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June2011 South


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									South Dakota                                                       Volume VIII, Number VI
                                                                                June 2011

Banker                                                                    www.sdba.com

Banker Profile:
2011-2012 SDBA Chairman Bruce Byrum
Pierre, S. Dak
U.S. Postage

 Permit # 43

                                                             Also in this issue...
                                                                       SDBA, SDBIS and
                                                              Foundation Annual Reports

                                                           SDBA 2011 IRA School Preview

                                                          Agencies Work Together to Offer
                                                    Workshop on Generating Opportunities
                                              in SD Under Small Business Jobs Act of 2010

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SDBA Board of Directors                                    South Dakota                                                Volume VIII, Number VI
                                                                                                                                    June 2011
Dave Zimbeck, Chairman
Citibank (South Dakota), N.A., Sioux Falls
Bruce Byrum, Chairman-Elect
First Interstate Bank, Spearfish                           OFFICIAL MAGAZINE OF THE SOUTH DAKOTA BANKERS ASSOCIATION
Steve Hayes, Vice Chairman
Dakota Prairie Bank, Fort Pierre
Bob Rutten, Immediate Past Chairman
Citizens State Bank, Arlington
                                                           Message from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . 4
Term Ending April 30, 2012                                 Zimbeck Reflects on Past Year as SDBA Chairman
Paul Domke, Heartland State Bank, Redfield
Monte Troske, Farmers State Bank, Turton
                                                           From the Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Ken Karels, Great Western Bank, Sioux Falls
                                                           South Dakota Bankers Association Annual Report
Term Ending April 30, 2013
Kim Banks, Peoples State Bank, De Smet                     South Dakota Bankers Insurance & Services Update . . . . . 6
Ron Kristensen, Farmers and Merchants State Bank           Report on Midstates Banking Consortium and
  Plankinton                                               SD Bankers Insurance & Services Annual Report
Term Ending April 30, 2014
Bob Clair, American State Bank, Pierre                     SDBA Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Rick Rylance, Dacotah Bank, Rapid City
George Kenzy, First Fidelity Bank, Burke                   South Dakota Bankers Foundation Update . . . . . . . . . . . . . 9
                                                           South Dakota Bankers Foundation Annual Report
SDBA Staff
Curt Everson, SDBA President                               Interagency Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ceverson@sdba.com                                          Agencies Work Together to Offer Workshop on Generating
Mike Feimer, President of Insurance and Services           Opportunities in SD Under Small Business Jobs Act of 2010
Deb Gates, Administrative Vice President
                                                           Banker Profile: 2011-2012 SDBA Chairman Bruce Byrum .12
debgates@sdba.com                                          Ready to Take the Reins
Alisa DeMers, Publications Coordinator/Exec. Asst.         Washington Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
                                                           Wanted: Bank Advocates
Nadine Kepford, IS/Business Manager
nkepford@sdba.com                                          Ask the Appraiser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Jeanine Dyce, Administrative Assistant                     Ethics Rule: Conduct
Jan Chambers, Marketing Director of Education
                                                           Endorsed Vendor Spotlight:
jchambers@sdba.com                                         Central States Health and Life Co. of Omaha (CSO)                            . . . . 18
                                                           Our History, Strength and Commitment
Michelle Guthmiller, Insurance Specialist
                                                           SDBA 2011 IRA School Preview . . . . . . . . . . . . . . . . . . . . . . 19

Editor: Alisa DeMers                                       Training News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
                                                           Trust Officers Gather for Conference in Fargo
Advertising: If you would like to advertise in South
Dakota Banker, contact Alisa DeMers at                     Bank Notes/Classifieds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
                                                           Educational Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
      South Dakota Banker is a monthly magazine
published by the South Dakota Bankers Association
that is dedicated to enhancing the banking profession
by providing useful and timely information on important
events and trends in the banking industry. Members are
invited to submit news and information.
      The advertisements within this publication do not
necessarily represent endorsed vendors of the SDBA.
With the exception of official announcements, the
SDBA disclaims responsibility for the opinions
expressed and statements made. The editor reserves
the right to refuse any advertisement or editorial copy.
Advertising rates are available upon request.
      Member banks, branches and associate members
receive one complimentary subscription. Additional
subscriptions are available to members at a rate of $45
                                                                              South Dakota Bankers Association
per year. The non-member rate is $90 per year.
                                                                                109 West Missouri Avenue, PO Box 1081
              Serving Bankers Since 1884                                                    Pierre, SD 57501
                                                                               Phone: (605) 224-1653 Fax: (605) 224-7835
                           u                                                            Web site: www.sdba.com
          Message from the Chairman

Zimbeck Reflects on Past Year as SDBA Chairman
By Dave Zimbeck
General Counsel, Citibank (South Dakota), NA, Sioux Falls

                        une signals the beginning of           toot our own horns. We must continue to be advocates for
                        summer and a change in the SDBA’s      our banks and our industry each and every day.
                        leadership. First, I would like to           Looking back over the regulatory landscape of the
                    thank those bankers who afforded me        past two years, we have seen the kind of havoc that
                    the opportunity to have a leadership       Congress is capable of creating for our business when the
                    role in this organization the past 12      stars align. A classic case in point is how the Durbin
                    months.                                    Amendment was attached to the Dodd-Frank Act and
                        I would also like to thank members     passed the Senate without most senators understanding
of the Board of Directors for lending their time and talents   its impact. Even though we have had nearly a year to
to the SDBA. It is abundantly clear that our Association       digest the various provisions of the Dodd-Frank Act, it is
has a solid group of leaders who are dedicated to              clear that we are only at the beginning of a very long
preserving the soundness of banking, making sure that          journey in regard to the regulatory changes to come.
our industry is able to continue serving its customers and           We know our relationships with consumers will
communities in the future, and ensuring the relevance          change. We can expect the style and form of our customer
and effectiveness of the SDBA for the long term. Lastly, I     disclosures and the way we communicate with customers
would like to thank the staff at SDBA and SDBIS for their      will change. We will also be expected to compile data so a
dedication and service to all of our members. Thank you        relatively small number of anonymous bureaucrats with
Curt, Deb, Mike, Alisa, Nadine, Jan, Jeanine and Michelle.     little if any understanding of our industry can define the
     As this is my last monthly column, I’d like to give one   banking industry’s role in our economy for the betterment
last “shout out” to an individual who has done a lot for       of all segments of society. While this may be a noble goal
the banking community for a number of years. As most of        that looks good on paper, the ultimate form this social
you already know, Roger Novotny retired last month as          engineering experiment takes may prove to be something
Director of Banking. Roger exemplified class with his          completely devoid of common sense.
steady hand during some fairly tumultuous times for the              One thing that has been constant throughout this
industry. But perhaps his greatest legacy was the role he      process is the SDBA will be there to serve your institution.
played in the professional development of the                  We continue to have a close relationship with our
examination staff of the Division of Banking during his        members of Congress, and each of them have clearly
tenure. He leaves the Division well positioned to do the       demonstrated their understanding of the importance of a
important work of ensuring the safety and soundness of         sound banking industry for the good of South Dakota. We
South Dakota banks, as he rides off into the sunset like his   also enjoy almost instant access to key ABA staffers who
hero, Roy Rogers. Happy trails indeed, Roger.                  advocate on our behalf across a myriad of issues of
     Prior to becoming chairman, I wanted to emphasize         importance to banks of all types and sizes. Throughout
the importance of advocacy to our industry. This started       the political uncertainty surrounding consumer financial
several years ago when we instituted a survey of               regulation that is currently a way of life in Washington,
members to gather information and publish the amount of        Curt and the SDBA Board will remain engaged to help
time and money that South Dakota banks contribute to           shape policy whenever and wherever possible.
the greater good of their communities. Last year, we took            Please step forward when you are asked to let your
a significant step forward when we launched the South          voice be heard in Washington. Once the regulations are
Dakota Banks Make a Difference project.                        adopted and implemented, SDBA will be there with
     The effort that was put forth last fall was amazing. To   training resources to ensure that migration to the new
have more than 20 different banks competing in the same        regulatory environment will be as painless as possible.
market and a number of other banks from across the state             Thank you again for allowing me the opportunity to
work together in a cooperative effort to do so many            serve your Association this past year. We have a bright
positive things for our communities was outstanding. I         future ahead, and with the sound leadership and
was never so proud to be a banker and a part of this           guidance of your new chairman, Bruce Byrum, and new
Association, and I thank every one of you who took part        chair-elect, Steve Hayes, the SDBA is in a great position to
for the betterment of our communities and our industry.        meet the needs of South Dakota banks into the future. u
     My sincerest hope is that bankers continue to reflect
on all of the things they do as stewards in their
communities and offer gentle reminders of our service to        Dave Zimbeck is general counsel for Citibank (South
the public and political leaders from time to time. While it    Dakota), NA, in Sioux Falls. You can contact Zimbeck at
generally goes against our nature, sometimes we have to         (605) 331-1630 or david.zimbeck@citi.com.

