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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ Dennis Earhart and his son Nate building their great accomplishment out o f wood, nails and team work. Great Accomplishments Great accomplishments require determination. Hard work. And sometimes a little assistance. Assistance from someone who believes in you. Someone you can trust. Someone who can work together with you and safely get the job done. Dennis Earhart is a key member of the correspondent banking team at Merchants National Bank. With professionals like Dennis and assets of over $740 million, MNB can provide the financial assistance and teamwork to support your hard work and determination. Together we can accomplish great things. Call Dennis Earhart at 319/398-4789 or toll free 1-800-332-5991, ext. 789. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Strength of Eastern |owa Merchants National Bank Cedar Rapids, Iowa 52401 Member F D I C A BANKS OF IOWA BANK W ho’s the ATM network leader? The Plus System* network lets its num bers do the talking. Do 65 million Plus System® cardholders and eight million Plus System® transactions a year tell you something about national market dominance? They should. Because the Plus System® network has tens of millions more cardholders and processes hundreds of thousands more transactions every year than any other nationally shared ATM network. It’s no secret why the Plus System® network is the choice of consumers when it comes to obtaining cash https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis throughout the United States and Canada, and soon in Great Britain, Japan and Puerto Rico. At the Plus System® network, the philosophy has always been to offer customers unequaled reliability. And to offer customers uncompromis ing security that ensures the confidentiality of every transaction. 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For complete information regarding membership, please contact your local Plus System® member, or call Plus System, Inc. at (303) 573-7587. ^■Plus ^ System The premier choice. 4 NOffifflTOTERN FEBRUARY 1987 • 94th Year • No. 1481 MEMBER OF AUDIT BUREAU OF CIRCULATIONS MEMBER BANK MARKETING ASSOCIATION OLDEST FINANCIAL JOURNAL SERVING THE CENTRAL AND WESTERN STATES FEATURES 5 Editorial Across the Desk from the Publisher 7 Financial responsibility Donald Fedie calls it key to economic survival 9 Automating ag loans Nebraska software package offers new approach 10 Ag accrual income statement Minnesota banker likes REC-CHECK STAR 13 Cattle feeders fight back *** “Just got my hands on the ‘Open Letter’ and have read it very carefully. Simply an outstanding job of telling it like it is. I can only hope that your common sense analysis will get through to the right people.” Carlyle P. Austinson President (retired) Northwood State Bank Northwood, N.D. Iowa program aims at retained ownership 16 21 reasons for appraisals Certified farm appraiser relates benefits to banks 18 More on Chapter 12 Editor’s Note: Last month we published sev- 0 eral of the initial letters sent to us by N o r t h w e s t e r n B a n k e r readers after publication of our “Open Letter to Sen. Grassley” of Iowa in our December 15 Weekly Newsletter. That “Open Letter” invited the Senator to recon sider Chapter 12 Bankruptcy, which he co- £ sponsored, and to meet with bankers to dis cuss it. The Senator responded immediately and has graciously scheduled a meeting through the Iowa Bankers Association for February 9 at his Federal Building office here in Des Moines. We will be present and will £ give the Senator responses from bankers documenting their specific objections to Chapter 12. Results of that meeting will be published later. Here are a few of the addi tional reader responses to date: “Excellent letter to Sen. Grassley. We ap- % precíate your time and effort on our behalf. Chapter 12 is going great guns in our area. There were 146 people who attended a Chap ter 12 meeting here and a like number in North Platte. Chapter 12 does many things, including taking no more chances with the 0 young farmer, and discriminating against the small farmer (under $1.5 million). Mel Adams, Chairman, Adams Banks, Ogallala, Nebr. Banks’ “secret weapon” *** Barry Sullivan stresses personal, local relationships DEPARTMENTS 23 24 25 26 27 27 28 28 29 31 32 33 35 44 46 Illinois Minnesota Twin Cities Wisconsin South Dakota North Dakota Wyoming Montana Colorado Nebraska Omaha Lincoln Iowa Des Moines Index of Advertisers NORTHWESTERN BANKER 1535 Linden Street, Suite 201, Des Moines, Iowa 50309 Phone (515) 244-8163 Publisher & Editor Associate Publisher Associate Editor Ben Haller, Jr. Robert Cronin Melinda Sauers No. 1481 Northwestern Banker (USPS 397-620) is published monthly by the Northwestern Banker Company, 1535 Linden Street, Suite 201, Des Moines, Iowa 50309. Subscription $2.00 per copy. $24 per year. Second Class postage paid at Des Moines, Iowa. POST MASTER: Send all address changes to Northwestern Banker, 1535 Linden Street, Suite 201, Des Moines, Iowa 50309. Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “Congratulations on your great letter to the Iowa Senator. I sent a copy to Emil Reutzel, editor of the Norfolk Daily News. I enclose the results.” (The Norfolk news paper’s lead editorial was a thoughtful ap praisal of all the effects of Chapter 12 and called for its repeal.) B.M. DeLay, Chairman The DeLay First National Bank & Trust Co., Norfolk, Nebr. *** “I am sure you’re receiving a truckload of letters complimenting you on your open let- DEAR EDITOR. . . (Turn to page 21, please) 5 Across the desk from the Publisher Dear Readers: has been written, spoken M UCH and pictorialized about the ad verse condition of the agricultural economy in the Midwest the past four years. What started as another cyclical negative “blip” on decades of ag charts now is recognized as a major re-structuring within the in dustry. Its effects are being felt on everyone connected in any way with agriculture—farm operators, small town banks and other businesses, farm implement companies—with a total fallout that has affected mil lions of lives in the nationwide agri cultural sector, especially in the up per Midwest. Four years later, however, when many industry veterans feel that the problems have been identified and the final shakeout is underway, it’s time to look ahead to the agricul tural and financial industry we’ll all be working in just a few years away and into the fast-approaching next century. I t’s time to “accentuate the positive,” as one of Bing Crosby’s old songs advised. I t’s time to take stock of positive things we have go ing for us, the good programs we have in agriculture and banking, the modern technology that can inject an upbeat note in our cadence as we stride forward to a new drummer. This is not intended to close our eyes to present realities; but, while facing up to continuing resolution of problems we now know exist on the farms, in banks, in other businesses, sometimes with pain and casualties, it is only good business planning for bankers and farmers alike to look ahead and plan where they’ll be when they are among the survivors. I t’s not just good business, it’s vital not only to our future but to the world we’ll leave those who follow. Midwesterners want to be good ste wards, and good stewards look ahead to the welfare of coming gene rations. For this purpose, in this issue we have devoted extra pages we nor mally wouldn’t carry so that we might present to you a special selec tion of ag-oriented upbeat feature ar https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ticles, all except one of them written exclusively for you, our readers. That one is the text of a positive, forward-looking talk we heard from Barry F. Sullivan, chairman and CEO of The First National Bank of Chicago, when he addressed com munity bank executives who at tended his bank’s 40th Annual Cor respondent Bank Conference several weeks ago. Mr. Sullivan speaks almost enviously of “your greatest strength,” your community bank’s closeness to your customers, and urges you to utilize that strength to compete with and conquer the new wave of outside competition. One exclusive article by a Min nesota banker relates his bank’s suc cess with a modern record-keeping system for farm customers, as well as small businesses and professional firms. Another, written by an exper ienced Iowa and Minnesota farm real estate appraiser, tells how a qualifed appraiser can be an asset to a bank at the right time. Still, a third exclusive feature from a young Nebraska computer technology devotee tells how modern high-tech computers can work for banks and their ag customers. Addressing the touchy area of how to get farm operators to under stand the need for accurate financial records and, even more importantly, how to use them on the farm and with the bank is discussed for our readers by an 18-year financial vete ran who works with banks and farm owners in four states. Adding to this array of forward-looking articles is a special report on new programs be ing utilized aggressively by cattle men’s associations, with special em phasis on a successful Iowa pro gram. In addition to preparing these special articles for you, we’ve been deeply involved, as many of you know, in an effort to have Senator Charles Grassley (R., Ia.) take another look at the new Chapter 12 Bankruptcy Law he co-sponsored. Our “Open Letter to Sen. Grassley,” published in our December 15 Week ly Newsletter, which is mailed each week to all paid subscribers of the magazine, has drawn as much reader response with dozens of letters and long distance phone calls as any arti cle we’ve published in recent memory. Some of those letters were published in our January magazine, while others appear in this issue as Dear Editor letters. We are pleased to report that Sen. Grassley con tacted us immediately upon receiv ing our letter and is very concerned with banker reaction to the new law. He has graciously contacted the Iowa Bankers Association after get ting that letter and has arranged to meet with the IBA and several lead ing ag bankers here in Des Moines in early February. We have been in vited to attend that small meeting and will give you a report later. We are grateful to Sen. Grassley for ac cepting our invitation to meet with these bankers. With these special ag articles, and our approach to the Senator on your behalf, we hope to strike a positive note, and our concentrated effort is our re-confirmation of our publica tion’s commitment of 93 years to serve you, our readers, to the very best of our ability. Ours is the oldest banking magazine from Chicago to the West Coast and we are grateful to you for your continued readership, which in many instances extends to second and third generation banking families. To continue making our publica tion the strong, viable vehicle it is to assist you with up-to-the minute news and latest banking techniques, we invite you to not only keep us in formed about news from your bank, but also to let us know the types of articles you feel will be helpful to you and your staff. If you wish to recommend that we contact you or one of your staff or another banker you know who is doing something unique, or perhaps doing a routine job uncommonly well, please contact us. We’ll use your ideas to formulate further exclusive articles designed to be helpful to you and others to build better banks for the future. Cordially yours, Ben Haller, Jr., Publisher T he N orthwestern B anker Northwestern Banker, February, 1987 Whenacustomerdies, hisbiggestlegacyshouldn't bealoanbalance. ■ ' .■; ... iti ; • ;ns all the time. A custc^B lues and his family ^ ^ ^ ^ P ^ e r y th in g . Including a big loan balance. But you can prevent that from happening to your customers. W ith IBIS creditor protection insurance. We have a full line of plans to choose from. O ne that offers a complete excess program, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis as well as uncomplicated coverage for the complex agri business world. It’s also insurance that, like our company, is designed by Iowa bankers to help Iowa bankers. So it comes with benefits for you, too. Like a fully com puterized claim system, sales and product seminars plus life and credit life licensing schools. W ant to know more? For complete IBIS creditor pro tection insurance details, call 1-800-532-1423 toll-free.Today. IowaBankers Insurance& Services,Inc. The key to ag survival Financial responsibility Written especially for T he N orthwestern B anker By DONALD M. FEDIE, President Agri Control Company, Inc. Sioux City, la. ECENTLY, a second year accounting student was asked, “If you were a manufacturer, what is the R most important financial fact you would need to know?” He answered, “My cost of production.” A sec ond question followed. “Why?” The answer, “Because knowing the cost of production is essential if I am to sell my product at a profit.” Simple? Sure! For you and me. Unfortunately, not simple for the majority of ag borrowers. In bank after bank and on farm after farm, we have experienced the frustration of farmers not knowing or understanding the application of simple, fundamental financial man agement concepts. Basic terms such as accrual, fixed and variable expenses, and allocation of interest draw blank stares. When discussing ratios there is, at best, a comprehension of current ratio. Debt service coverage ratio or earned net worth change might just as well be formulas for calculating earth’s orbit. Gross margin is rarely understood, usually confusing. The reason? Because, until now, the only “ financial responsibility” required of most producers was writing checks to pay bills, and their wives do most of that. Until now! TIME FOR CHANGE The deceptive concept that increasing production can substitute for sound financial management does https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis not work. Producers cannot continue to fool them selves into believing that better yields will provide the funds to amortize steadily increasing loans! Nor can their lenders! If you need proof, look around. Count the number of producers and lenders that failed last year. I t’s not a problem of present income. A report released by USD A demonstrates that net earned in come equalled an all time high of $45 billion in 1985, and $40 billion is estimated for 1986. I t ’s a problem of repositioning and restructuring capital assets. I t ’s a problem of absorbing and allocating large capital losses. (See Chart I) USD A expenditures in 1986 represent a peak in agricultural spending. So says the budget the Presi dent submitted to Congress recently. As shown in the second chart, the USD A outlays in fiscal 1986 totalled $58.7 billion with $25.8 billion of that spent to support farm prices. The Administration projects total expen ditures to fall steadily to $37.6 billion by 1992. (See Chart II) At Agri Control Company we’ve been counseling with producers for over 18 years. A large number of our clients would not be in operation today had they not faced up to the financial facts of their businesses and learned how to utilize financial management tools. They became financially responsible to their business, to themselves, to their lenders. Northwestern Banker, February, 1987 8 CHART I NET CASH FARM INCOME FINANCIAL RESPONSIBILITY Financial responsibility means knowing and under standing the financial base (foundation) of a business, however structured; then, using that understanding to make sound, practical decisions on product selection (corn-beans-cattle-hogs-etc), production quantities (acres and number of head per year), and marketing (cash-hedging-options-forward contracts); and in deci sions concerning land ownership, equipment and facili ties purchase, and livestock purchase and develop ment. In short, proper, profitable use of capital assets. It means facing reality every day just like every other businessman and making the tough decisions that keep any business healthy, viable, and productive—a source of profit and strength to the owners, the lenders, and the community. We believe the illness gripping American agricul ture is essentially financial in nature, and that finan cial responsibility provides the cure. The need to edu cate and change financial management habits is now critical! For agriculture and for ag banking! It requires the efforts of everyone in the financial industry, but especially ag banking. I t’s particularly discouraging to see some of our best producers in the worst shape. I can identify with many of my banker friends who lament about “having closed out three farmers this week, with several to go,“...“only 10% are immune to financial disaster,”.... “one bad crop year could take out 50%.” And it’s not over yet! My one ardent hope is that the present problems of agriculture and the response of politicians doesn’t per manently turn the financial community away from agriculture. There are a lot of good people out there. It is a good industry. We do have a vested interest in helping to save it. □ ABOUT THE AUTHOR—Mr. Fedie was invited to share his in sights on financial responsibility for farm operators, based on his nearly two decades of successful work with farm operators and bankers in several states. Mr. Fedie has been active in financial and management consulting for over 18 years, specializing in agri-business since 1975. Additionally, he has been personally ac tive in farming, cattle feeding, and feedlot operations. This prac tical “ hands on” knowledge is the foundation that gives sub stance to his expertise. Recognized throughout the United States as a leader in his field, he regularly appears in seminars, on panels, and as a guest speaker for ag industry associations and businesses. Mr. Fedie is a Certified Member of the American Society of Agricultural Consultants, is registered with the Iowa Securities Department, and is registered with the Securities and Exchange Commission (SEC) as an investment advisor. Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Our continuing problem is that we can’t reach q enough people and change enough minds to make a dent in the real scope of the problem. The economic downturn has happened swiftly enough to engulf too many producers. I t ’s the domino theory in practice. THERE IS AN ANSWER * To this end, approximately one year ago, a bank vice president in charge of an ag loan portfolio of approxi mately $40 million asked me to put together a financial planning seminar (workshop) which could be offered to the banks’ customers. We developed a two-day work- • shop and, as of this writing, have already conducted, or have commitments to conduct, workshops for several banks in Iowa, Nebraska and Kansas. The response has been gratifying. The bankers echo our thoughts (or vice versa) about financial responsibil- • ity, and support the educational effort. To quote a cou ple: R. Strachan, DeLay First National Bank & Trust, Norfolk, Nebr., says, “Survey results demonstrate an enthusiasm for materials presented.” R. Cowan, CHART II USDA EXPENDITURES 83 84 85 86 87 88 89 90 91 92 [----- P r o j e c t i o n s ------- ] Laurens State Bank, Laurens, la., says, “Survival is understanding break-even costs, they can’t market without it.” Comments from participating producers have in cluded these: “If I were in banking, every young person begin ning farming would be required to attend such a semi nar as this.” “Should have been three days.” “Makes us more aware how important good records are to survive.” “Super seminar.” “Encourages me to keep better records.” But, let’s not kid ourselves. The road to educational excellence is a narrow, rough and twisting road. There will be continued disappointments, and we need the support of everyone within the financial community. We already know that the present two-day financial planning seminar should be thought of as only the first in a series of different topics. The ag producer will FINANCIAL RESPONSIBILITY. . . (Turn to page 17, please) 9 Automating the ag loan portfolio Written especially for the N orthwestern B anker By MARC CURRIE for Founders Financial Services, Inc. Lincoln, Nebr. RECENTLY released software package offers a A fresh new approach to the time-consuming task of managing the ag loan portfolio. While other financial ^ software packages were designed from the farmer’s standpoint, the newly developed agMGR (pronounced “ag manager”) software package from MGR Software, Inc., was designed with the aid of ag loan officers to of fer lending institutions a standardized method for the £ handling and evaluation of financial information. The basis of the agMGR software package came from a series of forms used by a major Nebraska bank ing corporation. The forms were originated by a group of corporation employees whose backgrounds included q government agency, Farm Credit System and commer cial bank lending experience. The forms that were developed included an extensive cash flow, balance sheet, trend analysis, and credit arrangement with a credit scoring system designed to complement the • package. The agMGR software incorporates all the ideas of these refined financial forms and adds a few twists to make a very complete, useful and efficient package. The package is very user friendly as a result of its menu driven format and it is right in line with these every day thought processes of an ag lender: 1. Balance Sheet. The heart of the system revolves around the balance sheet which is easily compiled through a series of supporting shedules. The user has the ability to compile a single and double column balance sheet at the same time. After the balance sheet is complete, the user can choose from various print modes which include: three styles of balance sheets, general customer information, and supporting schedule information. The completed balance sheet in formation then can be incorporated into a trend analy sis. 2. Trend Analysis. The trend analysis included in the agMGR package can span up to five years of customer information. In the trend analysis section, the user has https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a variety of evaluation tools at one’s finger tips. The tools the user has to choose from include an earned net worth worksheet, collateral margin worksheet, liquida tion analysis worksheet, and credit scoring worksheet. This is not the end of the evaluative tools of the agMGR package; from here the user may proceed to the credit arrangement. 