The Arkansas Banker June 2020

Summer 2020 • Volume CV, No. 10

2020-21 Chairman of the Arkansas Bankers Association

Jon Harrell

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COLUMNS

Spring 2020 • Volume CV, No. 10

President’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Lorrie Trogden

Chairman’s Column. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Jon Harrell

Washington Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Rob Nichols

DEPARTMENTS AmBA Training, Live Events & Webinars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2020 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Member News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Banker News & Moves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLES COVID 19-Long Lasting Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Mitigating the Cybersecurity Risk of Remote Work. . . . . . . . . . . . . . . . . . 10 ABA Chairman Jon Harrell. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 A Conversation with Tom Cotton. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 A Conversation with French Hill. . . . . . . . . . . . . . . . . . . . . . 34 The Arkansas Banker Online Join us at www.arkbankers.org to read and share statewide banking news!

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.

Arkansas Bankers Association Staff Lorrie Trogden, President/CEO • Carla Brinkley, VP/Controller • Kami T. Coleman, VP/Professional Development • Jessica Sahene, Technology & Marketing Director • Michael Spigner, Communications Director • Anna Squire, Business Development Director

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President’s Message ABA OFFICERS Jon Harrell, Chairman

Lorrie Trogden | President & CEO Arkansas Bankers Association

Generations Bank, Rogers

Jim Cargill, Chairman-Elect Arvest Bank, Little Rock

Randy Scott, Vice Chairman Farmers Bank & Trust, Blytheville

Tom Grumbles, Treasurer First Service Bank, Greenbrier

Rob Robinson, IV, Past Chairman Simmons Bank, El Dorado

Lorrie Trogden, President & CEO

Arkansas Bankers Association, Little Rock

BOARD OF DIRECTORS Craig Attwood, Pine Bluff Nathan Gairhan, Springdale Robert Husong, Rogers Gary Kleck, Springdale Cody Knight, Piggott Lance Lanier, Van Buren Barry Ledbetter, Little Rock Wilson Moore, Little Rock Evelyn Morris, El Dorado Marnie Oldner, Little Rock Mark Roberts, Malvern Todd Smith, Magnolia Jamie Waller, Magnolia Lynn Wright, Little Rock

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The Paycheck Protection Program (PPP) started in early April, but it feels as if it has been going on for years. PPP and its lack of guidance, and the quest to keep employees and customers safe while fulfilling essential banking needs, has everyone frustrated and exhausted. Thus, our focus at the ABA has been to meet YOUR needs, to take care of you, and make sure you have all the resources you need to be successful during this crisis. I hope we have accomplished that and served you well. We are still hosting our daily calls and sending out daily recap emails with information and notes from the calls. If you have not joined us, you are missing out. We discuss PPP, have guest speakers, and are now turning the conversation towards best practices for reopening lobbies. If for some reason you are not receiving these daily emails, please contact me or anyone at the ABA and let us know you want to get them, and we will add you to the list or troubleshoot with your IT department as to why they are not making it into your inbox.

Speaking of reopening lobbies, we have an ABA COVID Task Force hard at work on that topic. Special thanks to Task Force Chairman Cathy Owen and members Kenneth Barnard, Scott Brady, Dave Dickson, Aaron Huntley, Scott Miller, Chuck Morgan, and Paige Mulhollan. The task force has already accomplished several things: wrote a survey about reopening lobbies and compiled results that were shared with members; completed a matrix of best practices which was pulled together from six different sources; and are talking with the AR Department of Health about the guidelines they have established and what might be the best fit for financial institutions.

The Association is also involved in pandemic issues at both the state and national levels. At the state level, we have been in communication with Governor Hutchinson about what works best for banks and former ABA Chairman Rob Robinson also spoke at one of the governor’s daily press conferences. We worked with the Arkansas Economic Development Commission on developing its Quick Action Loan Program and several banks participated in getting those funds into the hands of small businesses. I have been appointed to the Governor’s Economic Recovery Task Force and serve on the Commerce sub-committee. The Task Force continues to meet, and the governor has indicated that after our final report, we may need to continue foward as needed should the crisis further develop. We greatly appreciate all the governor has done to be supportive of our industry throughout the crisis.

The Association receives a call from the press about once a week, which has resulted in articles in the Arkansas Democrat-Gazette, magazine interviews, and a few Facetime interviews with local news stations. The ABA takes pride in pushing the success of our bankers into the media and our social media channels. If you have a story we can share, please send it to us!

On the national level, we have worked with our banking association peers across the U.S. to monitor, comment, and lobby about federal legislation pertaining to COVID, as well as communication with the SBA and Treasury. In addition, I’m excited to say I was invited by the governor to accompany him on a trip to the White House to meet with President Donald Trump. We started with a press conference in the Cabinet Room and then moved into the Oval Office. It was thrilling to get to share PPP success stories from Arkansas with the president. He knows Arkansas banks are working hard to meet the needs of customers and save small businesses here in our state. The picture shown is of Governor Asa Hutchinson, Dr. Deborah Birx, and I in the Oval Office with the president, Kansas Governor Laura Kelley, and Kansas Secretary of Agriculture Mike Beam.

It is the ABA’s strongest desire to be a relevant and valuable resource for you, so please let us know what you need! We are happy to explore every option available to ease your pain points. As always, call or email me anytime–I’m here for you and because of you. Thank you for what you are doing for the citizens of Arkansas–you are on the front lines, saving businesses and changing lives every day.

TO THANK YOU OUR ABA BANKPAC DONORS

Farmers Bank & Trust Company 

Jon Harrell 

Magnolia Banking Corporation 

Marnie Older 

Horatio State Bank 

Boris Dover

First Community Bank 

Cornerstone Bank

Works24 Corporation 

Eagle Bank & Trust Company 

Lorrie Trogden 

MNB Bancshares, Inc. 

$500 Club

Your Arkansas Bankers ABA BankPAC contribution is one of the most important investments you can make to protect the future of the banking industry.

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CHAIRMAN’S COLUMN Jon Harrell | Chairman

Arkansas Bankers Association

“ESSENTIAL?” I say, “YES!” It’s safe to say that banks spun out of the 2008-2011 economic downturn with a less than sparkling public image. Whether community banks contributed to the issues that exacerbated the most recent great recession or not, we have had a difficult time flipping the script. The onslaught of Dodd-Frank and other regulations following slowed down our processes and made explaining required documentation to close loans a very difficult and confusing task to our customers, further tarnishing the public’s view of banking. Non-traditional options popped up as options for our current and potential customers that highlighted that customers didn’t need traditional brick and mortar bank branches for their banking needs. Talented graduates from our universities didn’t pursue banking as a degree path or consider it as a career option. Now we have P2P platforms that are taking our deposits out of the banking system altogether. It leaves me asking, when are we going to catch a break?

As community bankers have done for decades, we went to work. We worked through our problem credits. We worked with our struggling customers to get them through to the other side. Bank’s utilized the TARP Program as it was intended and repaid the funds; making it one of the most successful and profitable bailout programs in history. The industry slowly started to heal and increased industry capital levels improved our balance sheets.

We managed through the Dodd-Frank regulations and beefed up our compliance teams and utilized consultants to implement the new requirements. The administration change in 2016 brought about federal tax rate changes and a change in tone with our regulatory agencies. The economy started to boom, the stock market began to soar, and residential and commercial construction was healthy.

The sudden arrival of COVID-19 has changed the landscape at an unfathomable pace. Suddenly, optimistic 2020 budgets are tossed aside with reforecasting a challenge with all of the uncertainty about the duration and depth of the virus. We are increasing our loan loss provisions, hoping for the best but preparing for the worst. We have closed our lobbies to traffic and some of our team members are working from home. We all dusted off our telecommuting policy and used it. With all of the economic chaos and uncertainty that we are experiencing, we have discovered one thing about our industry: WE ARE ESSENTIAL. We will never get, nor do we deserve, the praise and recognition of the health care workers or first responders that are on the front lines of this epidemic.

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The sacrifices they and their families are making are unbelievable and we all owe them a tremendous amount of gratitude.

We are appreciative of the many industries and occupations that are supporting our communities and economies through this time. Banking is certainly proving its worth from continuing the flow of transactions and commerce to facilitating SBA Paycheck Protection Program (PPP) loans at impressive levels for our customers and communities. We are also a major conduit for federal stimulus checks to reach consumers. Furthermore, we are once again working with our customers to provide payment relief through interest only and deferment options. Small businesses and the individuals running them are the backbones of our communities. I am impressed with their fortitude and desire to get to the other side of this situation and resume business as usual. They want to rehire their employees and serve their customers with what is hopefully pent up demand once this is over.

The next three to six months will be unchartered territory for our industry. We will begin and hopefully complete the process of handling the forgiveness piece of the PPP loans. The majority of loan customers that we are modifying current loan terms for will hopefully be able to begin re-amortizing their loans. There will inevitably be the need to continue working with some of the harder hit industries that will be slower to come back, and we look forward to serving those businesses.

A better realization of the total impact the virus is having on our loan portfolios will begin to come into view.

Certainly, positive things will arise from this experience. We learn from every situation and challenge that comes our way.

We may be a little more battered and bruised but this will prepare us for the next hurdle that comes our way, no matter how high!

I, for one, am proud to work for an essential business that has demonstrated the ability and willingness to do what is necessary to help our customers, clients, and communities in a crisis.

I am hopeful the banking industry will come out on the other side of this pandemic with a better image.

Contactless Society – COVID-19 Long Lasting Effects

i

t has been a few months since the initial impact of the virus on the world. One of the longest lasting impacts of this crisis will probably have to do with infectious disease protocols, how to live our lives limiting physical social interactions. As difficult as the situation has become, it could not have happened at a more opportune time. Technology has created a sort of virtual society and modified our way of life with regards to daily activities like shopping and entertainment.

It is funny how up until just a few months ago technology was a concern for the older generations, fearing that it was isolating humans and doing away with established social norms.

Fast forward to the present and now this same technology seems to be playing a sort of salvation. Can you imagine if we would have been exposed to this pandemic during the 1970’s or 80’s? With no capability to video chat, no possibility of shopping online, no video streaming, nor tweeting. What would have been the impact back then? Picture the group of people who are demonstrating against the social distancing measures because they are “sick” of being isolated, how would they have reacted 40 years ago?

Of course, there is also the grave financial impact the virus has had on the world economy. The reality is that all business which relied on human interaction will need to reevaluate how to evolve their model given the current situation and considering the future consequences on humanity. Just like technology has played its role in making it more bearable to self-isolate, it may also play a vital role in adapting new business models to the reality of social distancing. With experts warning of a second wave of the virus coming in the fall, it is now the time to think ahead and prepare businesses for what is coming.

In the banking industry, virtual institutions (those that have no brick and mortar operations) will probably be the ones to benefit most since they possess a business model that is well equipped to adapt to this new reality. So, it is imperative that traditional institutions adopt some of the practices of their virtual competitors and while figuring out how the human interaction component of their business model can be modified to adhere to the new social norms. Banks will need to get creative in order to offer a personal touch in the way they service their clients while limiting the actual “touch points.”

I believe technology is one of the most important components to accomplish this shift in the traditional banking model. In order to remain competitive, banks should immediately focus on two technologies that will allow their business to operate with certain normality while limiting personal interactions:

1. Remote Banking Capability

2. Self-Service and Automation Most banks already offer their clients options to do their banking remotely thru mobile and online platforms, but the number and type of transactions clients are able to process thru

this channel will be critical going forward. A robust online and mobile banking platform will be indispensable in the future.

Self-service banking and automation will also need to improve, offering bank clients more options beyond the scope of current ATM functionality. The technology already exists for lobby kiosks to replace live tellers with simple, easy to use interfaces.

These devices will possibly become the preferred method of banking given the advantage for no human interaction.

But is technology the only challenge banks will face? Not necessarily. An important element to consider is the fact that traditional banks were moving toward a more personalized branch environment, where front-line bankers met with customers thru pre-established appointments. So now, banks will need to figure out a way their clients can still see a friendly face while inquiring about their accounts and services even as they limit in person interactions. The bottom line is that external factors are impacting currently established norms in most facets of our lives and it is our ability to adapt that will help us get thru the storm. Recognizing the challenges ahead and forming a visionary strategy is of utmost importance if businesses are to survive.

About the Author Cesar A. Rivas is National Sales Director for Sound Payments Banking Technology Solutions (BTS), assigned to represent the firm across all 50 states in the U.S. His background in technology and the financial services industry are the perfect combination of skills and knowledge to effectively present the benefits that cutting-edge technology developed by Sound Payments BTS provides financial institutions of all sizes.

During his career that spanned more than fourteen years in banking Rivas served as a regional manager and a senior VP for the West Ft. Lauderdale and Boca Raton markets. He also was a technical support engineer for Compaq Computers, providing hardware and software support for mobile and portable technologies to high level executives for large corporations.

Rivas holds a degree in Computer Information Systems, certifications in Microsoft Networking Technologies, and course work in computer programming and software design. In the financial area, he is certified in Consumer and Business Banking, Business Lending, and the Business of Banking.

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WASHINGTON UPDATE Rob Nichols | President & CEO American Bankers Association

Coronavirus Strikes.

America’s Banks Step Up. The world is grateful for all who have served on the front lines battling the COVID-19 crisis—the doctors and nurses who have put their lives at risk to care for the sick and dying as well as those who have kept our grocery stores and pharmacies stocked. These essential service providers are the pandemic’s heroes, putting the needs of others ahead of their own.

There is another category of worker that also fits this bill. It’s the women and men who work for America’s banks. You, too, are first responders—not to the health crisis but to the economic crisis spawned by it. And if I could drive by your offices (home or otherwise) honking and holding up signs in appreciation, I would.

Whether working from your main office or the kitchen table, in the first several weeks of the pandemic you extended critical lifelines to countless households and small businesses suffering from the loss of income resulting from stay-at-home orders. From the loan officer who learned that the trick to getting into E-Tran (the Small Business Administration’s portal for submitting Paycheck Protection Program applications) was to try at 2:00 a.m., to the staff who put in extra time to help customers needing forbearance or other accommodations and the employee disinfecting the ATM each day, you proved that serving your communities is not just your job, it’s your calling.

Your personal efforts, combined with banks’ institutional responses—waiving fees, offering low-rate personal loan programs, deferring payments and even effectively fronting customers their economic impact payments—demonstrate that banking is first and foremost about helping others.

America’s banks weren’t just deemed essential businesses by governors in state after state; they became essential partners in delivering massive amounts of federal government relief.

Despite its faults, the SBA’s unprecedented PPP program— which in its first phase processed 14 years’ worth of SBA loans in less than 14 days—simply could not have been executed without banks acting as the middlemen. And thanks to the sophisticated payment system the industry has built over the years, banks have been key conduits for distributing—safely and quickly—tens of millions of economic stimulus payments to individuals.

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AmBA has been proud to support you in your efforts and to tout publicly all you have done, as we did through aba.com/ CoronavirusResponse and the press statements, media interviews and digital ads that pointed people to that page.

As always, our efforts are carefully coordinated with the AmBA-State Association Alliance, which has never been more important or more valuable to the industry as a whole. For the first several weeks of the crisis, state association and AmBA leaders held daily conference calls to discuss what banks were reporting from the front lines, identify solutions and relay needed policy fixes or guidance to policymakers. The flow of information was equally important in reverse.

Sometimes the clarity we all needed from Washington was slow to arrive, but policymakers understood and appreciated that our appeals were solutions-focused and made in good faith. In fact, our most effective advocacy often involved direct phone calls, emails and texts to lawmakers, regulators and top Treasury and SBA officials, with public finger-pointing taking a back seat.

AmBA’s efforts throughout the crisis, like your state association’s, have been focused on ensuring you have what you need to continue supporting your institutions, customers and communities through this these extraordinary times.

We deeply appreciate all of your efforts and are committed to supporting you as we work to rebuild the economy. Because every hero needs a sidekick, and we are proud to be yours.

ABA PROFESSIONAL DEVELOPMENT

AmBA TRAINING AmBA Training includes extensive learning opportunities suited to specific job roles, in both facilitated and self-paced online formats, as well as in person. Flexible and cost-effective, AmBA’s online training opportunities are continually updated to provide a superior learning experience that can be accessed from anywhere, at any time.

