The Arkansas Banker June 2019

June-July 2019

Focus Forward: What to Expect

Volume CII, No. 6

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The Arkansas Banker | June -July 2019

June-July 2019 COLUMNS

Volume CII, No. 6

President’s Message

4

Chairman’s Column

6

Reframing the Credit Union Debate

8

Lorrie Trogden Rob Robinson Rob Nichols

Meet Your Lawmakers: Speaker Matt Shepherd Emerging Leaders Update

DEPARTMENTS

George Purvis

16 18

Professional Development Webinars 7 Live Events 11 AmBA Training 13

Member News

37

Banker News & Moves

39

SPOTLIGHT

DD&F Consulting Group

10

Opening New Accounts

36

The Arkansas Banker Online

Join us at www.arkbankers.org to read and share statewide banking news!

Focus Forward: What to Expect 12

14

5 MINUTES WITH BLAKE TARPLEY 15

19 By Gwen Green HOT TOPICS 22 FROM THE SMALL BUSINESSES FIRST HALF OF LOOK TO ONLINE 2019 MILLENNIAL MINUTE LENDERS MARY HARGRAVES

FINTECH: HOW DIGITAL WALLETS WORK

By Julie Stackhouse

20 34 HOW TECH CHANGES THE BANK-CUSTOMER RELIEF FOR COMMUNITY

SURVEY

BANKS IN DEPOSITS COMPETITION

RELATIONSHIP

27 28

SAYS 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. Subscription to The Arkansas Banker magazine is included in the membership fees to the Arkansas Bankers Association. Cover price is $5.95 each. Annual subscription rates are $40.00 for members and $60.00 for non-members.

BANKERS GIVE BACK

30

By David Sill

By James Hendron

Random question.

Random bankers.

Interesting results.

What are you most looking forward to this summer?

39%

School’s out = no traffic on the way to work!

4%

Snow Cones

39% Going to the Lake

19%

Cookouts & Camping

June-July 2019 | The Arkansas Banker

3

PRESIDENT’S MESSAGE Welcome to our combined June/July issue of The Arkansas Banker magazine.

Our new quarterly schedule starts with our next issue, hitting stands in September. You’ll still be able to read the magazines online, and you’ll get more in every issue, covering the substantive topics important to our industry.

The board voted on this change at our June board retreat, which included welcoming our newest board member, George Purvis, who will represent the ELS Council, conducting a board member orientation for all new board members, evaluating an association database upgrade, and creating new association task forces and committees.

Be on the lookout for an email coming your way with more information about those.

I would like to dedicate the rest of my column to a wrap-up of the 2019 state legislative session. In prior columns, I have pointed out specific bills that were significant to our industry and needed special attention. This will be an overview of all of the bills the Association took a stance on throughout the session, our position, and the outcome.

2019 State Legislative Session • AR - HB1040 to amend the Arkansas Hot Check Law. ABA added amendment language. Bill was never introduced on the House floor.

• AR - HB1125 to prohibit an insurer from requiring payment for healthcare services through gift cards, credit cards, or virtual credit cards. ABA added amendment language. A second amendment was requested, sponsors denied. Bill is now Act 300.

• AR - HB1295 to establish Every Arkansan Retirement Plan Opportunity Act. ABA opposed.

Recommended for interim study.

• AR - HB1307 permitting a bank or banking institution to utilize the small claims division of a district court ABA supported. Recommended for interim study.

• AR - HB1340 to amend the prohibited practices concerning a credit union. ABA supported.

Bill is now Act 252.

• AR - HB1405 to amend the law concerning the canceled checks of a public entity; and to provide alternative formats for maintaining and accessing the canceled checks of a public entity. (DF&A bill) No objection from ABA. Bill is now Act 255.

• AR - HB1499 to amend the law concerning the publication of notice required for a statutory foreclosure. ABA opposed. Bill deferred.

Bill Spotlight: AR - SB257 to include financial institutions insured by the National Credit Union Administration as institutions allowed to serve as depositories of public funds. ABA opposed and lobbied against. Bill defeated.

• AR - HB1516 to allow a foundation to serve as a fiduciary; and to provide for a foundation to serve as an executor of an estate. ABA opposed. Worked with bill sponsor and her constituents to amend the bill. Bill is now Act 836.

• AR - HB1704 to establish the Arkansas State Consumer Justice Enforcement Act; and to regulate standard-form contracts. ABA opposed. Bill defeated.

• AR - HB1765 to establish the Uniform Directed Trust Act. ABA supported member amendment. Bill is now Act 1021.

• AR - SB79 to revise the maximum loan limits of certain loans. State Bank Department code clean-up bill. Bill is now Act 62.

• AR - SB80 to clarify the remedies and procedures for nonpayment of rent on a safe-deposit box. State Bank Department code clean-up bill. Bill is now Act 63.

• AR - SB257 to include financial institutions insured by the National Credit Union Administration as institutions allowed to serve as depositories of public funds. ABA opposed and lobbied against. Bill defeated.

Lorrie Trogden | President & CEO Arkansas Bankers Association

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The Arkansas Banker | June -July 2019

Bill Spotlight: AR - SB390 to authorize and require certain funds to be deposited into the State Treasury Money Management Trust; to amend the Long Term Reserve Fund; and to establish fees for funds deposited into the State Treasury Money Management Trust. ABA opposed and lobbied against. Bill defeated.

ABA OFFICERS Rob Robinson, IV, Chairman Simmons Bank, El Dorado

Jonathan Harrell, Chairman-Elect Generations Bank, Rogers

Jim Cargill, Vice Chairman Arvest Bank, Little Rock • AR - SB390 to authorize and require certain funds to be deposited into the State Treasury Money Management Trust; to amend the Long Term Reserve Fund; and to establish fees for funds deposited into the State Treasury Money Management Trust. ABA opposed and lobbied against. Bill defeated.

• AR - SB408 concerning disclosure requirements for real estate transactions; to require the disclosure of agricultural operations near real property located in a rural area. ABA opposed. Bill was amended and is now Act 515.

• AR - SB462 to require fire protection coverage in force before the closing of a loan for a mortgage or deed of trust ABA opposed. Bill defeated.

• AR - SB469 concerning the liability of certain individuals with an interest in real property for the criminal acts of third parties; and to declare an emergency. ABA supported. Bill is now Act 496.

• AR - SB544 to establish prejudgment and post-judgment interest rates. ABA requested amendment, which was added. Bill is now Act 995.

• AR - SB558 to repeal Arkansas Code § 1630-104 concerning the contractual waiver of a jury trial; to make the repeal of Arkansas Code § 16-30-104 retroactive; and to declare an emergency. ABA opposed and lobbied against.

Bill defeated.

• AR - SB584 to require the department of finance and administration to provide space on income tax forms for an individual taxpayer to designate more than one (1) account for the direct deposit of the taxpayer’s refund. ABA supported. Bill is now Act 774.

• AR - SB632 to authorize the Arkansas Economic Development Commission to support a cyber alliance in order to reduce cyber risks and encourage economic development. ABA requested amendment, which was added. Bill is now Act 1085.

There are also several pro-banking bills making their way through Congress right now. We are tracking their progress and reporting each week in the Tuesday eNews email. If you are not receiving the eNews, contact us and we will get you added. As always, please contact us anytime with thoughts on legislation, both state and federal.

Bill Spotlight: AR - SB469 concerning the liability of certain individuals with an interest in real property for the criminal acts of third parties; and to declare an emergency. ABA supported. Bill is now Act 496.

Bill Spotlight: AR - SB558 to repeal Arkansas Code § 16-30-104 concerning the contractual waiver of a jury trial; to make the repeal of Arkansas Code § 16-30-104 retroactive; and to declare an emergency.

ABA opposed and lobbied against. Bill defeated.

Tom Grumbles, Treasurer First Service Bank, Greenbrier

Cathy Owen, Past Chairman Eagle Bank & Trust, Little Rock

Lorrie Trogden, President & CEO

Arkansas Bankers Association, Little Rock

BOARD OF DIRECTORS Johnny Adams, Conway Craig Attwood, Pine Bluff Jeff Brecklein, Jonesboro Nathan Gairhan, Springdale David Jessup, DeWitt Lance Lanier, Van Buren Barry Ledbetter, Little Rock Wilson Moore, Little Rock Marnie Oldner, Little Rock

Bill Spotlight: AR - SB584 to require the department of finance and administration to provide space on income tax forms for an individual taxpayer to designate more than one (1) account for the direct deposit of the taxpayer’s refund. ABA supported. Bill is now Act 774.

George Purvis, Eureka Springs Mark Roberts, Malvern Lori Ross, Arkadelphia Randy Scott, Blytheville Todd Smith, Magnolia Jason Tennant, Eureka Springs Lynn Wright, Little Rock

June-July 2019 | The Arkansas Banker

5

CHAIRMAN’S COLUMN

The Future is Now The focus of this month’s Arkansas Banker is on innovation in our industry, so prior to seeing the content of this issue I thought it would be interesting to learn what the pundits, prognosticators, and industry experts were predicting out there in the ether. So off to Google I went. What I discovered was intriguing to say the least. Ultimately, the technological and innovative advancements in our industry are aimed at improving the customer experience while positively impacting the bottom line – two issues we all can appreciate.

In no certain order, a glimpse inside the crystal ball:

Blockchain Technology – I read nine different articles trying to figure out what this is. I’m still confused, but all say it will

Upgraded ATMs – The next evolution in ATMs is likely to involve contactless payment, think Apple Pay or Google Wallet.

Biometric authentication is already in use overseas, expect this soon in the United States.

Advanced Mobile and Digital Banking – Integrating AI solutions, such as chatbots, into bank service platforms will assist

Wearables – You know, the smartwatches you see people constantly tapping. Banks could use Bluetooth beacons to push personal greetings to customer’s smartwatches when they are near or entering a bank location.

Proliferation of Non-Banks – Without overbearing regulatory oversight and the compliance burden our industry “enjoys”, these companies can devote huge amounts of capital to cutting-edge fintech and possibly innovate faster and attract those tech-savvy customers.

“Apple Store-Style Experience” – This is already happening; some banks are even advertising this type of branch

Automated Financial Service Employees – Former CEO of Citigroup said up to 30 percent of banking jobs could disappear

revolutionize our industry. Your IT folks can help you with this one.

customers in simple tasks such as making payments.

experience. within the next five years due to developments in technology. I tend to disagree. I believe our Bankers are what sets the “Community Bank” apart from the rest. Note that he is a former CEO.

Interactive Tools – Think computers, tablets and free internet in branches then toss in an interactive wall, a massive touch

The Teller Kiosk – These self-contained pods replace the “teller row” and allow for a more interpersonal connection between banker and customer.

AI-Powered Virtual Assistants – Russian bank Sberbank offers its customers an AI-based tool called Tips. This software

One-on-One Personal Service – This retro approach to customer service ... Wait, this is what Community Banks offer each and every day already to their customers. (Full Disclosure - I didn’t have to search Google for this one! Just wanted to test if you read the entire list).

screen where customers can click around industry news and events while they wait to be served.

analyzes a customer’s banking behavior to provide personalized estimates for what will happen in the future. No word on whether Trump approves.

As the saying goes, “The future is bright.” We all can agree that technology and other innovations will continue to reshape our industry, just as it has all the others. If our customers would rather have an AI-Blockchain Wearable or old-fashioned face-to-face discussion, we will provide it for them. As I tell my team every chance I get, “Our most precious asset is our customers, treat them as such and it will return dividends in perpetuity.”

Rob Robinson | Chairman Arkansas Bankers Association

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The Arkansas Banker | June-July 2019

ABA PROFESSIONAL DEVELOPMENT

JULY-AUGUST 2019

WEBINARS

Train multiple employees for one price, from the convenient location of your bank!

Monday, July 22, 2019

Wednesday, July 31, 2019

Wednesday, August 7, 2019

UCC Rules 1:30 p.m. – 3:30 p.m.

Untangling the Web of Fee Disclosures 10:00 a.m. – 12:00 p.m.

Creating Effective Anti-Harassment Policies and Process 10:00 a.m. – 12:00 p.m.

Thursday, August 1, 2019

Do’s and Don’ts on Formal and Informal Trust Accounts 1:30 p.m. – 3:30 p.m.

Tuesday, July 23, 2019 CRA Nuts and Bolts: Five Steps to Pass the Exam 10:00 a.m. – 12:00 p.m.

10 Overdraft Privilege Hotspots 1:30 p.m. – 3:30 p.m.

Thursday, July 25, 2019 Online Deposit Account Opening 1:30 p.m. – 3:30 p.m.

Accounts Receivable and Inventory Financing 10:00 a.m. – 12:00 p.m.

Excel Explained: Intermediate Pivot Tables 1:30 p.m. – 3:30 p.m.

TILA/RESPA Mortgage Servicing Rules 10:00 a.m. – 11:30 a.m.

Friday, August 2, 2019

Deposit Compliance Issues 1:30 p.m. – 3:30 p.m.

