Community Banking News Blog | Community Bankers of Iowa (CBI)

Government Affairs Weekly Report - Week 12: March 27-30, 2017

3/31/2017

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group

Second funnel arrives as work on policy bills nears completion.
Senate gives final passage to workers compensation reform legislation and the bill is headed to Governor Branstad.
Legislation to enforce the statewide minimum wage is also heading to the Governor.
Governor Branstad submits revised budget for FY18 to reflect $191 million reduction in revenue estimate (as required by state law).

Iowa Senate completes action on significant workers compensation reform
Senate Republicans provided all 29 votes in favor of HF 518, a package of significant reforms in the state’s workers compensation system, on Monday night. As no amendments to the bill were approved, the measure now heads to the desk of Governor Branstad and he will most definitely sign it, as the measure was one of his highest 2017 Session priorities.

Proponents hailed its passage as the first significant reform of the system in nearly a century and as necessary, given the state’s move over the last 10 years from having some of the nation’s lowest cost workers compensation costs to the middle of the pack.

The bill was be signed Thursday at 4:50 pm in the Governor’s formal office.

CBI Legislative Reception a Success

3/30/2017

CBI held it's first-ever Legislative Reception at the Iowa Taproom in downtown Des Moines on Wednesday. The reception brought together over 50 Iowa community bankers with over 30 Senators and Congresspeople in Iowa's General Assembly. Among those legislators attending were Speaker of the House Linda Upmeyer, Senate Majority Leader Bill Dix, Senators Michael Breitbach, Randy Feenstra, Tim Kraayenbrink, Tom Shipley, Jack Whitver, Brad Zaun, Charles Schneider, Craig Johnson, Dan Zumbach, Dennis Guth, and Bill Dotzler. Also in attendance were Representatives Brian Best, Chris Hall, Dave Maxwell, David Kerr, Gary Carlson, Jerry Kearns, John Landon, Louie Zumbach, Mike Sexton and Walt Rogers, as well as State Auditor Mary Mosiman.

Thank you to the following CBI Endorsed, Associate and Affiliate Members for sponsoring the event: SHAZAM, ICBA Securities/Vining Sparks, United Bankers' Bank, Midwest Independent Bank and Bankers' Bank.

L-R: Dave Caris - CBI; Stacy Snyder - Midwest Independent Bank; Senate Majority Leader Bill Dix; Terry Nielsen - Raccoon Valley Bank

L-R: Jessica Bartels - Storey Kenworthy; Suzanne Meyers-Warrick - Single Source Architects; Gus Barker - Community Bank of Oelwein; Senator Brad Zaun; Dan Kramer - SHAZAM; Stacy Snyder - Midwest Independent Bank.

L-R: Larry Winum - Glenwood State Bank; Brad Robson - First State Bank-Belmond; Speaker of the House Linda Upmeyer; Gus Barker - Community Bank of Oelwein; Senator Tom Shipley; Dave Caris - CBI; Mike Segner - Peoples Trust & Savings Bank, Clive.

Government Affairs Weekly Report - Week 11: March 20-23, 2017

3/24/2017

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group

Overview / Major Events

One week remains until the second legislative funnel is reached.
House-passed workers compensation reform bill unlikely to be considered by Senate until next week.
House panel begins examination of state tax credits and options for reducing the size of total credits over time.
Senate set to pass Voter ID legislation, today, clearing the way for Governor’s signature next week.

Iowa Senate delays action on significant workers compensation reform
As predicted in this newsletter last Thursday, the House did pass a comprehensive package of reforms to Iowa’s century-old workers compensation system. After a long and “spirited” debate, House Republicans provided all 55 YES votes and sent HF 518 to the Senate.

However, last week’s prediction that the Senate would act on the bill THIS week looks likely to be proved false, as I do not expect full consideration by the Iowa Senate until some time NEXT week.

Senate Republican leaders remain confident the bill will be adopted in its present form and sent to the Governor, soon, but are focusing on some internal caucus issues to ensure further weakening of the bill does not occur during Senate consideration of a number of amendments.

Government Affairs Weekly Report - Week 10: March 13-16, 2017

3/17/2017

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group

Overview / Major Events

New revenue estimate from the REC sends a shock through the State Capitol as leaders deal with a new budget reality.
The most significant reform of Iowa’s workers compensation law cleared the House on Thursday.
Two weeks remain until the second legislative funnel is reached.

March REC revenue estimate is a shocker
The state’s Revenue Estimating Committee met on Tuesday of this week and announced a downward revision of their projections for the remainder of FY17 (our current budget year) and FY18 (the budget year currently being constructed by the legislature).

The REC reduced FY17 revenue projections by $131 million (and this is on top of the $110 million reduction announced at the December 2016 meeting of the REC and which triggered mid-year budget reductions) and FY18 revenue projections by $190 million.

