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CBW bankers rally around legislative efforts at annual meeting
Northwestern Financial Review, Oct 1-Oct 14, 2005 by Bengtson, Tom
Wisconsin bankers are working with the legislature to change the state's law so that it will permit reciprocal interstate branching. The move, discussed at the Community Bankers of Wisconsin annual management conference and expo at the Wisconsin Dells, Aug. 31 through Sept. 2, is another sign of a changing industry as the association advances into its 25th year.
Under current Wisconsin law, a state bank cannot set up a branch in a neighboring state, and banks in other states are not allowed to set up branches in Wisconsin. Jim Sheriff, CBW legal counsel, told bankers that if the law is changed, Wisconsin state-chartered banks could open branches in 17 other states that permit reciprocal interstate branching, including Illinois, Michigan, and Indiana. Minnesota does not allow such branching.
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About 70 percent of CBWs members who responded to a survey on the topic conducted earlier this year said they favor such legislation. CBW is working with lawmakers to get a bill introduced in the Assembly this month. The legislation also would eliminate the age restriction, which currently prevents an out-of-state bank or holding company from buying a Wisconsin institution until it is five years old. The Wisconsin Bankers Association also supports changes in the state's branching law.
Illinois changed its law to permit reciprocal interstate branching just last year. The Community Bankers Association of Illinois got behind the effort after a membership vote revealed that most of its members wanted interstate branching.
Daryll Lund, CBW president, noted the organization continues to evolve to meet the needs of members. He cited the organization's ATM Access Network, started in 1997. "Our network started with just over 100 ATM locations," Lund said. "Now we have over 600 locations making us the largest selective-surcharge alliance in Wisconsin. We are now larger than the biggest banks, including M&I, U.S. Bank, Associated, Chase and the credit unions."
Lund said CBW is working with the University of WisconsinWhitewater's economics department to evaluate data from the banks that use the ATM network. He said he expects the data to show that those banks have impressive profitability ratios relative to those banks that have not used the network.
Lund used his annual association update speech at the conference to encourage bankers to support the Communities First Act, the legislation spearheaded by the Independent Community Bankers of America that would reduce the regulatory and tax burden of community banks. Based on an American Banker survey that said compliance costs at banks equal about 7 percent of the industry's annual revenue, Lund said Wisconsin banks spend $440 million on compliance. He noted that 851 rules have been promulgated for banks since 1989, including 50 in the last year.
"Will those regulations be around in the future?" Lund asked. "The answer to that question is dependent upon our actions today. We need to become more proactive in asking for what we need. If we ask for nothing, nothing is what we will get. That is why ICBA in partnership with CBW and 43 state associations is supporting the Communities First Act.
"Unfortunately, sometimes bankers are our own worst enemies," he continued. "Some in our industry are skeptical about the Communities First Act because they believe it may undermine efforts underway on credit unions and other reg relief bills. If that is the case, are we only supposed to seek regulatory relief after we tax credit unions or place restrictions on our competitors? Aren't 851 rules since FIRREA enough that something needs to be done? I say waiting is not an option."
Lund recognized several bankers in his speech, including Gary DeMaster, who goes off the CBW board after completing his year as immediate-past chairman. Lund noted that DeMaster, of Oostburg State Bank, was chairman during a particularly eventful year. It was during DeMaster's chairmanship that the state's Department of Revenue began to audit banks for taxable activity in their out-of-state investment subsidiaries. The move created a rift between bankers and the state agency, with CBW eventually helping to draft language used to facilitate agreements between many of the banks and the state.
Sheriff reported that about 150 banks have signed settlement agreements with the state, paying about $27 million in total taxes. Discussions remained underway through September with some 25 to 35 banks. Sheriff said the Department of Revenue will start issuing assessments for back taxes to banks that do not settle by October. He said the assessments could lead to litigation in some instances.
Community Banker Award
The Community Bankers of Wisconsin named Charlie Saeman its Outstanding Community Banker Award winner. Saeman is from the State Bank of Cross Plains, which has a solid connection to CBW. Saeman was chairman of CBW in 1998-99. Saeman's mentor and colleague, Lee Swanson, was one of the founders of CBW, was chairman of the group in 1992-93 and is an Outstanding Community Banker Award winner himself in 1989. Swanson is chairman of the State Bank of Cross Plains, which is the only CBW bank to have two award winners who also are past chairmen.
