The Arkansas Banker Spring 2022

SPRING 2022

THE WAR

for Workers B AN K S ARE CHAL L E N G E D F O R E M P LOY E E S AT ALL LE V E LS PG 20

Russian Hackers Hone in on Banks pg 16

Feds Want Input on Central Bank Digital Currency pg24

ECORA Expected to Help Rural America pg 38

THE ARKANSAS BANKER

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A PUBLICATION OF THE ARKANSAS BANKERS ASSOCIATION

CONTENTS

SPRING 2022 VOLUME CV, NO. 1

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ARKANSAS BANKERS ASSOCIATION STAFF

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President/CEO Lorrie Trogden VP/Controller Carla Brinkley VP/Professional Development Kami T. Coleman

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Technology & Design Director Jessica Sahene Executive Administrative Assistant Peggy Cecere

EDITORIAL STAFF

Editor Roby Brock Creative Director Ashlee Nobel

Lee Lee Arts + Design

Contributing Writers

Daniel Baker, Jim Cargill, Katie Harrison, Rob Nichols, Susannah Marshall, Randy Scott, and Carl White

The Arkansas Banker (ISSN 004-1726) is published quarterly by the Arkansas Bankers Association, 1220 West Third Street, Little Rock, AR 72201. Phone: 501.376.3741.

Periodical postage paid at Little Rock, AR. Postmaster: Send address changes to Arkansas Bankers Association, 1220 West Third Street, Little Rock, AR 72201. Subscription to The Arkansas Banker magazine is included in the membership fees to the Arkansas Bankers Association. Cover price is $5.95 each. Annual subscription rates are $40.00 for members and $60.00 for non-members.

Federal tax law prohibits the deduction of lobbying expenses for federal incomes tax purposes. Organizations like ABA, which assess member dues, are required by law to notify their members of the portion of their dues attributable to lobbing/and therefore non-deductible on your federal tax return. For the year 2021, it is estimated that 13.32% of your dues will be attributable to lobbing as defined by the IRS. Contributions to ABA are not charitable contributions, however, they may be deductible as a legitimate business expense.

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President’s Message Professional Development

Chairman’s Column Washington Update Commissioner's Column

Features 24

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BANKER Q&As

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Columns 04 08 10

Departments

Developments at the FDIC

An unprecedented move that seems to be politically motivated.

Overdraft Overhaul

Overdraft fees are coming under scrutiny, it may be time to reevaluate.

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The Millennial Minute: Latrecia Branch Five Minutes With ...

Faviola Alba

INDUSTRY UPDATES

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On High Alert

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Name, Image, Likeness

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Central Bank Digital Currency

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ECORA Gaining Momentum

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Ransomware

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NEWS & MOVES

Banks a target for Russian hackers.

Banks poised to capitalize on NIL deals.

Federal Reserve to explore benefits and risks.

Legislation that would help rural America.

Trends, detection, and what to do.

COVER STORY

20 The War for Workers

Banks are growing, but there are struggles to recruit and retain talent.

THE ARKANSAS BANKER

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PRESIDENT’S MESSAGE Lorrie Trogden

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President & CEO

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Arkansas Bankers Association

he new year has begun, and we are moving full steam ahead here at the ABA!

ADVOCACY: We had 11 bankers on the Hill for our March trip to D.C., and they represented our industry very well. We had impactful visits with all our federal delegation. Topics covered included: 1. Cannabis Banking - Closer to passage than ever before and we are hopeful to get it through the Senate by the end of 2022. Thank you to Senator Boozman and Congressmen Crawford, Hill, and Womack for their support.

2. Central Bank Digital Currency – This is a very nuanced topic and there are bankers on both sides of the issue, however, I believe we can all agree that the Federal Reserve does not need to hold individual customer deposits via the form of digital currency (or any other for that matter).

The Fed has promised not to move forward “without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.”

3. CFPB Supervision of Nonbank Small Business Lenders – Currently the CFPB has supervisory authority over banks as it relates to information about lending to “women owned, minority-owned and small businesses,” but not over nonbank lenders. (1071) We are requesting Congress amend the CFPA to give the CFPB supervision authority over nonbank lenders.

“Tomorrow is the first blank page of a 365-page book.”

- Brad Paisley

4. Community Bank Leverage Ratio – Since the onset of the pandemic, many community banks have experienced significant unexpected balance-sheet growth, and as a result have experienced deterioration in leverage ratios. Congress should give regulators flexibility to adjust the leverage ratio floor and we are specifically asking that the temporary 8% pandemic related ratio, which is now expired, be reinstated.

5. Enhancing Credit Opportunities in Rural America – This is a level playing field issue with Farm Credit. This bill removes the taxation on income from farm real estate loans and rural home mortgage loans in rural areas and towns of less than 2,500 for FDIC insured institutions. This bill will most likely start seeing significant movement in 2023. Special thanks to Senators Boozman and Cotton and Congressmen Westerman and Womack for co-sponsoring this bill.

In addition, we are seeing some of the national policy issues such as fair access and ESG starting to creep into the state legislation. The 2022 fiscal session is now over, but work on bills for the 2023 substantive session is already starting. It’s very important that candidates who understand banking and are supportive of our industry are elected.

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ABA

OFFICERS Jim Cargill, Chairman Arvest Bank, Little Rock

Randy Scott, Chairman-Elect Farmers Bank & Trust, Blytheville

Jim Taylor, Vice Chairman First Security Bancorp, Rogers

Lori Ross, Treasurer

Citizens Bank, Arkadelphia PHOTO: (from left to right) Dharmin Patel, Arkansas State Bank Department; Jim Taylor, First Security Bancorp; Randy Scott, Farmers Bank & Trust Company; Cathy Owen, Eagle Bank & Trust Company; Senator Boozman; Derek Eckelhoff, First Security Bank; Seantor Tom Cotton; Lorrie Trogden, Arkansas Bankers Association; Beth Presley, Arvest Bank; Commissioner Suzannah Marshall; Maret Cahill Wicks, Arvest Bank; Randy Rawls, Union Bank & Trust Company; Jim Cargill, Arvest Bank.

CRA SECTION: The member-driven ABA CRA Section is up and running, holding its inaugural meeting in January. This section does require dues to participate (by bank), and you should have received a notice about that in February. If you missed it and would like your bank to participate, please contact us and we will get you added. The section will meet monthly and hold other specialized training.

LIVE FROM LITTLE ROCK: Our 2022 Annual Convention April 5-7 will be INPERSON, and I couldn’t be more excited! We have a great speaker line up as well as ABA officer elections. Join us to bid a fond farewell to Chairman Jim Cargill, and to welcome incoming Chairman Randy Scott during the Chairman's Dinner. Please register and let’s give this new year a proper start with fabulous speakers, friends, fun, and fellowship.

ELECTIONS: At both the state and national level, we are consumed with mid-term elections. At the state level, because of redistricting, every single state legislator is up for election. There are over 35 seats that don’t have an incumbent running or are new – it will be a large incoming freshman class. All

constitutional offices are also in this year’s election, with the current Governor, Attorney General, Treasurer, and Lt. Governor all term limited. At the national level, races are being closely monitored for a possible shift in the majority party of both the House and the Senate, with the House being the most likely right now.

November is going to be a very exciting month.

ABA BankPAC: As you can see from the issues listed above (and that’s only a small portion of important topics), it is vital that we support candidates who understand our industry, are supportive, and will have a seat at the table when decisions are made. The sheer number of candidates in this campaign cycle has put a dent in our PAC funds, and we have a 2022 fundraising goal of $75,000. You can find a PAC brochure and contribution information on our website under the Advocacy tab. I cannot stress enough how important it is to have a strong PAC that complements our grass-roots efforts. When we stand together as one voice, we can, and we do move mountains!

I look forward to seeing you at the Annual Convention, other in-person events, and bank visits this year!

Jon Harrell, Past Chairman Generations Bank, Rogers

Lorrie Trogden, President & CEO

Arkansas Bankers Association, Little Rock

BOARD OF DIRECTORS

Derek Eckelhoff, Rogers Nathan Gairhan, Springdale LaTricia Hill-Chandler, Little Rock

Robert Husong, Rogers Gary Kleck, Springdale Cody Knight, Piggott Wilson Moore, Little Rock Marnie Oldner, Little Rock Todd Smith, Magnolia Rob S. Tiffee, Little Rock Jamie Waller, Magnolia Scott Walker, El Dorado

Lorrie Trogden, President & CEO

Jay Wisener, Little Rock

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CHAIRMAN’S C O LU M N

Improving DE&I is Good for Talent Retention and Growth Jim Cargill

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Arkansas Bankers Association

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oday, more than ever before, many of our customers and associates want to know they are doing business with or working for companies that “get it.” They want to know that we’re

actively working to make changes that improve our organizations not just for the sake of the bottom line, but for the betterment of the communities we serve as well as the people relied upon to provide the service.

One way to demonstrate that we “get it” is through the work we do to improve diversity, equity, and inclusion (DE&I). Those aren’t just buzzwords or a vague moral concept.

Research shows that improving DE&I helps companies retain and recruit talented staff.

Additionally, there’s a benefit to the bottom line from better understanding the needs of a wildly diverse audience of potential customers so we’re prepared to offer products and services that meet those needs.

A U.S. House Committee on Financial Services report on diversity in banking noted that “companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability.

Companies in the top-quartile for ethnic/ cultural diversity on executive teams were 33% more likely to have industry-leading profitability. That this relationship continues to be strong suggests that inclusion of highly diverse individuals – and the myriad ways in which diversity exists beyond gender.”

For example, a National Public Radio report on workplace diversity noted that while diversity has historically referred to categories like race and gender, companies and diversity experts continue to broaden the pool and audience to which diversity applies by adding categories such as age, sexual identity, and disabilities.

The House report also found that only 29% of senior executives are women and only 19% are in a racial or ethnic minority. The Committee for Better Banks report Advancing Racial Justice for Frontline Bank Works released in March 2021 found that Black and Latino employees at 13 major U.S. banks have a less than 25% chance of being promoted or hired for a senior management or executive position in comparison to their white colleagues. Those workers also have a very high likelihood of holding entry-level positions with limited mobility, such as bank teller and call center employees in comparison to their white colleagues, the report found.

We need to be reviewing promotion practices to ensure that every staffer is given the same opportunities to advance.

However, we know that promoting from within is not a panacea. We must also ensure we are hiring a diverse workforce. I know this will lead many of you to the question: How can we hire a diverse staff if we aren’t seeing a diverse pool of applicants?

One approach is for us to become gardeners, cultivating talent through innovative

“Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability.”

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programming and partnerships that target the issue from different stages. For example, we need to be sure we’re accessible and mentoring the staff we have as well as partnering with higher education institutions – especially historically black colleges and universities and others with diverse demographics. We also need programs that focus on attracting youth to the industry from similarly diverse schools for young students.

At Arvest Bank, we are working intentionally to increase our generational diversity by sponsoring the Academies of Central Arkansas. Through this public-private partnership, 10 high schools in four districts across Central Arkansas have created career-themed academies that prepare students to graduate ready for college, careers, lifelong learning, and leadership.

The teachers deliver relevant learning with real-world experiences provided by the designated industry.

Whether students graduate and go directly into a career or into post-secondary education, the partnerships with businesses ensure that students are exposed to the talent and skills needed for the future workforce.

This exposure, coupled with coursework, educates students on future careers – such as banking – in the professional world.

It is my hope that many of these students will attend colleges and universities right here in Arkansas and remain here, deepening the talent pool that we will all have access to for hiring and serving as examples for young people in their orbits. I encourage every C-suite leader to take a long hard look at current practices and implement necessary adjustments to make the banking industry in Arkansas as diverse, equitable and inclusive as possible.

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PROFESSIONAL D E V E LO P M E N T

Calendar of Events APRIL - JUNE 2022

April 05

T UES DAY 4:30 P.M.­– T H URSDAY 11:30 A.M.

A B A A N N UA L CONVENTION

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The Arkansas Bankers Association's 132nd Annual Convention will be held downtown in our state's capital city. Along with longstanding events such as the Day with the Commissioner and the Simmons Bank Strawberry Breakfast, we will witness the installation of our ABA officers and more!

Make plans to join us as we reunite for our annual event.