3. Credit Arrangement. The credit arrangement form used in the agMGR package was designed with the bank director in mind. With today’s depressed ag economy and the trend of bank directors towards tak ing a more active role in lending decisions, this one form gives directors all the items necessary to make sound lending decisions and to help reduce lender lia bility. Evaluative tools of the credit arrangement in clude a collateral margin worksheet that differs from the one in the trend analysis, a debt repayment analysis worksheet, and the same credit scoring sys tem used in the trend analysis. It also includes a sec tion to record the terms of the loan, repayment sources, security taken, lien search information, bor rowing history, and other balance relationships. The credit arrangement also includes an area to record imAUTOMATING AG LOANS. . . (Turn to page 12, please) ABOUT THE AUTHOR: Marc Currie is a graduate of Dakota Wes leyan University where he received a Business major, with minors in ag management and computer science. As a programmer he designed agMGR, an ag/financial statement software program of fered by MGR Software, Inc., Burwell, Nebr., of which he is a stockholder. The company markets agMGR in Nebraska and it is marketed in other states by Founders Financial Services, Inc., Lincoln, which was formed recently to provide marketing services for a number of single-product software firms. Organizers of FFS are Roger Beverage, a Lincoln and Omaha attorney who is also a former Nebraska superintendent of banking, and Tom Shambo, a former member of the Nebraska department of banking. Among the products marketed by FFS is BancAnalysis, designed and owned by Mr. Beverage and Mr. Shambo, and featured in previous issues of Northwestern Banker. Northwestern Banker, February, 1987 10 Computer generates ag accrual income statement figures FARM Customers at First Nat’l Bk., Keister, Minn, are taking advan tage of REC-CHEK, a simplified record-keeping system. Above, left to right, Dawn Braund, mgr., REC-CHEK processing department, talks with Clair Hagen, area farmer and bank REC-CHEK customer, and Donald Nickel, v.p. and ag loan off. Also pictured is Ken Bird, bank pres. Editor's Note: Just over 20 years ago we had the privi lege of writing the first feature article that related to our banker readers the potential advantages of a new bank service called REC-CHEK, a simplified record keeping system for farm customers. REC-CHEK was developed by Nevada National Bank, and Sam McHose was president of the $8 million deposit bank at that time. He had just hired Tom Johnston in March, 1965, to manage the small bank’s operations department. With Mr. McHose, he developed the cod ing system that is key to REC-CHEK. The nine-month pilot program had 55 participating farm customers. Mr. McHose later sold his interest in Nevada National, but continues to serve as chairman. Farm Journal magazine became interested in the new venture in mid-1966, purchased a half-interest, then later bought out the company. In the late 1960s, Farm Journal sold the company to its present owner and president, Dave Anderson, who was with Nevada National Bank at that time and with the REC-CHEK system almost from its founding. He has continued to build it into the pre-eminent farm record-keeping sys tem in use, and has given it state-of-the-art manage ment with the latest, most sophisticated computer ap plications. Now, 20 years after that first feature article in these pages, the following article recounts how well RECCHEK continues to serve community banks and their ag customers with a solid system that has grown in use over the past two decades. * * * Written especially for T he N orthwestern B anker By KENNETH R. BIRD, Executive Vice President First National Bank, Kiester, Minn. N OUR bank we are moving from ag lending based Icomplete on analyzing the tax return and a cash flow to a more analysis of the farm operation’s Net Farm In come based on an accrual income statement. That has required additional training on our part, as well as a concerned effort to train our farm customers on how to gather that information. For a period of time, many ag industry experts were Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis saying that to gather that kind of information we would need a double entry accounting system from our farm operators, but few of our customers had the time or the understanding to handle a system of that kind. REC-CHEK has recently come out with a system called STAR that takes the information from the RECCHEK program that we run in our bank and makes the necessary adjustments to complete a 5-year Balance Sheet Spread and an Accrued Income Statement. We are now able to use our in-bank microcomputer to prepare these statements. REC-CHEK’s training program combines lender/ computer operator training with on-site customer edu cation meetings, so that our borrowers now can see what is necessary to complete the forms that we need here in the bank. I think all ag lenders now are realizing that a simple tax return and a cash flow, although adequate for lend ing in times of appreciating land and equipment values, are just not enough to determine the real pro fitability of a farming operation. To get the net income figure from an accrual income statement, and then to determine the capacity to repay capital debt, requires customer training and a recordkeeping system that show an accurate Family Living Expense figure. In the last several years we have moved from a period of farming where poor records were adequate to one of good records being a requirement. But, we must consider our customers! Without the opportunity to obtain formal accounting training, which most will not have, we are asking them to perform an impossible job. One alternative would be to ask them to get a certified statement from a CPA, but we have found that to be very expensive, if not impossible. Several years from now, we may require that on large lines, but in the meantime we need to provide a system that is as easy to operate as possible, and then use a system like RECCHEK’s STAR to make the adjustments we need to have an accrual income statement. In the last severed years we have seen software com panies that sell ag packages to banks come and go. Our bank purchased one of those packages, and having a package with no support and training is worse than having no package at all. The REC-CHEK company has been around for 20 years, and I believe it has a large enough base of banks and revenue to continue the * * JOHM Q. CUSTOMER RR1 ANYWHERE USA NATIONAL STATE BANK SYSTEM OF RECORD KEEPING SUMMARY STATEMENT COPYRIGHT © «EC CHEK INC © NEVADA. IO W A 12345 ACCOUNTNUMBER 1234 BANK N U M B ER M ONTH A N D YEA R FORM RC 100 t TYPEACCOUNT 10 86 AGRICULTURE ----CURRENT ------ CURRENT YR TO DATE- YR TO DATE EXPENSE EXPENSE INCOME INCOME i i i T i i i i 17645134 5645134 ________ i i__ i 75672 ¡"34 45672}. 34 i i i i i 45321100 i _____ i _ __ . _ _ j __ --------------7---i i 3455 TffÖ i i i i 1 i i i i ■ iI i — 56739T34 56739}. 34 i i i 1 ________ --------------r1__ " iT s s s s y tr f i 1 03107}. 02 i i i i i i i i i i T OPERATING EXPENSES i i i i i 234 .¡60 ------------ -—ii,----AUTO i i 349. ¡00 BREEDING i i i i 567¡. 34 1845.¡79 FEED i -—Ti 5 ¿>706*.i 1¿. 64651 .¡46 FEEDER LIVESTOCK 1 i i 1 i i FEEDER LIVESTOCK i1 - -------------i i 7332 .¡00 FERTILIZER i i i 7932 .¡50 -------------- ii,----2300'. 50 FUEL i i i INSURANCE i i i i 1234*. 35 4690 .¡69 INTEREST OPERATING NOTE i i “ ¡ i 789 .¡50 INTEREST MACHINERY NOTE i i i i i i INTEREST RE 678 .¡23 i— -------------- 1 i ¡ LABOR .........90V.¡4S' i i i 12000 .'00 i MACHINE HIRE 1200o'. 00 i i i 673 .¡43 MI SC. i ■ i i i OTHER i i i i RENT SStfö ..<Jö i i i 567 .¡i 2 ________ 1___ REPAIRS i i i ------- BBTöGlScf i SEED i i i i i i STORAGE i i i i SUPPLIES i i i i i i TAX ES i i i ___ ___ i » TRUCKING 076 .¡3Ö i i i i 2109.150 U T IL IT IE S i i 456Î. 34 9 1 2 aó8 WET AND MEDICAL i i i j 109801 .182 TOTAL FARM EXPENSES 733441.65 i ii 1 ■ i 1 733441.65 _ 1081071.02 TOTAL FARM INC. / EXP. _ _ i - - Gi 109801 .¡82 198883». 02 i i 1 i i i 1 CAPITAL SALES, IN V, LOANS i i ------- 1----3 6 7 3 ~ZZ3 s r nu r r v e st g c r i i i i i MACHINERY i i ............... i---1 -------------1 ---RE IMPROVEMENTS i i 9 o g q o L oo OPERATING NOTE 300001.00 75000 ^00 -----------1------- ________ i.__ i MACHINERY DEBT i ffffôû ■ “ ¿SGOüVtrff i i i i 34000 400 12500o!. 00 RE MORTGAGE i j i T u Ta L "T24-67S:¡23300 U0{. OÌJ “‘ 2BDWffíOTf i 1 i i i i i i 1 PERSONAL AND FAMILY1r 605 400 i i FAMILY LIVING EXPENSE 9251.02 15925 402 2456». 34 i i HEALTH AND LIFE INSURANCE 678434 i i j i i INCOME AND S. S. TAXES 567J-34 i TOTAL PERSONAL H í 77*75 470 245¿if 34 9 2 ^. 0 2 i 2 i i i i i ______i___. CODE DESCRIPTION NUMBER — rcra HARM INCOME 105 CORN SOYBEAN 110 115 MARKET HOGS 120 SOWS 125 CCC LOANS GGWERNMENT PROGRAMS 130 135 OTHER FARM INCOME 199 TOTAL FARM INCOME 20 0 205 210 215 220 225 230 235 240 242 243 244 245 250 255 260 265 270 275 230 235 290 295 300 305 399 400 500 "'5ÖB' 510 515 520 525 530 599 600 605 610 615 699 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ,rtfÏÏ Northwestern Banker, February, 1987 12 of operation, the training that is being done by RECCHEK, and the fact that it is an Ag analysis package written for banks and not farm operators. Those other packages are fine for the farmers that are capable of running them, but they don’t produce the Risk Rating and the many ratios we get from STAR. Whatever program your bank selects, make sure it will produce an accrual income statement, is easy for your people to operate, and that the company offering it will support it with continuing training, for both lender and farm operator. □ training and support we will need as our requirements for information and our computer equipment change. REC-CHEK charges for these services, but we in our bank are now realizing that we cannot afford the exper tise necessary to maintain the programming effort to support a system on our own. In effect, we are contrac ting for this specific job, and I suggest that unless your bank is large enough to have a programming staff for your microcomputer department, your bank would be dollars ahead to do the same. There is also the issue of liability. Our industry has been successfully challenged in the last severed years by borrowers in bankruptcy proceedings who claimed that the figures on the financial statements were not those of the borrower, but those of the lender. In other words, the lender filled out the financial statements. We are quickly coming to the time where we will not be able to buy enough liability insurance, if, in fact, we can buy it at all, to cover that situation. We need to conduct borrower training seminars to instruct our cus tomers to fill out our financial statements. Again, that is an excellent application of contract services, and one that the staff of REC-CHEK provides for us. REC-CHEK’s STAR program produces a Cash Flow, a Five-Year Balance Sheet Spread with a Risk Rat ing System, an Accrual Income Statement, and an all-im portant Comparison of Actual versus Projected that can be run anytime during the year. That last report would be excellent for FmHa Guaranteed Loans. In our bank we like the STAR package because of the ease AUTOMATING AG LOANS. . . (Continued from page 9) portant credit factors that affect the loan. 4. Cash Flow. The one final intricate part of the pack age is the cash flow section. Within this section the user can compile a projected and an actual quarterly cash flow on the customer. One unique feature of the cash flow is its ability to establish an accrual-based in come statement on the customer. Another feature the cash flow offers is the ability to run a monitor report in which the computer compares the actual data to the projected data looking for any variances in the figures. The monitor report may be run for any specific quar ter, with a year-to-date comparison at the same time. 5. Other Features. Other features of the agMGR soft ware package include: • A time saving feature that allows the user to build a set of data for the new year off the previous year’s data. • An option package that includes the SIDEKICK desk top manager from Borland International, which consists of a full function note pad, calculator, Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis STAR Microcomputer Ag Credit Analysis Five Year Balance Sheet—Enter three year’s history, make the fourth year the current year’s data, and the pro gram will interact with the cash flow to make a projection for the end of the next operating year. After calculating Net Worth on a Market Value Basis, the program calculates li quidation margins, and such ratios as the Current Ratio, Debt/Worth Ratio, and Liquidation Margin/Debt Ratio. A credit scoring is also produced by assigning points to the ratios, and printing a Performance Rating for each cus tomer. Accrual Income Statement—Previous year’s tax returns are required to produce an accrual income statement. The program matches expenses for a given year with income for that year, with adjustments for beginning and ending inven tories from the Five Year Balance Sheet and tax deprecia tion. Cost basis for major assets are used. Farm Budgets—A projected budget for crop and live stock income and expense is produced. This information automatically flows to the Cash Flow, which saves much time when completing each customer’s Cash Flow. Cash Flow—A projected plan for the up-coming year that requires additional income and expense information not brought forward from the Farm Budgets. Cash Flow Monitoring—One of the most valuable parts of the system, this program interacts with the REC-CHEK program to produce a report that compares the projected with the actual income and expense for both the month and year-to-date, with a variance for each category. This is an excellent report for FmHa Guaranteed Loans, or any credit that your bank is monitoring. calendar, modem dialer, and an ASCII table. It should be noted that the SIDEKICK package is fully active at all times when using the agMGR package. By using the SIDEKICK package, the user has the ability to record all pertinent documentation while working in the agMGR package via the note pad. • A complete set of data collection forms that coin cide with the software package inputs. These forms are to be completed by the customer for two purposes: 1) To aid the banker in completing the required com puter inputs. 2) To allow the lending institution to protect itself from the borrower when taking control of the operation by having the borrower sign the forms to indicate he understands them. • One final feature that further enhances the pack age is its ability to run “what if” situations in all of the sections of the agMGR package. The agMGR package operates on IBM and IBM compatible computers. A minimum of 256K memory is necessary with 3.1 or higher DOS (disk operating sys tem). Two floppy disk drives or one floppy and one hard disk drive also are required. □ 13 m I# A N orthwestern B anker interview with MARK WILLIAMS, Fieldman Iowa Cattlemen’s Association, Ames, la. and OLIN J. COX, Nutritionist Cox Nutrition & Technical Services, Patón, la. NE CASUALTY of the Midwest ag crisis has been the cattle feeding industry, a mainstay of the O farm economy in most upper midwest states. An : assault on the dietary value of red meat, coupled with traditionally low returns for producers while retail counter prices soared in the 1970s, converged for a showdown at the same time the economic recession that greeted the 1980s brought sweeping changes to the livestock industry. Along with a re-structuring shakeout that has been occurring in all areas of agriculture, trade associations representing the livestock interests are fighting back with new programs on behalf of their members. One is the Commercial Feeding and Grazing program offered by the Iowa Cattlemen’s Association, based on the “Retained Ownership” concept. The Nebraska Live stock Feeders Association, Lincoln, and the Nebraska Stock Growers Association, Alliance, have hired a staff person whose principal duty is to promote the cat tle feeding industry for the state and provide a commu nications link for this vital area of the livestock indus try. The Kansas Livestock Association, Topeka, has a program very similar to that in Iowa. Mark Williams, ICA fieldman, says his association’s Commercial Feeding and Grazing program, which went into effect early in 1986, offers a listing service of qualified livestock feeders and grazers in the state. “Qualified is the key word,” he emphasizes. “That means those individuals have met standards set by a core group of feeders and grazers in conjunction with the ICA. Our organization did the approval work last https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis im i year when the program was started. The sign-up period is open once a year and that 1987 sign-up was during the month of January for 1987. This year the approval of those who meet our standards is given by ICA along with the member core group.” Mr. Williams coordinates the promotional work to market this concept. This includes a videotape for ICA or member use that shows ideal conditions for feedlots and grazing and explains visually the various steps that should be followed by a qualified operator in pursuit of good feeding and grazing practices. In addi tion, ICA will go alone or accompany members on visits to prospective cattle customers in other states, and also conducts tours of qualified Iowa facilities for ag visitors. Mr. Williams says the association’s Commercial Feeding and Grazing program offers these features: • Grazing for cows-calves and yearlings. • Retained ownership calves a specialty—back ground or finish. • Consulting nutritionists and veterinarians. • Computerized feedlot monitoring and record-keep ing. • Contracting and hedging services. In its contacts with prospects, the ICA points to the state’s abundant feed at low costs, proximity of sev eral major commodity delivery points, no property tax on cattle, personal attention with professional care, proximity to high quality feeder cattle of southern Iowa, and surplus slaughter capacity. The core committee of ICA consists of 12 members, with Evan Vermeer of Sioux Center as chairman and Steve Taylor of Mt. Ayr as vice chairman. One of the committee members is Olin J. Cox, owner of Cox Nutri tion and Technical Services, Paton, la. He received his Bachelor of Science degree in animal science with a production background from Kansas State in 1969, then earned an M.S. degree in ruminant nutrition in 1973 at Kansas State. He has commercial cattle Northwestern Banker, February, 1987 14 CGX N U T R I T I O N & T E C H N I C A L S E R V I C E S COX N U T R I T I O N & T E C H SER. C A T T L E S P E C I F ICAT IONS STEER P E N NUMBER: 0 ST AR TE D: JA N 10 FINISHED: JU L 6 F E E D E R C O S T C * / 100 L B S . > S A L E P R I C E CS /1 00 LBS. > 7. S H R I N K 7. D E A T H L O S S mi s c . c o s t <:$:> INTAKE FACTOR EFFICIENCY FACTOR W E A T H E R E F F E C T (7. 1R E D U C T I O N ) 7. I N T E R E S T Y A R D A G E (S/DAY) — 72.00 60. 00 4.00 1.50 12. 50 5.90 5. 75 11.00 . 