UPCOMING ONLINE COURSES The Banking Industry July 6, 2020 Consumer Lending July 6, 2020 Introduction to Agricultural Lending July 13, 2020 General Accounting July 20, 2020

PROFESSIONAL DEVELOPMENT For more information about ABA Live Events or Webinars log on to www.arkbankers.org or call 501.376.3741.

EVENTS*

Providing you with interaction with expert instructors!

Real Estate Lending Compliance August 4-5, 2020 Hot Topics for Bank Boards August 20, 2020 Real Estate Evaluations 101 - Supporting the Value September 9, 2020 * Live Events subject to conversion to a virtual learning format.

WEBINARS

Providing you with educational topics to learn about from the comfort of your desk!

Introduction to Products & Services July 27, 2020

Pros and Cons of Social Media Use By Institutions July 15, 2020

Managing the Bank’s Investment Portfolio August 3, 2020

Beyond Reg H: Thinking Outside of the Box July 21, 2020

Marketing Planning August 17, 2020 Grandfathered and Tainted Generation-Skipping Trusts September 3, 2020 Legal Foundations in Banking September 14, 2020 Launching a Prize-Linked Savings Program in 90 Days September 15, 2020 Preparing for a Possible Wave of Defaults: Impacts for Corporate Trustees September 22, 2020 Basic Administrative Duties of a Trustee September 28, 2020 For more information about AmBA Training, log on to www.arkbankers.org or call 501.376.3741.

Executive Total Compensation - Strategies To Motivate July 21, 2020 ACH Origination for Lenders and Cash Management August 4, 2020 New Technology: Cash Recyclers, Pod Banking & ITMs August 11, 2020 Excel Explained: Speed Tips August 14, 2020 Director Compensation & Committee Best Practices August 20, 2020 ACH Exception Processing August 26, 2020 Excel Explained: Automating Financial Statements September 2, 2020 Shattered Myths of Banking September 3, 2020 Audit Report Writing September 9, 2020 Quarterly Compliance Briefing: Fall 2020 September 10, 2020 Create Engaging Conversations in the Branch of the Future September 17, 2020

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Mitigating the Cybersecurity Risk of Remote Work

By Jon Waldman, CISA, CRISC President SBS Institute | EVP – IS Consulting – SBS CyberSecurity, LLC

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oday, an unprecedented percentage of the workforce is working remotely in an attempt to help slow the spread of COVID-19 in communities across the country.

This is an uncertain time for everyone, but particularly for business owners who may have never operated with a fully remote staff before. One question everyone should be asking is how to ensure business continues as usual – but in as secure a way as possible.

According to the National Cyber Security Alliance (NCSA), global crises often correlate with an increase in cybercrime.

Cybercriminals will seize the COVID-19 pandemic as an opportunity to manipulate people based on their fears and insecurities. Lately, these “bad actors” have been sending email, text and social media messages claiming to provide a link to new information about the virus – which, of course, leads the victim to take actions that give the cybercriminal access to their network.

So, business owners need to be ultra-diligent in how they make sure their employees can work from home securely. Hopefully every business already has a pandemic preparedness plan in place, but if not, this is a good time to write one.

Regardless, staff members should be reminded of their company’s cybersecurity policies. If no policies have been written, consider sending a list of cybersecurity tips in the meantime.

At minimum, these tips should include the following: • Make sure your home Wifi network is secured by a strongpassword. If possible, consider setting up a separate Wifi network for work versus for personal devices, like cellphones, Xboxes, smart speakers and TVs. • Make sure no one in the household outside of the employee is using the business device.

• Password-protect all accounts with unique individual passwords. Don’t re-use passwords for personal and work accounts.

• Don’t click on any links sent to you by unknown email addresses. Check the email address carefully before clicking any links or downloading any documents.

• Don’t reveal any personal or company information to anyone over email.

• If you do click on a malware link, report it immediately to your manager.

• Remind your employees what is considered sensitive information that should be protected. This includes financial information, proprietary business documents, industry secrets, downloadable products and personal/employee information.

A VPN offers a business-owned and encrypted location for files to be stored and accessed.

Security and reliability are the main pros associated with using a VPN, as they are a single location for all business-owned information.

Right now is a great time to review all cybersecurity policy documents – or create them. If adjustments have been made, remote working policy and acceptable use policy documents should be resigned by all employees or by those who are transitioning to remote work, if they have not signed those previously. These agreements help to protect businesses and support employees in the transition from office to remote working.

If remote workers will have to use a computer that is not company-owned, consider documenting a list of pre-approved, downloadable security software to be installed on employee devices. Work with employees to ensure security software is properly installed on each computer. It’s recommended that this security software be managed centrally by the business, but if not, employees should be trained (and reminded) on how to keep that software updated regularly.

Business owners should also look into setting up a virtual private network (VPN), which allows employees to work from their laptops at home using a company-owned private network. A VPN offers a business-owned and encrypted location for files to be stored and accessed. Security and reliability are the main pros associated with using a VPN, as they are a single location for all business-owned information.

Having a pandemic preparedness plan is a good idea, too. This should outline the company’s policy, plan and testing questions, and should also include a template for a vendor management letter and any regulatory checklists needed in the midst of a pandemic like this one.

While the CDC has not said how long social distancing and remote work will be necessary, this is an opportunity for business owners to take some time to set up remote work capabilities for their employees, and even evaluate how well employees perform working from home.

The middle of a global pandemic may seem like too late to start thinking about cybersecurity, but when it comes to network protection, it is better late than never at all.

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5

minutes with...

Jason Tennant President/Chief Lending Officer Cornerstone Bank

How long have you been in the banking industry?

I’ve been in the banking industry for thirty-five years. I began with Union National Bank in Little Rock, then moved to Northwest Arkansas in 1990 and worked at Arvest and First National Bank of North Arkansas, and now I’m with Cornerstone Bank where I’ve been since 2012.

Over the course of your career, what is the biggest shift you’ve seen in banking?

It has to be technology and electronic/mobile banking.

Thank goodness we are in the electronic age because with the recent COVID-19 documentation, it would have been much more cumbersome if clients had to physically sign paper work! Most of this has been for the betterment of our industry. Many years ago, if someone moved away, they almost always closed their accounts. Now we can bank with them from a distance.

To you, what is the most enjoyable aspect of being a banker?

I am basically a “country banker,” where relationships really matter. My single favorite thing to do is to help the first-time buyer, whether it is with an automobile or a home. They are so excited and happy. That is very rewarding to me.

What is the most helpful banking product on the market today?

Again, I would have to say the electronic side of banking. Debit cards and mobile banking have changed how our industry works.

What trait does the modern banker need to have to be successful?

To be successful in the long run in our industry, you have be able to balance the mobility of bank products and convenience with personal service. One thing that will never go out of style is personal service. We pride ourselves in being available for our bank clients. It means so much for your client to know that they can call you for anything, even if that is “not your expertise.” Seeing the problem solved and making sure that your client is cared for will keep your client base with your bank better than anything. A simple follow-up call goes a long way!

Tell us something that your fellow bankers might be surprised to know about you!

I grew up in a family that loves music and likes to play it. I have three brothers. When I was a child, our family–led by my parents– had a band and played in various shows in Northwest Arkansas. I still like to pick around on a guitar. I guess you can call it a “JOYFUL NOISE!” I also have been the PA announcer for Berryville Schools since 2008.

What can you simply not resist?

I can’t resist totally spoiling my grandsons. We now have been blessed with four grandsons. I am pretty pitiful to watch around them!

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Ways Banks Can Use

d

Visual Storytelling

By Doug Wilber • CEO of Gremlin Social

o your customers find your content easy to absorb, appealing—even compelling? If your bank’s communications are perceived as stale and confusing, it can be difficult to resonate with your audience. Even banks have something interesting to say, and visual storytelling is the most reliable way to land a compelling and memorable message with the audiences who matter most.

Consider that the human brain is said to absorb up to 65 percent of visual information but only 10 percent of written or spoken information. Social media statistics back that up: On Facebook, images lead to about 2.3 times more engagement than text-only posts. And according to the ABA State of Social Media report, survey participants said the top three types of content that drive engagement for banks are photos, videos, and graphics. Financial institutions should take note of this trend. Today’s consumers speak a more visual language on social media, and banks need to join the conversation. Visual assets help you educate consumers as well as humanize your brand by showing off employees and community involvement, rather than just promoting products and services. These three visual storytelling tips are a great place to start sharing content that will help you build connections:

When Educating, Use Infographics.

One of your biggest responsibilities as a financial institution is to be a source of education for your customers. But financial education can be dry, complex, and (let’s be honest) boring to the average consumer. Infographics are a great way to break down potentially confusing subject matter into a format that consumers will not only understand, but also remember.

Americans are Happy with their Bank...

9 in 10 account holders are “very satisfied” or “satisfied” with their primary bank

If you want to present a lot of numbers on a subject, for instance, an infographic is your best bet. Instead of presenting statistics in an intimidating table or list, put them into a visually appealing infographic that directs a reader’s eye toward the most important data.

Show Off Your Community Connections.

Eighty-seven percent of consumers reported they would purchase from a company that supports an issue they care about. That means you should be involved in the things that matter most to your community.

Pitch in at school fundraisers or community food drives, and share videos and photos of your efforts. This will not only show how you are making a larger impact, but it will also connect with people on a human level. Research shows that even B2B customers are emotionally connected to their vendors, and see about 21 percent of appeal in a brand due to its business value—but double the appeal for its personal value. Find out what your community cares about and show the personal value you bring to the table. (Photo at left: Grand Savings Bank of Siloam Springs participated in Bowl for Kids’ Sake.)

Celebrate Employee Achievements & Milestones.

To take humanizing your brand a step further, highlight the humans within your organization. People don’t want to see paid advertisements on social—they want to see stories. Share images of your employees that showcase their milestones and achievements. Audiences will find inspiration in their successes and remember their faces. Then, when consumers are in search of a financial product, they’ll be more likely to go to the people they already recognize and relate to. (Photo at right: Herbert Thomas, center, receives a Milestones in Banking award for 40 years of service in 2019 from BKD representatives Gary Edwards and Megan Clark.)

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ABA Chairman Jon Harrell: Faith, Family, & Work....in that order

(Photo from left to right) Daughter-in-law Josie, son Max, Jon, Sheila, and daughter Mackenzie.

who is a commercial lender at Generations Bank and Mackenzie, 20, a junior at the U of A in Fayetteville majoring in nutrition.

When asked about his greatest achievement, Harrell is quick to respond, “family.” That can apply to his work and his personal life.

“I am proud to carry on the tradition of managing a family bank and that I am able to continue and hopefully improve on the culture and character of our bank. Personally, I am so proud that Sheila has put up with me for 27 years! If you’ve ever seen us together, she’s 5’ on a good day (she wears a lot of high heels) but her personality and charm carry me and has certainly helped my career. I’m proud of my kids and the kind of adults thy have turned out to be. They are much better humans than I was at that age!” he laughs.

j

on Harrell is not someone you would overlook in a crowd.

For one thing, he towers over most people, measuring in at 6’5”. Plus his wide grin, warm personality, and southern gentleman manners just naturally draw people in.

Getting to know someone like Harrell is a definite plus in the banking industry and not just because he’s the current chairman and CEO of Generations Bank. He’s the fifth generation Harrell to lead the bank. Generations is a family owned bank that began in Calhoun County in 1907. They branched into Northwest Arkansas in 2010 and moved their main location to Rogers in 2019, where it is now headquartered. They are a $530 million community bank.

Harrell was born in southwest Arkansas in 1966, in the sleepy little town of Prescott. The Harrells moved to Camden in 1969, where they lived for Jon’s childhood. After graduating from Camden high school in 1984, Harrell headed north, to the University of Arkansas at Fayetteville where he graduated in 1988, with a BSBA in Finance and Banking. After graduating college, Harrell obtained a graduate banking degree at the Graduate School of Banking at LSU in 1997. In 1992, Jon met his future wife, Sheila and they are the parents of two children: Max, 24,

14

The Arkansas Banker n Summer 2020

But Harrell isn’t all work. He keeps his large frame fit by being a member of Orange Theory fitness. Although, he does point out with a smile that he’s the senior member of most of the classes he attends. He’s an avid golfer and whenever their schedules allow, he and his wife like to get away to a family condo in Destin, Florida. A trip much easier to take now that they are “empty nesters.”

Harrell began his banking career as an examiner with the Arkansas State Bank Department. He thought climbing the professional ladder in a large bank in a metropolitan area was how he wanted to spend his career but with time, goals can change. He realized that he wanted to work in a community bank and carry on the family legacy. Something that didn’t seem as important to him starting out. Harrell also learned the importance of patience. “This isn’t an industry that you quickly accelerate up the organizational chart,” he says. He offers this observation, “I think our industry has to embrace and challenge our newer, young employees with tasks and responsibilities that our industry has previously made you earn with time. Millenials and Gen-Zers aren’t as patient as we were and we have to acknowledge this and recognize young talent and provide opportunity for rapid growth.”

One factor that contributes to less patience in the younger generation might be attributed to technology. Although shorter attention spans might be one drawback there are many other factors that many experts point out are outweighed by the benefits of modern advances. Harrell confirms that point and states that technology is the biggest shift that he has seen in banking. “The advances in technology and it’s impact on how the bank and its customers transact business is by far the biggest change,” Harrell says. “Also, additional regulatory changes that have made doing business more difficult and the increase in cybersecurity risks are a negative shift,” he’s quick to point out.

Technology is very important in today’s banking industry and Harrell knows that it requires a strong understanding and a willingness to embrace the impact of technology and how it will change the future of banking. “Strong relational skills continue to be necessary to be successful in this business, as well,” he states. “I enjoy the technical and relational mix that it takes to be a successful banker. I enjoy the challenge and opportunity of managing a business along with the relationships I have with our staff, our customers, and community.”

Harrell is the 2020-21 incoming chairman for the Arkansas Bankers Association (ABA) but working with the ABA isn’t new.

He’s been Vice Chairman, Chairman-Elect, and a board member. When asked about his experiences with the ABA he said, “The ABA has had big changes in the last few years. We all miss Bill Holmes and the presence he was with the ABA and banking in Arkansas. I had the privilege of sitting in when Lorrie was interviewed for the President’s job and I have never been more impressed than I was with her preparation, confidence, and communication during that interview. I remember looking around the table after her interview and telling the central

(Top left photo) Jon and Sheila were married in 1992 and Jon is quick to credit his wife’s charm as helping him in his career.

(Above photo) A fifth-generation banker, new ABA Chairman Jon, celebrates with a cake at Generations Bank in Rogers.

Arkansas bankers that if we didn’t hire her for this job, they should employ her at their respective banks ASAP! It’s a different vibe and feel around the association but one thing hasn’t changed: all efforts are made with the best interest of Arkansas banks at the forefront.”

One thing Harrell said that he is looking forward to as the new chairman is continuing to work with the association for Arkansas banks and representing the bankers around the state at the national conferences that they attend. He emphasizes that he wants to make being a banker “sexy again” and push the agenda that the banking industry needs young talent. “Banks’ reputations took a big hit during the 2008-2012 financial crisis and are no longer a desirable path in our states’ colleges and universities.” He continues, “We as an industry need to do what is necessary in regard to increasing starting pay and responsibility to compete for the best and brightest.”

Whether you’re discussing the banking industry, the ABA, or the game of golf, it’s evident that Jon Harrell is someone you want to listen to. The culture at Generations Bank is defined by “Faith, Family, and Work, in that order.” It’s evident that Harrell practices what he preaches and expects his staff to do the same and that’s something to be commended in today’s world.

The Arkansas Banker n Summer 2020

15

2020-21 LEADERSHIP CHAIRMAN • Jon Harrell

Faces of the ABA

Jon Harrell is the Chairman and CEO of Generations Bank and President and CEO of Harrell Bancshares, Inc. He is the fifth generation Harrell to lead the management team of Generations Bank.

His banking career began with the Arkansas State Bank Department. He is a graduate of The Graduate School of Banking at LSU, and previously served a three-year term on the ABA Board of Directors and was the 2019-20 Chairman-Elect.

He is also a cabinet member of the St. Mary’s Heritage Society and is active in the NWA Fellowship Church community where he serves as a community group coach.

