The Arkansas Banker September 2015

Implementation of TRID

Trust Conference

Marketing Conference

The Arkansas

Banker

5

Things Every Leader Must Know To Get The Most Volume XCIX, No. 9 | September 2015 September 2015 | The Arkansas Banker

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The Arkansas Banker | September 2015

Free 877-428-6649 Toll

The Arkansas

Banker Volume XCIX, No. 9 | September 2015

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

CONTENTS COLUMNS

EDITORIAL OFFICE

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

MAGAZINE RATES

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

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

Washington Update

8

Political Perspective

Bill Holmes

Gov. Frank Keating Roby Brock

34 Member News

DEPARTMENTS

36 Professional Development 37 Banker News & Moves 39 Index of Advertisements

SEPTEMBER FEATURES

ADVERTISEMENT

SUBSCRIPTION

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EDITORIAL

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.

President’s Column

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

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10 Get to Know Congressman French Hill 14 What You Need to Know Before

the Implementation of TRID

By Adam Gilbert, DD&F Consulting Group

15 Help Your Community ‘Get Smart About Credit’ 15 Regulatory Burden Limiting Bank Products and Services 16 Evaluating the Coupon Rate in Pre-Purchase Analysis

By Christopher R. Morgan, Country Club Bank Capital Markets Group

18 2015 Trust Conference 20 5 Things Leaders Need to Know to Get More

By Kevin D. Wright, The Journey to the Best You

23 Municipal Bonds and Pension Liabilities:

Reporting Changes Ahead

By Dana Sparkman, The Baker Group

26 2015 Marketing Conference 28 Research Can Transform Your Marketing Strategy

By Tom Hershberger, Cross Financial Group

30 5 Questions Community Bank Marketers Should Ask

By Sam Kilmer, Cornerstone Advisors

32 125 Years of the ABA: ABA Chairmen 1891-2015

September 2015 | The Arkansas Banker

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PRESIDENT’S COLUMN Checking in on Congress We have a total of 27 banking advocates headed to Washington, D.C. on the 15th of this month — one of our largest groups in quite some time.

Congress will return from a five week summer recess the week before we arrive.

With the presidential and congressional election season off to an early start, this fall session of Congress will move quickly.

Their calendar will be extremely busy with key issues, such as the Iran Nuclear Pact, the Continuing Resolution to keep the government open, the Highway Bill, EXIM Bank Funding, and the ever-necessary Omnibus Funding Bill. Congress has less than 50 days scheduled to consider legislation out of the four months left on the calendar. It may be mid-December before we see the Senate’s actions on Reg Relief.

While Congress was in recess, many of you were able to meet with our delegation as they traveled through their home districts.

The focus of our discussions was reg relief issues. As you know, Senate Banking Committee Chairman Richard Shelby (R-AL) has dual tracked his regulatory relief measure (S. 1294, the Financial Regulatory Improvement Act), continuing to express his desire to bring the Senate Banking Committee-passed version to the Senate floor while likewise including

a virtually-identical set of provisions in a Senate Appropriations bill, presented by our own Senator Boozman (R-AR). We are expecting Chairman Shelby to continue his efforts to incorporate his broader regulatory relief package into other mustpass bills, such as a possible Omnibus Appropriations bill, which is more likely to be signed by the President.

When Congress returns, we anticipate waging another battle over a funding proposal in the Highway Trust Fund reauthorization bill. Prior to Congress adjourning, a proposal was included in the Senate-passed version of the Highway Bill that reduces the dividend paid by the Federal Reserve to member banks over $1 billion in assets from 6 percent to 1.5 percent. By statute, Fed member banks are required to subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, half of which must be paid-in while the other half can be called by the Federal Reserve Board. Member banks receive a fixed 6 percent dividend annually on that stock — this rate was set by statute and hasn’t been adjusted since 1913.

Despite industry opposition, this proposal was included in the Senate version of the Highway Bill without any study or analysis.

Fortunately, it was not included in a short-

term Highway Bill passed by the House; however, since under congressional budget rules this dividend reduction provision “scored” as a $17 billion revenue-raiser over a 10-year period, we expect it to continue to be a matter of debate as a “pay for” for a longer term Highway Bill or other government programs. AmBA, along with other national and state trades, will continue to convey our strong opposition to the proposal.

In the House, we expect a number of banker-supported bills to be considered on the House floor in September and October.

Among the proposals likely to be brought up are: H.R. 1553, the Small Bank Exam Cycle Reform Act, that would increase the asset threshold ($500 million to $1 billion) for insured depository institutions eligible for 18-month onsite examination cycles; H.R. 1941, the Financial Institutions Examination Fairness and Reform Act, which would establish clear standards and create an independent Examination Review Director to ensure the consistency of all examinations; H.R. 3192, the Homebuyers Assistance Act, which would provide a safe harbor (until February 1, 2016) for

40 YEARS AGO: Association President Dorman Bushong, Farmers & Merchants Bank, Rogers; and President-elect, William H. Kennedy

Jr., National Bank of Commerce, Pine Bluff(seated); with ABA Committee Chairmen for 1975-76 (left to right) Gene Fortson, Worthen Bank & Trust, Little Rock; John Lewis, First National Bank, Fayetteville; B.J. Ford, Merchants & Planters Bank, Camden; W.M. Campbell, First National Bank of Eastern Arkansas, Forrest City; Artie Seidenschwarz, Farmers & Merchants Bank, Stuttgart; Joe Hiatt, American State Bank, Charleston; Jo Stewart, First National Bank, Conway; Ernest Wilson, First National Bank, Harrison; James Cook, National Bank of Commerce, El Dorado; Walter Jennings, First National Bank, Little Rock; Fred Michael, First State Bank, Lake Village; and Finley Vinson, First National Bank, Little Rock.

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The Arkansas Banker | September 2015

ABA EXECUTIVE COMMITTEE

PRESIDENT & CEO BILL HOLMES

enforcement of the CFPB’s TILA-RESPA Integrated Disclosures regulation; H.R. 766, that would require federal banking agencies to present a material reason for a financial institution to terminate a relationship with a customer or group of customers (aimed to address “Operation Chokepoint” issues); and, If further bipartisan agreement can be reached, we expect the House to consider H.R. 1210, the Portfolio Lending and Mortgage Access Act, that would provide that loans originated by insured depository institutions and held in portfolio are treated as qualified mortgages.

We will continue to pursue other priority issues, including gaining additional support for H.R. 2896, the “Taking Account of Institutions with Low Operation Risk Act” (the TAILOR Act).

The Tailor Act directs Federal bank and credit union regulators to consider the risk profile and business model of an institution when taking regulatory action. We are optimistic that a similar version of this legislation will be introduced soon in the Senate.

In addition — and with the assistance of AmBA, our bankers, and the other state associations — we will also continue to actively educate members of Congress on the recent proposal by the credit union regulator to expand credit union business lending activity, as well as the NCUA’s egregious efforts to push the envelope on its membership, secondary capital, and low-income designation rules. And thanks to persistent pressure of bankers and state associations, we are close to securing a date for a congressional hearing on the Farm Credit System.

We will report next month on what we learned during our Annual Washington, D.C., Visit.

Parkway Bank, Rogers

ROBERT Y. TAYLOR | CHAIRMAN

SEAN WILLIAMS | CHAIRMAN-ELECT First National Bank of Wynne, Wynne

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

JUDY LAWTON | TREASURER Heartland Bank, Little Rock

CHUCK MORGAN | PAST CHAIRMAN Relyance Bank, Pine Bluff

BILL HOLMES | PRESIDENT/CEO Arkansas Bankers Association, Little Rock

ABA BOARD OF DIRECTORS PHIL BALDWIN | GROUP 2 Citizens Bank, Batesville

J. MICHAEL JONES | GROUP 5 Merchants & Farmers Bank, Dumas

GREG CONNELL | GROUP 2 The Farmers & Merchants Bank, Perryville

CRAIG MOBLEY | GROUP 4 First Financial Bank of El Dorado, El Dorado

TROY DUKE | GROUP 5 Gateway Bank, Rison

WILSON MOORE | GROUP 2 Bank of America, Little Rock

Regions Bank, Hot Springs

ELIZABETH FARRIS | GROUP 4

JERRY MORGAN | GROUP 1 Focus Bank, Jonesboro

GARY GOLDEN | GROUP 4 First State Bank of DeQueen, DeQueen

Eagle Bank, Little Rock

SCOTT HANCOCK | GROUP 3 Centennial Bank, Fayetteville

RANDY SCOTT | GROUP 1 Farmers Bank & Trust Co., Blytheville

DREW HARPER | GROUP 2 Bank of the Ozarks, Little Rock

MIKE SMITH | GROUP 5 McGehee Bank, McGehee

JON HARRELL | GROUP 3

JIM TAYLOR | GROUP 3 First Security Bancorp, Fayetteville

DARWIN HENDRIX | GROUP 4

STANHOPE WILKINSON | GROUP 3 Farmers Bank & Trust, Greenwood

CATHERINE OWEN | GROUP 2

First Bank, Rogers

Bank of Delight, Delight

CHARLES HORTON | GROUP 1 Fidelity Bank, West Memphis

ABA STAFF BILL HOLMES

PRESIDENT/CEO 501.978.3602 | bill.holmes@arkbankers.org

CARLA BRINKLEY

VP/CONTROLLER 501.978.3608 | carla.brinkley@arkbankers.org

AVA FRANKS

VP/DIRECTOR OF GOVERNMENT RELATIONS 501.978.3606 | ava.franks@arkbankers.org

JESSICA SAHENE

AARON GAMEWELL

EVP/COO 501.978.3613 | aaron.gamewell@arkbankers.org

KAMI TAYLOR COLEMAN

VP/PROFESSIONAL DEVELOPMENT 501.978.3614 | kami.coleman@arkbankers.org

TRACI LOGSDON

DIRECTOR OF COMMUNICATIONS 501.978.3603 | traci.logsdon@arkbankers.org

TERRI KELLY

MARKETING COORDINATOR 501.978.3609 | jessica.sahene@arkbankers.org

PROFESSIONAL DEVELOPMENT COORDINATOR 501.978.3607 | terri.kelly@arkbankers.org

STUART THALHEIMER

BRENDA SCARBROUGH

EXECUTIVE ASSISTANT ADMINISTRATIVE ASSISTANT 501.978.3605 | stuart.thalheimer@arkbankers.org 501.978.3600 | brenda.scarbrough@arkbankers.org September 2015 | The Arkansas Banker

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WASHINGTON UPDATE The Dangers of a Captive Regulator NCUA’s latest plan to loosen the reins on credit unions and allow them to veer further from their mission has bankers seeing red. The regulatory end-run would give the already tax-exempt $1 trillion industry new and potentially risky lending powers. It’s an audacious proposal that must be stopped — and you can help.

First, some background. Acting as cheerleader instead of credit union supervisor, NCUA in June issued a proposal that grants the credit union industry’s wishes for increased business lending authority. Specifically, the proposal would: Widen loopholes to the member business lending cap by “clarifying” that non-member business loan participations do not count towards the statutory cap and by eliminating regulatory oversight of the concentrations of these loans.

Make the statutory cap meaningless by allowing certain credit unions to exceed the member business loan statutory authority. In fact, if both the proposed business lending and pending capital rules are adopted as proposed, the statutory cap could nearly double without any congressional approval.

Remove important safety-and-soundness checks and balances by, for instance, eliminating the requirement that borrowers pledge personal assets — along with business assets — as collateral for new business loans.

Such a relaxation of standards makes the industry’s insurance fund vulnerable and leaves taxpayers holding the bag should anything go wrong. Indeed, NCUA has failed to prove that it is ready or able to supervise institutions with major business loan portfolios.

A quick look at credit unions’ track record on business lending raises serious concerns about whether they, or their regulator, are equipped to handle these loans. Since 2010, at least five credit unions have failed because of poorly run business loan programs. These failures accounted for a quarter of all losses to the insurance fund over that period. It’s a situation that does little to instill confidence in broadening credit unions’ commercial lending authority.

should be lending to businesses, it voted for less, not more. In fact, the 1998 law that restricted member business loans to 12.25 percent of assets emphasized that credit unions should focus on consumer lending in order to remain true to their mission. Since then, credit unions have repeatedly implored Congress to change the rules, and lawmakers have declined to do so.