Fair Lending 10:00 a.m. – 12:00 p.m.

Unclaimed Property Compliance for Financial Institutions 10:00 a.m. – 12:00 p.m.

Friday, July 26, 2019

Monday, August 5, 2019

Analyzing the Balance Sheet and Income Statement 10:00 a.m. – 11:00 a.m.

Assessing Your Bank’s Call Center to Take it to the Next Level 1:30 p.m. – 3:30 p.m.

Monday, July 29, 2019

Tuesday, August 6, 2019

CRE Appraisals: Regulations and the Review Process 1:30 p.m. – 3:30 p.m.

Director Compensation and Compensation Committee Best Practices 10:00 a.m. – 11:00 a.m.

Tuesday, July 30, 2019

Excel Explained: Budget Spreadsheets 1:30 p.m. – 3:30 p.m.

Writing High-Impact Executive Summaries 1:30 p.m. – 3:30 p.m.

Thursday, August 8, 2019

Friday, August 9, 2019 ACH Exception Processing 10:00 a.m. – 12:00 p.m.

Tuesday, August 13, 2019 Call Report - Lending Schedules for Banks 10:00 a.m. – 12:00 p.m.

Do’s and Don’ts on Power of Attorney Documents 1:30 p.m. – 3:30 p.m.

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

June-July 2019 | The Arkansas Banker

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AMERICAN BANKERS ASSOCIATION

Reframing the Credit Union Debate

For too long, banks with legitimate concerns about unbridled credit union growth have been portrayed as Goliath picking on David. The truth is that in many states, a credit union is one of the largest local financial institutions, outranking most of the state’s community banks in size.

households, that the National Credit Union Administration maintains no data on credit unions’ effectiveness at providing financial services to people of “small means,” and that its definition of “low-income” is far more expansive than that used by other federal agencies.

But rather than trying to convince policymakers or the public that central casting got it all wrong—that it’s big credit unions that are harming small banks—ABA, with guidance from our long-standing banker Credit Union Task Force, has made a deliberate effort in the past two years to raise the level of awareness about credit union policy issues and excesses among third parties and the media.

This lack of credit union mission compliance is the rub for Petrou. “Sometimes the question of credit-union mission compliance is seen as an us-versus-them battle between bankers and credit unions,” she said. “This study readily acknowledges the vital role credit unions can and should play in household financial services—its goal is not to question credit unions, but to remind policy-makers of their vital mission to ensure that taxpayer-benefits received are credit-union benefits earned.”

We believe this strategy is effectively reframing the debate from banks vs. credit unions to credit unions vs. taxpayers, a crucial step toward drawing more oversight of the industry.

More people now are questioning whether credit unions, which enjoy a generous federal tax exemption, are earning this benefit. Even major media outlets like The Wall Street Journal, The New York Times and National Public Radio have turned a critical eye to credit union practices—running stories on the lax enforcement of meaningful membership restrictions and an expose of the industry’s taxi medallion loans, which imposed predatory terms on thousands of taxi drivers and drove some credit unions out of business.

The most recent criticism comes from a respected independent research firm—Federal Financial Analytics, run by veteran banking policy analyst Karen Shaw Petrou, who has a strong interest in matters of economic inclusion. ABA commissioned the study but had no editorial control over Federal Financial Analytics’ research and conclusions.

Petrou’s study assessed not only the extent to which credit unions meet their mission, but also how their federal regulator judges and enforces it. The paper found, among other things, that credit union members are disproportionately from middle- and upper-income

Rob Nichols

ABA does not disagree. We have long maintained that there is a role for credit unions in our financial services ecosystem.

But that role has become blurred as some credit unions increasingly look and act like banks, even purchasing them.

It’s past time for policymakers to take a truly critical look at today’s $1.5 trillion credit union industry to ensure the American taxpayer is not being cheated. We have called for just such scrutiny, urging NCUA in particular to conduct a “topto-bottom assessment” of whether the industry is meeting its targeted, statutory mission to serve households of “small means.” We have also asked the NCUA Inspector General to review the regulator’s role in allowing credit unions to lose sight of their mission.

In the meantime, ABA is continuing to challenge NCUA in the courts. Our lawsuit against NCUA over its expansive field of membership rule is still active; we won two of four counts, are appealing the other two, and a decision could come any day.

But we are excited to move our case to the court of public opinion—and even more encouraged that the response isn’t a knee-jerk dismissal of our grievances as competitive sour grapes. Others are now seeing the serious implications of credit unions’ mission failures and lax oversight, and such awareness is crucial to achieving a level playing field.

President & CEO, American Bankers Association

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The Arkansas Banker | June -July 2019

ABA BankPAC

ENDORSED VENDOR

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

Finalized Extended Payday Rule

For more information, visit the advocacy page of the ABA website. www.arkbankers.org

As anticipated, the Payday Lending Rule effective date has been extended once again. The mandatory underwriting provisions of the Payday Lending Rule were set to become effective August 19, 2019. However, in February of this year, the CFPB finally published proposed rescissions to that rule as well as a proposed extension of the effective date of the rule. The new Proposed Rule proposed to extend the effective date from August 19, 2019 to November 19, 2020. The comment period for the proposed extension ended on March 31, 2019. On June 7, 2019, at long last, the CFPB announced the final rule extending the effective date of the mandatory underwriting provisions of the Payday Lending rule to November 19, 2020, as originally proposed.

In the Final Rule for the extension, the CFPB made it clear that the extension is necessary so that the CFPB has adequate time to review the comments related to the rescissions that were also proposed in the February 2019. These proposed rescissions have been highly anticipated. They were promised for almost two years now, but continuously put off by the CFPB. In light of litigation in 2018 related to the mandatory underwriting provisions in the rule, the current CFPB administration has made a priority to reconsider the rule this year and address the comments received related to the proposed rescissions.

In the Final Rule for the extension, the CFPB is adding a section (1041.14) to make more clear the effective dates for all parts of the Payday Lending Rule.

Additionally, the Final Rule is amending the Payday Lending Rule to correct clerical and non-substantive errors in the Payday Lending Rule.

Great Things Happen When Bankers Come Together

Will this rule ever be final? Hopefully, but no one really knows. It has been highly debated, contested and advocated in all lending industries, including the banking industry. It is unlikely that the debate will stop with the effective date extension and the proposed rescission. We’ll have to wait and see what happens. At least for now we have a reprieve until November 2020.

To read more about the final effective date extension to November 19, 2020, visit the CFPB website here: bit.ly/2Jtk1gp.

For those that would like to read more about the Payday Lending Rule in general, you can do so on our website here: bit.ly/2SaBT2f. Member banks may find our Summary of the February 2019 Proposed Rules especially helpful here: bit.ly/2xQXCmN. For those that have any questions about the final effective date extension or the Payday Lending Rule in general, reach out to us by phone, chat, or email or bring it up as a topic of discussion on our monthly huddles.

June-July 2019 | The Arkansas Banker

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ASSOCIATE GOLD MEMBER SPOTLIGHT

Keeping an Eye on the Trends for Banks

by Elizabeth Silverstein

Randy Dennis, president and managing partner of DD&F, considers it his job to watch the trends. That priority helped him in 2008, when he saw the market crash happening before Arkansas banks were at risk.

That’s a benefit of being in the middle of the United States -- the ripple effect can take a little while. “In July of 2008, we were involved in a large failed bank acquisition in Arizona and California,” Dennis shared. “As we were going through the closing process, I realized that we were experiencing, firsthand, ‘the next big thing.’ During that week in July, we learned how failed bank acquisitions worked.”

He brought the information back to Arkansas’ hometown bankers, meeting with Arvest, Simmons, Centennial and Bank OZK. “As a result, our banks were leaders in the number of failed bank acquisitions across the entire US,” he said. “Even though Arkansas had a few failures, we always look for the trends in the industry and make sure that our members understand them and how they can take advantage of them.”

Dennis started his career in finances at age 24, when he joined Arkansas Financial Services after moving to Little Rock with his wife and infant daughter. He met Bob Fegtly and Bill DaBoll five years later when they joined AFS. Ten years after that, the three men built DD&F, which is now ranked as one of the top financial advisors for M&A in the United States.

Dennis and his team of 26 employees are still watching the trends.

And they’re offering a lot more services these days, include mergers and acquisitions, strategic planning, expansionary assistance, recapitalizing and repurposing small rural banks, loan reviews, compliance, IT audits, and marketing.

“Almost anything a bank needs in consulting services, we can provide,” Dennis said. “We are most effective with banks that need strategic direction, that are struggling with the changes going on the industry, struggling with how to do things, how to expand, how to deal with new regulations, how to pass on the bank to the next generation or whatever their plans are. We’re always looking for what our clients’ needs are and how we can meet those needs. We also want our clients to know, when a new opportunity arises, how it can benefit them.”

Dennis decided to become a member of ABA in 2004, when Ken Hammonds served as president/CEO of ABA, due to the shared missions between the two organizations. “Many of our clients are ABA members,” Dennis said. “We’ve worked with the ABA for years doing strategic planning for the association.

I’m very familiar with the mission of ABA and its purpose — they align very close-

10 The Arkansas Banker | June-July 2019

Randy is one of the original founding partners of DD&F. He has been involved in all phases of bank consulting since 1978. ly to our mission. Our goal is simply to help our clients be successful. Since we live in Arkansas, Arkansas banks will always be our first priority. I’m proud of our clients and our state banks. Several years ago, I predicted that Arkansas’ innovative bankers would get the recognition they deserved, and they have.

Without question, they have done well.”

Dennis explained that Arkansas has four banks with over $10 billion in assets.

This places Arkansas fifth in the country behind only New York, California, Utah and Texas. “ABA has always been very supportive of our banks and desires to expand the frontiers of banking,” Dennis said.

And he hopes to continue to work with banks in Arkansas and across the country, growing awareness one grassroots attempt at a time. “I think a lot of banks see us as one dimensional,” Dennis shared. “They may know us from our M&A, or loan, or IT side. That’s our fault.

We’re not big marketers or promoters.

We’re not running big ads everywhere.

Our biggest challenge is making sure our client base understands all of the different things that we do and how we can help them. People don’t need help all of it all the time. They usually need one thing. When they think, ‘What do we need here?’, we want to be the people that they call.”

JULYAUGUST 2019 Hot Topics for Bank Boards (Bank Director Training)

ABA PROFESSIONAL DEVELOPMENT

LIVE EVENTS

Providing you with face-to-face interaction with expert instructors!

July 23 | Arkansas Bankers Association Who should attend: Bank Directors, Executive Management, Senior Bank Officers

Cybersecurity July 24, 2019 | Arkansas Bankers Association

SEPTEMBER 17-18

Branch Management Workshop

20 Introduction to Universal Banking 24 Business Development for the Bank Office 25-26

Call Report Preparation

Who should attend: Information Security Officers, Information Security Staff, Compliance Staff

Opening New Accounts Document & Compliance August 21 | Arkansas Bankers Association Who should attend: Branch Managers, Branch Administration, New Accounts Representatives

NOVEMBER 6-7 13

Supervisor Boot Camp Lending Compliance Update

19 Loan Assistants & Processors Workshop 20 Loan Review Management

OCTOBER

TRID Essentials August 22 | Arkansas Bankers Association

2-3

IRA School

Who should attend: Compliance & Loan Officers, Auditors, Loan Managers

8-9

Mega Conference

22-23 Emerging Leaders Leadership Conference

Compliance School August 26-29 | Arkansas Bankers Association Who should attend: Compliance Officers, Internal Audit Staff, and any Compliance Personnel.

2-3

DECEMBER

Women in Banking Conference

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

June-July 2019 | The Arkansas Banker

11

5 MINUTES WITH

BLAKE TARPLEY

President, CEO & Chairman, River Town Bank Dardanelle, AR

Give us a little background on yourself: I’m originally from Oil Trough in Independence County, but my family and I relocated to Russellville with my dad’s employer the summer before my 9th grade year, where I graduated high school in 1988. I’m a 1992 graduate of Arkansas Tech University and completed the Graduate School of Banking at Colorado in 2017. I’m currently President, CEO, and Chairman of River Town Bank where I have worked since 2008 after holding various positions with other financial institutions. My first banking job was in the collections department at Worthen Bank in Russellville. I’ve served the community in several leadership capacities including Justice of the Peace/District 7, Kiwanis Club. Boys and Girls Club of the River Valley and Ducks Unlimited. I am married to Amy Tarpley with two children, Alex Tarpley, who will be entering the 9th grade at Russellville, and Hunter Hobby who is a senior at UALR majoring in civil engineering. In my free time, I enjoy traveling, weekend mini-cations, hunting and fishing.

should never stop learning, no matter where you are in your career.

What do you feel is biggest challenge community banks face today?

