Illinois Banker Magazine | July - August 2020

The Official Publication of the Illinois Bankers Association ilbanker.com

IBA’s 2020-2021

Executive Committee

July-August 2020

ADDRESS SERVICE REQUESTED ILLINOIS BANKERS ASSOCIATION 3201 WEST WHITE OAKS DRIVE, SUITE 400 SPRINGFIELD, IL 62704

July-August 2020 • Vol. 105 / No. 4 • ilbanker.com

TABLE OF CONTENTS

13 16-29 34

DEPARTMENTS 6 Message from the President and CEO 8 Compliance Corner 10 Preferred Vendor Spotlight 13 FLA Update

32 FEATURES

36 News & Notes 37 Online Training Options 38 On the Move

14 SBA 504 Lending: Going Beyond PPP

40 New Associate Members

REWIRED Annual Conference

40 Associate Member News

16 18 22 24 25 26 28

Virtual Conference Hits It Out of the Park!

IBA Chairman Ahrens’ Inaugural Speech Excerpts 2021 Illinois Bankers Association Board of Directors Award Winners Thomas A. Broeckling Named Banker of the Year Parting Address of Outgoing Chairman Kevin L. Olson Baker Honored with Lifetime Achievement and Distinguished Bank Counsel Award 29 Thank you to our Sponsors and Exhibitors

30 Legal Changes for Retirement Plans and IRAs 32 How does the COVID-19 pandemic affect your recent risk assessment?

34 FDIC Expectations on Ag Lending

40 Ad Index 41 Events Calendar

Our Mission: Advocacy. Education.

Industry Resource...for all Illinois bankers.

Our Vision: Connecting Bankers.

Advancing Banking.® Our Core Values: The Illinois Bankers Association will place our members’ interests first, be responsive to their needs, and provide them with the highest level of professionalism and service. The IBA staff is the Association’s greatest asset.

We will conduct ourselves with integrity and respect. We will work together as a team, share information, build upon our strengths, embrace new ideas, and recognize and celebrate accomplishments.

42 A Virtual Toast to Linda Koch!

July-August 2020 •

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OFFICERS AND EXECUTIVE COMMITTEE MEMBERS C. Brant Ahrens Chairman CIBC, Chicago

Michelle L. Gross Chairman-Elect State Bank of Bement

William P. Gleason Vice Chairman The Leaders Bank, Oak Brook

BOARD OF DIRECTORS REGION 1

REGION 4

Clark Delanois The Northern Trust Company, Chicago

Tom Gihl INB, Springfield

Jeff Fauver Catlin Bank

Joan Heggen U.S. Bank, Chicago

Anthony G. Nestler Hickory Point Bank and Trust, Decatur

REGION 2

REGION 5

Gary S. Collins Old Second National Bank, Aurora

T.J. Burge Community Partners Savings Bank, Salem

Rick M. Francois American Community Bank & Trust, Woodstock

Richard J. Knebel The Bradford National Bank of Greenville

REGION 3

AT LARGE

Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville

Dane Cleven Community Savings Bank, Chicago

Tyler Rouse First Federal Savings Bank of ChampaignUrbana

Megan Collins Bank of America, Chicago

James R. Hannon First Security Trust and Savings Bank, Elmwood Park Quint Harmon Pioneer State Bank, Earlville James H. Huiskamp Blackhawk Bank and Trust, Milan Richard J. Mahoney First Midwest Bank, Chicago

Pamela A. ShararStoppel Wheaton Bank & Trust Co. Matthew Smith First Mid Bank & Trust, Mattoon Simon P. Yohanan First Bank of Highland Park Andrew Butts Bank of Belleville (non-voting member)

Rick R. Parks First National Bank of Waterloo Steven F. Rosenbaum Hoyne Savings Bank, Chicago

ILLINOIS BANKERS ASSOCIATION STAFF DIRECTORY Two Offices to Serve You! Springfield Office: 800-783-2265 • Chicago Office: 800-878-2265 To connect with our staff, use this email format: firstinitiallastname@ilbanker.com

Betsy Johnson Treasurer Forreston State Bank

Executive Administration Randy Hultgren, President and CEO Erich J. Bloxdorf, Executive Vice President & COO Mary Curl, Executive Assistant & HR Manager

Thomas J. Chamberlain Member-at-Large Iroquois Federal Savings & Loan, Danville

Pam Macha, Springfield Office Coordinator Legal and Compliance Carolyn Settanni, Executive Vice President and General Counsel Carly Berard, Senior Counsel Michael Schasane, Staff Attorney Amy Giacomucci, Law Assistant

Anthony G. Nestler Member-at-Large Hickory Point Bank and Trust Co., Decatur

Bank and Partner Relations

Communications/Marketing/ Associate Membership

Illinois Bankers Business Services, Inc.

Debbie Jemison, CAE, Vice President

Brian Hoffman, President

Tammy Squires, Assistant Vice President Robin Lane, Director, Associate Membership Finance and Administration Mark Bennett, CPA, CFO and Vice President Marcia Stratton, CPA, Director Marie Ann South, Financial Assistant Government Relations Ben Jackson, Vice President

Phil Talley, Vice President, Insurance Services Casey Widholm, Marketing Manager Illinois Bankers Education Services, Inc. Callan Stapleton, President Kevin Klug, Vice President Bob Anderson, Manager, Education Relations & IT Support Cassie Mattson, Manager, Event Management and FLA Denise Perez, Manager, Education & Training

Julie Winterbauer, Vice President

Aimee Winebaugh, Assistant Vice President;

Amy Sale, Education Assistant

Linda Koch, CAE, Member/Business Relations Manager

Sarah Cowan, Membership and Government Relations Assistant

Illinois Bankers Group Insurance Trust

David Barbeau, Senior Banking Advisor (dbarbeau@htc.net)

Erich J. Bloxdorf, Plan Administrator

Sarah Cowan, Membership and Government Relations Assistant

Mike Mahorney, Senior Trust Advisor Hillary Meyers, Trust Manager

Kevin L. Olson Immediate Past Chairman Grundy Bank, Morris

Randy Hultgren Secretary President and CEO Springfield

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• July-August 2020

Editorial Offices 3201 West White Oaks Drive, Ste. 400 Springfield, IL 62704 217-789-9340 FAX 217-789-5410 www.ilbanker.com Debbie Jemison, Editor With the exception of official announcements, the Illinois Bankers Association disclaims all responsibility for opinions expressed and statements made in articles published in Illinois Banker. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

Illinois Banker (ISSN 0019-185X) is published bi-monthly and is available at a cost of $45 per year for members and $90 per year for nonmembers. Regular issue single copy price is $8.50. Postmaster, send address change to Illinois Bankers Association, 3201 W. White Oaks Drive, Ste. 400, Springfield, IL 62704. News items from members of the Illinois Bankers Association are invited and are due on the first of the month preceding publication. © Copyright 2020 by Illinois Bankers Association (unless individual articles list copyright). Reproduction of any material in the Illinois Banker is strictly prohibited without written permission of the publisher.

MESSAGE Welcome to Randy Hultgren, the IBA’s new president and CEO! Randy’s first President’s Message for the Illinois Banker magazine is taken from his welcome speech given during the IBA’s REWIRED Annual Conference on June 16.

Randy Hultgren

IBA President and CEO

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F

rom the brink of bankruptcy to the best banking association. I had no idea how bad the situation was for the Illinois Bankers Association 20 years ago when Linda Koch stepped up to be our President and CEO. Through many difficult years, Linda built an incredibly strong team at the IBA, worked tirelessly to keep and grow the membership of the Association, and regained the stature and respect of the Illinois Bankers Association with elected officials at every level of government.

Linda has been the leader we have needed to make it through devastating financial crises, through unprecedented legislative threats to banking from DC, and through significant consolidation and reduction in the number of banks in Illinois. I have heard from so many of you that the IBA has become the gold standard of banking associations throughout our nation.

Thank you, Linda, for all you have done and continue to do to serve our great members and our vital industry!

Bruce Baker, our General Counsel and Executive Vice President, has offered wisdom and direction at every step of rebuilding the IBA. No one in America knows more about banking or has had a bigger role in shaping good banking policy than Bruce. He is vigilantly watching for threats to our Members and is constantly crafting creative legal solutions to compliance and regulatory challenges. Bruce has led a powerful legal team and the IBA and our Members will continue to receive industry leading legal advice and counsel. Bruce, thank you for your great work and dedication advising and advocating for banks in Illinois and around the country for decades.

Allow me to share more about who I am.

My name is Randy Hultgren, and I am the

• July-August 2020

incoming President and CEO of the Illinois Bankers Association. If I was sitting in your chair, I would be thinking Randy has huge shoes to fill with the amazing Linda Koch retiring. This important role is a dream come true for me. I have watched and worked with Linda and the IBA team for more than 2 decades, never having an idea that I would one day be given the privilege of helping to lead the Association and lead the fight for the banking industry. My private sector career has been as an attorney, a financial advisor, a bond salesman, and a banker. As a banker myself, I know how you serve and help dreams come true. I have also had the privilege of serving in elected office for 24 years, with my last 8 years representing the great people of the 14th district of Illinois in the United State Congress.

My wife, Christy and I just celebrated our 29th wedding anniversary, have 4 great children, and we are about to become grandparents any day now.

My life story is tied to banking. I grew up with a dad who was a professional boxer.

Well actually, he put people in boxes for a profession. He is a mortician. My dad worked for a funeral home in Chicago and he had a dream of someday owning his own funeral home. In the mid-1970s, the opportunity arose when a funeral director in Wheaton, Illinois, suddenly died, and his wife needed to sell the business. My family sold everything we owned and my mom and dad met with a local banker at Gary-Wheaton Bank, named Jerry Bradshaw. He looked at what we had and how much the funeral home would cost and said he could not quite make the numbers work, but he believed in my mom and dad. He believed that Wheaton needed people like us to serve

MESSAGE

the families who were going through the loss of a loved one. He gave us the loan and we never missed a payment. We have cared for thousands of families going through one of the most difficult times of their lives because one banker believed in us. That banker’s decision was a turning point for my family and me that led to my education, my passion for service, my elections, and my commitment to banking.

We are living in the most difficult time many of us have ever seen. I am so proud of the sacrifice and commitment that you have shown in the last couple of months to help and serve your customers. Just as you have shown dedication and care, I can attest to the incredible work of everybody at the IBA as we strove to find clarity and direction for you and your customers through this unprecedented challenge.

It is important that we look to and prepare for the future. Our team is here for you to assist as your lobbies reopen, as many of your customers work through the forgiveness process, and as all our communities adjust to a new normal. We reach out our hand to offer help and to invite you to join with us.

Our entire team will continue to provide the highest quality education and training programs. The valuable and timely regulatory and compliance advice will be excellent and reliable. Bank Talent HQ and all our services and valued partnerships will help to provide a qualified workforce and key products that make it possible for you to meet the needs of your customers. Your voice will resonate through the halls of government with the trusted IBA advocacy team being present to guide the future of banking policy in our state and nation. I commit to you that the IBA will remain bipartisan with the ability to communicate with leaders and legislators from both sides of the aisle and from every part of the state.

The voice of banking is strongest when we have one clear message. Each one of us is different, but we all deeply desire the opportunity to help families, businesses and communities reach their goals and dreams.

The challenges and threats to banking are real. Customers ultimately pay the price if

our message gets confused and bad policy is implemented. I promise you that I will work daily to serve and advocate for every bank in Illinois and will constantly reach out to other entities that share our passion to make sure that we are speaking with one voice.

Illinois banks matter because you care. Your servant hearts have been on display over the last weeks in a profound, powerful way. One mid-size bank was able to process nearly 500 PPP loans for $32 million – saving nearly 4,500 jobs in its small southern Illinois community. An east central Illinois banker worked through the night to process loans in her small community.

