January 2021

Happy 2021! I am hopeful this year will be full of the perfect amounts of capital, earnings and liquidity for all of you and that we soon get to resume seeing each other in person. Drinks are on me.

TILA. Q: We are doing a mortgage to pay off a land contract. We treat these as refinancings, but we have a lender who prefers not to use a title company. The bank orders the deed and we do a seller-side-only Closing Disclosure (CD). My question is relating to the issue date. The borrowers’ CD will show 12-21-20 for the issue with a closing date of 12-24-20 and disbursement of 12-31-20. As to the sellers, should the dates match the CD for our borrower? They will not come in till the 31st to get their monies.

“The best surprise is no surprise.” Holiday Inn adopted this famous tagline in the 1970s to reassure guests that staying at one of their hotels would ensure that there were no surprises. After all, nobody likes unwelcome surprises, whether it be a lumpy pillow in a hotel room, an October surprise in a Presidential election, or the surprise a family receives when an IRA beneficiary designation — or lack thereof — results in the intended recipient not receiving the IRA assets.

With LIBOR’s days being numbered, financial institutions have the option of choosing their new interest-rate benchmarks, including fed funds. Yet, the Alternative Reference Rates Committee (ARRC) has recommended the Secured Overnight Financing Rate (SOFR) as the best option. Any widely used interest-rate benchmark should have three key qualities, according to ARRC:

This year has presented bank management teams with many issues to juggle, many of which seemingly pull in opposing directions, and most of which were not firmly on the radar to start the year. Such was life in 2020. Some banks’ primary concerns stem from the fact that the industry has seen a shift in liquidity. Balance sheets are flush with deposits relative to recent periods, while securities holdings have come down relative to assets. The build-in balance sheet liquidity has come in the form of cash, with an unusually high 7.6% of assets held in cash and equivalents as of June 30.

To start the year, I’d like to both properly memorialize the late, great Alex Trebek and provide some helpful suggestions for investment management in this challenging rate environment in which we find ourselves. And I’d like to do it in the space of this column, so let’s pick up our signaling devices and see what answers we have in front of us.

The new year brings with it a fresh start. We continue to face no shortage of challenges in 2021, from a divided nation to an ongoing health crisis. Yet, as community bank leaders, we need to flip our perspectives and find the potential in the moment. I recognize that’s easier said than done, and that’s precisely why we must lead by example, inspiring our teams and communities to keep moving forward. It’s our job to raise spirits so we can keep advancing in support of our communities.

As the calendar flipped to 2021, we didn’t magically return to a simpler, pre-pandemic era, unfortunately. We are still grappling with a global health crisis and a hefty amount of ambiguity around what comes next. Amid such uncertainty, it’s easy to focus on what we don’t know. But, as community bankers, we have a North Star in our mission, and we can find consistency in what we know to be true in this rapidly changing world: Community banks serve the needs of their communities.

We’d like to introduce our newest associate member who can offer the Montana banking community a great solution! Upgrade recently joined the Montana Independent Bankers as an associate member. Upgrade partners with community banks to provide access to prime credit quality consumer assets. Upgrade is a marketplace platform, founded in 2016. Upgrade currently employs 357 nationwide and has facilitated origination of ~$3 billion in loans since inception. Upgrade offers affordable and responsible credit

Headquartered in Fargo, North Dakota, Bell Bank is one of the largest independently owned banks in the nation, with assets of more than $8 billion. When Bell Bank opened its doors in 1966 with a single location in a north Fargo shopping center, our founders couldn’t have dreamed of the growth the company would have. For decades, having happy employees and happy customers has been at the heart of the organization. Our values — being a family, treating our customers well and making our community a better place — are at the core of all we do.