I think the biggest challenge facing all community banks, when you take out size as a factor, is to continue to connect with customers – both businesses and consumers – in a way that will make those customers still value the relationship with the bank and employees in the same way they have in the past. There is so much new competition from non-traditional banking lines along with technology advances that can remove the customers’ connection to their local bank. Newer customers who never were exposed to those aspects of actually going into a bank and having a personal relationship with a banker versus using just an app or website continue to be a growing part of the equation as they place less importance on where and who they do business with. Smaller community

What advice would you give to someone who was just beginning their banking career?

The best advice I could give a new banker is that banking is continually evolving as our economy changes and society changes.

Don’t be afraid of the change; embrace the challenge of change head on. Don’t be afraid to put yourself into roles that are outside of your comfort zone. Even though workplaces have changed in the recent years regarding what employees are looking for from an employer, I still believe hard work and being willing to take the extra step for a customer or a coworker will set you apart in your organization. Lastly, take every opportunity to learn. Whether it is from a mentor or just taking advantage of additional training. You

12 The Arkansas Banker | June-July 2019

banks have that issue along with a few other primary challenges, including managing expenses, especially personnel and IT; along with recruiting and retaining qualified personnel.

What is the best part of being a hometown banker?

Helping my customers reach their goals is still the most rewarding part of being a hometown banker. As a hometown banker, I am in public service. I want to help my community and the people who live here achieve their dreams. When I look back on my career, it’s those moments when I can help a family reach their goal of buying or building a new house or when we can help see a new business open or expand in our community. As a person who grew up in a small town in Arkansas, I grew up with the belief of helping your neighbors, and that a strong community is one that is built on trust and involvement. So, when the community and our customers thrive, our banks flourish.

I love being involved in my community and I am excited to see it grow and flourish for my customers, for my co-workers and for others in the community.

If you were shipwrecked on a deserted island and provided with food and water, what two additional items would you have with you?

I have dreaded answering this question on the account that I could answer this in so many ways depending on the day! Being strategic, my answer would be a satellite phone and a Swiss Army knife, but don’t expect me to call for a few days. However, if I had the knowledge that I would be rescued in few days, I might rather have my wife and some tanning oil.

ABA PROFESSIONAL DEVELOPMENT

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UPCOMING COURSES Intro to Agricultural Lending 7/15/2019 - 9/6/2019 Legal Foundations in Banking 7/15/2019 - 9/20/2019 Marketing Planning 7/15/2019 - 8/9/2019 Bank Lines of Business 7/22/2019 - 8/16/2019 General Accounting 7/22/2019 - 11/8/2019 Analyzing Financial Statements 7/29/2019 - 11/22/2019

Board Oversight: Compliance Management

Marketing Management 8/26/2019 - 9/20/2019

Anatomy of a Regulation for Compliance Professionals

IRA Online Institute 9/2/2019 - 11/24/2019

Basic Administrative Duties of a Trustee 8/5/2019 - 9/6/2019

Analyzing Bank Performance 9/9/2019

Building Customer Relationships 8/5/2019 - 8/30/2019

Leveraging the Benefits of a Diverse Workforce

CRCM Exam Online Prep 8/12/2019 - 10/18/2019

The Banking Industry 9/3/2019 - 9/27/2019

Managing the Bank’s Investment Portfolio 8/5/2019 - 9/6/2019

Ethical Issues for Bankers

CTFA Exam Online Prep 8/5/2019 - 10/25/2019

Building Customer Relationships 8/5/2019 - 8/30/2019

CTFA Exam Online Prep 8/5/2019 - 10/25/2019

Additional Topics Available at Any Time:

Basic Administrative Duties of a Trustee 8/5/2019 - 9/6/2019

Bank Marketing: Building Customer Relationships Marketing in a Digital World Preparing the Loan Estimate Bank Marketing: Building Customer Relationship

Money and Banking 11/4/2019 - 3/6/2020 Managing Interest Rate Risk 11/4/2019 - 1/10/2020 Managing Funding, Liquidity and Capital 1/27/2020 - 2/28/2020

For more information about AmBA Training, log on to www.arkbankers.org or call 501.376.3741.

June-July 2019 | The Arkansas Banker

13

BANKERS GIVE BACK

How One Branch Raised $1,675 With A Simple Idea

By Elizabeth Silverstein

Arkansas has made it – finally – to July, getting through a government shutdown, severe storms, and flooding over the course of only a few months.

In response, hometown banks, like Simmons Bank, have been showing up to ease the burden. “2019 has been full of unexpected events that have affected our customers,” said Caroline Makris, vice president and public relations manager. “We’ve had three events we would group in a disaster category, although they vary in nature.”

First there was the United States federal government shutdown, which started December 22, 2018 and lasted until January 25, 2019. Then May came along with storms and a tornado in Pine Bluff, Ark. That displaced 150 people. And late May brought the historic flooding of the Arkansas River, which crested in June.

“We approached these in a fairly similar manner as far as thinking about our customers and our communities,” Makris shared. “With each event, we wanted to look at how we could step in and help.”

Simmons spans 200 locations in eight states, with 80 branches in Arkansas alone. Makris said that when the bank saw the areas most affected, like Fort Smith, Conway, and Pine Bluff, they concentrated efforts and encouraged associates to help as needed.

“Pine Bluff really rolled up their sleeves and did a lot,” Makris said.

Simmons headquarters in Pine Bluff, and the branches started efforts on May 8 with donation boxes for personal items like shampoo, toothpaste, and baby items that made their way to the Red Cross. The nonprofit distributed the essential items to victims of the storm and the flood. Bank employees also pulled out their grills to feed volunteers and displaced families.

In Pine Bluff, they also charged a jean fee.

Associates could wear jeans for $5 a day or $20 for the week. They raised $1,675 as a result. “Local markets have a lot of autonomy to make those decisions,” Makris shared. “Under Pine Bluff Community President Daniel Robinson’s leadership, Pine Bluff decided to do a fundraiser, and it was a success for them.”

The efforts were all about community. “We want to give back to the communities we serve,” Makris said. “We realize how much they rely on us to step in during a time like this when it’s difficult to pay their bills or when they need boots on the ground, filling those sand bags or feeding people. Community banks really are the backbone of our communities, and people rely on us. When times get hard, we want to be there, and we realize how important that is.”

But sometimes the community doesn’t realize there’s help available, especially when it comes to loan repayment options while recovering from a disaster. Natalie Womack, senior vice president of consumer lending at Simmons, finds that there are a few misconceptions about what hometown banks can do. “I think the biggest misconception is that the bank doesn’t have anything they’re offering to assist their customers,” Womack said. “They just

14 The Arkansas Banker | June -July 2019

Pine Bluff associates feed on-site volunteers, as well as individuals and families displaced by the May 8 storms. assume they have to make it work. I like to encourage all of our customers to call us. It doesn’t have to be a natural disaster. It can be any type of hardship. We’re your community bank. We’re your partner. Reach out to us, please. We want to hear from you. We want to help.”

All consumer loan customers – whether they have a car loan, a home loan, an unsecured line of credit, etc. – can call to be assessed for the disaster relief assistance program. The program forbears up to three payments on the backend of the loan. “They don’t have to worry about making that mortgage payment for three months or that car payment for three months,” Womack said. “We forbear to the back of the loan. We give them the option. Some might say, ‘No, I just need one month, I don’t need the full three.’ We work with them based on what they need and how badly they were hit with unexpected expenses. We do a follow-up call to see how they are managing, and if they need additional help.”

Simmons Bank was able to assist five customers during the government shutdown and has recently helped two more during the flooding with forbearance on their loan payments. Womack said that they pay special attention to the counties listed by FEMA as a disaster site, but there’s no set deadline on getting assistance with hardship resulting from the difficult year Arkansans have experienced. “As long as they can show that hardship for the flooding, even if they call 90 days later, we’re going to do that for them,” Womack shared. “We’re still going to help as long as they have a hardship reflecting from that disaster.”

And the reality is, the bank employees get it. “We understand,” Womack said. “We’re some of those people, too. There are people at the bank impacted by this. We want them to understand we are their neighbors, we’re their partners, and we’re here to help.”

What’s your bank’s story? Contact Elizabeth at elizabeth.silverstein@arkbankers.org for a chance to be featured.

ENDORSED VENDOR

Hot Topics FROM THE FIRST HALF OF 2019

If you have recently attended or are attending any industry events, you’re likely to see one of C/A’s friendly staff members present (make sure to come by and say hello!). On our travels across the country, we’ve talked a lot about some specific topics that are popping up from coast-to-coast that may be useful for your bank.

First up is the recent CFPB Spring Agenda. There will be plenty of talk (and articles) about these proposed changes. This includes the attention paid to section 1071 of ECOA related to small businesses, the HMDA threshold proposals and the look at GSE QMs. Other notable items include the discussion related to consolidation of TILA and RESPA disclosures (didn’t we already do that?) and a review of regulations with significant impacts on smaller banks.

Regulators, on the other hand, have been talking a lot about complaint programs. Complaints were noted as a “Top Five” issue by most regulators we interacted with in the last quarter.

It’s critical to remember how important complaints are to the bank – both as a means to show the bank has a solid consumer complaint response program, but also as a way for the bank to suss out any issues or deficiencies that it may not be able to find in another manner. These complaints also help to show the perspective of customers/potential customers. These panels and conversations have also highlighted that the most common concerns relate to “classic” regulations and not new rules. These common sources of issues include RESPA Escrow, Regulation B joint intent, UDAAP, Regulation E error notice (like banks still requiring police reports to do an investigation) and the overall strength of the CMS. Another issue that’s both an old rule popping up with errors and a hot topic with a new rule, is our old friend, Flood. These issues relate to things like having the correct amount of flood insurance or ensuring proper flood insurance at all (for example, related to the specific definition of a “detached structure” or the lack of exception for uninhabitable properties or properties taken as cross-collateral or abundance of caution). In addition,

most of our bankers are concerned about the upcoming effective date for accepting private flood insurance policies.

Don’t forget that C/A does have a private flood insurance policy checklist to help if the policy does not have the “magic sentence.”

Fair lending, is of course, always a topic that’s brought up nationwide. Most of the focus, recently, is trying to deal with fair lending concerns when those rules don’t play nice with other requirements – like BSA. Bankers have talked quite a bit about E-SIGN and whether in-bank tablets should be used to show demonstrable consent. Most of our compliance professionals agree that this doesn’t meet the spirit and intent of the E-SIGN Act, but there are still varying interpretations of that rule.

Our final hot topics are things we expect will stay as hot topics for quite some time: Financial Exploitation of the Elderly and Marijuana Banking. Financial exploitation continues to be a topic of confusion related to privacy rules despite the safe harbor for reporting that was included in the Economic Growth Act and in various guidance from FinCen, the FFIEC and the CFPB. Marijuana banking concerns include how to delineate who is a marijuana-related business, whether the SAFE Banking Act will pass, and risks related to personal accounts for employees of marijuana–related businesses, some of whom are using their consumer accounts as a work-around for the business being able to access traditional banking services.

C/A has a variety of resources to keep our members up-to-date with what we’re seeing across our membership starting first and foremost with our monthly huddles. In addition, you can find tools we’ve created specifically based on member needs and also, FAQs from across the country in our bi-monthly webinars and monthly magazine section devoted to FAQs.

June-July 2019 | The Arkansas Banker

15

MEET YOUR LAWMAKERS

SPEAKER MATT SHEPHERD Republican • 6th District

What qualities make Arkansas a good place to do business?

Clearly, Arkansas is a great place to do business, as evidenced by the number of well-known businesses that were founded here and make Arkansas their home.

There are a number of qualities that contribute to this, but among those that standout are the hard-working people of Arkansas, the quality of life that can be enjoyed here, the relatively low cost of living, and our business-friendly state government.

What role does the banking industry play in the overall economic success of Arkansas?

The banking industry plays a huge role in Arkansas’ economic success particularly when you think about access to capital for the businesses themselves, but also in providing traditional banking products to working Arkansans.

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

The best way for individual bankers, or any Arkansan, to let me know their views is probably by email. I am certainly glad to take a phone call, but given the volume of contacts that each of us receive during a session, email is probably most effective.

Personally written emails as opposed to form emails are also more effective.

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

I am probably most proud of how we conducted our business in the House this past session. I wanted us to be very efficient and methodical. This meant we needed to debate issues in a civil manner, take a vote, move on to the next issue and keep the drama to a minimum. By and large, I believe that is exactly what we did.

16 The Arkansas Banker | June -July 2019

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June-July 2019 | The Arkansas Banker

17

EMERGING LEADERS UPDATE MILLENNIALS ARE HERE TO STAY

WORKING TOGETHER ON SOLUTIONS

Millennials are the topic that will not go away. We have been poked, prodded, polled, studied, discussed, and written about by almost every industry. Recent research suggests that we currently make up over one third of the work force and the US Bureau of Labor Statistics estimates that number to be 75% in just over the next ten years. Gallop finds that Millennials change jobs more than any other generation and that these changes cost the US Economy an estimated $30.5 billion annually. Earlier this year, I had the opportunity to sit on the Millennials vs. Management panel at the Annual ABA Convention. The dialog during the panel, as well as the comments and feedback I received afterwards, really opened my eyes to the disconnect.