4   www.sdba.com                                                                       South Dakota Banker u June 2011
          From the Executive Office

South Dakota Bankers Association Annual Report
By Curt Everson
President, South Dakota Bankers Association

                    Government Relations: South Dakota         effective lines of communication between ag producers’

                           he general elections of 2010 saw    primary lenders and input suppliers who might be asked
                           the Republican Party strengthen     or who might seek to offer short-term credit to those
                           its measure of control over both    producers. I believe both parties left that meeting
                    the legislative body and the executive     understanding ag producer and lender interests are not
                    offices housed in the State Capitol. The   well served by unexpected surprises. It is likely bankers
                    immediate challenge placed before          will meet with members of the Grain and Feed Dealers
                    newly-elected Gov. Dennis Daugaard         Association sometime later this year. We will explain our
                    was how best to deal with a daunting       principles and why they are important to assure the
structural budget shortfall. The national recession brought    stability and availability of general operating credit for
about year-over-year declines in major revenue sources         South Dakota’s ag producers But, if legislation like SB157
including the sales tax, contractors’ excise tax and bank      should appear in a future legislative session, SDBA will
franchise tax. The recession also created significant          continue its opposition. Stay tuned and involved.
growth in state spending for various medical services as
the numbers of people enrolled in the Medicaid Program         Government Relations: National
swelled, particularly in terms of children of those newly           Who knew that an 11th-hour Senate amendment to
unemployed or from low-income households in general.           the massive Dodd-Frank Wall Street Reform and
     Gov. Daugaard proposed a general 10 percent across-       Consumer Financial Protection Act of 2010 would become
the-board budget cut as the primary means to eliminate         the focus of the banking industry’s grassroots lobbying
the structural deficit and to avoid the use of one-time        efforts for the past 12 months? Sen. Richard Durbin (D-Ill.)
funds to perpetuate ongoing spending. While the                offered an amendment to put the Federal Reserve into the
Legislature ultimately made some changes to the relative       business of setting allowable rates for interchange fees for
distribution of the budget cuts, they did implement base       merchant-originated debit card transactions. In order to
budget cuts totaling about $127 million.                       get the required 60 votes for passage of his onerous
     The dominating presence of the state budgetary            amendment, Sen. Durbin shopped an exemption for
debate relegated most other legislative issues far into the    financial institutions under $10 billion in assets. Truth be
background. But there was one legislative issue which          told, Sen. Durbin originally proposed an exemption only
caused considerable concern among bankers and resulted         for institutions under $1 billion, but needed to up the ante
in significant work for the SDBA’s lobbying team. The          in order to convince enough Senators that only the largest
South Dakota Grain and Feed Dealers Association                financial institutions would be affected by capping
brought a proposal in SB157 to create a super priority,        interchange fees at a rate which would only cover a
non-consensual statutory lien for any seller of ag inputs      portion of marginal costs associated with any particular
who decided to finance the purchase and or the                 transaction. To their credit, both of South Dakota’s
application of those inputs and who ultimately didn’t get      senators saw through Sen. Durbin’s arguments, voting
paid for the goods or services rendered.                       against it.
     The banker leaders of the SDBA analyzed the pros               Because bankers representing the entire size range of
and cons of SB157 and developed a set of four principles       institutions recognized that a two-tiered pricing structure
which led to the defeat of SB157 in the Senate Agriculture     for debit interchange fees cannot work in a competitive
Committee on a 7-2 vote. Those four principles were: 1)        banking and retail marketplace, the SDBA has engaged a
lien priority – lien priority should be determined in          multi-faceted approach to informing elected officials,
accordance with existing UCC doctrine – first in time          opinion leaders and consumers of the undesirable impacts
means first in right; 2) release of lien – once satisfied, a   of putting the Federal Reserve into the role of setting caps
lien must be released in accordance of the UCC; 3)             on debit interchange fees. Our efforts have included:
consensual vs. unilateral liens – liens must require the            l Multiple face-to-face meetings between bankers
consent of the borrower; and 4) expansion of untaxed,          and South Dakota’s congressional delegation.
unregulated lending – SDBA opposes expanded legal                   l Op-ed pieces in several daily newspapers.
authority for unregulated, untaxed lenders. The SDBA                l Interviews with radio and newspaper reporters.
and members opposed SB157 since it included provisions              l Banker panel at business/economics forum of
in direct conflict with SDBA’s adopted principles.             South Dakota Chamber of Commerce & Industry.
     During the 2011 interim, bankers have already met              l Service on ABA Interchange Task Force.
with finance officers from the ag cooperative industry to           l Comment letters to banking regulators.
talk not only about SB157, but also to help develop                                                     Continued on page 21

South Dakota Banker u June 2011                                                                       www.sdba.com          5
          South Dakota Bankers Insurance & Services Update

Report on Midstates Banking Consortium and
SD Bankers Insurance & Services Annual Report
By Mike Feimer
President, South Dakota Bankers Insurance & Services Inc.

                           nce a year, 15 banking                  Wolf & Company P.C.: Joseph Romanello, WolfPAC
                           associations in the Midwest get    national sales manager, www.wolfpacsolutions.com
                           together to share ideas and have        In 2004, Wolf & Company, P.C., introduced WolfPAC
                  the opportunity to listen to                Integrated Risk Management (WolfPAC) – a secure, online
                  presentations given by a select number      suite of risk assessment tools and risk management plans
                  of vendors.                                 that incorporate the elements of enterprise risk into a
                       A special thanks to Marilee Davis      single, integrated solution. WolfPAC is used to help
                  with the Iowa Bankers Association, who      automate a financial institutions’ risk management
has been in charge of putting this event on for a number      program and is automatically updated to reflect changes
of years and has all the contacts to make it work. This       in regulations and examination standards. With WolfPAC,
gathering is very affordable for everyone to attend; the      financial institutions can assess risks and controls for IT,
participating vendors are gracious in supplying hotel         privacy, vendor, compliance and other operational risk
rooms and complimentary meals. This year was no               assessments and view centralized results across the
exception.                                                    enterprise. Robust reporting allows management to
    I am already working with one vendor with whom            analyze controls in relation to risk, provide
every bank can participate, with more to come on that         documentation for examiners, benchmark results against
opportunity. A special thanks to the following companies:     peer institutions and evaluate the institution’s risk profiles
                                                              against industry best practices. The result is significant
     SNL Financial: Chris Gill, director, community bank      efficiency gain across the institution’s enterprise risk
business development, www.snl.com/bank                        management program.
     For more than 20 years, SNL has been recognized as
the gold standard for banking data, news and insight.             Legosys Solutions: Rob Newberry, president,
SNL’s database includes detailed profiles on more than        www.legosyssolutions.com
20,000 U.S. financial institutions, including all publicly-       Legosys Solutions is a professional services and
traded banks and thrifts, privately-held institutions and     technology firm based in Des Moines, Iowa. Legosys
credit unions. SNL is the trusted information partner for     Solutions offers a wide range of business disciplines and
49 of the 50 largest commercial banks in the U.S. and more    products to the financial services industry. Recent actions
than 500 community banks nationwide, as well as a             by regulatory authorities have resulted in the
number of national and state banking associations.            promulgation of new and complex banking regulations.
     l Peer Analytics: SNL’s data and pre-built Excel         Legosys Solutions is prepared to assist clients in
models help bank executives analyze their balance sheet       addressing the complex and numerous regulatory
and income statement performance against peers and            requirements. Through strategic alignment, process
their UBPR peer group.                                        improvement, risk management, technology integration
     l Branch Analytics: SNL offers a powerful tool,          and software development, Legosys Solutions can help
including a sophisticated mapping application that            you through these challenging times.
enables their clients to quickly perform in-depth market
studies integrating bank branch, deposit market share and         EverFi: Ray Martinez, www.everfi.com
demographic data.                                                 EverFi is the nation’s leading financial literacy
     l M&A Analysis: SNL offers powerful tools that           software company. This award-winning program teaches,
enable clients to screen for transactions in their            assesses and certifies students in financial literacy using
comprehensive deal database and perform detailed pro          the latest media tools including 3D gaming, Twitter-like
forma analysis of potential mergers and acquisitions          messaging tools, animations, video, adaptive-pathing and
(including deal pricing and pricing ratios) using their       other technologies. EverFi has been featured on CBS
Merger Model.                                                 Evening News with Katie Couric, Fox News, Fortune,
                                                              CNN, Entrepreneur and other media outlets. It was
    BankOnHold: Brian Hill, president & CEO,                  recently named one of the top 250 technology global
www.onholdworx.com                                            technology companies along with Facebook, Twitter and
    BankOnHold is the leading provider of on-hold music       other leading tech firms. Benefits to associations and
and messaging services, digital video signage and             member banks are:
overhead music specifically tailored to the banking               l Provide valuable opportunities for your member
industry. SDBA currently endorses BankOnHold.                 banks and your state by increasing bank visibility,
6   www.sdba.com                                                                       South Dakota Banker u June 2011
          South Dakota Bankers Insurance & Services Update

