Confab: Nebraska Bankers Association

The Nebraska Bankers Association annual convention featured robust attendance as bankers poured into the Embassy Suites Conference Center in LaVista to bid farewell to association leaders George Beattie and Karen Miller and to meet the person being groomed to head the association, Richard Baier. Craig Brewster, president and CEO of Butte State Bank, was elected NBA Chairman, taking the gavel from John P. Stinner, CEO of Valley Bank and Trust Company in Gering who has turned his attention to a campaign for a seat in the state's unicameral legislature. Michael Pate, president and CEO of United Republic Bank in Omaha, was named NBA chairman-elect..The two-day event in suburban Omaha featured an industry update from American Bankers Association Chairman Jeff Plagge, and presentations from military leaders, a business analyst and a former athlete..Baier, who will become NBA's president and CEO on Jan. 2, 2015 upon Beattie's retirement, introduced himself to the membership. For many people, it was their first opportunity to meet Baier, who joined the NBA staff on March 17, two months after his selection was announced.."I was born in western Kansas. Had a chance to survive the farm crisis of the 1980s. I was a sophomore in high school as the FDIC liquidated the largest bank in our community and I watched the devastation as the hardware store, the grocery store, the dry cleaner and a few other businesses literally closed within 30 days. I have a profound respect for the importance of the financial services industry," said Baier from the stage before a general session. "After college I did a little stint in Washington D.C. I came back to graduate school here in Nebraska and have been fortunate to be here ever since. I worked in LaVista, York, North Platte, and most recently I have been in Lincoln for the last 11 years. Spent almost nine of those years working for Governors Mike Johanns and Dave Heineman as head of economic development, and that's where I got to meet many of you.."Looking forward, one of our biggest challenges is in the area of government affairs. That is one of my personal passions, something I am very interested in, and something I have been doing for the last 10 years," Baier said. "I led the team that put together the Nebraska Advantage Act which is helping to grow business in the state." Noting his work on a program called the Talent Innovation Initiative, Baier said, "I have had a great deal of experience working with our Nebraska legislature and also on federal issues.".Baier said he has visited some 30 banks so far and he hopes to visit all 208 banks in the state..Beattie, who has led the NBA since 1991, is taking this year to mentor Baier through the transition. Many of the speakers to take the stage during the convention acknowledged Beattie for his leadership, which has made the association one of the most respected state banker groups in the country..Miller's Jan. 2, 2015 planned retirement adds to the gravity of the transition. Miller is senior vice president at the association. She was honored at the convention particularly for her work with the NBA's Leadership Program, which she started in 1996. Since then nearly 150 bankers have completed the two-year program, including Brewster who was part of its inaugural class..Brewster as NBA Chairman.Brewster said the biggest issue he expects to deal with during his chairmanship is the leadership transition. He said the board will take the opportunity to look at the big picture, including association and board structure. Brewster noted Nebraska has half the number of banks that it had when Beattie joined the NBA 23 years ago..Brewster commented that while the NBA is in a period of transition, so is the industry. "One of the questions you may be asking yourself is, 'is my bank too small to succeed?' Today we have an alphabet soup of regulations by which we are required to operate our banks," Brewster said. "A lack of de novo charters and a decline in bank charters is likely to continue as bankers tire under mounting regulatory burdens, and decide to sell to a larger institution to handle the onslaught of regulations. ."On top of that is credit union and Farm Credit System competition. FCS uses its government sponsored status to gain access to capital markets at rates commercial banks can only dream of. The banking industry is the only industry in the United States required to compete directly against two tax-advantaged industries, one of which is sponsored by the U.S. government.."We need to remind our government officials that our deficit could be reduced each and every year if these tax-advantaged entities paid their fair share in federal income taxes. Credit unions have cost us $20.5 billion in lost federal income taxes since 2001. Over the next five years, credit unions will cost tax payers $12.8 billion in federal taxes, according to Office of Management and Budget. This ranks as one of our largest corporate tax loopholes. Furthermore, the FCS tax subsidy cost taxpayers $6.5 billion in last five years. As Farm Credit continues to grow, so does its tax subsidy.".Brewster further talked about the difficulty many Nebraska banks have attracting and retaining talented workers. He said he frequently speaks to college classes about careers in banking and he encouraged his colleagues to take advantage of similar speaking opportunities..Stinner, who concluded his year as NBA chairman, hopes to continue to advocate for his industry as a members of the Nebraska legislature, a body of 49 state senators. Each senator is limited to two four-year terms. Stinner is running for the District 48 seat, located in the western part of the state. Another Nebraska banker, Matt Williams, also is running for the Nebraska legislature. Williams is the immediate past president of the American Bankers Association. (See accompanying article for more on their campaigns.).Industry issues.Plagge, president and CEO of Northwest Financial Corporation in Arnolds Park, Iowa, summarized industry issues and urged bankers to forge ahead with a positive attitude. "We just need to get back to the business of banking," Plagge said, lamenting the numerous distractions that keep bankers from focusing on their core business..Reg burden is a draining problem for both bankers and their customers, he said. "The real burden is on our customers," Plagge said. "We have to deal with it, we will work through it. But at the end of the day it is making doing business harder and you have to ask what was the intent of the regulation and is it serving that intent?".Plagge commented that the rules implementing the Dodd-Frank Act already fill 6,800 pages, and an additional 5,600 pages are anticipated to be needed to complete the rule-making. "There is just nothing good about 12,000 pages," Plagge said. "We know it is not going to be overturned. All we can do now is work around the fringes and make sure we identify those areas where we can make progress.".Acknowledging a tendency to grow weary of battle against credit unions, Plagge said bankers must continue to work to level the playing field. He said Nebraska banks collectively paid $224 million in federal income taxes last year, compared to nothing paid by credit unions. "When gross equals net, it's a good deal for the person who has that equation. It's a bad deal for the people trying to compete against them. We have to get that changed," Plagge said. "It is mission creep to the absolute maximum. A lot of large credit unions are nothing more than disguised banks with a tax benefit.".Plagge said the competitive situation with Farm Credit System institutions also is frustrating. "Last year the effective tax rate of the Farm Credit System was 4.5 percent," he said. "Last year the Farm Credit System made $4.64 billion; that tax benefit now is $1.34 billion that they have to work against you. That's a huge advantage when someone hands you $1.34 billion and says go have fun.."At Farm Credit System, loans greater than $1 million now comprise 51 percent of their loan portfolio; 83 percent of their loans last year went to large borrowers. Young farmers, beginning farmers — that's not their target any more. Their target is the biggest and the best. Their credit limit system wide is $1 billion," he said..Plagge encouraged bankers to remain positive. "If we wake up every morning saying boy it sucks to be us, how do you think our customers pick up on that attitude? How do you think your employees pick up on that attitude?" he said. "We have to be positive about our industry, every problem brings an opportunity.".Other presentations during the convention came from Commander Kirk Lippold, United States Navy; Admiral James Stavridis, USN; Rory Aplanalp, Forbes magazine editor Rich Karlgaard and former NFL player Rocky Bleier.