CHAIRMAN-ELECT • Jim Cargill Jim Cargill is President and CEO of Arvest Bank in central Arkansas, overseeing Arvest’s retail, consumer, and commercial banking operations. He has helped develop Arvest’s marketing initiatives, including an extensive sales and service culture training program designed to take Arvest’s customer service to a higher level. Cargill has also worked to further Arvest’s ability to identify bank products and services that are of the greatest benefit to customers.

Cargill is a member of the Little Rock Regional Chamber of Commerce Board of Directors, the Fifty for the Future Board of Directors, UA- Little Rock Foundation Board of Directors, and the Little Rock Downtown Rotary Club.

VICE CHAIRMAN • Randy Scott Randy Scott is President and Chief Executive Officer of Farmers Bank and Trust, in Blytheville. He served as Chairman of the State Bank Board in 2019, where he continues to serve on the board. In addition, he serves on the Board of Trustees at Arkansas Northeastern College, a two year institution whose main campus is in Blytheville.

Scott has also served on the Board of Directors of the Blytheville Baseball Boosters Club, on the Board of Directors of the Great River Medical Center, Chairman of the Board of Directors of Great River Economic Development, and President of Blytheville Unlimited.

TREASURER • Tom Grumbles Tom Grumbles is President and CEO of First Service Bank in Greenbrier.

Grumbles, after graduation, started his banking career in Little Rock, and shortly after, began working in Dermott at what is now First Service Bank. In 1999, he helped move the charter to Greenbrier and helped grow to 11 locations in 10 towns in north and central Arkansas.

He attended Hendrix College in Conway, where he majored in Business and Economics. He was a charter board member of Arkansas Bankers’ Bank and served part of his tenure as Chairman.

PAST CHAIRMAN • Rob Robinson Rob Robinson is the Market President of Simmons Bank in El Dorado and serves as a senior credit officer for the bank. Prior to joining Simmons Bank in 2004, he worked for Arvest Bank, Central Bank & Trust, and the Arkansas State Bank Department.

Robinson takes an active role in his community, and is currently serving as Vice Chairman on the Medical Center of South Arkansas Board of Trustees, Vice President of the South Arkansas Community College Foundation Board; board member of the Arkansas Hospital Association; President of Arkansas Hospital Trustees Association; and is on the board of El Dorado Fifty for the Future.

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The Arkansas Banker n Summer 2020

2020-21 ABA Board of Directors GROUP 1 Cody Knight President & CEO Piggott State Bank Piggott

GROUP 2

GROUP 3

Lance Lanier Executive Vice President Citizens Bank & Trust Co. Van Buren

Barry Ledbetter Chief Banking Officer Simmons Bank Little Rock

Nathan Gairhan President & CEO United Bank Springdale

Marnie Oldner CEO Stone Bank Little Rock

Gary Kleck EVP/ CLO Legacy National Bank Springdale

Craig Attwood EVP, Director of Banking FBT Bank and Mortgage Pine Bluff

Mark Roberts President Malvern National Bank Malvern

Todd Smith EVP/ Asset Management Farmers Bank & Trust Co. Magnolia

Jamie Waller President The Peoples Bank Magnolia

AT LARGE Robert Husong President First National Bank Rogers

Evelyn Morris President – VP/Loan Operations First Financial Bank El Dorado

Wilson Moore Regional President Bank of America Little Rock

Lynn Wright President - Arkansas Area Regions Bank Little Rock

The Arkansas Banker n Summer 2020

17

LIBOR TETHERED TO A SINKING SHIP?

t

By J. Cliff McKinney, ll • Quattlebaum, Grooms, & Tull PLLC

he London Interbank Offered Rate (“LIBOR”) is one of the most common reference rates used by banks for mortgages, swaps, and many other financial instruments. Unfortunately, scandal has overtaken LIBOR resulting in an uncertain future. LIBOR is set to be scuttled and will cease to exist in its current form in 2021. This leaves many banks both confused and potentially exposed to riptides of disruption as LIBOR sinks beneath the waves of financial history.

Brief History and Scandal

LIBOR originated in the 1970s originally as an interest rate for offshore Eurodollar transactions. The British Bankers’ Association restructured LIBOR in the mid-1980s into a rate that banks can borrow from one another in London. LIBOR operates through a system of more than 200 member banks across sixty countries. Member banks include many of the world’s largest financial institutions, including the Bank of England, Bank of America, Bank of Tokyo, and Citibank. LIBOR rates are published in various currencies, including the US dollar, the British pound, and the Japanese yen. At its peak, approximately 60% of all prime adjustable-rate mortgages and nearly all subprime mortgages were indexed to LIBOR. Today, it is estimated that between $200 trillion to $300 trillion in financial instruments reference LIBOR. LIBOR relies on accurate input and data from select member institutions (i.e., the panel banks), to generate the rate daily.

Unfortunately, several panel banks began manipulating the information used to generate LIBOR, which was unveiled in a 2008 exposé piece by The Wall Street Journal. This led to a series of investigations that found significant criminal activity.

18

The Arkansas Banker n Summer 2020

Regulators and law enforcement agencies in Britain, the United States, and other countries levied billions in fines against various member institutions. Most notably, UBS agreed to pay $1.5 billion in fines and penalties for its role in the scandals.

Several large banks remain under investigation.

The Slow Sinking and Possible Life Rafts

In addition to hitting a reef of scandals, LIBOR is also arguably based on an outdated methodology. Some commentators note that the pool size of the panel banks is too small, a problem exacerbated by the reduced pool of panel banks after the 2008 financial crisis. This small pool results in a methodology that is susceptible to manipulation and sample-size error.

In the wake of the scandals and criticism, the United Kingdom’s Financial Conduct Authority announced in 2017 that LIBOR as it currently exists will phase out by the end of 2021. LIBOR may continue to exist in some form after 2021, but the panel banks will no longer be required to participate, which will effectively end LIBOR’s usefulness. Unfortunately, if LIBOR does survive in some form after 2021, it might create even more ambiguity when instruments have not been updated to a new reference rate. Making matters worse, there are contingencies in the phase-out plan that could result in LIBOR ending prior to December 31, 2021.

Regulators and financial institutions around the world have been scrambling to create a replacement for LIBOR. The United States, United Kingdom, Japan, European Union, Canada, Switzerland, Australia, and Hong Kong have all formed transition committees to replace LIBOR in their respective countries,

The London Interbank Offered Rate (“LIBOR”) is one of the most common reference rates used by banks for mortgages, swaps, and many other financial instruments. Unfortunately, scandal has overtaken LIBOR resulting in an uncertain future.

LIBOR is set to be scuttled and will cease to exist in its current form in 2021. This leaves many banks both confused and potentially exposed to riptides of disruption as LIBOR sinks beneath the waves of financial history.

ed States, United Kingdom, Japan, European Union, Canada, Switzerland, Australia, and Hong Kong have all formed transition committees to replace LIBOR in their respective countries, resulting in a proliferation of alternative indices. The America transition committee, the Alternative Reference Rates Committee (“ARRC”), settled on the Secured Overnight Financing Rate (“SOFR”) as the recommended replacement for US dollar denominated transactions.

Brief History and Scandal

The New York Federal Reserve began publishing SOFR in April 2018. SOFR is based on Treasuries loaned or borrowed overnight in the repurchase market. The New York Federal Reserve calculates SOFR every morning using data from the previous overnight Treasury repurchase market activity. Some banks and Fannie Mae began using the rate in mid-2018, and its use is becoming more common.

LIBOR originated in the 1970s originally as an interest rate for offshore Eurodollar transactions. The British Bankers’ Association restructured LIBOR in the mid-1980s into a rate that banks can borrow from one another in London. LIBOR operates through a system of more than 200 member banks across sixty countries. Member banks include many of the world’s largest financial institutions, including the Bank of England, Bank of America, Bank of Tokyo, and Citibank. LIBOR rates are published in various currencies, including the US dollar, the British pound, and the Japanese yen. At its peak, approximately 60% of all prime adjustable-rate mortgages and nearly all subprime mortgages were indexed to LIBOR. Today, it is estimated that between $200 trillion to $300 trillion in financial instruments reference LIBOR. LIBOR relies on accurate input and data from select member institutions (i.e., the panel banks), to generate the rate daily.

Unfortunately, several panel banks began manipulating the information used to generate LIBOR, which was unveiled in a 2008 exposé piece by The Wall Street Journal. This led to a series of investigations that found significant criminal activity.

Regulators and law enforcement agencies in Britain, the United States, and other countries levied billions in fines against various member institutions. Most notably, UBS agreed to pay $1.5 billion in fines and penalties for its role in the scandals.

Several large banks remain under investigation.

The Slow Sinking and Possible Life Rafts

In addition to hitting a reef of scandals, LIBOR is also arguably based on an outdated methodology. Some commentators note that the pool size of the panel banks is too small, a problem exacerbated by the reduced pool of panel banks after the 2008 financial crisis. This small pool results in a methodology that is susceptible to manipulation and sample-size error.

In the wake of the scandals and criticism, the United Kingdom’s Financial Conduct Authority announced in 2017 that LIBOR as it currently exists will phase out by the end of 2021. LIBOR may continue to exist in some form after 2021, but the panel banks will no longer be required to participate, which will effectively end LIBOR’s usefulness. Unfortunately, if LIBOR does survive in some form after 2021, it might create even more ambiguity when instruments have not been updated to a new reference rate. Making matters worse, there are contingencies in the phase-out plan that could result in LIBOR ending prior to December 31, 2021.

Regulators and financial institutions around the world have been scrambling to create a replacement for LIBOR. The Unit-

How to Untether from LIBOR

All banks need to take immediate steps to address the LIBOR problem. First, banks should prepare a list of all financial instruments that are linked to LIBOR with maturity dates or extensions beyond 2021. Second, banks need to review each of these instruments to see if there is an alternative for LIBOR already provided. Third, banks need to negotiate with borrowers and counterparties to include LIBOR replacement clauses where appropriate.

Banks should avoid the temptation to just swap SOFR for LIBOR, which are not apples-to-apples products. SOFR and LIBOR are based on fundamentally different data and risk profiles. Consequently, the amount of applicable basis points will need to be adjusted to achieve the same effective rate. Any agreement to substitute LIBOR needs to be carefully worded.

Inevitably, there will be financial instruments not updated prior to the end of LIBOR. For example, when the Federal Reserve abolished the Discount Rate in 2003, it created a constitutional crisis in Arkansas where the maximum lawful rate of interest was pegged at 5% plus the Discount Rate. Some argued that in the absence of the Discount Rate, the maximum rate in Arkansas should be 5% and others even argued that no interest could be charged. While the Supreme Court of Arkansas ultimately resolved this in 2006 in favor of selecting the closest replacement to the Discount Rate, there were three years of general confusion and litigation. This is an analogous situation and there may be similar arguments that LIBOR linked loans are either limited to the number of stated basis points or that no interest can be charged. Litigation is inevitable.

LIBOR is like a sinking ship soon to go under. The question now is who will be pulled down with it and how much collateral damage will result. Banks can minimize risk by immediately switching to an alternative rate for all new financial instruments and by proactively addressing those situations where legacy instruments will extend past the end of LIBOR. Now is not the time to rearrange the chairs on the deck of the Titanic—now is the time to find a lifeboat and sail away from the wreck.

The Arkansas Banker n Summer 2020

19

By James Chessen AmBA Chief Economist

How Large Credit Unions Are Failing to Meet Their Mission, and How Congress Can Fix It

t

he credit union charter is grounded in the mission of serving the underserved, and in exchange for that worthy undertaking, Congress granted credit unions a federal income tax exemption.

Unfortunately, the biggest credit unions aren’t holding up their end of the bargain. Instead, they are abusing their tax advantage to serve higher income communities and are often shunning low- and moderate-income consumers—and the numbers spell that out.

Large Credit Union Branch Locations

Large credit unions have 10,300 branches in the U.S., but barely one quarter are located in the low-and moderate-income communities they were created to serve.

There are 21,200 credit union branches in the U.S., but just under 14,500 of them are located in middle- and upper-income census tracts according to data from S&P Global’s Market Intelligence. That means less than one third of credit union branches are actually located in the low and moderate income communities they were created to serve.

6%

Upper-income

The Arkansas Banker n Summer 2020

21%

Middle-income

Source: S&P Global Market Intelligence

20

44%

29%

Moderate-income

Low-income AmBA Data Bank

More disturbing is that fewer than 6 percent of the branches of large credit unions (those with over $500 million in assets) are in low-income communities. These largest credit unions receive the highest dollar benefit from the tax exemption, yet they have chosen to focus their resources on the well-to-do rather than using their tax advantage to help expand cheaper credit to those who need it most. Simply put, they are using their tax-exempt status to make profitable consumer and business loans to people who do not need taxpayer-subsidized financial services and can afford to shop around for financial products elsewhere.

This is why it’s important to distinguish the large, profit-driven credit unions from those smaller credit unions that are mission-focused and serving consumers in low-income communities. A deeper dive into the data shows that of all the credit union branches in low-income neighborhoods, two out of three are from small credit unions (under $500 million in assets).

Congress has the tools to make sure large credit unions do a better job of meeting their 1934 statutory requirement to serve people of modest means, and that starts with the Community Reinvestment Act. For more than 40 years, CRA has required banks to demonstrate that they are meeting the credit needs of low- and moderate-income neighborhoods. However, the law never applied to credit unions because their charter already called for them to serve consumers in those communities. But the credit union

industry is much different than it was in 1970s, and large credit unions have increasingly forgotten why they received their tax exemption in the first place. Congress should help them remember.

There are 594 credit unions with $500 million or more in assets—holding about $1.27 trillion of the industry’s $1.6 trillion assets—that could be doing a better job of meeting the needs of low- and moderate-income communities. If these credit unions are in fact meeting the needs of low- and moderate-income people, they should have no fear of demonstrating that explicitly as banks must do. Quite simply, lawmakers should make large credit unions meet the same CRA requirements as the banks they compete with every day.

It’s a change every taxpayer should welcome. The nation will forgo $22 billion in federal income tax revenue over the next 10 years to pay for the current credit union tax exemption, according to the latest figures from the Office of Management and Budget, and $18.4 billion of that—84 percent—will be forked over to the large credit unions with more than $500 million in assets. Given that extraordinary and unnecessary benefit, large credit unions should at least be held accountable for meeting the needs of the very communities they were created to serve in the first place. If the smallest credit unions can meet that mission, certainly their largest peers with the greatest resources can do the same. © 2020 American Bankers Association. Reprinted with Permission. All Rights Reserved.

2020

enVISIONing the future

ARKANSAS BANKERS ASSOCIATION ANNUAL CONVENTION September 14-16, 2020 • Downtown Little Rock Marriott The Arkansas Banker n Summer 2020

21

Community Bank Stress Testing for the COVID-19 Shock

l

Stress-Testing Reduces the Uncertainty

ike the financial crisis period, the COVID-19 crisis is again exposing community banks to a severely adverse shock.1 Arguably, the uncertainty associated with this shock is greater than the uncertainty experienced in 2008 at the onset of the financial crisis because there is no modern precedent for a global shock that has disrupted such a large swath of households and firms. Indeed, 3.28 million U.S. workers filed unemployment claims for the week ended March 21, nearly five times the previous record high.2 Given the uncertainty, a bank stress test is a useful tool to make an educated guess as to how banks will be affected by this crisis. Stress-testing provides insights to potential worstcase conditions in the banking industry, which provides opportunities for bankers, regulators and policymakers to better prepare. With preparation, damage to banks’ balance sheets can be reduced, allowing them to continue to lend to creditworthy households and businesses to promote economic recovery.

Bank stress testing is an even more relevant exercise for the COVID-19 shock than for previous crises. A stress test assumes that all banks go through an adverse scenario to provide a worst-case outlook for each bank. But we know prior to the stress test that only a subset of banks will experience the worst-case outcome because only a subset of firms and households are severely affected by the shock, and banks differ in their exposure to these entities.

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The COVID-19 shock more uniformly applies to all banks because the shock has driven even financially healthy firms and households into distress. In other words, even well-managed banks with low-risk profiles are directly hit by this shock. A stress test in this context is more likely to accurately portray the distress of a large proportion of banks.

