Montana Banker News May 2020

The HegreblogYear 1 with MBA…“YIKES!”

May 15 marks my one-year employment anniversary with MBA, and July 1 was my official start as President/CEO. I was barely getting the hang of “banker lingo,” which involves dozens of acronyms for agencies, organizations, regulations, programs and laws, when the world went upside down. What started out as jocular “elbow bumping,” toilet paper shortages, and quips about hand-washing, soon turned into conferences and meetings being cancelled, businesses and schools ordered to close, people told to stay home, and deteriorating economic conditions never before witnessed by most Americans.

Prior to the pandemic crisis, nearly every trade association in America, includingMBA/ABA, had “workforce development” goals at the top of their strategic plans. Nearly every business in every industry in every city or town cited a lack of skilled workers as a significant challenge. Overnight, a tidal wave hit, and massive unemployment faces the country as businesses temporarily closed and others saw demand for products/services plummet. Some companies like Amazon and Zoom hired people, but most businesses will not be thinking about workforce shortages for the foreseeable future.

Like every business and organization, the Montana Bankers Association was compelled to pivot quickly toaddress the new, urgent issues our member banks and bankers were facing. “Leadership and Advocacysince 1904” is a slogan we’ve used for decades, and it continues to serve as a guidepost for defining our rolein the current crisis.

The MBA has been quoted in numerous statewide news media stories over the past weeks, as we arerecognized as the voice of the banking industry in Montana. We led early with a public statement thatemphasized the financial strength of Montana banks and our commitment to serve the needs of customersand communities. We partnered with the Montana Chamber of Commerce in reinforcing the key rolebanks would play in processing and disbursing emergency loans to small businesses, and before the nowinfamous Paycheck Protection Program was even rolled out we were in the news urging business owners tobe ready with the right information and contact your banker early to prepare for the application process.

To be candid, we took some criticism for encouraging hundreds of business owners to contact bankers whodidn’t even have a playbook to look at yet. Some bankers at the time thought we were premature and a bitoverzealous in assuring the public that “your banker has your back…make sure you work with him/herearly and don’t wait.” In retrospect, we’re proud of the positive, proactive messaging in those early stagesbecause Montana community banks rose to the occasion by processing more than 13,000 PPP loans, inRound I, totaling nearly $1.5 billion, which on a proportionate basis to our population was extraordinary.After hiccups in the launch of Round II of the program, it appears that nearly every Montana bank wasable to submit applications on hand before funding ran out.

When bankers began sounding warnings that small businesses were at risk of failing if not allowed to opensoon, even with the PPP funds, MBA again pivoted and again partnered with the Montana Chamber. Bothorganizations surveyed members on the economic impact of business closures and we jointly authored aletter to Gov. Bullock, which was co-signed by numerous other business organizations. While the Governor was clearly deliberating how to phase a business re-open plan, our efforts provided him valuable “political cover,” by offering hard data from business owners themselves and the bankers who finance them.

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BANKER NEWS LEADERSHIP & ADVOCACY SINCE 1904

The Hegreblog continuedThroughout the crisis, we’ve been in constant contact with Montana’s congressional delegation and staff,along with assisting in organizing weekly calls with Montana Banking Commissioner Melanie Hall and herstaff, not to mention SBA folks who have been instrumental in assisting banks with guidance, coaching andtimely information.

Meanwhile, pandemic crisis aside, MBA downsized by one full-time staffer in January, changed ouraccounting software, and our IT provider, and have been negotiating to sell part of the building we own andoccupy in Helena. YIKES! To say the least, it has been a busy year. But I have enjoyed working with ourcommitted board of directors and with Tempi and Pam—who have been so patient and helpful I will beforever grateful. Thank you for your support and encouragement; I look forward to an equally exciting andchallenging “year two” with the MBA.