As she stated, “I’ve been doing this for over 12 hours and plan to stay up and continue fighting this e-tran system for my small businesses. I can’t imagine telling them that they didn’t get any funds because I decided to get some sleep.” A bank in northwest Illinois took the time to regularly deliver breakfast to hard-working city employees in their community. A central Illinois bank helped a local women’s clothing shop remain operational by walking them through the PPP process every step of the way. The store was able to move its inventory online – something it had previously tried with no success – and stay afloat. According to the store owner “We would not be here without our bank”. And this from a Chicago area restaurant owner: “Thank you so much for all your help and patience with us! With your help, we’re not going anywhere!” I know you all have your own stories of empathy and care that you and your employees have shown, and that has happened all over Illinois. Our team at the IBA will continue to speak up for you and share your great stories.

We have a rich, 130-year history at the IBA. Thank you, Linda, for giving your all to lead and lift the IBA. Thank you to everyone listening for the opportunity you have given me and for how you care for your communities. You have my promise that I will do my best every day to serve you, to lead the fantastic staff of the Association, and to do everything I can to grow your bank and keep the IBA strong and make you proud now and for years to come.

July-August 2020 •

•7•

COMPLIANCE CORNER By the IBA Law Department

QUESTION Our lobbies are closed, and we are only operating our drive-through windows. We are able to maintain six feet of social distancing at our teller stations; however, the tellers are not consistently six feet apart when they pull tubes from the drive-through. Are the tellers required to wear masks due to the inability to remain six feet apart at all times?

ANSWER Yes, we believe your tellers are required to wear face coverings or masks when they are unable to maintain six feet of social distancing.

The Executive Order for Phase Three of Illinois’ reopening (EO-38) provides: “Any individual who is over age two and able to medically tolerate a face covering (a mask or cloth face covering) shall be required to cover their nose and mouth with a face covering when in a public place and unable to maintain a six-foot social distance.” EO-38 also requires businesses to “ensure that employees practice social distancing and wear face coverings when social

distancing is not always possible” and retail stores to “take appropriate additional public health precautions, in accordance with DCEO guidance, which include: provid[ing] face coverings to all employees who are not able to maintain a minimum sixfoot social distance from customers and other employees at all times.”

EO-38 does not define the term “retail store.” However, the IDFPR’s Division of Banking has confirmed that financial institution branches should follow the same precautions as retail stores. EO-38 also requires all businesses to “prominently post the guidance from the Illinois Department

of Public Health (IDPH) and Office of the Illinois Attorney General regarding workplace safety during the COVID-19 emergency.” The IDPH guidance that must be posted states that employers should “provide face coverings to employees, especially when it is not possible to maintain at least 6 feet” of social distancing.

Consequently, we believe your tellers must wear – and your bank should provide them with – face coverings or masks, because they are unable to maintain six feet of social distancing when pulling tubes at your drive-throughs.

QUESTION We sold a personal money order to a customer that our bank did not sign. The customer lost the personal money order before filling in the payee line and signing it. Can we place a stop payment on the money order?

ANSWER

Yes, we believe you may place a stop payment on a personal money order that your bank did not sign. While the UCC does not define a personal “money order,” Illinois courts have found that “since a personal money

order is not signed by an authorized representative of the issuing bank, it is more in the nature of an ordinary check than a bank obligation, and, thus, subject to stop-payment orders.”

Unlike a cashier’s check signed by an

authorized representative of the bank as drawer of the check (for which a stop payment order is ineffective), a money order signed by a customer does not become an obligation of the bank.

About the IBA Law Department Our IBA Law Department provides many resources to help our bank members meet their compliance challenges, including a tollfree Compliance Hotline (1-800-GO-TO-IBA) and a dedicated compliance website (www.GoToIBA.com). We also publish a free weekly e-newsletter highlighting the latest regulatory developments, select recent Q&As, and other useful information – let us know if you want to subscribe!

Note: This information does not constitute legal advice. You should consult bank counsel for legal advice, even if the facts are similar to those discussed above.

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• July-August 2020

QUESTION When is it necessary to have a customer sign a modification of mortgage? If the interest rate, maturity date or any other loan terms are changed, do we need to provide new disclosures and record a modification of mortgage?

ANSWER

Depending on the changes being made, we believe it may be possible to modify the terms of a loan without recording a modification of mortgage, but we recommend engaging your bank’s counsel to review the relevant loan documents to ensure that your bank’s lien position will not be affected.

Additionally, aside from the caveats noted below, you would not be required to provide new disclosures if the documentation for the modification demonstrates that the existing loan is not being satisfied or released.

satisfying or releasing the existing obligation. The Illinois Conveyances Act also expressly provides that recorded mortgages do not need to include the loan’s interest rate.

Consequently, if your modification agreement demonstrates that it is merely amending and supplementing the original loan agreement (and you are not adding a variable rate feature), we do not believe it is necessary to provide new disclosures or record a modification of mortgage due to a changed interest rate.

Change in Interest Rate It is possible to increase or lower the interest rate on a mortgage loan without triggering Regulation Z’s definition of a “refinancing,” which would require new disclosures under the TILA-RESPA integrated disclosure (TRID) requirements – provided that a variable interest rate is not being added to the loan. The general rule is that a “refinancing” occurs only when an existing obligation is “satisfied and replaced” by a new transaction, which is determined by the language in the parties’ contract, as well as applicable state law. Regulation Z requires new disclosures if a variable rate feature is added to a loan, even if the original loan is not being satisfied or released.

Whether or not the original loan is being satisfied and replaced will depend on the specific language that you use in the modification agreement. For example, one federal court in Illinois reviewed the language of a modification agreement and determined that it did not constitute a refinancing because the modification agreement specifically stated that it was merely amending and supplementing the original loan agreement and not

Change in Maturity Date It also is possible to extend the maturity date of a loan without triggering a refinancing. Illinois courts repeatedly have held that a note “given in renewal of another note and not in payment . . . does not extinguish the original debt or change the debt except that it postpones the time for payment.”

We believe that the same logic would apply to a modification agreement that extends the maturity date of the original note without extinguishing it. The Illinois Conveyances Act also expressly provides that recorded mortgages do not need to include the loan’s maturity date. As such, if your modification agreement demonstrates that it is renewing and not extinguishing the original loan agreement, we do not believe it is necessary to provide new disclosures due to the extended maturity date.

If the original mortgage lists a maturity date, you may need to record a modification of mortgage reflecting the new maturity date to preserve your lien position. If the original mortgage does not list a maturity date, the Illinois Code of Civil Procedure provides that it will remain a valid

lien for thirty years after the date of the mortgage, which you may extend beyond thirty years by recording an extension agreement or affidavit.

Therefore, if the extended maturity date provided in the modification agreement occurs before the thirty-year expiration of the original mortgage, we do not believe you would be required to record a modification of mortgage due to an extended maturity date.

Other Changes in Loan Terms If other loan terms are being modified, whether you need to record a modification of mortgage and provide new disclosures will depend on the circumstances. For example, if you are modifying the loan terms to provide for an additional advance of funds, the Illinois Mortgage Foreclosure Law provides that future loan advances are covered by a recorded mortgage only if the advances are referenced in the mortgage or its companion promissory note. Consequently, if your original mortgage or note do not address future advances, we believe you would need to record a new mortgage or modification of mortgage to secure the new advances. Whether the modification of the mortgage would be viewed as a refinancing under Illinois law and Regulation Z depends on the analysis of whether the modification satisfies and replaces the previous obligation, as discussed above.

Conversely, if your original mortgage or note allow for future advances, we believe you would be able to structure the modification agreement in a manner that avoids characterization as a refinancing, and you would not be required to record a modification of mortgage, nor would you be required to provide new disclosures.

July-August 2020 •

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• July-August 2020

PREFERRED VENDOR

By Brian Hoffman, President, Illinois Bankers Business Services

Illinois Bankers Business Services Inc. names Abrigo as Preferred Vendor for PPP Forgiveness and Administration

This battle-tested SBA solution is trusted by over 175 community financial institutions. Abrigo can help your institution:

The Illinois Bankers Business Services Board has recently selected Abrigo as our Preferred Vendor for their Paycheck Protection Program (PPP) Forgiveness and Administration

Solution – part of the Sageworks SBA Lending solution. The program will aid our members and their customers with the loan forgiveness and administration process.

u Increase efficiency and speed of the PPP loan forgiveness process u Assist borrowers quickly and conveniently meet forgiveness application requirements u Accurately calculate forgiveness and apply PPP guidelines u Produce PPP-specific dashboards and reports u Reduce workload for loan officers, giving them time to focus on other opportunities for growth u Automate the collection and submission of required data and documents

continued on p12

July-August 2020 •

• 11 •

PREFERRED VENDOR

By Brian Hoffman, President, Illinois Bankers Business Services

Illinois Bankers Business Services Inc. names Abrigo as Preferred Vendor for PPP Forgiveness and Administration continued from p11

Key Features: 8 User-friendly PPP loan dashboard

8 Secure portal for

borrowers to upload UoP documentation

8 Trusted E-signature capabilities

8 Generate required

documentation for auditability

8 Borrower-friendly

forgiveness calculator based on SBA guidance

8 Streamline communication

with borrowers from application through decision

8 Transmit data to SBA based on guidance

8 Automatically generate Form 3805

8 Award-winning support,

training, implementation, and resources along the way

8 Fast core integration for required reporting

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• July-August 2020

To learn more about Abrigo’s solution, please contact Rene Morales, Senior Account Executive, at rene.morales@abrigo.com or 562-688-9542, or contact Brian Hoffman, President of IBBS, at bhoffman@ilbanker.com or 217-789-9340

FUTURE LEADERS ALLIANCE Nothing Stops the FLA from Connecting and Learning!

FLA Session 2 GR – New IBA President and CEO Randy Hultgren makes his introduction to the FLA Class of 2021 during their virtual FLA Session in April.

Ishmael

Kalka

Shaw

Butts

Maurer

Bushue

Martz

Austin

Cox

FLA Session 2 – Joe Micallef, Grow UP Sales, presents to the FLA Class of 2021 during a virtual FLA Session.

FLA Connection Hour – Alumni and current students get together for a muchneeded hour of networking, games and laughs during one of the many FLA Connection Hours that have been held since the start of the pandemic.

Hushka

Wyatt

Introducing the 2020/2021 FLA Board of Directors Welcome Josh Ishmael, INB, N.A. (Class of 2019) Welcome Lora Kalka, FNBC Bank and Trust (Class of 2020) Congratulations to Bethany Shaw, Peoples National Bank, N.A. (Class of 2009), for accepting the role of Vice Chairman Congratulations to Andrew Butts, Bank of Belleville (Class of 2017), for moving into the role of Chairman

Leaving the FLA Board of Directors

Continuing Terms on the FLA Board of Directors

Ryan Martz, Forreston State Bank (Class of 2015) Kara Austin, Murphy-Wall State Bank & Trust (Class of 2019) Trent Cox, Farmers & Mechanics Bank (Class of 2017) Christopher Hushka, CIBC (Class of 2017) Matt Wyatt, Busey Bank (Class of 2011) - Thank you for serving as FLA Chairman for 2019/2020!

Thank you Rachael Maurer, United Community Bank (Class of 2011) Thank you Greg Bushue, Washington Savings Bank (Class of 2018)

July-August 2020 •

• 13 •

SBA 504 Lending: Going Beyond PPP To Revitalize Our Economy

By Manuel Flores, President and CEO, SomerCor

B

anks have been playing a critical role in support of small business owners throughout the COVID-19 crisis. When it came time to provide immediate relief, banks stepped in front to participate in the Small Business Administration’s (SBA) Paycheck Protection Plan (PPP) loan program.

Now as the nation shifts to reopening and rebuilding our economy, banks have an opportunity to once again lead the way in support of small business growth and expansion through a different SBA initiative – the 504 (and 504 refi) loan program.

The 504 loan is designed to help entrepreneurs access affordable financing with the goal of growing small businesses, creating jobs, and increasing local economic development. The loan is for small businesses to purchase, expand or refinance commercial real estate or heavy equipment for their operations.

Last year, the SBA 504 program helped more than 6,000 businesses secure a combined $5 billion in financing.

The program is popular with small businesses because it provides 10, 20 or 25-year loan terms at below–market, fixed interest rates. These favorable terms result in more predictable and lower monthly payments.

