Wis. Group One bankers get association, regulatory updates

Northwestern Financial Review, Mar 15-Mar 31, 2005 by Bengtson, Tom

Kurt Bauer, who has brought a new level of enthusiasm to the Wisconsin Bankers Association since becoming its president one year ago, brought an up-beat message to Group One bankers meeting in Minneapolis for their 101st annual meeting on February 12. Bauer described the association's educational and service offerings, its growing political influence, and its work designed to mitigate efforts by the state's revenue department to levy additional taxes on banks.

About 65 bankers from the 20 western Wisconsin counties that make up Group One gathered at the Radisson Plaza hotel for the Fridaynight/Saturday gathering led by Susan Gilbert, an executive vice president with the First National Bank of Hudson, Wis. She is the organization's first female president. Jim Metcalf, branch president at Sterling Bank in Chetek, Wis., is set to be president for next year's meeting. At the 2005 meeting, members elected Greg Legare of United Bank in Osseo, to the post of secretary/treasurer, which puts him in line to be president during the 2007 meeting. Legare also serves on the board of directors for the Wisconsin Bankers Association.

Bauer, in his first address before the Group One bankers, said the Wisconsin Bankers Association donated more money to political candidates during 2004 than all but one other business interest group in Wisconsin. The money totaled nearly $500,000, a substantial increase over the $40,000 or so the organization typically raised for its political action committee in the mid 1990s. The donations have paid off, Bauer said. He described the environment at the Capitol as favorable to the banking industry "because we helped so many of them get elected."

Bauer said that while Wisconsin bankers have substantially increased their level of participation in political fundraising, bankers need to do a better job with grass roots involvement. "Our political grass roots lag behind," he told the group. "Now we have to develop a grass roots program."

A high level of participation by bankers is essential if the banking industry hopes to achieve tax parity with the largest credit unions, Bauer said. Noting the credit union industry's ability to turn out large groups of people at capital hill and rallies, Bauer said bankers need to involve employees at all levels, as well as directors. Although WBA is working the issue hard, Bauer said most of the work will have to be done at the national level; he encouraged bankers to get involved with the American Bankers Association's Operation Credit Union. "You don't have to be a member of ABA to help," he said.

Echoing that message was WBA Chairman Mike Crowley Jr., who also addressed the group. WBA's first chairman to head a savings association, Crowley said: "We need to tap the knowledge, experience and ideas of all our employees. The credit unions will win every fight if we don't ask all of our employees to participate." Crowley is president/CEO of Bank Mutual, Milwaukee.

Bauer said WBA will soon begin surveying members to gauge economic conditions around the state. The information will be presented to the media. "Becoming the source for statewide economic information will help those opinion leaders make the connection between banking and the health of Wisconsin's economy," Bauer said.

It is important for the industry to tell its story, Bauer said, intimating that a better understanding of the industry's role in the state's economic health may have helped it to avoid its on-going battle with the state's Department of Revenue. For over a year, the department has been aggressively focusing on banks that have out-of-state investment subsidiaries. The department contends that many of those banks are using the subsidiaries to avoid paying state income tax that they should be paying.

"Bankers are still perplexed as to why the DoR singled out a job-creating industry like banking for these audits, especially when large credit unions face no DoR scrutiny at all," Bauer said. "It is unclear what DoR accomplished by taking on Wisconsin banks. Roughly 115 bankers have signed settlement agreements with DoR, generating $24 million in revenue. That amount is a fraction of the $250 million that some said DoR hoped to collect."

WBA says the subsidiaries are a legal corporate structure and that the Department of Revenue has reinterpreted the law in an effort to shore up state revenue at a time when the budget is tight. "Legislating by audit is a dangerous precedent and one that has not gone unnoticed by other business groups who fear that their industry may be next," Bauer told the group. "To help protect the state's business climate, WBA is working with other business groups in Madison to make state agencies more accountable by strengthening their legislative oversight." The goal, Bauer said, is to improve the state's business climate so it is competitive with other Upper Midwest states.

Report from regulator

Sheila VanOrnum, assistant deputy comptroller in the Minneapolis south field office, said most of the 520 banks in the OCC's central district are financially sound. She said there are 25 "problem" banks, a number which has declined in the last six months. "The financial condition of our banks is really sound," she emphasized.