federal Bank Plainview Fergus Falls Ann Erickson Mary Stoick Chief Compliance & Audit Officer Emmet Nath Senior Vice President Stearns Bank N.A. Commercial Loan Officer Sunrise Banks, N.A. Saint Cloud Premier Bank Saint Paul Roseville Alec Fournier Daniel J. Thomsen Operations Specialist Christopher N. Nelson Vice President Lake Central Bank VP Commercial Lending Northeast Bank Annandale Reliance Bank Coon Rapids Faribault Jeremy Johnson Market President Lisa Pfeifle Frandsen Bank & Trust AVP/RE Loan Officer Foley First State Bank Southwest Edgerton Riley Koehn Credit Analyst Nikkie Purvis The State Bank of Faribault Director Operational Risk Faribault Bridgewater Bank Saint Louis Park Dan Korbel Chief Credit Officer Rob Riedel First National Bank of Moose Lake Commercial Lender, VP Moose Lake The Bank of Elk River Elk River Bryan Larson Chief Financial Officer American Federal Bank Fargo

Congratulations! Pioneer Bankers Club Inductees 1972 - 2022 Robert P. Carlson Bob Carlson started his banking career back in 1971 when he joined his father, Quentin W. Carlson, at Peoples State Bank in Comfrey. Bob became the third generation to work at the bank. Over the years Bob has held many positions at the bank and took over as President in 1989. In 1988, the bank acquired First State Bank of New London, Minnesota - now United Minnesota Bank. Bob is still active in banking, serving as President and Chairman of the Board at United Minnesota Bank. Bob has been active outside of the bank, serving on the Comfrey City Council, Comfrey School Board, Comfrey Fire Department, Springfield Golf Course Board, Comfrey First Responders, Spicer First Responders and Faith Church Board. Larry G. Knutson Larry Knutson began his banking career on May 15, 1972, when he went to work at The Citizens State Bank in Olivia. After several years, he moved 15 miles north to work at the State Bank of Blomkest. In 2005, Larry was named president when the bank opened a second office in Willmar and changed its name to Concorde Bank. Larry currently serves as Chairman, President, and CEO. Larry’s philosophy is that you must get down in the trenches to really learn and understand what the challenges are, and you should be willing to see and learn from the perspective of others. Larry says he is grateful for the opportunities he has had and he remains passionate about the independence and the relationships that community banking makes possible. Phyllis Krause Phyllis started with Alliance Bank (formerly known as Lake City State Bank), on April 17, 1972, as a bookkeeper and backup teller. As a bookkeeper, she worked with accounts payable, general ledgers, financial audits and more. In the early 2000s, Phyllis transitioned to the loan side of the bank as an Administrative Assistant. She spends most of her time assisting lenders with loan documents, loan payments, financial tracking, appraisal orders, title insurance orders, and other loan file maintenance. The banking industry has changed a lot over the past 50 years and Phyllis has done a great job evolving and growing in her different positions at the bank. She has been a very important employee, and we have been very fortunate to have her as a part of the Alliance Bank family for the past 50 years. 34 MBA News | July/August 2022 | www.minnbankers.com

Mark Loosbrock Mark is the President of the State Bank of Lismore, a rural agricultural bank in southwest Minnesota. Mark started as cashier on June 1, 1972 and was additionally involved in what is now known as Lismore State Agency. Upon his father’s passing in 1990, Mark ascended to the role of President. Formed in 1900, the bank is rooted in family, with Mark’s grandfather Leo serving as President from 1939-1942 and his father Marvin serving as President from 1974-1990. Mark has also worked with his brother Gary, nephew Troy, and sons Andrew and Matthew. Mark appreciates every person he has worked with, and the mutual respect he and his customers have for each other has meant a great deal during his career. While Mark’s community roots and involvement run deep, he is most proud of his family. Mark and his wife Jeanne have three children, Andrew, Matthew, and Jessica and six grandchildren. Mark Luukkonen Photo and biography unavailable Bruce L. Mathwig Bruce began his banking career in September 1971 with his hometown bank, Citizens State Bank of Green Isle. He then had a nearly twenty years productive tenure with the State Bank of Young America, which subsequently became KleinBank, and eventually Old National Bank. Bruce joined Citizens State Bank Norwood Young America in June 2020 and has been a very welcome addition to the lending team. Bruce grew up on a family farm. He has maintained a deep appreciation for agriculture and his farm customers throughout his career. He is respected for his dedication, skill and knowledge and demonstrates a genuine concern for the well-being of others, Bruce is a true professional! Bruce has been active in many community organizations, including leadership roles. Bruce and Lorinda have been married for 37 years. They have two daughters Jessica and Rachel, and a son Patrick. Donn N. Olson Donn began his banking career in November of 1971 after graduating from Moorhead State College. He has spent all those 50+ years at Farmers State Bank of Hoffman. His positions have ranged from Teller to Assistant Cashier to Cashier, Loan Officer and Assistant Vice President to Vice President; the position he currently holds. He has also held a seat on the board of directors of Hoffman Bancshares for several years. In addition to banking, Donn has been the manager/agent of Hoffman Insurance Agency, Inc. for most of those 50 years. He volunteered on the Hoffman Volunteer Fire Department for 32 years and Hoffman Lions for 50+ years. Donn is married to Brenda and has two daughters and three grandchildren. Jeff Schrempp Jeff didn’t intend to be a lifelong banker when he started his banking career as a coin sorter at Northwestern National Bank in 1972. But with dedication and a supportive bank, he stayed with the bank for 32 years as it morphed into Norwest and then Wells Fargo. In 2004, Jeff became the Market President of Associated Bank at their largest community bank in St. Paul, and then 12 years later joined Union Bank and Trust, a single location, union owned bank started in 1976, as their President/CEO. He’s grateful to the tremendous bankers he has worked with over the years. The Champion for Minnesota Bankers 35

2022 MBA Annual Summit 36 MBA News | July/August 2022 | www.minnbankers.com

Madden’s at Gull Lake, Brainerd The Champion for Minnesota Bankers 37

38 MBA News | July/August 2022 | www.minnbankers.com

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