Bankers had a lot — in fact, everything — to do with frustrating credit unions’ ambitions in Congress. Every time they pushed for a member business lending bill, you pushed back harder.

You helped make clear to Congress that such a bill would be unacceptable to the nation’s community banks.

GOV. FRANK KEATING President & CEO American Bankers Association

Now we must do it again. AmBA and the state associations mounted a major grassroots letterwriting campaign in August that resulted in an outpouring of banker comment letters to NCUA on the proposal. The letters may not persuade NCUA, but they will slow down the process. That gives us time to bring Congress into the debate.

If you are facing unfair and unbridled credit union competition, write to your lawmakers today. (And if you aren’t, write anyway — because it’s just a matter of time before an aggressive credit union enters your market.) Let lawmakers know how the unlevel playing field between community banks and tax-subsidized credit unions is harming your ability to serve your customers.

Unfortunately, the NCUA’s business lending proposal is only the beginning. The agency has already announced that it has an expanded field-of-membership rule and a secondary capital proposal in the works as well.

This rulemaking trifecta, which could seriously undermine bank competitiveness, puts NCUA in “captive regulator” territory, and it must be answered.

The agency must be reminded not only of credit unions’ mission but also its own: to ensure a safe and sound credit union system.

All of this should concern not only bankers but Congress, too. When Congress last weighed in on whether and how much credit unions © 2015 American Bankers Association. All rights reserved. Reprinted with permission.

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The Arkansas Banker | September 2015

ABA Live Events ABA Professional Development

Live Events...

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

SEPTEMBER 2015 24

| BSA/AML Compliance Management

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

27–1 | Basic Lending School

Holiday Inn Presidential, Little Rock Who Should Attend: Loan Officers and lending support staff, Credit Analysts, Loan Secretaries, Loan Administration Personnel, Loan Review Officers, Branch Managers, and Collections Personnel.

OCTOBER 2015 13

| Farmer Mac Road Show

Holiday Inn Presidential, Little Rock Who Should Attend: Ag Lenders, Bank Leadership, Credit and Funding Managers

14–15 | CCBSP (Certified Community Banking Security Professional)

15

Crowne Plaza, Little Rock Who Should Attend: ISO, Auditors, IT Manager, Compliance Officers, Security Officers, Operations Officers

| Safety & Soundness

Crowne Plaza, Little Rock Who Should Attend: Bank Directors, Executive Management, Senior Bank Officers, Shareholders, Chief Risk Officers, Senior Bank Officers

NOVEMBER 2015

3

| ELS Day with the Regulators

Federal Reserve Building, Little Rock Who Should Attend: Any banker who would like to learn more about regulatory processes, and hear from a variety of bank regulators

12–13 | Marketing Conference

Crowne Plaza, Little Rock Who Should Attend: Anyone responsible for marketing, public relations and advertising

20–21 | Trust Conference

Crowne Plaza, Little Rock Who Should Attend: Trust Officers, Wealth & Private Banking Directors, Senior Financial Advisors, Personal Bankers, Estate Planning Attorneys, Senior Level Executives, Portfolio Managers

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| Bank Directors I Workshop

Crowne Plaza, Little Rock Who Should Attend: Bank Directors, Executive Management, Senior Bank Officers, Shareholders

27–28 | IRA School

Crowne Plaza, Little Rock Who Should Attend: Trust Officers, Wealth & Private Banking Directors, Senior Financial Advisors, Personal Bankers, Estate Planning Attorneys, Senior Level Executives, Portfolio Managers, Any officer or manager who oversees the IRA department and may be responsible for answering IRA account holders questions or concerns but does not actually open IRA accounts, IRA Personnel who like a slower pace workshop to cover all the new changes in a comprehensive manner

17

| Women in Banking Conference

Crowne Plaza, Little Rock Who Should Attend: Women in banking on all levels who want to increase their effectiveness and success in the workplace

18–19 | Technology Conference

Crowne Plaza, Little Rock Who Should Attend: IT Officers, Technology Managers, Chief Information Officers, IT Committee Members

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

September 2015 | The Arkansas Banker

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POLITICAL PERSPECTIVE Enjoying the Moment Interest rates are low, gas prices continue to decline, unemployment is falling, and the housing market is steady — if not strong. In many regions of the state, sales tax collections are increasing, a sign of greater consumer spending activity. We should rejoice in all of these positive signals.

So why is there still a sense that despite several years of good news — interest rates, unemployment, housing, consumer spending, and gas prices have all been headed in the right direction for some time now — we just don’t trust that the fundamentals are ripe for real longerterm economic prosperity.

If any one of those factors were headed in the wrong direction, we’d certainly be anxious and anticipating more economic doldrums in the coming months and years.

For starters, we’re not seeing the productivity gains that were the hallmark of the late-90s boom (although we are seeing ridiculous valuations of Internet tech firms). Wages are not growing at extraordinary rates, which is a good thing for keeping inflation in check, but a bad thing in terms of increasing consumer confidence and greater spending activity.

The good news that I’ve summarized above is partially what has led to headlines like this: “FDIC Banks Post Highest Total Quarterly Income On Record.”

In case you missed it, U.S. commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. (FDIC) reported aggregate net income of $43 billion in the second quarter of 2015, up $2.9 billion (7.3 percent) from a year earlier and the highest quarterly income on record, the federal agency announced in early September.

The 5,881 insured institutions identified as community banks reported $5.3 billion in net income in the second quarter, an increase of 12 percent from the second quarter of 2014. Net operating revenue of $22.3 billion at community banks was $1.6 billion (8 percent) higher than a year earlier.

It would seem to an outsider that financial institutions have indeed found a way to navigate in the Dodd-Frank world to a position of profitability.

These toplines don’t explain the undercurrents of what’s happening in the banking world. There are eroding margins in key areas and no doubt increasing compliance costs. Many larger banks can spread these expenses across a wide swath of their operations, whereas smaller banks don’t have that ability. Most of the bankers I know are fairly savvy at detecting trends and have re-positioned their efforts to capitalize on the opportunities and minimize the losing strategies.

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The Arkansas Banker | September 2015

GUEST COLUMNIST ROBY BROCK

We continuously get mixed signals from the manufacturing and trucking sectors, the early indicators of what may happen in the product pipeline for the American economy. One month, the news is good, the next month it’s bad — overall, it’s steady.

It doesn’t help our confidence either that the Dow Jones can plunge 800 points one morning because of something happening on the other side of the planet.

Certainly, there are aspects of Dodd Frank that are on their way to the financial sector and while everyone has a strong opinion on how bad it could be, no one can accurately predict how it will actually impact overall bank performance. To be sure, the federal law will complicate practices at the local level for institutions it was never intended to affect and that adds to the anxiety.

Let’s do this for now: enjoy the short-term good news, prepare for the inevitable shifts that come with good fortune, and bank on the fact that the financial sector is among the most adaptable, responsive and plugged-in business group when it comes to the economy and making adjustments.

In politics, there is always more power in the government that is closest to the people. With the community banking strength we see in Arkansas, business should be no different.

Roby Brock is the Editor-in-Chief of Talk Business & Politics, an Arkansas-based multimedia news organization.

Read news or sign up for daily newsletters at TalkBusiness.net.

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September 2015 | The Arkansas Banker

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Get to know Congressman

French Hill Hometown:

Little Rock

Alma Mater:

Vanderbilt University

Elected to Office: November 4, 2014

Committee Assignments House Committee on Financial Services

Click here to learn more about Congressman French Hill.

Subcommittee on Oversight and Investigations Subcommittee on Capital Markets and Government Sponsored Enterprises Task Force on Terrorism Finance

Contact Congressman Hill Congressman French Hill 1229 Longworth HOB Washington, D.C. 20515

Contacts: A. Brooke Bennett A.Brooke.Bennett@mail.house.gov

Conway Office 1105 Deer Street, Suite 12 Conway, AR 72032

Holli Heiles Holli.Heiles@mail.house.gov

Little Rock Office 1501 N. University Avenue, Suite 150 Little Rock, AR 72207

Jill Cox Jill.Cox@mail.house.gov

Web: www.Hill.House.gov

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The Arkansas Banker | September April 2015 2015

From an economic standpoint, what is the major focus of the session? And what can we expect to see result from this focus?

Everyone agrees that community banks did not cause or contribute to the 2008 financial crisis, yet they are bearing the brunt of the regulatory fallout as a result of the 2010 Dodd-Frank Act. My biggest priority is to move away from Dodd-Frank and continue to push for a streamlined, commonsense regulatory system that does not unduly burden our capital markets, money center, and community banks, along with their unique abilities to serve their customers.

Give us a progress report regarding ongoing measures for regulatory relief for Arkansas’s hometown banks.

The Committee has passed 19 banking bills, nine of which have also passed the full House.

One bill that is of particular interest back home is H.R. 650, the Preserving Access to Manufactured Housing Act, which passed the House on April 14, by a vote of 263-162. H.R. 650 would preserve access to financing for manufactured housing. In Arkansas we have 170,000 manufactured housing units, equating to about 13 percent of housing units in our state.

As a former community banker in Arkansas, I know firsthand that manufactured housing is one of the best options for affordable housing for many of our families, especially those in rural areas. However, under new mortgage rules issued by the CFPB, many of these manufactured housing loans are now automatically considered high-cost, which increases the cost for consumers and subjects lenders to greater liability. Because of this, many of my former colleagues in community banking are offering fewer of these loans. This

impacts hardworking low-to-moderate income families across Arkansas with aspirations of owning a home.

Share some highlights from any hearings that took place during this session.

In July, timed with the five-year anniversary of DoddFrank, the Committee had a series of hearings designed to investigate the burdensome regulations of Dodd-Frank and its negative consequences on the economy. We have also held hearings with U.S. Treasury Secretary Jack Lew on the state of the international financial system, and multiple hearings highlighting the accountability issues at the CFPB. The Committee will continue to hold hearings in line with its themes of growing the economy by decreasing regulatory burdens and promoting an environment that allows banks to best serve their local communities.

List three goals you have to alleviate the regulatory burden of hometown banks.

1. I would like to convert the Consumer Financial Protection Bureau (CFPB) into a Consumer Financial Protection Institute, which will serve its true consumer protection function by researching consumer topics for the financial services prudential regulators and issue best practices for their consideration. The institute would have no rule making or enforcement authorities.

2. Create a commission to review the entire banking and securities code similar to a successful approach that was taken in Arkansas in the mid-90s. The Commission would identify outdated, clear cases of rules where costs exceeding benefits, and conflicting or duplicative regulations and make policy recommendations to Congress for change.

Congressman French Hill addressed attendees of the 2015 ABA Annual Convention in May.

September April 2015 | The Arkansas Banker

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3. Find a Dodd-Frank alternative: I am working with House colleagues to craft a regulatory exemption from DoddFrank and Basel III if a bank maintained a certain level of capital requirements, performance, and compliance success.

Will you be sponsoring legislation?

I recently sponsored H.R. 3192, the “Homebuyers Assistance Act.” H.R. 3192 delays enforcement of a CFPB regulation surrounding the home buying process to allow more time for the CFPB to ensure purchasers and buyers are not unfairly harmed by this new regulation. H.R. 3192 passed the House Committee on Financial Services by a vote of 45-13.

I also authored a bill H.R. 2356, the Fair Access to Investment Research Act, with Mr. Carney of Delaware, that provides for appropriate rule changes to encourage greater research coverage of Exchange Traded Funds (ETFs). The number and size of ETFs have grown rapidly and consumers would benefit from greater research coverage. H.R. 2356 passed the House Financial Services Committee by a vote of 48-9.

What is the best way for individual bankers to let you know their views on legislation that affects your constituents?

The best way to give me your input is via Facebook, telephone, regular mail, or email. If you go to my website www.hill.house.gov you can see how to reach me on all of these formats.