With Healthserve no longer operational, and the corresponding downsizing of staff, the BANCSERVE and MBA boards of directors jointly decided to list vacant space we own in the John T. Cadby building in downtown Helena for sale or lease. BANCSERVE, a for-profit subsidiary of the Montana Bankers Association, owns four of six office suites in the building. One suite is occupied by MBA staffers Cary Hegreberg and Pam O’Reilly, along with two employees of the Montana Multiple Listing Service, one suite on the main level is leased to a well-established Helena law firm, and the other two have been vacant for a couple years.

BANCSERVE has signed a Buy-Sell Agreement for its two suites on the upper level of the two-story building, which is where MBA/BANCSERVE offices have been for many years. Presuming the sale goes through this summer, we will be moving into renovated space we own that is currently vacant on the street level of the building. While the new offices are not as “prestigious” as our current digs, this will be a fiscally prudent move that will add to our healthy financial reserves and dramatically reduce operational costs by not paying taxes and utilities on vacant space. At this time, it also appears that Montana MLS will move with us and continue paying nominal rent for two offices.

An issue we are encountering as we prepare for the move is mountains of bankers’ boxes and file cabinets crammed full of records, along with unneeded office machines, telephones, furniture, and “junk” stashed in the basement 30+ years ago. So, please bear with us during the next few months as we execute this painful but prudent relocation of our offices.

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MBA/BANCSERVE sellingoffice space

The newest member of the Montana BankersAssociation team, our communications contractorSara Cutter. Sara and her husband, Jack, ownCutter Consulting a communications and marketing firm which specializes in digital strategies. Hailing from Colorado, they now live in Helena with their adorable Olde English Bulldogge, Prudence, and are enjoying their new home immensely. You can reach Sara at Sara@CutterConsultingLLC.com

Please help us distribute your articles andpromotions. Send pieces which are informative

to bankers, discuss relative trends, & bestpractices.

Send to:cary@montanabankers.com

Introducing Sara Cutter

BANKER NEWS LEADERSHIP & ADVOCACY SINCE 1904

For stepping up during the COVID-19 pandemic

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Thank you!

Small Business Association MontanaBrent Donnelly, Tom White, and Lorena “Rena” Carlson

Montana Division of Banking and Financial InstitutionsMelanie Hall and her fantastic staff

Sen. Jon Tester, Sen. Daines, Cong. Gianforte and their greatstaffers who communicated with us constantly and continue to do so

Gov. Steve Bullock for appointing three members of the MBA to hisEconomic Relief Task Force, for listening to our concerns aboutre-opening the economy is a safe, methodical way

Montana Chamber of Commerce

Bank staff and employees who have gone the extra mile

BANKER NEWS LEADERSHIP & ADVOCACY SINCE 1904

COVID-19 Resources from Office Depot

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The Montana Bankers Association is proud to stand with you during uncertain times. Our partners atOffice Depot have been on top of our member’s needs from the onset of this pandemic. Following are someitems to help provide your customers and employees peace of mind.

If you have questions about any of these items, contact Office Depot's Isaac Mares at (855) 337-6811 Ext.12878 or isaac.mares@officedepot.com.

Canvas Cloth Face Masks Available for Pre-Order;Release on April 29Cloth Face Masks from Office DepotBella + Canvas Cloth Face Coverings$19.99 per pack of 10Enter Item # 9885276

Ultra-soft sweatshirt-like fabric makes this one-piece face cover comfortable, cozy, andbreathable. A one-size-fits-all design with raw edges, two ear holes and a contoured shapemakes the mask versatile for many different face sizes and shapes.

Countertop, Hanging and Mount-to-Counter Barriers

Counter Barriers Affordably priced and available in a variety of sizes and options. Thesebarriers provide added protection from potential respiratory droplets for both thecustomer and employee.

Click here for more information.

Custom Signage Solutions for Health and Safety

Pedestal signs and table tents let you put your message where it's needed easily andquickly. Engraved signs can be cleaned as often as needed without damaging the sign orthe message. Floor decals help your customers practice safe social distancing and avoidthe spread of germs.

Click here for more information.