INSTRUCTOR: Ron Rushing

LOCATION: Little Rock Marriott Downtown

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BANK DIRECTORS WORKSHOP

Never have the demands on a Bank's Board of Directors been greater. During this session, directors will gain a better understanding of the duties, responsibilities and liabilities involved in this leadership role. Attendees will take part in the ABA's Annual Convention Day with the Commissioner, followed by lunch and an afternoon workshop.

INSTRUCTOR: David Kemp LOCATION: Little Rock Marriott Downtown

L OA N A S S I S TA N T S & PROCESSORS WORKSHOP

This seminar is designed to provide lending knowledge and administrative effectiveness of one of the most important positions in a community bank’s lending staff – the loan assistant/ loan processor. This session is perfect for loan assistants and loan processors, credit administration supervisors, and other members of the bank’s loan support staff with credit administration responsibilities.

INSTRUCTOR: ABA

THURSDAY 8:15 A.M.­– 4 P.M.

TUESDAY 9 A.M.­– 4:30 P.M.

May 04

W E D N E S DAY 9 A.M.­– 4 P.M.

BANK SECURITY HOT TOPICS

Join an industry expert for this interactive program featuring the most current topics in bank security. This program will cover a variety of subjects. There is something for everyone in this information-packed session!

INSTRUCTOR: Barry Thompson LOCATION: Arkansas Bankers Association

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WEDNESDAY 9 A.M.­– 4:30 P.M.

F O U N DAT I O N S FOR COMMERCIAL LENDING

This event is designed to provide an overview of commercial lending through an assessment, type and structure of a commercial loan, as well as building relationships with new and existing clients. Participants will have exposure to assessing loan suitability, structuring a loan and developing a sound lending understanding upon which to build comprehensive commercial and business relationships.

INSTRUCTOR: Ron Rushing LOCATION: Arkansas Bankers Association

CALL REPORT P R E PA R AT I O N

This event will provide information and comprehensive training on new, proposed, and revised changes to the Call Report with identification of specific line items impacted. Accounting guidance and regulatory changes will be discussed and presented.

LOCATION: Arkansas Bankers Association

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MONDAY 9 A.M. ­– 4 P.M.

INSTRUCTOR: Cynthia Dopjera LOCATION: Virtual Learning

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TU E S DAY 9 A.M.­– W E D N E S DAY 3:30 P.M.

ADVANCED BSA/AML COMPLIANCE SCHOOL This event focuses on the latest changing BSA arena and offer tips and tools to develop and manage an “adequate” and “an effective and reasonably designed” BSA program.

Attendees will receive a Training Program Manual, an updated FFIEC BSA/AML Examination Manual, a Resource Manual.

INSTRUCTOR: Dianne Barton LOCATION: Virtual Learning

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FOR MORE INFORMATION ABOUT ABA TRAINING & EVENTS, AND TO REGISTER, LOG ON TO WWW.ARKBANKERS.ORG.

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T H URS DAY 2 P.M.­– 3 P.M.

FINANCIAL A N A LYS I S O F BANK M&A T R A N S AC T I O N S

This session will take an in-depth look at the financial analysis of a bank M&A transaction from each of the buy and sell side. This session will include specific review and discussion of the various pricing methods that are employed by investment bankers, and will also discuss the applicable Acquisition Accounting and taxation concerns.

INSTRUCTOR: Greyson Tuck LOCATION: Virtual Learning

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T H URSDAY 10 A.M. ­– 3 P.M.

EDUCATION AND TRAINERS FORUM

This three-part series forum provides an opportunity for bank trainers to exchange ideas freely, brainstorm challenges and examine pressing issues in today's ever-evolving regulatory, cost-conscience, and results-driven environment.

The agenda is based on input from participants in the forum group as well as banking industry employee development key topics. Dates for the forum are May 12, September 15, and November 3.

INSTRUCTOR: Dianne Barton LOCATION: Virtual Learning

June 14

AT A GLANCE

TU E S DAY 10 A. M. ­– 12 P. M.

BI-MONTHLY COMPLIANCE BRIEFING

Keeping up with changes and deadlines in the compliance area gets more complex every year. Now, we can assist you with that task. This series includes bi-monthly (6), twohour webinars focused on the most recent changes to the compliance landscape.

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INSTRUCTOR: Carl Pry LOCATION: Virtual Learning

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TH U R SDAY 9 A.M. ­– 3 P.M.

C&I LENDING

Attend this seminar and learn the vital role of Commercial & Industrial (C&I) Lending in today’s competitive bank market and explore underwriting, managing, and marketing C&I loans.

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ABA Annual Convention April 5th - 7th

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Live events are subject to a virtual learning environment. For more information, contact the ABA at (501) 376-3741 or Kami Coleman at kami.coleman@arkbankers.org.

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WASHINGTON U P DAT E

LEADERS IN FINANCIAL LITERACY:

Bankers Celebrate 25 Years of Teaching Children to Save Rob Nichols

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President and CEO

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roviding children with a strong base of financial knowledge is critical to helping them unlock their financial future and prosper as adults— and bankers are uniquely positioned to play a role in that process.

American Bankers Association

posts, letter templates and graphics—everything your bank needs to spread the word about financial education.

As we work toward the collective goal of increasing financial health in the U.S., reaching out to young people is a great step bankers can take. When bankers engage with the younger members of their commuThis year, the ABA Foundation celenities, it does more than simply providing brates a major milestone as we commemstudents with the “nuts and bolts” of finanorate the 25th anniversary of the Teach cial education—it allows them to interact Children to Save financial literacy initiative. with their local bank and understand that Since 1997, Teach Children to Save has the 2 million women and men working in brought students in grades K-8 important the banking industry are lessons about money and invested in their success. real-world financial conThey have the opportunity cepts—from saving and to see bankers as teachers, spending to budgeting and “Since 1997, Teach Children to Save has brought experts and as trusted rekeeping their money safe. students in grades K-8 important lessons about money sources in their communiWith the help of bankers ties, and they can begin to nationwide, Teach Children and real-world financial concepts—from saving and see the value of a having a to Save has reached a total spending to budgeting and keeping their money safe.” relationship with a bank. of 9.5 million students to With all of the financial date. (If you’re looking for hardships families have exsomething to compare that and produce their own video showcasing perienced over the past two years, it’s more to, it’s roughly the number of people that their financial knowledge. Learn how your important than ever that the next generation live in the state of New Jersey.) Add in the bank can get involved at no cost, visit aba. is given the tools and knowledge they need to ABA Foundation’s other financial education com/LightsCameraSave.) make prudent financial choices as they grow program for teens and college-age students, In honor of Financial Literacy Month, up. And so I hope each and every one of you Get Smart About Credit, and that number the foundation observes Teach Children to will make the commitment this year to join grows to almost 11.8 million children and Save Day in April, but bankers’ efforts to with the ABA Foundation, take advantage young adults who have benefitted from the raise awareness about financial education of all the free resources that are available and foundation’s financial education curriculum are by no means confined to one day. In fact, participate in Teach Children to Save and our (that’s a population roughly equivalent to Teach Children to Save encourages bankers other financial education initiatives. With the population of Ohio). to advance financial literacy throughout the your help, we can keep these programs going Teach Children to Save began by proyear in whatever way they choose. To help strong for another 25 years and beyond. viding bankers with tools and resources to banks engage on social media channels, To learn more and register for Teach enable them to take lessons on financial with that, the foundation has created a free Children to Save, visit aba.com/teach25. literacy topics into classrooms in their comTeach Children to Save communication For questions on the ABA Foundation’s fimunities. Over the years, it has evolved and toolkit for participating banks to use. The nancial literacy programs, contact ABA’s Jeni adapted to changing needs and preferences kit includes everything from social media Pastier at jpastier@aba.com. of younger generations—including pivoting

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to be heavily focused on virtual learning during the COVID-19 pandemic.

This year, as the program celebrates its “silver jubilee,” the foundation is placing a particular emphasis on bringing financial education to students through video, and will be rolling out three short videos this spring designed to deliver engaging, age-appropriate lessons by grade level.

(And speaking of video, students also have the opportunity to participate in the foundation’s Lights, Camera, Save! program, through which they channel their creativity

OUR ABA BankPAC MEMBERS Thank You TO PRESIDENT’S CLUB Arvest Bank First National Bankers Bankshares Relyance Bank Stone Bank James Cargill III Jon Harrell Joseph Ruddell Randy Scott Jim Taylor Lorrie Trogden

GOLD

Tommy Bond Hall Calhoun Sara E. Cobb Charles Compton Karen Cree Chevron L. Ergle Sandra Ferguson Mary Fowler Todd Haynes Eddie Lumsden Raymond Lee Merrill Richard Moellers James E. Peacock Kathyrn Wilson Roberts Lori Ross Ali King Sugg Jamie Waller Stanton Willis Larry T. Wilson Mark T. Wilson Mike Wilson Jay Wisener Brandon Zinser

SILVER

Justin Bell Steve Bell Gina Bennett Paula O. Blackwell Clay Conly Bob H. Crafton Phillip Foster Ronny Goff Carl Harrell Steven Harrell Brad Harrison Gary Kleck John D. Langston Paul Lindsey Nicholas Nabholz John David Neely John Rose Richard Smith Tommy Wagner, Jr.

BRONZE

Clark Fincher Pamela S. Murray Todd Smith Scott Walker

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COMMISSIONER'S C O LU M N

The Priority List Susannah Marshall

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Commissioner

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like to make lists. I work well

when I have a “to-do” list, a list for both home and the office. I have a sense of accomplishment, sometimes just a fleeting one, when I mark everything off of my current list.

But I know that my list for the office is never fully cleared as it contains many topics that are works in progress – banking issues that are consistently evolving and new trends or industry related matters that warrant my attention.

As we begin 2022, have you and the board made a list for your bank? What are the issues that you want or need to address in the current year? Not just the normal strategic goals or financial metrics, but any specific trends or banking topics that your bank wants to elevate during the year.

I am happy to share a few items from my list: • As an industry, are we prepared for the rate increases that have been announced?

Are banks evaluating their interest rate risk positions and adjusting as possible? Is there any area of the balance sheet/income statement that has not been reviewed for the potential effects of rising interest rates?

• Are banks (that have not yet adopted) prepared for the implementation of the Current Expected Credit Losses (CECL) methodology now that we are less than a year away?

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Arkansas State Bank Department

• Cybersecurity risks increase daily – how do the banks feel about their cybersecurity posture? What additional tools or resources are needed in this area? Are there any gaps within each bank’s internal information technology team?

• Labor market pressures are all around.

Are banks able to identify individuals who will become the next generation of leaders within the organization? Will banks need to re-evaluate some parts of their business model to adapt to changes in needs or preferences from the workforce?

• In addition to staffing related matters, how many banks will be impacted this year by changes in board composition? Are banks actively evaluating the structure of the board to see if it fully represents the institution today and the markets the bank

serves? We all know that it can take time to address the need to fill board vacancies.

Do the banks have plans in place for any unforeseen changes?

• How are banks prepared to address the ongoing discussion of Mergers & Acquisitions? Even if a bank has no plans to sell, is it prepared to answer that question if asked by a possible acquirer? If a bank is interested in expanding its operations, have they laid the groundwork internally for growth by merger? Will this be the year that some banks choose to enter new markets outside of Arkansas? If so, how will those new markets fit into the bank’s various programs such as compliance, Bank Secrecy Act, internal audit and loan review?

• So much conversation is happening in the industry concerning expansion of

“In addition to staffing related matters, how many banks will be impacted this year by changes in board composition? Are banks actively evaluating the structure of the board to see if it fully represents the institution today and the markets the bank serves?”

for your support in 2021 digital products and services. How is each bank planning addressing their own digital future? Will Arkansas banks partner more with third parties and embrace more fintech? How much will customer demand drive a bank’s efforts to adopt technology?

Has the pandemic forever changed customers’ preferences for conducting banking activities in-person or remotely?

• How transitory is this period of inflation? Are the bankers beginning to see inflation significantly affect some of their customers? What industries are most affected by this period of inflation and what, if any, additional measures are banks implementing during this timeframe?

Arkansas bankers have withstood so much over the years. In the first quarters of 2020 and 2021, I was very concerned about how our industry would fare during the pandemic. Not because of the overall condition of the Arkansas banking industry, but because we had not previously faced the challenges of a pandemic.