My dedicated staff and I are always happy to hear from constituents, especially those in the banking community who are seeing firsthand the ways in which the current regulatory climate is not only hurting their business, but also the consumer as well.

What are you most proud of regarding your leadership in the state of Arkansas?

My work with the Rotary of Little Rock. I have been a member since 1993, and was fortunate to serve as President in 2005-2006. When I was President, Hurricane Katrina devastated much of the Gulf Coast. Our club was very active in the recovery process down there, over 100 Little Rock Rotarians and their families made seven working trips to Lacombe, Louisiana, bringing over $550,000 in financial support to the effort.

What do you do on the weekends?

I spend time with my family, visit with constituents, travel the district, and when I have time, I enjoy being outside.

Hiking and hunting are two of my favorite pastimes.

What are the last two books you read?

The Quiet Man about my old boss President George H.W. Bush. It’s by former White House Chief of Staff and Governor of New Hampshire, John Sununu Alice, the biography of Alice Roosevelt Longworth written

by Stacy Cordery And, right now I am enjoying David McCollough’s new book on the Wright Brothers.

...and the last two movies you saw?

“The Grand Budapest Hotel” “Being There,” a classic Peter Sellers comedy-drama.

Congressman Hill with a group of Arkansas bankers during the 2015 American Bankers Association Government Relations Summit in March: (front row) Bill Holmes, Arkansas Bankers Association, Little Rock; Robert Taylor, Parkway Bank, Rogers; Commissioner Candace Franks, Arkansas State Bank Department, Little Rock; Congressman Hill; Don Walker, Arvest Bank, Fayetteville; John Womack, Arvest Bank, Little Rock; Becky Womack; (middle row) Rodney Shepard, Arvest Bank, Fort Smith; Blake Fletcher, Arvest Bank, Little Rock; Sean Williams, First National Bank of Wynne, Wynne; Chuck Morgan, Relyance Bank, Pine Bluff; (back row) and Mike Lambert, Federal Home Loan Bank of Dallas.

12

The Arkansas Banker | September 2015

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Common Mistakes on LLCs 9/29/2015 1:30 p.m. - 3:30 p.m.

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Do’s and Don’ts for Working With Caregivers and Fiduciaries 10/2/2015 10:00 a.m. - 12:00 p.m.

Opening Minor Accounts: Legal Ownership and More 10/14/2015 1:30 p.m. - 3:30 p.m.

Liquidity Risks: Basics-Measuring and Managing 10/28/2015 2:00 p.m. - 3:40 p.m.

Stress Testing the Loan Portfolio: Regulator Feedback 10/15/2015 2:00 p.m. - 3:00 p.m.

Mortgage Servicing Compliance 10/28/2015 1:30 p.m. - 3:30 p.m.

IRAs: The Basics 10/16/2015 10:00 a.m. - 12:00 p.m.

UCC: What You Need To Know About the Amendments 10/6/2015 10:00 a.m. - 12:00 p.m.

10 Simple Rules for Tellers To Save You Thousands 10/20/2015 10:00 a.m. - 12:00 p.m.

Writing An Effective Credit Memorandum 10/6/2015 1:30 p.m. - 3:30 p.m.

Commercial Loan Applications: What Can Go Wrong?

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Managing a Dynamic ALCO 10/6/2015 2:00 p.m. - 3:40 p.m.

Bitcoin for Bankers 10/7/2015 10:00 a.m. - 12:00 p.m.

BSA for the Frontline 10/7/2015 1:30 p.m. - 3:30 p.m.

IRAs: Way Beyond the Basics 10/29/2015 1:30 p.m. - 3:30 p.m.

Robbery Procedures, Counterfeit and Fraudulent Items 11/4/2015 10:00 a.m. - 12:00 p.m.

Mortgage Loan Originator Required Training Series: Part III 11/17/2015 10:00 a.m. - 12:00 p.m.

FFIEC Guidance on Employee Use of Social Media 10/21/2015 10:00 a.m. - 12:00 p.m.

Critical Issues on Certificates of Deposit (CDs) 11/18/2015 1:30 p.m. - 3:30 p.m.

IRAs: Beyond the Basics 10/22/2015 10:00 a.m. - 12:00 p.m.

Dealing With Appraisals: Regulations and Requirements 12/3/2015 1:30 p.m. - 3:30 p.m.

25 Lessons Learned From Safe Deposit Box Litigations 10/27/2015 10:00 a.m. - 12:00 p.m.

IRS Information Reporting: What You Need To Know 12/17/2015 10:00 a.m. - 12:00 p.m.

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

September 2015 | The Arkansas Banker

13

What You Need to Know Before the Implementation of TRID

Change. While change is not always a bad thing, it is almost certainly a challenge. As bankers, we are currently in an environment of constant and seemingly unending change.

With October quickly approaching, it brings with it the implementation of the TILA/ RESPA Integrated Disclosure (TRID). TRID is one of the most comprehensive changes to residential mortgage lending to date. It’s intent is to finally bring together the rules and disclosures of two separate regulations and simplify the disclosures provided to the customer.

Here are some of its highpoints: 1. Timing for Disclosure: One of the biggest changes related with TRID is that the Closing Disclosure (formerly the HUD Settlement Statement and the Final Truth in Lending Disclosure) must be provided at least three business days prior to consummation of the loan. If a bank continues to utilize third parties, such as title companies or attorneys, to prepare the closing documents, then the bank should make sure that there is clear communication with those parties about the new rules and the timing of the disclosures. Banks should also communicate this new rule to realtors since this will impact all parties associated with the transaction.

2. Loan Types subject to TRID: While construction-only loans and loans secured by vacant land or by 25 or more acres are currently subject to TILA, they have not been subject to RESPA. Under TRID, these loans types will now be subject to the disclosure requirements. Also banks should be cautious about providing the new disclosures for all closed-end real estate transactions. Some transactions, such as reverse mortgages, require the GFE, HUD Settlement Statement and Truth in Lending forms.

3. Change information required for applications: There has also been a change to the definition of an application. An application is deemed to be complete when the lender has received: the applicant’s name; income; social security number; the property address; an estimated value of the property; and the loan amount sought.

The current definition under RESPA has an additional provision which states “any other information deemed necessary by the loan originator.” Be sure to provide the Loan Estimate within three business days of receipt of the six pieces of information for applications subject to the new TRID disclosures.

This is not intended to be a comprehensive outline of the TRID changes, but to highlight some of the areas that may have a significant impact on a bank’s processes. Remember to document all of the training that has been conducted, and the new processes and procedures that have been implemented in response to TRID. Bankers are becoming masters of change. Keep taking small steps and the change, no matter what the form, will be manageable.

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The Arkansas Banker | September 2015

ABOUT THE AUTHOR

Adam Gilbert, CRCM, serves as a member of the DD&F Risk Management Group with responsibility for performing a variety of assessments associated with consumer compliance, fair lending, loan review, internal audit, and the Bank Secrecy Act (BSA). He is a licensed attorney with over six years of experience in the financial and banking industry as an auditor, consultant, and mortgage broker. He also served an externship with a state banking regulatory agency.

DD&F Consulting Group is an ABA Gold Associate Member.

AmBA Survey:

Help Your Community ‘Get Smart About Credit’

Is your community smart about credit? The American Bankers Association’s Get Smart About Credit Day, slated for Thursday, October 15, is the perfect opportunity to encourage young people to develop responsible credit habits.

The program, now in its 13th year, is a national campaign of volunteer bankers who help young people develop responsible credit habits. The program focuses on the following important financial obstacles facing teens; paying for college, building good credit habits, and protecting their identity.

This program is an opportunity for Arkansas banks to plug into a national effort to equip students with ways to ensure a financially fit future. Your bank can team up with the AmBA in this effort to teach the local community how to effectively use credit, by using provided resources in the following topic areas: You are in charge. You are responsible for your finances and you should act accordingly by creating a realistic budget or plan and sticking to it.

Watch Spending. You control your money, determining how you spend or save it. Pace spending and increase saving by cutting unnecessary expenses like eating out or shopping so that your money can last throughout the semester.

Use Credit Wisely. Understand the responsibilities and benefits of credit. How you handle your credit in college could affect you well after graduation. Shop around for a card that best suits your needs.

Utilize Your Bank Account. Banks are more than money in a vault. They offer valuable services that students can benefit from like check cashing, debit cards, online banking, balance alerts, personal loans, direct deposit, financial education and some offer identity theft protection.

Regulatory Burden Limiting Bank Products and Services Growing regulatory compliance burdens have led nearly half of all banks to reduce their offerings of financial products and services, according to the American Bankers Association’s 2015 Survey of Bank Compliance Officers. A combined 46.3 percent of respondents said their bank had cut offerings for loan accounts, deposit accounts, or other services because of regulatory effects.

Additionally, 46 percent of bank compliance officers reported their institution had decided not to launch a product, open a new channel, or had held off on entering a new market – temporarily or permanently – due to compliance concerns.

“It’s clear that the compliance burden brought on by Dodd-Frank has had an impact not only on banks, but more importantly on the customers and communities they serve,” said Frank Keating, AmBA president and CEO. “This regulatory overcorrection has limited the loans, products and services available to consumers.”

Further evidence of regulations’ effect on customers can be seen in the one-third (33.8 percent) of banks that turned down otherwise creditworthy mortgage borrowers in an effort to comply with the Ability-to-Repay Rule. The rule’s impact was felt most by banks with between $1 and $10 billion in assets. Approximately one-third of banks now make exclusively Qualified Mortgage loans.

The survey also reviewed trends in banks’ risk assessment processes. More than 75 percent of respondents perform enterprise-wide risk assessments, a majority of which are done annually. Results showed that as bank asset size increases, so does the percentage of institutions performing enterprise-wide risk assessments.

In other findings, an increasing number of banks are relying on social media monitoring as a portion of their consumer complaint management process. Just over 50 percent of respondents use social media or other internet sites as a way to review comments about their bank – an increase from the 42.2 percent that did so in 2013. ​​​

Be particular when it comes to money. Don’t trust just anyone with your money. Be skeptical of classmates, friends or salespeople that have ideas for your money.

Save. Things happen, and it’s important that you are financially prepared when your car or computer breaks down or when you have to buy that unexpected bus ticket home. No matter how small the amount you should start putting some money away immediately.

Ask. This is a learning experience, so if you need help, ask. Your parents or your banker are a good place to start and remember the sooner the better.

To participate in this program, and access customizable resources and communications tools, log on to the American Bankers Association website at www.aba.com.

September 2015 | The Arkansas Banker

15

Evaluating the Coupon Rate in Pre-Purchase Analysis The coupon rate and the effect it has on the liquidity, market value, and any optionality of a fixed-income security is an integral, but often overlooked, part of pre-purchase analysis. There are several ways to mitigate the amount of loss when rates inevitably rise: increase cash holdings, purchase short-term and/or floating-rate bonds, and buy high coupon “cushion” bonds. The latter can be a bit of a shock for some, as a higher coupon is accompanied by a higher price, but in a rising rate environment a high coupon bond will lose less and provide income above the prevailing market rates. Simply said, higher coupon bonds hold their value in a rising rate environment better than the near-par and discounted price alternatives. High coupon bonds (also referred to as kickers, cushion bonds, premiums, or rate shields) will provide greater cash flow that will allow investors to repurchase securities at lower prices (higher yields) and mitigate losses as rates eventually increase.

Assuming identical maturities, a bullet structure with an above market coupon is mathematically a shorter duration than a lower coupon bond because more cash flow will reprice at higher rates and therefore, more value will be retained when prices rise. They decline less in price and therefore are more valuable.

If a bond contains a call option, the importance of coupon rate in prepurchase analysis becomes even more critical as illustrated below in the example

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calculated by the Bloomberg Total Return Analysis.