Because the 504 loan program

requires the participation of a thirdparty lender (usually a bank), it is a public-private partnership that comes with notable benefits to participating banks as well. Far from a financing tool of last resort, the 504 program enables banks to participate in strong small and mid-size business loans, diversify loan portfolios, mitigate lending risk, expand their credit box, and earn Community Reinvestment Act credit.

No matter the project type, the bank takes a first lien position at a 50% Loan To Value (LTV). The deal structure limits bank exposure, decreases the impact on bank liquidity, and helps borrower

creditworthiness across the board.

The SBA 504 program includes a refinance option for small businesses to restructure existing debt on their commercial real estate. The refinance program provides immediate cash flow benefits and unlocks real estate equity to provide cash-out for eligible expenses. The 504 refi can also increase working capital by lowering monthly mortgage payments and reducing uncertainty with a long-term, belowmarket fixed interest rate SBA loan.

During an economic downturn, the 504 refinance program offers banks a strategic lending option to strengthen existing credits and loan portfolios. COVID-19 has wreaked havoc on our economy, triggering a recession affecting the viability of many businesses and increasing the likelihood of business loan failures.

A banker can use the 504 refi to help existing customers take advantage of lower interest rates and access to equity, while at the same time reducing their credit exposure through the lower LTV. The SBA first launched the 504 refi as a pilot program in response to the Great Recession from 2010 to 2012. The pilot was so effective it became a permanent SBA lending option in 2016.

For some banks, the PPP loan program was their first experience with SBA lending. While PPP can claim

Business in mixed or single-use building

New business or single-use building

New business in single-use building

40%

SOMERCOR SBA 504 Loan

35%

10%

Borrower Capital

50% Lender Loan

• 14 •

It is the unique structure of the loan that provides benefit to both the borrower and bank. A 504 loan offers up to 90% financing for established businesses. The bank finances 50% of a project while the SBA, through a Certified Development Company (CDC), covers the remaining 40%. In the case of a new business, the borrower puts 15% down, decreasing the SBA portion to 35%. For new businesses in a single-use building (i.e. carwash or gas station), the borrower puts in 20% and the SBA covers 30%. (See below)

• July-August 2020

SOMERCOR SBA 504 Loan

15% Borrower Capital

50% Lender Loan

30%

SOMERCOR 20% SBA 504 Loan Borrower Capital 50% Lender Loan

many successes, there is little debate there were significant challenges in the rollout and implementation, mostly attributable to the newness of the program and its evolving rules and guidance. This is in direct contrast to the SBA 504 program, which has been in place for more than thirty years and has a well settled framework.

Moreover, unlike the PPP loan, where banks are on their own for navigating SBA requirements, a CDC, like SomerCor, manages the 504 loan application, underwriting, funding, and servicing. CDCs are certified by the SBA as non-profit corporations charged with promoting economic development through SBA 504 loan program. CDC staff have a high-level of expertise and serve with the dual purpose of helping small business owners access the 504 loan and partnering with participating banks to navigate the SBA lending process quickly and efficiently. In a sense, the bank is able to outsource the entire SBA loan process to the CDC while making a conventional senior mortgage loan at a 50% LTV. As we continue the fight against the COVID-19 health crisis and move to restart our economy, many industry sectors will experience radical change transforming business models, altering operations, and impacting revenue streams. Some businesses will need to expand rapidly to meet new demand, while others may need to shore up capital for expected lean years ahead. Either situation provides an opportunity to explore how the SBA 504 loan program can provide support to meet current lending parameters at your bank to best serve your business customers and help lead the way to revitalize our economy.

About the author: Manuel Flores is President and CEO of SomerCor, a non-profit lender certified by the Small Business Administration that specializes in SBA 504 loans. IBA Associate Member

July-August 2020 •

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ANNUAL CONFERENCE

REWIRED Annual Conference Hits It Out of the Park!

Going virtual didn’t stop us from holding two terrific PAC events, including a silent auction and the Illinois Bankers PAC Virtual Cooking lesson with Master Chef Tim Bucci. Chef Bucci is both an extremely talented chef and an exceptional teacher. Under his virtual instruction, viewers were led through a mouth-watering three-course dinner, with tips, tricks and tastes sure to impress any dinner guest! He definitely needs his own show! If you are interested in seeing an encore performance, contact the IBA’s Aimee Winebaugh at awinebaugh@ilbanker.com.

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• July-August 2020

When it became apparent that the opportunity to hold our IBA annual meeting in person was slim to none, the Annual Conference Committee, along with IBA staff, quickly switched into high gear to see what other options were available. We knew we still wanted to get together because the Annual Conference is one of the highlights of our year. We still wanted to provide much-needed educational content and critical regulatory information. We still wanted to recognize our very-deserving banks and bankers. We still wanted an appropriate send-off for Linda Koch and Bruce Baker who were retiring at the end of the month, and a rousing welcome for our new president and CEO Randy Hultgren. And, importantly, we still wanted the opportunity to connect our Associate Members, Preferred Vendors, sponsors and exhibitors with our industry’s decision makers.

How best to accomplish all that?

Well, the record number of attendees to our annual event saw what we

came up with on full display as we completely REWIRED the entire event.

It was a full, fantastic virtual program, with many surprises!

Attendees were encouraged to embrace the unique event – not to just sit and watch – and they certainly did, taking part, actively engaging, visiting and interacting with our exhibitors and other attendees and exploring our virtual conference and all it had to offer.

Annual Conference Committee Chairman Michelle Gross, State Bank of Bement, was emcee for the event and said it best, “Throughout the pandemic – and even before – each of our banks has been trying to find ways to differentiate and lead in our communities. Well, this is your chance to build upon what your bank offers to your communities and customers.

We have the information, speakers, vendors and connections that your team has been looking for to make your bank better.”

Thank you for attending, sponsoring, exhibiting and engaging!

ANNUAL CONFERENCE

Thank you to our Annual Conference Committee Committee Chairman

Michelle Gross

State Bank of Bement

Nellie Andriyanova Bankers Healthcare Group, LLC

Chris Barrett Petefish, Skiles & Co.

Scott Bland First Neighbor Bank, N.A.

Sarah Dolan Quad City Bank and Trust Company

Save the Date • June 13-16, 2021 IBA Annual Conference Branson Convention Center • Branson, Missouri

Hayden Gardiner SouthernTrust Bank

Charles Griffin CIBC

Dawn Johnson Security Savings Bank

Will Justice Duncan-Williams, Inc.

John Martin Bank & Trust Company

Courtney Olson First Bank of Highland Park

Joshua Shofner First National Bank & Trust Company

Jack Vainisi Forest Park National Bank & Trust Company

July-August 2020 •

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ANNUAL CONFERENCE

IBA Chairman Brant Ahrens’ Inaugural Speech Excerpts

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ood afternoon – for those of you whom I have not had the pleasure of meeting, I am Brant Ahrens, President of Retail and Digital Banking at CIBC Bank USA. Seven years ago, when Linda Koch and Charie Zanck asked me if I would be interested in serving as the Chair of the Government Relations Committee, then join the Executive Committee, then serve as the Treasurer and eventually become the Board Chair, I never envisioned that I would be giving my welcome speech during a pandemic and during one of the nation’s most tragic episodes of protest, rioting and looting. In the name of “all men are created equal”– as Abraham Lincoln stated in the Gettysburg Address – we clearly have a long way to go to achieve the racial equality that Lincoln so bravely called for during our Civil War. I’d like us to just take a moment of silence for our country.

I was both flattered and humbled when I was asked by the Nominating Committee to Chair the Board of IBA. It was a decision that I gave tremendous consideration and contemplation– a decision that I did not take lightly.

Somewhere in that 7-year timeframe, Linda Koch informed the board that she would be retiring in June of 2020 – just when I would be coming on as chairman.

I wasn’t sure if I should take that personally, but I completely understood why Linda had chosen that path. I want to take a minute to personally thank Linda for all that she has done for the Illinois Bankers Association and for me personally. Linda has been an exceptional CEO for the past 20 years.

I have always been impressed with

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• July-August 2020

Linda’s leadership skills, her patience, her negotiating abilities and her sense of humor. This pandemic is another example of how nimble and flexible the IBA is under Linda’s direction. You see, we have a perfect storm here. I’m coming in as the new board chairman– as Linda is exiting stage left– and Randy Hultgren is coming in as the new President and CEO WHILE the economy

has come to a screeching halt and we have had to shelter in place.

All of the plans we had been making– the Annual Conference being one of them– got tossed out the window. Linda and Randy and all the creative minds at the IBA quickly changed course and put together this virtual conference to keep the traditions alive and to bring us all together.

ANNUAL CONFERENCE I am grateful for Linda’s leadership and friendship and I look forward to getting to know Randy better and helping to shape the game plan during my term as Chairman and for the years to come.

Let me also give a shout out to Kevin Olson who just completed his term as board chair. He is going to be a hard act to follow. Kevin was on course to beat Dan Watts’ bank visit record but was sidelined by the Governor’s Stay in Place Order. Because I love a challenge, I am going to try and beat Kevin’s record.

Randy and I may not be able to hop in the car and drive all over the state visiting bankers BUT we will find a way to connect through the use of technology.

In that spirit, Randy and I plan on developing a strategy to visit with banks throughout the state in the manner that makes the most sense - it may be on Zoom or in may be in person, but I know for a fact that it will happen.

I would like to take a quick step back and share with you how my love for banking began. I started my career doing exactly what I will be doing as Chairman of the IBA – driving the roads of downstate Illinois visiting bankers! Yes, I was that young correspondent banker knocking on your door pitching holding company loans, cash letter, and deposits.

This is where I learned the importance of the hometown bank and how these banks supported their communities and small businesses. After getting to know just about every small town in Illinois, about 9 years into my career, I got the break of a lifetime!

Ironically, however, I didn’t even know it, despite the fact that it hit me squarely between the eyes. And so I reluctantly went to work for Norm Bobins, the CEO of LaSalle Bank as his Chief of Staff. Boy was I in for a ride! Norm almost drowned me with a vast array of duties from 7 am to 7 pm every day. But I learned more in that position than any other in

my career and, if asked, I would do it again in a heartbeat. Norm has become a friend and an amazing mentor over the past 20 years and I want to thank him for his guidance, wisdom and true empathy that he has shown over the years! Mark Hoppe, I know you are out there somewhere... don’t worry you were a close 2nd. Mark taught me that if I wanted to beat him into the office I had to get there before the sun came up!

So, deep down, I am a downstate kid who just happened to make a career in the big City, which quite frankly I had only been to once prior to my interview at LaSalle Bank.

Having come from a small community in central Illinois, I had an idea that the local bank is often the heart of the community, but I didn’t really get it until I worked those long days as a correspondent banker. Whether it’s a mortgage to a firsttime home buyer or an SBA loan for a start-up business, we, as bankers, understand this phenomena, but the public often doesn’t quite get it.

The public wants and needs their bank, but it’s not until something goes wrong that they understand the importance of the hometown bank. And sometimes when things go wrong, the banks actually get blamed.

Throughout my career, the banking industry has weathered many storms – the 1998 Asian crisis, 2001 tech crisis, 2008 financial crisis, and now this one.

That said, I believe that during this current crisis, banks are having one of their finest moments.

The United States and the banking industry, in particular, have proven time and time again that they are resilient and adaptable. After the housing crisis,

the banking industry took a beating, but we worked so hard to rebuild our reputation and our shattered economy. I am confident that the banking industry will once again do its part to ensure that American society is given the assistance that it so desperately needs.

To quote one of my favorite country songs... “The house don’t fall when the bones are good.” During this pandemic, we have proven to ourselves, our regulators, Congress and, most importantly, to our customers that our house – collectively made up of each of our banks– has a solid foundation, sturdy beams and an indestructible roof. We should all be proud of what we did back in March, April and May to keep the financial system running. We figured out how to conduct business through driveups; how to schedule appointments so that customers could safely visit their safety deposit boxes; how to get loan documents notarized; and how to keep calm and bank on. No panic.