demonstrate community reinvestment and link with               Dell SecureWorks, Office Depot, Paystubz and Secure
potential customers in an exclusive way.                       Banking Solutions that help round out the offerings to
    l Enhance media attention and legislative efforts.         member banks.
                                                                    We continue to expand our offerings through SDBIS.
    This three-day event provides an excellent venue to        This year, we have introduced a new marketing
exchange ideas and learn from other banking associations       relationship with Office Depot for all member banks and
what is working and what is not. One of our missions is to     their employees. As an Office Depot customer, you will
develop association-based products that we can provide         have access to the exclusive Business Services Division
to our member banks and have control of the marketing          Website and realize significant discounts on office
and distribution of that product. If you have an interest in   supplies.
any of these companies, please give me a call at (605) 660-         SDBIS will soon be introducing an education program
2341 or email me at mfeimer@sdba.com.                          for high school students; a windows-based interactive
                                                               software that takes a student through six levels of
SDBIS Annual Report                                            financial literacy. The great thing about this product is the
    Over the past year, SDBIS continues to increase our        ability to customize the software to give credit to the
endorsed vendors. We are careful in choosing them as we        financial institution that is sponsoring the program in
want to create great value for both the Association and        their community.
our member banks.                                                   All of our endorsed vendors do an excellent job
    Some of our long standing members are BlueCross            providing much needed products and services. A
Blue Shield, Central States Health & Life Co. of Omaha,        complete list of endorsed vendors was published in the
Deluxe Financial Services, Delta Dental of South Dakota,       April issue of South Dakota Banker. The list is also available
Federal Flood Certification Corp., Ascensus, BancInsure,       on the SDBA’s Website at www.sdba.com. u
BankOnHold, Dakota Security Systems, Fringe Benefits
Design, Strunk and Associates, Mutual of Omaha
Insurance Company, FinCrime, Thumbprint Signature               Mike Feimer is president of South Dakota Bankers Insurance
Program and Reliance Standard. We have some new                 and Services (SDBIS). You can contact Feimer at (605) 660-
additions like DairyNet, NFP Renaissance Bank Advisors,         2341 or mfeimer@sdba.com.

        ank You2010-2011                                               ank You2010-2011
  Th        SDBA Board of Directors                              Th          South Dakota Bankers
                                                                              Insurance & Services
                         Chairman Dave Zimbeck,
                         Citibank (South Dakota), NA,                          Board of Directors
                         Sioux Falls
                         Chairman-Elect Bruce Byrum,                                     Chairman Curt Everson,
                         First Interstate Bank, Spearfish                                SDBA President, Pierre
  Vice Chairman Steve Hayes,                                                             President Mike Feimer,
     Dakota Prairie Bank, Fort Pierre                                                    SDBIS, Yankton
  Immediate Past Chairman Robert Rutten,
   Citizens State Bank, Arlington                                Karl Adam, Dakota State Bank, Blunt
  Kim Banks, Peoples State Bank, De Smet                         Steve Hageman, Plains Commerce Bank, Watertown
  Paul Domke, Heartland State Bank, Redfield
  Bob Clair, American State Bank, Pierre                         George Kenzy, First Fidelity Bank, Burke
  Ken Karels, Great Western Bank, Sioux Falls                    Kevin Lippert, First PREMIER Bank, Sioux Falls
  George Kenzy, First Fidelity Bank, Burke
  Ron Kristensen, Farmers and Merchants State Bank,              Robert Rutten, Citizens State Bank, Arlington
                                                                 Ray Smith, First National Bank in Philip
  Rick Rylance, Dacotah Bank, Rapid City
  Monte Troske, Farmers State Bank, Turton                       Kevin Tetzlaff, First Bank & Trust, Brookings

South Dakota Banker u June 2011                                                                        www.sdba.com          7
        SDBA Financial Report

                           Consolidated Financial Reports
                       Statement of Financial Condition - December 31, 2010 (Unaudited)

         ASSETS                               SDBA            SDBIS         Eliminations Consolidated
         Cash and CDs                       $ 2,010,841     $  242,519     $          -   $ 2,253,360
         Prepaid Expense                         20,912            440                -        21,352
         Accounts Receivable                    108,948         15,536                -       124,484
         Federal Income Tax Recoverable             -            6,364                -         6,364
         Investments                          1,080,658          1,000          (270,315)     811,343
         Property/Equipment                       8,570         13,897                -        22,467
           TOTAL ASSETS                     $ 3,229,929     $  279,756     $ (270,315) $ 3,239,370

         Accounts Payable                          8,638          6,398             -            15,036
         Deferred Revenue                        136,842          2,000             -           138,842
         Deferred Tax Liability                      -            1,043             -             1,043
           TOTAL LIABILITIES                $    145,480    $     9,441    $        -      $    154,921

         Common Stock                               -            375,000       (375,000)         -
         Additional Paid-In Capital                 -             48,801        (48,801)         -
         Unrealized Gains                        71,988              -              -         71,988
         Members' Equity                      3,012,461         (153,486)       153,486    3,012,461
           TOTAL LIABILITIES & EQUITY       $ 3,229,929     $    279,756 $     (270,315) $ 3,239,370

                      Statement of Revenue - Year Ended December 31, 2010 (Unaudited)

         REVENUE                                SDBA        SDBIS           Eliminations Consolidated
         Memberships Dues                   $     376,250 $      -         $          -   $   376,250
         Educational Programs                     229,834        -                    -       229,834
         Convention/Conferences                   218,923        -                    -       218,923
         Commissions/Servicing Income                 -      264,160                  -       264,160
         Investment Income                         71,371      5,857                  -        77,228
         Advertising Income                        42,049        -                    -        42,049
         Insurance Administrative Fee              68,004        -               (68,004)         -
         Other Income                              15,650        -                43,681       59,331
            TOTAL REVENUE                       1,022,081    270,017             (24,323)   1,267,775

         Administrative and Operating             781,376       321,220         (68,004)       1,034,592
         Outstate Conferences                     115,777           -               -            115,777
         Educational Programs                     139,155           -               -            139,155
         Committees                                 2,227           -               -              2,227
         Federal Income Taxes                         -          (7,522)            -             (7,522)
         Instate Convention/Conferences            65,906           -               -             65,906
         Foundation Fund Drive Match                2,803           -               -              2,803
            TOTAL EXPENSES                      1,107,244       313,698         (68,004)       1,352,938

         TOTAL REVENUE UNDER EXP.           $     (85,163) $    (43,681) $      43,681     $     (85,163)

8   www.sdba.com                                                                 South Dakota Banker u June 2011
          South Dakota Bankers Foundation Update

South Dakota Bankers Foundation Annual Report
By Deb Gates
Executive Director, South Dakota Bankers Foundation

                          everal changes in South Dakota     contribution from the local sponsoring bank. South
                          Bankers Foundation projects took   Dakota banks were able to provide their communities
                          place over the past 12 months.     with $100,000 in high school scholarships through the
                    The most notable was retirement of       South Dakota Bankers Foundation in 2011 and 2010,
                    Money Smartz for Teens (formerly         despite reduction of endowment payout, the effects of
                    known as the Economics Seminar for       which are still being felt in our portfolio from the 2008
                    Young Adults).                           market downturn.
                        This two-day personal economics           The South Dakota Bankers Foundation quasi-
program had been offered successfully through the SDBA       endowment fund and banking chair endowment fund are
for 49 years, receiving national recognition on several      managed by the University of South Dakota Foundation
occasions. Following a steady decline in registration        (USDF) and are included as separate accounts within that
numbers, the Board directed staff to research possible       portfolio. Contributed value of the quasi-endowment fund
reasons for the decline. Student focus groups, discussions   is $1.275 million with a market value of $1.92 million as of
with teachers, and follow-up letters to schools led to the   March 31, 2011, (up from $1.74 million at this time one
conclusion that lengthy travel time to attend the Mitchell   year ago). Earnings from the quasi-endowment continues
location, and two “plus” days away from school in a busy     to support many excellent consumer youth programs
student’s life no longer makes sense.                        including the High School Business Plan Competition;
     The conclusion reached was that there was a need to     Jump $tart Coalition; SD Future Farmers of America; SD
offer economic education beyond the classroom, but a         Ag in the Classroom; SD Future Business Leaders of
one-day seminar offered in two locations was a better        America, post-secondary scholarships in colleges,
choice. Last fall, a one-day program was offered in Rapid    universities and vo-tech schools; and the high school
City and Huron. The Huron location attracted 47 students     scholarship program for graduating seniors.
representing 12 schools, and that event was deemed                Market value of the banking chair endowment,
successful. However, there were only seven registrants for   funded with a contribution of $254,750 from the sale of
the Rapid City location, which was cancelled.                the old First National Bank of South Dakota building in
     A low registration fee of $50 was charged for student   Vermillion, currently stands at $350,230 as of March 31,
participation (paid for by local banks), with no fee being   2011 – up from $319,724 at that same point in time the
charged for adults. Following Board discussion on the        previous year. The payout from the banking chair
impact of continuing to subsidize the event, it was          endowment provides funding for special banking research
determined that the approximate $9,000 amount would          programs, and a portion of the salary and benefits for the
have greater impact if we were to expand various             professor of the Institute for the Study of Rural Banking.
scholarship programs and prizes awarded in the highly-       Dr. Leon Korte currently holds that professorship and is
successful Business Plan Competition.                        currently researching the effects of Dodd-Frank on our
     The Board also took action to recognize former chair    industry.
and Foundation Board member Joyce Hazeltine for her               With the market stabilizing even more since it’s
efforts in chairing the high school scholarship campaign     volatility in 2008, the USDF Investment Committee has
that raised $881,000. A $1,000 Joyce Hazeltine Scholarship   returned from its monthly and bi-monthly meetings to its
was established in her honor, to be awarded annually to a    normal quarterly schedule.
college junior with an expressed interest in banking,             The South Dakota Bankers Foundation is a 501(c)(3)
finance or business.                                         charitable organization, and your contributions are tax-
     In addition, a $1,000 David S. Birkeland Scholarship    deductible. We encourage you to consider contributing to
was established using the same criteria. This scholarship    the Bankers Foundation and the future of South Dakota’s
replaces the David S. Birkeland Leadership Lecture Series    youth when planning your estate. u
that was established with a $25,000 endowment by the
                                                                 * See a list of the 2010-2011 SD Bankers Founation Board
SDBA in the former SDBA chair’s memory. The proceeds
                                                             of Directors on page 16.
were earmarked to be used to hire a motivational speaker
at the Money Smartz for Teens Seminar.
     The High School Scholarship Program continues to         Deb Gates is executive director of the South Dakota Bankers
thrive with requests from South Dakota banks far              Foundation and administrative vice president of the SDBA.
exceeding available funds. The program provides $1,000        You can contact Gates at (800) 726-7322 or
to a graduating high school senior, made possible with a      debgates@sdba.com.
$500 contribution from the Foundation and a $500

