Pub. 7 2019 Issue 4

4 The Community Banker www.mibonline.org Executive Director’s Report T he year 2019 has come to a close, and a new decade has started. Here is the quote that captures well my thoughts on this new year and the last New Year’s Eve celebration of the 2010s decade: “Youth is when you're allowed to stay up late on New Year's Eve. Middle age is when you're forced to.” ~Bill Vaughn One of my favorite classic Hollywood films is White Christmas. This time of year, as sung by Bing Crosby in that wonderful film: “We count our blessings instead of sheep.” However, this may not be true for my sheep industry clients who are literally counting sheep at this time of year. For Montana’s community banks there were a lot of blessings to count in 2019, and 2019 was a great year for community banking as a whole. The industry came out of 2018 like a lion. According to the FDIC’s fourth-quarter community banking perfor- mance report, 2018 was a record-breaking profit year for community banks across the country. Community banks experienced a 29.4% increase in full-year net income from the prior year. As we moved through 2019, that profit trend continued. As of the end of the third quarter of 2019, the FDIC reported that community banks, which represent 92% of all insured institutions, reported a net income of some $6.9 billion in the third quarter of 2019. This amount was up $466.2 million (7.2%) from the third quarter of 2018. The end of 2019 also saw our national associ- ation, ICBA, roll out its exciting credit union ed- ucation program. This ICBA campaign, entitled the Wake Up campaign, is designed tomake the public and policymakers open their eyes to the growing threats posed by credit unions' abandonment of their foundingmission, facilitated by their captive federal regulator, the National Credit Union Administration. Some facts you may not know about Mon- tana’s credit unions and the costs flowing from their tax advantages include: 1. Credit unions do not pay federal in- come tax, do not pay rent on military bases, and have little to no oversight; 2. Montana credit unions used their tax exemption to avoid paying $8,554,434 in federal income taxes in 2018; 3. Montana credit unions held $5,167,966,240 in tax-free assets; 4. Montana credit unions used $2,822,963 of their tax subsidy on non-member expenses; and 5. This lost tax revenue would pay for 90 teachers, 52 police officers, and 67 social workers in Montana. For years, MIB has been talking to our lawmakers about the tax and regulatory ad- vantages credit unions have, and ICBA really brought home our shared message this year. The year 2019 also marked a significant change in federal regulation of marijuana and associated product banking. This year, Congress considered the Secure and Fair (SAFE) Banking Act. This bill provides a safe harbor to those financial institutions which bank marijuana-related businesses. Telling- ly, for the prospects of bill passage, some 38 state attorneys’ general have publicly supported this federal legislation to help bring legal clarity to “grey market financial activities” like marijuana. ICBA strongly supports the SAFE Banking Act because the bill would provide certainty for community banks in an area of the economy that poses a high risk and major uncertainty. It will be interesting to see if this legislation makes it to the president’s desk in 2020. In 2019, the Association hosted another great state convention and trade show. The Association’s event was held in Butte this past year, which was the first time the Association had hosted its annual convention in the min- ing city for over a decade. Also, the Associ- ation once again hosted its annual football tailgate parties at a Griz and Bobcat football game. We were lucky that the weather was much more cooperative for our football events this year than last. 2019 also saw the association grow in terms of our associate membership. Our industry partners continue to expand and that increased support shows in our convention and event attendance. With the start of 2020, the Association moves into its seventh decade of existence. While the member bank names and the board members and officers are always evolv- ing, the mission of the Association remains constant and timeless. The MIB has one mission and one mission only — to help Mon- tana community banks prosper so that those banks can help their local communities and customers prosper. In 2019, a large focus of the Association’s efforts on its members' be- half was to inform our members of advances in financial services technology. The Associa- tion also continues to make small regulatory relief its top advocacy priority. It is possible, if not likely, as this decade progresses, we will find that advances in technology and regula- tory relief will be inextricably linked. A new decade means new opportunities for you, your bank, and the industry. A new year also provides an opportunity to recognize and reflect on the magical formula that makes Montana’s community banks successful — that formula being your customer-first focus. Un- derlying the economic success of community banks for the last several years is the ability of "our" banks tomake the customer the priority. I hope 2020 is the best year yet for you and that you don’t break your new year’s resolution — at least not before the end of February. My new year’s wish for the year 2020 is that everyone has a happy holiday season and enjoys the time spent with their family, friends, and loved ones. I am excited to be a part of another pro- ductive year for MIB and its member banks and associate member partners.