Just a lot of hard work and perseverance by our dedicated employees.

When Congress passed The CARES Act, banks were asked to participate in the Payroll Protection Program. $500 billion dollars-worth of PPP loans made their way to over 4 million small businesses in an effort to save jobs and often the business itself.

During my career, one of my proudest moments was watching the team at CIBC work 24 hours a day– nonstop– to develop a program that we could roll out immediately to our small business customers. We served all 2,800 clients who applied and made over $2.1 billion of small business loans.

I believe that during this current crisis, banks are having one of their finest moments.

July-August 2020 •

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ANNUAL CONFERENCE Meet Your New Illinois Bankers Association Chairman Christopher Brant Ahrens President of Retail and Digital Banking and Head of US Strategy CIBC Bank USA Birthplace: Charleston, IL Education: Bachelors of Finance; University of Illinois If I Weren’t in Banking: I would love to be playing professional baseball.

What are you most looking forward to as Chairman: I’m looking forward to meeting more bankers across the entire state.

I would like to be remembered one year from now for: Helping banks think through how to recover from the Covid-19 pandemic.

What’s your very first IBA memory?

The 1996 convention in Peoria where I met my ex-wife.

Best Advice I Ever Received: Always take the meeting! You never know what might come of it.

Who I admire the most: Norm Bobins One thing people don’t know about me: I have a tattoo on my left shoulder Favorite Vacation Spot: Sailing in the British Virgin Islands.

Still on my bucket list: Visiting the Far East Most interesting thing in my office: Wine Sports faves? St. Louis Cardinals Baseball – Fighting Illini Hoops and Football What do you do to de-stress? Read

Best Decision: Going to work for Norm Bobins as his chief of staff.

Most Recent Accomplishment: Setting up the Paycheck Protection Program for CIBC and funding 2,800 clients for $2.1 bln in loans.

Greatest Challenge in the Industry: Keeping up with the large banks from a technology perspective and developing young talent.

Best Advice for Young Bankers: Always take on a new challenge.

If a special project comes up, run toward it and excel at it. It will create opportunities.

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• July-August 2020

Family: Carson Reece Ahrens (17) and Alexis Katherine Ahrens (14)

Despite the challenges with the roll out of the program, the banking industry proved that we were up for the challenge and that we could work with one hand tied behind our backs, basically blindfolded, while taking a huge leap of faith. It was a combination of tremendous leadership and the utilization of just about every bank department to ensure the program ran smoothly and efficiently.

Our team also created an excellent communication strategy that kept management, the Board, all of our employees, and our clients fully informed.

I know in my heart of hearts that we helped a lot of businesses stay afloat by lending them their first tranche of money from the Payroll Protection Program.

And now we are in the middle of the Forgiveness period– doing the same thing for our clients all over again!

The theme of this year’s annual conference is Standing Tall. While Abraham Lincoln was our tallest president – at 6 feet 4 inches– he was truly tall in his ideas and his principles. If you watched the miniseries on Ulysses S. Grant, you experienced incredible examples of amazing leadership with Lincoln’s resolve and Grant’s determination to win the Civil War. And that is what we need for the banking industry to thrive... Leadership.

We work in the world’s greatest banking system due in large part to the efforts of President Lincoln. He is responsible for signing into law the National Currency Act, which created the national banking system and the Office of the Comptroller of the Currency as its supervisor. Lincoln had the foresight and the wisdom to create, and I quote, “a reliable and permanent influence in support of the national credit, and protect people against losses in the use of paper money.”

When the pandemic caused most of us to stop going into our offices and conducting business as usual, we kept the banking system running by finding the safest ways to serve our customers while

ANNUAL CONFERENCE keeping our employees – our frontline workers – safe. We did not experience panic because the safety nets had been built and they were there to protect our customers and the banking system.

While we, the banks, were able to keep paying our employees and assisting our customers, other industries could not operate under the new governmentimposed rules and, sadly, a lot of business have closed permanently and far too many people are now unemployed. It saddens me to think of all the mom and pop businesses that could not weather the storm. And then the riots and the looting started right when businesses were attempting to getting back to a semi-normal. Meanwhile, there is the threat that we will experience a second wave of COVID-19 in the fall.

What I can say is that we have used this pandemic to test our strength and the strength of our systems at each of our individual banks. It was not perfect. There were hiccups. But for the most part, we all made the necessary adjustments to keep our operations up and running while protecting our employees and our customers. We are reliable and we are permanent, thanks to Abraham Lincoln and his wisdom and courage.

As the Chairman of the Illinois Bankers Association, I am going to use my time in this position to champion banks and the positive contributions they make in every aspect of society and business. We should never again be vilified by consumers, small businesses, or large corporates. We finance the smallest to the largest and the economy would grind to a halt without us.

I look forward to meeting as many of you as I possibly can over the course of my term in whatever way will make the most sense. I am not sure when we will be able to safely have large gatherings again but, when we can all be back together, we will celebrate … we will celebrate Linda and her tenure at the IBA, we will celebrate our new CEO, Randy Hultgren, and we will celebrate each of you and your amazing institutions.

I am so very proud to be a banker and to be the Chairman of the Illinois Bankers Association. Together, all of us, will weather this crisis and come out on the other side stronger. Please join us a little later to have a virtual cocktail and toast Linda, Randy, the other new board members, and, of course, our incredible Illinois banking industry!!!

July-August 2020 •

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ANNUAL CONFERENCE

Meet Your Illinois Bankers Association Board of Directors Executive Committee

Chairman C. Brant Ahrens CIBC, Chicago

Chairman-Elect Michelle L. Gross State Bank of Bement

Vice Chairman William Gleason The Leaders Bank, Oak Brook

Treasurer Betsy Johnson Forreston State Bank

Region 1

Clark Delanois The Northern Trust Company, Chicago

Joan Heggen U.S. Bank, Chicago

Region 2

Gary S. Collins Old Second National Bank, Aurora

Rick M. Francois American Community Bank & Trust, Woodstock

Region 3

Member-at-Large Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville

Member-at-Large Anthony G. Nestler Hickory Point Bank and Trust Co., Decatur

Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville

Tyler Rouse First Federal Savings Bank of Champaign-Urbana

Region 4

Immediate Past Chairman Kevin L. Olson Grundy Bank, Morris

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Secretary Randy Hultgren IBA President and CEO Springfield

• July-August 2020

Tom Gihl INB, Springfield

Anthony G. Nestler Hickory Point Bank and Trust Co., Decatur

ANNUAL CONFERENCE

Region 5

At Large

T.J. Burge Community Partners Savings Bank, Salem

Richard J. Knebel The Bradford National Bank of Greenville

Dane Cleven Community Savings Bank, Chicago

Megan Collins Bank of America, Chicago

Jeff Fauver Catlin Bank

Quint Harmon Pioneer State Bank,

Earlville

James H. Huiskamp Blackhawk Bank and Trust, Milan

Richard J. Mahoney First Midwest Bank, Chicago

Rick R. Parks First National Bank of Waterloo

Pamela A. Sharar-Stoppel Wheaton Bank & Trust Co.

Matthew Smith First Mid Bank & Trust, Mattoon

Simon P. Yohanan First Bank of Highland Park

Andrew Butts Bank of Belleville (non-voting member)

At Large

James R. Hannon First Security Trust and Savings Bank, Elmwood Park

At Large

Steven F. Rosenbaum Hoyne Savings Bank, Chicago

Thank you to our Outgoing IBA Board Members Immediate Past Chairman Daniel P. Daly, SENB Bank, Moline

Martin J. Noll, Oak Park

Christopher P. Barton, Geneva

Daniel J. Hollowed, Cornerstone National Bank and Trust, Palatine

July-August 2020 •

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ANNUAL CONFERENCE

Congratulations to all of the exceptional banks and bankers who were recently honored at the IBA’s REWIRED Annual Conference!

Banker of the Year Thomas A. Broeckling, First National Bank of Steeleville (p. 25) Lifetime Achievement and Distinguished Bank Counsel Award Bruce Jay Baker, Illinois Bankers Association (p. 28) Community Service Awards u First Bank of Highland Park (Top) First Neighbor Bank, N.A. (Middle) Philo Exchange Bank (Bottom) Illinois Bankers PAC Bank of the Year Murphy-Wall State Bank and Trust Company Honorary Lifetime Membership Daniel P. Daly, SENB Bank q 50 Year Club Awards Frank Joy, Bradford National Bank Jeff Bowden, Illinois Bankers Association

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ANNUAL CONFERENCE

Thomas A. Broeckling Named Banker of the Year The announcement of our Banker of the Year award had a bit of a twist this year.

Due to the pandemic, we had to surprise our winner via Zoom. It was a fun experience, witnessed by members of the bank’s board, staff, family and the IBA team, as well as last year’s winner Tom Hough who presented the award. From all of us, congratulations, Tom! Well deserved!

Thomas A. Broeckling, President of the First National Bank of Steeleville, is the Illinois Bankers Association’s 2020 Banker of the Year. This is the 18th year for the award, and it is the highest honor the Illinois Bankers Association

can bestow on one of its members. It is presented annually to an individual whose dedication to excellence has most profoundly enhanced the banking industry.

Broeckling’s banking career spans more than 36 years. He has a long history of community involvement and achievement and has been very active with the IBA throughout the years. He regularly attends IBA events like Economic Investment Day, the Washington Visit, the Annual Conference and IBA golf outings, and he and his bank are long-time PAC contributors.

He is a past member of the IBA Board of Directors. In addition, he is a current member of the IBA’s Government Relations Committee and has served on the Annual Conference Committee as well as the Audit Committee.

He takes great pride in serving his community and currently serves as President of the Board of Directors for School District 63 and as Vice President

of HSHS St. Joseph’s Hospital Board. He has served on numerous other boards, including the Lehrter Park Board and Friends of St. Joseph’s Hospital Board, and he has been active in many other organizations, including the Damiansville Chamber of Commerce, Albers Jaycees and Albers Commercial Club.

During the COVID-19 pandemic, Broeckling has proven to be a true leader, going above and beyond and working closely with bank employees to ensure a smooth transition into multiple phases of emergency business procedures. He is dedicated to growing the careers of his bank employees through guidance and leadership, and, in 2016, he was instrumental in forming the bank’s first-ever Employee Engagement Committee with the goal of creating an environment that values and supports each employee and promotes a healthy organization through communication, involvement, respect, training and recognition.

July-August 2020 •

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ANNUAL CONFERENCE

Parting Address of Outgoing IBA Chairman Kevin L. Olson, Grundy Bank

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ost of you know me. But for those who don’t, I’m Kevin Olson, President, CEO and Chairman of the Grundy Bank located in Morris, Illinois.

We’re a $275 million bank located about 65 miles southwest of Chicago.

It’s truly been an honor to serve as your Chairman for the past year. I would like to thank all the IBA Board Members, Executive Committee Members, past Chairs, Linda and all the incredible IBA staff for their help and support over this past year and throughout my time serving on the Board.

I also want to thank my fellow employees, officers and directors at Grundy Bank for their support in allowing me to serve this past year as your Chairman and for the many years I’ve been active in the IBA and ABA. Without their support, my service would not have been possible. And to my loving wife Mary, thank you. She’s followed, or for

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• July-August 2019

those of you know Mary I should say she’s led me, on many of our IBA journeys as we’ve made friendships and memories that will last a lifetime.

One of my goals this past year was to raise the awareness of the Illinois Bankers PAC. Under the leadership of IBA PAC Board Chairman Tom Chamberlain from Iroquois Federal Savings and Loan in Danville and IBA Assistant Vice President Aimee Winebaugh, we had the most successful year in recent history raising nearly $350,000. But, we must not rest on our laurels. This is going to be an unusual year for campaigning and our friends who hold office at the federal, state and local levels need our support. So please, ask your Boards of Directors, your employees, and your officers to chip-in to the PAC so we can achieve the results we desire in the upcoming election.

Another goal of mine was to personally visit with as many Illinois banks

as possible. Chairman visits to Illinois banks are a tradition started by our last two Chairmen, Dan Watts and Dan Daly.