My list for 2022 is full of questions and thoughts about how the banking sector will respond to so many unknowns and so many opportunities. Fortunately, this year’s list is not about whether we can survive a global pandemic, but rather about how we will thrive beyond it. Here’s to a busy, but successful 2022 – which is the No. 1 item on my list!

AAMSCO

Foundation Life Insurance

American Bankers Association

Haberfeld

Apiture

Hogan Taylor, LLP

Arkansas Capital Corp.

IntraFi Network

Arkansas Small Business and

JER HR Group

Technology Development Center

Lee&Mason Financial Services

Arkansas Treasurer’s Office

NFP Executive Benefits

Bankers Assurance, LLC

Quattlebaum, Grooms & Tull

BHG

PLLC

BKD, LLP

Rose Law Firm

CardAssets, LLC

SBS Cybersecurity

Celero Commerce

SettlePou

Confluent Strategies

SHAZAM

Data Driven Partners

SimmonsBank

DataScout, LLC

Smiley Technologies, Inc.

EGP, PLLC

Southeastern Commercial

Exchange Capital Corporation

Finance, LLC

FHLB of Dallas

SPARK

Fiserv

Spry

FNBB

TeleComp

FNBB Insurance Agency

Wright, Lindsey & Jennings, LLP

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BANKER Q&A

THE

MILLENNIAL MINUTE with Latrecia Branch SVP, Operations Stone Bank, Little Rock

WHAT CAN BANKS DO TO BETTER APPEAL TO MILLENNIALS – IN THE WORKFORCE AND AS CUSTOMERS?

Having that much interaction with so many people, you just never know what the day will bring.

Millennials would like to see a ‘change’ to the traditional workplace.

Millennials want access to more remote work. They like the idea of being able to work from anywhere and not be bound by location.

They want to be managed by people who care about them as a person and as an employee. Banks must be willing to offer a variety of opportunities, competitive pay and benefits, and promote career progression. Millennial customers are technologically savvy and value digital banking services and convenience. Their life is literally held in their hands. Banks must be prepared to reshape banking to leverage the opportunity.

WHY ARE YOU INVOLVED IN THE EMERGING LEADERS SECTION? I attended an Emerging Leaders conference a few years ago and had a great experience. I was surprised to see the absence of diversity.

I’m hoping my involvement will inspire other minorities, especially women, to participate in leadership programs. Emerging Leaders offers countless networking opportunities and ways to channel your passions. It’s such a great way to level up your career and meet other great professionals.

WHAT IS THE MOST INTERESTING PART OF YOUR ROLE AT YOUR BANK?

WHAT DO YOU LISTEN TO ON YOUR MORNING COMMUTE?

The most interesting part of my role is the variety of issues I get to deal with each day. You’re either mastering a routine task or plunging into a new one. Operations offers opportunities to learn new things with the rapidly changing technology. Although sometimes daunting, I find it rewarding to see how confidently we approach change. In bank operations we connect with other departments, vendors, customers, and sometimes other banks.

My go to is SiriusXM. I listen to a morning show called “Sway in the Morning”. My favorite day to listen is on Thursday for “Good News Thursday”. I listen to people from all walks of life tell their good news. The collection of news includes difficult obstacles they have overcome, goals they have met and other uplifting snippets. It just reminds me of how thankful and fortunate I am and even when times get hard, I too can have “Good News”.

“I’m hoping my involvement will inspire other minorities, especially women, to participate in leadership programs. Emerging Leaders offers countless networking opportunities and ways to channel your passions. It’s such a great way to level up your career and meet other great professionals.”

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BANKER Q&A

FIVE VE minutes with...

Faviola Alba

SVP, Community Lending Manager Arvest Bank, Little Rock

Q. TELL US ABOUT YOUR EARLY CAREER...LOOKING BACK,

Q. I ALWAYS START MY

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A.

HOW WOULD YOU DESCRIBE YOURSELF?

I would describe myself as eager to learn; something that remains true today. I love learning new things. Getting the details about new products and services we can use to help customers reach their financial goals is always a highlight. I was also eager to learn from my managers and associates in different roles. I knew it was important to expand my knowledge and that doing so would expand my options for career growth with Arvest.

DAY WITH...

I always start my day with being thankful and appreciative of the new day. Then, I prepare for the day by reviewing important tasks I want to accomplish, both personally and professionally.

“I am most proud of leading the expansion of consumer lending training. When I started 6 ½ years ago, the lending team consisted of approximately 20 lenders and five assistants. Now the team includes approximately 150 trained associates within different departments.”

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I always start my day with “ being thankful and appreciative of the new day. Then, I prepare for the day by reviewing important tasks I want to accomplish, both personally and professionally.

”

Q. WHAT’S THE DIFFERENCE BETWEEN A BOSS AND A LEADER?

A.

The main difference between a boss and a leader is the way the person approaches people and situations. A leader is inclusive; a person who encourages and empowers associates to learn and strive for their goals, and then stays involved, offering support along the way. A leader recognizes successes and practices good listening.

Q. WHAT ARE YOU MOST PROUD OF

REGARDING YOUR LEADERSHIP AT ARVEST BANK?

A.

I am most proud of leading the expansion of consumer lending training. When I started 6 ½ years ago, the lending team consisted of approximately 20 lenders and five assistants. Now the team includes approximately 150 trained associates within different departments.

Q. WHAT ARE THREE THINGS STILL LEFT ON YOUR BUCKET LIST?

A.

The three things on my bucket list are: Visit key landmarks in Mexico, travel to Rome and attend a professional figure skating event in person.

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On

High Alert T H E G LO B A L ST R ANG L E HOL D ON RUSSIAN FINANC IAL A SSE TS H A S MAD E BANK S A L ARGER CYB ERTARGET.

by Roby Brock

T

he U.S. financial system has been under consistent attack by Russian hackers and cybercriminals for decades, but the latest economic sanctions for Russia’s aggression in Ukraine has heightened prospects for assault.

Federal officials have been warning banks and financial services firms for months about escalating threats from Russia, even staging a ransomware drill in November 2021 for how to handle a massive, systemwide attack. The exercise included over 240 public and private sector institutions.

CISA, the Cybersecurity and Infrastructure Security Agency, is the federal agency tasked with alerting and offering protection. CISA Director Jen Easterly warned in March that malicious foreign actors were at work trying to disrupt markets and undermine security.

The agency also noted that Russian state-sponsored actors have demonstrated sophisticated tradecraft and cyber capabilities by compromising third-party infrastructure, compromising third-party software, or developing and deploying custom malware. Furthermore, CISA said these financial terrorists have the ability to maintain “persistent, undetected, long-term access” in compromised environments—including cloud environments—by using legitimate credentials.

“We need to be prepared for the potential of foreign influence operations to negatively impact various aspects of our critical infrastructure with the ongoing Russia-Ukraine geopolitical tensions,” Easterly

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said. “We encourage leaders at every organization to take proactive steps to assess their risks from information manipulation and mitigate the impact of potential foreign influence operations.”

Arkansas banks are unlikely to be the first wave of targets as bigger fish, such as national banks with multiple access points and vulnerabilities, will likely take the brunt of any large-scale efforts.

However, with the interconnectivity of the global financial system, no financial institution should consider itself untouchable.

John Burgess, co-founder and president of Mainstream Technologies, and Lee Watson chairman and CEO of the Forge Institute, are two Arkansas experts who understand the threats posed by cybercriminals. Burgess, who also serves as his company’s Chief Security Officer, leads Mainstream’s Cybersecurity Management and Consulting unit. Watson’s group is a leading trainer of IT professionals in the realm of cybersecurity, particularly when it comes to national defense.

The Arkansas Banker asked Burgess and Watson to assess the current environment.

Q: What kind of prep are you advising clients to do with this heightened situation?

WATSON: Two major things - the first is to practice solid cyber hygiene. Be brilliant on the basics here. Change your passwords

... these financial terrorists have the ability to maintain “persistent, undetected, longterm access” in compromised environments— including cloud environments—by using legitimate credentials.

regularly, update your software immediately when patches come out, evaluate for insider threat, maintain your firewall with updated rules and permissions, monitor your IDS and IPS, and use multi-factor authentication for everything.

The second, and I can't emphasize this enough, is that education needs to become a top priority within your organization.

If you’re not training your employees to recognize and respond to current threats, you’re way behind and will be the subject of a major incident if you don’t catch up.

BURGESS: I think at this stage the way

that conflict has unraveled so far, unless you have business in the Ukraine or Belarus or Russia, I don't think it appears that it's escalating to a state versus state kind of

John Burgess

Lee Watson

Co-Founder / President Mainstream Technologies

Chairman / CEO Forge Institute

conflict. What the Western countries have done sanction-wise really puts the Russians in the position that they have to double down on the garden variety cybercrime that they've been doing all these years. Now, fraud and theft are going to be their main sources of getting the capital that they need to continue funding operations. Ransomware and stealing credentials so that you can actively steal from someone's bank account or pursue an identity threat strategy will be their main options.

We're advising clients to follow the common measures that we've always talked about to defend against those kind of threats. So workforce awareness training, make sure that your people understand how to recognize these suspicious emails, how to safely handle them. Make sure you've got the backstops in place behind your users. Do you have anti-malware software running?

Do you have protections that will block traffic to and from known militia sites?

On the credential side, it still is something that's perceived as annoying and a nuisance, but multifactor authentication.

Put that in on any system, on any account that will support it. And if you have systems that don't support it, figure out how to replace them with systems that do support it.

Q: What type of disruption should companies, especially banks, be watching for?

WATSON: The three major ones over

the last year have been Distributed Denial of Service, Phishing, and Ransomware.

Distributed Denial of Service (DDoS) is a malicious attempt to disrupt the normal traffic of a targeted server, service or network by overwhelming the target or its surrounding infrastructure with a flood of Internet traffic. A Phishing attack is where an attacker sends emails from a known or trusted sender in order to obtain confidential information from targeted individuals. Ransomware has been all over the news this year, but it’s an infection of malicious software on your computer that exports and subsequently encrypts a group of files until you pay a ransom. What people really haven’t been communicating in the media is the connection between cyber-criminal groups and advanced persistent threats (nation-state adversaries). There is quality, relevant, and vetted reporting that suggests these nation-states are tasking and directing the cyber-criminal groups to conduct attacks on their behalf.

BURGESS: It's always good to have, not

just these protective strategies in place, but

CISA.gov is a federal website that offers updates on current cyberthreats and recommendations for corporate leaders and CEOs to protect their businesses.

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... education needs to become a top priority within your organization. If you’re not training your employees to recognize and respond to current threats, you’re way behind and will be the subject of a major incident if you don’t catch up. to have what we call detection technologies, so things that are watching your log files and are able to recognize that traffic is coming in from a malicious site or a login is attempted on an account from a place that doesn't look right. If I have a bank customer in Arkadelphia and they sign in from Arkadelphia every time they do it and all of a sudden that account is trying to sign on from Kazakhstan, that's an indication that there might be something fishy.

It doesn't necessarily prove that something's fishy, but that's a red flag if you have one of these detection tools in place.

And train your workforce to recognize these human-based threats, turn on multifactor authentication, and make sure that you're actively watching your environment through some tools to detect when bad actors are rattling the doorknob or have actually gained access.

Q: What should banks do to be best prepared?

WATSON: Education, education, education. Outside of the education of Cyber and

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IT professionals, education of every individual about the current threat status is critical. The number one reason an organization has been exploited is employee negligence and naivety. A basic understanding of the current cyber threat will have every individual in a state of heightened awareness, keeping their head on a swivel for things out of the ordinary, like an email or calendar invite from an outside source, for example.

BURGESS: Now's a good time to just do

a checkup on what you're doing from a cyber defense standpoint. Make sure all your tools are in place and functioning. Make sure that training's up to date. Look for those opportunities to deploy. If you haven't got some of these technologies deployed, there's never a better time than now to get them in place. Because if this conflict does escalate, we may see, and I certainly hope we don't, but you could see an escalation of state-versus-state type activities. And these same tools will protect a bank or any other business from those kind of activities.

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JOB

Seeker’s

Market BANKS ARE GROWING, EMPLOYMENT IS UP, BUT THERE ARE STRUGGLES TO RECRUIT AND RETAIN TALENT.

by Roby Brock

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DAVY CARTER

REGIONAL PRESIDENT FOR CENTENNIAL BANK IN JONESBORO

GLENDA CATON

SHRM-SCP AND OWNER OF CATON CONSULTING

I

n November 2021, financial sector employment in Arkansas set a record with 67,900 employees. It’s a 39% growth rate over the last decade. Even during the COVID-19 pandemic, employment only slipped 3% among banks and financial firms. In the ensuing months, employment has soared.