An Historical Loss Approach

The community bank stress test we developed after the 20072009 financial crisis uses an historical loss approach to estimate five-year changes to bank capital from a severely adverse shock.3 It does this by applying chargeoff rates derived from banks’ actual chargeoff rates between 2008 and 2012, which encompasses the recession and recovery following the financial crisis. Specifically, chargeoff rates applied to each bank in a local market are taken from the 90th percentile chargeoff rates of all banks in the market. For example, the chargeoff rate for commercial and industrial loans for a bank in the first year of the five-year simulation is the 90th percentile chargeoff rate experienced by banks in its market in 2008. The chargeoff rate for the second year is the 90th percentile chargeoff rate of those banks in 2009, and so on through 2012.

An advantage of the historical loss approach is that the financial crisis shock provides a severely adverse scenario that serves as a benchmark for future crises, and it bypasses the need to use econometric approaches to map changes in economic conditions into banks’ chargeoff rates. A disadvantage is that future shocks are assumed to be identical to the benchmark scenario.

U-Shaped or V-Shaped Business Cycle?

The adverse scenario for the COVID-19 stress test should reflect the forecasted macroeconomic conditions that will ensue. Our default adverse scenario from the 2008-2012 period is a U-shaped business cycle where the economic decline persists for two years (2008-2009) and the recovery is relatively slow. In contrast, analysts expect a V-shaped business cycle resulting from the COVID-19 shock because once households and employees can move freely again, demand for goods and service will resume and most businesses will return to normal production levels quickly. The quick response by the Federal Reserve and the $2 trillion economic relief package passed by Congress in late March will also assist the economy recovery.

Using 2019 as the base year (Y0) to establish initial conditions, we adjust our financial crisis shock to reflect GDP growth expectations for 2020-2024. Figure 1 plots real GDP growth rates for two different scenarios, each beginning with the actual 2019 GDP growth rate of 2.3%. The U-shaped series plots actual growth rates between 2008 (Y1) and 2012 (Y5), and it represents the economic growth pattern of our default financial crisis stress test. The V-shaped line in Figure 1 plots forecasted growth rates between 2020 and 2024 in response to the COVID-19 shock. These forecasts have a wide dispersion. The Conference Board, Goldman Sachs, and Wells Fargo, respectively, forecast 2020 growth rates of 1.4%, -3.8%, and 0.5%.4 We assume that growth in 2020 (Y1) is the average of the three values at -0.6%. Most forecasts assume that economic growth rebounds quickly thereafter, so we assume 2% GDP growth rates for 2021-2024 (Y2-Y5).

Figure 1. GDP Growth Rates by Scenario

3.0

Chargeoff Rate Adjustments

We alter the stress-test chargeoff rates from the financial crisis years to account for the different economic dynamics of the COVID-19 scenario. The initial known chargeoff rate in 2019 is 0.2%. We double the chargeoff rates from 2008 and apply them to 2020 (Y1). We use the actual 2009 chargeoff rates in 2021 (Y2), and we set chargeoff rates at 0% for 2022-2024 (Y3Y5). The doubling of Y1 chargeoff rates reflects the more rapid economic deterioration in 2020 relative to 2008. The same 2009 chargeoff rates for Y2 capture the lagged effect on bank performance from the distress of firms and households that spills over from the initial shock in 2020. Finally, the zero chargeoff rates thereafter reflect the quick recovery. Table 1 presents a comparison of the mean chargeoff rates for the financial crisis scenario based on the U-shaped business cycle, and the COVID-19 scenario based on the V-shaped business cycle.

Table 1. Mean Chargeoff Rates by Scenario Year

Financial Crisis

COVID-19

2019 (Y0) 2020 (Y1) 2021 (Y2) 2022 (Y3) 2023 (Y4) 2024 (Y5)

0.2% 1.0% 2.2% 2.2% 1.9% 1.3%

0.2% 2.1% 2.2% 0% 0% 0%

Stress Test Results

2.5

We run community bank stress tests on both the COVID-19 scenario and the financial crisis scenario. The latter scenario would become more relevant should the effects from COVID-19 persist much longer than the March 2020 forecasts.

For both scenarios, 2019 is the initial year (Y0), and the fiveyear projections are from 2020-2024.

2.0 1.5 1.0 0.5

We first project the number of banks that are in danger of failing from each adverse scenario. When a bank’s Tier 1 leverage ratio (Tier 1 capital to total assets) dips below 2%, Prompt Corrective Action (PCA) guidelines mandate that regulators must close the bank if the bank does not present a credible capital restoration plan.

0.0 -0.5 -1.0 -1.5 -2.0 -2.5 -3.0

In sum, the COVID-19 shock is initially more severe than the financial crisis shock, but the recovery is much quicker. The GDP growth rate is forecasted to be 0.5 percentage points lower in 2020, and 4.5 percentage points higher in 2021 than actual growth rates during the financial crisis.

Y0

Y1 U-Shaped

Y2

Y3

Y4 V-Shaped

Y5

Figure 2 shows the number of distinct banks through the given year of the simulation with a Tier 1 leverage ratio below 2%. Community banks are projected to fail at a faster pace in 2020 and 2021 in the COVID-19 scenario. Of the 4,432 community banks at year-end 2019, 50 of them dip below the 2% threshold from the COVID-19 shock, but only 26 banks cross that threshold from the financial crisis shock. None of the 82 Arkansas community banks is projected to fail by 2021 in either scenario.

(Continued on next page.)

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23

Figure 3. Number of Banks with T1Lev <6%

(Continued from previous page.)

Figure 2. Number of Banks with T1Lev <2% 250

700

200

179

50

00

14 2019

11 2020

300

68

65

57

262

.14%

200

86 .01%

100

26 2021

383 .46%

400

97 50

367

.68%

500

100

2022

Financial Crisis

2023

2019

COVID-19

We also project the number of banks that become severely distressed even if failure is not imminent. We define a seriously distressed bank as one whose Tier 1 leverage ratio falls below 6%. The 6% threshold, which is roughly half the mean capital ratio of community banks in 2019, implies that banks may have to curtail credit supply to preserve capital, which can exacerbate the downturn and slow the recovery.

Figure 3 plots the number of distinct banks through the given year of the simulation with a Tier 1 leverage ratio below 6%.

The results show the same pattern as Figure 2. By 2021, 262 banks fall below the 6% threshold from the COVID-19 scenario, nearly double the 140 banks from the financial crisis scenario.

Two of those banks are headquartered in Arkansas. Over the full five-year horizon, however, just 289 banks (6.5%) cross the threshold from the COVID-19 scenario while the comparable number for the financial crisis scenario is 637 banks (14.4%).

Two Arkansas community banks become severely distressed in the COVID-19 scenario, and five banks in the financial crisis scenario.

The average bank projected to become severely distressed from the COVID-19 scenario is larger than the median community bank and operates primarily in urban markets. The mean severely distressed bank holds assets of $655 million at yearend 2019, and 87% of the banks are headquartered in urban markets. This patter exists because, even when adjusted for a V-shaped business cycle, the 90th percentile chargeoff rates taken from the years 2008-2012 reflect the geographic pat-

The Arkansas Banker n Summer 2020

0

2024

Banks, however, weather the COVID-19 scenario much better than the financial crisis scenario over the five-year horizon because the economic recovery is much quicker. Just 68 banks (1.5%) are projected to fail by 2024 in the COVID-19 scenario, but 237 banks (5.3%) are projected to fail from the financial crisis scenario. Just one Arkansas community bank is projected to fail in 2023 in both scenarios.

24

637

600

150

0

1.11% 1.11% 1.11%

1.17% 800 1.17%

237

272

281

.16% 140

00 -.01%

32 -.03% 2020 2019 2021 2020 2022 2021 20232022 20242023 2024 Financial Crisis COVID-19 Financial CrisisCOVID-19

terns of the financial crisis shock. During those years, banks in large urban areas with greater exposure to construction and land development (CLD) loans were hurt the hardest. Our projections retain this influence. Indeed, there is reason to believe that community banks most exposed to the COVID-19 shock also operate in large urban markets because the population density fosters conditions for the virus to spread more easily. Of the 262 community banks projected to dip below the 6% Tier 1 leverage threshold by 2021, 159 (61%) of them are headquartered in the five states of Florida, Michigan, Illinois, Georgia, and Minnesota.

Figure 4. Mean ROA

1.17%

1.11% 1.11% 1.11%

1.17%

.68% .46% .16%

.14% .01% 2019

289

-.01% -.03% 2020 2021 2022 2023 Financial Crisis COVID-19

2024

In addition to capital ratios, we project bank profitability during the stress test scenarios. Figure 4 plots mean return on assets (ROA) between 2019 and 2024. Banks begin the stress

test with a healthy ROA of 1.17%. In the COVID-19 scenario, ROA is projected to dip to just one basis point in 2021, but it rebounds quickly close to pre-shock levels at 1.11%. ROA for the financial crisis scenario decline and recovers more slowly. ROA is 0.68% in 2020 and hits its trough in 2022 at -3 basis points before slowly rising to 0.46% in 2024. The higher profitability for the COVID-19 scenario after 2021 again reflects the quick recovery. Arkansas community banks show similar profitability trends for both scenarios.

In sum, the COVID-19 stress-test scenario results in somewhat more banks failing or becoming severely distressed during the first two years of the simulation relative to the financial crisis shock. However, bank health rapidly improves thereafter so that the number of severely distressed banks after five years is far less than the number of severely distressed banks from the financial crisis scenario. The latter scenario, however, will become more relevant if the effects from COVID-19 persist longer than currently anticipated.

Banks Are Better Prepared for a Shock

Regardless of the damage that economic disruptions from COVID-19 may impose on the banking industry, banks are better prepared to absorb an adverse shock than they were in 2007. Compared with 2007, community banks hold fewer CLD loans, and fewer banks have relatively low capital ratios. In 2007, the mean CLD loan to total loan ratio was 12%; in 2019 it was 6.3%. Similarly, in 2007 nine percent of banks had a Tier 1 leverage ratio less than 7.5% versus just one percent of banks in 2019. For both scenarios, our stress-test failure projections are much lower than they were for banks in 2007. From Figure 2, we project 68 community banks to fail from the five-year COVID-19 scenario, and 237 to fail from the financial crisis scenario when 2019 is the base year. In contrast, the financial crisis scenario using 2007 as the base year projected 762 failures.

In fact, 386 community banks failed between 2008 and 2012.

Higher capital and lower inherent credit risk have made banks less vulnerable to shocks in 2019 than in 2007.

Conclusion

Current expectations are for a V-shaped business cycle, which makes the COVID-19 scenario more likely. We caution, however, that economic forecasts are highly uncertain. If the COVID-19 virus were to disrupt production and consumption for a prolonged period, the adverse effects on the banking industry would more closely resemble the projections from our financial crisis scenario.

Fortunately, both the COVID-19 and financial crisis stress test scenarios show significantly less adverse effects on community banks than the actual damage that resulted from the 20072009 financial crisis and Great Recession because banks are better prepared to absorb an adverse shock than they were in 2007. Even if the current economic shock is prolonged, the banking industry should fare better than it did between 2008 and 2012.

Timothy J. Yeager is Professor of Finance and holds the Arkansas Bankers Association Chair in Banking at the University of Arkansas. Cao Fang is a doctoral student in the Finance PhD program.

Notes 1. Community banks are those with less than $10 billion in real total assets.

2. Wall Street Journal, “Record 3.28 Million File for U.S. Jobless Benefits,” March 26, 2020.

3. For more information on the stress test model, see our working paper, “An Historical Loss Approach to Community Bank Stress Testing,” available at https://walton.uark.edu/ departments/finance/community-bank-stress-test.php 4. The Conference Board, “The Conference Board Economic Forecast for the U.S. Economy,” https://www.conferenceboard.org/data/usforecast.cfm, accessed March 25, 2020; Goldman Sachs Research, “US Daily: A Sudden Stop for the US Economy,” March 16, 2020, https://www.goldmansachs.com/insights/pages/usdaily-20-march-2020.html, accessed March 25, 2020; Wells Fargo Monthly Economic Outlook, Forecast Update: Global Downturn Imminent, March 16, 2020, https://www.wellsfargo.com/com/insights/economics/ monthly-outlook/, accessed March 25, 2020.

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Unfortunately, banks are confronted with the economic shock from COVID-19 only a decade after the financial crisis. Our historical loss community bank stress test provides a tool to quickly assess banks’ capital sufficiency during a five-year shock resembling the financial crisis. The shock from COVID-19, however, is likely to be shorter in duration but more severe initially so we adapt our financial crisis scenario to reflect a V-shaped business cycle shock.

The COVID-19 stress test scenario projects that through 2021, 50 banks will fail versus 26 banks from the financial crisis scenario, but none of those banks are headquartered in Arkansas.

Over a five-year horizon, however, the results are reversed. Just 68 banks are projected to fail from the COVID-19 scenario relative to 237 failures from the financial crisis scenario, and one of those banks is chartered in Arkansas. In addition, nearly 90% of the severely distressed banks are headquartered in urban areas, and most reside in the more populous states.

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25

Bankers and Economics Arkansas

Likeminded Champions of Economic Literacy

By Claudia Utley • Economics Arkansas

For more than 50 years, the annual ABA Chairman’s Campaign has raised funds to enhance economic opportunities for Arkansas teachers and students.

i

ronically, that patronage began with a locked door. The Arkansas Council on Economic Education was founded in early 1962 to teach educators how to integrate economic and personal finance education into the elementary and secondary classroom curriculum. The thinking was—and still is—that school students who master sound decision-making skills, learn how to manage money and understand the principles of the American free-market economy will be more likely to thrive as adult citizens, consumers, and members of the workforce.

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The Arkansas Banker n Summer 2020

Immediately after the council’s inception, a major challenge emerged: No money was available for initial teacher training.

About $10,000 was needed to send 52 Arkansas teachers to economics summer workshops at various, out-of-state universities; none of the required courses were offered locally. The council’s first executive director, Bessie B. Moore—legendary for her determination and passion—sprang into action: She gathered 22 bankers and business leaders in a conference room of the Marion Hotel in Little Rock and explained the problem. Then she locked the door and announced it would remain locked until the necessary sum was pledged.

The sum was pledged within the hour, the door, unlocked. Since then, that door has opened many opportunities for Arkansas teachers and students, thanks to consistent funding from Arkansas’s business leaders for economics training and resources.

The funding has continued despite many changes over the years, even the name of council: it is known today as Economics Arkansas.

Bankers have been among Economics Arkansas’s most steadfast supporters, even though today’s fundraising efforts are much less dramatic. In 1968, the ABA Chairman Campaign was launched, which continues as a letter-writing campaign on Economics Arkansas’s behalf. Headlined by the annual ABA chair, it is the only one of its kind, as ABA bylaws restrict the association’s financial support to Economics Arkansas and any other organization. To date, the campaign has raised almost $2 million.

Why bankers? In Bessie B. Moore’s own words: “More than other businesses, bankers recognize the need for economic education. The very nature of banking assigns them responsibilities to help eradicate economic illiteracy. Every day they witness tragic results to individuals who cannot manage the family budget, who do not understand the nature or use of credit and who do not realize the value of saving.” (from The Arkansas Banker, July 1966) That assessment still rings true. Economics Arkansas reached out to several bankers to ask why they have supported the organization for many years. Here is what they shared:

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Donny Story, Arvest Bank, Fayetteville President:

As a banker, I know that local economic prosperity goes hand in hand with sound money management skills. Every business owner, every individual needs to learn how to handle money wisely: save some, spend some, invest some, and give some. Economics Arkansas does a superb job of personal finance education. I know that the students who receive that education today will be smart, confident citizens tomorrow. They will strengthen their communities and build better lives for us all. By supporting Economics Arkansas, Arvest and I help build that future.

Rob Robinson, Simmons Bank, Community President/Senior Credit Officer, El Dorado, and 2019-20 ABA Chair:

Like most banks, Simmons is vigorously participating in our community. We go into the local schools to teach financial literacy. We see how important it is to teach saving and budgeting concepts, especially in elementary school. Our volunteer engagement dovetails with what Economics Arkansas does with schools. The more groups reach out to these elementary school students, the better chance they have to learn how to handle money. These are concepts the students need for life.

Gary Canada, CEO, Bank of England:

We notice that basic economic knowledge is lacking among customers. We want to encourage economic education in schools. A lot of students don’t understand debits and credits and they need to learn that in high school. They need to understand that they have to have some income before you take on debt.

Economics Arkansas invests all support in Arkansas teachers and students by offering training and resources. All trainings are approved for professional development credit by the Arkansas Department of Education, standards-aligned, grade-appropriate and project-based. Each year, the organization trains approximately 2,800 teachers in grades Pre-K through 12.

More information about the organization, plus a secure online giving portal, can be found at www.economicsarkansas.org.

Donna Spakes donna@flicar.com 501.519.0555 | 800.446.2214 flicar.com

The Arkansas Banker n Summer 2020

27

Local Resources Matter More Than Ever After COVID-19

by Arkansas State Senator Bruce Maloch

w

hen you have spent 35 years as a banker in a community like Magnolia, served in the state senate and house, practiced law, and run a cattle ranch, itâ&#x20AC;&#x2122;s easy to think you have seen it all.

But then COVID-19 came along, and we were reminded that none of us had ever seen anything like this.

The virus was different from any previous national crisis because with COVOD-19 we were all threatened no matter where we live. But as summer arrives, we are starting to put this behind us. We are finding our way toward a new normal after a spring that saw schools close, businesses damaged, and forced us all to retreat to our homes.

In March, I was asked to help with the process of approving the release of emergency funds from the $173 million-dollar COVID-19 Rainy Day Fund. I have worked with Governor Hutchinson and legislative leaders to continue to make smart decisions to get funding where it can best help protect the state. We have worked together to be fast and innovative in finding solutions to new problems, and we tried hard not to respond like a bureaucracy.

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The Arkansas Banker n Summer 2020

This was a health crisis but make no mistake, it is also an economic crisis the likes of which we had never seen. Unemployment claims were filed at a record rate, and small businesses in every Arkansas community are still struggling with the fallout.

Right now, local banks continue to play a key role in providing the stability any community needs to rebuild. Many restaurants have reopened, and itâ&#x20AC;&#x2122;s nice to finally be able to greet our neighbors on downtown sidewalks as local shopping comes back.

Arkansas bankers remain in the middle of this effort as they process and service loans that are channeling federal funds to individuals and businesses. As Governor Hutchinson asked state government to do, bankers have in many cases put aside traditional ways of doing things to expedite the distribution of federal stimulus funding.

With summer arriving, we can refocus on things that will be critical to bringing our economy back. One of those is the November 2020 passage of Issue 1. This Issue 1 will extend a sales tax that provides $86 million annually to mayors and county judges to make local decisions about funding roads. Statewide, Issue 1 would generate more than $8 billion in economic activity over the next decade while creating 3,600 jobs and improving 7,000 miles of roads.

Issue 1 will not only help with economic growth, it will help us create safer and more efficient highways, county roads, and city streets. It will also be an important part of our rebuilding process as every dollar spent on road funding in Arkansas turns over between three and five times in local economies.

Companies that work on our roads hire skilled labor, buy pickup trucks at local dealerships, and buy lunch at the Main Street cafĂŠ. Investment in infrastructure helps the local economy long after a crew repairs an old bridge or opens a new road.

Before COVID-19 arrived, the defeat of Issue 1 would have meant communities and counties were looking at a 30% reduction in local road budgets. Columbia County alone would face a loss of over $800,000 annually, an amount I know our county judge and mayors could not stand to lose. Under normal circumstances that would be difficult for any community to deal with, but when our economy shut down in March, counties and municipalities lost millions in sales tax revenue because people took months off from shopping, eating out, or putting gas in their cars.

If you combine the economic damage from the virus, with a potential failure of Issue 1 to extend the sales tax, we would be looking at a catastrophic budget situation.

COVID-19 has prompted some of us to think about infrastructure issues in a different way. In the earliest days of the crisis, as everyone rushed to the grocery store to stock up on groceries and cleaning supplies, the supply chain that provides for all of us was threatened. But ultimately it held together and allowed us to buy the groceries and prescription drugs we needed to keep our families safe.

The Arkansas system of interstates, county roads, and city streets allowed truck drivers to bring us the essentials of life.

Truck drivers who put aside their own health concerns, and left their own families, to help the rest of us. It is not overstating the case to say the supply chain operating on our roads is what held us together.

As we come out of this historic economic shutdown, Iâ&#x20AC;&#x2122;m proud of the leadership of bankers across the state as we helped our communities get through this crisis and now back to work.

My time at Farmers Bank & Trust Company, and my years as a quorum court member, have taught me that local leaders understand places like Magnolia far better than people who live elsewhere. We will need local control, and local resources, to put our damaged economy back together.

Issue 1 will help with that as it generates $290 million annually to help make our 16,000 miles of roads safer and better.

Bruce Maloch is a cattle rancher and an Arkansas State Senator representing Senate District 12. He is the Vice-Chairman and General Counsel at Farmers Bank and Trust in Magnolia. Maloch was recognized as Legislator of the Year by the Arkansas Realtors Association, Person of the Year by the Arkansas Municipal League and has been named one of the top ten legislators by Talk Business magazine.

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The Arkansas Banker n Summer 2020

29

By Gwen Green

Small Business Lenders Rely on Center’s Expertise and Experience

p

am Turner of Mountain Home wanted to buy an established local business, so she contacted a local bank, FNBC. One of the first steps the bank suggested was getting in touch with the Arkansas Small Business and Technology Development Center. “I’m thankful the bank pointed me to the center. The one-on-one assistance with my business plan and financials, and the ASBTDC business financing seminar I attended, gave me the tools I needed to get funding to purchase PolyClean,” said Turner, who obtained a loan and line of credit from FNBC after working with Laura Miller of the Arkansas State University ASBTDC. Chad Hudson is regional president and chief lending officer for FNBC Bank. The community bank has locations in north central and northeast Arkansas. According to Hudson, when FNBC customers want to start or grow a small business, the bank often recommends ASBTDC’s help. “For someone looking to start, purchase, or expand a business, the process and information needed can be intimidating. ASBTDC is an excellent resource for helping these individuals navigate the planning and the process,” he said.

Now with Southern Bancorp in El Dorado, Carl Sivils has worked in banking in Arkansas for three decades. He became acquainted with ASBTDC about seven years ago and has been referring customers to the center ever since. “Some entrepreneurs in the beginning know what they want to do, know how to do it, and have a game plan on how their idea would make money. However, sometimes they don’t have a business back-

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The Arkansas Banker n Summer 2020

ground and need some assistance in putting their idea into a structured request. This can be very frustrating and stressful for the individual. ASBTDC works with individuals and gives them guidance on what a lender is going to need to make an informed decision when looking to fund a loan request,” said Sivils.

215 Capital Projects in 2019

In 2019, ASBTDC consulted with 204 new clients who were referred by lenders. Around the state, the center assisted with 215 funded projects last year, ranging in size from $5,000 to $6.6 million. In total, clients obtained $72 million in capital investment with the center’s help.

The university-based program serves the entire state through a network of offices. Funded by the U.S. Small Business Administration and seven host universities, ASBTDC provides information and tools to build successful businesses. One-on-one assistance is available free of charge. “We provide guidance and direction to help clients be prepared with the information that a lender needs to see. Our assistance also helps clients be better borrowers,” said Heather Robinette, ASBTDC’s entrepreneurial services manager.

“We encourage lenders to see us as the place to send bankable projects. Banks can refer any type of loan project to us,” she said. “It doesn’t matter if it is an SBA loan or not.”

While welcoming bank referrals, Robinette also notes the limits of ASBTDC services. Consultants cannot work with non-profits or provide tax or legal advice, she explained. In some cases, consulting may be premature. “Individuals who are still nailing down their business idea and are in the basic concept stage aren’t ready for consulting. They need to come to one of our training events or use the resources on our website,” said Robinette. “Likewise, folks who are not yet bankable due to personal financial issues typically need to address those first before diving into business planning with us.”

The most common reasons lenders refer prospective small business owners to the center are for help with budgeting, business planning, and financial projections, Robinette said.

For customers who are already in business, banks recommend the center for assistance with cash flow and capital requirements for expansion. Also popular with lenders is the customized market research ASBTDC provides for business planning and growth strategy development.

Everybody Wins

Hudson said small business borrowers benefit greatly from ASBTDC’s “expertise and experience.” The center’s involvement also has advantages for lenders, especially SBA lenders, he said. “The ASBTDC prepares a very thorough and SBA-compliant business plan. Their plans meet all the requirements for an SBA submission. They provide very beneficial demographic information that helps me make an informed decision.”

“The level of service provided by ASBTDC is extremely high regardless of the specific location in Arkansas,” he added. “The ASBTDC staff routinely travels to Mountain Home and Batesville to meet with customers regularly. They hold seminars and one-on-one meetings.”

Candy Guinn of El Dorado was referred to the ASBTDC at Southern Arkansas University by Sivils. A psychiatric-mental health nurse practitioner, Guinn started The Guinn Clinic in December with financing from Southern Bancorp (photo at right). “My career background and expertise are clinical, not business. Business planning, knowledge about financial goals, and understanding the reality about those goals is so important to the success of the business. ASBTDC offers this free service of helping people just like me,” she said.

Even though she was in El Dorado, working with the center in Magnolia was convenient for Guinn. “Resources are available online and in-person. Communication is easy (by) email, text, face-to-face,” she said. Sivils said Guinn was “the perfect example” of how valuable ASBTDC is for a first-time business owner with no business background. He credited Kristen Cribb and Janell Morton of the SAU office for helping Guinn with her financing proposal, cash flow projections and other financial information, industry data, and descriptions of her products and services and the market for them.

Staff Draw on Banking Experience

Several ASBTDC staff have banking backgrounds, including Aimee Weaver of the office at the University of Arkansas at Monticello. Before joining the center in 2018, Weaver was a business banking specialist for U.S. Bank in Hot Springs. “I am familiar with the requirements of financial institutions for capital injection, collateral, and cash flow for financing startups and existing businesses,” she said.

Weaver recently helped Brandt and Fara Bottoms secure a $1.1 million SBA 7(a) loan from Citizens Bank in Monticello to launch Bottoms Up Flying Service. With the clients’ permission, she conferred with the bank’s Chris Lampkin to make sure the

couple had their business plan and documentation in order.

“I work hard to assist in any way to get the loan approved and closed,” said Weaver.

Mary Beth Brooks leads the University of Arkansas, Fayetteville ASBTDC office. She spent 28 years in banking and was president and CEO of The Bank of Fayetteville from 2004 to 2015.

Her extensive network of banking connections sends her client referrals “all the time,” she said. “I still get invited to various banker events, so I always see people there. I also speak to loan committees, and I still go to lunch routinely with several bankers.”

Brooks says as a lender she was unaware of all the ways the center can assist clients. “I did refer some customers to ASBTDC for financial projections, but I did not ever fully understand the extent of services offered. I had no idea but sure wish I would have! We make the lenders’ lives easier,” she said.

‘A Strong Resource’

Hudson became a member of the ASBTDC State Advisory Board in 2019. He considers the center an important resource for FNBC Bank and its growth initiative. Banks that don’t utilize the center “are missing out on a huge resource at their fingertips and the opportunity to bring additional value to their clients,” he said. “I highly recommend ASBTDC to any bank seeking a strong resource for business startups, acquisitions, or expansions.”

For more information about the Arkansas Small Business and Technology Development Center, visit asbtdc.org.

Gwen Green of Little Rock is the communications manager for the Arkansas Small Business and Technology Development Center.

The Arkansas Banker n Summer 2020

31

A Conversation with

Senator Tom Cotton

What were your career goals when you first entered government? How has that changed over time?

‘Career goals’ may be the wrong phrase. Politicians and bureaucrats often think of their government service in terms of their own careers instead of what’s best for Arkansas or the country. My goal is advocating for the right path for Arkansas and our nation—and that hasn’t changed.

What has been one of the biggest challenges you’ve had to face in federal government?

The sheer size of the federal government. Even as a United States Senator, I’m still only one of 100. Working towards progress in such a large system with so many opinions and moving parts is difficult, and that’s why we need as many good, thoughtful Americans in government as we can muster.

How do you maintain a work/life balance?

It’s easier than you may think. Ecclesiastes advises that there’s a time and season for everything. Mark hard boundaries for work, family, service, and then respect those boundaries. If you prioritize correctly, the rest will fall into place.

What is the most important lesson you’ve learned in your career to date?

Do what you believe to be right and stand by it, regardless of the pressure or opposition. I was lucky to have early examples of this in my life—like my drill sergeant, who always said, “Do the hard right over the easy wrong”—or my dad, who always counseled the “do-right rule.” Elected officials get blamed—often rightly—for pandering and flip-flopping when they lose their moral compass. When I was first elected to the House, Senator Tom Coburn encouraged me to stand firm for what I believe, regardless of the shifting winds of popularity. When we find ourselves on the losing side of public opinion on any given issue, in the long run, people will respect that adherence to conviction more than a willingness to throw those convictions away for political gain.

32

The Arkansas Banker n Summer 2020

How would you describe your leadership style? What experiences have you had to cultivate that style?

Lead from the front—do the hard things yourself to prove to others that they can and should be done. By doing so, we inspire others with the courage to do those things as well. My Army education was one long training in leadership, and that leadership is just as dynamic and essential in politics as it is in the military.

Tell us about your experiences working with the Arkansas Bankers Association.

My staff and I have a great relationship with the Arkansas Bankers Association and with their CEO, Lorrie Trogden. I enjoyed being a guest speaker on a recent ABA conference call, and they have been a great partner during the pandemic – both as a source of information and by helping us disseminate info to Arkansans. Banks across Arkansas are economic engines in the communities they serve. From financing farming operations, to helping a young couple buy their first home, to providing capital to an entrepreneur, banks in Arkansas touch almost every aspect of our state. ABA does a good job of communicating the concerns of these banks to us, and I hope we do a good job of listening and taking action to address those problems.

What has been your greatest achievement that you are most proud of? (Professional, personal or both) My greatest achievement has been the privilege of making a life with my family—my wife, Anna, and my two sons, Gabriel and Daniel.

Any philosophy or motto you try to live or work by?

Do the hard right over the easy wrong.

Congratulations!

Each year, Arkansas Business presents its “40 Under 40” list to recognize intriguing business and political leaders under 40 years old. The 2020 list appeared in the May issue of Arkansas Business.

To qualify the individual must...

• Be under 40 years old as of 6/1/2020

• Have made an impact on his or her company or community.

• Not have been a previous honoree

• Show the potential to be a leader in business or politics during the next decade.

The Arkansas Bankers Association would like to congratulate these ABA members!

Chris Beaty TeleComp

Will Gladden

Signature Bank

Graycen Bigger

Luke Brown

Farmers and Merchants Bank/ NEA Regional Intermodal Authority

Heide Harrell, APR Rose Law Firm

Crews & Associates Inc.

Antwan Phillips

Wright Lindsey Jennings

Daniel Robinson Simmons Bank

The Arkansas Banker n Summer 2020

33

A Conversation with

Congressman French Hill

What has been one of the biggest challenges you’ve had to face in the federal government?

What were your career goals when you first entered government? How has that changed over time?

When I announced that I would run for Congress in the fall of 2013, I had spent the last two decades as a community banker here in Arkansas. However, just prior to moving home to take a post at First Commercial Corp. (now Regions Bank - Arkansas), I had spent four years working for President George H.W. Bush during his administration at the U.S. Treasury and at the White House. Prior to my service with President Bush, I had five years working in commercial and investment banking as well as two years on the professional staff of the U.S. Senate Committee on Banking. Thus, with that business background, I ran for Congress with a keen interest on prioritizing government spending, rightsizing and balancing the cost-benefit of federal regulations, achieving pro-growth tax reform, and creating an environment more conducive to spur new company formation and entrepreneurship. During the past five years, I have spoken out on these objectives and have introduced and supported legislation to achieve them; in many cases, I’m gratified by the success that has been achieved.

Over time, my work has expanded to include a great passion for our men and women who have worn the uniform, our veterans. I’m proud to have a crackerjack military and veteran team of advisors on my staff, and together, we are working to advance important veteran legislation and provide quality service to our veterans facing individual challenges here in our central Arkansas.

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The Arkansas Banker n Summer 2020

Clearly, the biggest challenge that I believe confronts all members of Congress, including me, is the intense gravitational pull by so many forces to increase government spending while rarely prioritizing spending programs or alleviating regulatory burden. It’s the key reason I have restarted former Sen. William Proxmire’s, “Golden Fleece Award” to recognize government waste, fraud and abuse. Any time that we have an opportunity to gain efficiencies, cut out waste, or enhance a program without spending more money it’s an opportunity to celebrate. It’s the rare visitor to my office seeking to reduce spending for a particular topic or even willing to leave it flat!

But clearly, today and for immediate future, the most significant challenge is the overwhelming public health crisis and the resulting economic catastrophe that is COVID-19. This challenge will continue to manifest itself for many months and years to come.

How do you maintain a work/life balance?

Life in Congress has as its biggest challenge time management. Spending three to four days of the week in Washington and the balance of the time home in central Arkansas makes work/life balance a real juggling act. I enjoy spending time at home with family or on a family trip. Our family loves exploring new places and spending time together on the road.

Personally, meaningful time in the outdoors -- hunting, hiking, climbing, canoeing -- are key elements of striking that balance.

For five decades, I have treasured my time exploring Arkansas’s beautiful rugged terrain. Time on the trail or on the river is immediate tonic to me, and for me, there are never enough hours in the outdoors.

What is the most important lesson you’ve learned in your career to date?

There is no substitute for hard work. I have worked since I was a teenager. I had wonderful role models in my two grandfa-

thers and my dad all of whom had terrific work ethics — accompanied by warm, witty senses of humor. I’ve always encouraged colleagues, young people, and students that that “success comes before work” only in the dictionary. There is no substitute for perseverance, and I firmly believe that a key difference between successful people and those who don’t make is that successful people look at that list of tasks that they do not want to do — and they do them anyway.

How would you describe your leadership style? What experiences have you had to cultivate that style?

My leadership style is service-focused. I believe in building a plan and ensuring that the team entrusted with that plan has the training and resources necessary to carry it out to success.

I believe in a collaborative effort where leaders lead by doing and setting a positive, energetic example.

Tell us about your experiences working with the Arkansas Bankers Association.

I greatly enjoyed my two decades of association with the Arkansas Bankers Association. I served on the Board of Directors and attended many annual meetings and annual summer seminars. I’m grateful for the friendships that I built through the Association and the knowledge that I acquired from high-quality speakers, training opportunities, and peer-topeer exchanges.

What is been your greatest achievement that you are most proud of? (Professional, personal, or both) Personally, I am devoted to our family and live in awe of Martha’s legal career and community leadership as well as Liza and Payne for their exceptional talents and abilities. It’s been so rewarding to watch our kids grow, learn, and become successful young adults.

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Professionally, it had been a goal since my college days of starting a banking-related business before I turned 40. My grandfather and my father had always urged me to develop professional skills and leadership in order to prepare me for heading off on my own and helping start a new enterprise. I missed my goal, as I was 42 years old when I started Delta Trust and Banking Corp. I’ll be forever grateful to my fellow investors and our remarkable team of bankers and leaders that built our successful community institution.

Any philosophy or motto you tried to live or work by?

In 1983, I visited the White House for the first time during the administration of President Reagan. President Reagan had given senior White House staffers a lucite block for their desk with his favorite saying on it. A friend gave me one, and I’ve kept it on my desk ever since. It reads: “There is no limit to what a man can do or where he can go if he doesn’t mind who gets the credit.” It has been a wonderful guide.

Jill Grimsley

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The Arkansas Banker n Summer 2020

35

Commercial Lenders: Are you ready for this troubled economic time?

e

very lender has experienced that scenario where they get notice that one of their loans is in default and they begin preparing for a workout. Most lenders have also had that scenario turn into a nightmare once they discover that the financing statement that was intended to place a lien on the borrower’s equipment was never filed. What is the next step? What if the borrower files bankruptcy? Are there other liens out there?

In a thriving economy, the severity of issues like these are lessened. Low default rates and healthy balance sheets tend to make loan documentation errors fade into the background.

When the economy turns, however, these mistakes raise their ugly heads. During the Great Recession, and specifically for the 10 quarters following the third quarter of 2008, total commercial loans and leases fell by a total of $1.3 trillion—a 16.2% drop for their peak. During that same time period, there were approximately $412 billion in commercial real estate loan defaults. The commercial loan default rate ballooned from .3% to almost 6%.

Commercial lenders may now be facing an even more daunting challenge. Credit Suisse recently estimated that the second quarter GDP will contract by 33.5%. In other words, the period from April 1 to June 30 is shaping up to be the worst quarter on record going back to 1945. According to data from the Department of Labor, 22.4% of Americans who were in the labor force before the coronavirus pandemic (162.9 million) filed 36.5 million unemployment claims in the eight weeks between mid-March and mid-May 2020.

The recent economic downturn gives lenders the ability to revisit how they handle loan defaults and workouts. The immediate goal of a commercial lender during a tumultuous economic period is to ensure that its loan is properly documented and the collateral is secured, to establish an open line of communication with the borrower, and, in the event of a workout, to create documentation that will make the loan enforcement process cleaner, safer and more efficient. Below are a few ways lenders can accomplish these goals.

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By Kelly W. McNulty

Identify Problems and Issues

Once a loan goes into default, the first thing every banker should do is gather all loan documentation associated with the loan to ensure everything they thought was in the file is actually in the file. The lender should check that the promissory note, the mortgage, the security agreement, the assignment of rents, the guaranty and similar documents are all found, and make sure that all documents are signed and include all of the relevant information. An unsigned security agreement can turn a fully secured loan into a general unsecured claim. All loan documents should correctly note the loan number and have the correct borrower. We have all seen loan documents that have one name on the front, but have the signature of another entity or person on the signature page.

If there are deficiencies, the lender should immediately determine exactly what actions are needed to shore up any issues. If the mortgage or UCC-1 financing statement were not recorded—have them recorded immediately. If the guaranty is not signed, contact the borrower and have them sign it (the use of a forbearance agreement will be discussed in more detail below). Are the inventory or equipment lists up-to-date? To complete most of these tasks, the lender will have to communicate with the borrower, and that presents an opportunity for the lender to become more intertwined with the borrower and his or her business.

Be An Asset to Your Borrower

One of the main complaints most borrowers have is that they are not able to communicate openly and regularly with their lender. This communication issue is also prevalent for lenders when there is a default. Borrowers have a history of disappearing once the loan goes into default. Lenders can take a few simple steps to avoid this problem and to facilitate the workout process.

Set Up a Meeting. When was the last time you visited the borrower’s business? Such a visit allows the lender to not only improve their relationship with the borrower, but it also al-

lows the lender to view how the business is operating. Is the business properly staffed? Is there sufficient inventory? Is the building in good condition? If your main collateral is the business’s equipment, can you locate the majority of the pieces of equipment on-site? Is that delivery truck the bank has a lien on still being used, and where is it located? Only by visiting the business and getting to know your borrower better can you answer these questions.

Arrange for Regular Updates. Most loan documents contain a provision that requires the borrower to provide the lender with regular updates on accounts’ receivables, inventory and other similar information. Have you been using that? Do you have this most basic information in your file, or, as is common, is your most recent inventory list from when the loan was issued? While most borrowers may see this additional reporting requirement as a hassle, explain that the bank can only make decisions on refinancing or loan workouts if they have the most updated information. Arrange for the borrower to send you monthly (or more frequently if necessary) reports. If the borrower is not already preparing these reports, that may be a warning sign.

Use These Meetings and Information to Your Benefit.

While most lenders are wary of getting too involved in their borrower’s business, banks can use these client meetings and updated information to better understand the viability of the borrower. In these troubled economic times, banks want their borrowers to be as healthy as possible. Banks can use this information to assist clients in improving their areas of deficiency. Is their A/R constantly lagging more than 60 or 90 days?

Are they under-insured or over-staffed? While always avoiding taking actual control of the business, lenders can help improve the health of their borrowers by providing guidance and assistance on basic business operations. Even if it is just “gentle prodding,” a borrower that knows the bank is going to review its operations will most often work harder to ensure its business is running efficiently.

Forbearance Agreement

The Washington Post recently reported that the “economy has entered a deep recession that has echoes of the Great Depression in the way it has devastated so many businesses and consumers, triggering mass layoffs and threatening to set off a chain reaction of bankruptcies and financial losses for companies large and small.” Unfortunately, regardless of your efforts to assist the borrower, there will be many loans that wind up in the special assets department.

A forbearance agreement is often the best weapon in a lender’s arsenal when a loan goes into default. A forbearance agreement is an agreement whereby the borrower ratifies and reaffirms all of its financial and other obligations to the bank, agrees to certain payment obligations, and waives many of its defenses to an enforcement action, in exchange for the lender (temporarily) foregoing its enforcement rights. A forbearance agreement also helps your borrower by providing it a structured workout plan. Your forbearance agreement should, at a minimum, contain the following provisions.

Recital of Loan History. The beginning of any forbearance agreement should set forth all of the loan documents that have been executed by the borrower. This not only centralizes all of the relevant information on the loan, it also forces you as the lender to organize and assemble all of the loan documentation.

WHEREAS, the Borrower executed and delivered to Lender that Promissory Note dated _____ in the original amount of $_____, and that Security Agreement dated _____filed of record in the Arkansas Secretary of State Office on _____ as Instrument No. _____, and that Mortgage dated _____and recorded in the Office of the Circuit Clerk and Ex-Officio Recorder for _____ County, Arkansas (the “Recorder’s Office”) on _____ as Instrument No. _____, and that Assignment of Leases and Rents dated _____ and recorded in the Recorder’s Office on _____ as Instrument No. _____, and related security and loan documents related to Loan No. _____ (collectively, “Loan No. _____”).

Reaffirmation. The borrower should ratify and reaffirm all of the loan documents, all of their signatures, and all of its obligations contained in the loan documents. For example: Borrower and Guarantor swear, affirm, attest, warrant and represent to Lender the following: That this Agreement constitutes and comprises a legal, valid and binding obligation that is fully and completely enforceable against Borrower and Guarantor.

That Borrower and Guarantor hereby ratify and reaffirm all of their financial and other obligations of every nature that are set forth and contained in the Loan or New Loan Documents.

Forbearance Conditions. The forbearance agreement should fully and clearly set forth the new payment terms and other conditions placed upon the borrower. For instance, the agreement should state how much the new payments will be and when they are due. If any taxes are due, the agreement should require the borrower to pay them by a date certain. The bank can also get the borrower to agree to the reports and meetings encouraged above. The agreement should also require the borrower to pay the cost (i.e., attorney’s fees) for the preparation of the forbearance agreement, and any other costs that may be incurred by the lender. Finally, to ensure that the borrower will assist in any additional modifications that may be necessary in the future, the agreement should have the following provision: Borrower shall perform such other actions as deemed reasonably necessary by Lender to accomplish the purposes of this Agreement.

Waiver. One of the main goals of a forbearance agreement is to ensure that the borrower does not possess any claims against the lender or defenses to the enforcement of the loan documents. To the extent any such claims or defenses exist, the forbearance agreement should contain language waiving them.

(Continued on next page.)

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(Continued from previous page.)

Neither Borrower nor Guarantor possess any offset rights, counterclaim rights or other defenses to the payment and performance of their financial or other obligations that are set forth in the Loan, New Loan Documents or this Agreement but to the extent they may have such a claim or right, they fully waive and release them in their entirety.

Neither Borrower nor Guarantor possess any lender liability, duress, business or contractual interference or other claims of any nature against Lender, its predecessors in interest, successors or assigns, or its agents, but to the extent they may have any such claims, they fully and knowingly waive and release any such claims in their entirety.

Event of Default and Termination of Forbearance. The agreement should contain provisions similar to the following:

All parties hereto acknowledge, understand and agree that Borrower’s failure to pay when due any required payment due under the Loan and this Agreement or to pay or perform any other condition or covenant of any nature as contained in this Agreement or the Loan or New Loan Documents, shall be considered an Event of Default without the need for any notice or any cure period, notwithstanding the existence of any notice or cure periods in the Loan or New Loan Documents, all of which are hereby waived (“Event of Default”).

This Agreement shall terminate on _____, unless extended as provide for herein. All parties hereto acknowledge, understand and agree that should any Event of Default occur under this Agreement prior to _____, the Loan, or the New Loan Documents, then Lender’s obligation to forbear collection and enforcement efforts shall immediately cease, and that the Lender shall have the right to promptly and immediately prosecute its claims against Borrower and Guarantor.

Consent Judgment. Although some courts will resist the enforcement of this provision, the forbearance agreement should provide that the “Lender shall be entitled as a matter of law and fact to a judgment against Borrower and Guarantor should Lender terminate its forbearance obligations under this Agreement.”

There are many other provisions that can and should be added to the forbearance agreement to ensure that the lender is in the best possible position at this stage of the loan. You should contact a creditor’s rights attorney at the first sign of borrower distress and he or she can assist you in preparing the necessary documents and making sure that you are ready for the worst.

Kelly W. McNulty is a partner at GILL RAGON OWEN, P.A. Mr. McNulty’s practice focuses on business litigation, commercial foreclosures, representation of creditors in bankruptcy and non-bankruptcy, and providing general corporate representation. He regularly speaks and writes on the issues facing lenders and other creditors in bankruptcy and foreclosure.

Take heart—we’re here for you.

The COVID-19 outbreak is an evolving crisis, and we want to keep financial institutions up to speed on the latest tax and accounting updates as we evaluate ways to mitigate the inevitable economic effects. Visit our COVID-19 Resource Center at bkd.com/covid-19 for relevant news, changing guidelines and new regulations.

Everyone needs a trusted advisor.

Who’s yours?

501.372.1040 • @BKDLLP

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Tonya Cellers Community Banker lll Simmons Bank, Hot Springs, AR

What can banks do to better appeal to millennials – in the workforce and as customers?

Millennials bring new ideas and innovations, so it is important for banks to make recruiting them a priority. They can focus on recruiting at colleges and on social media, offer a competitive salary, expand perks and increase volunteer efforts in their communities. We want defined career paths and the opportunity to make a difference in our community. If a bank can accomplish those two things, they would make banking an appealing choice.

To gain millennials as clients, banks must reach them in their preferred channels like social media. They need to focus on mobile banking that is fast and easy. Millennials are not intimidated by tech like previous generations. If they can focus on convenience while still promoting the banker client relationship, they will have life long customers.

What technology innovation has made the most impact on your life?

My smart phone of course! I know it is cliché, but I do everything from my phone. Banking, shopping, investing, interacting with friends, you name it. I also use it every day to listen to either a book, music or one of my favorite podcasts.

What advice do you have for women wanting to get into banking?

Just go for it! Banking is still a male dominated field, but it doesn’t have to stay that way. It is important for women to have a seat at the table. We can bring different perspectives and skill sets that are important to the industry and community. You should not be afraid to be yourself even if you are the only woman in the room. Early in my career, I tried to be more like my male counter parts. I was not being authentic to myself or my work style. One of my favorite quotes is “Don’t make yourself small to make others feel more comfortable”. I think women often fall into that trap when working in a male dominated environment. Engrained social norms can be a difficult thing to change. However, I think it would be difficult to be happy and successful in your career if you are not being authentic. I am incredibly fortunate to now work for a bank that sees the importance of a diversified workforce and embraces women in banking.

What civic project has your bank participated in that touched you the most?

Recently, our team provided lunch for the ER staff at our local hospitals. During this time of uncertainty, it was important for us to let our medical workers know that we appreciate their sacrifices. We also used clients who own restaurants for the catering. Our community is hurting so any small gesture of appreciation and support means a lot to them right now.

What can you simply not resist?

Any opportunity to spend with my son! I will cancel plans to hang with him. Luckily, my friends are gracious with me.

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Legal Developments in Banking

By Justin T. Allen

Attorney • Wright, Lindsey, & Jennings LLP

There are two significant issues for banks that have made their way through the court system recently. One involves waiver of jury trials in the event of a dispute and the other impacts cross collateralization. Banks need to be mindful of these developments as they move forward with drafting loan documents.

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Jury Trial Waiver

he last 2 years have seen a lot of activity with regard to jury trial waiver provisions, including multiple court decisions and legislative activity. Earlier this year, the Arkansas Supreme Court weighed in again and the opinion seems to be largely good news in that it supports the validity of jury trial waiver provisions in lending transactions.

In late 2017, in Tilley v. Malvern National Bank (Tilley I), the Arkansas Supreme Court invalidated the jury trial waiver provision in the loan documents. The Court held that a jury trial waiver can only be done in the manner “prescribed by law” and, since the legislature had not passed a law allowing a waiver in that manner, the Court declined to enforce the provision.

In the wake of that decision, in a 2018 special session, the legislature passed Act 13, which allowed for a jury trial waiver in lending contracts. After Act 13 was adopted, MNB again sought to enforce the waiver against Tilley. That issue went back up to the Supreme Court and, in December of 2019, the Court essentially ruled that Act 13 could not be applied retroactively to Tilley’s claim against MNB. (Tilley II) The majority opinion in Tilley II was troubling because it contained some language that suggested that Act 13 wasn’t valid in any case, present or future. The good news is recently, in

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BHC Pinnacle Pointe Hospital v. Nelson , the Arkansas Supreme Court issued an opinion that should ensure that Act 13 is valid, and jury trial waivers are enforceable in lending transactions.

In Nelson, the two named plaintiffs filed a class action suit against Pinnacle alleging violations of the wage and hour laws in Arkansas. Pinnacle moved to dismiss relying on a clause in the employment agreement calling for such disputes to be submitted to arbitration, rather than to a court. The circuit court denied Pinnacle’s request, but the Supreme Court reversed and held the matter should be dismissed and submitted to arbitration.

One of the plaintiffs’ arguments in the case relied on Tilley v.

Malvern National Bank. Plaintiffs claimed that since the arbitration clause in the employment agreement was based on federal arbitration law that is was invalid because a wavier can only be provided by “Arkansas law.” The Court rejected that argument, holding that the jury trial waiver can be based on court rule, Arkansas law and/or federal law.

In short, while a borrower may still try to argue otherwise, Nelson strongly suggests that Act 13 is valid and enforceable moving forward despite the loose language in Tilley II. Indeed, it holds that a jury trial waiver can be enforced in the manner prescribed by both state and federal law.

Cross Collateralization

In March, the Arkansas Court of Appeals handed down an opinion in Equity Bank vs. Southside Baptist Church, 2020 Ark App. 199. Equity Bank (Bank) was the lender to Southside Baptist Church (Church) on two separate loans: a 2008 loan of $2,600,000 secured by a mortgage on real property owned by the Church (Note 1) and a 2012 loan with a principal amount of about $150,000 secured by the Church’s furniture, fixtures, inventory, and equipment (Note 2).

The Church defaulted on the two notes, and the Bank filed suit. The parties attended mediation, and resolved most of their issues: The Church deeded the land to the Bank, the parties agreed that the remaining debt associated with Note 2 is $55,000, and the Church sold the collateral securing Note 2 for $55,000. The only remaining issue was to which of the two outstanding debts the $55,000 would be applied.

The Church filed a motion for summary judgment that the $55,000 should apply to the debt under Note 2. The Bank asserted that, due to cross collateralization language included in Note 2, it had the option to apply the $55,000 to the debt memorialized in Note 1. The circuit court granted the Church’s motion for summary judgment and ordered application of the $55,000 to Note 2 after finding that the cross-collateralization clause in Note 2 did not clearly contemplate extending security to the Note 1 debt.

The Bank argued on appeal that language in Note 2 specifying that “this Agreement secures all obligations, debts and liabilities, plus interest thereon, of [Southside Baptist] to [Equity Bank] . . . whether now existing or hereafter arising” clearly referred to Note 1 and that all parties involved knew of the Note 1 debt at the time Note 2 was executed.

The Court of Appeals noted that while Arkansas law does permit parties to secure existing or future debt under the terms of a mortgage or security agreement given to secure a different debt, the security will not be extended to prior debts unless the instrument unambiguously identifies those debts intended to be secured. The Court did not find the phrasing “all debt” “now existing” to properly identify Note 1. The Court affirmed the circuit court’s decision to apply the $55,000 to Note 2.

As a result of this ruling, when cross collateralization is desired, the existing notes should be unambiguously identified by referencing the specific debt obligation document, and attaching it, and a mortgage modification should be filed referencing the cross collateralization.

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INVEST IN YOURSELF

The Graduate School of Banking at Louisiana State University is Worth the Investment!

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By Robin Simpson, Community Bank President, BancorpSouth, Rogers, AR he best time to invest in yourself is today! I want to encourage everyone, but especially women who have overlooked the program and hesitated due to scheduling and family commitments. This program is for you! I can’t guaranty it will be easy, but it will be worthwhile.

The Graduate School of Banking at LSU (GSBLSU) is an intensive program of study with two weeks on campus for three consecutive years in addition to self-study projects for the two intervening years, so it is a commitment, but I know families can make it work. I want to share information about scheduling, family concerns, and home study which are often among the reasons that fewer women enroll versus men.

SCHEDULING

I encourage you to call the GSBLSU office to discuss possible scheduling conflicts. Many issues can be resolved…since the program is held in late May it commonly coincides with graduation ceremonies or other work obligations.

For example, my roommate had to miss afternoon classes and fly home to attend her children’s high school graduation. She flew back the next morning, and had a private proctored exam on Sunday, before the session resumed Sunday night. Another classmate began GSBLSU with me in 2017, but was not able to attend in 2018 due to work commitments. The school gave him permission to join a later class in year two, moving back his graduation, but allowing him to retain credit for the work he had already completed. As a class officer, I am aware of some new “classmates” we gained, who re-joined our class to graduate in 2019, after sitting out for at least one year. It can be done!

Most working parents, but especially moms, have learned a key survival skill for life……RELAX. Your house doesn’t have to be magazine photo-ready all year. You don’t have to make an “A” on every paper (though some think you do). Balance is the key to the success of the program. The materials covered and the experience gained is the journey and the investment in your career.

FAMILY

You will have some free time during the weekend between the on-campus weeks. It is possible for family or friends to come and see you for a few hours, which helps minimize homesick feelings. This may not be possible for some, but the break between classes is a welcomed rest!

As a mom, you can find value in your children bonding with dad. Personally, mine enjoyed a mini-vacation while I was gone, which included a major league baseball game and a helicopter ride. With technology, you can see your children’s sweet faces while they tell you about their day. On a few occasions, I stepped out of an evening social so I could connect with my family. I was still able to be a part of important moments with my girls. You can also connect with family during breaks between classes or during the long lunch break each day.

The impact on children seeing their parent (especially daughters who see their mom) setting a goal, committing the time to make it happen, and completing a professional certification is impactful. Children will see the importance of education and life-long learning.

GSBLSU 2019 Class Officers: (left to right) Ben Burton, Mitch Gay, Robin Simpson, Cliff Kilpatrick, and Miguel Garcia.

(Photo on opposite page) GSBLSU Graduating Class of 2019.

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HOME STUDY SURVIVAL

Remember to RELAX. Produce the best work you can, within the time you can commit. (Choose a reasonable time limit.

You will not be able to complete your projects in two hours.)

Sometimes you have to choose how much time you want to commit, and don’t get too detailed if it means more time commitment than you can afford.

Family support is a huge benefit for home-study projects.

Have your children make memories with grandparents or go on an adventure with dad. This will allow some uninterrupted hours to write papers or conduct research.

A few tips on survival of the home study projects: The projects are usually published while you’re still at GSBLSU. You can spend time getting a head start, reviewing the projects, or asking questions from the instructors to get a clear understanding of expectations. Start the projects as soon as you can when you arrive home. The projects are related to class work and you will find the information is fresh from class time and notes. The projects have due dates and may not be due until fall, but you will feel much better when the holidays are approaching if you have a head start. Planning ahead even for procrastinators, will be helpful. You can do it!

RESULTS

Though I will not imply that GSBLSU will win you an immediate promotion, I will say, improved credentials cannot hurt you. I was promoted at work during my second year of the GSBLSU program, and one of my roommates was awarded a huge promotion that coincided with our GSBLSU graduation in 2019.

Your company likes having high quality teammates they can be proud of!

Your completion of the Graduate School of Banking at LSU will impact your future: • Your family will be proud of your accomplishment of an important goal • Your children will have a favorable view of life-long learning • Your employer will see your commitment to your career and self-improvement • Your resume’ will be a forever highlight that you have graduate study credentials • Your network will include bankers, regulators and many other professional experts from among the connections you make while attend GSBLSU, in addition to • Lifelong new friends.

Investing in yourself is worth the effort!

The Arkansas Bankers Association oversees scholarships which are awarded annually to worthy candidates. As of last year, in addition to a general scholarship open to all candidates, a new scholarship open only to female and minority applicants to the Graduate School of Banking at LSU was offered. Please see the Arkansas Bankers Association website to obtain current information.

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Letters to the ABA

We write today on behalf of the Arkansas Cattlemen’s Association (ACA), representing over 8,650 cattle producers and their families located across the state of Arkansas. We would first like to thank you for your comments during Governor Hutchinson’s COVID-19 press conference on March 28, 2020. It is reassuring to know that money is safe, insured and assessable for cattle producers and their families during these difficult times.

Much like Arkansas banks, Arkansas cattle operations are open and operating. Every day, Arkansas cattle producers are rising to the challenge to meet the protein needs of Arkansas, the United States and the world. Unfortunately, like so many industries across the nation, the COVID-19 outbreak has not left the catttle industry and producers unscathed. A recent economic damage assessment from Kansas State University, estimated that the COVID-19 outbreak has damaged the cow-calf sector of the cattle industry to the tune of $3.53 billion; while the stocker sector of the industry has been damaged by $3.79 billion. Loss of equity and volatile markets will undoubtedly have serious repercussions for producers and will reverberate through the industry for a significant time.

We recently received an email from one of our members, a young producer in Greene County, which read in part; “When talking to lenders, the trending rebuttal is ‘we are being told it is business as usual’ from the cattle market.” This email illustrates the uncertainity and level of concern in our industry. As stated above, while cattle markets continue to operate and cattle move through the supply chain, prices are artificially low, in response to COVID-19. We write this letter today to offer ourselves as a resource to the members of the ABA. The ACA is ready and willing to assist our local banks by answering questions about market events, governmental economic assistance for cattle producers, or common management practice. Please know we are available to assist you and your membership however we can so together we can assist the cattle producers of Arkansas.

The ability for cattle producers to access financial tools is critically important. We appreciate all of our local banks across the state that continues to serve our agriculture communities. There is a saying, “Behind ever successful farmer is a wife who works in town.” It may be past time to add “and an understanding banker.” We wish you and the ABA continued success. If we may be of service, please do not hesitate to reach out.

Sincerely,

Bernie Freeman President Arkansas Cattlemen’s Association

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Cody Burkham Executive Vice President Arkansas Cattlemen’s Association

Member News Simmons First National Corporation Announces Amendment to Stock Repurchase Program

First Community Bank Purchases Property for Central Arkansas Banking Center

Simmons First National Corporation (Nasdaq: SFNC) (“company”) announced that its board of directors has approved an amendment to the company’s stock repurchase program (“program”) that increases the amount of the company’s common stock that may be repurchased under the program from a maximum of $60 million to $180 million. The program was originally approved on October 17, 2019, and to date, the company has repurchased approximately $31.6 million of its common stock under the Program.

First Community Bank has purchased the southeast corner of Rahling Road and Chenal Parkway in Little Rock and plans to seek regulatory approval to build a new central Arkansas banking center.

“The board’s decision to expand the size of our stock repurchase program reflects our continued confidence in the strength and long-term prospects of our business,” said George Makris, Jr., the company’s chairman and chief executive officer.

“We remain committed to leveraging our strong balance sheet to responsibly reduce the number of outstanding shares of our common stock, which we continue to believe is an attractive investment, particularly at current trading prices.”

The program permits the company to repurchase shares of its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the program will be determined by the company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of the common stock, corporate considerations, the company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The program does not obligate the company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. The program will terminate on October 31, 2021 (unless terminated sooner).

“We are excited to build on our footprint in Arkansas,” said Dale Cole, chairman and CEO of First Community Bank. “First Community continues to invest in central Arkansas.”

Cole further stated, “In 2017, the bank opened its first Little Rock location at the corner of Kavanaugh and Cantrell. In 2019, a second full-service location was opened at Saddle Creek. It is with great excitement that I can share our news of the purchase of this property and our plans to construct a new state-of-the-art banking center for central Arkansas, pending regulatory approval. Our 27-location banking network also offers two facilities in Cabot and a new full-service location in Conway with more expansion plans to come.”

The proposed plan is to build an approximately 15,000 squarefoot, two-story complex on the site. Work would start later this year with the goal of opening in 2021. Plans put the proposed building directly across from the Promenade at Chenal.

“Between the growth that we have experienced as an organization and expansion opportunities in central Arkansas, it became increasingly important to expand into a larger banking center to show our commitment to this area,” said Renè Julian, community president in Little Rock. “The new banking center will include a retail banking branch plus office space for retail and commercial lending, secondary market home loans, electronic banking services and bank operations. It will be a true one-stop financial center.”

Partners Bank Supports Helena in a Unique Way When the Helena Health Foundation assisted in acquiring a ladder fire truck for Helena/West Helena, it would not fit through the downtown Helena fire station building door. Partners Bank has contributed almost $20,000 for the work needed to accommodate the need. Pictured are Vance St. Columbia, Mid-South Regional President, and Stephenie A Cooke, Bank Culture Officer for Partners Bank; Mayor Kevin Smith of Helena/West Helena; and members of the Helena Fire Department.

Partners Bank is celebrating its 80th birthday this year and what better way than giving back to the community in which it started. The Bank operates six branches in Helena/West Helena, Marvell, Marion, and Wynne.

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Member News Citizens Bank Partners with Teslar Software to Better Serve Communities

Arvest Bank Foundation Provides Grant to “Recycle Bikes for Kids”

Teslar Software, a provider of automated workflow and portfolio management tools designed to help community financial institutions thrive, announced in May that Citizens Bank selected its platform to enhance efficiencies and better serve its customers.

The Arvest Bank Foundation donated a gift of $3,000 to Recycle Bikes For Kids, a nonprofit organization in North Little Rock that provides refurbished bicycles to children in central Arkansas, free of charge.

Based in Batesville, Arkansas, Citizens Bank has a reputation for providing exceptional service to its customers; the bank has nearly 20 branches throughout Arkansas and continues to expand its footprint. The bank was seeking ways to improve operations when it was introduced to Teslar based on a peer bank’s recommendation.

“Our goal was to make banking easier for our customers by streamlining operations; it turns out that Teslar will add many more efficiencies that are critical to our future growth,” said Pam Jones, Citizens Bank Executive Vice President – Banking Services and Compliance. “Citizens Bank is owned by local shareholders and governed by a local board of directors, most of whom live, work and invest alongside our customers. Solutions like Teslar provide better service and support to these communities and make an impact on Main Street, while helping us to scale.”

Citizens Bank plans to leverage Teslar’s automated workflows and portfolio management tools to streamline commercial lending and improve processes such as exceptions tracking, reporting and scorecards. Teslar integrates with the bank’s document management portal, which will reduce paperwork and end many manual, paper-based processes.

“Citizens Bank has been recognized nationally and locally as an institution that puts its customers first,” said Joe Ehrhardt, CEO and founder of Teslar. “With Teslar, it will be able to invest in its commitment to its customers by offering a more agile, enjoyable banking experience, while also helping the bank’s operations and ability to scale. Teslar can help institutions like Citizens Bank stay relevant and grow.”

Teslar provides community financial institutions with automated workflow and portfolio management tools to streamline and improve processes with easy access to relevant information needed to operate. The Teslar platform integrates siloed systems, centralizes data and boosts efficiencies enterprise wide to optimize profits and make customer interactions more meaningful.

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“Anyone who has ever ridden a bike knows the joy it brings, and we believe every child deserves a bike of their very own,” said Ron King, founder of Recycle Bikes for Kids. “Bikes provide transportation and a sense of independence, freedom and exploration. We very much appreciate the Arvest Bank Foundation for keeping the children of our community in mind during its annual giving initiatives.”

“We’ve been fortunate to witness first-hand the great work Ron and his volunteers do to transform used bikes into meaningful gifts for so many children across Arkansas,” said Jim Cargill, president and CEO of Arvest Bank in central, northeast and southwest Arkansas. “By extending the life of these bikes, this program provides an element of sustainability and teaches volunteers of all ages mechanical skills that so many people don’t have exposure to these days.”

Volunteers are solely responsible for the repair and refurbishing of the bikes that are donated to Recycle Bikes for Kids. Since the program was founded in 2008, it has distributed more than 17,500 bikes to children across central Arkansas. Every child who receives a bike also receives a bicycle helmet. Anyone 16 years of age or older may earn a free bike of their own to repair, after serving a certain number of volunteer hours with the program to help refurbish bikes that will be given to children.

Recycle Bikes for Kids accepts bicycles of any size and kind. More information about the program is available at www.recyclebikesforkids.org.

Member News Arvest Provides One Million Meals Arvest Bank launched its annual two-month Million Meals initiative to fight hunger in the four-state region the bank serves.

Instead, the bank announced it will proactively provide one million meals in the fight against hunger.

In this, its tenth year, Arvest’s Million Meals campaign has raised a total of 17,068,971 meals, which includes more than $3 million in funds given directly to the bank’s dozens of local food partners.

Due to the effects of COVID-19, local food partners saw an increased need for the help Million Meals provides. Arvest encouraged anyone who usually supports the Million Meals campaign through in-branch food contributions or fundraisers to donate directly to their local food bank or other appropriate organization if they were able.

“This donation allows us to help meet an immediate and growing need, and hopefully provide support for the weeks or months to come,” said Jim Cargill, president and CEO of Arvest Bank in central, northeast and southwest Arkansas. “The 80plus food partners we support can provide five meals with every dollar that’s donated, so we are working toward keeping their shelves stocked for those facing food insecurity.”

Cornerstone Bank Donates to the Affordable Housing Project Jason Tennant, President and CLO, Cornerstone Bank, presented a check for $5,000 to the Affordable Housing Project. The donation was part of a $10,000 commitment to the Carroll County Collaborative the bank made this year to help facilitate the completion of various phases of the project. The funds will be used to help meet the pressing demand for affordable housing in the Carroll County area.

Jason stated, “We are thrilled to assist in the continued development of our local communities. Cornerstone Bank, being the largest mortgage lender in Carroll County, has many loan programs that fit our community’s needs. Teaming with the Carroll County Collaborative’s leadership will allow us to help more people become homeowners in Carroll County. We are appreciative of the Carroll County Collaborative’s efforts as it relates to the project and the impact it will have on our local communities.”

The Affordable Housing Project will help provide individuals with more affordable, safe housing resources in Berryville, Green Forest, and Eureka Springs areas. While affordable housing is a critical issue everywhere, it is particularly a problem in Arkansas and Carroll County.

In central Arkansas, Arvest provided funding assistance to the Arkansas Food Bank.

The bank’s decision to provide one million meals was based on the fact hunger is an issue in every community it serves.

In 2018, 11.1 percent of American households were food-insecure, meaning they had difficulty at some time during the year providing enough food for all their members due to a lack of resources.

Farmers Bank & Trust Provided Students with WIFI During Pandemic From early April to late May, several Farmers Bank & Trust locations provided free WIFI service to students to aid the communities during the pandemic. Access was available from 7:00 a.m. to 8:00 p.m. any day of the week for students to complete their schoolwork. Students could access the WIFI connection from the parking lots of offices in Arkansas that included Magnolia, Texarkana, Hope, Camden, Prescott, Malvern, and Bryant. The offices in Texas included Texarkana, New Boston, and Prosper.

Farmers Bank & Trust Chief Executive Officer, Chris Gosnell, stated, “As a community bank with a giving mission to help further education in our footprint, we recognized a need to provide WIFI to local students and families. We are constantly looking for ways to help our communities during this time, and I applaud our team for setting up this service promptly and look forward to assisting local families during this difficult time.”

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Member News FNBB Celebrates 35th Anniversary First National Bankers Bank will celebrate its 35th anniversary on July 2. FNBB received a charter from the Office of the Comptroller of Currency and opened for business on July 2, 1984, as the first nationally chartered banker’s bank in the nation.

FNBB began with one office location in Baton Rouge, Louisiana where the corporate headquarters is currently located. The bank grew with the opening of Mississippi National Bankers Bank in 2000, and Alabama Bankers Bank in 2004. The merger of Arkansas Bankers Bank into FNBB in 2008, and the acquisition of Independent Bankers Bank in Florida 2015 rounded out its footprint across the Southeastern United States. In 2011, FNBB consolidated its bank subsidiaries into a single charter under the FNBB banner.

FNBB not only added bank locations but expanded its services beyond traditional correspondent banking services. Under the Holding Company, First National Bankers Bankshares, Inc., FNBB Services Corp. was launched to provide internal audits, IS audits, compliance services and loan review services, followed

by FNBB Capital Markets, LLC providing retirement benefit services and FNBB Insurance Agency, LLC to offer insurance products.

“The foundation, traditions and core values associated with FNBB are as strong today as in 1984”, said Joseph F. Quinlan, Jr. who is Chairman of FNBB, Inc. Mr. Quinlan added, “The FNBB team provides unique perspectives, delivering innovative solutions to help community banks grow their customer relationships. FNBB lives by our core values, striving to always do the right thing and be your trusted partner. As customers have faced challenges they have come to rely on FNBB to be there for their bank as well as their employees. At FNBB, it’s our people who deliver Service Beyond Comparison.”

“While community banking will continue to change, FNBB’s commitment will not”, says Jim Hudson, President and CEO of FNBB. “We will continue to provide high quality correspondent services to facilitate the success and growth of our shareholders and clients.”

“Our organization is extremely well capitalized and postured for continued growth both organically and through M&A, said Joseph F. Quinlan, III who is President and CEO of FNBB, Inc. Despite some constriction in our customer base over the last few years because of M&A, we remain very confident about the strength and future of community banking and the critical role that FNBB will have in that space for years to come.”

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Arvest Go Mobile Banking App Certified by J.D. Power Arvest Bank is pleased to announce J.D. Power has certified the Arvest Go mobile banking app for providing “an outstanding mobile banking experience,” making Arvest the first mid-sized bank – and one of a select few in the nation – to earn this designation.

“In today’s digital banking environment, mobile app excellence is not limited to only the big banks,” said Bob Neuhaus, vice president of banking and payments at J.D. Power. “J.D. Power’s Mobile App Certification Program recognizes regional banks like Arvest that demonstrate mobile app leadership in the industry.”

J.D. Power’s Mobile App Certification Program powered by Centric Digital focuses on certifying top-performing brands within a variety of industries, including financial services, insurance and healthcare. As a first step, brands must rank among top performers in the most recent J.D. Power North American Mobile App Satisfaction Index.

Benchmark rankings are based on overall customer satisfaction with the mobile app experience for 120 brands across seven industries. Specific factors for Arvest Go included ease of navigation, range of services, speed of completing transactions, clarity of information and the app’s overall appearance.

The Arvest Go app was designed to allow customers to take control of their accounts whenever and wherever they want, and is loaded with features such as fingerprint and Face ID® login and a Quick View setting for checking balances without logging in. Most recently, Arvest added a tool that allows users to lock and unlock an Arvest debit or personal credit card to provide greater security and peace of mind. Arvest Go is rated 4.8 stars – on a 5.0 scale – in the app store.

“Arvest is constantly looking for new and better ways to help our customers bank in the ways that provide the most help and benefit to them,” Arvest marketing director Jason Kincy said. “This J.D. Power Mobile App Certification is rewarding primarily because it demonstrates that we are helping make banking faster, easier and more secure for our customers.”

Qualifying brands must pass a rigorous evaluation of 250 mobile app experience and operational best practices conducted

by J.D. Power in collaboration with Centric Digital. The 250 are a subset of Centric Digital’s DIMENSIONS, a classification system comprising more than 3,000 digital best practices called “classifiers” and used by industry leaders to benchmark digital performance.

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Banker News

Moves

Mark S. Forbis Joins Citizens Bank Board of Directors

Citizens Bank Promotes Savell to Retail Manager of Eagle Mountain Branch

Jeff Teague, Chairman of the Board of Citizens Bank, is proud to announce the appointment of Mark S. Forbis to the Citizens Bank Board of Directors.

Citizens Bank is proud to announce the promotion of Patricia Savell to Assistant Vice President and Retail Branch Manager of the bank’s Eagle Mountain location in Batesville.

Mr. Forbis recently retired after an illustrious 31-year career with Jack Henry & Associates, one of the nation’s leading financial services technology companies, with over 9,000 banking and financial services clients across America.

Ms. Savell has 29 years of banking experience, during which time she has served in management positions of increasing responsibility. She most recently served as Retail Manager at the Citizens Bank branch in Southside. She and her husband, Roger, live in Melbourne. They have one grown son, Cody.

During his career at Jack Henry & Associates, Mr. Forbis served in numerous executive management positions, most recently as Executive Vice President and Chief Technology Officer.

In this senior executive position, Mark led Jack Henry’s national technology strategy, their investment in and development of numerous forward looking, state-of-the-art and generationally transformational financial services technologies including: mobile/digital technology platforms, artificial intelligence software allowing voice activated banking and numerous other high value customer driven, technology based services.

“Mark is a world class financial services technologist with both expertise and vision. He has a seat at the table with those in the United States who invent and develop next generation technology and who will drive financial services innovation well into 2050 and beyond. Mark is a substantial resource for Citizens Bank as we aggressively move into the world of nationally innovative banking services,” said Jeff Teague, Citizens Bank Chairman of the Board.

Stone Bank Adds Dobbins to Mountain View Staff Denise Dobbins has joined Stone Bank in Mountain View as a teller and customer service representative. She has over 30 years of banking experience and was previously affiliated with Centennial Bank in Mountain View.

“We want to make certain every customer at Eagle Mountain feels that we handled their business professionally and exceeded their expectations,” Ms. Savell said. “We also are proud to welcome customers to our branch where they will enjoy a true hometown banking experience.”

“The Eagle Mountain Branch is located in a very busy shopping and commercial area, so we are always striving for a perfect mix of convenience and great customer service,” said Katherine Harris, Vice President and Market Retail Manager for Citizens Bank. “Pat Savell and her team are looking forward to handling all of your financial needs.”

FNBB Announces Promotion First National Bankers Bank is pleased to announce the promotion of Herbert Thomas to Senior Vice President, Relationship Manager. Herbert joined FNBB in 2017 and is responsible for business development in the Arkansas regions. Herbert has been in the financial services industry for over 38 years, primarily in a correspondent banking role. His experience and knowledge of the banking industry and bankers in Arkansas has been very valuable to efforts in serving our community bank customers.

Dobbins is a Mountain View native and a graduate of Mountain View High School.

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Banker News

Moves

Partners Bank Announces Changes in Several Locations Partners Bank has named Vance St. Columbia EVP, Mid-South Regional President; Erica Cook VP, Corporate Secretary; and Dana Pittman VP, Chief Operating Officer. Each of these work in the Main Branch in Helena-West Helena. Ben Pittman AVP, Credit Risk Officer, works at the Marvell Branch. Michael Bynum EVP, Central Arkansas Regional President will be working out of Conway.

Vance St. Columbia

Erica Cook

Dana Pittman

Union Bankshares Announces Staff Addition Jarrod Yarnell, CEO, of Union Bankshares, has announced that Karey Don Kesterson has been hired as Senior Vice President, Risk Management Officer. Union Bankshares is the holding company for Union Bank of Mena and First National Bank at Paris.

Kesterson was previously Chief Financial Officer for Mena Regional Health System. He is a Certified Public Accountant and member of the American Institute of Certified Public Accountants and Arkansas Society of Certified Public Accountants, and graduated Henderson State University in Arkadelphia with a degree in Accounting.

According to Yarnell, “we are extremely pleased that Karey Don has joined our team, and are confident that his level of expertise and experience will be an asset to the bank well into the future. Homegrown talent and hometown banking go hand in hand, and that’s what we have in Karey Don”.

Union Bank of Mena, founded in 1934, has branches in Mena, Hatfield and Wickes. First National Bank at Paris was founded in 1891 and has branches in Paris, Caulksvile, Ozark and Clarksville, and in Booneville and Waldron as Community National Bank.

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Ben Pittman

Michael Bynum

Farmers Bank & Trust Announces Promotion of Lacey McClish to SVP of Operations Bank president Randy Scott remarked, “Of the many opportunities that I really enjoy at the bank, the one that I enjoy the most is when I can announce the promotion of a very deserving bank employee. I am very excited for Lacey McClish. She has been with our bank for 15 years, beginning her career as a teller, and she has steadily advanced through the bank to where she now oversees all the bank’s operations, which include Bookkeeping, Customer Service, and Teller Operations. Lacey is very special, and is very dedicated to our customers and to our bank staff.”

“I could not be more excited,” McClish said. “I love the bank, its staff, and the increasing opportunities I have been given to serve our customers, and to advance in my career. Our bank is so customer service driven, and that’s what I like the most!”

A Senath-Hornersville High School graduate, McClish also attended Arkansas Northeastern College. McClish and her son Hunter Vuletich, recently moved from Manila to Blytheville, and she will soon be married to Blake Wyatt.

Scott concluded, “Lacey is truly representative of the dedicated Farmers Bank staffers here, and all across Mississippi County, who have focused on providing the best in community banking service and services for 112 years!”

Union Bank Of Mena Announces Staff Promotions Kevin Williams, President of Union Bank of Mena, has announced multiple staff promotions.

Jason Sullivan has been promoted to Senior Vice President, Lending. Sullivan, who was previously Vice President, Lending, graduated Southern Arkansas University in Magnolia and Barrett Graduate School of Banking in Memphis, Tennessee. Sullivan is a member of the Arkansas Cattlemen’s Association and a volunteer for Baker Cemetery, Inc. Pilar Fowler has been promoted to Vice President, Compliance and BSA Officer. Fowler, who was previously Assistant Compliance and BSA Officer, graduated from the University of Arkansas at Little Rock with a degree in accounting. She is a member of Mena Rotary Club and Vice President of the board of directors of the Mena/ Polk County Chamber of Commerce.

Nina Moore has been promoted to Vice President of Retail Banking and Security Officer. Moore was previously Assistant Vice President of Retail Banking and Security Officer and holds an associate's degree in business from Eastfield Community College in Mesquite, Texas. Moore is a past board member of the Ouachita River School District and the Mena / Polk County Chamber of Commerce and is a member of the Mena Lioness Club and is a Relay for Life volunteer.

Misty Hubbard has been promoted to Assistant Vice President of Retail Banking and CSR Manager. Hubbard has been with Union Bank of Mena for 16 years, has served on the board of directors of the Court Appointed Special Advocates (CASA) of the Ouachita Region, and is a volunteer for Relay for Life.

Simmons Names Northwest Arkansas Market President Simmons Bank has promoted Charlie Van Ness to market president for Northwest Arkansas. Van Ness, who previously served two years as Simmons’ Northwest Arkansas lending manager, will oversee strategy along with loan and deposit growth for one of the state’s fastest-growing regions.

With more than twelve years of industry experience, Van Ness has previously served as Northwest Arkansas market president of Bear State Bank (acquired by Arvest in 2018), senior vice president of commercial lending at First Federal Bank (later Bear State Bank) and as a credit analyst for both Heartland and Regions banks.

Carson Retiring From Generations Bank After 45 Years Generations Bank has announced that Terry Carson is retiring from Generations Bank where he served as Market President in Van Buren.

Terry had previously retired in 2018, but a loss in the Generations Bank family in Van Buren prompted his return to banking with Generations. He reassumed the role of Market President in his return. Those he worked alongside said “ he has been a truly great mentor”, that he “encouraged and always believed in me” and that they could rely on him to know a little bit about everything, noting he is “a walking library, if you need to know something, I bet he knows the answer”.

“Terry’s presence will be greatly missed, and we hope to see him around the bank soon. We appreciate you stewarding our Van Buren branch remarkably, and wish you well during retirement,” said Joe Ruddell, President of Generations Bank.

“We are grateful for how Terry served our Van Buren branch and market. After his initial retirement, he stepped back in to lead during a trying season and excelled. Thank you for your service to our team, Terry,” stated Jon Harrell, Chairman, and CEO of Generations Bank.

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Thereâ&#x20AC;&#x2122;s a reason strawberries are our favorite fruit.

Please join us for the 62nd Annual Simmons Bank Strawberry Breakfast. Enjoy a home-cooked breakfast with plenty of fresh strawberries.

Simmons Bank Strawberry Breakfast Little Rock Marriott Wednesday, September 16 7:30 â&#x20AC;&#x201C; 8:30 a.m.