Protect Your Customers and Employees with Check-in and Temperature VerificationCapabilities

Help protect the health and safety of both employees and customers by preventing anyonewith a temperature from entering your institution. Alarms can be added to sound whenthose above the temperature threshold and those without access attempt to enter.Custom Sizes and Configurations Available

Click here for information. For a quote, contact Isaac Mares at (855) 337-6811 Ext.12878 or isaac.mares@officedepot.com.

BANKER NEWS LEADERSHIP & ADVOCACY SINCE 1904

Endorsed Partner Highlight

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Become a MBA Endorsed Partner!Contact Pam O'Reilly, Association Services Director at800.541.5126 or Pam@MontanaBankers.com

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Excerpt: Put Down the LongbowIn ag banking, the right relationships still mattersAg banking is different." How many times have you heard that one? Or, if you are an ag banker, how many of you have used that argument in loan committee as the discussion goes on and on about the viability of a particular credit?Is ag lending really different, and if so how? We recently put our heads together to come up with what we believe are the reasons why ag banking is different than other types of lending, and why it demands and why it demands a different, relationship-driven approach.

First, ag banking requires a holistic approach by the lender. Successful ag bankers must have at least a working knowledge of the type of agriculture that is being financed. And while you could argue the same is required by lenders who make convenience store loans, for example, we believe that most successful ag bankers must know more about the businesses they are financing than just about any other commercial bankers.

The proof of this is what happens when a banker, who has no agricultural experience whatsoever, gets into an ag credit - usually it is a disaster. In addition, schools for ag bankers still teach that lenders need some expertise about the particulars of agricultural enterprises. In part, tradition exists around this approach, but ag banking is also taught this way because it has been proven to work.

Read the full article at https://www.montanabankers.com/resource/resmgr/banc-serve_newsletter/March_Madness-Heather_Malcol.pdf

Heather Malcolm is Vice President of agricultural lending at Bank of the Rockies, Livingston, MT

AdvocacyEnhancing Credit Opportunities inRural America (ECORA) ActThe Enhancing Credit Opportunities in Rural America Act, alsoknown as ECORA (H.R. 1872/S.1641), is a farmer friendly bill tohelp lower the cost of financing farm and ranch real estate. ECORAwas introduced in the House of Representatives by RepresentativeSteve Watkins and in the Senate by Senator Pat Roberts. In Marchthe ABA sent a letter in support of the ECORA Act. The latestaction on the bill was March 26th, Referred to the HouseCommittee on Ways and Means. MBA will be ramping up supportand working with Montana farm groups on this bill.

Read the ABA letter in support of H.R. 1872 www.mon-tanabankers.com/resource/resmgr/docs/ABA_Support_-for_HR_1872_ECOR.pdf

Read the ABA letter in support of S. 1641 www.montanabank-ers.com/resource/resmgr/docs/ABA_Support_-for_S_1641_ECORA.pdf

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WebinairsBSA-AML Annual Officer Training / Deposit Compliance and Operations ConferencePhysical Security ConferenceMAY 12, 13 AND 149:00 A.M. TO 4:00 P.M. TUES/WED AND 9:00 A.M. TO 3:30 P.M. THURS

BSA-AML OFFICER ANNUAL TRAINING AGENDA / DEPOSIT COMPLIANCE AND OPERATIONS CONFERENCE AGENDAJust because we are dealing with a global pandemic doesn't mean we drop the ball on training! MBA brings our annual BSA-AML Officer training and Deposit Compliance via webinar with Deborah Crawford. We will be using Deborah's webinar provider TelSpan and there will be opportunities for questions and answers, plus the program will be recorded and available to you. We have set the agenda with scheduled topics and breaks so that if you choose to shuffle different staff for specific topics, you can do so easily.Register HERE

PHYSICAL SECURITY CONFERENCE AGENDAMBA brings Physical Security Conference with Barry Thompson and Arvin Clar. We will be using Zoom for this all day conference (9:00 a.m. to 3:30 p.m.) We have set the agenda with scheduled topics and breaks so that if you choose to shuffle different staff for specific topics, you can do so easily.