South Dakota Banker u June 2011                                                                      www.sdba.com           9
          Interagency Training

Agencies Work Together to Offer Workshop on Generating
Opportunities in SD Under Small Business Jobs Act of 2010
By Christine Sorensen, SD Rural Development Coordinator

(CDFI) and
others took part
in a one-day
workshop held                                                   From left, Trina Lyons, CorTrust Bank, NA, Sioux Falls, and
in Chamberlain       From left, Sarah Jorgensen, South Dakota
                     Department of Agriculture, visits with     Tanya Fiddler, Four Bands Community Fund, Isabel.
on May 12.
Attendees were       Cinnamon King, director of the South
given the            Dakota Export Assistance Center.
opportunity to learn more about the Small Business Jobs
Act of 2010 and SBA and USDA programs and their
benefit to the nation’s economy as well as local economies.
     Hailed as a success, the workshop gave all those in
attendance an opportunity to network and share a
combined vision in increasing access to capital and
creating jobs in South Dakota.
     Dan Hannaher, SBA regional administrator for Region
8, gave the initial overview of the major programs under
the Act, including the Small Business Lending Fund and
the State Small Business Credit Initiative. Jeff Stout from
the Office of Capital Access, U.S. Department of Treasury,
gave additional detail specifically on the State Small
Business Credit Initiative with fellow panelists from the       From left, Jeff Priebe, First Dakota National Bank, Chamberlain;
SD Governor’s Office of Economic Development.                   Tim Potts, USDA- Rural Development, Rapid City; and Cal
     The luncheon keynote was provided by Richard               McGinnis, First Interstate Bank, Sturgis.
Todd, vice president of the Federal Reserve Bank of
Minneapolis. Dr. Todd’s presentation was titled “Small
Business and the Economy – A National and Local
     Panelists from the South Dakota Division of Banking
and Finance, FDIC, OCC and Federal Reserve Bank of
Minneapolis gave regulatory perspectives on how they
consider government-enhanced guarantee programs for
safety and soundness. Representatives from the U.S. and
Foreign Commercial Services and South Dakota Small
Business Administration covered assistance available to
businesses in funding export markets.
     The day concluded with a panel of representatives
from the South Dakota Rural Enterprise Initiative, Four
Banks Community Fund and South Dakota-SBA. The
panel gave a CDFI perspective of the Community                  From left, planning committee members Terry Lee, FDIC,
Advantage Program and the role of community                     Kansas City; Christine Sorensen, USDA-Rural Development,
development organizations in the state.                         South Dakota; Sandy Gerber, Federal Reserve Bank of
     The event was a cooperative effort of the Federal          Minneapolis; Michael Martinez, Office of the Comptroller of the
Reserve Bank of Minneapolis, FDIC, SBA, OCC, USDA-              Currency, Denver; Deb Gates, SDBA; and Paul Gunderson and
Rural Development and the SDBA u                                Chuck Hughes, South Dakota Small Business Administration.

10    www.sdba.com                                                                        South Dakota Banker u June 2011
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          Ready to
     Take the Reins
           Meet 2011-2012
SDBA Chairman Bruce Byrum
By Alisa DeMers, Editor                   Savings & Loan was opening a new             residential real estate lending, this

           hen Bruce Byrum isn’t          branch in New Rockford. He applied           new position included managing the
           overseeing the operations      for the job of managing the new              real estate construction, home loan
           of First Interstate Bank in    branch, and after graduating from            department, including the bank’s
Spearfish, he can be found spending       college began his work as manager/           secondary market processing center.
time with his horses in the Black         trainee in 1976.                             The job in Rochester provided many
Hills. His favorite pastimes on his            “It wasn’t the industry itself that     training opportunities and exposure
free weekends are trail riding and        necessarily drew me into banking. I          to more commercial lending.
horse camping.                            really had no relatives that worked in           From there, Bruce transferred to
    Bruce and his wife Becky live on      banking or had any opportunity to            First Bank in Bismarck, N.D., for the
an acreage outside of Spearfish. They     work for a family bank,” Bruce said.         position of commercial loan account
have lived in Spearfish since 1989,       “I was looking more for a job that           executive. He had additional
when Bruce accepted the job as            provided a nice lifestyle, especially        oversight responsibilities of the
president of First Western Bank (now      with my background, coming from a            bank’s home loan originators. While
First Interstate Bank).                   family where dad and I both worked           in Bismarck, Bruce said he further
    On June 7, Bruce will take the        in road construction.”                       developed his skills as a commercial
reins of the South Dakota Bankers                                                      lender by managing a loan portfolio
Association as the 2011-2012              A Career in Banking                          made up of mostly medical clinics,
chairman. He will assume this                  In his first banking job in New         hospitals and commercial real estate
position during the SDBA’s General        Rockford, Bruce’s primary                    loans.
Session Meeting at the 2011 Annual        responsibilities included personnel
Convention in Sioux Falls.                and property management, deposits            A Move to South Dakota
                                          and loan growth. Bruce said                      Bruce moved to South Dakota
Growing Up in Rural North Dakota          managing a small savings and loan            when Paul Christen, owner of the
     Bruce grew up in New Rockford,       branch was a great opportunity. The          First Western Banks in the western
N.D., a small town in the central part    job exposed Bruce at a young age to          part of the state, was in the process
of the state where the economy is         many of the same challenges he deals         of purchasing a small independent
mainly supported by agriculture. His      with today.                                  bank in Spearfish. After interviewing
father worked on road construction             After working at the bank in            with Regional President John
as a heavy truck mechanic and then        New Rockford for eight years, Bruce          Johnson, Bruce accepted the position
as project supervisor. In addition to     moved to Mitchell, S.D., to manage a         of president of the newly-acquired
raising seven children, Bruce’s           larger branch for Metropolitan               bank and moved to Spearfish in
mother sold Tupperware to help            Federal Savings & Loan. After that           February 1989.
support the family.                       job, he accepted a position with First           Bruce said his first few years in
     The family lived on an acreage       Bank in Rochester, Minn.                     Spearfish required long hours at the
on the outskirts of New Rockford,              Because of his background in            bank dealing with staffing issues and
where they raised a couple of milk
cows, pigs, chickens, ducks, geese, a
few beef cows and horses. Bruce said
farm chores created a good work
ethic and helped keep him out of
     In the summers, Bruce worked
for the local Agricultural
Stabilization and Conservation
Service (ASCS) office, hoed beets for
the Extension Office, hauled
thousands of small hay bales for an
uncle, and drove grain trucks during
harvest for another uncle. Once he
obtained his driver’s license, he
earned money for college by driving
a gravel truck.
     After graduating from high
school, working road construction
and spending a winter in Hawaii, he
enrolled in the State School of Science
in Wahpeton, N.D. While working on
his business management degree, he
learned that Metropolitan Federal         Bruce Byrum is president of First Interstate Bank in Spearfish at 1400 North Ave.