With only 3.5 months left in the FY17 budget year, another $100 million in new budget cuts could have significant impacts on the state’s ability to continue to provide many key basic services. Thus, the Governor and legislative leaders have agreed to bridge the revenue shortfall by using the state’s cash reserve fund and avoid further cuts this year.

Rural Mainstreet Sinks for the Month: Farmland Cash Rents Fall 16 Percent from Last Year

3/14/2017

March Survey Results at a Glance:

The overall index fell below growth neutral for the 19th straight month.
Rural Mainstreet businesses, not directly linked to farming, expanded employment for the month.
Average annual cash rents for crop acreage was $211 per acre, which is down 16 percent from last year according to bank CEOs.
More than seven of 10 bank CEOs expect farm loan defaults to rise over the next 12 months. Almost one in six bankers expect such defaults to expand by more than 10 percent.
Almost one-third of bankers report that property taxes are a major economic problem for farmers in their area.

OMAHA, Neb. (March 16, 2017) – The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 19th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The index, which ranges between 0 and 100 slipped to 45.3 for March from 45.8 in February. The last time the overall index was at or above growth neutral was August 2015.

“Weak farm commodity prices continue to squeeze Rural Mainstreet economies. Over the last 12 months, livestock commodity prices have tumbled by 6.6 percent and grain commodity prices have slumped by 0.9 percent. Thus, year over year price changes remain negative, but are now less negative than several months ago,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

But there was a great deal of variability across the 10-state region. For example, Scott Tewksbury, president of Heartland State Bank in Edgeley, North Dakota reported, “Record 2016 crop yields have enabled most crop based farms to have a good economic year in our area, but concerns remain over projected profitability for 2017.

Rural Mainstreet Climbs to Highest Level Since September 2015: But Only 15 Percent Report Expanding Economy

3/13/2017

February Survey Results at a Glance

The overall index, while remaining below growth neutral, rose to its highest level since September 2015.
More than one-third of bank CEOs reported their local economy remains in an economic downturn. Only 14.9 percent of bankers indicated their local economy was expanding.
On average, farmland prices have declined by 5.1 percent over the past 12 months.
Approximately 73.9 percent of bankers expect agriculture- equipment sales to continue to decline in their area over the next year.

OMAHA, Neb. (Feb. 16, 2017) – The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 18th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The index, which ranges between 0 and 100 advanced to 45.8 from 42.8 in January. This is the highest overall index since September 2015.

“Weak farm commodity prices continue to squeeze Rural Mainstreet economies. However, the negatives are getting less negative. Over the past 12 months, livestock commodity prices have tumbled by 9.4 percent and grain commodity prices have slumped by 6.3 percent, both an improvement over last month,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Only 14.9 percent of bankers reported that their local economy was expanding. Approximately 34 percent indicated their local economy was in a recession with the remaining 51.1 percent indicating little or no economic growth.

According to Todd Douglas, CEO of the First National Bank in Pierre, South Dakota, “What we see in the agriculture industry is that farmers hurt the worst are those who farm small grain crops exclusively.” Douglas indicated operators that diversify in cattle, cattle feeding, hogs and other like type lines, are maintaining, or at least not experiencing as large a drop in net worth.

GUEST OPINION: Maintain competition and routing in payments

3/3/2017

by Paul Waltz, President & CEO - SHAZAM

The debate over regulating the payments industry has become more important than ever with vigorous activity around regulatory rollback and repeal. Preventing price fixing and regulatory overreach in the banking profession are important considerations, but preserving the interest of community banks and credit unions should be at the heart of the debate.

In recent weeks, rhetoric supporting the idea that efforts to repeal Dodd-Frank should include a complete repeal of The Durbin Amendment has dominated the news. Much of the chatter is focused on pricing controls imposed under Durbin, with no consideration or little understanding of the second unaffiliated network requirement provision and prohibition on routing restrictions, which protects competition in the debit payments market.

What bankers know, and some of the op-ed authors have forgotten, is the best way to keep your costs in check is to make sure there is healthy competition between providers. The two unaffiliated network requirement and prohibition on routing restrictions do exactly that. They preserve the right to choice and flexibility for both bankers and merchants, and diminish influence that entities with significant market power would leverage to create longer-term damage in the market.

Government Affairs Weekly Report - Week 8: Feb. 27-Mar. 2, 2017

3/3/2017

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group

Overview / Major Events

First Funnel Arrives.
Action still pending on dozens of bills on at the time of publication.

Workers Compensation Reform Legislation On the Move
This week the House and Senate brought forward companion bills to provide the most comprehensive reform of the Workers Comp (WC) system in Iowa in decades. Designed to rebalance a system that has become progressively anti-employer in its application, HSB 169 and SSB 1170 both cleared subcommittee and were expected to clear full Commerce Committee votes in both Chambers by the end of this week.

Expect the House and Senate to bring the bills to their respective floors next week in an attempt to complete work by March 9 or March 10.