Yet talk to a bank CEO today, and he or she will tell you that finding workers may be the biggest challenge.

“You have to ask why,” said Davy Carter, Regional President for Centennial Bank in Jonesboro. “The economy has been great.

We’ve had a heck of a bull run. There’s been a lot of expansion in the economy and a lot of growth in banks and branching. So the demand for good, experienced talent has increased dramatically. That has costs.”

Glenda Caton, SHRM-SCP and owner of Caton Consulting, offers human resources consulting services for small- and mid-sized companies and local government workforces. For an illustration of current conditions, Caton notes that in real estate you sometime have a buyer’s market, sometimes a seller’s market. Right now, the labor market favors those looking for work.

“It is 100% a job seeker’s market right now,” she says. “It’s going to turn back

BRUCE MALOCH

VICE-CHAIRMAN & GENERAL COUNSEL AT MAGNOLIA-BASED FARMERS BANK AND TRUST

around, just like real estate does, in a few years. But right now, if you’re wanting the top talent and the best of the best, then you’re going to be paying way more.”

Wages are always a concern, but in the post-COVID-19 world, other factors are also playing major roles. Some employees want to work remotely, others are asking for four-day weeks for better work-life balance, and some want to move up the corporate ladder faster than their experience may allow.

Bruce Maloch, Vice-chairman & General Counsel at Magnolia-based Farmers Bank and Trust, said his growing southwest Arkansas bank, which has branches in the Oklahoma and Texas markets, has been challenged to find top talent at entry level positions, call center

“THERE’S BEEN A LOT OF EXPANSION IN THE ECONOMY AND A LOT OF GROWTH IN BANKS AND BRANCHING. SO THE DEMAND FOR GOOD, EXPERIENCED TALENT HAS INCREASED DRAMATICALLY. THAT HAS COSTS.”

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“IT’S A QUALITY OF THE WORKPLACE THAT WE TRY TO SELL, THE CULTURE, A PLACE THAT PEOPLE ENJOY COMING TO WORK, INVOLVEMENT IN THE COMMUNITY – WE ALLOW BANK TIME FOR THAT.”

operations, loan officers and senior staff.

“It’s all challenging,” he said. “Even though there’s wage pressure, we don’t really see it as much as finding people who are willing to apply and go to work… The employees that do come often want to increase to the next level much quicker than my generation did.”

Maloch isn’t sure if the stimulus and child-care money that benefitted many workers through the pandemic is part of the reason for the struggle, but he’s doing all he can to make work at Farmers Bank and Trust as attractive as possible.

Besides career path possibilities, his bank offers health benefits, a retirement package, equity ownership, and a bonus plan for bank performance. It’s easier to recruit in more populated locations like the Dallas metro area or Texarkana. In smaller towns, it helps if a worker is from there and looking to return to their roots.

“It’s a quality of the workplace that we try to sell, the culture, a place that people enjoy coming to work, involvement in the community – we allow bank time for that,” Maloch said.

Carter notes that there has always been healthy competition between banks for good employees.

“You can only do so many things in that regard,” he says. “Banks have always competed with each other especially in good, growing, populated markets.”

He adds that pre-pandemic loan officers were often the central target

of intense competition. Now, he sees it across the board.

“That environment has spread post-pandemic throughout the entire level of banking organizations. Labor markets are tight and banks aren’t immune from that,” Carter said.

A March 10 U.S. Labor Department report notes that job openings in the financial sector was 538,000 nationwide in January 2022, up 95% from January 2021 when there were just 276,000 job openings in the industry. Hiring in January 2022 was

generations in the workforce. Employees are taking care of their children, their parents, and in some instances, their grandparents.

She advises banks and other employers to do all they can to get creative in order to attract talent. Work-from-home is important. For some, four-day workweeks are critical. Other candidates may be seeking personal mental health days. There are still the traditional concerns of pay equity, benefits and promotion opportunities.

“There still have to be rules for workplace conduct, but at the same time, COVID showed us things we never thought possible were possible. We’ve got to open our minds and get really creative now,” Caton said.

“Employees have to know that not only will they have that flexibility, but their job is going to be there if they have to take the day off.”

While it may be a few years before the labor market cycles in another direction, Maloch is focused on the immediate.

He wants to find talented, hard-working

“ ... COVID SHOWED US THINGS WE NEVER THOUGHT POSSIBLE WERE POSSIBLE. WE’VE GOT TO OPEN OUR MINDS AND GET REALLY CREATIVE NOW.” 239,000 compared to 205,000 a year earlier.

Clearly, hiring is falling well behind the number of openings.

Add to the mix that layoffs and discharges in the financial services sector was at a 5-year low in 2021 at 6.1%, indicating that the banking industry is in a period of keeping staff not cutting it loose.

Caton, the HR consultant, said the workforce was deeply affected by the COVID-19 pandemic, but it is changing in ways beyond the pandemic’s effect. For instance, she observed that for some families there are four

employees that are looking for the value proposition he’s offering. At the end of the day, banking isn’t about numbers, it’s about your employees.

“Even with digital delivery, with what’s going to happen with cryptocurrency, banking is still a people business,” he said.

“You compete to some extent on the rates for deposits or loans, but taking care of the customer is still the driving force and we need people who want to help others.

When a bank has one of those, you want to keep them.”

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Recent Developments

AT T H E F D I C AN INTERVIEW WITH FORMER FDIC BOARD MEMBER AND MISSISSIPPI BANKER JOE NEELY

Courtesy of Mississippi Bankers Association

T

he Federal Deposit Insurance Corporation (FDIC) is an independent agency created by Congress to maintain stability and public confidence in the nation's banking system by insuring bank deposits. It has served this function since its creation in 1933, in a purposely designed, balanced, non-partisan manner. However, in December, some members of the Board of Directors bypassed the normal agenda and staff vetting procedures in an unprecedented move that seems to be politically motivated.

PHOTO: Joe Neely, former FDIC board member, a state Commissioner of Banking and Consumer Finance, retired Chief Executive at First National Bankers Bank, and currently principal of Neely and Associates, LLC. Photo courtesy of Mississippi Bankers Association

These actions led to the FDIC Chair’s abrupt resignation and have led some to question the remaining leadership’s objectiveness, including Mississippi’s own former FDIC board member, Joe Neely. He is a former career banker, a state Commissioner of Banking and Consumer Finance, retired Chief Executive at First National Bankers Bank, and currently principal of Neely and Associates, LLC, a banking consulting entity. Neely’s broad banking experience including his time on the FDIC board gives him unique knowledge of this situation. MBA considers his perspectives as informative to bankers in order to raise their awareness of recent developments and the current environment at the FDIC.

FDIC BACKGROUND 101 The FDIC is governed by a five-person Board of Directors that includes the Comptroller of the

Currency and the Director of the Consumer Financial Protection Bureau, and three independent FDIC Directors all of whom are appointed by the President and then confirmed by the Senate. Each board member must meet certain statutory requirements. For example, one must have state bank supervisory experience.

The number and composition of board seats has varied somewhat due to changes made by Congress over the almost 90 years of the FDIC’s existence. Importantly, no more than three board members can be from the same political party.

Currently the Vice Chairman seat is vacant and, as of February 4, 2022, Chairman Jelena McWilliams’ resignation leaves the Chairman position officially vacant. FDIC Director Martin Gruenberg will likely function as Interim Chairman until which time the White House elects to nominate a Chairman and that nominee is subsequently confirmed by the Senate.

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Newly appointed member Chopra and longtime member Gruenberg acted unprecedentedly when they held a private, unscheduled vote to solicit public feedback on potential changes to the FDIC’s bank merger approval process.

As of publication, the board members are Martin Gruenberg, Director, FDIC; Michael Hsu, Director, Acting Comptroller of the Currency; and most recently appointed, Rohit Chopra, Director, CFPB. All three are considered Democrats and were appointed

by Democratic presidents, meaning there is currently no voice from the Republican party on the board.

WHAT HAPPENED IN DECEMBER Newly appointed member Chopra and longtime member Gruenberg acted unprecedentedly when they held a private, unscheduled vote to solicit public feedback on potential changes to the FDIC’s bank merger approval process. The FDIC Chair controls the agenda, and Chopra and Gruenberg attempted to override that protocol. McWilliams did not participate in the vote and cited the maneuver as improper and out of order. In an official statement, the FDIC said the action was not valid. This then led to debate over whether a majority of the board can force items onto the board agenda without the consent of the Chair.

“The FDIC has three responsibilities,” said Neely. “To effectively supervise state-chartered banks, to protect and preserve the integrity of the deposit insurance fund, and to provide for the orderly liquidation of failed institutions. For 88 years, the FDIC has successfully and efficiently accomplished this mission. And for that time, the Chairman has managed the agenda [of Board meetings]. Chopra and Gruenberg circumvented 88 years of 26

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process and protocol, as well as bypassed FDIC staff, with their attempt to publish their proposed rule for comment.”

Then, at a December 14 board meeting, McWilliams rejected a bid by Chopra to add a record of the vote to the FDIC’s official minutes.

Just two weeks later, McWilliams submitted her resignation letter. McWilliams had been FDIC Chair since 2018 and she was appointed for a term extending through 2024. Her resignation leaves key regulatory agency leadership positions for President Biden to fill, pending Senate confirmation. President Biden’s recent pick for Comptroller of the Currency, Saule Omarova, withdrew after facing bipartisan Senate opposition in December.

WHAT IT MEANS FOR THE FDIC NOW “I was very impressed with Chairman McWilliams, having had the opportunity to meet with her personally and privately. Her heart was in the job, and I have no doubt that she tried every day to do the right thing, especially given her background,” said Joe Neely. McWilliams immigrated to America from Yugoslavia in 1991, and her father lost all deposits in a bank failure.

Neely was appointed to the FDIC board of directors in 1996. He was a Republican appointed by President Bill Clinton (Democrat). It was a 5-person board at the time. However, the Office of Thrift Supervision Director held the seat now held by the CFPB Director.

“Since its founding, the board has worked collegially to achieve the Corporation’s mission by blending their combined expertise and experience while relying heavily upon the support of FDIC staff. As a board member, you must leave your personal or political agendas at the door. What has happened recently is a classic example of what happens when partisan politics enters the boardroom of what should be an independent agency,” he said.

Neely said that during his own 14-month confirmation process that no one once tried to influence his vote, including any Senator or the White House. He believes that appears to have changed now.

“Certain Directors are clearly carrying out the motives of their political supporters and the current administration. For example, Chopra initiated this pre-meditated coup less than three weeks after being sworn in as Director of CFPB,” he said.

He continued that he is also very concerned about the FDIC staff. “FDIC staff was bypassed in the drafting of the proposed bank merger document. As a result, it was filled with inaccuracies, omissions, and misrepresentations that would not have been present had the experienced people at the FDIC been allowed to research and prepare the document. No Director is intelligent, astute, or seasoned enough to make informed decisions on complex and technical matters without assistance and support of the capable and experienced staff at the FDIC,” he said.

Given the mission of the FDIC, Neely believes that every banker should be

“As a board member, you must leave your personal or political agendas at the door. What has happened recently is a classic example of what happens when partisan politics enters the boardroom of what should be an independent agency.”

concerned about what is currently going on within the board at FDIC. “Each pillar of the mission affects every deposit holder in America. The overwhelming majority of Americans are banking at FDIC regulated and insured banks, and you want a regulator who is not using political bias or an agenda when supervising the safety and soundness of that institution. You also want the deposit insurance fund protected and preserved without prejudice or bias toward any depositor. And, if a bank should fail, you want to see that the institution is liquidated and assumed in an orderly and independent process without favor to any depositor, claimant, or stakeholder.”

Neely handled one bank failure while he was the Mississippi Commissioner of Banking and Consumer Finance, and it’s an experience he said he’ll never forget. “It was the right decision. But no one was as nervous as I was walking into that bank.

However, because of the long-standing protocols and procedures in place established by the FDIC, everything was handled properly and efficiently. That’s the system that needs to be preserved. You don’t want partisan politics interfering with that process and skewing the balance somehow.”

WHAT CAN BE DONE “The FDIC cannot effectively operate with political influence. Congress will have to act to help restore balance to the board.