South Dakota Banker u June 2011                                                                         www.sdba.com          13
credit quality challenges, along with    centralized secondary market                    A Change in Bank Ownership
policy and procedure changes.            processing center at his branch.                     In January 2008, First Western
     “In time, with a strong local            In 2007, First Western Bank                Bank was sold to First Interstate
economy and a talented, dedicated        opened a second branch in Spearfish             Bank. For the next 18 months, the
staff, the bank grew from the            at 311 N. 27th Ave. to service the              bank continued to operate under the
smallest to the largest of the four      expanding business and housing                  name First Western Bank while First
commercial banks in Spearfish,”          developments on the east side of the            Interstate Bank policies and
Bruce reflected.                         city. The two branches in Spearfish             procedures were incorporated into
     “Another key factor in the bank’s   and the processing center today                 the day-to-day operations. In
success was Paul Christen and John       employ around 35 people.                        November 2009, the final changes
Johnson’s philosophy of banking.              The bank has added services to             occurred, including the merger of the
First Western Banks were operated        its standard offerings, such as wealth          two banks and the change to the
with a great deal of autonomy,           management, trust services and cash             name First Interstate Bank.
allowing bank presidents to react        management.                                          While First Interstate Bank is a
quickly to the local economy and              “What makes us different is what           large bank, Bruce said it has many
customer needs.”                         has allowed us to grow beyond our               similarities to First Western Bank.
     Bruce’s duties at the bank in       competition, and that is the quality of         Both banks were family-owned
Spearfish have been those of the         our staff, their expertise and the              community banks whose branches
bank president, head of the              strong relationships that they have             were operated with significant
Corporate Marketing Committee,           built, and a banking model that                 autonomy, and the owners had a
serving on the Northern Hills ALCO       allows us to be responsive to our               strong belief in supporting their
Committee, as well as helping design     customers and community,” Bruce                 communities through donations and
and manage the bank’s performance        commented.                                      foundation grants.
compensation program.                         All of the bank’s branches are                  First Interstate Bank is a multi-
     In the early 1990s, Bruce           located fairly close together                   state, $7.1 billion banking
established a real estate processing     throughout the Black Hills area,                organization headquartered in
center at the bank. Because of his       however, they all have different                Billings, Mont. Evolving from a
background in home loan                  markets, Bruce said. Spearfish’s                single bank in Sheridan, Wyo., in
originations and processing, Bruce       portfolio is commercial and retail,             1968, First Interstate Bank today
was asked to establish and manage a      with little to no ag lending.                   operates 72 branches and more than

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14    www.sdba.com                                                                           South Dakota Banker u June 2011
100 ATMs in Montana, Wyoming
and South Dakota.
    According to the bank’s
marketing department, First
Interstate remains a family business
guided by the values of its founder,
Homer Scott, Sr., who believed in
hard work, teamwork, fair dealing,
and walking the extra mile for the
customers and communities the bank
serves. These values continue to
guide second- and third-generation
members of the Scott family who
continue to lead the company
forward today.
    “First Interstate Bank offers
higher pay scales, better benefits, and
more products and services. Thus,
we added staff versus layoffs, which
occurs in most mergers,” Bruce said.
“Overall, the merger was a positive       Bruce and Becky Byrum and their children Cody and Meghan.
event for customers and staff.”
                                          Services Department at Northern            forward with the help of current
Life Outside of Banking                   State University.                          officers, directors and staff,” he said.
     Bruce and his wife Becky, who is          Bruce has initiated a South                The SDBA has a lot on the table
also from New Rockford, N.D., have        Dakota Banks Make a Difference             with pursuing new opportunities for
been married since 1976. Becky is a       project in Spearfish, which will           the SDBIS; the many federal
retired out-patient therapist with        include all local banks participating      legislative issues; and offering
Catholic Social Services. She             in a diaper drive this June.               education, training and support to its
continues to do volunteer work and             In addition to trail riding and       member banks. As chairman, Bruce
enjoys showing her horse at local and     horse camping, Bruce joked that he         said he has a responsibility to work
regional quarter horse shows.             serves as his wife’s groom during her      with President Curt Everson and the
     The couple has two children.         quarter horse competitions. In his         SDBA Board of Directors to prioritize
Their son, Cody, graduated from           younger years, he did a lot of team        efforts and resources for these and
Black Hills State University and          roping. In his free time, Bruce also       new issues this next year.
worked for Gov. Rounds and now is         enjoys bird hunting, golfing reading,           For the most part, Bruce thinks
deputy commissioner at the                watching movies and hiking.                the industry is doing a good job of
Governor’s Office of Economic                                                        addressing banking concerns. But, he
Development for Gov. Daugaard.            Leading the SDBA Forward                   does feel the industry would be
Cody was married in 2009 to Rachel              Bruce said he was inspired to get    better served if it would speak with
Eddy of Spearfish. He recently            involved in the SDBA by John               one voice on legislative issues.
returned from Afghanistan where he        Johnson, who served on the Board           Bankers, he said, need to allocate
served a one-year deployment with         and encouraged Bruce to attend             more time to fighting the industry’s
the SD Army National Guard.               SDBA meetings and events. During           battles.
     Their daughter, Meghan, is also a    this time, Bruce realized the                   Like many bankers, Bruce has
recent graduate of Black Hills State      importance of the Association.             developed problem solving skills,
University. She has worked as a real            “As I believe that banks have an     and he gets great satisfaction from
estate loan processor/underwriter at      obligation to support their                preventing or fixing problems. In
First Interstate Bank for the past        communities, I also feel that bankers      today’s banking environment, there
three years.                              have an obligation to support and          are many opportunities to prevent or
     Bruce has served on a number of      participate in the SDBA,” Bruce            fix problems, and it is this challenge
local boards, including the Chamber       explained.                                 that keeps Bruce engaged.
of Commerce and Spearfish                       Bruce served two terms as a               “Part of what keeps me going is
Economic Development. He is               director on the SDBA Board of              being part of what seems to be the
currently involved with Spearfish         Directors before going through the         routine day-to-day functions of the
Community Foundation, High Plains         chairs.                                    bank, but are major events in the
Western Heritage Center, Black Hills            “The SDBA has had some               lives of individuals or businesses
State University President’s Advisory     outstanding chairmen over the years.       such as buying that first home,
Council, and the Advisory Council         It is on their shoulders that I stand as   getting a new car, or starting or
for the Banking and Financial             I do my best to move the Association       expanding a business,” he said. u

South Dakota Banker u June 2011                                                                       www.sdba.com        15
          Washington Update

Wanted: Bank Advocates
By Gov. Frank Keating
President/CEO, American Bankers Association

                              hen it comes to industry           communicating the industry’s position on critical issues to
                              advocacy in Washington, D.C.,      elected officials and regulators with a strong, compelling
                              or in your state capital, one of   voice. We’ve proven that through the more than 160,000
                    the worst things to be personally told by    emails and letters bankers have sent to Congress on the
                    a lawmaker or a policymaker is, “I           debit card interchange issue through ABA and the state
                    didn’t hear from any bankers on that.”       bankers associations. And that’s just this spring.
                        We want to make sure that cannot             Elected officials and regulators need to know where
                    happen. Ever.                                our industry stands. They should expect to hear from
    Effective political advocacy means organization and          bankers on hot-button issues.
relationships. It’s about getting to know the members of             Every bank employee should know the important role
your congressional delegation and keeping them informed          their bank plays in the economic life of their community.
about industry issues, key legislation and important votes.      This unique perspective can become a valuable and
    This is why we developed the ABA Bank Advocates              trusted asset for policymakers whose decisions affect their
Program. This new grassroots program supplements our             constituents – and your bank’s customers.
successful Direct Contact Bankers program, which is                  Our direction is to move forward – to be on offense.
made up of bank CEOs, presidents and chairmen who                While not all lawmakers or policymakers will always
have built relationships with their members of Congress.         agree with our industry’s positions, we will be respectful
    We want to continue to increase our reach by                 and factual, but unrelenting in our political advocacy.
providing bank employees and directors with the tools                I’m counting on all of you to join us to help make that
and resources to effectively represent our industry. We’re       happen. u
encouraging employees and directors who are willing to
advocate on behalf of banking to sign up for the program.        Gov. Frank Keating is president and CEO of the American
    When it comes to political clout, there is strength in       Bankers Association. You can contact Keating by email at
numbers. Together, we can play a key role in effectively         fkeating@aba.com.

                                                                         ank You2010-2011
                                                                   Th         SD Bankers Foundation
                                                                                Board of Directors
                                                                                  Chairman Michael Keller, School of
                                                                                  Business, USD, Vermillion
                                                                                  2010 Lerdal Scholarship Winner
                                                                                  Kelli Wiedebush, Northern State
                                                                                  University, Aberdeen
                                                                                  Curt Everson, SDBA President, Pierre
                                                                                  Deb Gates, Foundation Executive
                                                                                  Director, SDBA, Pierre
                                                                   Stephanie Gongopoulos, The First National Bank in
                                                                     Sioux Falls
                                                                   Steve Hayes, Dakota Prairie Bank, Fort Pierre
                                                                   Dixie Hieb, Davenport, Evans, Hurwitz & Smith,
                                                                    LLP, Sioux Falls
                                                                   Boyd Hopkins, CorTrust Bank NA, Sioux Falls
                                                                   Sharon Paranto, School of Business, Northern State
                                                                    University, Aberdeen
                                                                   Norbert Sebade, First Interstate Bank, Wall

16    www.sdba.com                                                                        South Dakota Banker u June 2011
          Ask the Appraiser

Ethics Rule – Conduct
By Sherry Bren
Executive Director, South Dakota Appraiser Certification Program