Mr. Watts holds the record with 60 visits, and it was my intention to exceed that amount. And Dan we would have, had not the pandemic put a halt to our travel, but we came close in that shortened time by visiting over 45 Illinois banks. And just recently, Linda, Randy Hultgren and I visited a few more via Zoom calls. But the number of banks isn’t what’s important.

What is important is that we visited banks of all shapes and sizes ranging in assets from $15 million to over $20 billion.

Getting a chance to visit with these bankers was a privilege and the highlight of my year. It was fun to listen to their approach to banking. And, while each approach was unique, they shared many similar concerns—shrinking margins, the search for funding sources, competition for loans, looking for new markets and all the regulatory and legislative issues we all face. The other thing they shared was passion-- they shared a passion for banking, they shared a passion to provide solutions for the needs of their customers and employees, and they shared this burning desire to enhance the well-being of the communities they served.

This burning passion to help could not have been more evident than during the roll-out of the SBA’s Paycheck Protection Program. As a state association chairman, I was invited by the American Bankers Association along with the State Execs, like Linda, and the ABA Board of Directors and key ABA committee members to sit in on a call with one of the Senators who authored the CARES Act. He was explaining Congress’ intent of the PPP, and that they knew rolling this out and getting cash into local businesses hands within a

ANNUAL CONFERENCE few weeks of the bill’s passage would be no easy task. They knew the SBA needed assistance and they knew that America’s banks would be the trusted partners they could rely upon. And, they were right. This state’s bankers, like bankers all around the country, jumped right in. We worked with a program that was changing minute by minute. We took a leap of faith that we could rely upon the good intentions of the Treasury Department and SBA so that our clients and communities could have the liquidity needed to keep businesses alive and their employees, who are our neighbors, on the payroll. Our bank, as I am sure all of yours have too, received many letters and acts of kindness in appreciation of the Herculean effort put in by all bank employees to make this a reality. My fellow bankers, congratulations on a job well done!

Linda and I also used these visits to promote industry unity. We visited IBA members, CBAI members, joint members and non-members. At each stop, we promoted the importance of unity in our industry among all bankers and trade groups. While we still have a long way to go, I am happy to see that IBA and CBAI could recently come together on a joint letter to Senator Richard Durbin and on the Joint Statement regarding Illinois financial institutions’ response to the Coronavirus pandemic. I hope these two acts will be the beginning of more unity within our industry.

Bank visits also turned us on to another issue Illinois bankers faced.

The second banker we visited, Dave Janota, retired President of First Secure Community Bank, expressed concerns about the Secretary of State’s attempt to collect alleged unpaid back franchise taxes. You remember that – for years, Illinois bank holding companies and other corporations have relied upon a longstanding treatment of stock certificates held out of state as property located outside Illinois for purposes of

the company’s franchise tax calculation.

We found out that a state employee, singlehandedly, decided to change this interpretation and began sending out demands to banks for not only the current year, but also for previous years’ alleged unpaid franchise taxes, plus interest and penalties. For some of our members, hundreds of thousands of dollars and in some cases even millions of dollars were being demanded. The IBA, led by Bruce Baker and his legal team, spent countless hours negotiating with the Secretary of State’s Office to restore its original treatment of stock certificates held out of state. We were successful, and the rollback saved Illinois banks tens of millions of dollars – once again proving to our members, and bankers throughout the state, the value of IBA membership.

Speaking of Bruce, he’ll be retiring from the IBA the end of this month. Bruce has been with the IBA for over 21 years and began as the IBA’s outside counsel going back to the ‘80s. Bruce is a leading expert on banking law in the State of Illinois and the nation. His contributions to the success of the IBA and to that of Illinois banks is enormous. I am sure all of you will join me in saying, Bruce, it’s been a privilege to know and work with you and we wish you the best in retirement.

Bruce has left us in good hands as he retires. He has hired and mentored an excellent staff and I look forward to working with Carolyn Settanni as our new Executive Vice President and General Counsel. Carolyn, congratulations!

Transition was another keyword at the IBA over the past 12 months. IBA staff made a successful move into our new location on the southwest side of Springfield. I know from comments I’ve heard, that staff is excited about their new digs and I’m sure all of us will look forward to the days that travel returns and we can all stop in for a visit.

Our biggest transition is the retirement of Linda Koch. Linda, I wish we could all

be together this week to give you the send-off you deserve. You are the face and spirit of the IBA. Your passion for the IBA and bankers of this state and across the nation is infectious to everyone you meet.

For thirty-one years Linda has served our industry. She started as a lobbyist and the contacts she made is benefitting her, and us, today. In January, 2001 she became our CEO. The IBA was in a sink or swim place at that time, and Linda, along with Bruce Baker’s help, dug in and made the IBA the world-class operation it is today.

Linda, Mary and I along with the all the bankers and their spouses of this state, and nation, wish you and Bernie all the best as you enter the next stage of your lives. Thank you for all you’ve done for us.

The final piece in our transition puzzle is our incoming President and CEO Randy Hultgren. Last summer I shared with you the members of our search committee: Brant Aherns, Betsy Johnson, Charie Zank, Gary Hemmer, Stan Jenks, Dave Kuhl and me. The committee, along with our search firm, Lochlin Partners, scoured the nation. After lengthy consideration the committee’s unanimous choice was Randy Hultgren.

Randy comes to us with a passion for banking and an expertise on the issues we face. He served four terms in the US House of Representatives serving on the Financial Services Committee and was a key player in earning bipartisan support for SB 2155, our industry’s most recent regulatory relief bill. Prior to that he served in the Illinois State Legislature. He has also worked in finance, banking and law. Randy has a strong knowledge of our issues and is a familiar face to Illinois bankers. Randy, welcome to the IBA! Last year I closed with the words that our IBA is alive and well. It was then and it is now. Brant, it’s my pleasure to turn over to your leadership a very strong and vibrant IBA. I thank you all for allowing me to have this incredible experience as your Chairman of the IBA.

July-August 2019 •

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ANNUAL CONFERENCE

Baker Honored with Lifetime Achievement and Distinguished Bank Counsel Award Congratulations to Bruce Baker, longtime EVP and General Counsel for the IBA, on his retirement at the end of June. Bruce was awarded the Distinguished Bank Counsel and Lifetime Achievement Award during the Annual Conference. He was commended for his service throughout the event, culminating with a special tribute by the IBA’s Linda Koch and John Freechack with Barack Ferrazzano Kirschbaum & Nagelberg LLP.

Distinguished Bank Counsel & Lifetime Achievement Award 2020 - Bruce Jay Baker As a prominent attorney who throughout his forty-one year career in law has a proven commitment to the highest standards of professionalism; As one whose tremendous expertise and insights into the laws and regulations governing the banking industry have been instrumental in guiding countless bankers, advancing the banking industry in Illinois, and supporting and leading the Illinois Bankers Association; As Executive Vice President and General Counsel of the Illinois Bankers Association and the 1991 and 1997 recipient of its Distinguished Bank Counsel Award, whose leadership has been instrumental in developing the strongest Bank Counsel Conference across the country, and the most comprehensive compliance program for thousands of Illinois bankers; As Of Counsel to the law firm of Barack Ferrazzano Kirschbaum & Nagelberg LLP in Chicago, and former partner in the law firm of Schiff Hardin & Waite, General Counsel to the then Illinois Commissioner of Banks and Trust Companies, and Senior Counsel at Dean Witter Financial Services Group and Discover Card; As a highly acclaimed attorney who received his Juris Doctor from Washington University School of Law in 1979, who attended the University of Leeds, England, and the University of Illinois, Urbana, to obtain his B.S.B.A. degree in 1976; In commendation of his tireless labor and exceptional counsel to the Illinois Bankers Association and the many bankers and their financial institutions in Illinois.

The Illinois Bankers Association and its Board of Directors honors his many contributions and is honored to present this DISTINGUISHED BANK COUNSEL AND LIFETIME ACHIEVEMENT AWARD. ON TUESDAY, THE SIXTEENTH DAY OF JUNE, TWO THOUSAND AND TWENTY.

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ANNUAL CONFERENCE

Thank you to our Sponsors and Marketplace Exhibitors The IBA couldn’t have had such a successful event without the support of our sponsors and exhibitors! We can’t thank you all enough for sticking with us as we transitioned to a virtual event.

Exhibitors • Allied Solutions, LLC • Ameren Illinois Energy Effeciency Programs • APPI Energy – Preferred Vendor • ATM Solutions, Inc. • Bankers' Bank • Bankers Healthcare Group (BHG) • BankMarketingCenter.com – Preferred Vendor • BankTalentHQ – Preferred Vendor • Barack Ferrazzano • BITS • BOK Financial Institutional Advisors • EPIC Retirement Plan Services – Preferred Vendor • Federal Home Loan Bank of Chicago • FIPCO • Floodplain Consultants, Inc. – Preferred Vendor • Graduate School of Banking at UW - Madison • Illinois Bankers Circuit Box • Investors Title – Preferred Vendor • Liquid Capital – Preferred Vendor • LKCS • Main Street • Midwest Independent Bank • nCino • NFP • Northland Securities, Inc. • Office Depot – Preferred Vendor • Performance Trust • Plansmith • Plante Moran • Promontory Interfinancial Network, LLC • SB Value Partners • SBS CyberSecurity – Preferred Vendor • SomerCor • SPRY • Strategic Resource Management – Preferred Vendor • The Consultants • UFS, LLC – Preferred Vendor • United Bankers’ Bank • Voluforms • Welch Systems, Inc. • Windsor Mortgage Solutions

July-August 2020 •

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Recent Legal Changes for Retirement Plans and IRAs

By Sarah Sise, Partner, Lauren Schuster, Associate, and Gregory Chriss, Associate, Armstrong Teasdale LLP

In the last six months, two new significant laws have been enacted that impact employer-sponsored retirement plans and individual retirement accounts (IRAs). Most recently, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted in response to the COVID-19 pandemic and includes several provisions that affect employer-sponsored retirement plans and IRAs. In addition, late in 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law as part of the year-end consolidated spending bills, and was intended to expand benefits for retirement savings and provide administrative improvements.

Banks that sponsor retirement plans or offer IRAs in 2020 should be aware of the CARES Act and SECURE Act changes to ERISA and the Internal Revenue Code as outlined below.

CARES Act Relief Available under Retirement Plans. u Coronavirus-Related Distributions

(available until Dec. 31, 2020). The CARES Act permits CoronavirusRelated Distributions (CRDs) from retirement plans or IRAs for an eligible individual who (1) has been diagnosed with COVID-19 with a test approved by the Centers for Disease Control and Prevention (CDC), (2) has a spouse or dependent who was diagnosed with COVID-19 with a CDCapproved test, or (3) experienced

“adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease…” Total distributions treated as CRDs cannot exceed (1) $100,000 or (2) 100% of the participant or IRA owner’s account balance. Such a distribution offers certain tax benefits, including exemption from the 10% early withdrawal tax, the ability to be included in income over three years, and the ability to repay the distribution to the retirement plan or IRA within three years.

u Increased Plan Loan Limits and Extended Repayment Period (available until Dec. 31, 2020).

The CARES Act also increases the limits on loans from employersponsored retirement plans from $50,000 to $100,000, and the benefit percentage limit from 50% to 100% of the present value of the employee’s vested benefit. In addition, any outstanding plan loans with payments due from March 27, 2020, to Dec. 31, 2020, may be delayed one year. The increase in plan loans and the extended loan repayment period are only available to qualified individuals who have a coronavirusrelated diagnosis based on a CDC-approved test, a spouse or dependent who was diagnosed based on a CDC-approved test, or certain adverse financial consequences due to COVID-19. u Required Minimum Distributions (RMDs) Waived for 2020. Employersponsored retirement plans and IRAs are typically required to make minimum distributions after a participant or IRA owner reaches a certain age (as discussed in more detail below). The RMD requirements do not apply for calendar year 2020.