But for Congress to act, they must hear from American citizens and the banking industry,” said Neely.

Neely advocates for returning to the three-member board composition that existed prior to the passage of FIRREA in 1989 as a result of the savings and loan crisis. “The more agencies that are represented on the board, the more convoluted it becomes.” The CFPB did not even exist when the board structure was changed from 3 seats to 5 a few decades ago. The CFPB has a seat on the board as a result of the passage of Dodd-Frank in 2010, which eliminated the OTS and created the CFPB. According to Neely, that was the prime opportunity to return to a three-member board and internally refocus the FDIC’s mission.

Not only is it not balanced politically now, but the FDIC board does not accurately represent the banking industry or the depositor base across the country. “The FDIC shouldn’t make any policy decisions until there is a voice representing the minority political party on the board. There used to be a commitment to representation from both parties, and that commitment needs to be reestablished. And until this happens, it is eroding the board’s ability to meet its mission in a bipartisan manner,” he added.

He said it’s also worth pointing out that there is currently no community bank representation on the board. No present board member has experience supervising state-chartered banks, which is required by statute. Neely was the first FDIC Director to meet this newly adopted statutory requirement, having served as Mississippi’s Commissioner of Banking and Consumer Finance. The Conference of State Bank

Supervisors (CSBS), a national group dedicated to advancing state bank regulation and supervision, addressed this in a letter to Senate leadership on January 31.

According to Neely, “The FDIC is one of the sacred success story institutions in American history. It was created from a horrible situation, and it has done a wonderful job to ensure that situation doesn’t happen again.”

Neely said that countries all over the world use the FDIC as a model for insuring deposits within their institutions. While Neely was on the board, he worked with the nation of Korea to establish the Korea Deposit Insurance Corporation. “The entire free world beats a path to the FDIC’s door and envies the American system of depositor protection. Why would we allow that system to be compromised or placed in jeopardy?”

He is strongly advocating for bankers to get involved and reach out to Congress so the FDIC system can be preserved and proper balance on the board can be restored.

“We don’t need to tinker with the FDIC. We need to make sure this system prevails and performs its primary missions for the benefit of the American depositor and our country.”

Overall, Neely emphasized that the FDIC is still the strong institution it always has been, and the deposit insurance fund is sound. This invasion of partisan politics into FDIC governance is just a “crack in the veneer,” but one that needs attention immediately to maintain the ability of the FDIC to meet its mission for the benefit of the American public.

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PHOTO: JD Notae, the star Razorback basketball guard, tied his name to a NIL deal that quickly raised $45,000 for the Samaritan Community Center nonprofit.

Photo courtesy of University of Arkansas.

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BANKS POISED TO

Capitalize On Name, Image and Likeness Deals

by Roby Brock

N

ame, image and likeness – NIL, for short – is just in its infancy in Arkansas and across the country, but it may seem like it’s been around for decades if you’re listening to the radio, watching TV, or perusing social media.

The ads are prolific for businesses, and profitable for student-athletes, although few NIL contracts’ financial terms have been disclosed.

The NCAA laid out its initial NIL rules last July following a landmark U.S. Supreme Court decision, making the 2021-22 college athletics season the first with players in any sport to legally receive compensation outside of scholarships and cost-of-attendance stipends.

Many college athletes are successfully capitalizing on NIL deals, in large part due to good planning by universities and businesses.

JD Notae, the star Razorback basketball guard, tied his name to a NIL deal that quickly raised $45,000 for the

Samaritan Community Center nonprofit in Northwest Arkansas. The center provides food and other resources to families living in need, a cause important to Notae who grew up in a poor community.

You can hear other basketball, baseball and football players discussing the healthcare treatment they’ve received from a rehab center or the car options to be had at a local dealership.

Before Arkansas legislators passed the state’s regulatory law governing NIL, work was already underway. For instance, the University of Arkansas created a program called Flagship last summer to help Razorback athletes elevate their brands, social media influence and earning power.

It’s run through the Walton College of Business Office of Entrepreneurship and Innovation (OEI).

Not only does the program prepare student-athletes to plan for things such as taxes, but it teaches them how to negotiate financial arrangements and other aspects requiring an entrepreneurial mindset.

... the University of Arkansas created a program called Flagship last summer to help Razorback athletes elevate their brands, social media influence and earning power. It’s run through the Walton College of Business Office of Entrepreneurship and Innovation (OEI).

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“They are developing their brands ... and thinking about what sponsors they want to partner with instead of waiting for potential sponsors to come to them. That’s something they can carry with them to become entrepreneurs and innovators.”

Sarah Goforth

Executive Director Walton College of Business OEI Photo courtesy of University of Arkansas

“From an educational perspective, an exciting opportunity here is the skill of negotiation,” Sarah Goforth, executive director of the Walton OEI, said in a recent Northwest Arkansas Business Journal interview. “That is important in this case because it’s a new industry. There’s no fair market value. No one on either the business side of potential sponsors or the students’ side knows what their time is worth, what their autograph is worth, or what an appearance is worth. Negotiation is how you determine that, and doing that professionally, fairly and competitively is a fantastic skillset we’ve now been able to teach.”

Goforth said the Flagship program also aims to teach student-athletes to be proactive in seeking NIL deals versus waiting for someone to come to them.

“We’ve encouraged them to think about NIL in that context. What brands do you want to partner with for the long run? They are developing their brands around those things and thinking about what sponsors they want to partner with instead of waiting for potential sponsors to come to them. That’s something they can carry with them to become entrepreneurs and innovators,” she said.

In Conway, the Convention and Visitors Bureau signed NIL agreements with 30 University of Central Arkansas athletes to promote the central Arkansas city. The plan is to utilize the student athletes as ambassadors for the city’s “quality of place,” touting Conway’s amenities to residents and visitors.

There haven’t been any major NIL deals announced between athletes and any Arkansas banks, but financial institutions do have a history of aligning with college sports brands. It’s likely just a matter of time.

Banks can be found supporting (and marketing) at major football and basketball stadiums and arenas across the state. Arkansas State University boasts Centennial Stadium for football and First National Bank Arena for basketball. Harding University’s football team plays in First Security Stadium. You get the drift.

Simmons Bank has been active on a number of athletic fronts. The Pine Bluff-based financial institution anchors Simmons Bank field at the hometown stadium for the University of Arkansas Pine Bluff. It is in the process of securing the naming rights to War Memorial Stadium’s football field in Little Rock as well as Liberty Memorial Stadium in Memphis, 30

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home of the University of Memphis football team.

In December, Simmons Bank announced a multi-university initiative with 10 colleges and universities to be the presenting sponsor of women’s athletics. The 10 schools are Arkansas State University, Oklahoma State University, SMU, TCU, University of Arkansas Pine Bluff, University of Arkansas at Little Rock, University of Central Arkansas, University of Memphis, University of Missouri and Vanderbilt University.

The deal goes far beyond naming rights and brand marketing for the bank.

Simmons said the heart of the sponsorship is to emphasize customized programming and enhanced career opportunities for female student-athletes.

The bank is collaborating with each university – not the individual athletes – to create distinct programs ranging from financial education curriculum and leadership training to mentoring, internship programs and women-in-business development initiatives – which are aspects of some NIL deals. The ulterior motive is more than just naming rights and sponsor mentions during athletic events; the bank hopes to also diversify its

PHOTOS: (left) Simmons Bank will be the presenting sponsor of women’s athletics at 10 colleges and universities. (above) The Pine Bluff-based financial institution anchors Simmons Bank field at the hometown stadium for the University of Arkansas Pine Bluff.

Photo courtesy of UA Pine Bluff.

workforce by identifying strong female future bankers.

The partnerships are believed to be the first-of-its-kind corporate sponsorship across multiple schools and encompassing every team within each university's women's athletic program.

"The opportunity to partner with leading universities across our footprint to provide financial support while also developing programs to further enhance the qualities female student-athletes gain through competition is an incredible honor for our organization," said George A. Makris, Jr., chairman and CEO of Simmons Bank.

"Sports teach intangible leadership skills that can't necessarily be taught in the classroom while also building characteristics that include a strong work ethic, the value of teamwork and determination to see projects through completion - traits that readily translate from the sports world to the corporate world where we all play from the same tees," added Makris. " We applaud the talent and sportsmanship of these young women and believe our partnership with their universities will position them for even greater success in the future."

In the lead-up to the deal, Simmons utilized a global study of male and female executives conducted by EY and espnW between 2013 and 2016. It showed there is a clear correlation between athletic and business success. Some of the results included: • 94% of women executives have a background in sport and over half participated at university levels; • 80% of women Fortune 500 executives had played competitive sports;

• 74% of all executives believed playing sports can help to accelerate a woman's career; and

• 61% of the women executives who responded believed playing sports contributed positively to their career success and advancement.

The deal goes far beyond naming rights and brand marketing for the bank. Simmons said the heart of the sponsorship is to emphasize customized programming and enhanced career opportunities for female student-athletes.

"People are passionate about sports and partnerships like this give us an opportunity to connect with our customers on a more personal level while supporting the communities we serve," said Elizabeth Machen, executive vice president of marketing and communications at Simmons Bank. "Sports are also associated with values that perfectly align with the culture cornerstones at Simmons Bank – ‘better together, integrity, passion, high performance and pursue growth.’ We believe a sponsorship at this level allows Simmons Bank to make a real difference for female student-athletes, with programming that supports young women not only as rising athletes, but also as future business professionals and community leaders."

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Overdraft

OVER

by Katie Harrison

O

verdraft services are a standard banking product. Life happens, and thankfully, most banks offer an

overdraft product to come to the rescue when you are on vacation and forgot to do a savings transfer, or transpose numbers when balancing your checkbook. The end of 2021 came with a cautionary tale for financial institutions from regulators: Overhaul your overdraft services or potentially face enhanced scrutiny.

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HISTORY This is not the first time the Consumer Financial Protection Bureau (CFPB) has conducted research related to overdraft programs. Shortly after its creation in 2011, the CFPB published a semiannual report in 2012 that highlighted the pitfalls and consumer woes related to account maintenance and overdraft programs. The report revealed general consumer challenges with financial services

H AU L but specifically discussed consumer confusion concerning overdraft programs, alluding to complex parameters.

In recent years, there would be an enforcement action here or there related to overdraft fees. Many of these actions stemmed not from the products themselves but how consumers were sold or enrolled for participation in them. More recently, in 2020, TD Bank was found to be in violation of Regulation E as it related to overdraft fees for ATM and

one-time debit card transactions and ordered to pay $112 million in fees. In 2018, Minnesota-based TCF National Bank was in hot water for the same type of practices and was assessed $28 million in fees.

REGULATOR RESEARCH The CFPB conducted research using call report data to determine what impact overdraft and insufficient fees had on bank

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revenue. It primarily looked at two data points: 1) Overdraft/NSF fee reliance since 2015 2) Checking account overdraft at financial institutions served by core processors The first data point showed institutions with more than $1 billion in assets totaled $11.97 billion collectively in fees in 2019.

Overall market revenue for these fees was $15.47 billion in 2019. The apparent problematic statistic for advocacy groups and regulators is that overdraft and nonsufficient funds fees account for about two-thirds of fee revenue for institutions, making banks heavily reliant on this revenue. The second data point looked at core processors and their data for smaller institutions, primarily data for 2014. This research found 92.9 percent of smaller banks and 60.9 percent of credit unions had an overdraft program with 13 to 19 percent lower fees than large banks.

The first data point showed institutions with more than $1 BILLION in assets totaled $11.97 BILLION collectively in fees in 2019. Overall market revenue for these fees was $15.47 BILLION in 2019.

HERE IS A QUICK SNAPSHOT OF SOME RECENT CHANGES AT LARGE INSTITUTIONS: A L LY

BANK OF AMERICA

No more overdraft fees

Overdraft fee reduced from $35 to $10 on debit card purchases with insufficient balances Insufficient (aka NSF) fees eliminated entirely

C A P I TA L O N E

J. P. M O R G A N C H A S E

Complete eliminiation of all overdraft and NSF fees

No overdraft fee until account overdrawn at least $50; No fees assessed until after a full day to restore overdrawn balances Allow access to direct deposit up to two business days early No NSF Fees

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RESEARCH REACTIONS On December 1, 2021, CFPB Director Rohit Chopra published prepared comments in conjunction with the published CFPB research. One comment emphasized that instead of being paid (in interest) for banks holding consumers’ money, consumers now pay large banks for this privilege, primarily through account service charges like overdraft fees. Chopra went on to liken an overdraft fee to interest paid on a short-term loan, using the example of a consumer being charged a $34 daily fee for a day or two for the bank covering the small negative balance in their deposit account, and how that would equate to an annual percentage rate (APR) of more than 10,000 percent on a loan.