10 — 177 600.00 1101.18 2. 78 FEED/POUND GAIN AS FED B A S I S DRY MATTER BASIS 10. 25 7. 16 FEED/HEAD/DAY AS FE D B A S I S DR Y M A T T E R B A S I S 28.49 19.90 B R E A K E V E N P U R C H A S E P R I C E T / 100 75.71 BREAKEVEN SALE PRICE $/100 57.84 C O S T / D A Y <$) 1.12 P R O F I T / L O S S P E R H E A D <*> 23.74 C O S T OF G A I N FEED YARDAGE MISC. C O S T CATTLE INTEREST FEED INTEREST MI SC. INTERESTTOTAL 10 1987 INGREDIENT USAGE PERFORMANCE PROJECTION D A Y S ON F E E D STARTING WEIGHT FINISHED WEIGHT AVERAGE DAILY GAIN JAN */ 1 0 0 L B S . TOTALS 28.44 3.62 2. 58 4. 75 .76 . 16 13 9. 94 17.83 12.69 2 o . o3 3.73 .31 40.31 1 9 8. 39 AMOUNT INGREDIENT 101 C O R N 2711 30 6 HA Y MIX 51 5 901 BA L STR 74 375 C O R N S I L A G E 1520 20 2 L A C T O - W H E Y 150 52 4 R U M V T M / S E 401 S A L T 27 5 M E A T & B O N E M E A L 2 4 4 S O Y B E A N M E A L 44 409 UREA 400 L I M E S T O N E 40 2 D I C A L 41 3 D Y N A M A T E 43 0 M A G O X I D E 426 E L E M E N . S U L F U R 521 C A L F S T A R T E R C O N 67 5 2 0 C A T T L E S T R E S S /D 6 41 1 P O T A S S I U M C L R I D E 60 0 B O V I T E C 68 — TOTAL 5043 FEEDING PROGRAM RATION NAME ST ARTING DATE 1 STARTER J A N 10 2 G R O W E R #1 J A N 31 4 F E E D L Q T #1 MAR 2 b F E E D L O T #2 MAR 9 6 F E E D L O T #3 M A R 14 7 F I N I S H E R #1 M A R 19 8 F I N A L F I N I S H E R : M A R 24 DAYS 21 30 7 cr 5 5 104 *********************************************************************.*.#**.***.#** * * * * F I G U R E S A R E E S T I M A T E S A N D A R E B A S E D ON T H E B E S T I N F O R M A T I O N A V A I L A B L E . A N I M A L P E R F O R M A N C E W I L L BE A F F E C T E D BY W E A T H E R , G E N E T I C S , E N V I R O N M E N T , A N D O T H E R P A R A M E T E R S . NO G U A R A N T E E OF P R O F I T OR P E R F O R M A N C E C A N BE MADE. COX N U T R I T I O N & T E C H N I C A L S E R V I C E S RR1 BOX 63 R A T O N , I A . 5 0 2 1 7 * * * * *********************************************** ******** *********** ************* l Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 15 “Each feedlot operator or grazer must meet nine criteria before being placed on the listing service.”_______________ feeding and technical services credentials that go back to 1968, including commercial cattle feeding on his own, feed company field nutritionist and technical ad visor, with the past two and one-half years as field nutritionist for Eldon Juhl at Dana, la., for cattle be ing fed, plus developing that company’s computer management and monitoring programs. Mr. Cox developed his computer skills while he was a field nutritionist with ADM working with ranchers, feedlot operators and large capacity swine producers in Nebraska and Kansas. Mr. Cox points out that the Commercial Feeding and Grazing program encompasses these two main points: 1. Revitalization of the Beef Industry • utilize facilities currently idle • re-employ people to do what they know best; i.e., feeding and raising cattle • recognize and understand the economic ramifi cations of a healthy livestock industry on our local community level • the creation of wealth by utilizing resources that for the most part are renewable, but have little or no economic value unless fed to a rumi nant (forages, grazing, by-products, corn and soybean growers) 2. Restructuring of the Cattle Feeding Industry • utilization and incorporation of computers and applicable software to our industry • utilization of specialists and professionals in the area of health, nutrition, finance, tax and ac counting • predetermining profit potential, return on in vestment, price protection, and risk manage ment • cattle health and performance monitoring • shared risk of cattle ownership: a. retained ownership, b. cattle partnerships, c. cost of grain feeding, d. feed and yardage with predetermined ceiling and floors on feed cost. Each feedlot operator or grazer must meet nine cri teria before being placed on the listing service. Five of these criteria are the same for feeders or grazers: • Access to a certified livestock scale • Projection capabilities • Defined close-outs • Reasonable animal health program • Member Iowa Cattlemen’s Association Additional criteria that must be met for each group are: For Feeding • On-farm feed scales • Nutritionally balanced rations • Knowledge of water, air and waste management regulations • Semi-monthly feedlot monitoring program For Grazing • Accurate method of charging feed costs to owner • Water source • Adequate fences • Working facilities https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis In addition, feedlots and pastures are classified by types to help the potential client decide which partici pating member fits his cattle feeding need. Also, each feedlot operator is expected to furnish, upon request by a client, reference as to character, management and credit. It is also recommended that insurance, liabili ties and the use of a written contract be discussed with every client. Implementing this type of program to renew the cat tle feeding industry within Iowa costs money, and the ICA and its members have put up their funds. ICA has committed $5,000 seed money and the ser vices of staff member Mark Williams as coordinator. Each participating ICA member pays an annual ser vice fee of $150, plus 10 cents per head based on a one time capacity in the feedlots or pasture. The Depart ment of Economic Development contributed $6,000 for development of the 15-minute videotape entitled, “A Profit to Be Made.” Working with ICA, the core committee began its ad vertising campaign last June in cattle publications in Kentucky, Missouri, South Dakota, Virginia, Tennes see, Arkansas, Alabama, Mississippi and Georgia. Those ads resulted immediately in 45 requests for further information. Further, the core committee made personal contact with four states—Kentucky, Virginia, North Dakota and South Dakota. As a result, 30 cattlemen from Ken tucky have toured Iowa feedlots and pastures, and the first bunches of their cattle has gone through the feedlot program here. A small group made the tour from Virginia and has expressed high interest in the ar rangement to ship feeders to Iowa, some with retained ownership, others to sell as replacements. Approxi mately 80 cow/calf producers from South and North Dakota visited Iowa and several loads have been placed in Iowa feedlots and pastures from North Dakota. Additionally, ICA has worked closely with cow/calf operators in southern Iowa to place their calves in the feedlot and grazing program; again, some with re tained ownership and some as outright sales of calves. The 46 initially approved feedlot and grazing opera tors have one-half concentrated in the northwest quar ter of the state, which in former years was a premier feeding area of the nation. The balance of the 46 initial qualified members on the list show 12 in the southwest quadrant of the state, nine in the central counties in the eastern half of the state, and one in extreme north eastern Iowa and one in southeastern Iowa. Rich McKee of the Kansas Livestock Association, Topeka, describes his association’s effort to promote feeding as being closely parallel to the effort Iowa ini tiated last year. “We are putting together a video,” he said, “to aid members to explain to cattlemen, primari ly in other states, how the feeding industry in Kansas works, and to explain the advantages of Kansas to them. This is aimed primarily at those who have tradi tionally weaned calves, and now retain ownership. Our feedlot members can take this videotape with them outside the state and show it to any individual or to in terested groups.” □ Northwestern Banker, February, 1987 16 21 reasons for farm appraisals Written especially for T he N orthwestern B anker By HARRY S. HALVORSEN, AFLM Harry S. Halvorsen Real Estate Forest City, la. ...with the assistance of Fred Greder, farm loan repre sentative, Travelers Insurance Co., Mason City, la. GRICULTURE is in a crisis with new problems each day. Too many who have only been in farm A ing for the last 20-25 years feel the present situation is different. We who remember the good old days of the ’20s and ’30s, and heard our fathers and grandfathers talk about the early 1900s and before, know that the history of farming is only repeating itself. My Uncle Jap, who was born around 1890 on my grandfather’s farm, attended country school and the local academy which served as high school and junior college of that day and went to work in a bank at Thompson, la. He married a farm girl and owned a team of horses, a buggy and a milk cow for his growing family. Like most rural bankers, he had no problem understanding a farmer’s problems and correctly judg ing a farmer’s needs and ability to pay back a loan most of the time, unless there was a weather problem or extra poor prices. This was true for most rural bankers through the ’40s and ’50s and into the ’60s when the new era dawned and cash flow was replaced with the equity for mula and many bankers and farmers became paper mil lionaires. At the end of the ’70s higher interest became king and many of the equity loans that had been made were in trouble. The Government’s new program to lower grain sup port prices put the final kiss of death on equity farm loans. Because of equity farm loans, bankers and farm ers are going through severe emotional and financial stress. The current loan problems have developed a need for an outside independent person to judge the current value of previous loans made and on any new loans to Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis be made. Bankers and farmers need a person who is schooled in such appraisal techniques. £ The farm real estate and appraisal industry has re sponded to that need over the years with professional training and standards for members of the several trade associations serving these professionals. Much has been written concerning the need for accurate appraisals and how they should be conducted. For exam ple, Robert C. Suter, PhD, listed the following “ Rea sons for Appraisals” in his 1974 book, The Appraisal of Farm Real Estate (published by THE INTER STATE Printers & Publishers, Inc., Danville, 111., for % $14.50 per copy in that year). Mr. Suter was then in the Department of Agricultural Economics at Purdue Uni□ ABOUT THE AUTHOR—Mr. Halvorsen is a self-employed farm and land broker and appraiser, plus having an active part in farm ing 320 acres with his wife and son. He has been a farmer 44 years and had 20 years experience in that time in the fertilizer and seed business. He has been a licensed broker in Iowa and Minnesota for 10 years, and in Missouri since 1982. Mr. Halvorsen’s career in cludes appraisal work for attorneys on estates; banks and sav ings institutions for loan values, and IRS for challenges of estate value. He has a long string of credits for professional appraisal schools and seminars for continuing education, commencing in 1966. He is a member of the National and Iowa Associations of Realtors and National and Iowa Farm and Land Institute; Farm land of America, and North Central Board of Realtors. Currently, he is on the Iowa Farm and Land board of directors, serves as its regional vice president for northeastern Iowa, is chairman of its state legislative committee and has been ap pointed to the state legislative committee of the National Farm and Land Institute. He received his AFLM designation in 1983 from the National board of governors of the Farm and Land In stitute, holding certificate #648 in the 40-year history of that re cognition. 17 versity. His nine reasons for farm appraisals are still valid today: 1. To buy, to sell, to trade or to transfer ownership. 2. To establish the bases for depreciating various buildings and improvements insubsequent tax sche dules. 3. To settle a claim resulting from fire, wind or other casualty. 4. To assess the subject property for real estate tax purposes. 5. To obtain the basis for federal estate or state in heritance taxes. 6. To extend credit to the owner, thus financing the purchase of the farm, using the farm as security. 7. To liquidate the property, using the asset’s sale price to settle debts, liens, and other encumbrances. 8. To establish just compensation to the property owner in instances where a public agency is taking either all or part of the property for public use. 9. To appeal where compensation, assessment, or other values or amounts are thought to be in error. In the light of continuing developments since the publication of that book, we would suggest the follow ing additions to that list: 10. To understand the different soil types and to figure their productivity for the area. 11. To establish the cash flow potential for a period of years. 12. To judge the potential cash flow on the different farm buildings in hog-cattle or grain storage and dry ing facilities. 13. To understand the effect of the new tax law and the new Chapter 12 which will write down loan debt to fair market value and draw interest at a negotiated rate and establish the point beyond which 0% interest accrues. 14. To petition the court for a receiver to be ap pointed. It is easier to get a receiver if an unbiased appraisal establishes that the collateral won’t cover the out standing debt. 15. Outside appraisals may influence the decision of other lenders with whom a bank is negotiating; for in stance, FmHA in a guarantee loan application or Land Bank in a cash settlement compromise. 16. To argue for or against “marshalling” defenses. This is where a junior mortgage lender asks the court to force the first mortgage holder to bid each part of FINANCIAL RESPONSIBILITY. . . (Continued from page 8) eventually need to think in terms of a “continuing educational commitment” just like most other highly technical professions. It won’t be easy to produce this kind of attitude turnaround, but it is necessary. Our seminar is called “There Is An Answer.... and there is! It starts by asking the right questions. Recognizing that ag producers can do little about problems like export market base, interest rates, cur rency strength, and embargoes, more emphasis is re quired in areas that can be controlled, such as cost con tainment, management by objective and prudently fi nanced growth. For example, knowing the exact cost of producing https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the collateral separately at a Sheriff’s Sale. 17. To motion for the lift of the automatic stay in bankruptcy so the creditor can proceed with the collec tion. As in a receiver petition, it’s usually necessary to have outside estimates showing the loan is already undersecured. 18. Some of the midwestern states have legislation that requires the lender to bid the homestead separate ly at a Sheriff’s Sale at fair market value, which may be considerably less than the debt. An outside ap praisal may protect the lender from being forced to bid the homestead too cheap. In Minnesota, for example, the homestead can include up to 160 contiguous acres. 19. Outside, independent, credible appraisals are one of the few defenses left to a creditor after a customer has filed Chapter 12 bankruptcy. Chapter 12 reorgani zation plans will usually call for the debt to be written down to fair market value. The creditor cannot veto the plan as in Chapter 11 , but can make every effort to have the fair market value stay as high as possible. 20. The Chapter 12 era has already prompted more interest in programs whereby a portion of the debt is set aside to draw zero interest. The amount of debt within fair market value would continue to draw inter est at a negotiated rate. Outside appraisals would be helpful to establish the point beyond which zero inter est accrues. In Minnesota, The Rural Finance Admin istration is a state-sponsored debt set-aside and inter est rate buydown program. 21. Independent appraisals serve as excellent docu mentation in loan files for the benefit of examiners. Ap praisals support values to book acquired properties. Appraisals support the value of acquired properties already re-sold on contracts for deed. A bank’s best chance to establish the market value in today’s world is to use an accredited farm appraiser with a record of several years’ practice in its area. Readers may contact one of the following for informa tion on accredited appraisers: 1 . American Institute of Real Estate Appraisers, 430 N. Michigan Ave., Chicago, Illinois 60611. 2. Realtors Land Institute (Formerly the Farm and Land Institute), 430 N. Michigan Ave., Chicago, Illi nois 60611. 3. American Society of Farm Managers and Rural Appraisers, 950 South Cherry St., Suite 106, Denver, Colorado 80222. Telephone 303-758-3513. □ one bushel of grain or 100 pounds of beef or pork is cri tical to the operator in order to determine the most effi cient utilization of fixed facilities, inventory and cash. Over the last few years, Agri Control has developed an inexpensive system of collating and analyzing data from existing producer records that generates this in formation quickly and easily. The seminar is where we deliver that system to the producer. First, by educating him or her to the need and application of financial management tools, then by providing the sys tem for using that education. In short, we teach finan cial responsibility and provide the means to achieve it. We sincerely believe that achieving financial responsiFINANCIAL RESPONSIBILITY. . . (Turn to page 20, please) Northwestern Banker, February, 1987 18 Local banks have a “secret weapon”... ...“the strength and quality of your relationships with customers” Remarks by BARRY F. SULLIVAN, Chairman First Chicago Corporation Chicago, 111. ...at First National Bank’s 40th Conference of Bank Correspondents November 24, 1986 ITH REGARD to the nature and scope of the W changes we face, it is interesting to note that three years ago the Bank Administration Institute sponsored a study on the outlook for banking in this country. It involved surveying hundreds of industry experts to determine their views on what the years ahead would hold for financial services. Generally speaking, the results of that study were quite reason able, and remain so today. But, some of its specific pre dictions bear out the underlying truth in the old rule that, when you are forecasting, give a number or give a date but never both! In particular, the study concluded that the number of banks in the United States would decline by almost one-third, to 9,600, by the year 1990. For example, it projected that “small” banks, those with assets of up to 100 million dollars, would contract in number some 40 percent. Not surprisingly, perhaps, more than half of all banks in this country, the study predicted, would be involved in consolidations either as acquirers or as acquirees. Today, three years later, it is apparent that the future is not unfolding quite in accordance with the conclusions in that report. For example, the total number of banks in the United States has held fairly steady at around 14,000 in spite of consolidations and closings. This is so because hundreds of de nova banks have opened in recent years. In 1985, the figure was 345. And a good number of them are community banks. The Record of Acquisitions Acquisitions have been taking place — there were Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 236 last year — but not at a pace that would ultimately involve one-out-of-every-two banks. In fact, I think that we in the industry need to make certain that we do not allow thinking about acquisitions to become a pre occupation that interferes with other pressing matters. Potential acquirers are finding that the prices of in stitutions that are truly desirable candidates have risen to stratospheric levels. For example, in 1984, First Chicago purchased American National and its subsidiaries for 1 and Vz times book value. Ju st recent ly, N.B.D. Bancorp of Detroit reportedly agreed to pay 3 and Vz times book for USAmeribancs — a holding company with six banks here in the Chicago area. In some cases, there may well be a unique reason for “paying up” to acquire a position. But acquisitions at hefty multiples are frequently explained by pointing to large anticipated synergies. The massive synergies needed to justify some of today’s purchase prices can be realized only by intrud ing broadly and deeply into the operations of the ac quired institution. And that kind of heavy involve ment runs the risk of draining that bank of the very strength that made it a sound acquisition candidate in the first place. Acquisitions can be an important part of a bank’s plans. And they are here at First Chicago. But an ac quisition strategy is not a panacea. We must also address the changes in our environment that threaten the very strengths we bankers want to preserve, acquire, or sell. The challenges and opportunities resulting from these changes