Here are one Millennial community banker’s thoughts on bridging that gap:

1) Get us involved in planning.

No one would go to their local butcher to have open heart surgery. Why would we look just to senior managers, staring down the road to retirement, to implement changes in policies and practices for our rising stars? You might be surprised by some of the fresh ideas that come to the table.

2) Do not just listen … act!

It is important to us to be heard. However, you will do more harm than good if you make the ask with no intention of doing anything about it.

3) Giving back matters.

ELS OFFICERS George Purvis, President

Cornerstone Bank, Eureka Springs

Evelyn Morris, Vice President First Financial Bank, El Dorado

Brandon Gentry, Treasurer First Financial Bank, El Dorado

ELS COUNCIL Brent Atkins, Hot Springs Ralph Bradbury, Little Rock Shawn Dunham, Rogers Derek Eckelhoff, Rogers Brock Ferguson, Jonesboro David Johnson, Trumann

Most of our organizations are probably already the leaders of philanthropic giving in our communities so take advantage of that and let your Millennials have a say in where that money goes.

4) “Attaboy/girls” add up.

Parades aren’t necessary, but little moments of recognition add up. My CEO does a fantastic job at this. He’s always making sure our team knows when someone has gone above and beyond. He is also quick to give us additional causal days or buy lunch for everyone. This not only lets us know we are appreciated, but when our customers ask what the occasion is, it lets them know what a great job their bankers are doing.

Bryce Larry, Rogers Lance Nutt, Fordyce Christopher Pledger, Little Rock Kyle Schlenker, Cherry Valley Sandy Starnes, Batesville

5) Make a plan for movement and stick to it.

Millennials do not sit still well. Make a plan with your team members regarding how they will advance through the ranks and stick to it. Sit down and go over time frames or bench marks that will advance your people to the next level so they know exactly how and when they will be moving up. Even lateral movements to new positions/ departments, changes in title and minimal upward changes in benefits will help retain your Millennial staff. When the time comes, and it has been earned, make those big promotions, too. Do not be held back by age or the length of time your people have been with you. There are lots of Millennials capable of senior positions. They just need the chance. You will be miles ahead paying and promoting your staff than you will be having to bring in a new trainee and starting from the beginning.

To my Millennials, I say: try to be patient. Remember that change takes time. Some companies have worked the same way since the beginning. Make it a point to regularly meet with your supervisor to discuss your performance and future. Do not feel you are entitled to anything without earning it. Find a company to build a career.

George Purvis | ELS President Cornerstone Bank, Eureka Springs

18 The Arkansas Banker | June -July 2019

What is the Emerging Leaders Section?

The Emerging Leaders Section (ELS) was organized by the Arkansas Bankers Association Board of Directors to provide information concerning educational opportunities available for its members. The ELS was established to provide leadership training for young bankers, to enhance banking careers, offer its members the opportunity to learn, network, and be productive members of the banking profession.

Call Kami at 501.978.3614 to get involved!

MILLENNIAL MINUTE

MARY HARGRAVES

What can banks do to better appeal to Millennials as customers?

Since Millennials keep up with the latest technology, it’s important that banks have strong mobile banking platforms. Simmons has features like text banking, mobile check deposits and a card alerts app that make it easy to handle banking from the palm of your hand.

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

I love that Simmons gives back to communities during times of need. For example, Simmons offered assistance for those affected by the government shutdown earlier this year. Most recently, Simmons partnered with the Red Cross to help flood victims across our footprint.

Bank

Simmons Bank, Little Rock Position

Communications Specialist How long have you been with Simmons?

A little over a year.

Why is it important for Millennial bankers to get involved in our industry?

According to the U.S. Bureau of Labor Statistics, Millennials will make up 75% of the U.S. workforce by 2030. It’s important that Millennial bankers get involved now to start making positive and lasting impacts. With all of the digital disruption we’ve experienced during the course of the last decade, we have the opportunity to help banking shift and evolve to become a more seamless part of life for consumers.

ABA Washington Fly-In Do you have questions for the Regulators?

On September 30 - October 2, 2019, Arkansas Bankers will travel to Washington Get an opportunity to meet the members of Congress and their staff members and get a unique opportunity to ask legislators questions about policy behind & implementation of regulations, guidance, etc.

Not able to attend? Send us questions you want answered!

June-July 2019 | The Arkansas Banker

19

CONSUMER RESOURCES

Much To Do About Private Flood The long-awaited final private flood rule was, at last, jointly released on February 20, 2019 by the OCC, FRB, FDIC, FCA, and NCUA (“the Agencies”) six long years after the first proposed rule. The first proposed rule released in October 2013 introduced the requirements for accepting private flood insurance that meets the definition under the Biggert-Waters Act. Three years later, in November 2016, the Agencies revised and reproposed the private flood rule.

There are some key differences in the final private flood rule from the 2016 proposal.

The final rule requires the bank to accept private flood that meets the definition of private flood insurance under the rule, without exception. However, it also allows the bank a safe harbor if the policy contains the Compliance Aid sentence.

The Compliance Aid sentence (sometimes referred to as the magic sentence) is a sentence in the policy that provides safe harbor to the bank where the bank is permitted to rely on the Compliance Aid sentence that states that the policy meets the definition of private flood insurance under the law and regulation. The specific sentence is: “This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”

If the Compliance Aid sentence is not included in the policy, then unfortunately, the bank is required to look through the policy to determine if the policy meets the definition of private flood insurance. In order for the

policy to meet the definition of private flood insurance it must be (1) issued by a insurer or surplus insurer that is licenses by the state regulatory agency in which the property is located, (2) be at least as broad as NFIP, including deductibles, exclusions, and conditions, (3) require a 45 written notice for non-renewal or cancellation, (4) include information regarding insurance available under NFIP, (5) have a clause similar to SFIP regarding mortgage interest, (6) include a one year statute of limitations provision, and (7) include cancellation provisions that are as restrictive as those in SFIP. (If this seems vague or confusing, Compliance Alliance has a checklist available in our Flood toolkit that may be helpful: www.compliancealliance. com/find-a-tool/by-toolkit/flood.)

Unfortunately, the final rule does not specifically address when the Compliance Aid sentence is not 100% correct or varies from the sentence in

20 The Arkansas Banker | June -July 2019

the rule. However, it would be most conservative to not rely on the sentence if it is not 100% correct or varies from the sentence in the regulation. It would be most conservative to go through the policy to be sure that it meets the definition of private flood insurance as it is defined in the rule.

The final rule also does not address the situation where the Compliance Aid sentence is in the policy as it is written in the rule; however, immediately after the Compliance Aid sentence, the policy contradicts the sentence in such a way that it makes it clear to the bank that the policy does not meet the definition of private flood insurance. Again, it would be most conservative to not rely on the sentence if it is not 100% correct. It would be most conservative to go through the policy and document exactly why the policy does not meet the definition of private flood insurance as it is defined in the rule.

One question that we have gotten on the hotline quite a bit is if the bank may review the policy to determine

if it meets the definition private flood insurance, even if it does contain the Compliance Aid sentence. There is not a prohibition in doing that. However, there is a possibility that the sentence could be there, the bank goes through the policy, and then finds that the policy in fact does not meet the definition of private flood insurance, in which case the bank can deny it. However, the bank would want to thoroughly document this practice in the bank’s internal policy and procedures as well as in the loan file regarding why the bank found that the policy did not meet the definition of private flood insurance even though the policy included the Compliance Aid sentence that states that the policy does meet the definition.

However, even if the policy does not meet the definition of private flood insurance under the defintion in the rule, the bank may still accept the policy, subject to certain restrictions. In order for the bank to accept the policy under discretionary acceptance, the policy must (1) meet the minimum coverage amounts, (2) be issued by a license insurer, (3) include both the mortgage or and the mortgagee as loss payees, and (4) provide sufficient protection, considering safety and soundness, and the bank can document this in writing.

The rule also includes specific requirement related to when a bank may accept a mutual aid society policy under discretionary acceptance. In order for the society to be considered a mutual aid society such that the rule would allow the bank to accept the policy, (1) the members of the group must share a religious, charitable, educational, or fraternal bond, (2) the group must have an agreement to cover losses due to property damage, including for flooding, and (3) the group must have a demonstrated history of fulfilling the terms of the agreements for flooding.

Unfortunately, the final rule does not expand on mutual aid societies and new guidance related to the new final rule has not yet been released by the agencies.

The bank will need to thoroughly document its analysis and determination regarding any mutual aid society policies.

The bank needs to make policy decisions now, as the final rule was effective July 1, 2019. It applies when a building secures the loan and it is in a Special Flood Hazard Area (often referred to a SFHA, Flood Zone, High Risk Flood Zone, or 100 year plan), even if it is only taken in an abundance of caution during a MIRE event (Making, Increasing, Renewing or Extending). If the building does not secure the loan, it is specifically carved out of the collateral or the loan is secured by something else, like a CD, then the flood rule does not apply. If the building is not in a SFHA, then flood insurance is not required, but may be a safety or soundness consideration.

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Fore more about the final private flood rule, Compliance Alliance has a summary of the final rule in our flood toolkit, along with a template flood policy that has been updated for the new final rule, and the checklist mentioned earlier.

Find the toolkit here: www. compliancealliance.com/find-a-tool/bytoolkit/flood.

Daniela Clark serves as Associate General Counsel for Compliance Alliance. She holds a Bachelor’s in Business Administration with a concentration in Management from the University of Texas at Arlington, AACSB. Daniela received her JD from Texas A&M University School of Law and is a licensed attorney in the State of Texas. Daniela brings to Compliance Alliance her knowledge of consumer finance compliance.

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

June-July 2019 | The Arkansas Banker

21

Survey Says More Small Businesses Looking to Online Lenders Results released in April from the annual Federal Reserve Banks’ Small Business Credit Survey contain valuable information about business owners’ borrowing attitudes and activities. More than 6,000 employer firms shared insights on their 2018 performance, credit needs, and financial challenges.

Here are some important takeaways for bankers from the survey.

Small businesses’ use of online lenders is growing.

Almost a third (32%) of the firms seeking financing in 2018 applied for funding from an online lender.

The trend is unmistakeable, up from 24% in 2017 and 19% the previous year.

The main reasons for applying to an online lender? Speed and opportunity. For those going the online route, 63% said speed of decision was the largest factor, with 61% citing the likelihood of being funded.

The survey defined online lenders as nonbank lenders, including Lending Club and others.

On the lengthy to-do lists of small business owners, obtaining financing is a chore most want to wrap up quickly.

They would rather spend their time on serving customers.

A quick answer and perceived higher chance of approval, along with a simple application process give an edge to online lenders.

Loans and lines of credit are popular.

Compared to other financial products, including credit cards, equipment leases,

trade credit, and equity, applicants sought far more loans or lines of credit.

Of businesses that applied for financing, 85% attempted to obtain a loan or line of credit. In contrast, only 28% sought credit card financing.

Growth was the top reason businesses pursued financing, with 56% wanting funds to expand the business, pursue new opportunities or acquire business assets. Other reasons were to meet operating expenses, refinance, replace assets or make repairs.

However, when facing financial difficulties, the majority of businesses relied on the owners’ personal funds.

More than 60% of firms responded that they had experienced challenges, such as paying operating expenses, in the year prior. The most common actions taken to address such challenges, in order of popularity, were using personal funds (69%) followed by taking on

22 The Arkansas Banker | June -July 2019

additional debt (45%); cutting staff, hours or operations (32%); paying bills late or not at all (28%); and other (9%).

Whether positioning for expansion or struggling to stay afloat, businesses in either boat could benefit from assistance with budgeting, financial analysis and market research, services available at no cost to Arkansas business owners through the Arkansas Small Business and Technology Development Center.

Smaller loans have broader appeal.

Of those who did seek financing, most sought amounts below $100,000, with only 24% looking to obtain more than $250,000.

Of the small businesses not seeking financing – 57% of the businesses surveyed – 28% said they had sufficient financing, meaning the rest may have

unmet financing needs. Of this group, 14% expressed aversion to debt as their rationale.

At ASBTDC, we often talk to entrepreneurs who would rather boot strap the business with their own money. They tell us they don’t want to go through the process of applying for a loan. Some are in a hurry while others are afraid they’ll be turned down or are uncomfortable taking on debt.

While we never want a business to over-leverage, many business owners don’t understand the risks associated with being under-capitalized. We see creditworthy businesses pass up the opportunity to borrow funds only to find themselves in a bind later. For example, startups commonly underestimate the time needed to generate a profit and may run out of working capital.

Lender relationships matter.

Businesses applying for financing at banks said their existing relationship with the lender was the reason. Of the firms that applied for funding at small banks, 65% said their relationship with the lender was the largest factor influencing their decision. Likewise, 58% who chose to apply at a large bank cited their existing lender relationship as the top reason.