Bond A and Bond B are both municipal bonds with similar maturity and call structures. If rates were shocked up 200 basis points, the bond with the higher coupon and higher price, Bond B, will lose $46,234 less than Bond A. Why? Because the high coupon is high enough to still be called even though rates moved higher at call date. Bond A however, is not called because it is “cheap money” to the issuer and is allowed to run forward to maturity. If rates were high when the security was issued but have come down significantly, the issuer will have more incentive to call the bond and reissue that debt at a lower cost to them, i.e., a lower coupon…similar to refinancing a home at a lower mortgage rate. This dynamic should always be taken in to account when buying a callable bond. Obviously, market conditions and the needs of the issuer at a specific point in time can influence their decision to exercise the call option. Likewise, the nature of the call, one time versus quarterly or continuous for example, often impacts whether the call is exercised. Knowing that, for illustration’s sake, for one-time calls, the calculation is relatively simple: 1. Subtract 20 basis-points (again, can differ from time to time) from the current callable coupon (this is roughly the cost of issuing new debt) 2. Determine the yield of a non-callable agency for a period of time between

the call date and maturity date of the bond you’re considering 3. Subtract the yield of the bullet agency from the callable coupon (less 20 basis points) to determine how many basis points the call option is in or out of the money. This represents how many basis points the issuer can save by refinancing to a bullet agency with a maturity similar to the original bond.

For example, consider a new issue 2% coupon, five-year/one-year one-time call. First, subtract 20 basis points from 2 percent to arrive at 1.80 percent. Then determine the yield of a 4 year bullet agency, which is roughly 1.56 percent.

Subtract 1.56 percent from 1.80 percent,

Yield

Price July 2016 assuming 200 basis point rate increase

Loss/Gain per $1 Million July 2016

Bond

Coupon

Maturity

Callable

Price July 2015

A

3%

9/1/2024

9/1/2023

$106.29

2.233% YTM 2.150% YTC

$91.75

($138,800)

B

5.29%

10/1/2024

10/1/2020

$113.00

3.623 YTM 2.623% YTC

$102.54

($92,566)

The Arkansas Banker | September 2015

2015 ABA Salary & Benefits Survey Results Available Paying people fairly is good business. Underpay, and employees will eventually look for a better job offer.

Overpay, and the budget and profitability suffer. That’s why banks use salary surveys to research the value of their jobs.

To determine the prevailing rate for a job, banks can “benchmark” jobs against compensation surveys that are detailed and specific to our states’ banking markets and regions. A good compensation survey uses standard, proven methods of data gathering and statistical analysis to determine how much banks pay for a specific job in a specific region. Banks pay for compensation data because the benefits exceed the costs. The amount your bank spends on this survey is just a fraction of a percent of your total payroll costs. to get 0.24 percent. The bond is currently 24 basis points in the money, meaning if the bond is still in the money on the call date, the bond will likely be called. However, if the 4 year bullet yield were to rise above 2 percent by the call date, the bond would be out of the money, meaning there is a good chance it would not be called away.

Callable bonds with lower coupons typically have a higher yield to call, and a lower probability of being called away.

Bonds with higher coupons will have a lower yield to call, and a higher probability of being called, reducing the issuer’s interest cost and, more importantly, the investor’s income.

The coupon rate has a substantial influence on a bond’s performance. It significantly affects market pricing and the probability of a call option being exercised. As we wait for a rise in interest rates, it is advantageous to remember that higher coupon bonds will hold their value better than those with lower coupons. High coupon bonds offer a unique opportunity in this uncertain investing landscape.

ABOUT THE AUTHOR

Christopher R. Morgan is an Investment Officer for Country Club Bank Capital Markets Group in Kansas City.

Country Club Bank is an ABA Gold Associate Member.

TO PARTICIPATE OR NOT TO PARTICIPATE

Here are some considerations for you to weigh when deciding whether to participate in next year’s compensation survey Every participant improves the quality and the validity of the results. Your bank’s participation can stimulate others to participate. In other words, if nobody puts data in, nobody gets data out.

If your chief competitors are participating, it may make sense for you to participate as well so that there are statistically significant numbers.

If your company is one of a few banks in a region your participation could make a significant difference in the validity of the data.

Participants receive a significant discount on the price of the survey.

This may be the least costly salary survey available, but has more information specific to Arkansas banks than any other.

Participating banks have been sent their copy of the results, and non-participating banks may purchase the results for $350.

ORDER YOURS TODAY

If your bank did not participate in the 2015 survey and you would like to obtain a copy of the 2015 survey results, please contact Stuart Thalheimer at 501.978.3605.

September 2015 | The Arkansas Banker

17

2015 Trust Conference October 20-21, 2015 Crowne Plaza, Little Rock

The role of a community bank’s trust department is a unique one — from assisting with estate and retirement planning to staying current on very specific legal and ethical responsibilities. The 2015 Arkansas Bankers Association Trust Conference is structured to meet those unique needs.

Join your colleagues from across the state to discuss the tools and strategies needed to serve your customers and manage your portfolio of business in today’s demanding environment.

Click here for more details on the 2015 Trust Conference!

Featured Speakers

Bryant Cranford is an attorney at Rose Law Firm in Little Rock, practicing in the areas of employee benefits and executive compensation, tax, estate planning, and probate.

Brad Davidson is Founder and Principal of spardata.

He is responsible for business development in the financial services market segment at spardata.

Tony Hilliard is an attorney at Ramsay, Bridgforth, Robinson and Raley LLP in Pine Bluff, specializing in taxation, estate planning, banking, employee benefits, and business law.

Angela Hopkins specializes in Business Valuation and Litigation Support at Frost, PLLC in Little Rock. She is also experienced in fraud investigations.

Chuck Maggiorotto is President and CEO for Tower Wealth Managers. He directs and oversees all aspects of asset management and leads the wealth management team.

Sam Shapiro is a portfolio manager in the Quantitative Investment Strategies group within Goldman Sachs Asset Management.

Coleman Westbrook is a partner at Friday, Eldredge & Clark.

He specializes in gift, estate taxes; charitable and other lifetime and testamentary transfers.

Kevin Wright is a former NCAA Division 1 football champion and a seasoned executive at one of the top five Banks in the U.S. with insight into leading and motivating your team.

Timothy J. Yeager, PhD is an Associate Professor of Finance at the University of Arkansas Sam M. Walton College of Business, and the ABA Chair in Banking.

Dan Young is a member of Rose Law Firm, a Professional Association, in Little Rock. He focuses his practice in the areas of taxation, probate, corporate law, and trusts and estates.

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The Arkansas Banker | September 2015

Bert Purdy, CPA, CTFA, is the Director of BKD’s St. Louis office; Purdy provides a wide range of accounting, auditing, and consulting services.

To register, contact the ABA Professional Development Department at 501.376.3741 or via email at terri.kelly@arkbankers.org.

Trust Conference Agenda Tuesday, October 20, 2015 9:00 a.m. – 10:00 a.m. Registration / Continental Breakfast 10:00 a.m. – 10:30 a.m. ABA Welcome & Introductions 10:30 a.m. – 11:30 a.m. Sales Performance:

Taking Action Kevin D. Wright, The Journey to the Best You Maximize your company’s greatest assets with motivation, inspiration and the proven system. The journey to becoming the best company begins with the best people — learn how to attract top talent, develop existing talent and retain your best talent and customers.

11:30 a.m. – 12:00 p.m. Networking Break 12:00 p.m. – 1:00 p.m. Lunch Featuring:

The Economy and Your Clients Chuck Maggiorotto, Tower Wealth Managers A review of current economic circumstances, potential investment implications and anticipation of possible client viewpoints and reactions.

1:00 p.m. - 2:00 p.m.

Big Data + Insights:

The Data Revolution Sam Shapiro, Goldman Sachs Asset Management Find out about The Data Revolution, and how you can harness it to be more successful in your bank.

2:00 p.m. – 2:30 p.m.

Networking Break

2:30 p.m. – 3:30 p.m.

Fraud and Forensic Accounting Angela Hopkins, Frost, PLLC This session will define forensic accounting and look at the typical types of fraud that take place in banks and trust departments by exploring statistical data and actual engagements (including war stories), and looking at the litigation implications.

3:30 p.m. – 4:30 p.m.

Best Practices for

Effective Administrative

and Investment Reviews Bert Purdy, BKD, LLP In the days of digitally-automated administrative and investment reviews, the focus of administrators and investment officers has turned to efficiency. With this increase in efficiency, has effectiveness been lost? Discover best practices for performing administrative and investment reviews in both an efficient and effective manner.

5:00 p.m. - 6:00 p.m.

Reception Sponsored by Federated Investors and Crews and Associates

Wednesday, October 21, 2015 8:30 a.m. – 9:00 a.m.

Continental Breakfast

9:00 a.m. – 10:00 a.m. Update on Estate Planning

and Trust Administration Coleman Westbrook, Friday, Eldredge & Clark Learn what you need to know about recent changes and developments in Estate planning and Trust Administration.

10:00 a.m. – 11:00 a.m. Unique Asset Administration Brad Davidson, spardata We all deal with assets that aren’t commonly traded on a recognized exchange. But, are we dealing with them properly and in the best interests of our clients? Gain insight in how to deal with unique assets and how they can affect your portfolio.

11:00 a.m. – 11:15 a.m. Networking Break 11:15 a.m. – 12:15 p.m. Asset Bubbles and Fed Intervention Timothy J. Yeager, PhD, University of Arkansas The Fed continues to rely on inflation to signal a tightening monetary policy, but that signal is no longer effective. Current monetary policy is more likely to inflate asset bubbles than to raise inflation. The Fed needs to shift to a new signal, based on credit expansion.

12:15 p.m. – 1:00 p.m. Lunch 1:00 p.m. – 2:00 p.m.

Dealing with Closely Held

Business Entities in Trusts

and Estates Tony Hilliard, Ramsay, Bridgforth, Robinson & Raley LLP This session will review the issues, requirements and best practices when a trust or estate holds an interest in a closely held business entity.

2:00 p.m. - 3:00 p.m.

Pitfalls for IRA Custodians

and Legal Update

– Prohibited Transactions Dan Young and Bryant Cranford, Rose Law Firm Find out about transactions (we will review a recent bankruptcy case involving a Maumelle investment in which a bankruptcy judge determined whether a prohibited transaction had occurred); IRS reporting issues (including UBIT, required minimum distributions and valuation of nonpublicly traded assets); the DOL’s proposal to redefine who is a “fiduciary,” and custodians’ obligations under customer IRA agreements. The presentation will also review recent case law and statutory changes that are relevant to trustees.

3:00 p.m.

Adjourn

Who Should Attend: Trust Officers, Wealth & Private Banking Directors, Senior Financial Advisors, Personal Bankers, Estate Planning Attorneys, Senior Level Executives, and Portfolio Managers

September 2015 | The Arkansas Banker

19

5

Things Every Leader Must Know To Get The Most…

ABOUT THE AUTHOR

Kevin D. Wright is a big guy with a big message: from humble beginnings in Philadelphia spending every summer on his family’s farm, to NCAA Division 1 Conference Champion football player, to an executive at one of the top 5 banks in the U.S. Wright has insight on leading and motivating your team.

Hear more from Kevin Wright at the 2015 Trust Conference!

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Imagine having more DDA, mortgage and trust customers than you can handle, triple digit revenue increases year after year and Twitter, Facebook, and Periscope ablaze from customers singing your praises. The best companies are the result of their people. No two alike; each bringing a dynamic difference to the workplace. Does your environment allow your people to bring their full selves, making the unassailable difference for your organization? Or do you force them into your proverbial box like 24 crayons in Crayola box?

Employee engagement is a critical consideration for leaders and companies that want to perform at the highest levels.

Unfortunately, the research data is staggering.

Many, like global research and consulting firm Gallup, indicate roughly three quarters of American workers are disengaged.

Engaged employees provide many benefits to their organizations: enhanced customer

The Arkansas Banker | September 2015

service, increased productivity, and improved retention. Bankers are realizing their firms cannot afford to ignore the responsibility of keeping their team members engaged.