Chopra also said CFPB bank examiners will prioritize examinations of banks that are heavily reliant on overdraft fees, likely focusing again on call report data for this determination. “Financial institutions that have a higher share of frequent overdrafters or a higher average fee burden for overdrafting should expect us to be paying them close supervisory attention. Ultimately, we plan to inform institutions on where they stand relative to their peers with overdraft. We believe sharing that information will increase transparency and help against the race to the bottom we have seen in this market.”

INDUSTRY RESPONSE As a response to the CFPB’s claim to enhanced scrutiny into overdraft-related products, multiple large banks have begun slashing overdraft and insufficient fees or have drastically overhauled their overdraft products with more consumer-beneficial features.

... using the example of a consumer being charged a $34 DAILY FEE for a day or two for the bank covering the small negative balance in their deposit account, and how that would equate to an annual percentage rate (APR) of more than 10,000 PERCENT on a loan.

Cutting fees in these programs may be more of a challenge for smaller institutions that do not have the diversified revenue streams that larger banks have. As your institution reviews its programs and procedures regarding overdraft protection and handling of insufficient funds, bear in mind the consumer protection regulations that may be applicable:  Regulation B – Equal Credit Opportunity Act  Regulation E – Electronic Fund Transfer Act  Regulation V – Fair Credit Reporting Act  Regulation Z – Truth in Lending Act  Regulation DD – Truth in Savings Act  Third-Party Oversight  Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) This article is for general information purposes only and is not to be considered as legal advice. This information was written by qualified, experienced BKD professionals, but applying this information to your particular situation requires careful consideration of your specific facts and circumstances. Consult your BKD advisor or legal counsel before acting on any matter covered in this update.

ABOUT THE AUTHOR Katie Harrison is a member of BKD National Financial Services Group with more than a decade of banking and compliance experience, years of practicing law in the business sector, and six years of compliance consulting.

Consumer Financial Protection Bureau Announces Settlements with TD Bank for Illegal Overdraft Practices, August 20, 2020, https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-settlement-td-bank-illegal-overdraft-practices/. i

Bureau of Consumer Financial Protection Settles With TCF National Bank, July 20, 2018, https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-settles-tcf-national-bank/. ii

CFPB Research Shows Banks’ Deep Dependence on Overdraft Fees, December 1, 2021, https://www.consumerfinance.gov/about-us/newsroom/cfpb-research-shows-banksdeep-dependence-on-overdraft-fees/. iii

Prepared Remarks of CFPB Director Rohit Chopra on the Overdraft Press Call, December 1, 2021, https://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-cfpb-director-rohit-chopra-overdraft-press-call/. iv

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INDUSTRY U P DAT E S

FEDER AL RESERVE TO EXPLORE

Benefits and Risks of

A C E NTR A L B A N K D I G ITA L C U R R E N CY

by Carl White

R

ecently, the Federal Reserve System released a discussion paper titled, Money and Payments: The US Dollar in the Age of Digital Transformation. The paper does not make an argument for or

against a Central Bank Digital Currency, or CBDC; rather, it offers some of the Federal Reserve’s views on how a CBDC might be designed and outlines several factors that the Federal Reserve will weigh before making any decision on a U.S. CBDC.

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The Federal Reserve has long believed it can achieve better policy outcomes when it engages a wide range of stakeholders in deliberating different policy choices. The choice of whether to launch a CBDC is no different, and the discussion paper poses 22 questions to the public on the potential benefits and risks of a CBDC. Responses are requested by May 20, 2022, and may be submitted at the following link: https://www.federalreserve.gov/apps/forms/cbdc. The questions for which the Federal Reserve is seeking public comment are:

... the discussion paper poses 22 questions to the public on the potential benefits and risks of a CBDC. Responses are requested

by May 20, 2022, and may be submitted at the following link: https://www.federalreserve.gov/apps/forms/cbdc.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

What additional potential benefits, policy considerations, or risks of a CBDC may exist that have not been raised in this paper?

Could some or all of the potential benefits of a CBDC be better achieved in a different way?

Could a CBDC affect financial inclusion? Would the net effect be positive or negative for inclusion?

How might a U.S. CBDC affect the Federal Reserve’s ability to effectively implement monetary policy in the pursuit of its maximum-employment and price-stability goals?

How could a CBDC affect financial stability? Would the net effect be positive or negative for stability?

Could a CBDC adversely affect the financial sector? How might a CBDC affect the financial sector differently from stable coins or other nonbank money?

What tools could be considered to mitigate any adverse impact of CBDC on the financial sector? Would some of these tools diminish the potential benefits of a CBDC? If cash usage declines, is it important to preserve the general public’s access to a form of central bank money that can be used widely for payments?

How might domestic and cross-border digital payments evolve in the absence of a U.S. CBDC? How should decisions by other large economy nations to issue CBDCs influence the decision whether the United States should do so?

Are there additional ways to manage potential risks associated with CBDC that were not raised in this paper?

How could a CBDC provide privacy to consumers without providing complete anonymity and facilitating illicit financial activity?

How could a CBDC be designed to foster operational and cyber resiliency? What operational or cyber risks might be unavoidable?

Should a CBDC be legal tender?

Should a CBDC pay interest? If so, why and how? If not, why not?

Should the amount of CBDC held by a single end user be subject to quantity limits?

What types of firms should serve as intermediaries for CBDC? What should be the role and regulatory structure for these intermediaries?

Should a CBDC have “offline” capabilities? If so, how might that be achieved?

19. Should a CBDC be designed to maximize ease of use and acceptance at the point of sale? If so, how?

20. How could a CBDC be designed to achieve transferability across multiple payment platforms? Would new technology or technical standards be needed?

21. How might future technological innovations affect design and policy choices related to CBDC? 22. Are there additional design principles that should be considered? Are there tradeoffs around any of the identified design principles, especially in trying to achieve the potential benefits of a CBDC? As described in the paper, the Federal Reserve does “not intend to proceed” with launching a CBDC without support from Congress via a “specific authorizing law” and will only take further steps if “research points to benefits for households, businesses and the economy overall that exceed the downside risks and indicates that a CBDC is superior to alternative methods.”

The paper also noted that the Federal Reserve is “committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them.”

We’ve seen technology significantly transform the business of banking in recent years—and while I believe that technology remains the key to the future of community banking—I also believe that significant changes to our banking and payments systems should only be made after significant public dialogue and with broad public support.

I encourage all Arkansas banks to respond to the 22-question survey and add their voices to this national conversation on CBDCs.

ABOUTTHE AUTHOR Carl White has 32 years of experience in the Supervision Division of the Federal Reserve Bank of St. Louis. He is currently senior vice president of the Supervision, Credit and Learning Division.

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INDUSTRY U P DAT E S

ECORA

Gaining Momentum in Washington D.C.

by Randy Scott

R

ecently, a group of 10 Arkansas bankers attended the American Bankers Association Washington D.C. summit. The summit al-

lowed us to learn about issues affecting the banking industry and allowed us to share those concerns with our Congressional representatives.

I am proud to report that ECORA made American Bankers Association’s top six list of items to discuss with all legislators nationwide. The Enhancing Credit Opportunities in Rural America Act (H.R. 1977/ S. 2202), also known as ECORA, will help

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sustain and grow Rural America by lowering the cost for farmers financing agricultural real estate and rural homeowners seeking credit for housing in small rural communities of 2,500 or less.

ECORA has been introduced in the House of Representatives by Representatives Ron Kind (D-WI) and Randy Feenstra (R-IA).

In the Senate, the legislation has been introduced by Senators Jerry Moran (R-KS), John Boozman (R-AR), Mike Rounds (RSD), Kevin Cramer (R-ND) and Roger Marshall (R-KS).

ECORA removes the taxation on income from farm real estate loans and rural home mortgage loans in rural areas and

The Enhancing Credit Opportunities in Rural America Act ... will help sustain and grow Rural America by lowering the cost for farmers financing agricultural real estate and rural homeowners seeking credit for housing in small rural communities of 2,500 or less.

towns of less than 2,500 made by Federal Deposit Insurance Corporation insured financial institutions. By removing this taxation, the cost to make these loans will be reduced, and the savings will be passed on to farmers, ranchers, and rural homeowners. It is estimated ECORA could reduce the average interest rate on a farm and ranch real estate loan by 21%.

ECORA offers a simple solution to help farmers, ranchers and rural homeowners without creating new government payments or programs.

The Kansas Bankers Association was the first to push for ECORA with the support of Senator Moran. The Arkansas

Bankers Association and Senator Boozman were quick to see the need for ECORA in Arkansas. Currently, we have Senator Tom Cotton, Senator John Boozman, Congressman Bruce Westerman and Congressman Steve Womack on board to support ECORA. Now, it has become a nationwide issue with all 50 bankers associations talking to their legislators.

This bill would allow FDIC insured banks to offer lower interest rates to all loans secured with farmland and put us on a level playing field with Farm Credit, which pays no taxes on any of their income. Agriculture is one of the largest industries in Arkansas and this would be

This bill would allow FDIC insured banks to offer lower interest rates to all loans secured with farmland and put us on a level playing field with Farm Credit, which pays no taxes on any of their income.

a huge win for the agriculture industry as well as rural Arkansas communities.

I would encourage each of you to talk to your U.S. Representatives and Senators to tell them the importance this bill would have on rural Arkansas. Also at a grassroots level, talk to your county Farm Bureau associations and other ag related trade groups and let them know how ECORA can help save rural America.

This is not a piece of legislation for the banking industry. This is a piece of legislation for the agriculture industry and rural America. Rural America needs community banks and community banks need agriculture loans.

ABOUT THE AUTHOR Randy Scott is President and CEO of Farmers Bank & Trust in Blytheville. He has been in banking for 30 years.

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INDUSTRY U P DAT E S

RANSOMWARE Taking Your Data Hostage

by Daniel Baker

H

ave you heard the age-old joke about a man and a stick? A man walks into a bank waving a stick

in the air. Confused, the teller queried him with the standard bank greeting – to which the man promptly replied, “Quick! Give me all your money! This is a stickup!”.

The first time I heard this joke I groaned. Each time since then has caused me to roll my eyes and wish we had some better banking jokes to rely on. Although we jest about bank robberies and tell horror stories of hostage situations with the fascination of late-night campfire ghost stories, criminals have found ever new ways to “rob” banks, businesses, and the average consumer. Historically, these have caused potential losses totaling in the billions.

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In some cases, criminals find it easier to gain access to the bank's system with a type of malicious software (“Malware”) and threaten to publish or block access to the data or computer system, by encrypting it, unless the victim pays a ransom fee to the attacker.

Usually, the ransom demand would come with some sort of deadline. If the victim doesn’t pay in time, the data is gone forever. This specific type of attack is called Ransomware.

FINCEN RANSOMWARE TRENDS IN BSA – JANUARY 2021 AND JUNE 2021 Since late 2020, there has been a steady and substantial increase in the severity of ransomware attacks against critical U.S. infrastructure.

“Cybersecurity and Infrastructure Security Agency (“CISA”) offers a one-stop shop for government resources containing alerts, guides, fact sheets, and training all focused on reducing the risk of ransomware.”

Earlier this year, ransomware attacks have been the direct cause of gasoline shortages and negatively impacted many different markets including, manufacturing, energy, health care, and food supply chain in the U.S. and globally. Janet L. Yellen, Treasury Secretary, noted, “Ransomware and cyber-attacks are victimizing businesses large and small across America and are a direct threat to our economy.” (“Treasury Takes Robust Actions to Counter Ransomware,” U.S. Department of the Treasury, 21 Sept. 2021, https://home. treasury.gov/news/press-releases/jy0364.)

The total U.S. dollar value for ransomware-related transactions reported in SARs filed during the first six months of 2021 exceeded that total amount of any previous year – since 2011. In the first six months of 2021 alone, FinCEN identified $590 million in ransomware-related SARs. This is a 42% increase compared to a total of $416 million for all of 2020. If this trend continues throughout the rest of 2021, SARs filed in 2021, relating to ransomware, will have a higher transaction value than similar SARs filed in the past 10 years – combined.