Relationships develop with time and trust. We advise business owners interested in a loan to talk to the bank where they already have accounts. With the rise in online banking and fintech solutions, some don’t feel a personal connection to a bank anymore.

Banks that want to retain small business customers and gain trust with new entrepreneurs should focus on relationship building. Here are three tips: 1. Respond as quickly as possible to loan requests, especially when the answer is no. We’ve worked with many clients who have applied for a business loan and thought their chances of obtaining the loan were good only to find out two months later the loan was denied.

If your bank can’t do the project, tell the customer as soon as possible and offer concrete reasons why. When the answer is yes, customers also appreciate a timely response so they can proceed with their plans.

2. Visit their businesses on-site and online. Stop by in person or engage on social media to demonstrate that you are paying attention. For most business owners, their businesses are like their babies. Have you ever met

parents who didn’t beam when showing pictures of their baby? Likely not.

Your genuine interest will make the owners feel more comfortable and give you a glimpse of why they are so passionate.

3. Understand their business cycle and reach out when appropriate. If you know that a customer’s busy time of year is fall, reach out in summer to see how things are going. Does the business have any new capital requirements? Since many business owners wait to the last minute to address capital needs, help them avoid this common pitfall by anticipating their needs.

The personal connections and local market expertise make banks popular with small businesses, but business owners also want speed and ease. Banks should strive to offer a seamless customer experience in-person at the branch or online to appeal to small business customers.

The full 2019 Report on Employer Firms is available at bit.ly/2XBckZw.

Gwen Green is the communications manager for the Arkansas Small Business and Technology Development Center, part of the University of Arkansas at Little Rock College of Business.

June-July 2019 | The Arkansas Banker

23

Arkansas Tax Reform Improves the Business Climate for Banking and Other Industries

By Matthew C. Boch Dover Dixon Horne PLLC

Major tax reforms were adopted by the 2019 General Assembly based on the recommendations of the Arkansas Tax Reform and Relief Legislative Task Force. The tax reform package carried in three bills:

recent Arkansas memory, and banking is a major beneficiary. Further, the substantial improvements to the tax climate fit within the state’s fiscal and political constraints and set the state for future growth and additional reforms.

• Act 182 cuts the top individual rate from 6.9% to 5.9%.

The Tax Reform Task Force Identified Legislative Priorities

• Act 822 requires remote seller sales tax collection, extends net operating loss (NOL) carryforwards, cuts the corporate income tax rate to 5.9%, and adopts single sales factor apportionment (including single receipts factor for banks).

Arkansas’s tax system reflects its populist heritage: very low property taxes, high and complex sales and use taxes, and a steeply progressive income tax. While the state is about average in combined state-and-local government taxation per person in gross terms, Arkansas is a poor state and so its tax burden is high as a share of GDP, especially compared with neighboring low-tax states in the Mid-South.

• Act 819 adopts administrative reforms including moving franchise tax administration to DFA and requiring regular review of exemptions, credits, and incentives.

These reforms, which phase in over the coming years, comprise the most the pro-business tax reform package in

In recent years, Governor Hutchinson and the General Assembly have been reducing that burden with a series

24 The Arkansas Banker | June -July 2019

of income tax cuts: The $100 million middle class tax cut of 2015 and the $50 million low-income tax cut of 2017. The Task Force was created as part of the 2017 package, to give legislators who wanted bigger cuts a chance to study and design such a plan.

With a mission of making Arkansas taxes fairer and more competitive, the Task Force met for most of 2017 and 2018, ultimately recommending 23 proposals ranging from hundred-million-dollar tax cuts and structural reforms, to administrative changes, to niche issues for specific industries. Clearly the state could not make all the changes for a total cost of $400 million or more: About half the recommendations were enacted in some form in 2019, and their impacts will phase in over the next few years.

Bringing the Rate Below 6%: Tax Cuts for

Individuals and Businesses The highest priority reform of the Task Force was income tax cuts, and it delivered, with legislation that will lower the rate to 5.9% in the coming years.

For individual income tax (including taxation of passthrough business income), Arkansas embarked not just on cuts but on true reform, albeit limited to high earners. For the high-earner bracket schedule, Act 182 flattens the rate structure. The top rate will fall from 6.9% to 6.6% in 2020 and 5.9% in 2021. In 2021 and going forward, there will be only three brackets for high earners: 2% on the first $4,000, 4% up to $8,000, and 5.9% on all income exceeding $8,000.

Corporate income taxes are being cut under Act 822, dropping from the current 6.5%, to 6.2% for tax years beginning in 2021, and to 5.9% for tax years beginning on or after January 1, 2022. This will put top marginal corporate income tax rates on parity with the individual top rate reduction to 5.9% under Act 182.

Technical Business Income Tax Reforms: Apportionment and Net Operating Losses Act 822 includes two major technical reforms to business income tax that may seem esoteric, but which are more important than rate cuts for many businesses: single sales factor apportionment and net operating loss (NOL) carryforward extension.

The benefits from single sales factor apportionment—called single receipts factor in the context of banking— should be particularly beneficial for multistate banks headquartered or with a major presence in Arkansas.

Arkansas “apportions” the overall income of a multistate business to determine its share of the income to tax, and the state has considerable

leeway in the formula that it uses.

For the past few decades the general Arkansas formula has been 25% on payroll, 25% on property, and 50% on sales. Banks use a different, special formula for financial institutions that is 33% receipts, 33% property, and 33% payroll. Basing apportionment—and thus state income tax—on property and payroll penalizes economic development, and so states have been adopting single sales factor apportionment. Arkansas will move to single sales factor apportionment for tax years beginning in 2021 and thereafter, and as part of that change Arkansas is also adopting single receipts factor apportionment for financial institutions.

The benefits from single sales/ receipts factor apportionment vary depending on a company’s line of business and whether it has a large Arkansas presence. In general, banks, manufacturers, wholesalers, and retailers with Arkansas headquarters or significant operations should benefit considerably. It makes Arkansas a much more hospitable location for bank headquarters.

The benefits from single sales/receipts factor apportionment will become even stronger if Arkansas enacts an additional Task Force recommendation in a future session, the repeal of the throwback rule. The throwback rule (a statute, not a regulation) reduces the competitiveness benefits from single sales/receipts factor apportionment by “throwing back” sales to Arkansas when the business is not subject to income tax in the destination state, such that a business is still being penalized for locating in Arkansas. Throwback repeal was a recommendation of the Task Force but there was not room for its fiscal impact in the 2019 legislative package.

Continued on pg. 26

June-July 2019 | The Arkansas Banker

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Continued from pg. 25

The other major technical corporate income tax reform is extension of net operating loss carry forwards from five out to ten years. This is very important in creating a fair tax environment for cyclical businesses: income taxes allow a taxpayer to carry over a loss from one year to the next to offset future income, to avoid taxing phantom income that is nothing more than a recovery from the previous loss. Arkansas has been tied with Rhode Island with a worst-inthe-nation five-year limit on how long a loss can be carried forward. For losses incurred in the tax year beginning in 2020, that will now extend to eight years, and to 10 years for losses incurred beginning in 2021 or thereafter.

Online Sales Tax for Arkansas Begins July 2019 Arkansas businesses and residents should have begun seeing sales tax collected consistently on most online purchases. After the United States Supreme Court Wayfair decision in 2018, states clearly have the power to require most remote sellers to collect tax, and almost all states with sales taxes have adopted or are adopting statutes or rules to require tax collection by remote sellers. Under Act 822, Arkansas has adopted thresholds of $100,000 of sales or 200 separate transactions in the current or prior year to trigger the tax collection obligation. These thresholds are like those used in other states.

Besides direct remote seller sales, Arkansas will require collection by online marketplace facilitators based on the same $100,000 or 200 transactions thresholds. A marketplace facilitator is a business that allows third-party sellers to offer items and that also processes payment. The requirements also apply to business-to-business marketplaces.

Marketplace collection is particularly significant since it will capture the “long tail” of sales by smaller sellers that would be under the sales and transactions

thresholds on their own.

For businesses that do not have sales tax permits—as well as for individuals accustomed to tax-free online shopping—the change may result in increased costs as tax will now almost always be collected by the seller.

Technically the tax has always been owed as a use tax that the buyer was supposed to pay, but this obligation was not well enforced except for sales tax permit holders.

Administrative Reforms: Franchise Tax Administration to DFA, Biennial Credits and Exemptions Review, and ACD Guidelines Looking beyond the big-dollar cuts and reforms, Arkansas tax reform includes several administrative provisions provided by Act 819. Effective May 2021, franchise tax administration will move from the Secretary of State to the Department of Finance and Administration (DFA), where it will be administered in conjunction with the income tax. DFA may be more assertive in auditing and enforcing the tax.

The Assessment Coordination Department (ACD)—which is becoming part of DFA under state government transformation—is going to make guidelines and rules for county assessors for property tax exemption decisions as well as assessment of business inventory. It is intended to address divergence and inconsistency among counties that had emerged in Tax Reform Task Force testimony. Again, this will be effective May 1, 2021.

Perhaps the reform with the greatest long-term impact will be the biennial review of income tax and sales and use tax credits, deductions, and exemptions.

DFA will provide a report to the General Assembly before each regular session explaining the purpose, amount, and

26 The Arkansas Banker | June -July 2019

effectiveness of each exemption, discount, credit, or deduction. The first report is due ahead of the 2023 session.

DFA will need to hire additional policy and economics staff just to be able to produce the report. Concerns by various stakeholders surrounding the Task Force’s evaluation of credits and incentives in 2017-2018 thus appear set to become a permanent feature of Arkansas politics and policy.

More Tax Reform in 2021 and Beyond?

The Task Force’s systematic review yielded substantial reforms at a reasonable cost. While originally there was talk of “everything being on the table” in the hope of making big cuts to position Arkansas more like Texas or Tennessee, ultimately fundamental structural changes were avoided.

Arkansas will continue to have low property taxes and high sales taxes, and now the income tax will have a little less bite with a top rate of 5.9%. The big sales tax exemptions and business incentives were retained. Corporate tax reforms position Arkansas as more mainstream rather than a negative outlier.

The big question is whether Arkansas keep going with reforms so that it can have a truly competitive tax system.

With the desire to get income tax rates below 5%, and with several significant Task Force recommendations yet to be realized (throwback rule repeal, inventory property tax relief, etc.), there is a road map for future reform.

If the political will for a fairer and more competitive system continues in 2021 and beyond, and if the supportive fiscal environment persists, future General Assemblies may be able to finish the work of the Task Force. In any event, the tax reforms of 2019 alone have made Arkansas considerably more competitive and hospitable for business generally and especially for the growth of the banking industry in the state.

Fintech: How Digital Wallets Work may be stored by a third party and used for purposes not intended by the consumer.

New payment options made possible by financial technology are changing the way we transact with friends, family and businesses. Digital wallets—called mobile wallets when associated with a cell phone—allow purchases and money transfers without the physical use of cash, checks or credit/debit cards.

Some consumers also worry about balances kept in the wallet and the applicability of federal deposit insurance to those balances. They may also worry about loss of payment and personal data if a mobile device is hacked, lost or stolen—or even if a payment is sent to the wrong person.

Digital Wallet Basics Person-to-person (P2P) payments and person-to-business (P2B) payments can now be made through mobile applications on phones or even watches.

• P2P payments use the internet, mobile applications and/or text messages to move funds through the Federal Reserve’s automated clearing house service or debit and credit card networks.

• P2B payments use a number of technologies to transfer payments data between mobile devices and businesses, including QR codes and wireless communications.

Providers such as PayPal and its P2P payment service, Venmo, offer users numerous ways to make and receive payments from individuals and businesses.

Some digital wallets—such as those associated with Apple, Samsung and Google—allow consumers to transact with a varied number of merchants; other wallets are specific to a given merchant, such as Starbucks or Walmart.

Banks have gotten into the market, too. Zelle, a digital payments network owned by some of the nation’s largest banks, allows users to send funds directly to bank accounts.

Security Features of Digital Wallets Digital wallets use authentication, monitoring and data encryption to secure personal information. Other typical security features include tokenization— where sensitive information is replaced by randomly generated numbers that are then transmitted using existing debit and credit card networks.

Looking Ahead The use of sandboxing architecture on mobile operating systems adds to the security. Sandboxing refers to the isolation of individual applications from malicious malware.

Younger Consumers Lead the Way Experian reports that digital payments topped $720 billion in 2017, and the outlook for future growth is positive.

Not surprisingly, younger consumers have been quicker to adopt the technology than their older counterparts.

A 2016 Fed report on consumers and mobile financial services found that, of those consumers with cell phones in 2015, 30% of 18- to 29-year-olds and 32% of 30- to 44-year-olds used their phones to make mobile payments.