SECURE Act Notable Retirement Plan Changes Effective in 2020. u RMD changes (effective Jan. 1,

2020). w Increased RMD Age from 70½ to 72. Under prior law, an employer-sponsored retirement plan was required to begin distributions to a non-actively employed participant by April 1 of the year after the participant reaches age 70½. Similarly, under prior law, the owner of a traditional IRA was required to begin distributions by April 1 of the year after reaching age 70½.

For participants and traditional IRA owners who reach age 70½ on or after Jan. 1, 2020, the

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• July-August 2019

SECURE Act delays when the individual must begin receiving required minimum distributions from age 70½ to 72. w Limits “Stretch” RMDs. The SECURE Act makes changes to certain inherited accounts. It requires certain non-spouse designated beneficiaries to withdraw the entire inherited interest within 10 years after the participant’s death. Notably, this change will not apply to surviving spouses, a minor child, a disabled or chronically ill person, or any other designated beneficiary who is not more than 10 years younger than the participant. u Repeal of Maximum Age for Traditional IRAs. Under prior law, an individual who had attained age 70½ by the close of a year was not permitted to make a tax-deductible contribution to a traditional IRA. Beginning Jan. 1, 2020, the SECURE Act repealed this maximum age and permits tax-deductible contributions to a traditional IRA after age 70½. u No Retirement Plan Loans Through a Credit Card. Under existing law, employer-sponsored retirement plans may provide loans to participants. Any retirement plan loans to participants made on or after Dec. 20, 2019, through the use of a credit card (or similar arrangement) will be deemed a distribution. If an employer offers this type of arrangement in a retirement plan, the employer should take a fresh look at the arrangement as soon as possible. u Optional Birth or Adoption Distributions. Under existing law, a distribution from a retirement plan or IRA may be subject to a 10% additional tax (early withdrawal tax) if made before the participant or IRA owner reaches age 59½. Beginning Jan. 1, 2020, the SECURE Act permits a penalty-free distribution of up to $5,000 for qualified child

birth or adoption expenses. Such distributions will not be subject to the 10% early withdrawal tax and are available to participants of all ages. However, before offering this type of distribution in an employersponsored retirement plan, the employer should consider whether the distribution will become a protected benefit.

Notable SECURE Act Changes after 2020. u Long-Term, Part-Time Employee

Eligibility. For plan years beginning after Dec. 31, 2020, long-term, part-time workers who work at least 500 hours a year, for at least three consecutive years, and who are age 21 by the end of the three years, must be offered the opportunity to contribute to their employer’s plan. However, employers may exclude from nondiscrimination and coverage testing employees who become eligible through this provision. u Lifetime Income Disclosures. w Pension benefit statements will need to include disclosures about lifetime income. w More details, as well as a model lifetime income disclosure, are expected from the Department of Labor in 2020.

Other Optional and Miscellaneous SECURE Act Retirement Plan Changes. u Increases automatic escalation cap

for those automatically enrolled in certain qualified automatic contribution arrangement safe harbor plans from 10% to 15% of compensation. u Eliminates the annual safe harbor notice requirement for a safe harbor 401(k) plan that provides a nonelective contribution and meets certain conditions. u Creates a new, open, multiple employer (pooled) option for employer retirement plans to potentially reduce fiduciary exposure.

u Provides relief for closed defined benefit plans from certain nondiscrimination testing. u Permits in-service distributions at age 59½ for defined benefit pension and money purchase pension plans (reduced from age 62). u Consolidates annual reporting obligations on Forms 5500 for similar plans. u Increases penalties for failing to file tax returns, Forms 5500, annual registration statement, and other filing penalties. u Provides additional relief and incentives for small employers.

Plan Amendment Deadlines.

Employers who sponsor a retirement plan should be aware of the following plan amendment deadlines for the CARES Act and SECURE Act: u By the last day of the plan year that

begins in 2022, for most employers, plan documents must be amended to reflect the CARES Act and SECURE Act changes. u By the last day of the plan year that begins in 2024, governmental and collectively bargained plans must be amended to reflect the CARES Act and SECURE Act changes.

Next Steps. It’s important to be aware of the CARES Act and SECURE Act changes for employer-sponsored retirement plans and IRAs and to implement the various changes required or available in 2020. In addition, it’s not too early to start planning for changes effective in 2021 and beyond that affect employer-sponsored retirement plans and IRAs. About the authors: Sarah Sise, Partner, Armstrong Teasdale LLP, may be reached at ssise@armstrongteasdale. com, 314.342.8062; Lauren Schuster, Associate, Armstrong Teasdale LLP may be reached at lschuster@atllp.com, 314.342.8011; and Gregory Chriss, Associate, Armstrong Teasdale LLP may be reached at gchriss@atllp.com, 314.342.8012. IBA Associate Member

July-August 2019 •

• 31 •

How does the COVID-19 pandemic affect your recent risk assessment?

By Robert Bondy, Partner, Sherrie Krowczyk-Mendoza, Partner, and Scott Phillips, Senior Manager, Plante Moran

Chances are you recently finished your risk assessment for the year when – all of a sudden – the COVID-19 national emergency hit, forcing people and businesses to take an unwanted pause. Financial institutions everywhere are experiencing the same issues: the unknown economic impact, immediate operational changes, unprecedented lending demands, and unknown portfolio adjustments. Additionally, government programs have created a change in your risk environment that warrants attention.

Amid a “hopeful” reopening of the economy, as your institution turns its attention toward a new way of operating, it’s critical to consider the following categories and the impact they could have on your recently completed risk assessments. Even if you’re not changing your risk assessment, we recommend documenting that you’ve considered these areas.

New government ending programs

• Compliance with terms allowing for

The newly formed loan programs, including the Paycheck Protection Program and Main Street Lending Facility, bring with them increased risk. Considering the loan volume you’ve seen in the last eight weeks is typically what you’d see in a normal year, do you feel comfortable with how you’re evaluating these items: • Eligibility of prospective borrowers • Internal controls around new loans, from loan initiations, underwriting, decisioning, commitments to fund loans and loan boarding • Implementing new forms and related documentation

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• July-August 2019

loan forgiveness

• Accounting for the costs and

income associated with these programs • Tracking and reporting of these loan types to loan committee and the board • Continued regulatory compliance requirements on a very stressed and time-sensitive operational team • Fair lending implications relative to loan decisioning • Monitoring these loans to ensure that terms are all within the established guidelines of the SBA and Department of Treasury

Changes in the operating environment

With the pandemic causing businesses to institute sudden operational changes in people, processes, or products, you need to consider what updates are necessary to maintain strong internal controls over financial reporting. Examples include: a reduced on-site workforce, remote workat-home arrangements, reliance on more paperless documentation, and virtual preparation and attendance of internal and board-level committee meetings.

Since these arrangements may continue indefinitely, consider reviewing the following list sooner than later: • Impact of operational staff working from home • Adequacy of loan imaging or paperless documentation • Level and trends of loan closings with policy exceptions • Number of days to post-close review • Branch monitoring activities (cash levels) • Approval process for wire transfer requests • Segregation of duties pertaining to changes to customer accounts • Segregation of duties around new account openings and obtaining required documentation

• Level of regulatory compliance

exceptions (example, review of HMDA LAR) • Monitoring of employee production and related role expectations (are these documented?)

• Redeploying employees from closed offices to a productive backoffice position to assist stressed departments (i.e., mortgage department stress due to increased production volume)

Assisting customers during the pandemic

Regulators issued guidance on the treatment of requests for loan modifications early in the onset of the pandemic. It’s likely that your loan staff have been busy processing government loan applications, responding to requests from customers to modify current loan agreements, and monitoring forbearance guidance on sold mortgage loans, especially in light of falling interest rates. Understanding the process your institution implemented to ensure consistency and safety in the risk profile is an important baseline as you monitor asset quality through 2020 and beyond.

Do your executive management team, business line managers, and board of directors understand the following as they relate to monitoring loan modifications and loan forbearances? Has your lending portfolio softened, which could be an early indicator of the impact of these economic hardships or even prepandemic signs of economic hardships?

• Identification of pre-pandemic signs of borrower economic hardships (i.e., past due or inability to pay for real estate taxes during the prepandemic time frame) • Formal program to accommodate customer requests to modify loans due to the economic impact of COVID-19 • Understanding of Section 4013 of the CARES Act and the consideration of TDR classification • Understanding Interagency Statements to exclude modifications (other than Section 4013 modifications) from TDR classification • Understanding the impact of changes to terms with serviced mortgage loans

Prudent pandemic enhanced risk management considerations

With all of these new programs available to help your customers and to position your institution to support those in the community, there’s an underlying economic impact to your institution.

We recommend sound corporate governance to ensure that your executive management team, along with your board of directors, is managing and monitoring risk management on a regular basis, as the risk changes every day. Consider the following for prudent pandemic enhanced risk monitoring: • How are you monitoring the temporary relief programs that are now in place? Is there regular internal and board-level reporting?

What types of “dashboard” or “snapshot” information are you including to properly ensure you are managing and monitoring related risks?

• How are you planning on dealing with borrowers requesting temporary relief, that you have some indicators this temporary relief won’t solve their longer-term issues?

• Have you considered what impact the pandemic has on your allowance for loan loss calculation? As it may be too early for financial impact to show, what changes are you considering to your qualitative factors and how are you documenting them?

• Have you considered the risks inherent with information technology and cybersecurity, considering the remote working arrangements, increased loan volume, and other immediate changes?

Audit and monitoring related considerations

With all of these heightened risk issues, your internal audit, regulatory compliance, and loan review functions will look different. Their risk assessments, especially as time passes through this pandemic, will more than likely change.

And, with the remote environment, let’s not forget about the impact on information technology-related audits.

Although not exhaustive, here are a few things your audit and monitoring functions should consider.

• Has your internal auditor enhanced

their internal audit schedule, considering the remote working environment, the time stress on the operations department, and other changes?

• Has your compliance officer enhanced their compliance monitoring, especially considering the potential for impact on regulatory reporting such as the HMDA LAR and human-related errors? Should your compliance officer revisit the current monitoring schedule to a more tailored approach for this current pandemic and its impact?

• Have you considered potential changes in your loan review scopes to identify early softening and/or potential for post-pandemic-related financial concerns?

• Have you considered, in the near term, limited scope testing of the loan programs to ensure that loan terms and related documentation are in compliance with guidelines established by the SBA and Department of Treasury? Early self-identification will allow you to identify potential options to limit any later challenges.

• Have you continued to monitor your asset/liability model for all of the sudden changes to your institution, and the potential for longer-term impact on decisions you may make and/or may need to discuss with your board?

Putting it all together

When you update your risk assessment or document these pandemic-related issues and their potential impact, you’ll likely force your executive management team and business-line managers to consider these items as well and, potentially, to identify an ongoing need for internal changes. That decision could create the risk monitoring instrument that your board should be mandating to allow it to manage and monitor risk in the future.

About the authors: Robert Bondy is a Partner, Sherrie Krowczyk-Mendoza is a Partner, and Scott Phillips is a Senior Manager, with Plante Moran. Visit Plante Moran at https://www.plantemoran.com/ IBA Associate Member

July-August 2020 •

• 33 •

FDIC Expectations on Ag Lending

By Micheal Holdren, Iron Comps by Tractor Zoom

In January, the FDIC released a Financial Institution Letter (FIL) titled “Prudent Management of Agricultural Lending During Economic Cycles.” www.fdic.gov/ news/news/financial/2020/ fil20005a.pdf It’s no surprise that the continued pressures facing the agricultural economy are worthy of regulatory concern and rightfully so. Farm incomes have stabilized in recent years but remain well below the averages over the last decade with many farmers struggling to continue their operations.

One might even suggest, we have fallen into a new normal.

This isn’t the first time the FDIC has issued guidance on Agricultural Lending. In fact, this FIL replaces and rescinds FIL-39-2014, Prudent Management of Agricultural Credits Through Economic Cycles, dated July 16, 2014, which replaced a similar FIL from 2010. You get the point.

During my time in banking, I always approached these publications as an expectation for the next 12-24 month examination cycle.