                    Using a Flawed Appraisal Report                credible market data indicates otherwise, the appraiser’s
                         A client engages an appraiser             impartiality, objectivity and independence appear to have
                    (Appraiser A) to appraise a property.          been compromised. The ETHICS RULE clearly prohibits
                    Appraiser A is provided with a copy of         such a practice. The Conduct section of the ETHICS RULE
                    an appraisal report prepared by                includes the following statements:
                    another appraiser (Appraiser B)                     An appraiser must perform assignments with impartiality,
                    retained by the property’s owner.              objectivity, and independence, and without accommodation of
                    Appraiser A finds significant errors in        personal interests.
Appraiser B’s appraisal report. What should Appraiser A                 An appraiser must not perform an assignment with bias.
do?                                                                     An appraiser must not advocate the cause or interest of any
     State laws vary concerning appraisers’ duties in              party or issue.
reporting other appraisers’ potential violations of USPAP.              An appraiser must not accept an assignment that includes
Though USPAP does not specifically address appraisers’             the reporting of predetermined opinions and conclusions.
responsibilities when confronted by other appraisers’                   An appraiser must not use or communicate a report that is
USPAP violations, it does address the ethical aspects of           known by the appraiser to be misleading or fraudulent.
using misleading or fraudulent reports. While it is not                 An appraiser must not knowingly permit an employee or
unethical for Appraiser A to read Appraiser B’s appraisal          other person to communicate a misleading or fraudulent report.
report, it is unethical to use it. The Conduct section of the           The Management section of the ETHICS RULE also
ETHICS RULE states:                                                states that:
     An appraiser must not communicate assignment results in            An appraiser must not accept an assignment, or have a
a report that is known to be misleading or fraudulent.             compensation arrangement for an assignment, that is
     An appraiser must not knowingly permit an employee or         contingent on any of the following:
other person to communicate a misleading or fraudulent report.          1. the reporting of a predetermined results (e.g.,
     Appraiser A fulfills the first part of this requirement       opinion of value);
by not using Appraiser B’s appraisal in his own appraisal               2. a direction in assignment results that favors the
of the property. He fulfills the second part of the                cause of the client;
requirement by pointing out to his client the misleading                3. the amount of a value opinion;
or fraudulent aspects of Appraiser B’s appraisal and                    4. the attainment of a stipulated result (e.g., that the loan
advising the client against relying on that appraisal.             closes or taxes are reduced); or
Appraiser A’s responsibilities beyond these actions are                 5. the occurrence of a subsequent event directly related to
not a matter of USPAP.                                             the appraiser’s opinions and specific to the assignment’s
                                                                   purpose. (Bold added for emphasis)
Value of Opinions that Equal Contract Prices                            An appraiser must develop an opinion of market
    I know appraisers who consistently conclude that               value impartially and objectively. An appraiser who
the market value of any property they appraise is equal            selects only data that complements a contract sale price or
to the contract sales price. In doing so, they facilitate          analyzes data in a manner to purposefully support a
sales and financing of sales, which is apparently what             contract sale price violates the ETHICS RULE.
keeps their clients happy. Is this a violation of USPAP?
    A contract sale price can be a good indicator of a                  If you have an appraisal related question that you
property’s market value, and it may be logical and                 would like to have answered in the “Ask the Appraiser”
reasonable for the appraiser to conclude that they are the         column, please submit it to Sherry Bren, executive director
same. However, this is not always the case. In some                of the Appraiser Certification Program, 445 East Capitol
situations, a contract price will exceed what is typical in a      Ave., Pierre, SD 57501, fax (605) 773-5369 or by email at
market. In other situations, a contract price will be less         Sherry.Bren@state.sd.us.
than what is typical. A contract sale price, while a
significant piece of market data, must not become a target             Notice: Public information regarding disciplinary
in an appraisal assignment. Rather, competent analysis of          action taken against an appraiser is available upon written
relevant and credible market data must be the appraiser’s          request to the address or email above. Include in the
basis for a market value conclusion.                               request for information the name of the appraiser and the
     If an appraiser consistently concludes that the               appraiser’s city and state of residence. (Disciplinary action
contract sale price of any property they appraise equals           may include denial, suspension, censure, reprimand or
market value, particularly when a competent analysis of            revocation of a certificate by the department.) u

South Dakota Banker u June 2011                                                                             www.sdba.com          17
          Endorsed Vendor Spotlight

Central States Health & Life Co. of Omaha
Our History, Strength and Commitment

OUR HISTORY                                                       OUR STRENGTHS
                                        Founded in 1932,              CSO’s vision is to be the
                                   Central States Health &        leader in the debt protection
                                   Life Co. of Omaha              product market by providing
                                   (CSO) pioneered what           innovative solutions and value
                                   was then called                to agents, creditors and their
                                   Deferred Payment               customers. We are uniquely
                                   Health & Accident              positioned to capitalize on our
                                   Protection. Designed           dual focus of extending
                                   for borrowers, this plan       traditional credit life and
                                   of protection made the         disability insurance products as
                                   loan payments for the          well as providing service and
                                   insured when death or          marketing support for debt
                                   disability made it             cancellation programs. Our
                                   difficult. This protection     solid history of successful business practice has positioned
                                   was the first of its kind      CSO with an exceptionally strong financial base.
                                   in the Midwest.                    With more than 75 years in the business, CSO today
    Through the years, CSO has experienced solid and              supports more than 4,700 automobile dealerships and
consistent growth, becoming a leading writer of credit            financial institutions and is a top provider of debt
insurance. The Fact Book of Credit Related Insurance 2009         protection products for the dealer market in the United
reports CSO as the sixth largest U.S. credit life and             States. The number of in-force credit life and disability
disability writer based on 2009 direct written premiums.          policyholders and debt cancellation addendum holders
With the expanded ability of financial institutions to offer      exceeds 401,000. In addition, CSO processes more than
debt cancellation products to their customers, we                 23,000 credit insurance certificates and debt cancellation
developed our debt cancellation programs, adding yet              addenda on a monthly basis. CSO possesses the
another offering to our product portfolio. For year ending        knowledge and skills required to extend superior service
2010, the combined statutory surplus and asset valuation          and products to its policyholders and business partners
reserve exceeded $108,000,000.                                    alike.

     CSO’s commitment to its business clients and insureds
is to provide exceptional service. We employ an industry-
focused team of administrators and professionals who
excel in their area of responsibility and provide
unparalleled service, including:
l A personalized “one call” approach through our
   helpline that allows for customers to speak to a CSO
    representative rather than an automated menu system.
    Call us at 1-888-453-5125 from 7:30 a.m. to 5:00 p.m.
    Central Time.
l A call abandonment rate at 1.5 percent.
l 98 percent of calls are answered in less than 20 seconds.
l $1.99 million in benefits provided monthly.
l A five-day overall benefit turnaround.
l Training support built around several delivery systems
    to meet our clients’ needs.

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                                      P.O. Box 641668 l Omaha, Nebraska 68164-7668
                                             1-888-453-5125 www.cso.com

18    www.sdba.com                                                                        South Dakota Banker u June 2011
                                            SDBA 2011 IRA School
                        September 7-9, 2011       n   Clubhouse Hotel & Suites   n   Sioux Falls, S.D.

Overview                                                         Basic Agenda
IRAs still have unlimited potential! Let us help your staff      l   Overview of IRAs
to be better prepared for the future of IRAs. The South          l   Procedures to Establish IRAs
Dakota Bankers Association (SDBA) is offering its three-         l   Plan Agreement Changes in 2010 & Additional
day 2011 IRA School on September 7-9, 2011, at the                   Changes in 2011
Clubhouse Hotel & Suites in Sioux Falls, S.D. The school         l   IRA Amendment Update 2011
will cover:                                                      l   Setting Up and Organizing Your Files (self audit)
    l Traditional IRA (major emphasis)                           l   Contribution Rules
    l Roth IRA (major emphasis)                                  l   Tax Benefits
    l Coverdell ESA                                              l   Bankruptcy Bill
    l Health Savings Accounts                                    l   Saver’s Tax Credit
    l SEP-IRA                                                    l   Administering Distributions: Pre 59 1/2 , Post 59 1/2
    l SIMPLE-IRA                                                 l   FDIC IRA & Inherited IRAs
                                                                 l   Substantially Equal Periodic Payments
                                                                     Transfers, Rollovers and Direct Rollovers
Why Attend                                                       l
                                                                 l   Recharacterizations (additional emphasis)
l   Most comprehensive IRA course offered.
                                                                 l   Excess Contributions (additional emphasis)
l   Learn new rule changes and reinforce existing IRA
                                                                 l   Taxation of Distributions from the Traditional IRA and
                                                                     the Roth IRA
l   Learn what it means to be in or out of compliance.
                                                                 l   IRA Tax Losses
l   The opportunity to go more in-depth in all topics
                                                                 l   RMD Rules for Accountholders
    versus attending any one-day program.
                                                                 l   RMD Rules for Beneficiaries
l   The opportunity to ask more questions, share with
                                                                 l   Conversions
    others and to go through real case problems.
                                                                 l   Reconversions
                                                                 l   IRS Reporting Duties – Changes in 2011 1099R & 5498
Who Should Attend                                                l   Procedure to Correct Previous Year’s 1099R & 5498
l   New IRA Personnel: Quickest, easiest and most                l   SEP-IRAs
    comprehensive way to get a new person trained in             l   SIMPLE-IRAs
    IRAs plus CESAs and HSAs.                                    l   Health Savings Accounts (HSAs) (1-11/2 hours)
l   Experienced Personnel: Much more thorough and                l   Coverdell ESA (1/2 hour)
    comprehensive than a one-day seminar. This covers            l   Marketing Opportunities for IRAs
    new materials and reinforces old materials, plus covers
    transactions that occur infrequently. This is a must for     New Items
    IRA bank resource people.                                    l   Current Events: Proposed Legislative Changes
l   Note: Even though you may have attended previous             l   Conversion Rule Changes: 2010 vs 2011/2012 & After
    IRA schools, you will still benefit due to the many          l   Why or Why Not to Convert
    changes in retirement programs, the complexity of            l   Fee Disclosures: Update
    IRAs, the quantity of information, and reinforcement of      l   Reporting Rule Changes in 2011
    existing rules and procedures.                               l   Trust Beneficiary Rules
                                                                 l   Minors as Accountholders or as Beneficiaries
Daily Schedule                                                   l   Exciting New Case Problems
8:15 am .............. Welcome, Introduction, Coffee/Rolls
8:30 am .............. Session Starts                            About the Instructor
10:00 am ............ Break                                                       Mike Nelson taught sales and marketing
10:15 am ............ Session Resumes                                             for 13 years at Central Lakes Community
12:00 noon ........ Lunch                                                         College and from there started his own
1:00 pm .............. Session Resumes                                            training company where he conducted
2:45 pm ............. Break                                                       insurance, real estate and securities
3:00 pm .............. Session Resumes                                            training seminars. He presently develops
4:45 pm ............. End of Day                                                  financial training services for financial
                                                                 institutions around the U.S. He holds BS and MS degrees
Notice: Please bring your vendor’s IRA forms to class            from St. Cloud State University. Mike has always been the
as they will be a part of the school.                            SDBA’s most highly rated IRA instructor.
          Training News