THE STRATEGY TO GETTING THE MOST FROM YOUR TEAM MEMBERS

While there are five dimensions to the “whole” employee, we’ll assume we’re addressing the professional dimension here. Diving a little deeper, let’s address the five-part strategy to getting the most from your employees. Shhh, I’ll let you in on a little secret. This can also be used for product development, significant others and yourself. When wanting to more deeply connect, ample time must be spent around the following: Fields Connections Differentiation Sequencing Impact

Humans, and consequently employees desire to be in a consistent state of growth.

Developmental meetings are a great place to discuss the five strategy elements to deeper engagement to get the most out of your talent. Understand where your employee is headed. Or said differently, what fields does she wish to “play on?”

Where is it that she would like her career to go? This is a good time to gain insight around whether you have a long-term employee, or one that considers her calling elsewhere.

What are the essential connections necessary to move from where he is today, to where it is he aspires to be? Whether in another division of your firm, the office next door or The Peace Corp, it is essential that as a leader we understand where our talent aspires to be and how to be helpful in getting them their.

Few of us really take the time to

understand our point of differentiation.

What is it that makes us so special in the context of our role or future roles? You’ve likely picked up by now this system is forward looking. You are meeting them where they are, and assisting in their growth.

Equally as important as knowing the Connections necessary and Differentiation, one must understand the sequence of events that need to occur to get them to where it is they aspire to be.

Many of us want to go from midnight to morning in just minutes. Fortunately, it’s not that easy. There are reasons we can’t sell, until we get our Series 6. As we consider the generational differences in the workplace, this conversation may have varying tones and speed aspirations. With Millennials projected to be 75 percent of the U.S. workforce by 2025, we should get comfortable with an expeditious timeline.

Ultimately, as leaders it is incumbent upon us to assist our talent to realize the impact they make in their current role and will make in their aspiring position.

Depending on the motivation for the aspiration, your employee may realize the position they aspire to, doesn’t align with the impact they wish to make.

Pizza parties and ice cream socials are nice and may in fact make your employees happy momentarily. However, your company would be much better served by implementing plans tailored to the particular capabilities and aspirations of your employees. Not only is this a much more effective way to make employees feel more connected with the goals and mission of the company, it has the added benefit of showing your team members that you are committed and care about them individually, not just to the extent that they fit into the organization at large.

As leaders, you are engaged.

September 2015 | The Arkansas Banker

21

Since 1979, The Baker Group has helped community

investment firm of choice for financial institutions.

financial institutions steer through unpredictable

When facing a transition through an uncertain

economic environments using robust tools and

environment, The Baker Group can help you fit

resources for interest rate risk and investment portfolio

together the pieces of the financial puzzle.

management. As we transition through 2015, our task is to now help financial institutions develop effective processes and strategies that will ensure optimal performance in a puzzling financial environment.

Our proven approach of total resource integration utilizing software and products developed by Baker’s Software Solutions* — combined with our solid investment experience and advice — makes us the

Asset/Liability Management • Evaluate Earnings and Capital at Risk • Simulate Stressed Rate Scenarios • Analyze Risk Management Strategies

Investment Strategies • Develop Quarterly Strategies • Determine Optimal Relative Value • Manage Risk vs. Reward Tradeoff

Education • Tailored Board Education • Webinars for ALCO • Interest Rate Risk Seminars

To find out how The Baker Group can assist your institution in defining and meeting its financial objectives, call your Baker representative or Ryan Hayhurst at 800.937.2257.

Member: FINRA and SIPC www.GoBaker.com Oklahoma City, OK | Atlanta, GA | Austin, TX | Indianapolis, IN | Salt Lake City, UT | Springfield, IL | 800.937.2257 *The Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc.

22

The Arkansas Banker | September 2015

Municipal Bonds and Pension Liabilities:

Reporting Changes Ahead ABOUT THE AUTHOR

Dana Sparkman is Vice President / Municipal Analyst in The Baker Group’s financial strategies group.

She manages a municipal credit database that covers more than 100,000 municipal bonds, providing clients with specific credit metrics essential in assessing municipal credit.

The Baker Group is an ABA Gold Associate Member.

Municipal bonds are a key component of most bank investment portfolios. In recent years, credit risk and credit risk analysis for municipal issuers have become hot topics for bankers and regulators alike. Since 2009, concerns regarding the lack of transparency of pension liabilities have surfaced as a handful of large municipalities cited unfunded pension liabilities as the main cause of their financial distress. In response to these concerns, the Governmental Accounting Standards Board (GASB) prepared two new statements in June 2012 to replace the prior statements regarding pension reporting. Together, these new statements will require the following:

will likely increase. For now, it’s too early to gauge the full impact of the changes as the GASB statements were fully implemented for fiscal years ending in June 2015 or later.

A more realistic discount rate to be used when calculating pension liabilities The net pension liability will be reported with other long-term liabilities on the balance sheet Better comparability between plans

Required Contributions/Governmental Fund Expenses (Benchmark=10% or less) This ratio provides insight into the burden pension contributions place on the municipality by comparing the amount that needs to be contributed to fully fund the plan over time to total governmental expenses for a given year.

The bad news for some municipalities is that their liabilities reported on the balance sheet

The good news is that increased transparency and comparability triggered by the new reporting requirements will allow analysts to gather pension data in a much easier and more reliable manner. As pension liabilities prove to be a central component of municipal credit worthiness, it is crucial that investors obtain pension data as a part of their credit analysis process. Below are a few examples of the pension credit metrics that we suggest investors monitor on an ongoing basis:

September 2015 | The Arkansas Banker

23

Amount Actually Contributed/Required Contributions (Benchmark=90% or more) If this ratio is 100%, it means the issuer is paying the necessary amount to amortize their future liability. If it is less than 100%, the municipality may have trouble meeting future obligations. Some plans are structured as “Pay-As-You-Go” (PAYG) plans meaning that the municipality only contributes what actually has to be paid out of the plan that year as opposed to also putting aside money for the future. In this case, this ratio will be much less than 100%.

Funded Ratio (Benchmark=60% or more) This is the percent of actuarially accrued liabilities covered by actuarially accrued assets. The actuarial accrued liabilities figure is the estimated amount needed to pay off future pension liabilities. Due to the nature of PAYG plans, it is common to see a 0% funded ratio for them because the payments only cover current costs rather than current and estimated future costs.

Unfunded Actuarially Accrued Liabilities/Total Assets (Benchmark=20% or less) This ratio gauges the size of the unfunded liability relative to the asset size of the municipality by showing the

24

percent of assets needed to pay off the liability today if necessary.

Pension Bonds (Benchmark=0) Pension bonds represent debt issued to fund pension or OPEB liabilities.

Most of the time, the proceeds from the issuance of pension obligation bonds are used to pay current retiree pensions because the municipality has not been putting aside the required amount each year during the retirees’ employment. This is a way to defer the costs until future years. The proceeds can also be used to prepay the required pension contributions resulting in a net pension asset.

The current regulatory environment for banks requires a municipal credit analysis process that includes pre-purchase and post-purchase documentation. This

The Arkansas Banker | September 2015

process needs to include reviewing risks associated with unfunded pension liabilities. The recommended credit metrics listed above and other information about unfunded pension liabilities can be found by reading the footnotes to the municipality’s financial statements.

Baker has been manually collecting this data for our clients for over 3 years, and we now have pension data for about 80% of the over 20,000 municipal bond issuers and 130,000 cusips in our database. below is an example of the pension specific portion of The Baker Group’s Credit Criterion Check tool for postpurchase monitoring. As the availability of pension data becomes more accessible, this tool will help identify municipalities with pension plans that don’t meet our preferred benchmarks.

APR IL 9 TH , 10:24 A .M .

GET TING A POSITIVE RETURN ON TRUST IN AN INS TANT,

LU CI A M A R T I N E Z ACH I E V E D T H E R E WA R D O F A R EL AT I O N S H I P B U S I N E S S

A simple handshake wasn’t enough when Lucia Martinez’s client walked in to hand-deliver her final loan payment.

Lucia’s community bank had backed the city’s only woman-run auto-body shop for more than 10 years. Supported by CNA’s deep understanding of business risk, the bank had the confidence to invest in good ideas from uncommon sources. Now Lucia was ready to hug her friend, a thriving small business owner ready to talk expansion. Great job, Lucia.

To learn more about our broad portfolio of insurance products and services for community banks visit, www.cna.com/communitybanks.

CNA is proud to be the endorsed carrier of the Arkansas Bankers Association.

Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. The examples provided in this material are for illustrative purposes only and any similarity to actual individuals, entities, or places is coincidental. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2014 CNA. All rights reserved.

September 2015 | The Arkansas Banker

25

Arkansas Bankers Association

Marketing Conference November 12-13, 2015

About the Marketing Conference Click here for more details on the 2015 Marketing Conference!

The ABA and the Sells Agency team up to host this informative two-day event centered on your bank’s marketing strategies.

Featuring national speakers and experts on a range of topics as well as informative and practical round table discussions, this new conference will help bank marketers stay ahead of current trends while connecting with other Who Should professionals in the field.

Attend

Anyone responsible for marketing, public relations and advertising

Marketing Conference

Agenda

12:30 p.m.

Registration

7:30 a.m.

Continental Breakfast

1:00 p.m.

Welcome & Announcements Arkansas Bankers Association

8:30 a.m.

Using Research to Guide Your Future Tom Hershberger, Cross Financial Group

1:15 p.m.

Social Media Marketing Amber Farley, FMS Social

10:00 a.m.

Networking Break

2:30 p.m.

Networking Break

2:45 p.m.

Digital Media Ryan Manchee, Centro Media

4:00 p.m.

Media All-Stars Round Table: Practical Advice on Working with the Press Moderator: Mike Sells, Sells Agency Gwen Moritz, Arkansas Business David Smith, Arkansas Democrat Gazette Kim Souza, The City Wire Britt Talent, Cleveland County Herald

10:15 a.m.

Bank Executive Round Table: What Bank Presidents Really Want from Their Marketing Departments Moderator: Aaron Gamewell, ABA Chip Blanchard, First State Bank, Russellville Ron Witherspoon, Arvest Bank, Oklahoma City Larry Wilson, First Arkansas Bank & Trust, Jacksonville

11:45 a.m.

Hotel Checkout Break

12:00 p.m.

Lunch Featuring: Welcome to the New Marketing Muscle with Sam Kilmer, Cornerstone Advisors

5:30 p.m.

Cocktail Hour Sponsored by: Sells Agency

2:00 p.m.

Adjourn

Thursday, November 12

26

The Arkansas Banker | September 2015

Friday, November 13

Featured Speakers

Tom Hershberger, President & CEO of Cross Financial Group, is an industry leader in bank marketing and research and a faculty member of the ABA School of Bank Marketing Management.

Amber Farley, EVP at FMS Social, is one of the nation’s leading experts on social marketing for banks and a frequent presenter on social media marketing across the country.

Sam Kilmer, Senior Director at Cornerstone Advisors, is an author, national speaker, consultant and marketing thought-leader.

Ryan Manchee, Senior Director of Digital Innovations at Centro, leads a team of specialized innovation strategists focused on emerging technologies and multi-screen marketing trends.

Media All-Stars Round Table Working with the media is a great way to promote and strengthen public opinion of your bank. Get tips on how to build and maintain media relationships during our Media All-Stars Round Table with: Gwen Moritz, Arkansas Business David Smith, Arkansas Democrat Gazette Bank Executive Kim Souza, The City Wire Round Table Britt Talent, Cleveland County Herald So you’ve got a great marketing idea...now what?

How should you pitch it to your boss, and what factors come into play when implementing a marketing strategy from upper-level management... find out during our Bank Executive Round Table with: Chip Blanchard, First State Bank, Russellville Ron Witherspoon, Arvest Bank, Oklahoma City Larry Wilson, First Arkansas Bank & Trust, Jacksonville

To register, contact the ABA Professional Development Department at 501.376.3741 or via email at terri.kelly@arkbankers.org.

September 2015 | The Arkansas Banker

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Research Can Transform Your Marketing Plan ABOUT THE AUTHOR

Tom Hershberger is president and CEO of Cross Financial Group, a consulting firm based in Lincoln, Nebraska that specializes in sales and marketing support services for community banks. Tom is a faculty member at the Graduate School of Banking at the University of Wisconsin and the AmBA School of Bank Marketing and Management.