face local banks —just as they face their larger colleagues. # ^ 9 ^ w, ^ ( £ 4 q f 9 % m • The Commercial Paper Story For example, 15 years ago, banks accounted for fully 90 percent of short-term corporate borrowing. This year, 50 percent of that market has been taken over by commercial paper. That phenomenon has been given the name “securitization,” and this form of disinter mediation is now creeping into the market for mediumterm lending, as well. There is little question that commercial paper has made bank lending to the “Fortune 1 ,000” a break even business, at best. And some observers have gone on to wonder how long it will be before the “C & I.” loan is a thing of the past. That concern is understand able. After all, commercial paper has displaced loans not just to the “Double A” and “Triple A” credits. Com mercial paper has also taken over a significant portion of short-term lending to the lesser investment grade credits. Impact of Securitization Without exploring all of the various possibilities, let me say that it is my view that the “easy” disinter mediation has already taken place. Any new ground gained by securitization in the future will be hard fought. In particular, I believe that securitization will not reach smaller borrowers in the middle market. This is so because, unlike with larger firms, it is not possible to use information that is more or less public and readi ly available to assess their creditworthiness. This means that the companies that borrow from local banks will not be in a position to disintermediate through securitization. Nevertheless, securitization has serious implica tions for the balance sheets of local banks. This follows from the fact that its impact on larger banks has forced them to begin looking on smaller companies as potential customers. Clearly, this means pressure on the pricing structure. And, if larger institutions can somehow offer enough rates, lending business could move in their direction. My own feeling is that new arrivals are going to find local banks to be pretty tough competitors. Among the advantages that local banks have are their strong fran chises. And that is not a piece of banking mythology. The Atlanta “Fed” took a look at this issue and con cluded that smaller firms definitely prefer to deal with smaller banks. But securitization through the shift of many cor porations to the use of commercial paper is not the only reason why money-center and regional banks are searching for new customers to lend to. The more gen eral problem that adds impetus to this search is one that is shared by all of us in this industry. It is that ob solete legislation prevents us from offering a wider ar ray of financial services to both our wholesale and retail customers. Banks Need Fuller Powers With regard to local banks lending to business, this is relevant because that vestige of the “New Deal” — the Glass-Steagall Act — prohibits larger banks from fully entering the field of investment banking. Given the heavy pressure on margins, broader underwriting ability would diminish the need of larger banks to move deeply into the middle market. This is borne out by the fact that more than one major institution has https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 19 spoken publicly of the possibility of giving up its bank ing charter in order to gain full access to investment banking. We banks are restricted from providing our custo mers with the full range of financial services that they want and need. But, as you well know, the same is not the case with the so-called “non-bank banks” and our other competitors — such as American Express. Here, the focus is primarily on the consumer part of the busi ness, which is such a vital part of your franchises and, historically, a great source of the strength of local banks. The threat, therefore, is a major one even though we will, I am confident, ultimately have expanded product powers. The problem is that, in the meantime, our com petitors will gain footholds from which we will have a hard time dislodging them. And there has already been some serious erosion in consumer lending areas that have traditionally been part of the product mix of local banks. Home Mortgages Now a Tool The home mortgage business is a perfect example. I certainly realize that there have been difficulties with fixed-rate mortgage portfolios. Nevertheless, it can be argued that a home mortgage is an especially important product to sell to a consumer. It is a major financial transaction for the homeowner. And it can be used to establish or strengthen a relationship that includes other products and services. That is why it is a source of some concern that fully 50 percent of all mortgages are tunneling through to mortgage bankers without any involvement by com mercial bankers. How can this development be dealt with? When a product plays such a key role in marketing strategy, it is a likely candidate for “loss leader” sta tus. There is nothing inherently wrong with this ap proach to pricing. Nevertheless, it does entail incurring a loss on a product. If the marketing objective is to establish an overall relationship, as you know, that can be achieved without losing money. This is because of something that began back in the early 1970s. Pooled Mortgages Now Competitive That was when the Federal Government created a secondary market in pooled mortgages through agen cies such as the Government National Mortgage Asso ciation — “Ginnie Mae.” The idea caught on. Today, mortgages, once the most illiquid and most localized of financial instruments, have become an accepted part of the wider financial landscape. In fact, the spread be tween new mortgages and 10-year Treasury notes, for example, has dropped more than 200 basis points in the last dozen years or so. Furthermore, according to one report, by 1983, the volume of newly issued mort gage-backed securities was greater than the volume of newly issued stocks and bonds. Because of the nature of local bank funding sources, you are in a position to be quite competitive with regard to pricing without actually going below your cost of funds. With a strong secondary market readily available, there is, therefore, an opportunity to price aggressively, and then to sell-off the instrument. In ad dition to the benefit of starting or strengthening a rela tionship with a consumer, your local bank can earn the Northwestern Banker, February, 1987 20 points and the origination fees. My purpose in mentioning this is to emphasize that there may well be a greater threat than we have recog nized associated with the incursions of our competitors into the home mortgage business. But both “Ginnie Mae” and now “Fannie Mae,” as well, offer the oppor tunity to compete effectively. “Home Equity” Installment Loans And I want to continue on the subject of homerelated lending. As you know, the recently enacted Tax Act has enhanced the attractiveness of the “Home Equity” loan for consumers. It is not very likely that this vehicle will lead to an increase in consumer borrowing in the aggregate. Still, it may shift the mix of consumer debt, and this may be especially beneficial to a local bank that does not have a credit card product. I say that because you may have been noticing some slippage in the installment loan category and not just because of the auto financing situation. It is a fact that there has been a tendency for the consumer to substi tute borrowing on his credit card — or cards, in some cases — for personal installment debt. The tax-pre ferred nature of the home equity loan may prove strong enough to outweigh the convenience of credit card borrowing for some consumers. To the extent that it is, you may do some home equity lending that other wise would have taken the form of credit card debt at some other bank. Auto Financing Is “Loss Leader” Because auto loans have played a role in cementing the local bank franchise with the consumer, let me say a few words about auto financing. It there ever was a “loss leader,” it is the loans being offered by the finance subsidiaries of the automobile companies. For marketing reasons, the domestic producers have chosen low financing interest rates as the mechanism, in effect, for lowering the prices of their cars. The trick to using an incentive like that is to avoid letting it become a fixture. It looks to me, unfortunately, as if concessionary interest rates have become practically permanent. No wonder that the captive finance companies grew their market share from 31 percent of auto installment debt to 35 percent in just one year — 1985. That was at the expense of commercial banks, and similar increases can be expected in the years ahead. Part of the reason for this is the recent securitization — that is to say, the pooling and sale — of automobile loans. These securitized loans are known as certificates of automobile receivables — “CARS,” for short — and they will permit the captives to expand without being constrained by the growth rate of their capital. Frankly, I think we need to recognize that this prob lem is going to get worse before it gets better. The domestic automobile industry will continue to face a very competitive environment for many years to come; and, because of its flexibility, concessionary financing will remain an attractive marketing tool. In my view, all of us in banking need to think about finding a sub stitute for the traditional auto loan. Non-Bank Bank Threat My comments have been directed at some examples on the asset-side of the balance sheet — to highlight the incursions into our product areas. Yet, there is a Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis threat on the liability-side, as well. It is that the “nonbank banks” pose a serious potential challenge to your base of core deposits. In particular, it would be unwise for any of us to underestimate the situation created by some of the ma jor retailers. It is reasonable to assume that, sooner or later, their stores in your local market will be compet ing aggressively with your for deposits. When that happens, it will certainly raise our level of frustration. Obviously, banks need more even-handed laws and regulations relative to our “non-bank” competitors. That will help us all. But local banks have a “secret weapon,” if you will, in this battle. It is actually a weapon that is really no secret at all. Local Banks Offer Value I am referring to the strength and the quality of your relationships with your customers. You are will ing and able to give a degree of personal service that few competitors can match and all customers value. And I mean “value” in a very concrete sense. In fact, I am convinced that, if local banks continue and even deepen the personal service that has gotten them where they are, they will have more than a fight ing chance to fend of the coming assault on core deposits. I have consciously focused my remarks on some issues that pose challenges to local banks, so, I want to be sure to underscore the fact that we at First Chicago believe very strongly that local banks in the Midwest have bright futures ahead of them. That confidence arises in large measure from the readily observable fact that local banks have strong and long “track records” of successfully and profitably adapting to and serving their markets. Consequently, the enviable franchises that local bankers can point to are not the result of “happenstance.” Rather, they reflect an understanding of, and willingness to serve, the needs of customers. Correspondent Relationships That has always been a key to success in banking. It always will be, even as our industry continues to undergo profound change. I am convinced that the cor respondent relationships that, hopefully, have served you well in the past will continue to be sources of mutual benefit in the years ahead. □ FINANCIAL RESPONSIBILITY. . . (Continued from page 17) bility provides the only real, long term answer to the problems facing the ag producer and his lender. Our seminar, among other things, teaches the pro ducer to understand the language and appreciate the terminology of a banker. At Agri Control, it’s our goal to understand the language and appreciate the terminology of a producer, a farmer. I t’s important to know the meaning and full economic impct of cattle on feed days, of conversion ratio and average daily gain. I t’s important to recognize fixed and variable expenses, and how each are affected by total acres cropped, bushels per acre, cattle on feed days, pigs per litter, or acres per cow/calf unit. The challenge of the future for all of us within the agricultural and financial community is to attain the degree of confidence required to insure our ability to work as a profitable partnership. □ £ # # • ® ^ ^ 9 ^ # # £ § || # 9 # DEAR EDITOR. . . (Continued from page 4) ter to Senator Grassley. I am enclosing a let ter I wrote to him describing our first experi ence with Chapter 12. You have described the situation perfectly. There will be a lot of farmers who will not get credit because of Chapter 12, double jeopardy and a host of other discriminatory laws passed by our leg islature and Congress. I hope your letter gets to the proper source and I’m sure it will.” Edward L. Tubbs, Chairman Maquoketa State Bank, Maquoketa, la. * * * “I have just read your open letter to Sena tor Grassley and was overwhelmed with a de sire to say ‘thank you.’ Your letter should be applauded by all bankers and I hope your past rapport with Chuck will help him realize the urgency of the matter. A moratorium is one thing, but no bank can or should have to absorb the losses in flicted by Chapter 12. When the farmers asked to borrow money they threatened us with ‘doing business down the street’ if we didn’t go along. Their loyalty was pretty thin in those days and we bankers believe we were servicing our good customers. Because of Chapter 12, even the good ones will now find financing non-existent. “We have an attorney in Sioux Falls that has advertised to the farmers not to pay un til they review with him the possibility of protection under Chapter 12. “Senator Grassley has been less than ap preciative of the bankers’ original support to elect him, but I don’t think he meant to ring the death knell on them and then like domi noes, the farmer, businessmen and ultimate ly the small town itself. I hope your letter gets positive results.” L.H. Olson, President Commercial Trust & Savings Bank, Mitchell, S.D. * * farming. The growth of our banks and the community will be hurt severely by the new Chapter 12 Bankruptcy Law. “I hope more than Senator Grassley will be able to read your letter. Very well written and brings the true story home.” James C. Stratton, President Osmond State Bank, Osmond, Nebr. * * * “I just finished reading your letter to Senator Grassley. Congratulations and best wishes! You sure know how to ‘give ’em hell’ and all of us are behind you. I trust that all who agree with you on this situation will have some influence on the people we elect.” James R. Campbell, President Norwest Bank Minneapolis, N.A. Minneapolis, Minn. Jeff Rodman Leaves ABA To Join MASI Staff As V.P. Jeffrey J. Rodman is joining the staff of MABSCO Agricultural Ser v ices, Inc. (MASI) as vice p re sid en t-m ar keting, effective F e b ru a ry 17. Mr. Rodman re signed his posi tion as assistant director of the A g ric u ltu ra l B ankers D ivi J.J. RODMAN sion a t th e * “May I express my thanks for sharing with our industry your excellent letter to Senator Grassley on Chapter 12 Bankruptcy. “For some reason, we have difficulty in educating our legislators, along with others, that we are going the extra mile to help save the farmer and small business that show any sign of possible survival. We do not need ridi culous solutions like Chapter 12. “As you so skillfully pointed out, they do not realize that we have a responsibility to our depositors, regulators and stockholders. If the local bank fails, the community prob lems are magnified many, many times. “I have always appreciated your fine pub lications and news of banking. Please keep up the good work and maybe some of our farm ers, businesses and bankers will survive for another day.” Darold Petersen, President Lakeside State Bank New Town, N.D. *** “Excellent job...The young farmers in our area will be the hardest ones hit. We will not be able to finance them and getting them into a new venture. I can see no way that we can take a chance, like someone who has the po tential and the seed money to get started https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis We ifajffre Perf ormance As field representatives of the G.D. vanWagenen Company, we enjoy being of service to our customers. Teaming with our internal service representatives, we deliver the highest quality of Collateral Insurance Management. At G.D. vanWagenen, service delivers performance. Automated Insurance Management System Blanket Single Interest Insurance Conversion and Confiscation (Skip Insurance) Credit Life/Primary and Excess Mobile Homeowners Insurance W Offices At: Denver, CO Phoenix, AZ Omaha, NE Minneapolis,MN Cedar Rapids, IA Billings, MT Reading, PA G.D. van Wagenen Company 12 South Sixth Street Minneapolis, MN 55402 1-800-742-5658 (Minnesota) 1-800-328-2052 (Out-of-State) The Collateral Protection Insurance Specialists Northwestern Banker, February, 1987 22 American Bankers Association headquarters in Washington, D.C., to accept this new appointment in Des Moines, la., headquarters of MASI. In his new position he will man age marketing and sales, formulate marketing strategy and product de velopment, handle public relations, and supervise participant training. MASI serves member banks of 12 state banker associations, as well as participating banks in three addi tional states. Mr. Rodman is a native of Springville, la., and is a 1977 gradute of Iowa State University. Upon gradu ation, he began his financial career with the Federal Land Bank Asso ciation in Decorah, la., serving there as vice president/branch manager. In 1982 he joined the Farm Credit Administration headquarters in Washington, D.C., as a regional supervisory officer. In that position he was assigned to a two-man team with responsibilities for maintaining on-going contacts with the Farm Credit Banks of St. Paul, comprising $11-$12 billion in total assets. He was reassigned in 1984 to Farm Credit Banks of Spokane as part of C apital. Another reason fo r selecting Swords Associates. had received a warning from the Comptroller’s office. Swords Associ ates was called to help us organize our chaos. After a meeting with manage ment and an examination of the bank’s operations, Swords Associ- “We as the directors of a $200 million national bank had to make some drastic decisions. Our ROA had dropped below .60% and our capital-to-assets ratio stood at 4.8%. We had dismissed most of the upper level management, and ates was back within a week with what they considered our most viable solution. Swords Associates recom mended that our bank offer to exchange variable rate preferred stock for our soon-to-be-due deben tures. An austerity program was to be launched immediately to en hance our profitability. With Swords Associates assistance a prospectus was developed, a meeting held with the Comptroller and the exchange idea presented and approved by the debenture holders. Today after carefully following Swords Associates suggestions and further consultations on other minor problems, our bank has fully re covered. Our ROA is presently run ning at a respectable 1.26%, capital-to-assets ratio is up to 6.8%. We have recently lifted our austerity program and are viably competing for business in the community." Ær/A SWORDSASSOCIATES. INC. PROFESSIONAL BANKING CONSULTANTS 4900 OAK SUITE 301 KANSAS CITY, MISSOURI 64112 (816) 753-7440 The Carpenters Pension Fund of Illinois, covering the State of Illinois and the eastern half of Iowa, announced today a financ ing program of new and rehabilitation construction projects. The Pension Fund is interested in providing financing of con struction and end loans at competitive rates. The servicing of these loans, ranging from $250,000 to $2,000,000, will be handled through local banks. The program is available for com mercial and residential projects. For further information, please contact: Frederick A. Westmark, Administrative Manager, Illinois Employee Benefits Cor poration, 28 North First Street, Geneva, Illinois, 60134, 312/ 232-7166. Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the FCA’s reconstruction effort in that problem-plagued district. He left the FCA in 1984 to join the American Bankers Association headquarters staff as assistant director for the Ag Bankers Divi sion, where he has been responsible for all activities, services and pro ducts of the division. After receiving his B.S. degree in Industrial A dm inistration from Iowa State in 1977. Mr. Rodman also did post-graduate study at Luther College in Decorah, and at American University in the nation’s capital. He has also taken advanced training in ABA’s Commercial Lending School at the University of Oklahoma, and its course in Nego tiating Skills, as well as several AIB courses. LaSalle National Corp. Acquires Lisle Bancorp. LaSalle National Corp., Chicago, has completed the acquisition of the Lisle Bancorporation, the holding company for the $100 million Bank of Lisle. The bank, renamed the LaSalle Bank of Lisle, now offers access to higher lending limits and proven in ternational, trust and support ser vices to Lisle and all of DuPage County. LaSalle National Corp., the hold ing company for LaSalle National Bank, Chicago, had announced its plans to acquire the profitable Bank of Lisle in July, 1986. It has since received regulatory and shareholder approval for the merger, according to Homer J. Livingston, Jr., presi dent and chief executive officer of LaSalle National Bank. Leonard P. Ponte remains as president of the Lisle bank. LaSalle National Corp. paid $18 million to purchase and merge with the Bank of Lisle, located at 4733 Main St. in Lisle. During 1985, the Bank of Lisle reported a 2.17 percent return on assets, ranking it in the top 4 per cent of banks its size. LaSalle National Bank is a subsi diary of Algemene Bank Nederland N.V. (ABN Bank) and a member of its ABN/LASALLE group which has offices in 13 North American cities. ABN is one of the world’s largest financial institutions, with more than $60 billion in assets and more than 900 offices in 43 countries worldwide. of Chicago. He was also responsible for CASH STATION, First Chica go’s proprietary ATM program as well as its credit card merchant pro gram, home banking and self-service terminals. Previously, he managed ATM network marketing for CASH STATION, Bank-at-W ork/ACH sales and consumer affairs, all at First Chicago. * * * bank for 13 years. She most recently IBA Conference Set served as assistant cashier. For Feb. 25-26 Ms. Turner most recently served The Illinois Bankers Association as personnel administrator. She will will hold a Consumer Credit Confer be assistant cashier in personnel. ence on February 25-26 at the Hyatt Ms. Slimp has been with the bank Regency Woodfield in Schaumburg. for six years. She most recently This year’s conference theme is served as teller supervisor respon “Changing Ideas To Profits.” sible for proof, cash vault and ATM On February 25, Bill Grove of At operations. In addition to being pro lantis, Fla. will speak on “Excel moted to cashier, she will also serve lence is an Inside Job.” Mike Moebs, as manager. G.M. Moebs & Associates, Lincolnwood, will present “Home Equity Ideas for Profits.” Jerry Markbreit, NFL Referee, will be the luncheon speaker. The afternoon workshop sessions include: “ Implementation of Home Equity Loans: A ‘user’ tells all;” “Building Dealer Volume: Auto/RV/ M arine;” ‘‘S tu d e n t L oans—A Changed Environment,” and “Pric ing Techniques for Improved Profit ability-A utos, Home Equity, etc.” On February 26, James W. Evans, attorney from Champaign, will speak at 7:30 a.m. on “Ques tions & Answers” and at 9 a.m. on “Loan Documentation for Con sumer Lenders.” Morning workshop sessions include: “When to Use Pro fessional Collectors;” “The Pluses of Mergers & Acquisitions,” and “Compliance Issues for Installment/ Consumer Lenders.” Stephen S. Cole has been named Registration is $150 per person and $125 for each additional regis president of MONEY STATION of trant from the same bank/firm. The Illin o is, Inc., fee includes two continental break C hicago, th e fasts, a luncheon, three coffee newly consoli breaks, two receptions and all con dated automated teller network of ference materials. MONEY NET WORK and CASH STA Three Promoted in Aurora TION. Mary K. Cinton has been pro Mr. Cole, who moted to assistant vice president in began his career S. COLE operations, and Barbara L. Turner with First Na and Martha J. Slimp to assistant tional Bank of Chicago in 1972, cashiers of Aurora National Bank on most recently served as vice presi Indian Trail. dent and head of the electronic bank Mrs. Cinton has been with the ing division of First National Bank https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Lane Financial, Inc. has an nounced that it has completed its previously announced acquisition of the $107 million asset Bank of West mont in Westmont. William N. Lane, III, chairman of Lane Financial, said the affiliation of the Bank of Westmont with Lane Financial will provide a strong pre sence in the western suburbs and boost the economy’s assets to nearly $ 1.6 billion. Marcel Levesque will continue to serve as CEO of the Bank of West mont. Total assets of the Bank of West mont were $107 million as of Sep tember 30, 1986. Promoted in Monmouth Chris J. Gavin has been promoted to assistant vice president of Mon mouth Trust and Savings Bank. He joined the bank in 1983 and was ap pointed loan officer in 1984. FNBOS Officers Earn MBA Degrees AT a staff wine and cheese party, USAmeribanc First National Bank of Skokie Pres. James A. Carlson (left), congratulates April A. Locander, v.p. of support services, (cen ter), and Michael Henthorn, cust. serv. off. and mgr. of the Financial Services Center, (right), for completing the necessary courses to earn a masters degree in busi ness administration from Loyola University. Diplomas were awarded in January. Ms. Locander and Mr. Henthorn joined the bank in 1979. Northwestern Banker, February, 1987 24 bank as vice president-cashier and director. He formerly served as president and director of American Bank, Danube, and most recently was a loan officer with Farm Credit Services in Elkhorn, Wis. R.W. Terwilliger, pres., Eden Prairie T.L. Jeffers, exec, v.p., Minneapolis MBA Expands Programs The Minnesota Bankers Associa tion, with direction from various committees and the MBA board of directors, has expanded its educa tional offerings 97 percent during the last two years, according to MBA Administrative Vice Presi dent Wayne Berthiaume. Nearly 200 days of programs will be offered by MBA during July 1986-June 1987. Two hundred pro gram days averages out to be almost one program for every working day. 1975 when she joined the bank’s bookkeeping department, where she The Investing for Profits seminar, held various positions including sponsored by the Minnesota Bank supervisor. In 1979, she became an ers Association Investments and auditor for First Bank System work Funds Management committee, will ing throughout South Dakota, Min be held March 5 at the Hotel Sofitel, nesota and Wisconsin. She rejoined Bloomington. The seminar will pro First Bank Northfield in 1980 as vide an opportunity to discuss new operations and compliance officer. investment products and services, In 1984, she joined Bank of Minnea tax reform impact on the invest polis and Trust Company as assis ment portfolio and outlook for inter tant vice president in charge of Named in Andover Kathy S. Cripe has been named an est rates. assistant vice president of St. An The registration fee is $80 per operations. thony National registrant and includes all meeting Bank, St. An materials, lunch and breaks. Only Changes Told in Adams The Farmers State Bank of thony Village, members and associate members of the MBA are eligible to attend. For Adams has announced the retire and will manage more information, contact the MBA ment of Robert D. Hanson as presi the bank’s new dent. He joined the bank in 1967, office in Ando office. ver. serving as president since 1981. Prior to join Gordon Klaudt has been elected Named in Eden Prairie ing the bank last president. He has been with the Marquette Bank Eden Prairie has year, she had bank since 1963, serving as vice announced the appointment of Bill president-cashier and director since been a branch Ks CR|pE Breit to presi m anager w ith 1980. dent. He had Roland Hoffert has joined the First Minnesota Savings Bank. served as a vice p re s id e n t of Marquette Bank St. Anthony N a t’l Bk. Opens in Andover M i n n e a p o lis ’ corporate ser vices group. Before joining Marquette Bank Minneapolis, he was a division sales manager for Westinghouse Credit Corporation in Chicago, 111. He also served as a vice president and client executive for Norwest Bank in Marshall. In addition, he served as vice president and market ing manager for Norwest Business Credit and assistant vice president of lease marketing for Norwest Leasing. MBA Seminar Scheduled * Named in Northfield Elaine Bauernfeind has been named assistant vice president in charge of operations at First Bank Northfield. She began her banking career in Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ST. Anthony National Bank in St. Anthony Village has opened a temporary office in Ando ver at 13851 Round Lake Blvd. The office is the bank’s first detached facility. Plans are underway for construction of permanent headquarters on Bunker Lake Blvd. The new 6,000 # sq. ft. building is scheduled for completion late this year. 25 Several new officers have been named at National City Bank of Minneapolis. Three were named to senior vice president status. They are: Thomas J. Freed, chief fi nancial officer and m anager, control depart ment; David M. Nash, manager, corporate devel opment depart ment, and Floyd J. Stewart, com mercial banking T.J. FREED division - A. D.M. NASH F.J. STEWART William L. Meyer has joined Norwest Bank Minneapolis as assistant vice president in the community b an k in g d iv i sion. Prior to join ing Norwest, he was in the corMarquette Bank Minneapolis has r e s p o n d e n t appointed Carmen Gugin as vice banking division at First Wiscon president and di sin N a tio n a l rector of market W.L. MEYER Bank of Milwau ing. She will be kee, calling on banks in northeastern responsible for Wisconsin. the m arketing * * * function at Mar q u e tte B an k Norwest Corporation has named Minneapolis and Kathleen L. Lock director of in its seven facili vestor relations ties in down for the corpora town Minneapo tion. She suc C. GUGIN lis, Eden Prairie, ceeds K erry Burnsville, northeast Minneapolis, Noyes, who has Edina and Brooklyn Center. tran sferred to Before joining the bank, she was Norwest Capital vice president for planning and mar Resources as se keting at St. Francis Regional nior marketing Medical Center in Shakopee. re p re se n ta tiv e * * * for pension and K.L. LOCK employee benefit John (Jack) A. Hoffner has joined programs. bank and manager of the accounting division. He has been with the bank since 1974. Named vice president of the com mercial banking division - B, Brid get A. Manahan has eight years of commercial banking experience. * * * v u in IT ic i t i a i D.E. FERRONI Q 0 B. MANAHAN Mr. Freed has been with the bank since 1969. He is the secretary and controller of National City Bancorporation. Mr. Nash has been in the banking industry since 1971. Con tinuing as manager of the commer cial banking division - A. Mr. Ste wart has been in the banking indus try for 27 years. In addition, Donald E. Ferroni has been named controller of the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis State Bank, St. P aul as vice president, retail banking. He joins the bank after 24 years with Min nesota Federal, formerly F irst Minnesota. j.a. h o f f n e r * * * Sale of Four Minnesota Norwest Banks Completed Sale of the assets and deposits of four Norwest banks in Minnesota to banks owned by Minnwest, Incorpo rated have been completed, accord ing to an announcement by Norwest Corporation. Norwest announced last January an agreement to sell assets and lia bilities of its banks in Montevideo, Robert P. Platzer has been pro Ortonville, Dawson and Luverne to moted to assistant vice president— Minnwest, a new bank holding comlending of Cherokee State Bank, St. Paul. He has been with the bank for MINNESOTA NEWS. . . (Turn to page 26, please) six years. Northwestern Banker, February, 1987 Pres. Named in Kenosha Rudolph F. Scuglik has been named president and chairman of the F irst Na tional Bank of Kenosha, suc ceeding Knox D. C orrigall who has retired. Mr. Corrigall joined the bank as a vice presi dent in 1966 and became p re si R.F. SCUGLIK dent and chair man of the board in 1976. Bank assets have grown from $120 million to $290 million during his term as president. Mr. Scuglik started at First Na tional in 1953 as a teller, was pro moted to cashier in 1968 and execu tive vice president and board mem ber in 1976. First Interstate Acquires Mid-Continental First Interstate Corporation of Wisconsin has announced that it has completed the acquisition of MidContinental Bancorporation, Inc. of Milwaukee. Mid-Continental Bancorporation is the parent of Conti nental Bank, which operates five of fices in Milwaukee. As of September 30, 1986, Mid-Continental had as sets of approximately $166,000,000. First Interstate currently has Milwaukee-area banking offices in Shorewood, West Allis, New Berlin, Racine and Caledonia. The five Con tinental Bank offices will initially continue to operate independently of the five existing First Interstate Bank offices in the Milwaukee area. The change in name to First Inter state and coordination of customer services among all offices in the Mil waukee area will occur by mid 1987. First Interstate Corporation of Wisconsin had assets of $1.27 billion as of September 30, 1986. With the Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bankshares, said that “unresolved issues between the parties led to the mutual agreement between Central Wisconsin Bankshares, Inc. and the Knutson family to cancel the agree ments for the acquisition effective immediately.” Plans for the purchase of the bank stock from the Knutson family had been announced in September 1986. The Federal Reserve Board had granted approval of the acquisition on November 4, 1986. addition of the five Continental Bank offices, it now operates 38 banking offices throughout Wiscon MINNESOTA NEWS. . . sin and has assets aggregating $1.44 (Continued from page 25) billion. pany founded by M.D. McVay, re tired president of Cargill, Inc. and a Two Named in Brown Deer former director of Norwest Bank Brown Deer Bank has named Minneapolis. Final approvals of the Brian Casper and Catherine Drager sale were received from regulatory assistant vice presidents. agencies in December and the trans Mr. Casper joined the bank one fer of operations was completed year ago as a lender in the commer January 19. cial banking department. He pre Following the closings, Mr. viously held several lending posi McVay said, “The banks are welltions with another major Milwaukee staffed, well-managed and located in area bank. strong communities with growth po Prior to her promotion, Ms. Dra tential, particularly in the agricul ger served as assistant controller tural sector. and operations officer for the bank. “Every community needs a sound She joined the bank in 1976. banking institution dedicated to the economy of the community. We are ABA Accredits WBA School pleased to become part of these com The Wisconsin Consumer Credit munities.” School, sponsored by the Wisconsin Bankers Association at St. Norbert MBA Appoints Manager Gordon L. Engfer has been ap College in West De Pere, has been given accreditation by the American pointed as manager of MBA Insur ance Agency, a Bankers Association. The accreditation was announced w h o lly -o w n ed at the ABA Education Policy and subsidiary of the Developmental Council’s recent M i n n e s o t a Bankers Asso meeting. The Iowa General Banking ciation. M r. E n g fer School, sponsored by the Iowa Bankers Association at the Univer w as fo rm erly of sity of Iowa in Iowa City, also re p re s id e n t D rovers F irst ceived accreditation. American Insur G.L. ENGFER ance Agency in Acquisition Cancelled South St. Paul and is a graduate of William H. Rodd, chairman and the Hartford Insurance School. He CEO of Central Wisconsin Bank- was with the Drovers Agency for 33 shares, Inc., and Lincoln V. Knut years and spent six years with Drov son, president of Westby-Coon ers First American Bank. Valley State Bank, has announced MBA Insurance Agency is the the cancellation of agreements pro Minnesota agency for Banclnsure viding for the acquisition of approxi financial institution bonds, directors mately 65 percent of the stock of the and officers liability insurance and bank by Central Wisconsin Bank- other bank risks. The agency also of fers other needed insurance pro shares. Edwin J. Zagzebski, president ducts for Minnesota banks and bank and COO of Central Wisconsin agencies. Two Named in Sioux Falls Appointed in Aberdeen Norwest Bank South Dakota, N.A., has announced the appoint ment of Kenneth D. Loken as senior vice president in the bank’s Aber deen branch. He had served as president of the Norwest Bank operation at Groton. He assumed his new position as part of a move to consolidate the re sources of the Aberdeen and Groton branches. Mr. Loken will report to Terry D. Baloun, president of the Aberdeen branch. Mr. Loken began his banking career in 1978 as an agricultural lender at Norwest Bank Aberdeen. He moved to Groton in 1980 and became president of the Groton branch in 1986. Elected in Sioux Falls First Bank of South Dakota has elected Jacalyn M. Bunkers as per sonal trust officer, trust services di vision, Sioux Falls. She joins the bank after working Added in Richardton The First American Bank of Rich ardton has announced that Richard Kingsley has joined the bank as vice president with the responsibility of senior loan officer and supervision of financial and regulatory reporting. He was most recently associated with Bremer Financial Services for Region V in special credits. His banking career began as an exami https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis with the accounting firm of Lyle B. Wrage & Company for the past six years. Sioux Falls Bank Names Two Dan Callis has been named assis tant vice president, mortgage lend ing of Norwest Bank South Dakota, N.A., Sioux Falls. He joined Nor west in 1978 in Rapid City and in 1985, transferred to Sioux Falls as a regional mortgage underwriter. In addition, Pam Friedel has been named mortgage loan officer of the bank. She joined Norwest in Min neapolis in 1977 and transferred to Sioux Falls in 1978 as a real estate secretary. She most recently served as regional processing administra tor. David M. Eiesland has been Retired in Tripp elected commercial loan officer of Harrison O. Brosz, vice president Western Bank in Sioux Falls. An ex and cashier, has announced his re perienced commercial lender, he has tirement from First State Bank of over 12 years of banking experience. Tripp, formerly Dakota State Bank. He has been associated with the bank for 35 years. He also served as a member of the bank’s board fulfill ing the duties of secretary. Joined in Sioux Falls Dennis Hoffman has joined Nor west Capital Management and Trust in Sioux Falls as a trust in vestment officer. Prior to joining Norwest, he was D.M. ElESLAND B.K. PERSON an investment officer and account Bryan K. Person has been elected executive with a local brokerage managing officer of Western Bank - company. He replaces Tim Melin North in Sioux Falls. Formerly a who has accepted the position of personal banking officer, he has manager of the Rochester Norwest trust office. been with the bank since 1983. Susan Welo has been promoted to a d m in istra tiv e o fficer—in v e st ments. She joined the bank in 1979. Mina Ulven has also been promoted to administrative officer—tax. She has been employed with the bank since 1984. Greg Sorum has been promoted to systems officer. He joined the bank’s staff in 1979. Promoted to personal banking officer, Nancy Schuelke joined the bank in 1981 and has worked in sev ner for the FDIC. He was also a vice eral areas of the bank. Bonnie Krueger has been pro president at Liberty National Bank, Dickinson, where he was employed moted to mortgage loan officer. She for seven years in operations, invest joined the staff of First National in 1985. ments and lending. Named in Grand Forks Promotions in Grand Forks A number of officer promotions have been announced at the First National Bank in Grand Forks. David Ramage has been elected to the board of Community National Bank of Grand Forks. He is the owner of United Cable Management. Northwestern Banker, February, 1987 28 Bank—Sheridan. He has served as ^ president of the Rawlins bank for the past seven years. He has also served as regional vice president over First Wyoming banks in Lara mie, Saratoga, Hanna and Wheat- f land. Mr. Eddington joined the bank in 1986. He has been in banking for 21 years. Changes Told in Kemmerer Larry L. Hassler has resigned as president and CEO of the First Wyoming Bank—Kemmerer, to ac cept a position as president and CEO of