Topics to be covered:Pandemic Frauds: What's AheadNew Technology: Cash Recyclers, Pod Banking & Interactive ATMsCheck Fraud SmackdownWhen Social Media AttacksFinancial Crime InvestigationsRegister HERE

Education

The Graduate School of Banking at Colorado (GSBC) has launched GSBC Cares: A Virtual EducationExperience as a service to the nation’s community banks amid the COVID-19 pandemic. The initiativecomes at no cost to bankers and aims to support them by keeping them informed and connected, whilegiving them access to the industry’s top experts.You can check out the virtual learning portal at https://www.gsbcolorado.org/gsbc-cares/

News from our graduate school partnersGSBC launches virtual learning & networking intiative for community banks amid COVID-19

In a recent letter to students, the Pacific Coast Banking School President prepared the incoming class forthe uncertainties of education during the COVID-19 pandemic. While hopeful that the University ofWashington will open this summer, President Claflin acknowledged they are working on contingency plansfor how they will respond in the event that either the UW will not be open or social distancing guidelinesmake it necessary to make changes to the residential portion of the program. In the event that PCBS isunable to hold their traditional on-campus session, they will be soliciting input from multiple sources tohelp determine the optimal approach to the 2020 PCBS experience.PCBS has also extended their refund policy to allow for a full tuition refund through June 30, 2020.

PCBS considers options for program delivery

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Watch for upcoming Conferences and Workshops coming in 2020 at MontanaBankers.com or for more information contact Pam O'Reilly, Association Services Director at 800.541.5126 or Pam@MontanaBankers.com

Events

It is with heavy hearts that the Montana and Wyoming Bankers Association’s have decided to cancel our 2020 Convention and Annual Meeting at The Northern Hotel in Billings. In working with the hotel and in light of the phased in reopening of Montana, Wyoming and Montana decided that within a joint convention with bankers, sponsors, and vendors, we could not meet the restriction of meetings with less than 50 people. We are thankful that we anticipated more than 200 people gathering in celebration of banking in Montana and Wyoming but alas circumstances will not allow it.

We want to thank the sponsors and exhibitors who had already registered:

Platinum Sponsors: Bankers’ Bank of the West Bell Bank Federal Home Loan Bank of Des Moines

Gold Sponsors: United Bankers Bank Eide Bailly, LLP

Silver Sponsors: Anderson ZurMuehlen & Co, P.C. Pacific Coast Bankers Bank

Our Exhibitors: Bankers Healthcare Group Compliance Alliance Computer Services Inc Eide Bailly, LLP Federal Reserve Banks Golden Eagle Insurance Harland Clarke iSolved HCM Promontory Interfinancial Network PULSE, A Discover Company The Baker Group United Bankers Bank Windsor Mortgage Solutions

We will keep our fingers crossed and look forward to joining you, our members and associate members in Rapid City, SD with North and South Dakota Bankers Association.

MBA, WBA cancel joint convention

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Press Releases

impact of this crisis which will be felt for months to come. This gift lays the foundation to provide food forfood insecure Montanans during the ever-changing times ahead.

“We believe every person has a basic human right to access nutritious, high-quality food. This gift from theMontana Glacier Family of Banks, allows MFBN to secure and transport over 100,000 meals for Montanansto help meet the increased needs during this unprecedented time. “We are so grateful for this donation.This gift is allowing us to continue our work and fulfill our mission.” Stated Gayle Carlson, MFBN ChiefExecutive Officer.

Since the Covid-19 pandemic began the amount of food distributed to those in need in March and April hasincreased in some areas of Montana as much as 50 - 100%. MFBN is working diligently to meet theincreased need for food assistance throughout Montana.

“Alleviating food insecurity and maintaining the ability to distribute and transport food to pantries acrossMontana during the COVID-19 crises, and at all times, is critical for the health and wellbeing of all Montanans’.