Hear more from Tom Hershberger at the 2015 Marketing Conference!

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At many community banks, marketing planning is simply the outcome of a monthly or quarterly meeting to discuss the advertising schedule and current offers being promoted by trade area competitors.

While the process does provide short-term structure for marketing activities, it is reactive and lacks a strategic foundation.

Planning at its core is strategic — a proactive investigation of opportunities, not a reactive posture based on one competitor’s quarterly special.

Research is, in most organizations, an overlooked resource when plans are being developed. The reason might be cost, but more likely, research benefits are misunderstood by management. For many bank managers, research is the unwelcome telephone survey during an evening meal.

That is not the beginning or the end of effective research.

STRUCTURE YOUR DISCOVERY

Well-designed research begins with the analysis of available data and migrates to intentional inquiries with targeted audiences. Think of it as a discovery process.

What do you need to know about your

The Arkansas Banker | September 2015

customers or trade area? The answer might lie in an examination of current customer purchase behaviors. A look at your existing relationship data might be exactly what you need to effectively identify the best market segments for a new product. There is no need to conduct market surveys if data management provides the information you need.

BEGIN WITH OBJECTIVES

Research is only required when additional information will improve the quality of a decision. Some research is conducted to determine what to do, while other projects are directed at how to do it. The results should be focused on objectives set before the research begins. If a decision has been made to introduce a new product, then utilize your research to gauge customer reactions to the service. The research results can improve the focus of your promotional communications.

PROVIDE A FOUNDATION FOR MANAGEMENT

Let’s use Community Bank A as an example. The bank’s management team is investigating the placement of a new branch in an adjacent community. If they have already purchased the property and started developing the branch floor plan, then the research opportunities are driven by questions about relationship acquisition in the immediate trade area. However, if the management team is genuinely interested in the best decision regarding a potential branch, research can provide an excellent foundation for their decision.

Community Bank A could employ several different research resources to evaluate the community and potential branch locations.

Relationship Information Management. An internal examination of Community Bank A customers can identify if the bank already possesses relationships in the proposed trade area. If customers are present, their product utilization is an excellent predictor of relationships that could be acquired.

A bank’s future customer is typically a clone of existing customers in the same trade area.

in a focus group environment. By profiling your focus group participants, you can capture the insights from a desired market segment.

IMPROVE YOUR DECISIONS

All research methodologies have a ‘best practice’ application. Mail surveys perform well with existing customers and fail to produce responses with non-customers.

Online surveys are inexpensive to execute, but include a passive design for data collection. Clarifying your research objectives is the only way to ensure you are selecting the most effective research methodology.

To know what your customers are thinking, who better to ask than your customers?

Research, properly designed, can provide actionable information superior to the general observations typically shared during planning meetings. The kind of information that removes the guesswork you get when creating a marketing plan based on last year’s results plus ten percent.

Adopt a strategy that places research in your marketing budget every year.

CREATE ACCOUNTABILITY

Not every performance measurement needs to come from the balance sheet or income statement. Research provides an additional layer of information to examine success and create accountabilities. Consider utilizing a customer satisfaction survey to determine if corporate communications and staff training are having a favorable impact on customer experiences. Utilize mystery shopping evaluations to collect customer assessments of the service they receive. You can even create accountabilities for your managers by using an employee survey to create an index score to track employee engagement. The options are numerous and more affordable than you might think.

“I know” is superior to “I think.” Use your research to determine what you know, before you make your final marketing plan decisions.

Image and Positioning Research.

Using telephone surveys for data collection, image research can help examine the top-of-mind awareness for Community Bank A and competitors in the trade area.

The investigation can be expanded to evaluate reputation factors and investigate consumer propensities to change financial institutions.

Focus Groups. Conducting focus groups with consumer households or businesses in the new community could provide important insights about competitors with established market share. Competitor strengths and weaknesses or consumer preferences are all easy to investigate September 2015 | The Arkansas Banker

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Five Questions Community Bank Marketers Should Ask WHAT’S YOUR OFFER?

ABOUT THE AUTHOR

Sam Kilmer is a Senior Director at Cornerstone Advisors, a consulting firm specializing in mid-sized banks, headquartered in Scottsdale, Arizona.

Hear more from Sam Kilmer at the 2015 Marketing Conference!

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Chase (the national megabank) came up in conversation at my family reunion earlier this year. Two different family members (community bank customers from different parts of the country) had established new Chase relationships. Not even a week later, I received a Chase offer for $450 to open a checking-with-savings ($300 for checking only). Curious and searching online, the closest competing offers I found were $300 from a couple regional banks, but not one from a community bank. I didn’t switch — even when they sent another letter upping the offer to $500 — but they had my attention.

When I looked up other offers, I noticed that OnDeck was alongside Wells and Bank of America in the Top 5 search rankings for business loans. nDeck had slick, “no hurdles” branding on its web site with the promise of a business loan decision in minutes with same-day funding.

Welcome to new marketing muscle: The delivery of specific value is replacing the nebulous brand yarn. We can debate the tactics, but $500 for checking/savings and same-day business loan funding are concrete offers! Chase and OnDeck have something else in common: By design or not, their brand names imply speed. And, whether speed comes through helpful mobile alerts or fast loan decisions, it is an increasingly powerful definition of banking convenience.

A quick look at the largest banks and industry disruptors shows an unmistakable emphasis on their marketing and technology. But, according to recent data gathered for The Cornerstone Performance Report, community bank tech spending (as a percentage of assets) has grown very little at best.

The Arkansas Banker | September 2015

Without correction, that resourcing trend could be deadly for community banks. Consider that in a recent study by CFI Group, online improvements were 400 percent more impactful to increasing satisfaction than improvements to branch staff or branch convenience.

That’s probably no surprise to the 75 percent of the U.S. population now clenching smartphones. And, this isn’t just transactional mobile banking. Cornerstone Advisors forecasts that over 50 percent of all new account originations will happen outside the branch by 2020.

WHERE’S YOUR OFFER?

The community bank marketing mix also hasn’t changed much to reflect a shift in impressions. The traditional media spending is pretty high while online channel marketing remains pretty low. And while we see emphasis on customer experience and lead generation, the mix is typically light in the online and search areas that increasingly guide consumers. Not just millennials, but all of us.

Digital marketing is now established more than emerging. According to eMarketer, digital ad revenues across all industries grew past print, outdoor and traditional radio years ago and will surpass those on television in three short years. Beyond Google’s $60 billion in ads growing 17 percent, consider…

Pandora radio’s $153 million growing at 155 percent Zillow’s $326 million growing at 65 percent LinkedIn’s $455 million growing at 45 percent Facebook’s $3.5 billion growing at 50 percent

Marketers are targeting consumers with digital because there is context closest to the buying cycle.

We are hearing some successes from bankers too, including...

CFO reported 15 percent of their bank’s mortgages now come directly from Zillow ads.

CEO credited LinkedIn with helping drive big loan growth in their low-growth market.

CMO pointed to Facebook driving increased interest in loans at their website.

As digital delivery and contact centers become the preferred service entry points, it’s important to understand the value for each channel and at each point in the engagement cycle: Needs analysis Lead development Presentation Closing Fulfillment As community banks compete against the Chases and OnDecks in the market, here are five questions worth asking: 1. What’s your offer? Is it helpful and meaningful?

2. Where’s your offer? Does it reach customers closest to buying decisions?

3. Do you have the right talent and tools to drive revenue growth using digital?

4. How does digital help (and get helped by) other marketing approaches?

5. How do you measure success and which approaches are working best?

September 2015 | The Arkansas Banker

31

125 Years of the Arkansas Bankers Association:

ABA Chairmen 1891-2015

Pictured here are the 125 bankers who have served as elected leaders of the Arkansas Bankers Association — leaders from across the state who have taken a strong role in advocating for a better banking climate for Arkansans. Through economic prosperity and downturns, these men have ensured that the voice of our industry was heard.

1891

W.Y. Foster Hope

1912

1900

1901

1913

1914

John G. James P. Fletcher Coffin Little Rock Batesville

Charles G. J.O. Covey George W. Henry Bentonville Rogers Newport Little Rock

1925

W.H. Johnson Fort Smith

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1926

Robert Neill Hot Springs

1927

1902

1903

1904

1905

1915

1916

1917

1918

1928

1929

1930

Charles McKee Fordyce

Carl Hollis Warren

1931

1894

Charles N. Rix Hot Springs

W.K. Ramsey Camden

1895

1896

1897

1898

1907

1908

1909

1910

1911

1919

1920

1921

1922

1923

1924

1932

1933

1934

1935

1936

1937

1906

W.J. Charles F. E.K. I.J. Stacey Stowers Penzel Smith Augusta Morrilton Little Rock Texarkana

B.C. Moorehead Virgil C. Powell Wright Pettie Camden Little Rock Jonesboro

1893

S.H. Hornor Helena

Past Chairmen of the Arkansas Bankers Association, April 27, 1921: John Q. Wolf, Charles G. Henry, George W. Rogers, Stuart Wilson,Virgil C. Pettie, B.C. Powell, Governor Thomas C. McRae, E.K. Smith, Claude Fitzpatrick, J.D. Covey, James P. Coffin, W.Y Foster, Moorhead Wright, Carl Hollis, I.J. Stacey, and J. M. Barker.

1899

1892

Logan Roots Fort Smith

George T. B.J. Brown E.H. Head S.S. Sparks Van Buren Pine Bluff Faulkner Fort Smith Helena

John Q. Sam W. Thomas C. George R. Wolf Reyburn McRae Wood Batesville Little Rock Prescott Van Buren

J.M. Barker Atkins

Stuart Claude S. H.L. George H. W.A. Loid Wilson Fitzpatrick Remmel Bell Hicks Rainwater Texarkana Helena Little Rock Nashville Little Rock Morrilton

Art T. W.W. John E. J.H. Bert A. Storm O. Thomas C. Jo Nichol A.N. George S. James H. Lewis Campbell Williams Stanley Lynch Whaley McRae, Jr. Pine Bluff Sicard Neal Penick Fayetteville Forrest Newport Little Rock Blytheville Bentonville Prescott Fort Smith Russellville Little Rock City

The Arkansas Banker | September 2015

1938

1939

1940

1942

1943

1944

1945

1951

1952

1953

1954

1955

1956

1957

1958

1964

1965

1966

1967

1968

1969

1970

1979

1980

1982

Lloyd W.A. E.P. Pyeatt Spencer McDonnell Searcy Hope Little Rock

1941

Ben L. Ross Helena

J.W. Donald Wayne A. Louis E. Herbert Harvel C. Thomas Beverly J. Bellamy, Barger Stone Hurley Adams G. Wilson Lambert A. Lewis Jr. Russellville Pine Bluff El Dorado Fayetteville De Witt Conway West Pine Bluff Memphis

Max A. Roy L. Mitcham Baker, Jr. Smackover Harrison

1977

1978

Cecil W. Cupp, Jr. Hot Springs

Doyle Brown Wynne

1990

1991

2003

2004

W.E. Ayers James V. Pine Bluff Kelley El Dorado

Robert V. Brothers Rogers

Gus Rusher Brinkley

1946

1947

1948

1949

1950

1960

1961

1962

1963

A.G. Kahn Charles A. W.B. R.H. Elgan C. Thomas Berry W.C. Shelby Little Rock Grodon Oglesby Dickenhorst Robertson W. Stone Vaughn Blewster Ford Pine Bluff Texarkana Morrilton Marianna Hot Fayetteville Magnolia Springdale Springs