Among those older than 60, just 13% reported making mobile payments.1 These results have been backed up by other surveys. A 2015 FDIC survey showed that the underbanked made and received P2P payments at higher rates than the fully banked.2

Why Digital Payments Aren’t for Everyone Some consumers are not comfortable using digital wallets. In fact, an American Bankers Association survey released in 2017 showed that just 12% of consumers trust alternative providers to protect their payments.3 One consumer concern is data privacy.

Depending on the wallet service, data

The enthusiasm for digital wallets by younger consumers suggests that usage will continue to grow. It is reasonable to expect that advances in technology and industry standards and/or that the introduction of privacy laws and regulations will serve to reduce privacy concerns.

Moreover, publications such as Consumer Reports are providing assessments of payment services to assist consumers in understanding their risks.

In the meantime, digital wallet users should read the disclosures provided by their payments service to ensure they understand the product(s) they are choosing.

Notes and References 1

“Consumers and Mobile Financial Services 2016.”

Board of Governors of the Federal Reserve System, March 2016.

2

“2015 FDIC National Survey of Unbanked and Underbanked Households,” Federal Deposit Insurance Corp., Oct. 20, 2016.

3

“Survey: Americans Trust Banks Most to Keep Their Payments Safe.” American Bankers Association, Oct. 9, 2017.

Julie Stackhouse is executive vice president & managing officer of Supervision, Credit, Community Development & Learning Innovation for the Federal Reserve Bank of St. Louis.

June-July 2019 | The Arkansas Banker

27

VENTURE CENTER

Building on Opportunity

How technology changes the bank-customer relationship

Opportunity is an apt descriptor of the technological innovations occurring right now in Arkansas, the birthplace of financial technology. Financial technology innovation, or fintech for short, means big changes are on the horizon for Arkansas bankers today, and the excitement is about much more than a single new business or one new piece of technology. The current fintech revolution brings an opportunity for change in the financial services landscape and offers new possibilities for banks and consumers.

Fintech has the power to reshape business and customer experiences in ways that vastly improve financial health, create stronger bank-customer relationships, improve bank efficiencies and significantly impact the overall economy.

The challenges in today’s marketplace require creative and innovative solutions for consumers and businesses alike.

The Venture Center, located in Little Rock’s Technology Park, is a non-profit organization dedicated to nurturing entrepreneurs who develop solutions for the rapidly changing financial services world.

Wayne Miller, the Venture Center’s Executive Director, approaches his role in the non-profit organization with a mix of entrepreneurial fire and gratitude for robust community support – including backing from industry giant Fidelity National Information Services (FIS). Evolved from the Arkansas-based company Systematics that led banking innovation from 1968, FIS continues to blaze the trail for financial technology services on a global scale, notably through the FIS sponsored FIS Fintech Accelerator Program.

“At a time when the vast majority of Americans are one unplanned expense away from going into significant debt, time is of the essence to find market innovations that will improve consumer financial stability,” said Miller. “As we work with FIS leadership to resolve consumer and business banking issues, our relationship with FIS remains important. FIS has made generous financial investments to fund the Venture Center’s FIS Fintech Accelerator program, but the investment made by the people of FIS helps the program produce meaningful results and continues to help us attract high quality participating companies.”

The FIS Fintech Accelerator Program is the Venture Center’s immersive program designed to accelerate the growth of early-stage companies and help them validate their solutions for real-world problems. Through the FIS Fintech Accelerator, 28 The Arkansas Banker | June -July 2019

entrepreneurs who want to partner or sell to financial institutions get to market faster than they ever thought possible.

2019 projections estimate FIS’s time investment in the FIS Fintech Accelerator at around 14,360 volunteer hours worth over $1 million. The hours are spent mentoring entrepreneurs who founded companies sourced by the Venture Center and FIS and deemed to be of potential value to financial institutions.

In late July, the Venture Center’s 2019 FIS Fintech Accelerator Program will finish its 12-week program for the ten portfolio companies with the 2019 FIS Fintech Accelerator Demo Day. Also referred to as Demo Day, the finale showcase event allows the cohort to present and demonstrate their solutions to a crowd of more than 350 people, including bank executives, venture capitalists, and Little Rock’s community leadership. This is the Venture Center’s fifth Fintech Accelerator, including both FIS and ICBA sponsorships, and two accelerator tracks going forward.

In our fourth year, we continue to build a positive global reputation. Take one look at the companies coming through our Accelerator programs and note the results. We have companies winning major competitions like Finovate and Money 20/20. These companies play meaningful roles in what we’re doing in Arkansas, and in the banking industry overall. Our

culminating event, Demo Day, is the perfect way to showcase their work and give stakeholders a glimpse into the future and relevance of their businesses.

Because of the high-quality innovative solutions the FIS Fintech Accelerator brings to financial industries, the program has garnered international attention. During the last application process, the team evaluated 225 applications from 32 countries. The ability to leverage relationships among those in the banking and financial technology services industry has been a key component to strengthening the core components of the Accelerator. That’s where FIS’s Executive-in-Residence, Collins Andrews, comes in.

Andrews is a former Systematics and Alltel Information Services executive who brings decades-long relationships to the partnership. His longtime experience in the industry primes his ability to guide the startup founders involved in the FIS Fintech Accelerator.

For the well-vetted early stage companies chosen to participate, FIS provides incredibly valuable mentorship, and Andrews is an integral guide in the process. Throughout the Accelerator program, the companies learn things from industry leaders brought in by FIS and the Venture Center that would have taken years to learn otherwise.

Community banks benefit, too, because they have VIP access to “pre-approved” companies that industry leaders believe have great potential. A company’s acceptance into the program is essentially FIS’ stamp of approval on display for an unprecedented number of banks.

“The main feature we offer is the opportunity to expose early stage companies to bank leaders who come here to learn about what the companies are doing,” said Andrews. “Simultaneously, we’re supporting the companies’ efforts to grow

through a frank exchange of opinions and information. But of tremendous importance for banks in those sessions is the view of technologies that may be applicable in a few years.

Community banks get a jump start on understanding these hugely impactful technologies.”

Andrews shared that an examination of the applying companies reveals patterns and emphases in certain areas such as marketing innovation, gaining deposits and improving security.

Having run Arkansas Systems, Inc (“ARKSYS”) for over 20 years, I see a value in the Venture Center’s Fintech Accelerator that could have been a fantastic opportunity for ARKSYS, if only it had been available to us. ARKSYS was one of the other early (before it was a word) fintech companies from central Arkansas. I am proud to be a founder of the Center and helping to organize our Fintech accelerators.

Uday Akkaraju, a recent FIS Fintech Accelerator graduate and founder of Bond.ai, brought an impactful technology to Arkansas after beginning his entrepreneurial career in New York. Through his company, Uday created an empathy engine which hyper-personalizes consumer behavior, allowing banks to encourage more savings and other banking products, as well as improve customers’ financial health. Uday saw the value in planting his company in Arkansas’ fertile tech environment, and when he relocated here, he brought innovative technology, new jobs and increased revenue for the state.

Uday saw an opportunity to make banks less product-oriented and more consumer-centric because when the consumer does well, the bank does well. When newer technology finds ways to increase customer stability, the benefits flow over customers, banks, and communities.

Continued on pg. 30

June-July 2019 | The Arkansas Banker

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Continued from pg. 29

Before their participation in the FIS Fintech Accelerator program, Bond.ai was a direct-to-consumer business. They had 40,000 individual users and were preparing for a bigger launch, but Uday truly wanted to improve financial life for people on a greater scale. Plus, in his experience, customers wanted to interact with companies who were recommended by their banks.

“We knew that if we had relationships with banks on a larger scale, then we’d have the inside tract to impact more customers,” said Uday. “When we heard about the Venture Center’s FIS Fintech Accelerator and understood its unique offering, we applied immediately.”

At the Venture Center, Uday had access to over 30 banks that wanted a deep understanding of what Bond.ai could do. There are many start-ups who participate in accelerators sponsored by banks, and while these are no doubt good experiences, the end result can only be a relationship with that one bank. But through the FIS Fintech Accelerator, over 30 banks examined Bond.ai. Gaining access to the perspective of several banks serving a diverse customer base and understanding their thoughts about his company transformed the way Uday approached his business.

After the Fintech Accelerator, Bond.ai changed its direction from a consumer model to a bank partner model. The shift created an entirely new focus in which learning to navigate the complicated financial industry regulatory environment became the highest priority hurdle to cross. It’s a complex area to learn, but working with multiple banks in the accelerator program meant a much faster learning curve.

Considering the wealth of input from mentors, and in addition to the fast-track regulatory education the Accelerator provides, a company like Bond.ai can compress their sales cycle from a year and a half to two months. This allows quick solutions for major issues, and that’s incredibly valuable for Arkansas banks.

The company founders who come to Arkansas for the Venture Center’s FIS Fintech Accelerator see more than just financial technology issues in bank services - they bring and adjust unique and innovative solutions. They see the chance to inject their companies with a rigorous boot camp, accelerating their companies and building relationships with banks of all sizes. As technology continues to reshape every facet of our modern lives from keeping up with our friends to banking and saving money, the Venture Center’s FIS Fintech Accelerator positions Arkansas as a fintech leader, and the impact for local banks and their customers will be felt on a generational level.

James Hendron is the Board Chair of Venture Center. Hendron works with start-up tech companies primarily in Arkansas. He spent 20 years as CEO and Chairman of Arkansas Systems, Inc (ARKSYS), worldwide EFT FinTech company.

30 The Arkansas Banker | June -July 2019

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Fed’s Small Business Credit Survey Sheds Light on Online Lending Are digital lenders taking over the commercial lending business?

transformed the way we do business; whether it’s a pair of socks, a set of spark plugs, an automobile, or even a vacation home, speed and ease are now table stakes with buyers and borrowers alike.

Do banks meet that expectation of a quick and easy approval process? Survey says? Hardly.

It depends on who you talk to, but all would agree that the financial institution’s grip on the business of small business lending is slowly loosening. And Small business owners in search of that opinion is supported by recent stud- capital are doing what we all do: they’re going straight to their smartphones. And ies conducted by the Federal Reserve. while speed and ease are surely reasons According to the latest Small Business to shop online for a loan, there are, of 1 Credit Survey , one out of four small course, other reasons. business borrowers have applied for funding with online sources. Conducted Take the chance of success. The Fed survey also points out that these loan in 2017, the survey ranks online lenders applicants tend to choose a lender based third among sources from which small on their perception of how likely it is that businesses apply for credit. their application will be approved... and • Large banks: 48% banks are not high on their list. Alternatively, online lenders merchandise their • Small banks: 47% willingness to give money away – even • Online providers: 24% to medium and high credit risks – and to • Credit unions: 9% do so within minutes, as opposed to days Why the shift? Commercial borrowers, and sometimes, weeks. In addition, onlike any borrower, want a process that is line lenders have less stringent collateral quick and easy. After all, the internet has requirements, again improving a poten-

tial borrower’s chances of approval.

Who are currently the bigger players in the online lending game?

Kabbage has provided over $5 billion in credit to small business people — $1 billion of that applied for during non-banking hours.

Square, run by Twitter, Inc. and now operating under the mantle Square Capital, has extended more than $3.5 billion in loans and cash advances to small businesses since its inception four years ago.

PayPal Holdings, Inc. has extended more than $6 billion in small-business loans since 2013, using data it collects from the processing of payments for Internet retailers.

And while online lenders are making inroads, it’s never too late to take the necessary steps to hold onto your lucrative commercial lending business. It can start, for example, with letting your customers know that this business is important ... to you and to them. Market your products

June-July 2019 | The Arkansas Banker

31

and services so that potential borrowers are aware of the benefits your products offer versus the pitfalls of those offered by online lenders.

Real speed vs. perceived speed Small business owners often need cash in a hurry, so loan approval times are critical. Online borrowers appeal to this urgent need with “approval in just minutes” marketing claims, and often, this simply isn’t the case. Get the message out there that “instant approval” is sometimes just a carrot that lenders dangle in order Trust is everything. While speed and ease to earn high-interest loan business. are certainly important considerations to small business borrowers, when asked, Lack of transparency the majority admit that online lenders What small business owners know about just don’t have the trust that banks do. borrowing is gleaned from their experiThe Federal Reserve research indicates ence as consumers. But not all forms of that for many small business owners, online credit behave exactly like consumdoing business with an institution they er credit nor traditional business loans. know and trust outweighs other factors.

One variation called a “cash advance” may To feel more secure with an online lender be paid off by the online lender taking and sharing financial data, borrowers are a piece of every customer credit card seeking out reviews and endorsements swipe, for example. In addition, online for validation. They’re still not 100% lenders tend to go light on disclosure ta- comfortable, however, with providing bles, leaving borrower’s in the dark about sensitive financial information to an repayment terms, fees, and very often, online provider. There is also the fear that high interest rates. When this information information that’s provided, such as comis available, it is often made available pany size and contact information, could only after the borrower has formally end up in the hands of unscrupulous applied for the loan or been asked to entities, or lead to unwanted solicitations provide sensitive information that many for unwanted products and services. are reluctant to give.