Trust Officers Gather for Conference in Fargo
By Dorothy Lick, NDBA Senior Vice President of Education     Reilly from Natixis Global Associates on investment

           ore than 70 trust officers from North Dakota,     implications of global inflation and Sandy Styer of
           South Dakota and Minnesota attended and 18        Trusted Advisor Associates on the keys to becoming a
           companies exhibited at the 2011 Tri-State Trust   trusted advisor. To wrap up the conference, Katherine
Conference held April 25-27 at the Ramada Plaza & Suites     Wills of Northern Trust offered a look at Northern’s “A
in Fargo, N.D. State Bank & Trust SVP Bob Willer kicked      Approach: Excellence in Execution.”
off the conference Monday evening with his presentation          Mark your calendars for the 2012 Tri-State Trust
“The Go-Giver: A Little Story about a Powerful Business      Conference, which will be held April 23-25 at the Ramada
Idea.” Each attendee received a copy of the book             Plaza & Suites in Fargo, N.D.
compliments of Stewart Capital Advisors.                         Some comments from this year’s event included:
     Tuesday morning, Dr. Quincy Krosby, chief market            l “Well-run event. Great use of my time. Thanks.”
strategist for Prudential Financial, presented                   l “Very good speakers and nicely organized handout
“Understanding the Economy and Navigating the                         materials.”
Markets,” during which she stated that oil is the biggest        l “Enjoyed Quincy (Krosby) the most, but all
wildcard in this economic recovery. Following Dr. Krosby,             speakers were good. Very good conference.”
Steve Bigge of Keebler & Associates discussed the                l “Always enjoy the economic recap and info on new
mathematics of gifting and inter vivos sales.                         regulations.”
     After lunch, Federated Investors’ Eugene Maloney            l “Very impressed with the quality of speakers and
gave an insightful talk on “What is a Fiduciary?”                    overall genuine ‘make you feel right at home’
Wrapping up the afternoon session were Alex Urbani                   attitude.”
from MainStreet Advisors on “The Prudent Investor Rule:          l “Great participation by vendors.”
Placing Responsibility Before Returns” and Michael               l “Best conference I have attended in the four years
Tschider of Goldleaf Partners, who provided an update on              I’ve been coming.”
Department of Labor fee disclosure initiatives.                  l “Excellent conference. I enjoyed networking with
     Wednesday morning featured presentations by David                exhibitors and other attendees.” u

           Dianne Harris,
    First Dakota National
   Bank, Sioux Falls, was
  the winner of an exhibit                                                                    Make y
          hall grand prize.                                                                         appen..
                                                                                             Home h

                                                                    Make your own home happen...

                                                                      Let        Daakota
                                                                      Let South Dakota Housing
                                                                     Development Authority help
                                                                    you purchase your first home
                                                                    with the First-time Homebuyer
From left, Great Western Bank employees Mark Sivertson,
Sioux Falls; Rosanne Krier, Sioux Falls; and Scott Olson,
Watertown.                                                              www.sdhda.org
                                                                        www.sdhda.org      1.800.540.4241       EQUAL HOUSING

20    www.sdba.com                                                                  South Dakota Banker u June 2011
          From the Executive Office...continued from page 5

     l Submission of amicus briefs in support of TCF           for disabled people, painted a local youth center in Sioux
National Bank’s lawsuit over the Durbin Amendment and          Falls, cleaned up a run-down block of Yankton, seeded
the Federal Reserve’s proposed implementation.                 and landscaped around a new welcome sign in Tabor,
     Passage of any measure which might be viewed by           served a USD Veterans Club appreciation dinner in
any member of the U.S. Senate as mildly controversial          Vermillion, spent a Saturday at Needs Anonymous in
normally requires 60 votes for passage. Also, no member        Webster, and provided 100 volunteer hours in one day
of Congress relishes the prospect of having to chose           painting at the Boys and Girls Club in Watertown.
among friends when they cast a vote. So, it is easy to              Those are just a few of the highlights of the Banks
understand why passage of S. 575, Debit Interchange Fee        Make a Difference emphasis for 2010. I want to encourage
Study Act of 2011, is anything but a certainty.                bankers all across the state to join forces and make a
     But hundreds of thousands of banker contacts have         difference for the betterment of your communities in 2011.
been made with members of Congress via emails, letters,        All it takes is for a couple of caring, ambitious bankers to
phone calls and personal visits. The Federal Reserve also      start the ball rolling by reaching out to a broader group of
received more than 11,000 comment letters on its               like-minded bankers within your community. Pretty soon,
proposed regulatory implementation scheme. Bankers are         lots of ideas about what, how, who and when will form.
clearly engaged and are making a difference in the public      Some people derive great satisfaction from collecting
policy debate in Congress. Our persistent efforts to expose    items to help people in need. Others are more motivated
the shortcomings of this new law prompted Sen. Durbin          to participate in projects that result in the production of
to chastise the ABA and by association any bankers who         sweat on their brow. In either case, a community and its
dare to express their concerns. In a recent letter to the      citizens in need benefit. Getting started can be the most
ABA, Sen. Durbin said, “I urge your association to stand       difficult step. Call the SDBA if you need some help.
down your massive misleading lobbying effort which is
aimed at preventing the Federal Reserve from ever              Banker Education and Training
coming forward with reasonable final regulations.” Since           SDBA staff understand the problems that lower
when does any member of Congress have the right to tell        interest earnings and regulatory pressures on service fee
any party with legitimate concerns about any issue that        income can create for our member banks’ bottom lines.
they have no right to express those concerns?                  But at the same time, banks need to make ongoing
     As I have been calling on bankers in the eastern part     investments in your most valuable asset – your people. So,
of the state in recent weeks, I have heard several recurring   we continue to strive to identify and deliver continuing
themes – high cost of regulatory compliance, concerns          education content which provides great value at an
about ability to originate home mortgages in rural             affordable price. Beyond the direct value we provide to
communities, mission and territorial expansion by              our member bankers, I am happy to report SDBA
aggressive tax-exempt credit unions, and cherry picking        education and conference offerings produced a solid net
by the Farm Credit System. While the current financial         income of $145,756 in 2010, compared to $178,000 in 2009
picture for most of South Dakota’s ag producers is             and $101,000 in 2008. In order to hold down banker
positive, corresponding weakness in loan demand and            education related expenses, we continue to focus on
low rates of return on other bank investments is putting       electronic avenues for marketing our education products
the squeeze on bank earnings. All of these factors together    to our members. We are particularly focused on targeting
caused bankers to express concerns about the long-term         emails to bankers most likely to have an interest in a
viability of the small, independent community banking          particular subject area. We want to encourage bankers to
business model. The SDBA, our sister organizations in          use the capabilities of our Web-based online banker
other states, the ABA and the ICBA work every day to           contact/event management software, which provides
communicate the industry’s challenges to elected leaders       bankers the ability to keep their own user-profile up-to-
and bank regulators alike. Political headwinds facing our      date. Please check your email inbox to stay current,
industry are still strong, but we will do everything in our    register for events and provide feedback upon completion
power to communicate your concerns and to push for             of an SDBA course, conference or seminar.
statutory changes where they are necessary.
Banks Make a Difference 2010                                        Like most of you, I feel like I have been drinking out
    If you look back at the January 2011 issue of South        of a fire hose since Wall Street melted down in 2008. We
Dakota Banker, you will find a story and photos                all feel the pressures created by congressional and
highlighting some of the community betterment projects         regulatory second guessing of the business models used
which bankers undertook in 2010. Based on feedback from        by community banks, money center banks and credit card
a host of nonprofit community groups, hundreds of              banks alike. But, out of today’s challenges will come
bankers answered the call to collect basic needs items like    tomorrow’s opportunities. Bankers are a resilient bunch of
diapers, baby supplies, coats, shoes, winter boots and         eternal optimists who care about the success of their
more than a ton of non-perishable food. Bankers also           customers and their communities. That is why I truly
raked yards of elderly people, provided moving assistance      enjoy working on your behalf. u
South Dakota Banker u June 2011                                                                     www.sdba.com        21
          Bank Notes/Classifieds

