Speaker: There’s opportunity for those with fire in the belly

Roxanne Emmerich, the dynamic service culture change agent, told community bankers this is a great time of opportunity. She was the featured speaker at the annual seminar hosted by the Eide Bailly consulting firm in Mankato, Minn., on Oct. 28. .Paul Sirek and Rhea Hemish of Eide Bailly preceded Emmerich with an update on tax law, while Minnesota Deputy Commissioner of Commerce Kevin Murphy provided an update on the condition of the state's banks.."This is an important time to pick up market share," Emmerich declared. She said most bankers are stuck in old ways of doing things, and they need to adopt new thinking. "You need a new belief system," she said. Bankers who say deposits are tough to come by typically find deposits tough to come by, she said. "We make things harder for ourselves than they need to be.".She encouraged bankers to "upgrade the quality of your customers," saying it is the surest way to make it through difficult times. "In a recession, you should be targeting the wealthy," she said, encouraging bankers to identify top prospects. Make a list, she said, and make sure everyone in the bank knows who's on that list..She said many employees are not particularly engaged in their work, a worrisome trend, she said because employee engagement is a leading predictor of profitability. "Some employees are working against you," she said..Leaders need to address issues surrounding under-performing employees. She said failure to deal with low-performers is the No. 1 reason CEOs get fired..She said successful leaders decide to be about making the world a better place. They are "givers," she said..People are willing to pay more for quality, so she said banks should figure out what they are good at, and who they are good with, and focus on those. Most organizations spend all their time on the wrong things. She maintained that if a bank's staff spends even 10 percent of its time on the right things, "you could turn the bank around.".She said banks get distracted with false opportunities. For example, many bankers are considering acquisition of failed bank assets, even though such a move might not make a bank any better off..She encouraged bankers to invest in their employees. She stressed the importance of developing a good culture. "Culture," she said, "is a leading predictor of profitability.".Start by asking yourself whether you are fun to be around. People want to be around others who are fun, she said.."Marketing is not a department, but a way of being," she said. Most billboards and newspaper ads merely position a bank as a peddler. She said a better approach is to develop an expertise that attracts market attention. "Become the learning center of your community," she suggested..Ultimately, success is a matter of desire, she said. "Do you have the fire in your belly or did you let it die out?" she asked in conclusion. .Expiring tax cuts.There are more than 100 tax provisions set to expire Dec. 31, reported Hemish, a tax expert with Eide Bailly..The long term capital gains rate is set to rise from 0-15 percent to 10-20 percent; corporate dividends, which now are taxed at capital gains rates, are going to go back to being taxed at the ordinary income tax rate, Hemish said..The 10 percent tax bracket is set to disappear and all other tax brackets are set to rise, with the highest bracket going to 39.6 percent from the current 35 percent..She also noted the uncertain situation surrounding the estate tax. In 2010, there is no estate tax; on Jan. 1, 2011, a tax rate of 55 percent is scheduled to begin to apply to any inheritance over $1 million. "Rumors are we could see an exemption of at least $3.5 million and possibly as high as $5 million," Hemish said..Hemish said some banks may qualify for an employee tax holiday if they hired someone after March 18, 2010. The Hiring Incentives to Restore Employment Act gives companies a $1,000 tax credit for hiring people who have been out of work for at least six months. In addition, the bank is exempt from paying the Social Security tax through the end of 2010..Sirek noted changes that will be coming as a result of the health care law signed last March. Beginning in 2011, companies will be required to include on employees' W-2, information about the value of their health insurance..Also, beginning in 2011, companies will have to provide 1099s to any business with which it does more than $600 worth of business. Currently, such reporting is only required when doing business with unincorporated entities. "It is widely believed this will change before 2012," he said..Effective 2013, high wage earning employees will have to pay an additional 0.9 percent on their Medicare tax. Employers will have to withhold the entire amount, but only have to match the current 1.45 percent..Also beginning in 2013, high-income people will be charged a 3.8 percent surtax on passive income, including income derived through subchapter S shares in a bank..Beginning in 2010, the government is providing a tax credit to small companies that provide health insurance to their employees. The credit covers up to 35 percent of the employer's cost. The smaller the company, the more likely it is to receive the full 35 percent credit. .Condition of banks.Murphy said that while most attention is focused on troubled banks, most of the industry is actually doing well. Eighty percent of state chartered banks, he said, have a Texas ratio of 49 or lower, "which is fairly respectable." Sixty-four percent of the banks, he said, have a CAMELS rating of one or two..Murphy reported that 61 banks have a rating of three; 41 banks have a rating of four and seven banks have a rating of five. Murphy said two of the 5-rated banks have buyers lined up..Murphy reported there have been 13 bank failures since January 2009. Most of the failures have been located in the Twin Cities or suburbs. "There were a lot of residential development and construction loans in these banks. These banks were relatively new, under 10 years old. A lot of these banks had heavy borrowings or non-core funding," Murphy explained.