Yours is an institution they can trust

experience that can compete with online lenders, you’re not without a story to tell; and it’s a compelling one. Make the most of your relationships. Trust and transparency can outweigh accessibility and ease.

Remember, small business borrowers are open to choices. It all comes down to convincing them that your institution is that right choice.

Notes and References 1

https://www.fedsmallbusiness.org/survey/2018/ report-on-employer-firms

Neal Reynolds, president of BankMarketingCenter. com, has worked with hundreds of financial institutions around the country, helping them grow core deposits and market share without growing their marMarket your strengths keting budgets. Neal can be reached at While you may not offer a digital lending nreynolds@BankMarketingCenter.com.

You’re the expert.

We want to hear from you.

The Arkansas Banker is accepting articles. Email Elizabeth at elizabeth.silverstein@arkbankers.org for the next issue’s topic and submission guidelines.

32 The Arkansas Banker | June -July 2019

Compliance School August 26 - 29, 2019 With so much up in the air in this regulatory environment, one thing that remains constant is the need for a strong commitment to compliance. Therefore, a strong understanding of the continually shifting landscape is essential.

Taught by Darlia Fogarty and Silvia Garcia Maggio of Compliance Alliance, this school will be split into three areas: lending, operations, and an advanced compliance update for 2019.

Sign up at www. arkbankers.org.

2019

GSB Online Seminar Series ONGOING THROUGHOUT THE YEAR

About the GSB Online Seminar Series Offering a convenient and costeffective way to participate in educational opportunities, these programs are designed specifically for financial professionals and delivered by some of today’s top industry experts. The use of state-of-the-art audio and video technology ensures a quality, interactive learning experience.

Relevant, bank-specific topics provide a solid educational value for you and your staff.

Educating Professionals, Creating Leaders

Registration includes: • One connection into the online seminar presentation—invite others to participate through the same connection at no additional cost • Handouts and other resource material • Unlimited access to the recording of live, online seminar presentations for 90 days after the conclusion of the program • Access to industry experts and nationally known speakers from the convenience of your office

GSB. org June-July 2019 | The Arkansas Banker

33

Relief for Community Banks in the Competition for Deposits The recent bank reform bill made a lot of news, but what may surprise you is the specific provision of the Economic Growth, Regulatory Relief and Consumer Protection Act that community bankers believe will have the biggest impact on their daily business.

Before the bill became law, a lot of attention was placed on the provision raising the systemically important financial institutions, or SIFI, threshold from $50 billion to $250 billion in assets, above which banks must contend with a heavier compliance burden.

Yet, the provision involving SIFIs directly impacts only a small number of commercial banks based in the United States—the dozen-plus with between $50 billion and $250 billion in assets.

Perhaps that’s why when Promontory Interfinancial Network queried bankers for its second-quarter Executive Business Outlook Survey, executives from the 390 banks that responded pointed elsewhere when asked to identify the law’s most impactful provision.

Thirty-seven percent of respondents said the law’s provision that allows most reciprocal deposits to be treated as nonbrokered deposits ranked highest on a scale of one to five, placing it first among the seven other provisions tested.

simplified capital rules for community banks, among others.

“We think the change to reciprocal deposits is great,” says Christopher Cole, executive vice president and senior regulatory counsel for the Independent Community Bankers of America.

“It clarifies the status of reciprocal deposits and alleviates the concerns many community banks had about using them.”

Similarly, the American Bankers Association noted, “The definition of brokered deposits needs to be modernized and we appreciate that Congress took a first step by recognizing reciprocal deposits are a stable source of funding for many community banks.”

The change in the law makes sense, says Neil Stanley, president of community banking at TS Banking Group, which owns three banks, including Treynor State Bank, a $400 million bank based in Treynor, Iowa. “This is one of those areas that reflects what bankers always thought was true— when a large, local depositor does business with us, any deposits above the $250,000 FDIC insurance threshold

It was up against stiff competition. The other provisions included those that eased the qualified mortgage rule, extended the regulatory exam cycle and

34 The Arkansas Banker | June -July 2019

shouldn’t be considered brokered or highly volatile just because we place them with other institutions on a reciprocal basis,” Stanley adds.

Underscoring the significance of the change, 58% of respondents to Promontory Interfinancial Network’s survey said they plan to start using, or expanding their use of, reciprocal deposits immediately or very soon because of the new law. An additional 29% said they would consider doing so in the future.

To put this in perspective, according to the same bank leaders, the next most impactful provision included in the new law relates to the easing of rules surrounding commercial real estate loans, followed by the provision that shortened call reports and then by the provision that provided qualified mortgage relief.

The change in reciprocal deposits may seem like a peripheral issue, but it addresses a fundamental inequity in banking. It helps level the playing field between the handful of large, money center banks headquartered in places like New York City and the thousands of smaller banks spread across the

country that serve as economic lifelines in their communities.

Institutional investors have often favored big banks because of the belief they are “too big to fail.” And since they have more resources to invest in mobile and online banking technology, big banks have become magnets for deposits from the new generation of digitally savvy consumers. These banks no longer need to rely as heavily on building branches in rural communities to compete with community banks for funding; they can now reach small-town customers through their smartphones.

As such, many of the nation’s biggest banks are reporting organic increases in deposits. And the competition on the funding side of the balance sheet will only intensify as interest rates climb. The Federal Reserve’s Open Market Committee has raised the fed funds rate multiple times this year and is expected to continue doing so.

By making it easier for community banks to use reciprocal deposits, in turn, the new law strengthens their ability to grow relationships and deposits from a local customer base without losing either one to bigger banks with deeper pockets.

“This is a step in the right direction,” says Bert Ely, a principal of Ely & Company, where he monitors conditions in the banking industry. “It makes it easier for community banks to accommodate large depositors.”

Given all this interest, it seems likely that the use of reciprocal deposits will increase in the coming months and years. Banks not currently familiar with them would thereby be wise to familiarize themselves with how reciprocal deposits work and their benefits.

David Still is the Regional Director at Promontory Interfinancial Network, LLC. To learn more about reciprocal deposits and the impact of the new law, contact David Still at dstill@promnetwork.com.

June-July 2019 | The Arkansas Banker

35

PROFESSIONAL DEVELOPMENT Check out these upcoming events:

Hot Topics for Bank Boards

T H G I L T O SP

Never have the demands on a bank’s board of directors been greater.

Demands arise from customers, stakeholders, regulators and staff. The current regulatory and economic environments have conspired to create potential hazards for directors.

During this session, directors will gain a better understanding of the duties, responsibilities and liabilities involved in this leadership role.

Attendees will leave this event better equipped to contribute to the financial security, marketing efforts and solvency of their institution.

On the Agenda

Who Should Attend:

• Responding to Regulatory Actions • Performance Management System • Audit Committee Function • Board Reports • Balancing Strategies for Community Banks

• Bank Directors • Executive Management • Senior Bank Officers

When:

Tuesday, July 23, 2019 9:00 a.m. – 4:30 p.m.

Where:

Arkansas Bankers Association 1220 West Third Street, Little Rock

Opening New Accounts Documentation & Compliance Well-trained new account personnel and universal bankers who recognize and stop attempted fraudulent activity are the first line of defense in protecting a financial institution. This workshop encompasses every aspect of account opening. Participants gain confidence and a clear understanding of the regulatory, compliance, documentation, and state law requirements for every ownership offered.

On the Agenda • Six Requirements for Opening Any New Account • Understanding Ramifications of “Checking a Box” on a Signature Card • TIN Compliance – When to Use an SSN vs. EIN • Proper Business Account Documentation and Resolutions • Opening Personal Accounts and Adding Authorized Signers or Agents • Power of Attorney • Trust Accounts • Payable on Death, In Trust For (ITF) • Accounts For Minors • Court Ordered Accounts • Social Security Representative Payee • Beneficial Owner Requirements – FinCen – New Customer Due Diligence

Who Should Attend: • Branch Managers • Branch Administration • New Accounts Representatives

When:

Wednesday, August 21, 2019 9:00 a.m. – 4:30 p.m.

Where:

Arkansas Bankers Association 1220 West Third Street, Little Rock

For more information, or to register for either of these seminars, log on to www.arkbankers.org or call (501) 376-3741.

36 The Arkansas Banker | June -July 2019

MEMBER NEWS Encore Bank Opens New Location In The Heights

Graduate School of Banking at LSU

Burt Hicks, senior EVP & COO, announced the new bank office in the Heights community of Little Rock, 5100 Kavanaugh, opened June 3 and hosted a grand opening on June 20.

Hicks also named Julie Harrelson as senior vice president and office manager for the Heights location.

Lorrie Trogden, ABA CEO & President, visits with students at the Arkansas Graduate School of Banking at Louisiana State University.

Two Arkansas Bankers Awarded GSB Scholarships Kristen Partridge

VP/Loan Operations Manager First Arkansas Bank & Trust, Jacksonville

Harrelson, a native of Bryant, has an 18-year banking career with extensive retail and private banking experience.

“We are thrilled to expand our footprint by adding our new location,” said Hicks.

“We believe our brand of banking, focusing on the customer and brining the bank to them, is a perfect match for the Heights. We are proud Julie has joined the growing Encore team, her

Brock Ferguson

Commercial Loan Officer Centennial Bank, Jonesboro

retail and private banking background is an asset to our goal of serving our customers and community with a high level of service.”

16 Graduate from Commercial Lending School Sixteen bankers, representing 14 financial institutions from across the state, came together to strengthen their banks’ lending departments. The five-day event, led by instructors John Cochran and Ron Rushing, gave bankers a strong general foundation for commercial lending, drilling down on credit analysis and how to deal with problem loans.

Lacey N. Clark of Simmons Bank, Vicki Smith of Southern Bank, Patrick J. Hum III and Chris Oldner of Stone Bank, Peyton Tillman of The First National Bank of Lawrence County, Lauren McClard of the Malvern National Bank, Jason Sullivan of The Union Bank of Mena, and Chris Hawkins of United Bank.

Students included: Clay Patridge of Arvest Bank, Ethan Barnes of Centennial Bank, Tanner Hooper of Chambers Bank, Daniel Pledger of FBT Bank & Mortgage, Christopher Diaz of First Security Bank, Corey Throneberry of First Service Bank, Michael Leon and Hunter Stuckey of Signature Bank of Arkansas,

“Really glad these classes exist. Looking forward to another.”

- Ethan Barnes, Centennial Bank June-July 2019 | The Arkansas Banker

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MEMBER NEWS Following Community Award, Simmons Bank Hot Springs Associates Present $10,000 to Local Nonprofit

After being named Simmons Bank’s 2018 Community Bank of the Year, Simmons associates in Hot Springs donated $10,000 in winner’s funds to Cooperative Christian Ministries and Clinic (CCMC).

The gift will support CCMC’s annual Golf Classic, a fundraiser to provide medical and dental services to the underserved in Hot Springs.

“We consider it an honor to benefit from the hard work and accomplishment of the Hot Springs Simmons team,” said Lynn Blankenship, executive director for Cooperative Christian Ministries and Clinic. “This donation will provide much needed assistance and resources for the

people we serve. This blessing will help support the life journey for many who are looking for a hand up not a handout.”

In January 2019, Simmons announced its Hot Springs team as winner of the company’s Community Bank of the Year Award, based on 2018 figures for outstanding loan and core deposit growth, J.D. Power & Associates customer satisfaction survey scores and cross-selling results. In addition to receiving individual cash prizes, Simmons’ Hot Springs associates were awarded $10,000 to donate to the local organization of their choice.

Associates voted to support CCMC for its service to under-resourced members of the Hot Springs community by addressing poverty, physical and spiritual well-being, and practical needs.

“Simmons has grown significantly these last few years, but our roots as a community bank continue to deepen,” said Freddie Black, Simmons Bank’s regional chairman for Arkansas and southwest Missouri. “As our Hot Springs associates demonstrate, we’re here not only to provide financial solutions to customers, but also to see our communities prosper.”

Four Arkansas Banks Named to Forbes’ annual “America’s Best Bank in Each State List”for 2019

First State Bank Extends Weekday Banking Hours

First Security Bank, Simmons First National, Bank OZK, and Arvest Bank all made the Forbes list, competing against over 5,000 financial institutions. Forbes and market research firm Statista evaluated the banks with surveys from over 25,000 customers.

First State Bank has extended its weekday banking hours to 7 a.m. to 7 p.m. through its newly installed Interactive Teller Machines (ITMs).

Locations with extended hours include: 501 W. Main St., Russellville, Ark. and 2002 N. Arkansas Ave., Russellville, Ark.

38 The Arkansas Banker | June -July 2019

BANKER NEWS & MOVES

TAKE Y UR D G T W RK DAY 2 19

Commissioner Franks Arvest Bank Adds Bricker of Arkansas State Bank to Treasury Management Dept. Promotes Patel Team

state of Arkansas. In his new role, Bricker will be responsible for sales activities within large corporate accounts, middle market and business banking.