the Anita State Bank in Anita, IA. Thomas Chinnock, senior vice president, has been promoted to president and CEO. Retired in Lusk Robert C. Templeton has an nounced his retirement from the Lusk State Bank. He has been with the bank for 28 years and has served as its president since 1967. He and his wife, Jo, plan to stay in Lusk and will be available to the bank in an advisory capacity. Named in Casper First Interstate Bank of Casper has named Donald Jepsen as vice # president in the bank’s real es tate department. He served as the branch man Pres. Named in Rawlins ager at Provi James R. Eddington has been d e n t F e d e ra l named president and chief executive S a v in g s and officer of the First Wyoming Bank— Loan in Cody Rawlins. He will replace Robert W. prior to accept Pappenheim, who has been named ing this posi D- J epsen president of the First Wyoming tion. Wayne Martin Retires From Denver Fed Bank Schedule Change For MBA Marketing Conference The Montana Bankers Associa tion’s 1987 Marketing Conference will be held April 9-10, instead of April 2-3. The conference location in Big Sky remains the same. The dates were changed to accom modate featured speakers John Pratt and Wes Seargant. Mr. Pratt, who will discuss sales and where they fit into the bank, will speak on April 9. Mr. Seargant will be speak ing on “You as a Marketing Profes sional” on the morning of April 10. Hired in Helena Montana Department of Com merce Director Keith L. Colbo has announced that Fred J. Flanders, Helena, has been hired as commis sioner of financial institutions. Mr. Flanders, who was employed Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis as a senior vice president, senior lending officer and second officer of Norwest Bank Helena, joined the de partment on January 19. Prior to joining Norwest, he was an investment broker with D.A. Davidson & Co. in Great Falls, and CEO of the Bank of Montana in Helena, in addition to holding a number of bank management posi tions earlier in his career. Scott Potter to Speak The MBA has booked Scott Pot ter, director of training for Financial Shares, Inc., to present “Underwrit ing the Self Employed Borrower” on Wednesday, March 25, at the North ern Hotel in Billings. Mr. Potter has been an outstand ing speaker at past MBA real estate conferences. W ayne W. M a rtin re tire d December 31 as senior vice president and Denver branch manager for the Kansas City Federal Reserve Bank, a post he had held for the past 10 years. Under Mr. Martin’s gui dance, operations of the Denver branch grew rapidly and now is among the largest branches in the Fed system in terms of check clear ing and other services provided to financial institutions. His acknowledged leadership as head of the Denver branch is due in great measure to the high regard and personal respect he earned from 10th District bankers during his 33-year career with the Kansas City Fed. He joined the headquarters of fice in 1953, was promoted to assis tant vice president in 1965, then in 1966 was transferred to the check collection department where he was named vice president in charge in 1970. His promotion to senior vice president came in 1976 when he was named Denver branch manager. Succeeding Mr. Martin at the Denver branch is Enis Alldredge, Jr., who had been vice president and assistant branch manager. He joined the Kansas City office in 1967 and then the Denver branch in 1981. ^ ^ ^ f £ • # 29 of Denver, has transferred to Colo rado National Bank—Exchange, Colorado Springs and has been elected an assistant vice president of that bank. He began his career with Colorado National in 1981 and has held vari ous investment positions. Businesses Indicate Worst May Be Over Retired in Denver R.J. (Jim) Nelson will retire as ex- 41 ecutive vice president and director of Central Bank of Denver effec tive February 1, 1987. He will be H retained as a c o n su lta n t to the bank. In making the an n o uncem ent • Donald D. Hoff man, chairman of the board, stated, “Jim Nelson has made a sig nificant contribution to the growth • and progress of Central Bank over the period of 37 years and we wish him well in his retirement. We are fortunate to have the continuing benefit of his knowledge and experi• ence through a consulting arrange ment.” ler works in real estate banking. He joined the bank last year. In addition, Thomas E. Kuhlman and Stanley M. Solodky have been promoted to assistant vice presi dents. With the bank since 1983, Mr. Kuhlman works in the personal trust and investments services area of asset management services. Mr. Solodky has worked in the public fi nance department since joining the bank in 1984. Also named was Leslieann Galla gher to asset management officer. She joined the bank last year. Denver Bank Elects Two Colorado N ational Bank of Denver has elected Joe W. Stander as senior vice president, and Gary L. Klein as vice president. Two Elected in Pueblo • • • • ^ Kevin S. McCarthy has been elected a vice president of Colorado National Bank—Pueblo. He began his banking career in 1976 as a loan review administrator with Pueblo Bank and Trust Company. He joined Colorado National Bank in 1983 as a commercial loan officer. Mark D. Dunsmoor has been elected a commercial loan officer of the bank. He recently transferred to the bank after completing an exten sive training program in Denver. He began his banking career with Citi zens State Bank in Wyoming in 1979. He later was associated with the First State Bank in Idaho Springs. Named in Denver United Bank of Denver has named Sally J. Kelly and Conrad W. Steller to vice presidents. Ms. Kelly, who joined the bank in 1965, man% ages the consumer bank’s seniors and professionals markets. Mr. Stel https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis J.W. STANDER G.L. KLEIN There are signs of cautious opti mism emerging among Colorado’s business executives, according to United Banks’ Colorado Business Confidence Survey for the fourth quarter of 1986. In commenting on the survey’s findings, Dr. Tucker Hart Adams, vice president-economics and plan ning for United Banks of Colorado, said, “ In our fourth quarter survey, we found that while business confi dence remains low, there are signs that this sentiment appears to be changing. Markedly fewer firms are planning to reduce their labor force over the next few months and the proportion of firms increasing their hiring plans has doubled from our second quarter survey. In addition to that, only a few companies now rate their financial position weak; this is down sharply from our find ings six months ago. Another sign of improvement is that fewer busi ness executives expect continued problems in Colorado’s economy.” “There seems to be more hope as we enter 1987,” continued Mr. Adams, “although business executives are still guarded in outlook. What seems certain, however, is that the pessi mism prevailing throughout the state is contributing to the soft economy because it has caused busi nesses to curtail or delay investment and consumers to delay con sumption.” United Banks’ Colorado Business Confidence Survey queries the chief executives of more than 100 of the largest firms in Colorado. It incor porates a representative sample of the state’s employment base and geographic distribution. Mr. Stander, controller of the bank, joined Colorado National in 1984 and was promoted to vice president in 1985. He previously served as credit center manager for the seven state Great Lakes Region for Citicorp Retail Services, Inc. from 1983-84, and was vice presi dent and controller at IntraWest Bank of Denver from 1979-1983. Mr. Klein began his banking career in 1976 as a loan officer for Omaha Farm Credit Bank. He joined Colorado National Bank of Elected in Boulder Denver last year. Annette Taylor has been elected a vice president of Colorado National Named in Colorado Springs Bank—Boulder. She began her James M. Desmond, who until re career with the bank in 1973 and cently was an assistant vice presi was later elected an operations offi dent of the Colorado National Bank cer of the bank. Northwestern Banker, February, 1987 30 1986 $11,636,000 1980 $5 ,075,000 1976 $3 ,155,000 EARNINGS 1972 $1,719,000 Our Reputation Is OnTheLine. We’re known as a bank that performs. In fact, the average annual growth rate of the after-tax earnings of First National Bank of Omaha* is 15%. And 85% of that goes back into the bank for better services and products. We’re proud of our solid growth. And proud to serve you— and assure you — with our strength, financial expertise and experience. Few institutions offer you what we can in performance and stability. Wouldn’t you rather trust your money to the people who have a reputation for sound financial management? In 1986, we achieved $11 million plus in earnings. That’s why we’re proud of our name. * First National of Nebr., Inc. No Wonder They Call Us First. firs! national bank Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis of omaha Member FDIC 31 Insurance to increase the limits of its “Directors and Officers Legal Defense and Limited Liability Poli cy” from $100,000 to $250,000. For more information, contact Steve McKelvey at the NBA office at (402) 474-1555. Promoted in Minden Changes Told in Alliance James E. Abbott, controlling shareholder of the Abbott Banking Group, has been named chairman of The Guardian State Bank & Trust Company, Alliance, replacing Don ald D. Stull, who has resigned as chairman to pursue other interests. Mr. Abbott has been a vice presi dent of the bank since 1981 and since 1982 has served as president of the holding companies that own the other Abbott Banks. Jack Craig has been promoted to senior vice president of the First Na vice president. Thomas J. Ehlers tional Bank of Minden. With the has been promoted from cashier to bank for 35 years, he most recently vice president. Promoted to opera served as vice president. tions officers were Jill Olson and Pamela Carlson. Merged in Gresham Promoted in Gordon Tim Keller has been promoted to executive vice president of Gordon State Bank, Gordon. He has been with the bank for seven years. Retires in Fullerton J.E. ABBOTT F.L. TOLSTEDT It was also announced that Frank L. Tolstedt has been named chief operating officer of the Abbott Banking Group. Mr. Tolstedt, who has been serving as president of the Guardian State Bank & Trust Com pany since 1986, will remain in that position as well as serving as presi dent of the Gordon State Bank in Gordon and The Anchor Bank in Merriman. He has almost 30 years of banking experience. The Abbott Banking Group is comprised of 10 banks located in northwestern Nebraska. This chain of banks was established by Mr. Ab bott’s parents and grandparents, making him the third generation of the Abbott family to be actively in volved in the management of the banks. Dale J. Black, who had served as president for First National Bank and Trust, Fullerton since 1970, has resigned. He will continue to serve on the bank’s board. He joined the bank in 1965 as vice president. Prior to that, he was a partner with the late Frank G. Ar nold in the Arnold-Black firm in Ful lerton for 14 years. He began his business career in Fullerton in 1936 in the grocery business with his father, the late Henry Black, and brother, Donald Black. Mr. Black served one term as mayor and is a part president of the Fullerton Chamber of Commerce. Celebrates 50 Years In Wauneta An open house was held at the Wauneta Falls Bank on December 17, 1986 to honor J. Wiley Green, chairman, for 50 years of service to the banking industry. Approximately 120 people at tended the special occasion. Increase on D&O Coverage Limits Approved Kansas Bankers Surety Co., the firm which writes blanket bonds and Advanced in Albion other bank insurance for many Neb The Albion National Bank has raska banks through the Nebraska promoted several individuals. Bankers Association’s insurance Wayne Boilesen has been pro subsidiary, has received approval moted from vice president to senior from the Nebraska Department of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Gresham State Bank merged as a branch office of York State Bank and Trust Company on Janu ary 1, 1987. Regulatory authorities had granted approval for the merger on April 18, 1986. At that time, Gresham State Bank reported assets of $3.5 million. Two Banking Schools To Be Held in Nebraska The Schools of Banking, Inc., sponsored by the Kansas and Neb raska Bankers Associations, will hold its 1987 School of Banking Fundamentals and its 1987 Profes sional D evelopm ent P rogram Commercial Lending school. The School of Banking Funda mentals will be held March 9-13 at the Holiday Inn in Kearney. The school offers a newly revised and ex panded curriculum specifically de signed for entry level bankers or those with very specialized experi ence. The PDP Commercial Lending School will be held April 5-10 at the Holiday Inn in Kearney. This school offers an exciting new curriculum af filiated with the ABA’s Professional Development Program. The course presents commercial lending as a complete process, emphasizing financial analysis. Enrollments for each school are limited. Contact Jone Beer or Pam Bartak at the Schools of Banking at (402) 474-3313 for more information. Promoted in Stamford Mark A. Mercer has been pro moted to vice president of the Stam ford Bank, Stamford. He previously served as cashier. Northwestern Banker, February, 1987 32 maha Directors of The First National Bank of Omaha have elected Bruce R. Lauritzen, 43, president to suc ceed F. Phillips Giltner, 61, who held that posi tion the past 17 years. The pro motion was re commended as p a r t of th e bank’s continu ing management B.R. LAURITZEN succession policy by Mr. Giltner, who was named vice chairman of the board and will continue as a member of the three-officer executive com mittee, along with Bruce Lauritzen and his father, John R. Lauritzen, chairman. Mr. Giltner also con tinues as president of First National of Nebraska, Inc., the bank’s hold ing company. Bruce Lauritzen is the fourth generation of his family to serve as president of First National Bank, and the fifth generation to serve on its board of directors. Chartered in 1863, the year the National Banking Act was passed, First National is the oldest bank from Omaha west. Mr. Lauritzen received his A.B. degree from Princeton University and an MBA degree from the Uni versity of Virginia, then joined First National in 1967. He has served the bank as a commercial loan officer, second vice president, vice president and since 1981 as executive vice president. Mr. Lauritzen also is president of three family bank holding com panies that own banks in Nebraska NIBA Legislative Dinner Held THE Nebraska Independent Bankers’ Association hosted its 1987 Legislative Dinner at the Nebraska Club in Lincoln last month. Present at the meeting were, from left: Lt. Gov. Bill Nichol, Scottsbluff; NIBA Pres. Roy Yaley, pres., Nebraska State, S. Sioux City; Sen. Bill Barrett, Lexington and Sen. R. Wiley Remmers, Auburn. Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis and Iowa. (A detailed interview with Bruce Lauritzen will be published in the next issue.) * * * Glenn R. Wilson, Jr., president of the Government National Mortgage Association (Ginny Mae), has been nam ed p resid en t and chief executive officer of FirsTier Mortgage Co. M r. W ilson has served the organization for G.R. WILSON, JR. 20 months. He joined FirsT ier M ortgage on February 2. Keith Morphew, retired president and chairman of the board of Firs Tier Mortgage, served as acting president during the past two months. * * * American N ational Bank of Omaha has elected Lori A. Packer as assistant cashier of the bank. The supervisor of the customer service department and teller area, she joined the bank in 1982. John J. Guthmann has joined the bank and L.A. PACKER will be active in personal banking and in the trust and investment division. He was as sociated with a bank in Lexington, Ky. for seven years. * * * An Omaha bank executive, John R. Cochran, chairman and CEO of Norwest Bank Nebraska, has been appointed a director of the Omaha £ Branch of the Federal Reserve Bank of Kansas City. He succeeds Donald J. Murphy of Omaha. In related actions, Janice D. Stoney, executive vice president and % COO, Northwestern Bell Telephone Co., was reappointed a director of the branch, and Kenneth L. Morri son, president, Morrison-Quirk Grain Corp., Hastings, was reap- # pointed chairman of the branch board. Other actions announced by the OMAHA NEWS. . . (Turn to page 33, please) ® ® ^ ^ a 33 FirsTier Bank Lincoln has an nounced a number of promotions. Jay D. Callahan has been pro moted to vice president, municipal & government bond division, and Charles Greenway has been pro moted to vice president, agricultural & financial institutions division. Mr. Callahan joined the bank in 1978. Mr. Greenway joined the bank in 1974. Promoted to assistant vice presi dent status are: Kathryn A. Barker, agricultural & financial institutions; Fern M. Spencer, marketing, and Marlene K. Wagner, municipal and government bond. Ms. McCall joined the bank in 1983. In 1977, Ms. Spencer joined the bank’s mar keting division and was named mar keting officer in 1980. Ms. Wagner has been associated with the bank since 1979. A number of new officers have been elected at National Bank of Commerce. Elected vice presidents were Ann Carlson, Randy Gustafson and Julie Pokorny. Ms. Carlson has held a * * * position in the trust tax department since joining the bank in 1980. Mr. Several were promoted at Na Gustafson joined the correspondent tional Bank of Commerce Computer banking division in 1984 and served Services Corporation. D. HOELTING V. LADEGARD as a farm and ranch officer pre Rob Spackman was promoted to viously. Also elected a trust officer, vice president. He joined NBC/CSC Ms. Pokorny has worked in the trust Commerce Group as loan review and in 1978 as a conversion representa division since joining the bank in general audit officer. Dan Walsh tive. 1976. joined the mortgage loan division in Named assistant vice presidents Elected assistant vice presidents 1983. were Mike Sorensen and Paul Wat were H. Cameron Hinds, Don Hoeltson. Mr. Sorensen joined the com ing, Vicki Ladegard, Catherine Mor pany in 1979 and Mr. Watson in rissey and Dan Walsh. Mr. Hinds 1981. and Mr. Hoelting both held posi Mary McCombs has been pro tions in trust investments since join moted to customer services officer. ing the bank in 1984. Ms. Ladegard She joined NBC/CSC in 1975. ¡M joined the trust marketing depart ment of NBC in 1983. Joining the OMAHA NEWS. . . correspondent division in 1985 Ms. (Continued from page 32) Morrissey previously worked for Federal Reserve Bank in Kansas Ci ty include the reappointment of F. Phillips Giltner, president, First Na D. WALSH C. MORRISSEY tional Bank, as Tenth Federal Re serve District representative to the Federal Advisory Council. In addi tion, Robert G. Lueder, chairman, Lueder Construction Co., was desig nated as deputy chairman of the board of directors of the Federal ÊÊtk Reserve Bank of Kansas City. R. GUSTAFSON A. CARLSON The Kansas City Fed’s Omaha Branch has almost 200 employees. * K. SUMMY J. POKORNY https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H.C. HINDS M. WANSER Kelly Summy has been elected farm & ranch officer. He was asso ciated with Hawkeye Farm and Ranch Management before joining NBC. Mona Wanser has been elected personnel officer. She has held a position in human resources since joining the bank in 1984. * * F. Donald Lewis, vice president of Southeast Banking Corporation of Miami, has died of pneumonia at the age of 42. He had a 20-year career in bank ing and had been a correspondent banker at the FirsTier Bank, (for merly the Omaha National Bank), from 1974-1980. Northwestern Banker, February, 1987 34 // § John Chrystal, President, Bankers Trust 0 hen you get a loan request, your customer wants a prompt answer. So when you ask your correspondent bank about overlines, shouldn't you be able to expect the same quick response? At Bankers Trust, our correspondent staff understands your overline needs. Just as important, we understand the need to respond to them without delay. As a major independent bank, we can usually give you an answer right away. An honest, straightforward answer. So, talk with Bankers Trust, where your overline requests receive the attention y o u deserve. W ^ • Call us for a complete range of correspondent banking services. TRUST SERVICES COMMERCIAL Investment Management Individual/Corporate Services Loans Bank Acquisition Loans Overlines & Participations INTERNATIONAL BANKING Full line of International Services INVESTMENTS Bonds Fed Funds CDs OPERATIONS Banking Systems Processing ATM & Débit Card Support Cash Letter Processing Remote Processing Support Call 1-800-362-1688 or 515-245-2424 • Seventh and Locust • Des Moines 50304 BankersTrust • Member FDIC Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 35 Wednesday, March 4 R.S. Howard, chmn., Oskaloosa N. Milner, exec, v.p., Des Moines IBA Marketing Conference Meets Mar. 2-4 HE 1987 Iowa Bankers Associa T tion M arketing Conference, “Marketing Per formance = Pro fit,” will be held March 2-4 at the Hotel Fort Des Moines in Des Moines. An excellent lineup of market ing experts, new ideas and inno M. THOMPSON vative products will be featured at the conference, The exhibit area will contain new products and services available to assist bankers. Winners of the “Best of Iowa” competition will be announced at the dinner on Tuesday evening. The program follows: Monday, March 2 P.M. 7:30 Reception, Hotel Fort Des Moines. Sponsored by John H. Harland Company, Des Moines. Tuesday, March 3 A.M. 8:00 Continental Breakfast. 