From that perspective, it’s important to know what new information the FDIC is communicating with the updated FIL. For the most part, when comparing the 2014 and 2020 FILs side by side, much of the information is the same, apart from a few additional paragraphs in the most recent publication.

First, the FDIC added the following language. “…cash flow margins for agricultural borrowers have become increasingly pressured by changes in supply and demand factors, poor weather conditions, and agricultural policy factors. Row crop operating expenses have risen while soybean, corn, and wheat prices have fallen.

Livestock sectors have also been challenged, especially dairy farming and cattle feeding. Farm working capital levels have deteriorated, debt balances have increased, and debt repayment capacity has constricted.

“Despite the difficult agricultural environment, farm real estate and equipment values have remained fairly resilient. Restructuring carryover debt has been a reasonable approach for borrowers with strong equity positions. However, given strained

cash flow, debt service has been challenging for borrowers with even moderate levels of term indebtedness.

As headwinds facing the agricultural economy persist, insured institutions must be prepared for agricultural borrowers to face financial challenges by employing appropriate governance, risk management, underwriting, and credit administration practices.”

The FDIC didn’t go out on a limb here. They acknowledged what we all know. Cash flows are break even, and the solution for shortfalls has largely been to restructure against existing equity positions, particularly real estate. However, I would draw your attention to the last sentence which, from my perspective, provides a caveat into what the FDIC is expecting on a go forward basis. The FDIC is looking for a structured, long-term approach to troubled relationships. Consider the following paragraph from the FIL. “Managing risk over the life of a loan includes: carefully documenting all lien perfections and other loan instruments; closely overseeing sale proceeds; conducting timely, independent collateral inspections; and developing a process for monitoring collateral values. A continuous credit grading program can help management identify credit risk early and take preemptive steps to prevent further deterioration.

Assigning initial credit grades, ensuring timely grade changes, and assessing the adequacy of the Allowance for Loan and Lease Losses in light of grade changes are vital.”

The FDIC is giving you the playbook for what they expect to see for documentation on struggling ag relationships.

• Documentation of lien perfections, • Oversight of sales proceeds, • Independent collateral inspections, • A monitoring process for collateral values, and • An established and ongoing grading system.

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• July-August 2019

While relatively basic, this playbook can be difficult to implement consistently across troubled relationships. After all, some struggling borrowers may have been prime borrowers not that long ago, and implementation of these risk mitigating strategies can feel like a breach of trust between the lender and the borrower.

This elevates the importance of ongoing conversations between the lender and borrower concerning operating results and overall performance expectations over the long-term. Be sure these discussions are happening, especially with your less seasoned lenders who may not have experience with difficult conversations.

Lastly, the FIL discusses, in detail, the FDIC’s willingness to accept modifications of loans, including loan

terms, with or without concessions.

Especially in circumstances where modified terms allow for a borrower to maintain positive cash flow, weather adverse conditions and stabilize their operations. In fact, the FDIC goes out of their way by stating, “Further, an institution that implements prudent loan workout arrangements after performing a comprehensive review of a borrower’s financial condition will not be subject to criticism for engaging in these efforts, even if the restructured loans have weaknesses that result in adverse classification.”

In other words, you know your borrowers, which ones you want to work with and which ones you want to

work out. Remember, a classified loan is an internal measure. It is not public information. Your risk rating system should be established, implemented and reported in such a way that those charged with governance roles can be informed of management’s assessment of risk and strategic direction.

However, don’t let a classified risk rating or Troubled Debt Restructuring classification get in the way of what is best for the bank and the borrower. You know your customers best. That is the core of community banking.

About the Author: Michael Holdren, content contributor for Iron Comps (www.

IronComps.com), is a former bank CFO turned CPA helping banks strategically with the finance of banking, audits, loan review and accounting. IBA Associate Member

July-August 2019 •

• 35 •

NEWS & NOTES

IBA Team Announcements

The IBA is excited to announce several recent promotions and other staff changes.

Law Department

the Chicago-Kent College of Law in 2010, where she was the Executive Articles Editor of the law review, and she received her undergraduate degree from the University of North Carolina - Chapel Hill.

She began her law career at a small law firm focused on business organizational, transactional, and real estate matters.

Congratulations to Bruce Jay Baker, longtime EVP and General Counsel for the IBA, on his retirement at the end of June. Throughout his 41 year career in law, he has shown proven commitment to the highest standards of professionalism, and his tremendous expertise and insights into the laws and regulations governing the banking industry have been instrumental in guiding countless bankers, advancing the banking industry in Illinois, and supporting and leading the Illinois Bankers Association.

Carolyn Settanni, who is in her tenth year as a member of the IBA’s Law Department, will succeed Bruce and has been named Executive Vice President and General Counsel. Carolyn received her law degree from

• 36 •

In addition, Michael Schasane has joined the Law Department. Michael graduated summa cum laude from the University of Illinois College of Law in 2019 and recently completed a legal fellowship with the UIC Office of University Counsel.

During law school, he was a member of the University of Illinois Law Review, received numerous awards, and completed internships with the Illinois Attorney General’s office and Gold Coast Bank.

Please join us in welcoming Michael to the IBA team!

Executive Administration

Randy Hultgren completed the transition to IBA President and CEO on July 1, taking over for longtime President and CEO Linda Koch, who

• July-August 2020

retired from that position at the end of June. As previously reported, Randy joined the IBA team in early April. An Illinois native, he has served in a number of elected offices for over 24 years, most recently in the United States House of Representatives from 2011-2019, representing the 14th Congressional District of Illinois. In addition to his public service, Randy has worked in finance, banking and law.

Bank and Partner Relations

Jeff Bowden, who has served as the IBA’s Senior Banking Advisor for the past six years has retired. He began his career in banking in 1970 at Louis Joliet Bank and Trust Company – later known as First American Bank. He has had numerous

positions over the years, including with Bank of America/Merrill Lynch and LaSalle Bank. We thank Jeff for his dedication to the industry and for the example he set for countless aspiring bankers. So many people have benefited from his leadership, vision, and the many personal and professional contributions he has made over the years. Jeff was honored with the IBA’s 50 Year Club Award at this year’s Annual Conference.

We wish him all the best!

While Linda Koch has retired as President and CEO, we are very happy to announce that she will be staying on with the IBA in a part-time capacity as Member/Business Relations Manager.

In her new role, she will continue her service to the IBA by taking Jeff Bowden’s place to focus on membership outreach in northern Illinois, and she also looks forward to promoting the many value-added benefits of the IBA as well as presenting business and insurance opportunities to our members.

The IBA is here for you

Online Training for You and Your Employees

A

lthough the IBA has suspended all in-person banker events for the time being, we have been working hard to provide you with the training you need in a virtual format. Please check our Calendar of Events www.ilbanker.com/Events/ Calendar-of-Events frequently for any changes. In the meantime, we have provided you with many other online training resources. For any questions regarding IBA Education and Training, please connect with us at education@ilbanker.com.

TOTAL TRAINING SOLUTIONS (TTS)

TTS offers live and on-demand webinars ranging from customer service to sales to underwriting – and everything in between.

• NOTE: 25% off all recorded webinars with the use of discount code WebinarOD25 at checkout • Extended OnDemand access period for all ‘Live Plus Five (Days)’ registrants to 60 days (versus 5 business days).

• Waived the $75 per location fee for additional locations. > View Calendar: www.bankwebinars.com/ ?idaff=17146 > Subscriptions: www.bankwebinars.com/ webinar/details/2520)

GRADUATE SCHOOL OF BANKING

These programs are designed specifically for financial professionals and delivered by some of today’s top industry experts. Live and On-Demand programs are available and include one connection to the live online seminar presentation and handouts. > View Calendar: www.gsb.org/onlineseminars/overview.php

AMERICAN BANKERS ASSOCIATION

Take advantage of this comprehensive source for training and education available through the Illinois Bankers, your local ABA training provider. From onboarding to early management to specialized lines of business, you can get ahead—fast. Enroll today and get ready to learn, advance and lead.

REMINDER IBA members receive ABA member rates on training courses. > Details: www.ilbanker.com/ Education-Events/ABA-Training

SBS INSTITUTE CERTIFICATIONS

The SBS Institute is uniquely designed to serve the banking industry by providing cyber education that will prepare students and their financial institutions for cybersecurity threats and regulations. Each course is available online and is tailored to specific roles within an institution, creating a flexible and targeted learning experience. > Details: www.ilbanker.com/EducationEvents/Online-Training)

July-August 2019 •

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ON THE MOVE Bettendorf, Iowa QUAD CITY BANK & TRUST

Ekizian

Anderson

Executive vice president and chief relationship officer Laura “Divot” Ekizian will be promoted to president, reporting to John H. Anderson, QCBT CEO and QCR Holdings, Inc. chief deposit officer.

Under Anderson’s leadership, QCBT has nearly tripled in size over the past twelve years.

Bloomington, Minnesota UNITED BANKERS’ BANCORPORATION, INC., M. Johnson

Hillard

C. Johnson

King

United Bankers’ Bancorporation, Inc., announced the appointments of Mike Johnson and Curt Johnson to United Bankers’ Bancorporation, Inc. (UBBI) and United Bankers’ Bank (UBB) Board of Directors. Mike Johnson is director of graduate studies for the Master of Science in Security Technologies degree program at the Technological Leadership Institute (TLI). Curt Johnson is president and CEO of Cherokee Bank in Cherokee, Iowa.

Chatham

UNITED COMMUNITY BANK

The bank welcomes Mallorie Lohman as a multimedia design and marketing specialist; David Gardner as a multimedia design and marketing specialist; and Zachary Goriszewski as a marketing support specialist.

Henna

Chandler

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Houston

Dobrinick

• July-August 2020

Chicago

FIFTH THIRD BANK Fifth Third Bank, National Association, announced that Mitchell Feiger, chairman and CEO, retired on May 29. Succeeding him as the leader of the Chicago region is Mark Hoppe, who had been named to the post of regional president in July 2019. Feiger had served in his current role since the merger of Fifth Third Bank and MB Financial in March 2019. He previously had served as president and CEO of MB

Financial. Hoppe’s broad management capabilities include having served in executive leadership roles in banking, including as president of MB Financial Bank, chief executive officer of Taylor Capital and president, CEO and a director of Cole Taylor Bank. His experience in commercial banking also includes more than 27 years with LaSalle Bank, N.A., where, among other responsibilities, he served as CEO of LaSalle Bank Midwest in Michigan.

He is a past chairman of the Illinois Bankers Association and past president of the Bankers Club of Chicago.

Clinton

FIRST NATIONAL BANK AND TRUST First National Bank and Trust recently hired Rhett Hillard to be a mortgage loan specialist on their team.

Davenport, Iowa QUAD CITY BANK & TRUST

Quad City Bank & Trust is proud to welcome Kristin King as Vice President, Correspondent Banking.

Before joining the Correspondent Banking team at Quad City Bank & Trust, Kristin’s career began with QCR Holdings, Inc in 2009 as vice president – Small Business Administration (SBA) lending manager.

Greenville

BRADFORD NATIONAL BANK Bradford National Bank is excited to introduce Bradford Wealth Management, its rebranded investment services division aimed at providing its customers and communities with the investment and financial planning services they need at a hometown institution they trust.

Financial Advisor Nate Henna will lead the division.

Madison, Wisconsin

Springfield

Bankers’ Bank welcomes Jim Houston as vice president, correspondent banker. He works in the Illinois office as a regional correspondent banker supporting customer relationships throughout central Illinois.

Steve Etheridge has come out of retirement and joined Hickory Point Bank to help serve local small businesses and nonprofit companies with Paycheck Protection Program loans.

BANKERS’ BANK

Pinckneyville

MURPHY-WALL STATE BANK AND TRUST COMPANY

Brian Chandler and Charles Dobrinick have both been elevated to the office of executive vice president at Murphy-Wall State Bank and Trust Company. This announcement was made following the bank’s annual board meeting in March. Chandler has 33 years of banking experience, all at Murphy-Wall State Bank. Dobrinick began his banking career in 1982.