Supporting our local communities is one of the pillars of our organization and we couldn’t be moreproud of the incredible work the Montana Food Bank Network is doing right now, when it’s needed themost.” – Scott Burke, President and CEO First Security Bank Missoula

Visit MFBN.org to learn more about the impacts of COVID-19 in our state and to donate to support ourneighbors in need.

About Montana Food Bank NetworkMontana Food Bank Network’s mission is to end hunger through food acquisition and distribution, education, and advocacy. They believe that every person has the fundamental human right to access nutritious, high-quality food that nourishes the mind, body, and soul. The Network is made up of 380 neighborhood food banks, community pantries, social organizations, homeless shelters, schools, and many other organizations committed to ending hunger in Montana. Montana Food Bank Network distributes food across Montana from Heron to Wibaux, Eureka to Yellowstone, and everywhere in between.

About the Glacier Family of BanksGlacier Bancorp is a regional bank holding company that provides industry leading financial services toindividuals and businesses throughout the Western United States. This has enabled us to serve our localcommunities with the same unique personal attention and friendly service our customers have come toexpect, with the added resources of our much larger banking family.

Montana Glacier Family of Banks announced$35,000 gift to the Montana Food Bank Network

The Montana Glacier Family of Banks (First Security Bank Missoula,Glacier Bank, Western Security Bank, Valley Bank Helena, FirstSecurity Bank Bozeman and First Bank of Montana) announced a$35,000 gift to the Montana Food Bank Network (MFBN). This giftwill support food distribution to food banks and food pantries acrossMontana during the Covid-19 crisis. MFBN recognizes the significant

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Compliance Alliance

Unless you’ve been living under a quarantine rock, you’re undoubtedly aware that Congress passed, andPresident Trump signed into law H.R.748, better known as the CARES Act, on March 27th, 2020. The Lawprovides multiple forms of relief, including the $350 billion Paycheck Protection Program and a delayedtax-return deadline of July 15th. The most important form of relief however, is the disbursement of reliefchecks intended for the majority of Americans.

WHO GETS A CHECK?The majority of Americans are eligible to receive a stimulus check if they meet certain qualificationsset-out in the Law. Specifically, eligibility will be based on each individual’s most recent tax return andadjusted gross income (AGI), which is difficult to explain but quite straightforward with this delightfulformula:

ADJUSTED GROSS INCOME = GROSS INCOME – ADJUSTEMENTS TO INCOMEGROSS INCOME = WAGES, DIVIDENDS, CAPITAL GAINS, BUSINESS INCOME, RETIREMENT DISTRIBUTIONS, ETC.ADJUSTMENTS TO INCOME = EDUCATOR EXPENSES, STUDENT LOAN INTEREST, ALIMONY PAYMENTS, & RETIREMENT ACCOUNT CONTRIBUTIONS

Ultimately, an individual filer will be eligible to receive a check if their most recent tax return showed AGIbelow $99,000. The thresholds rise to $146,500 for head of household filers with one child, and $198,000joint filers with no children. If an individual is above these thresholds, they will not be receiving a check.Additionally, those without a Social Security number, nonresident aliens, and individual’s claimed asdependent’s are equally out of luck.

HOW MUCH DOES EVERYONE GET?The relief checks are expected to be $1,200 for individuals, or $2,400 for married couples, with $500 pereach qualifying child. Filers with AGI up to $75,000 for individuals, and up to $150,000 for marriedcouples filing joint returns will receive full payments. However, as income rises above these amounts, thepayment will be reduced by $5 for each $100 above the $75,000/$150,000 thresholds. As discussed in theprevious section (I hope you read that section and didn’t immediately jump to the “how much do I get”section), single filers with income exceeding $99,000 and $198,000 for joint filers with no children arenot eligible to receive the relief checks.