1959

Cecil W. Cupp Hot Springs

Digby C. West Berryville

Sam H.C. P.L. Bowman Couch, Jr. Copeland McGehee Little Rock Newport

1971

1972

1973

1974

1975

1976

1983

1984

1985

1986

1987

1988

1989

1995

1996

1997

1998

2001

2002

2008

2009

2010

J.C. Edward William M. George R. Means Donald W. B. Finley Van Smith Thomas E. Dorman F. William H. Reeves M. Penick Campbell Shankle Wilkinson Stone Vinson Tuckerman Hays, Jr. Bushong Kennedy, Pine Bluff Little Rock Forrest City Camden Greenwood Jonesboro Little Rock Hope Rogers Jr. Pine Bluff

Joe Hiatt Charleston

1992

Louis Ramsay Pine Bluff

1993

1981

B.J. Ford Camden

1994

Floyd L. Parker Malvern

Doug Glover Forrest City

Wayne Clark Berryville

2005

2006

2007

William William H. John M. B. Gene William Wayne Sloan Harold E. H. Bowen Brandon, Lewis Staton H. Handy Hartsfield Rainwater, Henson, Jr. Little Rock Jr. Fayetteville Morrilton El Dorado Searcy Jr. Fort Smith Helena Jonesboro

Curtis Howard Barnett Hutchins Qualls Grace Siloam Texarkana Little Rock Springs

J. Thomas Larry T. John T. I. Joe May Wilson Womack Miles Pine Bluff Jacksonville Little Rock Mountain Home

Bart Lindsey Helena

John T. Hampton Rogers

1999

2000

2011

2012

2013

Don Patillo Hot Springs

Bob L. Larry Burns Kircher Magnolia Bald Knob

2014

John Edward L. Charles H. John David Charles G. “Reynie” Holt Blanchard Freeman Bartlett Morgan Rutledge Crossett Russellville Jonesboro Little Rock Pine Bluff Searcy

2015

Robert Taylor Rogers

September 2015 | The Arkansas Banker

33

MEMBER NEWS First Community Bank Celebrates Billion-dollar Milestone First Community Bank has reached $1 billion in assets, according to Dale Cole, the bank’s chairman and chief executive officer. Locally owned and managed, First Community Bank opened August 4, 1997, with 14 employees, the backing of 153 shareholders and $3.5 million in capital.

“This is a milestone that we have looked forward to achieving for a long time,” Cole said. “We actually hit the billion in assets on July 31, 2015. Seeing that $1,000,000,000 number on our financials was significant to me, and a very important day in the history of the bank. When the numbers started getting close, we asked our employees to email their prediction of when we might hit the big day. Suzy Oakley actually predicted the correct day, which happened to be just four days prior to the bank’s 18th anniversary.”

“When we opened our doors 18 years ago, our customers embraced First Community Bank because of our commitment to the communities we serve,” Cole said. “Although we are growing continuously, we have never strayed from our commitment. We know that the level of success we now enjoy is all because of the support we have received from our customers, investors, employees and directors. When you bank with First Community Bank, you are making an investment in your community.”

The bank celebrated the billiondollar achievement with employees participating in a balloon release at each of the bank’s 17 locations at 7:30 a.m.

Friday, Sept. 4.

First Community Bank now employs 274 professional bankers. Arkansas branches are in Batesville, Bald Knob, Cabot, Cave

City, Highland, Mountain Home, Searcy, Jonesboro and Bay, and Missouri has branches in Neosho, Goodman and Jane.

In addition to full service banking options, mortgage lending is offered through the network of branches, with an additional stand-alone origination office in Jonesboro.

Simmons First National Corp. Donates Wilmot Facility Simmons First National Corp. has donated a former branch bank on U.S. Highway 165 South in Wilmot to the city of Wilmot to be used as a municipal building for the city.

Simmons acquired the Wilmot facility in 2014 as part of the acquisition of Delta Trust & Bank Corp. of Little Rock. Delta, in turn, had acquired the Wilmot State Bank in September 1996.

“The roots of our company are in southeast Arkansas, and we feel very strongly about this part of the state,” said George Makris, the Simmons chairman and CEO. “This is a unique opportunity to help the people of Wilmot. Our community banking philosophy includes giving back to the areas we serve.

This donation will ensure that the people of Wilmot and the

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The Arkansas Banker | September 2015

surrounding area of Ashley County have access to government services.”

Carolyn Harris, the mayor of Wilmot, said the donation “will make a great impact in our city. The facility will provide muchneeded office space for our city personnel, including the water department, police department, city treasurer and mayor.

The area adjacent to the bank will serve as storage space. In addition, the vacant concrete slab is ideal for a farmers’ market that we will complete by the summer of 2016.

“The donation also will impact the senior citizens in our community. Many seniors must walk or drive across the railroad to get to City Hall. This location provides safer access for those needing to conduct business.”

MEMBER NEWS ARKANSAS BANK DEPARTMENT

APPLICATIONS & APPROVALS

Branch Bank Application An application filed by Bank of the Ozarks, Little Rock, Pulaski County, Arkansas, to establish a branch banking facility at the southeast corner of Custer Road and Collin McKinney Parkway, McKinney, Collin County, Texas, has been approved. August 17, 2015.

An application filed by First Community Bank, Batesville, Independence County, Arkansas, to establish a branch banking facility at 630 Southwest Drive, Jonesboro, Craighead County, Arkansas, has been approved.

August 21, 2015.

Send your Member News to traci.logsdon@arkbankers.org

FNBC Bank Named Among ‘Best Banks to Work For’ FNBC Bank in Ash Flat was recently named the #10 “Best Bank to Work For” by the American Banker Newspaper. This is the publication’s third year ranking 50 banks for taking their fun seriously. These banks are credited for making employees feel valued and engaged, offering competitive salaries, flexible schedules and opportunities to advance, and fostering a culture of camaraderie and positivity.

It only takes three months for new hires at FNBC Bank in Ash Flat, to qualify for an enhanced paid-time-off program that gives them an extra 40 hours to use for vacation or other purposes. “Essentially, employees get two and a half weeks of PTO their first year, and it just keeps growing from there,” says Steve Braun, FNBC’s director of human resources. Potential employees know about the program, “and it gives us a real competitive advantage in hiring.”

It’s part of a formula that emphasizes a strong

work/life balance. “As an organization, we don’t just say we care about you and your family, we show it through our actions and policies,” says Chad Hudson, an executive vice president and chief lending officer.

FNBC is big on recognition and community involvement. Work anniversaries merit giant Hershey bars with a personalized message from the bank’s leadership, while employees can give shout-outs to each other via a companywide intranet bulletin board. One popular program is a “Backpack Extravaganza,” which raises money for school supplies and shoes for disadvantaged kids.

When the children come to collect their supplies, FNBC President Marty Sellars even washes their feet as he fits them for shoes.

“Being humble is a core value,” Braun says.

FNBC Bank holds $360 million in assets, and has 109 total employees. Chairman and CEO of the bank is Martin Carpenter.

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September 2015 | The Arkansas Banker

35

PROFESSIONAL DEVELOPMENT 2015 Consumer Lending School

Click here for more photos from Professional Development events!

Twenty-five bankers from 19 banks across the state attended the 2015 Consumer Lending School in Little Rock, August 24-28.

The group learned the fundamentals of consumer lending, and focused on various topics including drafting loan policy, loan documentation, and collections. Serving as instructors for the four-day event were John Dominick, PhD, University of Arkansas Sam M. Walton College of Business; Ron Rushing, Rushing Consulting Group; and Aaron Gamewell, Arkansas Bankers Association.

2015 Consumer Lending School graduates were: (back row) Katlyn McClanahan, Cross County Bank, Cherry Valley; Kamekia Robinson, Arkansas County Bank, Stuttgart; Stacy Munford, First Arkansas Bank & Trust, Jacksonville; Becky Pevehouse, Bank of Augusta, Augusta; Joni Snow, First National Bank of Crossett, Crossett; Melinda Sawyer, Union Bank of Mena, Mena; Shannon Hirons, First National Bank of Wynne, Wynne; Tammy Gardner, First Arkansas Mortgage Company, Jacksonville; Brent Leas, First National Bank of NWA, Fayetteville; Brock Ferguson, Centennial Bank, Jonesboro; (front row) Misty Owens, Bear State Bank, Waldron; Sandy Kee, Farmers & Merchants Bank, Stuttgart; Lisa Jarrard, First National Bank at Paris, Paris; Paula Timms, Bear State Bank, Manila; Amanda Leftwich, First National Bank at Paris, Paris; Michael Shelton, First Bank, Camden; Megan Hooper, First Community Bank, Batesville; Cody Gregory, Bear State Bank, Harrison; Brooke Chandler, River Town Bank, Dardanelle; Stacey Hottinger, River Town Bank, Dardanelle; Amy Stonecipher, First National Bank of Wynne, Wynne; Cole Hollowell, First National Bank of NWA, Fayetteville; Autumn Hudgins, Cornerstone Bank, Berryville; Luke Parsons, Legacy National Bank, Springdale; and Ethan White, First State Bank of DeQueen, Nashville.

Training the Trainer

Matt McLeod of Matt McLeod Fine Art, Little Rock, AR

LENDING E M P OW E R M E N T - together with your bank -

arcapital.com

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The Arkansas Banker | September 2015

ABA’s “Training the Trainer” seminar was held September 3-4 in Little Rock with instructor Dianne Barton of Performance Solutions. The group learned how to structure a successful bank training program, keys for training delivery, and how to ensure regulatory trainings are conducted, among other topics. Pictured at the Training the Trainer seminar are (from bottom right) Nancy McCay, First National Bank, Crossett; Betty White, Signature Bank of Arkansas, Fayetteville; Annette Cornelison, Signature Bank of Arkansas, Fayetteville; Janet Paulette, Bank of the Ozarks, Little Rock; Kim Jennett, Anstaff Bank, Harrison; and Dianne Barton.

BANKER NEWS & MOVES CITIZENS BANK NAMES BRUCE HANKINS AS VICE PRESIDENT, MANAGER OF RETIREMENT PLAN DIVISION Citizens Bank has announced the hiring of Bruce Hankins as Vice President and Manager of Retirement Plans within the bank’s Trust Department, according to Robin Brock, Senior Vice President and Trust Officer.

“Bruce will play a key role in the Trust Department as the bank continues to grow and expand its services, particularly in the area of financial services,” Brock said. “His background adds a wealth of knowledge and experience that will prove very valuable both to the Trust Department and our bank.”

Hankins, a native of Oil Trough, is a Certified Public Accountant and most recently was Controller and Interim Chief Financial Officer of South Arkansas Community College at El Dorado.

He also has served as Director of Financial Services for the University of Arkansas’ Division of Agriculture in Little Rock; Controller of the University of Arkansas Community College at Batesville; and was a practicing CPA for many years in Batesville, Jonesboro and Memphis.

He received a Bachelor’s degree in Business Administration from Harding University at Searcy, with a major in accounting. He earned a master’s degree in business administration from the University of Arkansas at Little Rock.

Hankins is a member of the American Institute of Certified Public Accountants, the Arkansas Society of Certified Public Accountants, and the National Association of College and University Business Officers. He is a former ex-officio member of

the South Arkansas Community College Foundation.

Hankins and his wife, Sherry, are both originally from Independence County. They like to travel and enjoy outdoor activities.

TABITHA DODDRIDGE JOINS SIMMONS FIRST AS DIRECTOR OF PUBLIC RELATIONS AND SPONSORSHIP DEVELOPMENT Tabitha Doddridge has been named the Director of Public Relations and Sponsorship Development for Simmons First National Corp.

She will work in the company’s new corporate communications department, where she will oversee Simmons’ partnerships with organizations in Arkansas, Missouri, Kansas and Tennessee while seeking new ways to promote the Simmons brand.

Doddridge had worked since 2006 as the events and sponsorship director for the Arkansas Democrat-Gazette, the state’s largest newspaper. She was responsible for overseeing all aspects of events such as the Democrat-Gazette Bridal Show (the largest annual trade show in central Arkansas with more than 200 vendors), All-Arkansas Preps (one of the largest awards banquets in the state with an annual attendance of more than 1,000 people) and Pops on the River (the Fourth of July event in downtown Little Rock that drew an average crowd of 30,000 people).

At the newspaper, Doddridge managed three full-time employees and dozens of parttime employees and volunteers.