Rochester

ROCHESTER STATE BANK

Kim Kleinschmidt will be retiring in June after 43 years in banking, having served as CEO of Rochester State Bank for the past six years. Kleinschmidt’s 43-year banking career included four years on the Board of Directors of the Illinois Bankers’ Association, and four years teaching at the IBA Ag Lending School. He served as CEO for 27 years at several community banks in central Illinois making his final move to the Rochester State Bank in 2014.

Additionally, Gary Bohner will be promoted to CEO. Chris Walcher will move into the executive vice president role, and Jack Martin will assume the duties of assistant vice president of lending.

Rockford

BLACKHAWK BANK

Blackhawk Bank recently hired Lori Diaz as senior vice president, cash management, and Amy Smith as cash management administrator.

HICKORY POINT BANK

Kleinschmidt

Bohner

Walcher

Martin

Day

Gilchrese

Collins

Knop

SECURITY BANK, N.A.

Security Bank welcomes Kenton Day, CPA, as chief financial officer; Tammy Gilchrese, as AVP, loan servicing; Chris Willoughby as deposit operations manager; and Emily Collins, AVP, BSA and compliance officer.

Steeleville

FIRST NATIONAL BANK OF STEELEVILLE First National Bank of Steeleville has announced that vice president, Kenneth Knop, retired from the bank on March 31, 2020. Knop began his career in banking in 1973, at First State Bank of Campbell Hill as cashier, and progressed through the organization to become vice president and loan officer. In 1989, he joined First National Bank of Steeleville as assistant vice president and loan officer. Knop was promoted to vice president in 1998. During his nearly 31-year career at FNB, Knop served as the bank’s primary agriculture lender. As a farm owner himself, Knop had first-hand knowledge of the challenges of today’s farmer. He was also a representative of the bank at the Farm Bureau, Randolph County 4-H, and Randolph County and Jackson County Soil and Water Conservation Districts.

First National Bank of Steeleville also announced that Nathan P. Schatte has joined the bank as an agriculture and consumer loan officer.

Schatte joins FNB with twenty years of experience in the agriculture industry and nearly six years of experience in ag lending.

Schatte

July-August 2019 •

• 39 •

WELCOME

ASSOCIATE MEMBER NEWS Abrigo Abrigo announced upgrades to BAM+, its financial crimes detection software, including the addition of five transparent artificial intelligence/machine learning anti-money laundering (AML) scenarios and the ability to direct file Suspicious Activity Report (SAR) and Currency Transaction Report (CTR) batches to FinCEN. Abrigo developed each enhancement to enable users to work more efficiently while handling fewer false positives so they can focus on truly suspicious activity. For more information, visit abrigo. com.

Cinnaire Cinnaire has announced the promotion of Ryan Robinson to executive vice president, Operations and Corporate Risk Management. Affordable housing industry veteran Mike Witt has joined Cinnaire as vice president, Asset Management.

In these leadership positions, Ryan and Mike will each play a key role in supporting Cinnaire’s strategic plan while building on the organization’s strong history in the affordable housing and community development industry.

Neocova Julie Stackhouse, who recently retired as executive vice president of the Federal Reserve Bank of St. Louis, has joined the board of directors at fintech startup Neocova. At Neocova, Stackhouse will be part of the startup’s board of directors along with Bob Flores, president and CEO of Applicology Inc., and Stephen Glassgold, a managing director in the financial services group at Piper Sandler.

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• July-August 2020

NEW ASSOCIATE MEMBERS Cardinal Board Services Wayzata, MN www.cardinalboardservices.com Cardinal Board Services is a board search firm aiming to meet the unique needs of institutions within the financial services industry.

Backed by their 25-year history, they strive to assist banks in overcoming the challenges associated with the organization of the Board and the recruitment of new Directors or Advisors.

Freddie Mac McLean, VA www.freddiemac.com America relies on Freddie Mac to support the housing market and the nation’s renters, homebuyers and homeowners – across the entire country and in all economic cycles.

Godfrey & Kahn, S.C. Milwaukee, WI www.gklaw.com Godfrey & Kahn provides high-level service, strategic legal advice and smart, practical solutions to its clients.

For 60 years, we have been guided by core values set forth by our founders: A focus on our clients’ success, trust

in one another and our clients, a culture of teamwork that helps us achieve more together, a work ethic to achieve whatever is possible, and an integrity that keeps us focused on the right thing to do for our clients, our employees and our communities.

Liquid Capital Exchange, Inc. Irving, TX www.liquidcapitalcorp.com Established in 1999, Liquid Capital provides alternative financing solutions to business to business companies. Financing programs include, accounts receivable factoring, purchase order and work-in-process (WIP) financing as well as assetbased loans. We address issues such as constrained cash flow, supplier payments and leveraging receivables and hard assets for a revolving line of credit. With a North American footprint and substantial capital availability, Liquid Capital has provided over $3 billion in financing transactions. We work with a wide spectrum of industries, ranging from newer companies and those that have been around for generations. Our business model is relationship based combined with a high level of service.

ADVERTISING INDEX APPI Energy 800-520-6685 www.appienergy.com

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Bankers’ Bank (Wisconsin) 800-388-5550 www.bankersbank.com

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Howard & Howard 312-372-4000 www.howardandhoward.com

5

LKCS 815-223-0391 www.lk-cs.com

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MIB – Midwest Independent Bank 800-347-4642 www.mibanc.com

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United Bankers' Bank 612-881-5800 www.ubb.com

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Wipfli 800-486-3454 www.wipfli.com

19

EVENTS CALENDAR

UPCOMING EVENTS Please check our Calendar of Events www.ilbanker.com/Events/Calendar-of-Events and website www.ilbanker.com for online training options and any updates.

SEMINARS, CONFERENCES AND FORUMS AUG 7 AUG 12 AUG 13 AUG 14

CFO Forum – Springfield Performing Your ACH Audit – Virtual Small Bank CEO Forum – Bloomington Technology & Operations Forum – Springfield AUG 18 Bank Directors’ Symposium – Virtual AUG 18-19 BSA/AML Fundamentals Bootcamp – Virtual AUG 20-21 Advanced BSA/AML Academy – Virtual AUG 21 CFO Forum – Schaumburg AUG 25 Introduction to Consumer Lending – Virtual AUG 25-26 Family-Owned and Closely Held Banks Strategic Retreat – Galena

WEBINARS AUG 4 AUG 4 AUG 4 AUG 4 AUG 4 AUG 4 AUG 5 AUG 5 AUG 5 AUG 6 AUG 6 AUG 7 AUG 10 AUG 11 AUG 11

ACH Origination for Lenders and Cash Management* Employment Law Update How to Disagree Without Being Disagreeable Commercial Real Estate Appraisals: Overview of Evaluations, Validations of Existing Appraisals and Third Party Review Personal Tax Returns and Cash Flow: Focus on the Individual, Sole Proprietorships, Rental Property and Farms Loan Documentation: Roles and Functions of Key Commercial Documents PRIOR to Closing Advertising Compliance* Core Deposits: Impact on ALCO Measures & Funding Plans The Evolution of Data Science and Its Impacts on Consumer Lending Every Employee is Responsible for Customer Growth Mastering LinkedIn for Bankers: Prospecting and Building Relationships Managing Generations in Today’s Workplace Financial Fraud in the COVID-19 World* New Technology: Cash Recyclers, Pod Banking & ITMs* Commercial Real Estate Appraisals: Approaches to Value De-Mystified

ABA ONLINE TRAINING COURSES AUG 3

AUG 17 SEP 7 SEP 8

Building Customer Relationships CTFA Exam Online Prep Managing the Bank’s Investment Portfolio Marketing Planning IRA Online Institute The Banking Industry

AUG 26 Ag Banking Conference – Virtual SEP 15-17 Commercial Credit Underwriting Series Oak Brook SEP 17 CyberSecurity Seminar - Oak Brook SEP 18 CyberSecurity Seminar - Springfield SEP 21 Credit Compliance, Part 1 - Virtual* SEP 22 Credit Compliance, Part 2 - Virtual* SEP 22 LaserPro® Commercial Document Preparation for Beginners Workshop Springfield SEP 23 Credit Compliance, Part 3 - Virtual* SEP 23 LaserPro® Consumer Real Estate for Beginners Workshop - Springfield SEP 24 Deposit Compliance - Virtual*

SEP 24

* Regulatory Compliance Series

AUG 11

Personal Tax Returns and Cash Flow: Focus on Business Owners and/or Self-Employed with Pass-Through Income from Schedule K-1s Loan Documentation: Understanding the Roles and Functions of Key Commercial Documents AT Closing Critical Risk Management Issues and Insights for Corporate Trustees Brand Strategy: The Key to Higher Margins Lending to Churches and Non-profits Mastering LinkedIn for Bankers: Engage with Insights Leadership & Negotiation Skills for the Workplace Excel Explained: Speed Tips* Growing Your Bank: The Real Life Implications of the Regulatory Compensation Rules Commercial Real Estate Appraisals: Key Appraisal Components Beyond the Approaches to Value Advanced Personal and Global Cash Flow Issues: Capital Gains, Recurring/NonRecurring Items, Loss Carryforwards and Others Commercial Real Estate Lending: Cap Rates & Factors Beyond Debt Cover and Loan To Value

AUG 19

Implementing the Revised URLA: Here are the Details! * Using Sales Navigator: The World’s Best Prospecting Tool Director Compensation and Compensation Committee Best Practices* Successor in Interest: Protection that Most Banks Ignore Excel Explained: Automating Financial Statements* Grandfathered and Tainted GenerationSkipping Trusts Shattered Myths of Banking* Audit Report Writing* Quarterly Compliance Briefing: Fall 2020* Launching a Prize-Linked Savings Program in 90 Days Effective Strategic Planning - Beyond the Budget Create Engaging Conversations in the Branch of the Future* Preparing for a Possible Wave of Defaults: Impacts for Corporate Trustees Evolving Standards in Trustee Compensation

Analyzing Bank Performance Legal Foundations in Banking Introduction to Mortgage Lending Basic Administrative Duties of a Trustee Introduction to Ag Lending

Please visit www.ilbanker.com/Education-Events/ Calendar-of-Events for the most current listing of events.

AUG 11 AUG 11 AUG 12 AUG 12 AUG 13 AUG 13 AUG 14 AUG 17 AUG 18 AUG 18

AUG 18

SEP 14

SEP 21 SEP 28

LaserPro® Tips, Shortcuts and Best Practices Workshop - Springfield SEP 25 BSA/AML Compliance and Regulators’ Forum - Virtual* AUG 25 Introduction to Consumer Lending – Virtual AUG 25-26 Family-Owned and Closely Held Banks Strategic Retreat – Galena SEP 30 Advanced Personal & Business Tax Return Analysis - Springfield

AUG 20 AUG 20 AUG 24 SEP 2 SEP 2 SEP 3 SEP 9 SEP 10 SEP 14 SEP 15 SEP 17 SEP 21 SEP 30

 IBA * Total Training Solutions  American Bankers Association  Graduate School of Banking

July-August 2020 •

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THE LAST PAGE

A Virtual Toast Linda Koch’s farewell wasn’t an ideal send off, but we made the best of it during the Virtual Connections Happy Hour at our REWIRED Annual Conference! Friends, family past chairmen, bankers, industry representatives and IBA staff celebrated Linda through a virtual Zoom event.

First up was a Family Feud competition led by host Dave Kuhl (2007 IBA Chairman). Teams of past chairs squared off to answer questions about Linda. The Feud ended with fond tributes by each of the chairs.

That was followed by a surprise announcement of the creation of the Linda J. Koch Illinois Bankers scholarship.

Already, more than $65,000 has been raised for this special scholarship, an effort that was spearheaded by IBA Past Chairmen, the Annual Conference Scholarship Committee and the Illinois Bankers Scholarship Committee. If you would like to donate, please contact us at education@ilbanker.com.

The evening ended with several toasts to Linda, Randy Hultgren and Bruce Baker, including a beautiful tribute to Linda from her husband Bernie.

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• July-August 2020

July-August 2020 •

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• July-August 2020