This startling statistic not only displays the potential drastic increase of ransomware attacks within the past year but also increased awareness and reporting of ransomware attacks. Over the course of the review, SAR data reported a mean average of 76 ransomware-related transactions per month over the 6 months. The median average payment amount for each of these transactions was $102,273.

DETECTION, MITIGATION, AND REPORTING Bank’s play a vital role in protecting the U.S. markets from ransomware-related threats through BSA compliance.

Financial institutions should have policies and procedures in place that will help them determine if a SAR filing is required, or appropriate when dealing with a ransomware incident. These incidents not only

include situations where customers and businesses are victims of ransomware but also when the financial institution itself is a victim of a ransomware attack.

Under 31 USC §5318(g)(3), “Any financial institution that makes a voluntary disclosure of any possible violation of law or regulation to a government agency or makes a disclosure pursuant to this subsection or any other authority, and any director, officer, employee, or agent of such institution who makes, or requires another to make any such disclosure, shall not be liable to any person under any law or regulation of the United States, any constitution, law, or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including an arbitration agreement), for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in the disclosure.” This “Safe Harbor” creates an environment that protects the bank for mandatory AND discretionary SARs.

WHAT SHOULD THE BANK DO ABOUT IT? With how serious cybersecurity is, FinCEN recommends that banks add four specific actions to their BSA processes.

First, the bank should add indicators of compromise (“IOC”), or signatures/ artifacts observed on a network that likely indicate a computer or network intrusion, from threat data sources into their intrusion detection systems and security alert systems to enable active blocking or reporting of suspected malicious activity. Second, the bank should immediately contact law enforcement regarding any identified activity related to ransomware. In addition to law enforcement, the bank should contact OFAC if there is reason to suspect the cyber actor may be sanctioned or otherwise have a sanction nexus. Third, the bank should report suspicious activity to FinCEN,

calling specific attention to “Cyber Event Indicators”, including IOCs (email address, file names, domains, IP address, etc…), through effective SAR and SAR narratives.

Fourth, the bank should regularly review advisories and updates issued by regulators regarding ransomware, such as the FinCEN “Advisory on Ransomware and the use of the Financial System to Facilitate Ransom Payments” issued in October 2020.

In addition to preventative measures that the bank can, and should, take, the bank should also establish best practices of what to do in the event that they, or their customers, are subject to a ransomware attack. Multiple tools have been developed to increase awareness and provide assistance to financial institutions as they develop, rework, and maintain their ransomware procedures.

Cybersecurity and Infrastructure Security Agency (“CISA”) offers a one-stop shop for government resources containing alerts, guides, fact sheets, and training all focused on reducing the risk of ransomware. This resource can be found at: StopRansomware. gov. You can also access the multi-state information sharing and analysis center’s Ransomware Guide here.

CONCLUSION Ransomware is a serious issue. The substantial increase in ransomware attacks in the first six months of 2021 has shown that banks, consumers, and businesses are all exposed to these attacks. To help minimize risks, banks must not only establish policies and procedures that will help to identify the transactions involved, but also establish a process of reporting relevant transactions and activities. Only by dragging ransomware to the forefront of our awareness, can we work to minimize the lasting impact it may cause.

ABOUT THE AUTHOR Daniel Baker serves C/A as a Compliance Officer. He attended Michigan State University College of Law. During law school, he worked in a variety of compliance and legal positions for software companies, and Allpine Title. He also holds a Bachelor of Science in Business Management from Utah Valley University.

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FIRST SECURITY BANK Rogers Group 2

DUNCAN BELLINGRATH VICE PRESIDENT SIMMONS BANK Hot Springs Group 3

LATRECIA BRANCH SECRETARY/TREASURER STONE BANK Little Rock Group 1

ELS COUNCIL MEMBERS ETHAN BARNES

AMBER MURPHY

CENTENNIAL BANK Hardy Group 1

FIRST FINANCIAL BANK El Dorado Group 3

AARON BELL

BETH PRESLEY

FIRST SECURITY BANK Jonesboro Group 1

ARVEST BANK Fort Smith Group 2

IAN BRYAN

TY TEAGUE

SIMMONS BANK Russellville Group 2

FIRST NATIONAL BANK Little Rock Group 1

TAMMY ENGLE ARVEST BANK Siloam Springs Group 2

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S E C T I O N

DEREK ECKELHOFF PRESIDENT

EMERGING LEADER

ELS EXECUTIVE COMMITTEE

NEWS & MOVES

STONE BANK PROMOTES

ORT, DAVIS INTO NEW ROLES Sarah Ort

Senior Vice President and Chief Legal Counsel

Jeremy Davis

President of the Farm Service Division

S

arah Ort has been promoted by Stone Bank to Senior Vice President and Chief Legal Counsel.

She had been Special Assets Manager for the bank.

Ort is a graduate of Arkansas State University and earned a Juris Doctorate degree from William H. Bowen School of Law at the University of Arkansas at Little Rock.

Jeremy Davis has been promoted to President of the Farm Service Division (FSA) of Stone Bank. He has served as an Agricultural Loan Officer for the bank since 2012.

Prior to joining Stone Bank, Davis had served as a consumer and commercial lender with another Mountain View bank and a Poultry Field Service

Technician for Tyson Foods.

His duties will include Management of the portfolio that includes all areas of government-guaranteed agricultural loans with a specialized focus on Farm Service Agency (FSA) guaranteed loans. He earned a Bachelor of Science in Agricultural Business from Arkansas Tech University.

John Michael Russ has also joined Stone Bank as a BSA (Bank Secrecy Act) Assistant, part of the Risk Management team. He is a graduate of the University of Arkansas at Little Rock and holds a degree in finance.

Stone Bank has offices in Little Rock, Mountain View, Harrison, White Hall, DeWitt and Gillett.

ST. LOUIS FED LITTLE ROCK BRANCH

ANNOUNCES BOARD OF DIRECTORS CHANGES

T

he Federal Reserve Bank of St. Louis announced the following changes to its Little Rock Branch board of directors, effective Jan. 1: Millie A. Ward, president of Stone Ward in Little Rock, has been elected board chair for 2022 by the Branch board of directors. She has served on the board since 2017.

Jamie J. Henry, vice president of finance, Emerging Payments at Walmart Inc. in Bentonville, has been reappointed by the Federal Reserve Board of Governors to a three-year term.

Jeff Lynch, president and CEO of Eagle Bank & Trust Co. in Little Rock, has been reappointed by the St. Louis Fed board of directors to a three-year term.

Also serving on the board are: • Christopher B. Hegi, president and CEO of First Financial Bank in El Dorado; • Vickie D. Judy, chief financial officer and vice president at America’s Car-Mart Inc. in Rogers; • Vincent G. Logan, chief financial officer and chief investment officer at the Native American Agriculture Fund in Fayetteville; and • Darrin Williams, CEO of Southern Bancorp Inc. in Little Rock.

Members of the St. Louis Fed’s board of directors and those of its branch boards in Little Rock, Louisville, Ky., and Memphis, Tenn., are familiar with the economic and credit conditions of their respective regions. Their observations—along with the economic data and information gathered and analyzed by St. Louis Fed staff—help ensure that local conditions are represented in Federal Open Market Committee deliberations in Washington, D.C.

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NEWS & MOVES ARVEST BANK NAMES

SCOTT COPELAND TO LEAD IN MOUNTAIN HOME

A

rvest Bank named Scott Copeland community bank president in Mountain Home. Copeland has more than 14 years of industry experience, most recently serving as market president for another financial institution.

“Scott is deeply-rooted in the Mountain Home community and well-respected as a banker, civic leader, neighbor and friend,” said Layton Lee, loan manager for Arvest in North Central Arkansas. “We are thrilled he is bringing his talent, expertise and passion to our Mountain Hometeam.”

Copeland earned a bachelor’s degree in corporate

finance from Arkansas State University and completed both the Barrett School of Banking’s three-year graduate school and its commercial lending program.

Copeland has been a member of the Food Bank of North Central Arkansas’ board of directors since 2018 and currently serves as its finance chairperson.

He also is a past board president of the Mountain Home Area Chamber of Commerce and has served on the board of directors for the Twin Lakes Community Foundation, Twin Lakes Future Fund and Baxter Regional Medical Center’s Peitz Cancer Support House, among other civic endeavors.

“SCOTT IS DEEPLYROOTED IN THE MOUNTAIN HOME COMMUNITY AND WELL-RESPECTED AS A BANKER, CIVIC LEADER, NEIGHBOR AND FRIEND.”

SAM WALLS III NAMED

CEO OF ARKANSAS CAPITAL CORP.

L

ongtime Arkansas Capital Corp. executive Sam Walls III has been named CEO of the financial nonprofit effective Jan. 1, 2022.

Walls has worked as Arkansas Capital’s president and COO since 2015. He joined Arkansas Capital in February 2003 as vice president and later served as senior vice president for Arkansas Capital’s affiliate companies.

Walls replaces Rush Deacon, who was CEO from July 2013 through December 2021. Deacon is continuing with the company as managing director

of Pine State Regional Center, a subsidiary of Arkansas Capital approved by the United States (U.S.) Department of Homeland Security for project finance activities through the EB-5 Immigrant Investor Program.

Arkansas Capital is a nonprofit finance company formed in 1957 by Winthrop Rockefeller and other business leaders in Arkansas who saw the need to transform the state from an agricultural-dominated economy to a more diverse commercial economy.

The financial firm partners with commercial banks, small businesses, and others from the private and public sectors to maximize its lending and project finance products.

Walls’ father, Sam Walls II, was a former CEO of the organization.

SOUTHERN BANCORP TO ACQUIRE

PREMIER BANK OF ARKANSAS

T

he Federal Reserve Bank of St. Louis announced the following changes to its Little Rock Branch board of directors, effective Jan. 1: Southern Bancorp, Inc., announced it will acquire FCB Financial Services, Inc. and its wholly-owned subsidiary, Premier Bank of Arkansas.

Terms of the deal were not disclosed.

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Southern Bancorp is a Community Development Financial Institution (CDFI) and holding company for Southern Bancorp Bank, a $2 billion asset bank. Premier Bank of Arkansas is a $200 million asset bank with three branches operating in Marion, West Memphis, and Jonesboro.

The acquisition, which is subject to regulatory and shareholder approval, is expected to close in the second quarter of 2022. It will increase the number of Southern Bancorp locations across Arkansas and Mississippi to 54.

VETERAN BANKER BILL YEE

JOINS CITIZENS BANK AS SVP, LITTLE ROCK PRESIDENT

V

Bill Yee

SVP, Little Rock President

eteran banker Bill Yee is joining Citizens Bank as senior vice president and city president for the Little Rock market.

“Bill is a perfect fit for our bank, both in terms of culture and talent,” said Vernon Scott, EVP and regional president at Citizens Bank. “He is highly respected in the Little Rock community and the banking industry as a whole. Our customers and employees alike will enjoy working with him and will benefit from his expertise.”

Yee began his career as a commissioned senior bank examiner. He then entered commercial banking at Regions Bank and did long stints with Delta Trust & Bank and Simmons Bank.

Yee earned his undergraduate degree at the University of Arkansas in Fayetteville and was a graduate of the Southwest Graduate School of Banking at Southern Methodist University.

“BILL IS A PERFECT FIT FOR OUR BANK, BOTH IN TERMS OF CULTURE AND TALENT. OUR CUSTOMERS AND EMPLOYEES ALIKE WILL ENJOY WORKING WITH HIM AND WILL BENEFIT FROM HIS EXPERTISE.”

FARMERS AND MERCHANTS BANK

PROMOTES SARAH SALSBURY

T Sarah Salsbury

Private Banking Officer

he Board of Directors of Farmers and Merchants Bank and The Bank of Fayetteville promoted Sarah Salsbury to the role of Private Banking Officer. In her new position, Salsbury will provide concierge financial services to both private banking and wealth management clients, primarily in the Northwest market region.

Salsbury brings nine years of financial industry

experience to her new role. She has been employed with The Bank of Fayetteville for nearly five years, working in both retail banking and lending. Most recently, she worked as a commercial loan assistant.

Salsbury is a Northwest Arkansas native and an alumnus of Prairie Grove High School and the University of Arkansas Fort Smith, where she earned a degree in business leadership.