Dharmin H. Patel, a 14 year employee of the Arkansas State Bank Department has been promoted to Assistant Deputy Bank Commissioner

by Commissioner Candace Franks effective May 20, 2019. Patel is one of four Assistant Deputy Bank Commissioners with responsibility for bank supervision. Patel is a graduate of the University of Arkansas, Fayetteville with a B.S.B.A. in Finance and Banking.

“We are thrilled to add Jonathan to our team,” said Shawn Christian, senior vice president and regional sales manager for Arvest Treasury Management. “His experience and expertise will be a big benefit not just to the bank but, more importantly, our clients.”

Arvest Bank is pleased to announce it has hired Jonathan Bricker as vice president and international business development representative for its Treasury Management division.

Bricker, who has more than 16 years of industry experience, will be based in Little Rock, but will serve the entire

Bricker is a volunteer for Arkansas Children’s Hospital, vice president of the Lambda Phi Home Association of Sigma Nu, and has served as a board member for March of Dimes, among other civic endeavors.

June-July 2019 | The Arkansas Banker

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BANKER NEWS & MOVES Citizens Bank & Trust of Van Buren Announces Promotions Brent Taylor has been promoted to chief operating officer and will be joining the bank’s executive management team. Brent, a graduate of Alma High School, received his undergraduate degree from the University of Central Arkansas, and his Juris Doctorate from the University of Arkansas Little Rock School of Law. Prior to joining the bank in 2013 as a Vice President/Commercial Loan Officer at the Alma Branch, Brent served as a legal counsel for the Arkansas State Bank Department in Little Rock. He and his wife, Amanda, and children, Presli and Jack, reside in Alma. Brent and Amanda are very involved in the Alma community and enjoy spending family time watching Presli and Jack in all their school and sporting activities.

Ashley Reed has been promoted to vice president and has accepted the position of commercial loan officer at the Alma Branch. Ashley is a graduate of Mountainburg High School. She obtained her Bachelor’s Degree from the University of Arkansas Fort Smith, where she played four years on the Lady Lions Basketball Team. Ashley jointed the bank in 2011 as a management trainee and

in 2013 was promoted to consumer loan officer. She has attended both the Arkansas Bankers Association Consumer Lending School and the Commercial Lending School.

Ashley presently serves on the Board of Abilities Unlimited.

She and her husband, Derrick, reside in Mountainburg and spend their free time enjoying the outdoors with their family.

Grand Savings Bank Announces the Hiring of Lucinda Jenks Grand Savings Bank is pleased to announce the addition of Lucinda Jenks as senior vice president & Siloam Springs team lead.

Lucinda brings a lengthy and accomplished history in mortgage, consumer, and commercial lending to GSB along with a career-long commitment to serving community. A lifelong resident of Siloam Springs and Northeast Oklahoma, Lucinda began her banking career in 1995, shortly before earning her Bachelor of Business and Accounting from Northeastern State University. Lucinda has served in and managed multiple areas of banking, but her focus on helping local homeowners, businesses, and consumers achieve their dreams has earned her several sales and service awards.

Lucinda serves as a mentor at New Life Ranch, and she is active in the Siloam Springs Chamber of Commerce and the NWA Mortgage Bankers

40 The Arkansas Banker | June -July 2019

Association, on which she served as a past president.

Arvest Bank Promotes ErwinTharp to Business Banker in Cabot Arvest Bank has promoted Bethany Erwin-Tharp to the role of business banker. She will originate and manage business loans, serving customers in the greater Cabot area. Erwin-Tharp previously was a commercial lending assistant for Arvest, where she has been employed for 14 years.

Erwin-Tharp earned a Bachelor of Science degree from Arkansas State University.

She is a member of the Cabot Chamber of Commerce and New Life Church.

Arvest Bank Names Tim Hampel to Saline County Advisory Board Arvest Bank announced that Tim Hampel of Benton will join the bank’s Saline County Advisory Board. Hampel is president and CEO of Supreme Fixture Co., Inc., N&S Mechanical, Supreme Custom Fabricators, Supreme Retail and Southwest Millwork.

Hampel’s community involvement includes work with the Make-A-Wish Foundation and Big Brothers

Big Sisters of central Arkansas.

He also is director of a Christian youth camp that serves more than 100 teenagers in Lithuania. Hampel and his wife, Shelly, have two adult children and are members of North Side Church of Christ in Benton.

Mark Schulte Joins Stone Bank SBA Division Vinny Muratore, president of Stone Bank’s SBA Division, says veteran SBA Lender Mark Schulte has joined the Arkansas-based bank.

Mark has been involved in government guaranteed lending since 1989. He began his career with Charlotte State Bank in Port Charlotte, Florida where he learned SBA 7a and 504 lending to Small Businesses. He has also been involved in USDA Business and Industry governmentguaranteed Lending. When he is not working on his SBA loan volume, Mark enjoys world travel and high-speed driving events with the Porsche Club of America.

Bryce Goad Joins Centennial Bank Bryce Goad recently joined Centennial Bank as a commercial loan officer, according to Deana Osment, Centennial Bank’s Northeast Arkansas Division President.

Goad has 10 years of accounting experience at Goad & Company, PLLC, serving both consumer and commercial clients. He

BANKER NEWS & MOVES obtained multiple bachelor’s degrees in marketing, management and accounting from Arkansas State University and is a former member of the A-State Men’s golf team.

An active community member, Goad serves as a youth group leader at First Baptist Church and a City Stars baseball and soccer coach. Goad and his wife, Dione, are members of First Baptist Church. They have two sons, Keagan, 10, and Payton, 8.

Simmons Bank Names SVP of Treasury Management & Strategic Development Simmons Bank has named Leslie Parnell senior vice president of treasury management and strategic development.

Parnell will have direct oversight of Simmons’ Treasury Management team, including sales, product, customer implementation and servicing across the bank’s eight-state footprint.

She will also focus on honing commercial delivery channels.

Parnell was previously with Bank of America, where she managed teams of large corporate and commercial U.S. and Canadian treasury fulfillment and service professionals. During her tenure, she was responsible for efficiency improvements focused on bank risk, compliance and associate development. Parnell also

drove significant growth in customer satisfaction, as scored by monthly surveys.

A certified treasury professional, Parnell brings 22 years of industry experience to her role at Simmons.

Parnell graduated from Lake Forest College in Illinois with a bachelor’s degree in economics and a minor in marketing and public relations.

GSB Promotes Pam Hulion to Chief Regulatory Officer & Senior Vice President Grand Savings Bank is pleased to announce the promotion of Pam Hulion to chief regulatory officer and senior vice president.

A member of the GSB family since high school, Hulion began her banking career in 2000 as part of the school-towork program and continued to worked part-time at the Grove branch while earning her Bachelor’s degree in Developmental Psychology from Northeastern State University.

Upon graduation, Hulion pursued her calling in the banking industry, accepting an internal auditor position and soon after becoming one of GSB’s first Compliance Officers. In the 19 years she has been with Grand Savings Bank, Hulion has served as HR director, marketing director, operations officer, and loan operations/administrative

officer. In her new role, Hulion will oversee the compliance team to ensure GSB’s products and services meet state and federal regulations.

Hulion completed her CRCM certification in 2010 and earned her Master’s in Business Administration, Finance from Oklahoma Christian University in 2012.

Five Arkansas Bankers Graduate from GSB at LSU On May 31, 2019, 185 bankers received graduation diplomas from the Graduate School of Banking at Louisiana State University.

Five bankers represented Arkansas: Christian Harrod of Jonesboro, Centennial Bank; Tony Karnes of Fayetteville, Chambers Bank; Zachary Price of Harrisburg, First National Bank of Wynne; Robin Simpson of Rogers, BancorpSouth; and Micah Thompson of Springdale, Chambers Bank.

Students traveled from twenty-one states and Mexico to participate.

Simmons Bank Names Michael Powell as Mortgage Division President Michael Powell has been named as mortgage division president for Simmons Bank and will oversee all aspects of Simmons’ mortgage process.

Powell’s experience spans from mortgage banking and operations to strategic

planning and management.

Preceding stints at Centennial Bank and IberiaBank, Powell started Cornerstone Mortgage in 1999, garnering recognition from Arkansas Business as the largest independent mortgage banker in Arkansas for three consecutive years (2009-2011).

A graduate of Southern Methodist University, Powell previously served as a mentor for under-privileged children through STEP Ministries of North Little Rock.

First National Bank at Paris Announces Staff Promotions & Additions Travis Schluterman has been hired as assistant vice president of commercial lending. He earned his Business Admin Degree at the University of Arkansas - Fort Smith.

He serves as chamber ambassador for the Paris Area Chamber of Commerce and as vice chairman for Paris Housing Authority.

Lisa Jarrard has been promoted to assistant vice president of consumer lending.

Jarrard formerly worked as a loan assistant at First National Bank at Paris. She serves as Treasurer of the Paris Kiwanis Club, and she enjoys spending time with her family and cheering on the Paris Eagles.

June-July 2019 | The Arkansas Banker

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BANKER NEWS & MOVES Stone Bank Announces Deborah Moyers as Chief Operations Officer Vincent Muratore, President of Stone Bank’s Small Business Administration (SBA) Loan Division, announced that Deborah Moyers has been named Chief Operations Officer, SBA Division. Moyers is a seasoned veteran in the financial industry, particularly the analysis and service of government-guaranteed loans. She began her career more than 15 years ago as a Commercial Loan Officer, Credit Analyst and Special Assets Officer for Community Trust & Banking Company. She most recently served as EVP and Chief Operating Officer with Capital Growth Solutions, a Chattanooga, Tennesseebased Lender Service Provider.

She has also served as VP, Loan Administration and Loan Operations Department Head with CapitalMark Bank & Trust.

Grand Savings Bank Announces Promotion of Meredith Renfroe to Team Lead Grand Savings Bank is happy to announce the promotion of Meredith Renfroe to team lead for the Gentry and Decatur branches. Indispensable in guiding customers and staff

during the Grand Savings Bank acquisition in 2014, Renfroe officially became a part of the GSB family at the opening of the Decatur Branch in that same year. From starting as a teller in 1997 to serving as VP of Branch Operations in Benton County for Grand Savings Bank, Renfroe’s career has grown, along with the Gentry and Decatur communities she calls home.

Active in the Parent Advisory Board for Gentry’s primary schools and on the Gentry Intermediate PTO, Renfroe also serves both Arkansas and Oklahoma as a member of the O&A Honor Flight Board and the Circle of Life Ladies Auxiliary. She has worked extensively with the Gentry United Way and the Gentry Chamber of Commerce, and she is a winner of the Gentry Chamber’s Horizon Award.

A Grand Ambassador for GSB’s Gentry branch, Renfroe has been recognized as a leader and example, earning GSB’s Grand Service Award and Employee of the month for our Gentry branch. Renfroe also holds a Bachelor of Science in Finance from the University of Arkansas.

Vansandt Promoted to Chief Lending Officer Farmers and Merchants Bank President and CEO Gary Hudson announces the promotion of Kirk Vansandt to chief lending officer.

42 The Arkansas Banker | June -July 2019

Vansandt has served as market president and loan officer based in DeWitt. He was promoted to senior vice president in 2013. He began his career with the bank in September 2008 as a loan officer.

He and his wife Holly reside in St. Charles. In his spare time, he enjoys hunting and being outdoors with family and friends.

President and CEO of Eagle Bank & Trust Announces Beth Meister as Marketing & Social Media Manager Jeff Lynch, President and CEO of Eagle Bank and Trust, announces that Beth Meister has joined the bank as the marketing and social media manager. Beth is a recent graduate of Arkansas State University earning her Bachelor’s Degree in Marketing, with an emphasis in Sales Leadership. She began her banking career while interning at a Northeast Arkansas bank.

A native of Benton, Beth brings her vast skills to Eagle Bank and Trust where she will both plan and direct the Marketing and Social Media program.

New Directors Elected to Bank & Holding Company Board Kyle Ludwig and Dr. Chris Morgan have been elected

to three-year terms of the Board of Directors of The Farmers and Merchants Bank and its holding company, Farmers and Merchants Bankshares, Inc., during the official shareholders May meeting.

Ludwig is a native of Springdale, AR and resides in Stuttgart with his wife, Whitney Ludwig, and their three daughters. After graduating college, he began his career working at Ludwig Distributing Company. He serves as vice president and general manager. He is currently the treasurer and a member of the Board of the Stuttgart Chamber of Commerce.

Morgan is a native of Stuttgart, AR. He and his wife Kimberly Morgan have two sons.

Dr. Morgan practices medicine at the Baptist Health Medical Center in Stuttgart, AR. Morgan also serves as a board member for the Stuttgart Memorial Hospital Foundation. His civic activities include serving as vice president of the Stuttgart Public School Board and president of the Harry “Butch” Richenback Scholarship Foundation.

He is a managing member of Coastal Laboratories of Arkansas and the President of Walker Jones Land Company.

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44 The Arkansas Banker | June -July 2019