“We have a lot of exciting things planned at Simmons, and Tabitha will play an integral role in carrying out our communications plan,” said

Rex Nelson, Simmons’ director of corporate communications.

“She is well-known and wellrespected across the state of Arkansas.”

Doddridge graduated from the University of Arkansas at Fayetteville in 2000 with a bachelor’s degree in advertising and public relations. She joined the Democrat-Gazette following graduation. She worked as a writer, graphic artist and section coordinator until becoming the events and sponsorship director.

ARNOLD JOINS PEOPLES BANK Debbie Arnold has joined Peoples Bank as Vice President of Marketing.

“We are very excited to have Debbie join our Peoples Bank family!”

President and CEO Mary Fowler stated. “She has earned a great reputation in the banking industry, and we know she will be a valuable addition to our team. We invite Debbie’s family and friends to come see her in her new home at 500 N. Jackson Street!”

Arnold comes to Peoples Bank with over 29 years of bank marketing experience. A native of Magnolia, Arnold is an honor graduate of Southern Arkansas University with a Bachelor’s degree in Finance and General Business. She is a graduate of the Arkansas Bankers School of Bank Marketing and the American Bankers School of Bank Marketing and Management at the University of Colorado, where she served her class as Vice President.

Arnold has a long history of community service including Southern Arkansas University Foundation – Past President, Southern Arkansas University Alumni Association – Past President, South Arkansas Women’s Network – Past

President, Arkansas Chapter Bank Marketing Association – Past President, Southern Arkansas University Mulerider Club Advisory Board, Magnolia Junior Charity League, Magnolia Blossom Festival, Relay For Life, Leadership Magnolia and Magnolia-Columbia County Chamber of Commerce Board of Directors and banquet chairman.

Arnold was the recipient of the Leadership Magnolia Distinguished Alumni Award for community service in 2013.

In her leisure time Arnold likes to show American Quarter Horses on the local and regional level.

She is Treasurer of the South Arkansas Horse Association and Vice President of the Arkansas Quarter Horse Association. She is a lifelong member of the First Presbyterian Church in Magnolia where she has served as Deacon, Elder and Trustee.

BANK DEPARTMENT PROMOTIONS

Chambliss

Hurst

The Arkansas State Bank Department has announced the promotions of J.D. Chambliss, Jordan Hurst, Jordan Patterson, Raychel Pendergist and Chris Rittelmeyer to Commissioned Senior Examiners.

Patterson

Pendergist

Rittelmeyer

September 2015 | The Arkansas Banker

37

BANKER NEWS & MOVES BILL ODOM JOINS CENTENNIAL BANK AS FINANCIAL ADVISOR Bill Odom has joined Centennial Bank as a Financial Advisor.

“Bill’s vast experience as an investment professional will ensure that our customers are receiving sound financial advice. Having owned his own investment company, he understands and is accustomed to serving the changing needs of clients, from the first time investor to individuals ready for retirement,” said Deana Osment, Division President.

Odom has 28 years’ experience in the financial services industry. He has served as an insurance agent, investment representative, and Certified Financial Planner Practitioner.

He founded a private financial planning firm in Missouri and operated Odom Financial Services.

An alumnus of Arkansas State University, Odom earned a bachelor’s degree in communications and completed the College for Financial Planning’s Certified Financial Planner program.

Prior to his financial services career, Odom worked in the radio industry and served on the board of the Arkansas Broadcasters Association.

Odom is past president of Sikeston Rotary and a Paul Harris Fellow. He served as education chairman for the Southeast Missouri Life Underwriters and was active in scouting in Northeast Arkansas and Southeast Missouri.

He and his wife, Michelle Odom, reside in Jonesboro.

Odom is located in Centennial Bank’s main banking center at the corner of Red Wolf Boulevard and Highland Drive in Jonesboro.

38

HOME BANCSHARES, INC. AND CENTENNIAL BANK NAME CHIEF OPERATING OFFICER Home BancShares, Inc. and its wholly-owned subsidiary, Centennial Bank, announced its Board of Directors has named John “Stephen” Tipton as Chief Operating Officer of Home and Centennial, effective August 17, 2015. Tipton previously served as a Regional Vice President of Centennial.

“Stephen has demonstrated exceptional leadership and an ability to deliver results throughout his career,” said John Allison, Chairman. “He has excellent leadership skills and a deep understanding of the Company and the markets we serve. His banking and leadership experience will be a tremendous asset as we expand our markets and capitalize on growth opportunities.”

Tracy French, President and Chief Executive Officer of Centennial, adds, “We are fortunate to have talented leaders to promote from within. Our continued growth has made it necessary for us to add to our executive management team and Stephen’s extensive industry experience and deep expertise in banking make him an ideal choice as Chief Operating Officer.

I look forward to partnering with him in managing our business and executing our growth strategy going forward.”

Tipton began his banking career in 2005 and joined Centennial in 2006. Prior to becoming Regional Vice President, Tipton served as Director of Credit Risk Management.

Additionally, during his tenure at Centennial, Tipton has gained a vast array of experience in retail, business development, lending

The Arkansas Banker | September 2015

and acquisitions. Tipton was the recipient of the 2012 Chairman’s Award, chosen by Mr. Allison, Chairman, and is a graduate of the University of Arkansas at Fayetteville.

SIMMONS FIRST NATIONAL BANK ANNOUNCES ORGANIZATIONAL CHANGES David Bartlett, the president of Simmons First National Corp. and the chief banking officer for Simmons Bank, will retire in January following a distinguished banking career.

Bartlett has held leadership positions with major banks in Texas and Arkansas. He was a founder and the chief executive officer of Alliance Bank of Hot Springs, which merged with Simmons in 2004. Bartlett was chairman of the Arkansas Bankers Association in 2013-14.

“David has played a key role in structuring Simmons Bank for continued growth and success,” said George Makris, the Simmons First National Corp. chairman and CEO. “He led the transition from an eight-bank holding company to our current organization. We’ll soon be a one-bank holding company approaching $8 billion in assets.

David will be missed.”

“We wish David and his wife Nancy safe travels and much fun as they enjoy their grandchildren in retirement,” said Marty Casteel, the Simmons Bank CEO. “In addition to David’s contributions to our growth, he also introduced many best practices to our organization. David has been a leader in the banking industry and in the communities where he has lived. He has truly represented Simmons well in every aspect of leadership.”

The following changes were also announced: Barry Ledbetter, the chair for the Central/Northeast Arkansas region for Simmons Bank, will

assume the duties of chief banking officer. Ledbetter has been with Simmons for three decades. He previously served as chief executive officer of Simmons Bank of Northeast Arkansas, where he established the bank as a consistent top performer for asset quality, growth, efficiency and earnings.

Matt Reddin will assume the duties of Chief Lending Officer, a new position for Simmons Bank.

Reddin will work to develop community bank lending teams.

He also will have a leadership role in the bank’s loan approval structure.

Adam Mitchell will assume the duties of Chief Retail Officer, a new position for Simmons Bank.

Mitchell will work to ensure the efficient delivery of products and services through the Simmons retail branch network.

Freddie Black, the Chair for the South Arkansas Region for Simmons Bank, will assume the duties of regional chair for the state of Arkansas. Simmons will consolidate the three existing Arkansas regions — Central/ Northeast Arkansas, South Arkansas and Northwest Arkansas — into one region.

James Stobaugh will continue to lead the northwest Arkansas operations for Simmons and will report to Black.

“Freddie Black’s leadership, banking experience and familiarity with all Arkansas markets uniquely qualify him to grow our statewide market share,” Makris said. “And Barry Ledbetter has been a stalwart for this bank for 30 years. They will do well in these new leadership roles.”

Casteel said of Reddin and Mitchell: “Matt’s leadership and experience will be valuable in recruiting, training and supporting lenders throughout our footprint. Adam, meanwhile, will provide leadership to our retail banking associates in the delivery of products and services to customers in all market areas.”

INDEX OF ADVERTISEMENTS Arkansas Capital Corporation Group 36 www.arcapital.com

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CNA Insurance

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www.cna.com/communitybanks

First Tennessee Bank 9 www.ftb.com

Integrity First Bank

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www.goifb.com

US Market Solutions 29 www.equakeUS.com

Talk Business

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The Baker Group

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www.talkbusiness.net www.gobaker.com

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.

The Arkansas

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

BANKER NEWS & MOVES WUTHRICH, MAYS, GOMEZ, PHILLIPS AND SEARS PROMOTED AT BANCORPSOUTH BancorpSouth Bank has announced the promotions of Karen Wuthrich, Patricia Mays, Rebecca Gomez, Judy Phillips, and Joyce Sears.

Karen Wuthrich has been promoted to First Vice President in Commercial Lending. She has 40 years of experience, with over nine years at BancorpSouth. She holds an associate degree from Westark Community College and a bachelor of science degree in Accounting from Arkansas State University. Wuthrich is a graduate of the 2013 Leadership Fort Smith class, Chairman of the Fort Smith Housing Assistance Board, Treasurer of Girls, Inc. of Fort Smith, Sustaining Member of Junior League of Fort Smith, a member of Leadership Fort Smith Alumni Association, and is a PEO Chapter F. member.

Wuthrich attends the First Presbyterian Church where she serves on the Mission Committee.

Patricia Mays has been promoted to Assistant Vice President. Mays has over 30 years of banking experience, with 23 of those at BancorpSouth.

She rejoined BancorpSouth in 2006 as a Customer Service Representative. In 2008 she was named Van Buren Branch Manager, and in 2009 promoted to Branch Officer. Mays is a Fort Smith native and a graduate of Northside High School. She attended Westark Community College and has completed a number of American Institute of Banking courses. Mays has held a life insurance license for 12

years, earning a number of sales designations. She is active with Partners-In-Education, United Way and currently serves as Van Buren School District Education Foundation Board Member. She is a member of New Covenant International Christian Center.

Rebecca Gomez has been promoted to Branch Officer.

Gomez began her career at BancorpSouth in 1998. She served as Teller and Customer Service Representative at the East Branch, prior to transferring to the North Branch as a Customer Service Representative. She was named Branch Supervisor in 2012 and Branch Manager in 2014. Gomez is a 1987 graduate of Alma High School and is bilingual in Spanish. In 2014, Gomez received the President’s Club award for accomplishing over a million dollars in annuity sales.

Her community involvement includes serving as Board Member for Lend-A-Hand, and she is a member of Trinity Baptist Church in Fort Smith.

Judy Phillips has been promoted to Loan Officer.

Phillips has 44 years of banking experience.

She first joined BancorpSouth in 1971 in the Customer Service area before relocating out of state.

In 1975, she rejoined the bank as a proof operator, later becoming Supervisor of the Proof and Transit Department; she also later served as a Customer Service Representative. In 2001, Phillips moved to the South Branch as Administrative Loan Assistant. In 2013, she was promoted to Loan Representative. Phillips has completed the BancorpSouth Lenders Orientation program and has participated in American

Institute of Banking courses throughout her career. She is a member of Rock Island Community Freewill Baptist Church.

Joyce Sears has been promoted to Branch Officer. Sears has 42 years of banking experience, with 21 of those at BancorpSouth. During her career she has served as Teller, Vault Teller, Customer Service Representative, Consumer and Commercial Loan Assistant and Mortgage Loan Originator. Sears transferred to the Fayetteville Branch in 2008 where she was named Branch Supervisor for both the Fayetteville and Rogers branches in 2012 and Branch Manager of both branches in 2014. She attended Gentry High School, Arkansas Tech University, East Central University, and Westark Community College.

Her community involvement includes Veterans of Foreign War Women’s Auxiliary and United Way of Northwest Arkansas.

Jim Patridge, BancorpSouth West/South Arkansas Division President, said: “It is a pleasure to recognize and promote such long tenured and professional bankers who have done such a great job serving our customers and community for so many years.”

Give your employees the recognition they deserve!

Submit Banker News & Moves to traci.logsdon@arkbankers.org.

September 2015 | The Arkansas Banker

39

September/October 2014

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The Arkansas Banker | September 2015