BANKERS ASSURANCE JOINS

BKD CPAs

B

ankers Assurance, a regulatory compliance consulting firm based in Little Rock, is joining BKD CPAs & Advisors, effective Feb. 28, 2022.

Founded in 2009, Bankers Assurance serves more than 75 financial institutions in Arkansas and surrounding states, ranging from smaller community banks to larger regional institutions. The merger with BKD will enhance BKD’s financial services offerings.

A staff of five, including Bankers Assurance founder Shaun Harms, are joining BKD as part of the firm’s Little Rock office.

“Bankers Assurance is very excited to join BKD,” Harms said. “The values and commitment to a high quality of work are very aligned between both organizations, and together we will continue providing a value-added service to our clients.

We look forward to being a continued resource to community banks in the many years to come.”

BKD has offices in Little Rock, Rogers and Fort Smith.

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NEWS & MOVES ARVEST BANK HIRES GOOGLE EXEC

TO LEAD DIGITAL TRANSFORMATION STRATEGY

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Laura Merling

Chief Transformation and Operations Officer

rvest Bank announced the hiring of Laura Merling as chief transformation and operations officer. She started the job in October and is based in North Carolina.

Merling joins Arvest from Google Cloud, where she was chief transformation officer and managing director. Before joining Google, she was the managing director and chief digital officer for Slalom, providing business and product strategy to multibillion-dollar companies in technology, transportation, energy, CPG, retail, healthcare and education.

She also worked as the chief digital officer for Collins Aerospace and was vice president of digital

products for Ford and AT&T. “I have spent my career helping companies deliver on transformation objectives leveraging technology across all areas of a business with an end goal of disrupting existing business models, improving customer experience and creating operational efficiency,” Merling said. “The financial services industry is at an intriguing inflection point. Arvest has embraced the change and is at a point where a programmatic approach to delivering business outcomes can make a significant impact on the journey to redefining community banking in a digital world; I’m excited to be a part of it.”

SIMMONS BANK TAPS PAUL LOWE TO HEAD NEW CORPORATE BANKING DIVISION, RODNEY HAWKINS TO CHIEF AUDIT EXEC

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immons Bank announced the creation of a new Corporate Banking Division that will be led

by Paul Lowe. He will serve as executive vice president of Corporate Banking and will report to Chief Banking Officer, Matt Reddin.

The Pine Bluff-based bank said the new unit will provide Simmons the ability to consolidate specialized lines of business loans aligning commercial and equipment finance, government and institutional banking, mortgage warehouse lending, commercial deposits, asset-based lending and structured real estate finance into a dedicated division.

With 20 years of experience in corporate and real estate banking at various institutions, Lowe most recently led as Simmons Bank’s Metro Division president for the Little Rock, Memphis and Nashville markets in 2020 and as Central Arkansas Division as market president in 2019.

Simmons Bank also announced that Rodney Hawkins has succeeded Johnny McCaleb as executive vice president and Chief Audit Executive. Hawkins joined Simmons Bank in 2021 with responsibility for the oversight, administration and implementation of

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Simmons Bank’s risk-based Internal Audit function. Hawkins has worked closely with former Chief Executive Auditor Johnny McCaleb as part of a designed transition. McCaleb will continue to lend his expertise in an advisory capacity before his planned retirement in December 2022.

“Johnny and Rodney have done a remarkable job working together over the past nine months to ensure a smooth changeover as part of this planned transition,” said George Makris, Jr., chairman and CEO of Simmons Bank. “With three decades of Fortune 500, public-company experience and a highly regarded track record, Rodney is well-positioned to lead our audit team and build upon the success that we have gained under Johnny’s leadership.”

Prior to joining Simmons Bank, Hawkins was the Chief Compliance Officer and vice president of Internal Audit at Windstream Communications responsible for all aspects of the compliance, internal audit, security and risk management functions. Earlier in his career, he held the position of vice president of Internal Audit at Time Warner Inc (serving as the Chief Audit Executive for its Turner Broadcasting, Time Warner Cable, HBO and AOL subsidiaries) and held various audit and advisory management positions in a big-four public accounting firm.

A certified public accountant, Hawkins earned a Bachelor of Business Administration degree in accounting, with honors, from the University of Georgia. He is a member of the Institute of Internal Auditors, the American Institute of Certified Public Accountants, serves on the Board of Director’s for the American Cancer Society (Arkansas) and is an External Advisory Board member for the University of Arkansas Sam M. Walton College’s Business Integrity Leadership Initiative.

FIRST COMMUNITY BANK HIRES

GREG KLOTT, BRANDON SCALLION

F Greg Klott

Vice President of Business Development and Lending

Brandon Scallion

Vice President, Commercial Loan Officer

irst Community Bank has announced the hiring of Greg Klott as vice president of business development and lending at their branch located at 1205 Highway 65 North in Harrison.

“I am excited to be a part of First Community Bank. Their leaders’ focus is on building relationships and excellent customer service. The culture that has been built by Mr. Dale Cole and his leadership team is one of family and community. After our initial meeting, I knew that I wanted to be a part of this organization,” said Klott.

Klott earned his bachelor’s degree in education from College of the Ozarks.

Brandon Scallion joins the bank as vice president, commercial loan officer at the financial institution’s location at 310 Highway 62 East in Mountain Home.

With 20 years of banking experience, Scallion will be responsible for producing a variety of commercial loans as well as generating and managing a portfolio of business relationships.

“I am excited to join the First Community Bank family,” said Scallion. “I look forward to working with my new colleagues and helping out in the community.”

Scallion earned his bachelor’s degree in finance from the University of Arkansas and his graduate degree with concentration in community bank management from Graduate School of Banking at Colorado. He successfully completed all of the bank examination training schools at the FDIC Seidman Center in Fairfax, Virginia.

“THE CULTURE THAT HAS BEEN BUILT BY MR. DALE COLE AND HIS LEADERSHIP TEAM IS ONE OF FAMILY AND COMMUNITY. AFTER OUR INITIAL MEETING, I KNEW THAT I WANTED TO BE A PART OF THIS ORGANIZATION. ”

STATE BANK DEPARTMENT HIRES

FOUR NEW EXAMINERS

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he Arkansas State Bank Department has hired four new Bank Examiners.

Lane Hardee graduated in 2016 earning a Business Administration Degree in Innovation and Entrepreneurship, from the University of Central Arkansas.

Hardee has prior work experience serving as a manager of retail operations for a private company. He will be working as a Commercial Examiner in the Little Rock office.

Reed Middleton graduated in 2021 with a Bachelor of Science in Finance with an emphasis in Financial Management, along with a triple minor in Business Management, History and Political Science from Arkansas State University.

Middleton will be working as a Commercial Examiner in the Jonesboro office of the department.

Patrick Seung, graduated in 2018 with a Bachelor of Business Administration in Management Information Systems from the University of Central Arkansas

and is working toward a Master of Business Administration degree.

Seung has prior work experience in providing Information Technology support for a private technology company. He will be working as an Information System Examiner in the Little Rock office.

Tanner Ballard graduated in 2017 with a Bachelor of Science in Finance, with a concentration in Financial Management from Arkansas State University. Ballard has banking experience and served as a Compliance Analyst with Centennial Bank. He will be working as a Commercial Examiner out of the Jonesboro office.

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NEWS & MOVES SIGNATURE BANK TO ADD LATINO BOARD MEMBERS, ADDS BRANCHES IN ROGERS, HARRISON AND JONESBORO From left:

Scott Sandlin, Adam Arroyos, Brant Ward and Francisco Herrero

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ayetteville-based Signature Bank of Arkansas is launching in Rogers with an effort to employ bilingual staff as it ramps efforts to better serve area Latinos. The initial market location is planned for downtown Rogers, and its staff of six to 10 will speak English and Spanish.

Tori Bogner, vice president/marketing director of Signature Bank, said the planned Rogers location should be considered the headquarters for the new market as the bank works to add more bilingual staff in other area locations.

Recently, the bank partnered with Fayetteville-based professional development firm Serve2Perform in an initiative to prepare and place eight to 12 Latino members on the bank’s market advisory boards. The LatinXNA Board Placement Initiative is one of the first initiatives undertaken by Francisco Herrero, president for multicultural banking for Signature Bank, who started in the role in December.

Brant Ward, chief operating officer for Signature Bank, noted the bank also is opening locations in Harrison and Jonesboro.

HOME BANCSHARES ADDS TO MARINE LOAN PORTFOLIO IN $238 MILLION DEAL

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ome BancShares completed its purchase of the marine loan portfolio of Utah-based LendingClub Bank. Terms of the transaction totaled $238 million in acquired yacht loans.

The portfolio of loans will be housed within Home BancShares’ Centennial Shore Premier Finance (SPF) division, which will be responsible for servicing the acquired loan portfolio and originating new loan production.

SPF is a specialized marine lending division of Centennial Bank with a national platform for dealership floor plan and retail consumer marine loans. Upon completion of the acquisition, SPF will have total loans

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receivable of approximately $1.13 billion.

“The marine business has continued to be a strong segment for Centennial Bank,” said Home BancShares Chairman, CEO and President John Allison. “This opportunity allows us to acquire a quality portfolio that complements our marine finance division.”

Home BancShares beefed up its marine loan portfolio in February 2020 when it acquired LHFinance, the marine lending division of Bridgeport, Connecticut based People’s United Bank. At that time, Home BancShares acquired $405 million in marine loans.

THE MARINE BUSINESS HAS CONTINUED TO BE A STRONG SEGMENT FOR CENTENNIAL BANK. THIS OPPORTUNITY ALLOWS US TO ACQUIRE A QUALITY PORTFOLIO THAT COMPLEMENTS OUR MARINE FINANCE DIVISION.

JAMES ROUSE JOINS ARKANSAS SECURITIES DEPARTMENT

T James Rouse

Investor Education Director

he Arkansas Securities Department (ASD) said that James Rouse has joined the department as Investor Education Director.

Rouse has more than 25 years of experience in the securities industry, serving as an investment banker and financial advisor with Stephens Inc., Merrill Lynch, USBank Corp Investments and Valic Financial Advisors.

He will manage the ASD Investor Education Program, which is a public education initiative to in-

form Arkansas citizens about investing and securities.

This program is available to community, civic and senior groups.

Rouse is a former University of Arkansas football player and NFL running back. He also has volunteer experience in many local charitable organizations, including Arkansas Baptist College Foundation Board, Little Rock Chamber of Commerce Leadership Class, and City of Little Rock Advisory Team.

ARVEST WEALTH MANAGEMENT NEARS $16 BILLION IN ASSETS UNDER MANAGEMENT

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rvest Wealth Management (AWM), a subsidiary of Fayetteville-chartered Arvest Bank, had $15.9 billion in assets under management at the end of 2021.

That’s up from more than $14.4 billion at the end of 2020, more than $13 billion at the end of 2019 and more than $12 billion as of Dec. 31, 2018. Revenues were up from $69 million in 2020 to $87 million in 2021.

Later this year, Arvest Wealth Management will launch a new digital platform to engage with a new demographic of investors.

“We are excited because we want to provide our advisers the digital tools they need to engage with customers more effectively by embracing innovative digital channels that many consumers are expecting,” said Arvest Wealth Management president and CEO Jim King. “We are committed to reaching those who are in the early stages of investing and are more inclined to prefer digital services in their daily lives.”

BANK OZK’S SUSAN BLAIR

JOINS DDF CONSULTING

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usan Blair, who has a 40-year career in bank marketing and communications, has joined DD&F Consulting Group in Little Rock as a principal of the firm, the company announced Monday ( Jan. 24).

Blair will provide a wide range of marketing and communication services to DD&F clients, including marketing strategy and planning, product and pricing analysis, mergers and acquisition integration, public relations and media relations, product development and

implementation, customer onboarding and retention strategies, and rebranding.

Most recently, Blair retired from Bank OZK where she served as executive vice president.

Blair has a B.A. in Advertising and Public Relations from the University of Arkansas at Little Rock, is a graduate of the University of Georgia’s Bank Marketing Association School of Advanced Marketing and Strategic Planning and is an accredited member of the Public Relations Society of America.

Founded in 1993, DD&F Consulting Group, headquartered in Little Rock, provides consulting services to the community banking industry nationwide.

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A lot has changed in the last two years.

It’s time to check your concentrations.

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