HOW WILL THE GOVERNMENT SEND THE CHECKS?The IRS plans to use the direct deposit information provided by filers for their 2018 or 2019 tax returns.So for individuals who filed taxes in 2018 or 2019 with direct deposit information, they don’t need to doanything; the check will be automatically deposited into the account. For individuals who don’t file taxesbut do receive Social Security payments, they also don’t need to take any action. The Treasury Departmenthas said that the IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate thestimulus checks to Social Security recipients who did not file tax returns in 2018 or 2019. For individualswho do not have their direct deposit account set up, paper checks will be mailed to them directly.

WHEN WILL THE CHECKS ARRIVE?The IRS will make approximately 60 million payments to Americans through direct deposit starting inMid-April, most likely beginning the week of April 13th, for those who have set up direct deposits. For

Coronavirus Relief Checks:What You Need to KnowGreg Friedman, Associate General Counsel

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Compliance Alliance Continuedthose who haven’t set up direct deposit, the wait for paper checks will be noticeably longer. The paperchecks are estimated to begin going out sometime after May 4th, at a rate of about 5 million per week,which means some checks won’t be sent until Mid-August. This timeline is subject to change of course dueto the highly fluid nature of the situation. The IRS says the checks will be issued in reverse order based onan individual’s AGI, so that people with the lowest income will get their payments first.

WHAT DOES THIS MEAN FOR YOU?Nearly all of your customers are expected to receive government issued checks in the coming weeks.Should be simple, right? We’ve already seen an influx of questions regarding this program, and I’ve donemy best to address the most common concerns below.

1. WHAT SHOULD YOUR BANK BE PREPARED FOR?You can expect quite a few questions from customers regarding when and how they will receive theirchecks,. Reading the first part of this article will provide you with all you need to know about the reliefchecks, so that’s an easy one. You should also be prepared to inform customers of where they can findguidance on this program. The following links are where you and your customers can find further guidanceon the program.

•https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf - Section 2201 on Page 55 of the Law itselfdiscusses this program.•https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know – This IRS page is updatedregularly to provide the most important information needed on the relief checks.•https://www.irs.gov/coronavirus – This IRS page is tailored to provide help to taxpayers, businesses, and tax-exemptorganizations regarding the relief checks.•https://home.treasury.gov/coronavirus – This Treasury Department page provides regular updates on the reliefcheck program.

2. IF A CUSTOMER’S DEPOSIT ACCOUNT IS CLOSED, MAY WE REOPEN IT TO ACCEPT THE RELIEF CHECKS?There hasn’t been any specific guidance on this particular question at this point. Conservatively, we wouldadvise not “re-opening” a closed account to accept a stimulus deposit, similar to the best practice recommendation for IRS tax returns. Re-opening a closed account without the consent of the account ownercould raise UDAAP and potential legal issues, so tread lightly. Ultimately, the best practice here is for yourbank to treat these checks the same way you would general IRS tax returns.

3. IF A CUSTOMER HAS A NEGATIVE BALANCE, CAN WE CHARGE-OFF THE ACCOUNT USING THE RELIEF CHECKS?While there hasn’t been any specific guidance issued on this question, your bank should consider thereputational risk of depositing the funds and then using them to offset a negative balance. Although thebank would be within their rights to do so, it could cause reputational risk that is simply not quantifiableconsidering the spirit and intent of the Law, which is to assist our society in this time of crisis.

4. CAN WE DEPOSIT INTO AN OPEN ACCOUNT AS LONG AS THE NAMES ON THE CHECKS ARE OWNERS ON THE ACCOUNT?Yes, the bank may deposit a relief check into an open account as long as the names to which the check ispayable match the name/names on the account.

5. CAN THE BANK CHARGE A FEE TO CASH THE RELIEF CHECKS FOR NON-CUSTOMERS?There isn’t an express prohibition in charging a fee to cash the checks. The bank would just want to besure that the fee is disclosed before the transaction is conducted to avoid any potential UDAAP issues.

PARTING WORDSUnfortunately, the IRS and Treasury Department haven’t issued too much guidance on these upcomingchecks, so we’re all going to be figuring this out on the fly. As always, Compliance Alliance will be here tosupport you and your bank through this time whether it be through telephone, email, or our hotline chats.

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