Dacotah Bank, Aberdeen                                        Ag/Commercial Lender (Liberty National
Kristen Fauth has joined Dacotah Bank’s internal audit        Bank, Sioux Falls, S.D.)
team as an internal audit manager. Fauth’s primary            This is an extraordinary opportunity for the right
function is to conduct risk-based audits for the board of     candidate to work for a leading national bank with a
directors and senior management in all bank locations and     growing loan department. Responsibilities include
centralized bank functions of the company. Fauth              following established procedures and policies in securing
graduated from Aberdeen Central High School and is a          and analyzing commercial and agricultural loans,
1995 graduate of Northern State University with a             minimizing potential loan losses through frequent review
bachelor of science degree and majors in accounting and       of delinquency reports and changes of financial ratios that
finance. She brings more than 15 years of audit and           could indicate potential losses, working to market new
accounting experience to Dacotah Bank. Her office is          and existing products according to the bank’s strategic
located in the Midwest Building in Aberdeen. u                plan, providing superior customer service and
                                                              contributing to an environment of teamwork and
                                                              excellence, through effective communication and
South Dakota Division of Banking, Pierre                      cooperation, and actively participating in cross-selling
                  Bret Afdahl has been named the              bank services to new and existing customers.
                  director of the South Dakota Division       Requirements include a bachelor’s degree and five-plus
                  of Banking. He has served as the            years of related experience and/or training. Please submit
                  Division’s counsel and trust examiner       resume to Carrie Nothdurft, Liberty National Bank, 3520
                  since 2006. Afdahl replaced Roger           S. Louise Ave., Sioux Falls, SD 57106 or email
                  Novotny, who announced his                  carrien@libertynationalonline.com. Liberty National Bank
                  retirement in March.                        is an Equal Opportunity Employer. u

   Bret Afdahl     “An extensive search was conducted for
the director position. The best candidate ended up being      Ag/Commercial Loan Officer (First Savings
from within the division, and I am excited for Bret to        Bank, Britton, S.D.)
exercise his leadership capabilities and industry             First Savings Bank in Britton, S.D., has an opening for an
knowledge in this new role,” said State Labor and             ag/commercial loan officer. This is a great opportunity for
Regulation Secretary Pam Roberts. “Our team of bank and       a motivated individual who wants to live in Northeast
trust examiners is extremely well-trained, intelligent and    South Dakota. A minimum of three years lending
dedicated to their mission. Bret already plays a leadership   experience and a bachelor’s degree in business, finance or
role for this team and is well-respected.”                    related area preferred. Strong analytical and
                                                              communication skills are required. Ag background a plus.
The Division of Banking is charged with the regulation        Successful applicant must pass pre-employment screening
and supervision of state-chartered financial institutions.    including credit history and criminal background check.
The director also serves as the executive officer for the     Please submit resume to Brian Rabenberg, Branch
State Banking Commission. “I have worked with Bret            President, First Savings Bank, PO Box 899, Britton, SD
Afdahl in my role as chairman of the Banking                  57430 or email to brian.rabenberg@firstsavingsbanks.com.
Commission,” said Banking Chairman Jeff Erickson. “I am       Equal Opportunity Employer. u
confident Bret is ready for this new challenge.” u

                                                              Place Your Listing
Submit Your Bank Note                                         If you have a job opening at your bank or something to
If you are an SDBA member bank or associate member,           sell, send your classified listing via email to
tell us about your new employees, promotions,                 ademers@sdba.com and we will post it in the South Dakota
community service projects, economic development              Banker magazine and on the SDBA website. This service is
efforts, honors and landmark anniversaries. Email your        free to member banks. The fee is $50 for non-members.
stories and photos to ademers@sdba.com or mail to: Alisa      (150 word limit.) Questions, call Alisa DeMers, SDBA, at
DeMers, SDBA, PO Box 1081, Pierre, SD 57501. u                (800) 726-7322. u

                                                              SDBA E-News
                                      Would you like to receive a weekly electronic newsletter updating
                                      you on industry news, training, SDBA events and other financial
                                         services information? Create a profile at www.sdba.com.

22    www.sdba.com                                                                    South Dakota Banker u June 2011
           Educational Calendar

Seminars and Conferences
Upcoming Events                                               l   Games Trainers Play
SDBA/NDBA 2011 Annual Convention                              l   Check Holds
  June 5-7, 2011: Sioux Falls Convention Center and           l   Safe Deposit Webinar Series: Part 1 – Policies and
  Sheraton Hotel, Sioux Falls                                     Procedures
SDBA Technology Conference                                    l   The Insider Threat – Don’t Look the Other Way
  Sept. 27-28, 2011: Sioux Falls                              l   The New World of RESPA – What Lessons Have We
IRA Update                                                        Learned? Clues to Effective Compliance
  Oct. 18, 2011: Black Hills Community Bank, Rapid City       l   Compliance Perspectives: A Monthly Update
  Oct. 19, 2011: SDBA Office, Pierre
  Oct. 20, 2011: Ramkota Inn, Sioux Falls                     l   Call Report Preparation Webinar Series: Part 3 – Risk
                                                                  Based Capital
HSA (half day) and Reporting, Compliance & Forms
(half day)                                                    l   Dynamite Training Secrets for Everyone
   Dec. 5, 2011: SDBA Office, Pierre                          l   Legal Liabilities When Check Fraud Occurs
   Dec. 6, 2011: Ramkota Inn, Sioux Falls                     l   Global Cash Flow: What, How, Why
IRA Basics                                                    l   Safe Deposit Webinar Series: Part 2 – Legal Documents
  Jan. 10, 2012: SDBA Office, Pierre                              and Issues
  Jan 11, 2012: Ramkota Inn, Sioux Falls
June Webinars                                                 Dakota School of Banking
The following are available as live webinars and/or             June 12-17, 2011: Jamestown, N.D.
recorded seminars. For more information and additional
                                                              SDBA National School for Beginning Ag Lenders
webinars go to www.sdba.com, Calendar of Events, and
                                                                June 20-23, 2011: Black Hills State University,
click on the “Search for Trainings” page.
                                                                Spearfish, S.D.
l   Regulation Q Repeal
                                                              Graduate School of Banking at Colorado
l   Best Practices in Contract Negotiations for Third Party     July 10-22, 2011: Boulder, Colo.
    Banking Providers
                                                              Graduate School of Banking at Wisconsin
l   Introduction to Financial Planning Products                 Aug. 7-19, 2011: University of Wisconsin-Madison
l   An Eleemosynary State of Mind: What Charitable            GSB Human Resource Management School
    Techniques are Hot and What are Not                         Aug. 7-12, 2011: University of Wisconsin-Madison
l   Brave New World: Emerging M and A Strategies for          GSB Advanced Human Resource Seminar
    Community Banks                                             Aug. 9-12, 2011: University of Wisconsin-Madison
l   Commercial Loan Documentation – Part 1                    GSB Senior Management Seminar
l   Understanding the Business of Banking – Factors That        Aug. 14-19, 2011: University of Wisconsin-Madison
    Drive Profitability                                       School of Trust & Financial Services
l   Underwriting Tax Returns for Residential Loans               Aug. 22-26, 2011: Omaha, Neb.
l   Call Report Preparation Webinar Series: Part 1 –          Advanced Trust Administration School
    Operational Schedules                                       Aug. 23-25, 2011: Omaha, Neb.
l   Paper Checks, Remote Deposit Capture, ACH and             SDBA IRA School
    Electronic Transfers: What Law Applies and Who is           Sept. 7-9, 2011: Clubhouse Hotel & Suites, Sioux Falls
    Liable?                                                   Advanced School of Banking
l   Creating and Executing Your Branch Business Plan            Oct. 3-7, 2011: Grand Island, Neb.
l   Increase Your Safe Deposit Box Income                     GSB Financial Managers School
l   Regulation O: Lending to Insiders                           Oct. 9-14, 2011: University of Wisconsin-Madison

l   2011 Appraisal Regulations Update
l   Commercial Loan Documentation – Part 2
l   Officer Calling: Prospecting, Preparing & Presentation     Program and registration information is available six to
                                                               eight weeks before each conference. For complete registration
l   Call Report Preparation Webinar Series: Part 2 –
                                                               information, visit www.sdba.com.
    Lending Schedules

South Dakota Banker u June 2011                                                                       www.sdba.com         23
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