8:00 Registration Desk. 9:00 Welcome and Opening Re marks—Michael Thompson, marketing committee chmn. and v.p., Citizens State Bank, Clarinda. 9:15 The Product Planning/Process—Gary Raddon, pres., Raddon Financial Group, Chicago. 10:40 Energy Break. 11:00 Customer Service—Kateri Schmerler, asst, v.p., First Bank St. Paul. P.M. 12:15 Lunch. 1:30 Concurrent Workshops M ark etin g Show case I (three presenters) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2:40 3:40 4:00 5:30 6:30 M arketing Showcase II (three presenters) Pricing—Mike Moebs, pres., G.M. Moebs & Associates, Lincolnwood, 111. A nnuities—Jeannette E l lington, asst, v.p., life, dis ability, and annuity divi sion, Iowa Bankers Insur ance and Services, Inc., Des Moines. Concurrent Workshops M ark etin g Showcase I (three presenters) M arketing Showcase II (three presenters) Pricing—Mike Moebs. Direct Mail—Don Uker, pro fessional media consultant, Denison. Energy Break. “What We Want Out of Marketing” CEO panel with moderator Russell S. Howard, IBA pres, and chmn., Mahaska Investment Co., Oskaloosa. Cocktail Hour. Sponsored by Federated Investors, Inc., Pittsburgh, Penn. Best of Iowa Awards Dinner and Presentation, Grand Ball Room, Hotel Fort Des Moines. A.M. 7:30 Continental Breakfast. 8:00 “A Company Called You”— Dr. Charlene Bell, a licensed psychologist, educator, and consultant for business and industry, Des Moines. 9:00 “McDonald’s & Banking”— Peter Vergis, pres., Sides E a rn in g s G roup, Inc., Greenlawn, New York. 10:10 Energy Break. 10:30 Exhibit Area Closes. 10:30 Creating A Sales C ultureGeorge Morvis, pres., Finan cial Shares Corporation, Chi cago. □ Mid-Winter Mgmt. Conf. Planned For Feb. 25-27 “Bringing New Ideas Together,” is this year’s theme for the MidWinter Management Conference, planned for February 25-27 at the Sheraton Steamboat Resort and Conference Center, Steam boat Springs, Colo. The purpose of the event is to pro vide time for bankers to share com mon ideas, concerns and solutions to problems facing Iowa’s banking in dustry today. Representatives from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have been invited to speak on regulatory issues. Present ing the Thursday evening program will be representatives from ABA’s executive management staff. In addition to the beneficial items on the conference agenda, partici pants will be able to enjoy one of North America’s premier ski desti nations. For more information, call Barb Lowe, IBA conference coordinator at (515) 286-4346 or (800) 532-1423. 1987 Iowa Group M eetings Group 11 8 4 7 6 5 2 12 3 Date February 22-23 May 4 May 5 May 6 May 7 May 18 May 19 May 20 May 21 Location Burlington Clinton Cedar Rapids Ames Des Moines Council Bluffs Fort Dodge Okoboji Clear Lake Northwestern Banker, February, 1987 36 Io w a N e w s Group 11 To M eet at The Holiday In Burlington February 22 and 23 A THREE-HOUR seminar on “Bank Directors’ Responsibili ties and Liabilities, Capital Adequa cy, and Short-Term and Long-Term Strategic Planning,’’ will be pre sented during the Iowa Bankers As sociation Group 11 meeting at The Holiday, Junction of Highways 34 and 61 in Burlington, February 22 and 23. Edward K. Johnstone, II, president of Keokuk Savings Bank & Trust Co., will preside at the meet ing as Group 11 chairman, the post he was elected to at last year’s meet ing after then Chairman William R. Bernau, president of Peoples Sav ings Bank in Crawfordsville, re- E.K. JOHNSTONE D. AUSTIN signed to become the Iowa superin tendent of banking. Named Group 11 secretary at last year’s meeting was Daniel H. Doyle, president, Wellman Savings Bank, who succeeded Mr. Johnstone in that post. Group 11 and other oddnumbered IBA groups normally elect new officers in odd-numbered years, while even-numbered groups elect in even-numbered years. Conducting the three-hour semi nar from 9:30 a.m. to 12:30 p.m. on Monday, February 23, will be wellknown banking consultant Dr. Douglas Austin, president of Doug las Austin & Associates, Inc. His R.S. HOWARD N. MILNER firm is headquartered in Toledo and has offices in Chicago and Lansing. Doug Austin holds a Ph.D in both economics and business, is a Char tered Financial Analyst, attorney and a widely-known speaker on financial institution structure, man agement and operations. Dr. Austin draws on his 17 years of consulting experience and his years of research and study as a professor of finance at the University of Toledo. Dr. Aus tin will incorporate all three topics of bank directors, capital adequacy and strategic planning into this three-hour presentation. It will be a condensed version of the day-long seminar he and an associate pre sented for the IBA last year at a seminar at Iowa State University. The Group 11 meeting will start on Sunday with registration at The Holiday at 4:00 p.m. The social hour and buffet dinner will be followed by an address from IBA President Rus sell S. Howard, chairman of Mahaska Investment Co., Oskaloosa. Dancing will then continue to mid night, as usual. The Monday morning business session will commence at 8:30 a.m., featuring a report from Mr. John- SEE YOU IN BURLINGTON, FEBRUARY 22-23 FOR THE 1987 GROUP 11 MEETING $30 Special! The Holiday (Jet. of Hwy. 34 & 6i) ...for senior management and all bank directors Featuring Douglas A. Austin , PhD. Dr. Austin, president of his bank consulting firm in Toledo, Ohio, will conduct a three hour seminar. He will be addressing these important topics: • Directors Responsibilities and Liabilities • How to Run your board, not vice-versa. • Short Term and Long Term Strategic Planning Sunday - 22nd Monday - 23rd 4:00 5:30 8:15 8:45 8:30 Business Meeting 9:30 Douglas A. Austin Seminar 12:45 Luncheon Registration - The Holiday Social Hour and Dinner IBA Pres./Elect’s Address Dancing Hawkeye Bank & Trust Farmers & Merchants Bk. & Tr. First National Bank Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis £ • # • • • ® Io w a N e w s stone, then a report from Neil Mil ner, executive vice president of the Iowa Bankers Association, Des Moines. The meeting will conclude with £ the Monday noon luncheon and en tertainment. The program follows: Sunday, February 22 P.M. 4:00 Registration - The Holiday • 5:30 Social Hour - The Holiday 7:00 Buffet Dinner 8:15 Russell S. Howard, IBA pres ident 8:45 Dancing to midnight Monday, February 23 A.M. 8:30 Business Meeting - The Holi day. Presiding, Edward K. Johnstone. Minutes of previous meeting Speakers: Mr. Johnstone and Neil Milner, IBA executive vice president. 9:30 “Bank Directors’ Responsi bilities and Liabilities, Capi tal Adequacy, and ShortTerm and Long-Term Strate gic Planning—Dr. Douglas Austin, president, Douglas Austin & Associates, Inc., Toledo, Ohio. 10:00 Ladies program scheduled at The Holiday P.M. 12:45 Luncheon - The Holiday Entertainment and adjourn ment. □ q Waterloo Bk. Promotes Two Waterloo Savings Bank has pro moted James E. Thielen to vice president/trust officer, and Thomas H. Witry to manager of the bank’s 0 Hudson office. Mr. Thielen joined the bank in 1981 and was promoted to trust offi cer in 1983. 37 Iowa Farm land Values Decline Again THE value of Iowa’s farmland fell again during the past year—a decrease of 17 p erce n taccording to the annual Iowa State University survey of land values. The above graph shows county estimates of average dollar value per acre for Iowa farmland based on U.S. Census of Agriculture estimates and a Nov. 1,1986 survey of Iowa real estate brokers. The top figure is the estimated Nov. 1, 1986 value; the bottom figure is the estimated Nov. 1, 1985 value. This is the fifth consecutive year that land values have declined, however, this decline seems modest compared with the 30.2 percent decline in land values in 1985. Prior to joining the Hudson office, he was with another financial insti tution for eight years where he held the positions of loan officer, staff ap praiser and Traer branch manager. Changes Told in DeWitt Several management changes have been announced at DeWitt Bank and Trust Company. Ellis O. Barber, formerly presi dent of the bank, will now serve as chairman of the executive commit tee. Jon G. Billhorn has been pro moted to president and senior opera tions officer, and Larry C. Henson has been named chief executive of ficer and senior policy officer. Mr. Billhorn and Mr. Henson had served as executive vice presidents of the bank. Richard D. Kelly, previously senior vice president, has been pro moted to executive vice president and senior lending officer. Promoted in Lone Tree Deborah K. Lake has been pro moted to assistant vice president of The Farmers & Merchants Savings Bank, Lone Tree. She has been with the bank since 1983 and works with consumer and real estate loans. U.S. CHECK BOOK COMPANY WELCOMES YOU TO Iowa Bankers Group 11 Annual Meeting February 22-23, Burlington Visit us in our hospitality room at The Holiday J.E. THIELEN T.H. WITRY • Mr. Witry previously held the positions of assistant vice president and cashier of the Hudson State Bank prior to its merger with the 0 Waterloo Savings Bank in Decem ber 1986. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis United States Check Book Company 1201 SOUTH 16TH STREET • OMAHA, NEBRASKA 68108 In Nebraska Call 402-345-3162 Out of State Call WATS Line 1-800-228-9246 Northwestern Banker, February, 1987 38 Io w a N e w s Staff Changes in Indianola Peoples Trust & Savings Bank, Indianola, announced that Everett P. Brown and R. Milton Hennick joined the staff of the bank January 2. Both men had previously been with The National Bank of Waterloo in Waterloo. correspondent services to communi ty banks throughout central and southwestern Iowa. The National Bank of Waterloo provides data pro cessing and other correspondent bank services to 106 banks in North east Iowa. On December 31, 1986, Peoples Trust & Savings Bank was acquired by Iowa National Bankshares Corp., a bank holding company in Waterloo which also owns The National Bank of Waterloo and Midway Bank & Trust in Cedar Falls. Named in Waterloo Kelly I sherwood has been named a trust officer of Peoples Bank and E.P. BROWN R.M. HENNICK Trust Company Mr. Brown has been named presi in Waterloo. He brings 16 dent and director of the bank. He years of trusthad previously been vice president of correspondent banking at The Na related experi tional Bank of Waterloo and has ence with heavy experience in in over 20 years banking experience. Mr. Brown succeeds Jam es v e s tm e n t r e Davies, who has served as president search and port and chief executive officer of Peo folio m an ag e ples Trust & Savings Bank since ment. As a trust July, 1984. Mr. Davies, who expects officer for other to retire in the spring after 35 years financial institutions, he has a num of service, will continue with the ber of skills. bank on a part-time schedule as a consultant in several areas. Advanced in Ames From 1964 to 1968, Mr. Brown Nancy Linden has been advanced worked as an agricultural loan offi to assistant cashier at First Na cer and farm manager for Boone State Bank and Trust Company, tional Bank, Ames. She joined the Boone. He then joined the Norwest bank in 1979 in the bookkeeping Bank in Omaha in its correspondent departm ent and most recently banking department, serving rural served as head bookkeeper. banks in a five state area. Prior to joining The National Bank of Water loo in 1984, Mr. Brown was execu First National, Clarion, tive vice president, trust officer and Buys Failed Latimer Bank a director of Peoples State Bank in The Latimer Bank & Trust was Missouri Valley. declared insolvent and closed on Mr. Hennick has been named January 15 by state Superintendent senior vice president of Peoples of Banking William R. Bernau. The Trust & Savings Bank in the opera FDIC, acting as receiver, sold the bank to The First National Bank of tions and data processing area. Mr. Hennick had worked for The Clarion for a premium of $121,200. National Bank of Waterloo since The Latimer bank, founded in 1855, 1961 in several positions including and its offices at Alexander and auditor, cashier, and most recently, Coulter were re-opened January 16 senior vice president of data pro under the name of The First Na cessing where he was responsible for tional Bank of Clarion. O. Jay Tomson, chairman of the marketing new services to corres pondent banks. Prior to his work at First National of Clarion, said his The National Bank of Waterloo, he bank assumed approximately $22 worked for nine years at Norwest million in deposits, as well as $4.5 million in portfolio loans, all the in Bank Des Moines as auditor. Among his duties with Peoples vestments, cash and due, and cer Trust & Savings Bank, Mr. Hennick tain other assets. The FDIC re will be developing and marketing tained about $10 million of the failed Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis bank’s loans, with First National having an option to return any un desired loans within 90 days, and to purchase any FDIC retained loans at a 10% discount. FDIC injected $7,178,000 into the assuming bank, which took this in the form of a 6.25% interest-bearing note. First National of Clarion was the only bid der. Mr. Bernau said the Latimer Bank was subjected to “excessive loan losses, both agricultural and commercial. Contributing to this was poor loan selection and misman agement of the loan portfolio.’’ Mr. Bernau told reporters at a Des Moines press conference that the Koch family that had owned the bank for some time was “a fine fami ly’’ that had worked hard to remedy the bank’s problems, saying “they had done everything they could to save the bank after it was identified (about 18 months ago) as having near-terminal problems.’’ First National Bank of Clarion, founded in 1887, has deposits of $50 million, with capital, surplus and un divided profits and reserves exceed ing $6 million. The president and CEO of The First National Bank is Robert B. Bartholomaus. Mr. Tomson also is chairman and CEO of the $60 million asset Citi zens National Bank of Charles City, which announced an agreement re cently to assume by merger the Commercial Trust & Savings Bank in Charles City, which has about $45 million in assets. Retired in Missouri Valley After a 27-year banking career, Robert E. Brown has announced he will retire as p re sid en t and CEO of the First National Bank in Missouri Val ley, effe ctiv e March 1. M r. B row n began working a t th e b an k aM„ d Chh a ; heTd R.E. BROWN many offices over the years, includ ing service as a director. He was pro moted to president and CEO in 1983, succeeding Richard Day, who became chairman. He will remain at the bank as a director and perform duties in bank marketing, advertising and consult ing work. 39 Statement of Condition December 31,1986 I p lp iiii ASSETS $ Cash and Due From Banks Federal Reserve Funds Sold U.S. Government and its Agency Securities Municipal Securities Other Marketable Corporate Obligations Federal Reserve Bank Stock Loans Bank Premises and Equipment Interest Accruals Other Assets 42,066,499.62 107,400,000.00 757,231,136.21 219,030,343.33 7,675,775.10 1,122,000.00 230,369,470.82 11,605,340.38 30,365,801.35 10,255,819.80 $1,417,122,186.61 • LIABILITIES $ Capital Stock Surplus Undivided Profits ® $ 122,683,397.34 Total Capital Funds Federal Reserve Funds Purchased and Securities Sold Under Agreement to Repurchase Reserves for Interest, Taxes, and Other Liabilities Deposits ^ 2,400,000.00 35,000,000.00 85,283,397.34 $ 397,850,000.00 22,526,422.37 874,062,366.90 $1,417,122,186.61 BOARD OF DIRECTORS V.O. Figge Chairman of the Board Ä Edward L. Carmody Senior Vice President W Mel Foster, Jr. Pres., Mel Foster Co., Inc. Robert G. Lenertz Senior Vice President . James Kahl Figge Office of the President Thomas A. Gildehaus Executive Vice Pres., Deere & Company Lloyd G. Schermer Pres., Lee Enterprises John Kahl Figge Financial Consultant Richard R. Horst Senior Vice President and Cashier Charles R. Von Maur Petersen-Harned-Von Maur Thomas Kahl Figge Office of the President Richard E. Kautz Senior Vice President Robert V.P. Waterman Lane and Waterman Joseph S. Kimmel, Jr. Pres., Republic Electric Co. Henry C. Wurzer Kahl Properties Davenport Bank and Trust Company MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION 203 West Third Street • Davenport, Iowa • 52801 Resources Exceed One Billion Dollars https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Northwestern Banker, February, 1987 40 Io w a N e w s forms once the Internal Revenue ^ Service issues final regulations as a result of the Tax Reform Act of Pension (SEP) plans offered are sim 1986. ple and easy to administer. • The toll-free consulting service, Two Join Hampton Firm (800) 346-3961, offered by CWF is First Midwestern Financial Cor- ® staffed by five individuals, including poration, Hampton, has announced the attorney who developed the these two appointments: plans. Direct contact by subscribers James W. Davids to credit admin with these pension consultants will istration director and Paula J. q result in a quick response time to Rother to bank operations auditor/ questions. The number should be administrative assistant. utilized immediately by all current Mr. Davids was manager of the IBA retirement plan program sub Mason City office for First Bank scribers for all pension and IRA System Ag Credit Corporation since £ questions. 1983. Prior to that he was employed The IBA sponsored IRA/SEP by the Farm Credit System. At seminars, which were recently held First Midwestern, a bank manageat three locations across Iowa, were ment/consulting firm, his duties will conducted by CWF and received include audit and review of lending q great reviews. More IRA seminars departments, and overline functions are scheduled for February and of banks under management con March, and SMP/SEP Seminars will tract. be held in late April or early May. Ms. Rother was internal auditor Those already subscribing to the for two years with Security Savings % IBA retirement plan program may Bank, Eagle Grove, then worked in continue to use forms already con the audit and controller’s depart tained in their bank’s inventory. The ment for Brenton Banks, Inc., Des IBA will notify subscribers of any Moines. Her duties will deal with necessary changes regarding the bank operations and recordkeeping. # IBA M erges Retirem ent Plan Program N order to offer an expanded re IBankers tirement plan program, the Iowa Association has merged its retirement plan program with Collin W. Fritz & Associates, Brainerd, Minn. The IBA said the following are just a few of the benefits now avail able to members as a result of the merger: • Retirement plans and services offered by the IBA through CWF will be made available to current IBA retirem ent plan program subscribers as well as new subscrib ers at an attractive, introductory cost. • Payment of the initial fee and subsequent annual renewal fee will entitle the subscriber to the use of the prototype for the plan to which they have subscribed, utilization of a toll-free consulting service and re ceipt of a monthly pension newslet ter. • Individual Retirement Account (IRA), Standardized Master Plan (SMP) and Simplified Employee FIRST N A TIONAL BANK O F DUBUQUE Seventh at Town Clock Plaza Kennedy at Wacker Jackson and White at 22nd Asbury at Hales Mill Road STATEMENT OF CONDITION OFFICERS and DIRECTORS DECEMBER 31, 1986 ASSETS Cash and Due from Banks................... Time Deposits with Financial Institutions........................ Federal Funds S o ld ............................... Investment Securities U.S. Treasuries and A gen c ie s ......... State and Political Subdivisions . . . Other Investment S e c u ritie s ........... Loans, Net of Unearned Income ($317,000) ............................................ Reserve for Possible Loan Losses . Net L o a n s ........................................... Bank Premises and Equipm ent........... Other A s s e ts ........................................... TOTAL A S S E T S ................................. LIABILITIES AND STOCKHOLDERS EQUITY Deposits .................................................. Federal Funds Purchased and Securities Sold under Agreements to Repurchase ................................... Other L ia b ilitie s ..................................... Total Liabilities ................................. Common S to c k ....................................... Surplus .................................................... Undivided P ro fits ................................... Total Stockholders E q u ity ............... TOTAL LIABILITIES AND STOCKHOLDERS’ E Q U IT Y ............. $ 12,257,000 William G. Kruse Beverly J. Anderson Trust Department Chairman of the Board and Chief Executive Officer Mark J. Wlllging 3,000,000 3,200,000 J. Bruce Meriwether Vice President Personnel and Manager Personal Banking President Unda L. Budde Vice President Trust Officer and Trust Department Manager Paul J. Gisch 58,175,000 20,033,000 1,318,000 Senior Vice President Special Lending Vice President Manager Real Estate Department Vice President Trust Investments 106,157,000 (1,050,000) $105,107,000 3,597,000 3,665,000 $210,352,000 $182,029,000 8,520,000 3,725,000 $194,274,000 $ 4,800,000 4,800,000 6,478,000 16,078,000 $210,352,000 Thomas J. Stecher Senior Vice President Operations Richard A. Bean Senior Vice President Finance Francis A. “ Chip” Murray, Jr. Vice President Manager West Dubuque Office John M. Hansen Shirley A. Christensen President, Bird Chevrolet Co. Trust Officer Directors Senior Vice President Investments and Cashier Thomas W. Buelow Gladys A. Huenake Paul L. Britt Vice President Loan Administration Assistant Vice President President, Dubuque Stamping & Mfg. Inc. Leo M. Mallle Assistant Vice President Consumer Lending Manager President, Babka Publishing Co. Paul J. Gisch Mary A. Piersch Senior Vice President Special Lending Dale P. Repass Personal Banking Officer Philip T. Kelly Vice President Commercial Lending Alan L. Schuster Personal Banking Officer President, Communications Properties, Inc. Mark E. Small William G. Kruse Auditor John S. Nlgg Chairman of the Board and Chief Executive Officer C. Michael Reilly Data Services Officer John W. Law Vice President Marketing and Business Development, Non-Bank Services Scott A. Tlbben John W. Law Co., Retired David W. Spahn Vice President and Controller Agricultural Loan Officer Mary K. Santjer Assistant Controller FIRST NATIONAL BANK — DUBUQUE, IOWA 52001 Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Roger J. Rhomberg President, Rhomberg Fur Co. James E. Walsh Edward A. Babka Vice President Agricultural Lending Planning and Development Officer, University of Dubuque James A. Kerkhove John J. Savary Paul A. Pfohl President Wayne A. Norman Trust Operations Officer Assistant Vice President Manager North Dubuque Office Daniel E. Welu J. Bruce Meriwether James D. White Director of Manufacturing John Deere Dubuque Works N.J. Ylannias President, Dubuque Theatre Corp. President, Key City Investment Co. Honorary Directors Frank A. Fluckiger Charles J. Spahn Catherine Wlnall wit!) You Over 250 Iowa financial institutions have used Kirk Gross Co. services! Do they know something you don’t? Kirk Gross Co. has a solid reputation in Iowa for designing new financial institutions and remodeling present ones. If you are thinking about a new facility, put the responsibility and worrying in the hands of the TURN KEY professionals. We keep up on the latest ideas on planning, designing, construction and furnishings. That’s why we have completed more than 250 projects since 1971. The best part of this unequaled record is that so many are repeat, satisfied customers. Let Kirk Gross Co. explain how our complete TURN KEY program will save you time and money. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis If you’d like to know what other bankers know about Kirk Gross Co., call at your earliest op portunity. (How about right Now! Phone 319-234-6641) KIRK GROSS CO 4015 Alexandra Drive RO. Box 2097 Waterloo, Iowa 50704 42 Io w a N e w s IRS Says ’86 USDA Payments# Taxable on ’86 Income THE enormous sign of Northwest Bank & Trust of Davenport wasn’t intended to break records; the bank’s needs and the building parameters corresponded to surpass the Times Square sign by two feet in height. Iowa Bank Shows Up Times Square HE largest electronic message center in the United States, T North America and the Western Hemisphere is no longer the famous Times Square sign housed in New York City. The title now belongs to Northwest Bank & Trust of Daven port. The electronic display, positioned atop the North Park Tower Building at Northpark in Davenport, vir tually adds another floor to the ninestory structure. The electronic mess age center provides up-to-the-min ute information on products and ser vices, as well as the time and tem perature in seven foot characters. Designed and manufactured by Daktronics, Inc. of Brookings, S.D., the installation is four-sided. With a zipper effect, the four sides of the sign can work together to display messages, wrapping words around the building. Each side can also operate independently of the others by flashing words or by moving characters from the top or bottom of the display area. Four separate messages can be shown at any one time, if desired. The display is actually a solid matrix of computer-controlled flood lights, seven lamps high by 320 lamps wide. The lamps are selective ly lit to form words, graphics and even moving animation. The sign has full animation capabilities. Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Messages are illuminated with 2,300 spotlights, 55 watts each. The Venus (TM) 5000 computer-control ler, a product of Daktronics, creates and controls the messages, which can be read from one mile away in any direction of the building. Light and motion are visible from dis tances up to three miles. The sign runs the length of each side of the building; 72 feet on two sides and 88 feet on the other sides. Covering an area of 2,600 square feet, the sign itself is made of 16,000 pounds of aluminum and steel. The mounting structure contains 28,000 pounds of steel. All contracting and installation was done by Iowa firms and contractors. A dedication ceremony for the new sign was held December 2,1986 at the bank. At the ceremony, the first message to light up the sign was “Northwest Bank and the Quad Cities—TOGETHER—we can make it HAPPEN!” This winning mess age came from Debbi Nelson, of the bank’s discount brokerage depart ment, during an employee contest held at the bank. The sign was purchased through Jerry Fisher, a partner with Mid west Sign & Animated Displays Company of Davenport, and Jim Thomas, owner of Midwest Sign, who markets for Daktronics in Iowa. □ The Internal Revenue Service says that all payments from the U.S. Department of Agriculture ac-_ tually received or made available in 9 1986 must be included in the tax payer’s gross income for 1986. Neil E. Harl, professor of eco nomics and authority on farm in- ^ come tax, said the IRS clarified in come tax treatment of government farm program benefits in an an nouncement made late last month. The popular generic commodity £ certificates used last year are to be reported as income at face value, Mr. Harl says. The certificates had been issued in recent months in lieu of cash for diversion payments, defi- # ciency payments, and conversation payments. “ If commodity certificates were disposed of in 1986, any gain also should be reported in 1986,” Mr. # Harl added. The IRS announcement said pay ments actually received or made available in 1986 are taxable even if the taxpayer returns the payments # to USDA for repayment in 1987. The IRS says the same treatment applies if the taxpayer does not cash, deposit or redeem 1986 checks or commodity certificates until 1987. # The IRS also reminded taxpayers that the USDA would be reporting 1986 payments to IRS on Form 1099G. • ABA Accredits IBA School The Iowa Bankers Association’s Iowa School of Banking I and II, held each year at the University o f^ Iowa, Iowa City, was given accrediation by the American Bankers Asso ciation. The announcement was made at the ABA Education Policy a n d # Development Council’s recent meet ing. The school is one of eight accre dited banking schools in the nation. The Wisconsin Consumer Credit School, sponsored by the Wisconsin# Bankers Association at St. Norbert College in West De Pere, was also given accreditation. Now that it is accredited, the Iowa School of Banking I and II will # be recognized and accepted as a five credit course by colleges and univer sities. Plans are underway for the 1987 session of the Iowa School of Bank- # ing. In today’s market, knowing who’s competing for your customers’ loan business is vital. But gathering and maintaining accurate, up-todate information on your competi tion, inconspicuously, is nearly impossible. Unless you subscribe to Iowa Public Records Search’s Loan Activity Bulletin. The Loan Bulletin is a twice monthly report of all the loan activity in your county, and every county https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis important to you. Each report contains all liens filed with the Secretary of State; the secured party (your com petitor); the name of debtor; file num ber ;and the date and hour of filing. And the price is right, too — as low as $12.50 per county, per month. To order, or for information on our other search services (telephone searches, judgment searches, bank ruptcy searches, and more), give us a call. We’re Iowa Public Records Search. We’ll help you compete. IOWA PUBLIC RECORDS SEARCH, INC. # 2 C o rp o rate P lace 1 501 4 2 n d S treet: W e st D e s M o ines, Io w a 5 0 2 6 5 Telephone (515) 223-1153 44 United Bank and Trust in Ames and £ Banks of Iowa, Inc., which owns 14 banks in Iowa, including Valley Na tional Bank. Three Vice Presidents Named in Council Bluffs Jeffrey B. Weeden has been pro moted to vice president, cor porate tax, of Banks of Iowa, Inc. He joined the corporate office of B an k s of Iowa, Inc. in 1984 as assis tant vice presi dent. He is a cerJ- WEEDEN tified public accountant. * * * First Interstate Bank of Des Moines, N.A., has appointed Brian J. Beverly to as sistant vice pres ident of invest ments. He joins the bank from th e F e d e ra l Home Loan B ank of Des Moines where he was a s s is ta n t vice president B.J. BEVERLY and p o rtfo lio manager. Barbara D. Strank has been Janet L. Bohnet, Charles N. Gross and Christine L. Wendlandt have been pro moted to vice p re s id e n ts of F irst National Bank of Council Bluffs. Ms. B ohnet has been with the bank for 17 years and is cur rently adminis trative assistant J-L- B0HNET to the president, secretary to the named commercial loan officer of the board and manager of the loss pre bank. She previously held the posi vention function. tion of commercial loan officer at Manufacturers Bank of Lansing, Mich. Alan E. Gross has been appointed as manager of retail credit services. He was the manager of the Morris Plan, Des Moines, before joining First Interstate. * A.E. GROSS Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis * * Norwest Bank Des Moines has elected five new members to its board. The new members are: Mary Andringa, vice president of Vermeer Manufacturing Company, Pella; S.J. Brownlee, president and owner of S.J. Brownlee Farms, Inc. and Brownlee Management, Inc., Emmetsburg; Gary G. DeKoter, CPA, president and CEO of Harker’s Inc., Le Mars; Charles C. Edwards, Jr., president and publisher of The Des Moines Register, and James H. Kent, president of Kent Feeds, Inc., Muscatine. * * * C.N. GROSS C.L. WENDLANDT Mr. Gross was also promoted to commercial loan officer. He has 13 years banking experience. Ms. Wendlandt is currently re- ® sponsible for managing the con sumer banking area. She has eight years banking experience. Promoted in Dubuque * Dubuque Bank and Trust Com pany has announced the promotions of John K. Schmidt to vice presi dent, finance, and Jacquie M. Man- % ternach to auditor. Jack Krantz, president and owner of Adventurelands of America, Inc., has been elected to Brenton Na tional Bank of Des Moines’ board of directors. He has been president of Adventureland Park since 1971. * B.D. STRANK % * * Richard O. Jacobson has been elected a member of Valley National Bank’s board of directors. He is president of Jacobson Warehouse Company, Jacobson Larson Invest ment Company and Jacobson Enter prises, Inc. He is also a director of J.K. SCHMIDT J.M. MANTERNACH Mr. Schmidt joined the bank in 1984 as auditor. Ms. Manternach O has been with the bank since 1978. Iowa News 45 Ed Spetman Dies Ed H. Spetman, chairman and chief executive officer of Council Bluffs Savings Bank, died Janu ary 18, after a short illness, at the age of 63. He was named chairm an and CEO in 1982. In 1963, he became the bank’s presi dent. He had served the bank E H' SPETMAN for over 40 years and under his leadership, Council Bluffs Savings Bank became the largest in South west Iowa, growing to an asset size of over $200 million. He served the bank as executive vice president, vice president and cashier, auditor and assistant cashier. Mr. Spetman was also a director of Banks of Iowa, Inc., the state’s largest bank holding company. He also served on its executive board. Affiliated with many banking as sociations, he served on the state banking board from 1970-78 and was president of the Iowa Bankers Association from 1965-66. He also served on the American Bankers Association’s national agricultural committee. There a Difference in Banks Two Named in Sioux City Kent Handel and Michael H. Zim merman have been elected vice presidents of The Security National Bank of Sioux City. Trust, confidence, loyalty ... words our customers use to describe how they feel toward Valley National Bank. Valley Bank is experiencing substantial growth ... in deposits, ...loans, and ... in earnings. That’s because .we maintain a highly skilled staff, offer top service, and perform well financially. We welcome your inquiry ... Remember, there is a difference in banks. K. HANDEL M. ZIMMERMAN Mr. Handel joined the bank in 1982. He later served as manager of the personal trust area of the bank’s trust division and was named trust officer in 1984. He will be working in the trust services division of the bank. Mr. Zimmerman joined the bank in 1984 and was later named senior mortgage loan officer. He will be working in the bank’s real estate mortgage department. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Valley National Bank Id Main Office-Sixth and Walnut M em ber FDIC A “BANKS OF IOWA” BANK For Professional Correspondent Service call 1-800-622-7262 Northwestern Banker, February, 1987 46 Io w a N e w s Hired in Denmark The Farmers Savings Bank, W ever, has hired Michael D. Miltenberger as a loan officer for its Denmark of fice. Mr. M ilten b e rg e r has worked for the past 10 years as a controller for Farmer’s Coop eratives in Iowa and Missouri. Iowa College Foundation Gives Mid-Year Report Roger A. Hughes, executive direc tor of the Iowa College Foundation, headquartered in Des Moines, stated in his semi-annual report last month that total giving for ICF’s first six months of the 1986-87 fiscal year totaled $484,154, an increase of 4.6%, or $21,186 over the same period a year earlier. However, the number of donors was down from 421 to 417. There would have been a substan tial increase in numbers of donors and amount pledged but for the fact that in the 1985-86 year the number of Iowa banks contributing to ICF dropped to 234, compared to 350 contributing banks in 1983, thus re flecting the crisis situation in Iowa agriculture. Mr. Hughes stated in his semi-an nual report, however, that he pre dicts “ 1987 will be a major year in the history of ICF.” Elected in Sioux City • First National Bank in Sioux City has elected Pat Kuchel as mar keting officer. A gradute of Morningside College, Ms. Kuchel joined the bank last year as market ing director. P. KUCHEL Elected in Mason City Deluxe Check Completes Data Systems Acquisition • William L. Cody has been elected Deluxe Check Printers, Incorpo as cashier of First Interstate Bank, rated, St. Paul, Minn, has completed Mason City. the acquisition of A.O. Smith Data He joins the Systems, Inc. for $71.5 million in ^ bank from the cash. A definitive agreement on the First Interstate purchase had been reached with Bank of Maren A.O. Smith Corporation, the parent go where he was company of DSI, on November 26. controller and DSI was expected to have sales o f^ t r u s t officer. about $34 million in 1986. Prior to that, he “This acquisition ties in directly was a staff audi with Deluxe’s strategy to expand its tor with McGladmarket and product lines,” said rey, HendrickW-L- CODY Harold V. Haverty, president a n d £ son & Pullen in Mason City. chief executive officer of Deluxe. “DSI will provide Deluxe with an important additional service to offer its financial institution customers. It will also give Deluxe an opportu-# nity to participate in the growth of services related to all aspects of the payments system — automated teller machines and point-of-sale systems, as well as checks.” • DSI, based in Milwaukee, is a leading supplier of electronic funds transfer software and processing services, particularly software and services for autom ated te lle r # machines and point-of-sale equip ment. Committed to making your bank stand apart from the INDEX OF ADVERTISERS Bankers Trust Company., Des Moines Burlington Group 11 M eeting............ 34 36 Carpenters Pension Fund of Illinois . 22 Davenport Bank & Trust Company .. . First National Bank, D ubuque.......... First National Bank, O m aha.............. 30 Gross, Kirk Co., W aterloo .................. 41 IAC Group, Kansas C ity........................................................47 Iowa Bankers Insurance & Services, Inc............................ 6 Iowa Public Records Search, Inc......................................... 43 Merchants National Bank, Cedar R ap id s ........................ 2 # Norwest Corporation, Minneapolis................................... 48 Office Concepts, Ltd., Waterloo......................................... 46 Plus System, Inc., D enver................................................... 3 Swords Associates Inc., Kansas City ............................... 22 United States Check Book Co., O m aha............................ 37 A Valley National Bank, Des Moines.................................... 45 Van Wagenen & Co., G.D......................................................21 Northwestern Banker, February, 1987 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis You might even call it "free" income, because it's the extra profit your bank earns by providing your customers IAC credit protection. Remember too that these fee-based risk man agement services also protect your bank's assets. Think about it: You offer your customers the valuable service of financial security while enjoying asset protection and adding to your bank's profit base. What's more, our National Training Department w ill schedule a series of in-bank seminars to help the people in your loan department become confident and comfortable in their role of Financial Advisers to your customers. Also keep in mind that IAC offers you a full line of bank-designed products that range from Credit Life and Collateral Protection to Deferred Compensation programs for bank executives. W hat it all adds up to is that you have a lot to gain from IAC—including fee income that you could almost consider "free" income. Give us a call for the facts. A Full Service Company for The Full Service Bank Individual Assurance Company 1600 O ak St. • Kansas City, M O 64108 Phone toll free in Missouri (800) 892-5890, other states (800) 821-5434. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis We KnowTheWay To Lands Of Opportunity In today’s economic climate, you have to search for opportunities around every bend. And now more than ever, it takes a strong financial leader to help make sure the best ones don’t get away At Norwest Banks, we understand the needs and opportunities facing bankers today After all, we’ve operated banks of our own in more than 100 different markets over the last 50 years. And when you come to us for correspondent banking, we make that experience work for you. We can provide the specialized services you need in your marketplace—no matter how large or how small it may be. And whether that means ATM access, credit cards, investment alternatives, or traditional correspondent bank services, we’ll work with you to get the job done. Talk to us today about our full line of services. When it comes to correspondent banking, we know the way. ■ We Know The Way We Are Norwest. M N O R W EST BANKS Members FDIC https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis