The Arkansas Banker July 2016

Annual Washington Visit

Credit Impairment Standard

Leadership Conference Wrap-Up

The Arkansas

Banker

Remembering

Charles S. McCain Volume C, No. 7 | July 2016 July 2016 | The Arkansas Banker

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ABA Live Events ABA Professional Development

Live Events...

Provide you with face-to-face interaction with an expert instructor!

AUGUST 2016

3–5

| Bank Management Seminar

Hilton Sandestin, Destin, Florida Who Should Attend: Bank Directors, CEOs, Presidents, and Senior Management

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8–12 | Consumer Lending School

Crowne Plaza, Little Rock Who Should Attend: Consumer Loan Officers, Credit Analysts, Consumer Credit Personnel and Branch Managers

| Real Estate Loan Documentation

Crowne Plaza, Little Rock Who Should Attend: Commercial Lenders, Credit Analysts, Loan Documentation Specialists, Branch Managers, Private Bankers, and Business Development Officers

25 | Banking the Medical, Legal and Accounting Professional

Crowne Plaza, Little Rock Who Should Attend: Commercial Lenders, Business Development Officers, Private Bankers, Branch Managers, Assistant Branch Managers, and Credit Analysts

18 | BSA/AML Compliance Management

Crowne Plaza, Little Rock Who Should Attend: Personnel who have responsibility for maintaining or auditing BSA compliance efforts

23 | Legal Issues of New Account Documentation Crowne Plaza, Little Rock Who Should Attend: Customer contact personnel, Internal Auditors, Compliance Officers, Supervisors & Officers whose responsibilities include opening or managing new accounts and CDs

SEPTEMBER 2016

7–8

| Call Report Preparation

20

| 2016 TRID Essentials (Integrated Disclosures)

Crowne Plaza, Little Rock Who Should Attend: Anyone responsible for preparing, auditing, or signing the call report Holiday Inn Presidential, Little Rock Who Should Attend: Mortgage Loan Department Managers, Compliance Officers, Loan Officers, Auditors, and others with responsibilities for preparing, delivering, or auditing new disclosures

OCTOBER 2016

2–6

| Basic Lending School

Holiday Inn Presidential, Little Rock Who Should Attend: Loan Officers, Lending Support Staff, New and Intermediate Lending staff

21

| Credit Conference

28

| Regulatory Hot Buttons Conference

Crowne Plaza, Little Rock Who Should Attend: CEOs, Chief Credit Officers, Senior Lenders, Commercial Loan Officers, Credit Administrators, and Credit Support Staff Crowne Plaza, Little Rock Who Should Attend: Bank Directors, CEOs, and Executive Management

12–13 | 2016 Agricultural Lending Conference Crowne Plaza, Little Rock

Who Should Attend: Arkansas Ag Lenders & Ag Officers

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

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The TheArkansas ArkansasBanker Banker || July July2016 2016

The Arkansas

Banker Volume C, No. 7 | July 2016

The Arkansas Banker is the official publication of the Arkansas Bankers Association.

CONTENTS

EDITORIAL OFFICE

1220 West Third Street Little Rock, AR 72201 Phone 501.376.3741 | Fax 501.376.9243 www.arkbankers.org

COLUMNS

DEPARTMENTS

7

Washington Update

Sean Williams Rob Nichols

25 Professional Development 26 Banker News & Moves 27 Classifieds 27 Index of Advertisements

8

Annual Washington Visit

10 Alert: New Credit Impairment

Standard Issued

by Anne Coughlan

SUBSCRIPTION

FEATURES

MAGAZINE RATES

16 2016 Leadership Conference 20 Faces of the ABA: 2016-17

Emerging Leaders Section Officers 22 Faces of the ABA: 2016-17

Emerging Leaders Section Council

Cover price is $5.95 each. Annual subscription rates are $40.00 for members and $60.00 for non-members.

POSTMASTER: Send address changes to Arkansas Bankers Association, 1220 West Third Street, Little Rock, AR 72201.

Chairman’s Column

Bill Holmes

24 Industry News

ADVERTISEMENT

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

Phone: 501.376.3741. Periodical postage paid at Little Rock, AR.

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The publication of advertisement does not necessarily represent endorsement of those products or services by the Arkansas Bankers Association. The Editor reserves the right to refuse any advertisement.

Subscription to The Arkansas Banker magazine, which began monthly publication in April 1917, is included in the membership fees to the Arkansas Bankers Association.

President’s Column

EDITORIAL

The Arkansas Banker seeks to reflect the banking news of Arkansas and other news of direct interest to the Arkansas Bankers Association. Statement of fact and opinion are made on the responsibility of the authors alone and do not represent the opinion or endorsement of the Arkansas Bankers Association. Articles may be reproduced with written permission only.

4

Remembering C.S. McCain

COVER STORY

From small-town Arkansan to the head of Chase, a look back at the career of C.S. McCain.

See page 14

July 2016 | The Arkansas Banker

3

PRESIDENT’S COLUMN Contemplating the CHOICE Act I would like to share a few non-partisan thoughts about the recently proposed CHOICE Act, presented by House Financial Services Committee Chairman Jeb Hensarling.

CHOICE is the acronym for Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs.

Other bills to ease the regulatory burden have been proposed, but this one seems to have the strongest link to data. Not every bank would, or should, choose to elect this path. But I thought you should see the “executive summary” so that you could decide for yourself if this is an issue you want to support.

I think it was the Washington Post who opined that Mr. Hensarling’s plan to offer relief from some of Dodd-Frank’s more onerous provisions to banks that hold at least 10 percent capital as a buffer against losses offer as much protection against instability as the intrusive regulations do.

A writer in the American Banker suggested it would be a good antidote to Dodd-Frank.

The following is a highlighted version of an executive summary of the CHOICE Act, see what you think:

SUMMARY OF KEY PROVISIONS OF THE FINANCIAL CHOICE ACT Provide For Election To Be A Strongly Capitalized, Well Managed Financial Institution A banking organization1 may elect to become eligible for certain relief from current regulatory requirements and will be deemed to be wellcapitalized for purposes of all prompt corrective action laws if (1) the banking organization maintains a leverage ratio of at least 10 percent and (2) the insured depository institution has a composite CAMELS rating of a 1 or a 2 at the time the banking organization makes the election. Such a banking organization will be exempt from the following laws, rules, and regulations: Those addressing capital requirements, standards, or regulation (including all capital standards developed by the Basel Committee); Those addressing liquidity requirements, standards or regulation (including all liquidity standards developed by the Basel Committee);

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The Arkansas Banker | July 2016

Those permitting a banking agency to block a banking organization from making capital distributions to its shareholders; Those permitting a banking agency to consider risk “to the stability of the United States banking or financial system,” added to various federal banking laws by Section 604 of the Dodd-Frank Act, when reviewing an application to consummate a transaction or commence an activity if, after consummating the proposed transaction or commencing the proposed activity, the banking organization maintains a 10 percent leverage ratio; Those providing limitations on mergers, consolidations, or acquisitions of assets or control, to the extent the limitations relate to capital or liquidity standards or concentrations of deposits or assets, provided that after the transaction the surviving banking organization maintains a 10 percent leverage ratio; and To the extent not already provided for by the foregoing clauses, those contained in the final rule implementing Section 165 of Dodd-Frank and any other rule implementing standards of the type provided for in Section 165 of Dodd-Frank, including, among other requirements: àà The requirement to comply with the socalled “G-SIB surcharge”; àà The requirement to maintain “total loss absorbing capacity”; àà The requirement to comply with the “liquidity coverage ratio” and “net stable funding ratio”; and àà The requirement to submit “living wills.”

Notwithstanding the foregoing, the banking agencies will be permitted to conduct stress tests (but not limit capital distributions) of a banking organization that has made a qualifying capital election.

End “Too Big To Fail” And Bank Bailouts Repeal Title II of Dodd-Frank and substitute a new chapter of the Bankruptcy Code designed to accommodate the failure of a large, complex financial institution (Housepassed H.R. 2947, the Financial Institution Bankruptcy Act of 2016).

Prohibit the use of the Exchange Stabilization

PRESIDENT & CEO BILL HOLMES

Fund to bail out a financial firm or its creditors.

Repeal the FDIC’s authority to (1) bail out creditors of “solvent” banks, and (2) bail out creditors other than insured depositors of “insolvent” banks that are in receivership.

Empower Americans To Achieve Financial Independence

By Fundamentally Reforming The Consumer Financial Protection Bureau And Protecting Investors Re-establish CFPB as an independent agency outside of the Federal Reserve led by a bipartisan, five-member “Consumer Financial Opportunity Commission.”

Establish funding for the Commission through congressional appropriations.

Establish an independent, Senate-confirmed Inspector General for the Commission.

Provide the Commission with a dual mission of protecting consumers by enforcing the law and promoting market competition, with assessment of proposed rules, performed by an Office of Economic Analysis.

Give defendants in administrative actions the right to remove cases to federal court and clarify that Dodd-Frank’s three-year statute of limitations applies to such actions.

Increase threshold for bank supervision from $10 billion to $50 billion.

Permit states and tribes to request an unconditional 5-year waiver from CFPB regulation governing short-term, small-dollar credit.

Repeal CFPB’s indirect auto lending guidance.

Repeal Durbin amendment on debit interchange fees.

Demand Accountability From Financial Regulators And Devolve Power Away From Washington Increase oversight of all of the financial regulatory agencies to by subjecting them to the annual appropriations process. For the Federal Reserve, subject prudential regulatory and financial supervision activities to appropriations, while leaving monetary policy off- budget.

Harmonize the bureaucratic structures of federal financial regulatory agencies so they all reflect multiple, bipartisan viewpoints with independent members by: àà Converting regulatory agencies currently headed by single directors – CFPB, the OCC, and the Federal Housing Finance Agency (FHFA) – into bipartisan, five- member commissions; àà Increasing the NCUA’s board membership from three to five; and àà Modifying the composition of the FDIC’s fivemember board by replacing the CFPB Director and the Comptroller of the Currency with two independent members.

Demand Accountability From Wall Street Through Enhanced Penalties For Fraud And Deception Unleash Opportunities For Small Businesses, Innovators And Job Creators By Facilitating Capital Formation Repeal the Volcker Rule (Dodd-Frank Section 619).

If you agree with the majority of these proposed changes then share your thoughts with our delegation.

Our delegation will be in state until September when they will head back to Washington.

A full summary and details of the CHOICE Act are available at: http://www.aba.com/Advocacy/Grassroots/ Documents/FinancialCHOICEactSummary.pdf.

Lehman Rounds Out ABA Board of Directors Chris Lehman, President & CEO of First Delta Bank in Marked Tree, has accepted the final position on the 2016-17 Arkansas Bankers Association Board of Directors.

Lehman joins David Dowd (Cross County Bank, Wynne), Jerry Morgan (Focus Bank, Jonesboro), and Randy Scott (Farmers Bank & Trust, Blytheville) representing Group 1.

July 2016 | The Arkansas Banker

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CHAIRMAN’S COLUMN Planning for the Future of our Industry In early June, your ABA Board and staff convened for a strategic planning retreat in Little Rock to map association initiatives for 2016 and beyond. The opportunity to interact with friends and colleagues from across the state while working together for the benefit of our industry is both a privilege and responsibility. Broad topics included Government Relations, Education and Member Value, with significant and specific focus on initiatives to grow and strengthen ourselves in each of these areas. The collaboration and passionate participation was powerful and indicative of the commitment bankers across our great state share for moving our industry forward.

Recent years have been frustrating, tiresome, and simply difficult for many of us in banking. Politically, bank-bashing has become popular among many and, six years after Dodd-Frank and eight years post-crisis, the banking industry is still viewed with much stridency across the country, and certainly in Washington, D.C.

ABA EXECUTIVE COMMITTEE

In Arkansas, thankfully, we’ve been more successful than most in maintaining our banks’ bottom lines while also continuing to be community leaders and serve the vital roles banks play in communities.

In spite of this fact, many bankers are tired, and the seemingly never-ending burden of counter-productive laws and regulations has unquestionably damaged and changed the landscape our industry.

CHAIRMAN SEAN WILLIAMS President & CEO First National Bank of Wynne

As we look forward and consider our future, I’m convinced Government Relations has never been more important than right now! At the conclusion of our planning retreat, I don’t believe anyone in attendance doubted the commitment, passion or ability of our team to engage, adjust and be nimble when necessary to advocate effectively on our behalf.

requirement from our busy days. If you’re not currently involved, I encourage you to contact the ABA to learn how you can be a part of growing our political capacity and shaping the future of the industry we love!

Thank you to each of you for your kindness and well wishes at and following the convention. It is a privilege to serve and I continue to be excited about our future, and tremendously value your friendship and support. Have a great month and we’ll see you in Destin!

That said, we need more people from our industry writing, speaking and hosting policymakers in Little Rock and in Washington, D.C. Ava Roberts or any staff member at the association office can help with tools available that allow direct input and influence with nominal time

SEAN WILLIAMS | CHAIRMAN First National Bank of Wynne, Wynne

DAVE DICKSON | CHAIRMAN-ELECT Union Bank & Trust Co., Monticello

Eagle Bank, Little Rock

JUDY LAWTON | TREASURER

ROBERT Y. TAYLOR | PAST CHAIRMAN

BILL HOLMES | PRESIDENT/CEO

Heartland Bank, Little Rock

The Citizens Bank, Rogers

ABA BOARD OF DIRECTORS

PAT ANDERSON | GROUP 5

DAVID DOWD | GROUP 1

CATHERINE OWEN | VICE CHAIRMAN

Arkansas Bankers Association, Little Rock

JON HARRELL | GROUP 3

WILSON MOORE | GROUP 2

Simmons Bank, Pine Bluff

Cross County Bank, Wynne

Generations Bank, Rogers

PHIL BALDWIN | GROUP 2 The Citizens Bank, Batesville

TROY DUKE | GROUP 5 Gateway Bank, Rison

Bank of Delight, Delight

Focus Bank, Jonesboro

JIM CARGILL | GROUP 2

DON GIBSON | GROUP 3

J. MICHAEL JONES | GROUP 5

RANDY SCOTT | GROUP 1

DARWIN HENDRIX | GROUP 4

Bank of America, Little Rock

JERRY MORGAN | GROUP 1

Arvest Bank, Little Rock

Legacy National Bank, Springdale

Merchants & Farmers Bank, Dumas

Farmers Bank & Trust Co., Blytheville

GENE CRAWFORD | GROUP 5

CHRIS GOSNELL | GROUP 4

CHRIS LEHMAN | GROUP 1

JIM TAYLOR | GROUP 3

First National Bank of Crossett, Crossett

Farmers Bank & Trust Co., Magnolia

First Delta Bank, Marked Tree

First Security Bancorp, Fayetteville

SCOTT HANCOCK | GROUP 3

CRAIG MOBLEY | GROUP 4

LYNN WRIGHT | GROUP 2

Centennial Bank, Fayetteville

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The TheArkansas ArkansasBanker Banker || July July2016 2016

First Financial Bank, El Dorado

Regions Bank, Little Rock

WASHINGTON UPDATE The Best Defense is a Good Offense

ROB NICHOLS

President & CEO American Bankers Association

Since taking the helm of ABA on January 1, my priority has been meeting with and listening to bankers and state association executives about what’s needed to help banks succeed. I’ve logged tens of thousands of miles in service to that goal and by late June had visited with nearly 3,500 industry leaders at various state conventions and meetings.

The feedback I have received has been invaluable, and it has driven ABA activities in recent months. For example, you have told me in no uncertain terms that the industry needs to take our advocacy game to a new level to counter an increasingly organized, antagonistic and aggressive anti-bank lobby.

I would have thought that the stridency with which the public policy sector treats our industry would have lessened by now, six years after Dodd-Frank and eight years post-crisis.

But in fact it has increased. This is a problem.

Bank-bashing — including that which comes from within the industry — damages the entire industry’s image and feeds those who would prefer that banks be managed by Washington.

That is why ABA is pushing back — hard — in defense of banks. Among other things, we launched a targeted pro-bank image campaign aimed at Washington opinion elites. We are advertising on the radio and at Washington Nationals baseball games — which a disproportionate number of members of Congress, Hill staff, regulators, agency staff and reporters attend — as well as on social media pushing positive messages about the important role banks play in their communities. You can see some of that messaging at aba.com/AmericasBanks.

bankers are telling us that they either know their member of Congress or are willing to get to know them. They are contributing more to BankPac and their state PACs. And they are giving to the Fund for Economic Growth. (Incidentally, if you are one who has done all three, please know that staff at ABA affectionately refer to you as a “power player.” If you haven’t but want to learn more, visit aba.com/PowerUp.) And we are aggressively challenging cases of regulatory overreach, such as the National Credit Union Administration’s egregious member business lending rule approved earlier this year, which we believe contradicts the law, and the CFPB’s proposed rule on arbitration, which would dramatically limit the use of arbitration agreements even though data show they serve consumers better than class action lawsuits.

The feedback I’ve received in my first six months on the job also makes clear that we must be proactive in addressing broad trends that are reshaping banking. That is why two staff task forces at ABA have been studying the challenges and opportunities posed by the fintech revolution and massive demographic shifts. The groups will be recommending new ways ABA can serve the industry, with a sharp focus on how we can help community banks. More on that to come, but in the meantime rest assured that contrary to many headlines, millennials are not disenchanted with banks, and that opportunities for partnering with nonbank fintech companies abound.

These are just a few ways ABA, working closely with state bankers associations, is striving to build a more secure and competitive future for your bank. These efforts are built on banker feedback, and I hope you’ll keep that coming.

We also are going all-in on our Power Up initiative, which is aimed at getting more bankers engaged in politics — from building lawmaker relationships to donating funds for races — in order to increase our success in Washington.

I am grateful for the state associations’ leadership in promoting this cause. More

© 2016 American Bankers Association. All rights reserved. Reprinted with permission.

July 2016 | The Arkansas Banker

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Arkansas Bankers Association

Annual Washington Visit

September 20-22, 2016

The Arkansas Bankers Association Annual Washington Visit will take place September 20-22, 2016. Each year, a group of Arkansas bankers travels to Washington to attend meetings with the American Bankers Association, regulators, and the Arkansas Congressional Delegation.

Emerging Leaders who wish to make the trip. These stipends will be assigned on a first-come, first-serve basis.

The Annual Washington Visit is one of the most valuable forums that ABA presents, and members are encouraged to take part. The group is currently scheduled to meet with representatives from the CFPB, FHFA, and OCC, in addition to scheduled Capitol Hill visits with the Arkansas delegation. The Annual Washington Visit provides bankers the opportunity to share your concerns on pending legislation, regulations, and policies, face-to-face with the people responsible for writing them.

The ABA’s Annual Washington Visit is an opportunity every banker should take advantage of, and all are encouraged to join our group this fall as we tell the stories of Arkansas banks and their customers!

In an effort to engage Emerging Leaders in the Annual Washington Visit, the ABA will provide a $750 stipend for

The group will dine together in some of D.C.’s finest restaurants, and enjoy a cocktail party with Federal legislative staffers.

Registration Details

Registration is complimentary and includes visits to the Office of the Comptroller of the Currency, Conference of State Bank Supervisors, Consumer Financial Protection Bureau, Federal Housing Finance Agency, and American Bankers Association briefing, visits to the offices of the U.S. Senators and Representatives from Arkansas.

More Information

If you would like additional information about the Washington Visit, please contact Stuart Thalheimer at 501.978.3605.

Arkansas bankers in our nation’s capitol during the 2015 Annual Washington Visit.

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The Arkansas Banker | July 2016

Arkansas Congressional Delegation

Sean Williams, First National Bank of Wynne, Wynne; House Financial Services Committee Chairman Congressman Frank Hensarling (R-TX); Robert Taylor, The Citizens Bank, Rogers; and Jim Taylor, First Security Bancorp, Fayetteville.

Arkansas bankers have a round-table discussion while visiting Arkansas’s Senator John Boozman on Capitol Hill during the 2015 Annual Washington Visit.

SENATOR

SENATOR

John Boozman

Tom Cotton

REPRESENTATIVE

REPRESENTATIVE

French Hill

Rick Crawford

REPRESENTATIVE

REPRESENTATIVE

Steve Womack

Bruce Westerman

Fort Smith (R)

2nd District Little Rock (R)

3rd District Rogers (R)

Dardanelle (R)

1st District Jonesboro (R)

4th District Hot Springs (R)

Bankers introduce themselves to Arkansas Congressman Rick Crawford during the 2015 Annual Washington Visit.

July 2016 | The Arkansas Banker

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Alert: New Credit Impairment Standard Issued

by Anne Coughlan

On June 16, 2016, the Financial Accounting Standards Board (FASB) released the long-awaited standard updating the guidance on recognition and measurement of credit losses for financial assets. Accounting Standards Update (ASU) 2016-13, Financial Instruments— Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, supersedes today’s guidance and applies to all entities holding financial assets not measured at fair value (FV) through net income. The new requirements, known as the current expected credit loss model (CECL), replace today’s incurred loss model. At acquisition and each reporting date, entities will recognize an allowance for lifetime expected credit losses for instruments within the ASU’s scope. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. Entities will have flexibility The new model will to develop significantly impact methods financial institutions, to estimate although all entities and measure will need to evaluate expected the impact of the new credit standard—including losses, as long as the not-for-profits (NFP) methods are with programmatic consistently loans and companies applied and with long-dated trade reflect the receivables.

ASU’s key elements.

SCOPE

The ASU applies all financial assets measured at amortized cost, including certain debt securities, trade receivables, loans, net investments in leases, offbalance sheet credit exposures and reinsurance receivables. Debt securities classified as available-for-sale (AFS) are excluded from the scope of the CECL model and will follow a modified otherthan-temporary impairment (OTTI)

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The Arkansas Banker | July 2016

model. In addition, trading securities and loans held for sale are excluded from the scope of the ASU.

CECL MODEL

Currently, depending on the nature of the financial asset, a credit loss must either be probable or other than temporary before recognition. The ASU eliminates a recognition threshold on credit losses. An entity would recognize a Day 1 impairment allowance for its current estimate of contractual cash flows not expected to be collected on financial assets. Entities are permitted to develop credit loss estimates on an individual or pooled basis when similar risk characteristics exist. The allowance for credit losses may be determined using various methods, e.g., discounted cash flow (DCF), loss rate, roll rate, probability of default or methods that use an aging schedule. Entities should consider relevant internal or external information relative to assessing the collectability of cash flows. An entity should consider expected prepayments in estimating future contractual cash flows. Only an entity reasonably expecting to execute a troubled debt restructuring (TDR) would consider extensions, renewals or modifications.

The new model will significantly

impact financial institutions, Small banks may although all not need complex entities will need models; however, to evaluate the they will need to impact of the make changes to new standard— including not-for- current systems profits (NFP) with for data collection and analysis. programmatic loans and companies with long-dated trade receivables.

Range of Information

FASB has broadened the information an entity will be required to consider in developing its credit loss estimate.

Under current GAAP, an entity generally considers past events and current conditions in measuring credit losses.

The ASU requires the loss estimate to include relevant information about past events, current conditions and reasonable, supportable forecasts. To estimate expected credit losses, an entity need only consider relevant qualitative and quantitative factors reasonably available without undue cost and effort, which may be based on internal or external information. An entity may find that using its internal information is sufficient in determining collectibility. For periods beyond which an entity is able to make

a reasonable forecast, entities would revert to unadjusted historical credit loss experience.

Modified OTTI

For AFS debt securities, an allowance approach would be used, permitting an entity to recognize reversals of credit losses. Entities no longer will be required to consider the length of time the FV of the AFS debt security has been less than its amortized cost basis when estimating whether a credit loss exists.

Entities no longer will be required to consider historical and implied volatility or recoveries or declines in FV for AFS debt securities after the balance sheet date when determining whether a credit loss exists.

Purchased Credit-Impaired Financial Assets

The ASU modifies the definition of what were previously known as purchased credit-impaired (PCI) assets. FASB defines purchased financial assets with credit deterioration (PCD) as an acquired financial asset or acquired groups of financial assets with similar risk characteristics that have experienced a more-than-insignificant deterioration in credit quality since origination, based on the buyer’s assessment. PCD assets would follow the same approach as originated assets for purposes of credit impairment; upon acquisition and at each reporting date, an entity would recognize a credit impairment allowance for its current estimate of the contractual cash flows not expected to be collected. At acquisition, both the financial asset and allowance for credit losses would be recorded gross, and the allowance for credit losses would be added to the purchase price to determine the initial amortized cost basis. The result is no accretion into interest income of the credit-related discount. The difference between the amortized cost basis and par amount of the debt will be recognized as a noncredit discount or premium and accreted into interest income over the remaining life of the asset. Subsequent changes in expected cash flows would be recorded as gains and losses through the credit loss provision. Recognition of interest income would be accounted for under existing guidance in Receivables.

The following example is from FASB.

Example: Recognition of Purchased Financial Asset with Credit Deterioration Assume that Bank ABC pays $750,000 for a bond with a par amount of $1 million.

The bond is measured at amortized cost basis. At purchase, the allowance for credit loss on the unpaid principal balance is estimated at $175,000. At acquisition, the balance sheet would reflect an amortized cost basis for the financial asset of $925,000—the amount paid plus the allowance for credit loss— and an associated allowance for credit losses of $175,000. The difference between par of $1 million and the amortized cost of $925,000 is a noncredit-related discount. The acquisition-date journal entry is as follows: Loan—par amount: $1,000,000 Loan—noncredit discount: $75,000 Allowance for credit losses: $175,000 Cash: $750,000 The $75,000 noncredit discount would be accreted into interest income over the bond’s life, consistent with other Topics. The $175,000 credit loss allowance should be updated in subsequent periods for any changes in expected cash flows, with changes in the allowance for credit losses on the unpaid principal balance immediately reported in the statement of financial performance as a credit loss expense.

TDRS

The ASU does not change the definition or derecognition guidelines for TDRs, but rather changes the impairment recognized on restructuring. Credit losses for TDRs now will be measured using the CECL model. The ASU eliminates the The discount current GAAP embedded in the requirement purchase price to use a DCF attributable to technique. Credit expected credit losses, including losses would not concessions given be recognized as to a borrower interest income, under a TDR, will as is the current be recognized practice. through an allowance account.

New Disclosures

The ASU carries forward certain disclosure requirements of ASU No. 201020, Receivables (Topic 310): Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses, such as quantitative and qualitative information about credit risk, credit losses and credit quality, including the amount of recorded investment by credit quality indicator. The ASU requires a rollforward of the allowance for expected credit losses as well as comprehensive disclosures including, but not limited to, the allowance for expected credit losses, past-due and nonaccrual status, PCI financial assets and collateralized financial assets.

July 2016 | The Arkansas Banker

11

credit losses in the period received.

The discount embedded in the purchase price attributable to expected credit losses would not be recognized as interest income, as is the current practice.

PCD Assets

EFFECTIVE DATE

TRANSITION

FASB created a new subgroup of public business entities for the purpose of providing a delayed effective date for the credit impairment standard. This subgroup of smaller public business entities, which do not meet the definition of a Securities and Exchange Commission (SEC) filer, would have an additional year to adopt the standard for both annual and interim periods; this group would include many community banks. All other entities would have a one-year deferral for annual financial statements and two years for interim financial statements.

Transition would be on a modified retrospective transition basis. An entity will apply the guidance to all outstanding financial assets as of the beginning of the first reporting period the guidance is effective. Entities will reflect the cumulative effect of the change related to periods before the ASU’s effective date in the carrying amount of assets as of the effective date, with an offsetting adjustment to the opening balance of retained earnings. Financial statements for each individual prior period presented would not be adjusted.

The new guidance will be effective for public business entities that are SEC filers for fiscal years beginning after December 15, 2019, including interim periods, i.e., 2020 for calendar year-end companies. The effective date for smaller public business entities, which do not meet definition of an SEC filer, would be fiscal years beginning after December 15, 2020, including interim periods. For all other entities, including NFP entities and employee benefit plans, the new guidance would be effective for fiscal years beginning after December 15, 2020, and for interim financial statements for fiscal years beginning after December 15, 2020.

Early application is permitted for fiscal years beginning after December 15, 2018, including interim periods.

OTTI Debt Securities

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The Arkansas Banker | July 2016

For debt securities with a previous charge due to OTTI, transition would be on a prospective basis as of the effective date. The amortized cost basis of the debt security would be unchanged on the adoption date. Amounts previously recognized in accumulated other comprehensive income as of the adoption date that relate to improvements in cash flows would continue to be accreted to interest income over the remaining life of the debt security on a level-yield basis.

The effective interest rate on a security will remain unchanged as a result of the adoption. After adoption, recoveries of amounts previously written off due to improvements in cash flows would be recorded as a reduction in allowance for

An entity will classify assets accounted for under Subtopic 310-30, Receivables— Loans and Debt Securities Acquired with Deteriorated Credit Quality, as PCD assets at the adoption date, including those acquired assets for which Subtopic 310-30 has been applied by analogy.

At adoption, an entity will not need to reassess whether an instrument meets the PCI definition. Entities will be required to adjust the amortized cost basis of the financial asset and allowance for expected credit losses. The noncredit discount or premium—after the adjustment for credit losses—will be accreted to interest income using the effective interest rate at the adoption date.

CONCLUSION

Although the effective date may seem a long time away, there are some areas to focus on immediately. The CECL model may require operational and system changes to ensure compliance with the new requirements and to satisfy auditors and banking regulators.

Considerations include: Collecting and retaining data Tracking loans from origination Forecasting economic and other qualitative factors Preparing for enhanced disclosure requirements

ABOUT THE AUTHOR

Anne Coughlan is a Director in BKD, LLP’s Audit department, headquartered in Indianapolis.

ABA Webinars ABA Professional Development

Webinars...

Provide the option of training as many employees as you wish for one price, all from the convenient location of your home institution!

MONDAY, AUGUST 1

MONDAY, AUGUST 8

FRIDAY, AUGUST 19

Bank Call Report Preparation for Beginners: A 5-Part Series 10:00 a.m. – 12:00 p.m.

Consumer Construction Loan 1:30 p.m. – 3:30 p.m.

BSA Frontline Staff Training 1:30 p.m. – 3:30 p.m.

TUESDAY, AUGUST 9

TUESDAY, AUGUST 23

Commercial Construction Lending 1:30 p.m. – 3:30 p.m.

Service member Issues: The Military Lending Act & Others 10:00 a.m. – 12:00 p.m.

TUESDAY, AUGUST 2 UCC 3 and 4: Endorsements and Other Legal Check Issues 10:00 a.m. – 12:00 p.m.

Implementing the New Military Lending Act 1:30 p.m. – 3:30 p.m.

WEDNESDAY, AUGUST 3 Excel Explained: Filtering and Formatting Data 10:00 a.m. – 12:00 p.m.

BSA for Lenders 1:30 p.m. – 3:30 p.m.

Delivering Performance Reviews that Matter 1:30 p.m. – 3:30 p.m.

THURSDAY, AUGUST 4 Overdraft Privilege-10 Hot Spots 10:00 a.m. – 12:00 p.m.

12 Tricks That Make Training Stick 1:30 p.m. – 3:30 p.m.

Advanced Call Report 1: RC-R, Risk-Based Capital 1:30 p.m. – 3:30 p.m.

Personal Accounts- 25 Questions and Answers on Vital Issues 10:00 a.m. – 12:00 p.m.

WEDNESDAY, AUGUST 10 Top 25 Security Mistakes a Smart Institution NEVER Makes 1:30 p.m. – 3:30 p.m.

THURSDAY, AUGUST 11 Corporate Account Takeover: Latest Court Cases 1:30 p.m.– 3:30 p.m.

MONDAY, AUGUST 15 Commercial Loan Write-Ups & Committee Presentations: Part 1 1:30 p.m. – 3:30 p.m.

TUESDAY, AUGUST 16 Basic Cash Flow Analysis 10:00 a.m. – 12:00 p.m.

THURSDAY, AUGUST 18 FRIDAY, AUGUST 5 Advanced Call Report 2: Bank Holding Company Reports 1:30 p.m. – 3:30 p.m.

Closing Deposit Accounts: 10 Critical Issues 1:30 p.m. – 3:30 p.m.

ACH Exception Processing 1:30 p.m. – 3:30 p.m.

ACH Origination: Your Responsibilities & Warrantees 1:30 p.m. – 3:30 p.m.

WEDNESDAY, AUGUST 24 Health Savings Accounts 10:00 a.m. – 12:00 p.m.

Pain Relief for Managers- Managing Multiple Generations 1:30 p.m. – 3:30 p.m.

THURSDAY, AUGUST 25 Regulation DD – 10 Examination Hot Spots 1:30 p.m. – 3:30 p.m.

Compliance Perspectives: A Monthly Update 1:00 p.m. – 2:00 p.m.

FRIDAY, AUGUST 26 COSO 2013 Review & Update 1:30 p.m. – 3:30 p.m.

TUESDAY, AUGUST 30 Call Report for Banks: Recent Changes, Highlights, and Pitfalls 10:00 a.m. – 12:00 p.m.

Applicants and Applications 1:30 p.m. – 3:30 p.m.

For more information about ABA Webinars, log on to www.arkbankers.org or call 501.376.3741

July 2016 | The Arkansas Banker

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Remembering C.S. McCain It was said that he had been president of both the smallest and largest banks in the United States...

Charles S. McCain was an Arkansan with a passion for banking, who took his successes in a small town to the next level when he went on to serve as president and later chairman of Chase National Bank in New York.

Charles Simonton McCain was born in Pine Bluff in 1884, the son of prominent lawyer W.S. McCain and wife Eliza. The family later moved to Little Rock, where McCain attended local public schools.

It was in those early years that McCain found his love of banking — he got his first bank job at the meager age of 13, not because he had to work, but because he liked banking. While his friends were relaxing on their holiday and summer breaks from school and college, McCain spent his time learning the ropes of the banking industry from the ground up.

McCain attended Erskine College in South Carolina for a year before deciding to go to Yale. At the time, the young entrepreneur was only 16, so he opted to work for another year in the bank prior to enrolling in Yale as a sophomore. Again, his time was split between his books and banking. McCain graduated from Yale at the age of 20, ready to take on the world.

He was offered a job as cashier of a bank in Prescott, but before opening it burned

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The Arkansas Banker | July 2016

to the ground, leaving McCain to look for other avenues to start his formal banking career.

bankers and businessmen in both Arkansas and Louisiana held elaborate dinners in his honor.

And so, in 1904, with $1,000 in capital — that he had earned by day and hid in a sugar barrel by night — McCain organized and became the cashier of the Bank of McGehee. A year later, he organized and became the cashier of the Bank of Prescott, where he remained until 1907.

McCain made headlines again in 1927 when, at the age of 43, he took over the presidency of National Park Bank, making him the youngest bank president in New York City. A few short years later, the bank was absorbed by Chase National Bank, and McCain was named president of that institution; he would later become chairman of the board of Chase National Bank. During his years at Chase, the banker became well known in the national finance and social circuit, mingling with the country’s elite.

McCain went on to partner in the banking and insurance firm of A.B. Banks & Co. in Fordyce, and organized the Bankers Trust Company of Little Rock.

It was in 1925 that headlines across the south read “Big New York Bank Grabs Charley McCain.” The well-known banker headed for the big apple to assume the position of vice president of the National Park Bank, effective January 1, 1926. In anticipation of his success, McCain was flooded with telegrams and letters of congratulations from across the country;

While much of the nation began to panic about uncertain financial times following the the stock market crash of October 1929, McCain remained optimistic, leading Chase to purchase a New York investment house. There were also rumored plans to absorb Bank of America into Chase National.

In the fall of 1931, it was reported “For dinner, cigars, and discussion, President Hoover had at the White House four important Manhattan bankers: President William C. Potter of Guaranty Trust Co., President Charles Simonton McCain and Vice President James T. Lee of Chase National Bank; President George Willets Davison of Central Hanover Bank & Trust Co. Also present was Governor Eugene Meyer of the Federal Reserve Board. They conferred on ‘the general business situation.’ Two reports immediately developed: 1) the President was planning more banking aid to Europe; 2) he was arranging to protect mortgage issues from speculative manipulation.”

By 1933, nearly half of the country’s banks had failed, and investigations into pre-crash banking practices had begun.

In 1934, McCain left Chase to accept a position as president of the United Light and Power Company in Chicago.

He returned to New York in 1939 as a director and executive officer of one of Wall Street’s most successful underwriting firms of the time, Dillon,

Read & Company. McCain became president a year later, and with the firm until his retirement in 1951.

Throughout his career, McCain remained active in civic and philanthropic work.

Over the years, he served as a member of the American Bankers Association Executive Council; chairman of the Arkansas Bankers Association Legislative Committee; director of the Louisiana and Arkansas Railway; director of B.F. Goodrich Company; fund drive chairman during WWII for the Citizen Committee of the Navy Relief Society; and executive committee of the American Red Cross.

McCain and his wife Frances had two sons, William and Charles, and one daughter, Grace.

Charles McCain passed away on December 13, 1957, after two heart attacks, a stroke, and a battle with Parkinson’s disease. He was 73 years old.

In 2009, the McCain family made a contribution to the Arkansas Bankers Association to establish the Charles S. McCain Scholarship. This fund is meant

to further the careers of young bankers who are passionate about their profession and service to the industry. Additionally, the fund has been utilized for stipends for Emerging Leaders to attend the Annual Washington Visit and Government Relations Summit in Washington, D.C.

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July 2016 | The Arkansas Banker

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6 1 20 e c n e r e f n o C p i h s r e d a e L

Leadership Conference 2016

Bankers from across the state converged in Fayetteville June 16-17 for the 2016 Arkansas Bankers Association Leadership Conference.

Agenda topics focused on helping to further your career — from goal setting to leading teams, to optimizing your social network profiles.

(Above) More than 95 bankers from across the state were in Fayetteville for the 2016 Leadership Conference.

After general sessions with speakers Kevin Wright and Jenna Atkinson, attendees were able to customize their agendas by choosing breakout sessions that matched their current career needs.

(Right) Bankers discuss mergers and acquisitions with DD&F Consulting’s Randy Dennis during one of the conference’s afternoon breakout sessions.

This annual event gives young and aspiring bankers the opportunity to learn from experienced bankers and network with other young bankers.

Outgoing ELS Council President Kevin Thompson kicked off the conference on Friday morning.

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The Arkansas Banker | July 2016

Click here to see more Leadership Conference photos!

Lisa Taylor and her students from Willis D. Shaw Elementary of Springdale gave a report on the impact of Economics Arkansas.

Keynote speaker Kevin Wright encouraged attendees to set ­— and attain — goals.

Opening Reception

Southern Pioneer hosted the annual Opening Reception at the Garden Room in downtown Fayetteville.

(Above) John Anderson, Relyance Bank, Pine Bluff; James Lyle, McGehee Bank, McGehee; and Jacob Box, Simmons Bank, Dumas.

(Top Right) Christine Miller, Karrah Partin, and John Bonaminio, all of Heartland Bank in Little Rock.

(Middle Right) Blake Holzhauer, Centennial Bank, Fayetteville; David Johnson, Southern Bancorp, Trumann; and Ryan Moore, Centennial Bank, Jonesboro.

(Bottom Right) Brandon Gentry, Cross County Bank, Wynne; and Kevin Thompson, Centennial Bank, Fayetteville.

Social networking maven Jenna Atkinson gave the group a crash course in networking — both online and in person.

Rex Kyle of First Security Bank led a breakout session on adapting your career in the face of technological change.

Randy Dennis of DD&F Consulting Group spoke to attendees about M&A in today’s banking environment.

July 2016 | The Arkansas Banker

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2016 Leadership Conference

(Top Left) Outgoing ELS Council President Kevin Thompson thanks Greg McCarroll, Centennial Bank, Little Rock, for his service on the ELS Council.

(Middle Left) Outgoing ELS Council President Kevin Thompson thanks Jacob Box, Simmons Bank, Dumas, for his service on the ELS Council. Other council members completing their terms were Andy Horton, Fidelity National Bank, Marion; and Tyler Davis, Diamond Bank, Ashdown.

(Bottom Left) Incoming ELS Council President Blake Fletcher presents outgoing President Kevin Thompson with a ceremonial gavel and plaque.

Ava F. Roberts gave a Government Relations report from the ABA.

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The Arkansas Banker | July 2016

Willie Johnson taught attendees about the importance of trust in leading a team during the afternoon breakout sessions.

Incoming ELS Council President Blake Fletcher closed out the day.

Past Presidents Golf Tournament

Thank You to our Sponsors BOSC, Inc.

• Longest Drive Prize

Celerit

• Lanyards

DataScout, LLC

• Meet & Greet Breakfast

DD&F Consulting Group • Mobile App Banner Ad

Foundation Life Insurance • Mobile App Banner Ad

Friday, Eldredge & Clark • Golf Tournament

Kutak Rock, LLP Nine teams of golfers braved the heat on Thursday, June 16, for the annual Past Presidents Golf Tournament at Stonebridge Meadows in Fayetteville.

Prize winners included Max Harrell, Closest to the Hole; and Camron Hurst, Longest Drive.

First place went to the team of Kris Wolf, Ryan Moore, Barry Jackson, Clint Walker, and Kevin Thompson.

Ryan Moore also got a hole in one during the tournament.

• Lunch

The Johanson Group / DB Squared

• Mobile App Banner Ad

S.F. Fiser & Company

• Golf Tournament Drink Cart

Southern Pioneer Insurance Companies • Opening Reception

Travelers Insurance

• Closest to the Hole Prize

Second place went to the team of J.D. Chambliss, Hunter Norton, Chris Rittelmeyer, and David Coleman (not pictured).

Third place went to the team of Jeffrey Freiert, Price Boney, Matt Manley, and Camron Hurst (not pictured).

Barry Jackson, ABA, Little Rock; Kevin Thompson, Centennial Bank, Fayetteville; and Kevin Wright, keynote speaker for the Leadership Conference chat before hitting the course.

July 2016 | The Arkansas Banker

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Faces of the ABA: ELS Council Officers Blake Fletcher Named ELS Council President

Mr. Blake Fletcher was appointed as the 2016-17 Emerging Leaders Section Council President at the Arkansas Bankers Association Leadership Conference in Fayetteville on Friday, June 17, 2016.

Fletcher has been in banking for 16 years, spending the past nine months at Stone Bank. He is currently Senior Vice President / Commercial Lending for Stone Bank in Little Rock.

Having grown up in a community that promoted support to youth, business, and society, community involvement has been a lifelong commitment for Blake. He has had the opportunity to serve on various boards and community clubs and projects, and currently serves on the Arkansas Bankers Association’s Government Relations Committee.

Q&Awith Blake Fletcher Please tell us a little about yourself...

I graduated from Lonoke High School and from the University of Arkansas at Fayetteville with a BA in Business Administration / Finance. I have a 6-year-old little boy who I love spending time with including playing golf, helping coach him in baseball, and watching superhero movies (which he teaches me about)! In my free time, I enjoy running and playing golf.

How long have you been in the banking industry, and with Stone Bank?

I have been in the banking industry for 16 years and with Stone Bank since October 2015.

How long have you been involved with the Emerging Leaders Section of the Arkansas Bankers Association?

I have been lucky enough to have been involved in the Emerging Leaders Section of the ABA for the past four years.

What are some of your favorite experiences from being involved in the Emerging Leaders Section?

There have been several experiences that I have very much enjoyed over the past few years being involved with the Emerging Leaders. First of all, getting to know other bankers from around the state has been a great deal of fun as well as educational. Getting to visit with bankers and learn what other banks are doing and how they do things has given me a different view on what I can do better. Second, I have had the opportunity to represent the Emerging Leaders Section in Washington, D.C. on three different trips. Those trips have been extremely educational and eye-opening. The opportunity to visit with the state’s leadership in Washington D.C. and getting to know the staff members of our state leaders has helped open doors that would never have opened.

I have been able to build a few relationships with other bankers and staff members on these trips that will be long lasting.

What advice do you have for anyone just getting started in the banking industry, or someone who has worked in the industry only for a short time?

I would tell someone who is just starting out in banking a few things. The first thing would be to be patient. Understand that the senior management of your bank did not get in those positions overnight and it took a great deal of hard work.

Blake Second would be to ask questions. Don’t be afraid to ask Fletcher questions to other lenders or retail staff if there is something and his son, you might not completely understand. Finally, get to know Tyce, on their bankers in other areas of the state. It is a great deal of help summer being able to pick up the phone and call another banker in the vacation to Washington, state to ask, “how do you guys do XYZ?” D.C.

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The Arkansas Banker | July 2016

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

I enjoy developing relationships the most in banking.

Getting the opportunity to know customers, their business, and helping them get their business where they want it to go is very rewarding for me.

As the 2016-2017 Emerging Leaders Section president, are there any specific goals you would like to achieve?

I look forward to working with the incredible staff at the Arkansas Bankers Association even more over the next 12 months. We are just starting to work on the details, but we would like to start having small group meetings in each of the five groups throughout the state. We hope this will give more emerging leaders an opportunity to learn more about the ABA, Emerging Leaders Section, and make it easier for them to be involved in events.

John Anderson, Relyance Bank 2016-17 ELS Vice President Mr. John Anderson has been appointed as the 2016-17 Emerging Leaders Section Council Vice President.

Anderson is a 1999 graduate of Pine Bluff High School. He received a degree from Arkansas State University in Jonesboro in 2003, where he was a four-year letterman and pitcher on the baseball team. Anderson recently graduated from the Graduate School of Banking at Louisiana State University in Baton Rouge.

Anderson has been in banking for 13 years, spending the last eight years with Relyance Bank. He is currently Assistant Vice President of Commercial Loans.

Are you involved in any other organizations or extracurricular activities?

I have been lucky enough to get to know some great people in the UALR Athletic Department as well as to have the opportunity to have served on the UALR SpectacUALR committee the past three years.

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

Something other bankers might be surprised to know about me… well, maybe not surprised to know but would be surprised to see… would be me rolling out the “Carlton” dance on the dance floor from time to time.

Is there anything else you would like to share with our Arkansas bankers?

I am excited about the opportunity to work with everyone at the Arkansas Bankers Association. Mr. Bill, Barry, Kami, Ava, and everyone at the ABA has always been there for all of the bankers in the state, and I look forward to being able to give back and help them in some way.

George Purvis, Cornerstone Bank 2016-17 ELS Secretary / Treasurer Mr. George Purvis has been appointed as the 2016-17 Emerging Leaders Section Council Secretary/Treasurer.

Though he spent the first 16 years of his life in Eureka Springs Purvis graduated from High School at Watson Chapel in Pine Bluff. He received a Bachelor of Science in Biology from Arkansas State University in 2006. Following college, Purvis accepted a job with Cornerstone Bank and returned home to Eureka Springs, where he is currently an Assistant Vice President/ Loan Officer.

Purvis is a 2014 graduate of the Graduate School of Banking at Colorado. He has served on the Carroll County Community Foundation Board for the past six years, serving as their Youth Advisory Council Advisor for the past five years.

July 2016 | The Arkansas Banker

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Faces of the ABA: ELS Council Natalie Bartholomew

First National Bank of NWA, Rogers

John Bollinger

The Bank of Fayetteville, Fayetteville

Hunter Norton

First Security Bank, Fayetteville

Blake Fletcher, President Stone Bank, Little Rock

Ben Ridings

Bank of the Ozarks, Little Rock

Hunter Windle

Malvern National Bank, Malvern

Eduardo Abril

First State Bank of DeQueen, DeQueen

Rachael Schwartz

Farmers Bank & Trust, Texarkana

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The Arkansas Banker | July 2016

George Purvis, Secretary/Treasurer Cornerstone Bank, Eureka Springs

Sandy Starnes

Blake Johnson

The Citizens Bank, Batesville

Evolve Bank, Jonesboro

Ryan Moore

Centennial Bank, Jonesboro

Matt LaForce

First Security Bank, Searcy

Brandon Gentry

Cross County Bank, Wynne

John Anderson, Vice President Relyance Bank, Pine Bluff

Burt Hicks

Simmons Bank, Pine Bluff

James Lyle

McGehee Bank, McGehee

Robert Hargis

Parkway Bank, Monticello

July 2016 | The Arkansas Banker

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INDUSTRY NEWS

Scott Named to State Banking Board Randal Scott, president and chief operations officer of Farmers Bank and Trust Company, Blytheville, has been appointed to the State Banking Board.

Scott is replacing board member John Freeman, who served two terms on the Banking Board after initially being appointed in 2006 by former Governor Mike Huckabee.

Scott’s appointment by Governor Asa Hutchinson was effective as of June 8, 2016, and his term on the board will run through December 31, 2020.

Scott has been in banking for 26 years, including the last 16 years with Farmers Bank and Trust Company.

Scott graduated from Southeast Missouri State University, with a major in finance and minor in accounting. He also is a graduate of the Graduate School of Banking at Colorado.

Scott is a member of the Board of Directors of the Arkansas Bankers Association. In addition, he serves on the Board of Trustees at Arkansas Northeastern College, a two-year institution whose main campus is in Blytheville.

His previous community involvement includes being a member of the Board of Directors of the Greater Blytheville Area Chamber of Commerce. He served on the

Chamber’s Executive Committee and as president of the organization.

Scott currently is chairman of the Chamber’s Money for Main program, designed to help rehabilitate and restore historic downtown Blytheville.

He also has served on the boards of directors of Great River Medical Center, Blytheville, and Great River Economic Development.

The statutory powers of the six-member State Banking Board include the approval of rules and regulations issued by the Bank Commissioner and the rendering of decisions on numerous bank applications.

Scott fills one of three positions on the Banking Board designated as “banker members.”

New Platform to Streamline Examination Process Examiners will begin using a new electronic platform later this year that it is hoped will reduce the volume of paper documents requested during an examination.

The new Examination Tools Suite (ETS) will support all aspects of the examination function, combining operational and loan-review activities.

ETS replaces the current operational platform known as Genesys and the separate Automated Loan Examination Review Tool (ALERT).

State Bank Department examiners, in conjunction with their federal counterparts, will begin utilizing ETS in the third and fourth quarters this year.

“ETS brings enhanced security, access to key data and improved collaboration among examination team members,” said Bank Department Deputy Commissioner Susannah Marshall.

An application in the developmental stage, the Electronic Workpaper Program (EWP), will complement ETS and more fully utilize technology to obtain

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The Arkansas Banker | July 2016

and retain documents requested during an examination.

Since this is an internal program utilized for the examination process, notable changes in procedures affecting the bank are not expected. For example, the loan-data download that is requested will not change.

However, Marshall explained, “It is hopeful that once EWP is fully implemented, there will be somewhat of a reduction in the reproduction and creation of paper documents requested during an examination. EWP will not eliminate the need for all paper reports and data collection, but it should somewhat reduce the volume of hard materials maintained during and after a bank examination.”

EWP will enable examiners to retain and share more examination documents in electronic format.

ETS is a multi-year project initiated by the Federal Deposit Insurance Corporation

in partnership with the states through the Conference of State Bank Supervisors (CSBS), as well as the Federal Reserve.

The Federal Reserve System will limit its use of ETS to the loan function.

The roll-out of ETS officially began in the fall of 2015 in the FDIC’s New York Region.

Implementation of the program has moved from the East Coast westward. All states and FDIC regions should be fully trained and implementation completed by year-end 2016.

A senior examiner from the Bank Department participated in a three-week User Acceptance Training session with representatives from other states, the Federal Reserve and the FDIC during the development and initial pilot phase of ETS. Marshall encourages bankers with questions about the new electronic work programs to contact the Bank Department at (501) 324-9019.

From the June 30, 2016 issue of The Banker’s Advocate.

PROFESSIONAL DEVELOPMENT

Arkansas-Specific Webinar Offered Regarding New FLSA Overtime Regulations An Arkansas-specific webinar outlining the upcoming FSLA overtime regulations will be offered through the ABA on Tuesday, July 26, from 10:00 a.m. to 11:30 a.m.

It has been more than 10 years since the Department of Labor (DOL) made major changes to the Fair Labor Standards Act. However, the DOL estimates that more than 50,000 employees (and their employers) in Arkansas will be impacted by the recent rule updates. This webinar will teach participants how to avoid risk and liability by gaining a better understanding of the new overtime and exemption rules. This session will improve your understanding of these changes and how they relate to your company, and will prepare you to properly classify your employees NOW, in advance of the implementation of the changes.

ON THE AGENDA

What the proposed changes are; Who they will affect; The timeline for the implementation of

the changes; How to understand the difference between exempt employees and those eligible for overtime.

WHO SHOULD ATTEND

HR, senior lenders, compliance, audit and bank counsel

ABOUT THE SPEAKER

Stuart Jackson heads up Wright Lindsey Jennings’ Labor and Employment Team. He advises employers on compliance with civil rights laws and developing personnel policies, employment agreements and covenants not to compete. Jackson also defends employers in federal and state court litigation and appeals involving claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act and the Arkansas Civil Rights Act. Jackson is listed among The Best Lawyers in America, Chambers USA

“Leaders in Their Field” and MidSouth Super Lawyers, and has an AV® Preeminent™ 5.0 out of 5 Peer Review Rating through Martindale-Hubbell.

FOR MORE INFORMATION

For details, or to register log on to www. arkbankers.org, or contact the ABA Professional Development Department at 501.978.3614.

FDIC Banker Outreach The ABA teamed up with state and regional representatives of the FDIC for this year’s “FDIC Banker Outreach” program, held in Little Rock on June 30.

Geared toward bank directors, CEOs, risk management, and consumer compliance staff, this event allowed bankers to converse informally with FDIC representatives and get a timely update on current and emerging banking issues.

Among the representatives from FDIC will be Julie Banfield, Deputy Regional Director; Kristie Elmquist, Regional Director; Gary Beasley, Regional Manager; and Doug Wallace, Supervisory Examiner.

July 2016 | The Arkansas Banker

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BANKER NEWS & MOVES FIRST NATIONAL BANK ANNOUNCES NEW BRANCH MANAGER First National Bank of Fort Smith has announced an addition to their staff.

Cindy Barker has been named Vice President / Branch Manager of the First National Bank Stonewood Village location at 7410 Rogers Avenue.

Barker has over 20 years of banking experience and has been involved in numerous civic organizations, including the United Way. “We are extremely pleased to have Cindy as a First National team member”, says Anne Dunn, Senior Vice President Retail Operations. “Her financial industry experience and expertise will be a tremendous asset to both our customers and team members.”

A family man, Welfel spends his leisure time with his wife Kelly and their two boys, golfing, swimming, visiting playgrounds and enjoying family time with each other.

Stephen Griffin, a native of Little Rock, attended Catholic High School and graduated from the University of Arkansas at Fayetteville. He is active in and serves on the Board of Directors of The Hat Club of Little Rock, a non-profit group that have raised over a quarter of a million dollars for various other non-profit organizations since inception in 2010. Griffin is a well-known and respected Mortgage Originator in the Central Arkansas market where he has been employed for the previous twelve years. He, his wife Jill and their 2-year-old daughter reside in the Lakewood area of North Little Rock.

EAGLE BANK ANNOUNCES PROMOTION OF WELFEL; THORNTON NAMED LOAN MANAGER AT ARVEST HIRE OF GRIFFIN BANK, SPRINGDALE Jeff Lynch, President/CEO of Eagle Bank and Trust, recently announced the promotion of Lee Welfel to President of Eagle Bank Mortgage. In addition, Stephen Griffin has joined Eagle Bank Mortgage as Vice President/Mortgage Originator.

A native of St Louis, Mo., Lee Welfel joined Eagle Bank Mortgage on September 15, 2014 as Executive Vice President/Sales Manager and has since lead Eagle Bank Mortgage to become one of the leading mortgage lenders in the Central Arkansas market. Prior to joining Eagle Bank Mortgage he was in the mortgage industry in Central Arkansas for the past nine years.

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Arvest Bank is pleased to announce that Chris Thornton has been named Executive Vice President and Loan Manager for Arvest in Springdale.

Thornton has been with Arvest Bank since 1996, starting as a trainee and moving up through the commercial banking department. He most recently was Commercial Banking Manager and Senior Vice President for Arvest Bank in Fayetteville.

“Chris is an excellent banker and manager who can help lead the Arvest team here in Springdale,” said Kent Williamson, president and CEO for Arvest Bank in

The Arkansas Banker | July 2016

Springdale. “He has an excellent track record of loan portfolio management in Fayetteville and is focused on the customers’ financial needs and goals.”

A native of Fayetteville, Thornton grew up in Texas where he transferred from Tyler Junior College in 1990 to the University of Arkansas at Fayetteville, where earned his Bachelor of Science in business administration and marketing management in 1993. He is a graduate of the American Bankers Association Commercial Lending School in 1998 and the Southwest Graduate School of Banking in 2007. He is also a 2009 graduate of the Walton Institute of Leadership.

Thornton is the current president for the Children’s Safety Center and a committee member for Leadership Fayetteville since 2008. He services as a PTA/PTO member, Watch Dog Dad, Band Booster and chaperone for Springdale Schools. He is also chairperson and lay leader for The Uganda Missions Project through Central United Methodist Church in Fayetteville. He previously served on the administrative board for Central United Methodist Church, where he also served on the finance committee, staff parish relations, and as a confirmation teacher.

He and his wife, Kysia Thornton, live in Springdale and have a son and a daughter. The family attends Central United Methodist Church in Fayetteville.

MATT HICKS JOINS FIRST NATIONAL BANK OF NWA First National Bank of NWA announced that Matt Hicks has joined as vice president, commercial lender

and team leader for their Fayetteville branch. Hicks has 12 years of banking experience, 10 of those years, in the Washington and Benton County markets. In previous positions, Hicks was a Commercial Loans Market Manager and Market President. He earned an MBA from Harding University and received his Bachelor of Science from Arkansas State University.

Currently serving as Board Chair for Single Parent Scholarship Fund of NWA, Hicks is also the past Chair for the United Way Generation GIVE campaign and a graduate of the Fayetteville Chamber of Commerce’s Leadership Class XXII. “Matt has a great reputation for being a top notch banker who is involved in the community and has solid relationship development and leadership skills.” said Rob Husong, regional The Fayetteville branch is located at 2638 E Joyce Boulevard, Suite 1.

GENERATIONS BANK NAMES LOAN OFFICER Sam Carlton has been named Loan Officer for Generations Bank in Fayetteville.

Carlton has worked part-time for Generations Bank while attending the University of Arkansas at Fayetteville. He completed his education in December 2015 earning a Bachelor of Science in Communications with a minor in Business Marketing. Sam is a member of the Razorback Foundation Young Alumni and Northwest Arkansas Emerging Leaders.

“We are very excited to have Sam join us full-time,” stated Jon Harrell, Chairman of Generations Bank. “Sam will be a great asset to our team and the bank as we focus on growth in the Fayetteville market.”

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BANK DIRECTORIES AVAILABLE. There are still copies of the 2015-16 Arkansas Bankers Association Bank Directory available. Please contact Traci at traci.logsdon@arkbankers.org to order yours today!

BANKER NEWS & MOVES LEDER PROMOTED TO BANK EXAMINER MANAGER The Arkansas State Bank Department has promoted Stacey Leder to Bank Examiner Manager for the Trust examination staff.

ADVERTISEMENTS For more information on advertising in The Arkansas Banker, please contact Traci Logsdon, Director of Communications, via email at traci.logsdon@arkbankers.org, or by phone at 501.978.3603.

In this position, Leder will supervise two employees who examine the trust departments of Arkansas state-chartered banks. The team also examines Arkansas statechartered trust companies, of which there currently is one. Leder will be responsible for managing all aspects of the Trust examination function, including employee development, examination report preparation and review, and the scheduling of examinations.

The examination of a bank trust department includes, in part, ensuring the department adheres to the directives of its customers.

Examiners also check to ensure a trust department complies with state and federal laws and rules and regulations.

The Arkansas

Banker 1220 West Third Street Little Rock, AR 72201 Phone 501.376.3741 Fax 501.376.9243 www.arkbankers.org

Leder has been at the Bank Department for more than 21 years.

She initially was a commercial examiner but has been a Trust examiner for most of her career at the Department. Leder graduated in 1991 from the University of Central Arkansas, from which she received a Bachelor of Business Administration in General Business.

Leder succeeds Tom Narrell, who retired effective June 30. Narrell had supervised the Trust examination staff that he developed shortly after joining the Bank Department staff in August 1987.

CHRIS MEADOR APPOINTED VICE PRESIDENT, AG LENDER AT CORNERSTONE BANK Charlie Cross, President and CEO, Cornerstone Bank, is pleased to announce the hiring of Chris Meador as Vice President of Agricultural Lending for the local bank’s Berryville office. Mr. Meador is a lifelong resident of Green Forest, Arkansas, where he operates a broiler farm and cattle operation with his wife Alechia and their four children.

Chris is a graduate of College of the Ozarks with a degree in Animal Science and a Minor in Poultry Science. He is very active in the local and regional farming community, as he currently serves on the Farm Bureau Board of Directors as Treasurer/Secretary. He is also a board member of NRSC and a former board member of State of Arkansas Young Farmer and Rancher.

Additionally, Mr. Meador and his family were named Farm Family of the Year in 2013 and were winners of the 2010 Excellence in Agriculture Award. Chris joins the Cornerstone Bank lending team after a 14 year tenure with Tyson Foods.

Cross stated, “We are thrilled to add Chris to our great roster of professional bankers and are excited to bring someone with such a wealth of agricultural knowledge and experience to our lending team. We feel blessed to have his affiliation and trust he will be of huge benefit to our bank as we continue to grow our agricultural client base. We welcome Chris to the Cornerstone family.”

July 2016 | The Arkansas Banker

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The Arkansas Banker | July 2016