Kentucky banker magazine june 2015

KENTUCKY BANKER June 2015

CONTAC TS BOARD OF DIRECTORS Mr. Bill Allen Bank of the Bluegrass and Trust Company

Ms. Lanie W. Gardner First National Bank of Muhlenberg County

Mr. William Alverson Traditional Bank, Inc.

Ms. Elizabeth Griffin McCoy Planters Bank, Inc.

Mr. Thomas J. Smith, III American Bank & Trust Company, Inc.

Mr. James W. Beach Peoples Bank & Trust Company

Mr. Gordon Kidd United Cumberland Bank

Mr. Ryan Steger Commonwealth Bank FSB

Mr. Michael H. Mercer First Security Bank of Kentucky

Mr. H. Lytle Thomas Heritage Bank, Inc.

Mr. Glenn Meyers Kentucky Federal Savings & Loan Association

Mr. Frank B. Wilson Wilson & Muir Bank & Trust Company

Mr. Michael Mineer Citizens Deposit Bank & Trust

Mr. Greg A. Wilson The First Commonwealth Bank

Mr. J. Wade Berry Farmers Bank & Trust Mr. William F. Brashear, II Hyden Citizens Bank Mr. Neil S. Bryan The Farmers Bank of Milton

Mr. Louis Prichard Kentucky Bank

Cover photo taken by Robin Miller “Bee on Yellow Flower�

for the Scenes of Kentucky Photo Contest

KBA STAFF Ballard W. Cassady Jr. bcassady@kybanks.com President & CEO

Michelle Madison mmadison@kybanks.com Information Technology Manager

Audrey Whitaker awhitaker@kybanks.com Insurance Services Coodinator

Debra K. Stamper dstamper@kybanks.com EVP / General Counsel / Director of Compliance

Lanie Minton lminton@kybanks.com Administrative Assistant

Tim Abbott tabbott@kybanks.com Account Representative

Katie Rajchel krajchel@kybanks.com Staff Accountant

KBA Benefit Solutions

Paula B. Cravens Sturgeon pcravens@kybanks.com Director of Education Solutions Selina O. Parrish sparrish@kybanks.com Director of Vendor Solutions Matthew E. Vance mvance@kybanks.com Chief Financial Officer Miriam Cole mcole@kybanks.com Executive Assistant Paula Cross pcross@kybanks.com Education Services Coordinator Jamie Hampton jhampton@kybanks.com Education Services Coordinator Natalie Kaelin

nkaelin@kybanks.com Assistant General Counsel

Yvonne Savage ysavage@kybanks.com PAC Services Coordinator Angie White awhite@kybanks.com Manager, Communications Solutions Steve Whitlow swhitlow@kybanks.com Systems Engineer

Consultant

John P. Cooper jcooper@kybanks.com Legislative Solutions Consultant

KBA Insurance Solutions

Chuck Maggard cmaggard@kybanks.com President & CEO Brandon Maggard bmaggard@kybanks.com Account Representative

HOPE of Kentucky Billie Wade bwade@kybanks.com Executive Director

Tammy Nichols tnichols@kybanks.com Finance Officer & Asset Manager

Lisa Mattingly lmattingly@kybanks.com Director of Sales & Service Donna McCartin dmccartin@kybanks.com Benefit Support Specialist

CONTRIBUTING EDITOR Angie White awhite@kybanks.com

CONTACT 600 West Main Street Suite 400 Louisville, KY 40202

Phone: 502-582-2453 Fax: 502-584-6390 www.kybanks.com

June 2015 | 3

CHAIRMAN’S CORNER

I have always been proud to call myself a Kentuckian.

This deep sense of pride is even stronger after spending the last three weeks traveling across our great commonwealth – from Paducah, Prestonsburg, Bowling Green, and Central City to London, Louisville, Lexington and Northern Kentucky. Yes, all of our regions have unique opportunities and challenges as well as interesting people with diverse backgrounds.

Kentucky bankers share this common thread – each one of us believes that our community bank and our community bankers serve a greater purpose for each of our towns, counties, and regions.

Each of us understands our role in the local economy and the importance of a strong, locally-based bank to support the lives of our citizens and businesses. All of us are actively involved in our communities, making sure our regions continue flourish. Yes, the terrain, the issues, and the people may change, but the common values remain the same. That is why I am proud to be a Kentuckian and proud to serve as your KBA chairman.

As the financial landscape evolves in the 21st century, we must continue to preserve these core values. We share the same challenges – a slow foreclosure process, lower loan demand, pressure from non-traditional banks, thinner margins, and increased regulation (just to name a few) – but together we can overcome these issues. Individually, we have little to no impact on issues facing our industry, but by combining our voices we are heard.

Our group meetings provide the opportunity to catch up on the latest economic developments, region-specific issues, as well as other events affecting our industry. More importantly, they provide a forum for us to unite, build trust, and strategize as we continue our fight.

We have another chance to come together on July 10, 2015 at the Elk Creek Hunt Club in Owenton, Kentucky.

This will be an opportunity to build relationships across the state, discuss successes and issues within our industry and communities, as well as fund our Political Action Committee.

June 2015 | 4

We also get to shoot clays, which always makes me feel better! I know that we are all very busy, and for many of you it will be an investment of time and travel. I also know that building bonds across the commonwealth with your fellow bankers while funding our political action committee will go a long way to preserve community banking for generations to come! I look forward to seeing you for a day of stress relief!

Lytle Thomas, President/CEO Heritage Bank, Inc. Chairman of the Board, KBA

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STRAIGHT TALK Yes, the U. S. Post Office!

Since Dodd Frank passed, thousands – potentially millions – of people have been cut off from getting small dollar and emergency bank loans due to the new rules developed between FDIC and CFPB. (If I have to tell you what the acronyms mean, stop reading now).

Simple rules like the loan-to-equity or debt-to-income ratios, instituted to protect consumers, have actually harmed millions of them by limiting their ability to get what we used to call a character loan at a traditional bank. Where do they go instead? Historically, if your customer couldn’t get a loan at the bank, they would go to pay-day lenders and pay outrageous interest rates. But those at the helm of the CFPB can’t sleep at night with the thought of any private sector financial service provider realizing such profit levels, so they’ve decided to put pay-day lenders out of business with new rules, resulting in millions of consumers being added to the rolls of the unbanked whether through traditional or non-traditional providers. (I know, I’m torn on this part as well).

This got me thinking about what it is that the supporters of Dodd-Frank are actually trying to accomplish?

Where are they hoping to drive these millions of people to go for loans and other services, especially when there is an emergency need? Think hard now. What is the only institution in the United States that doesn’t care or answer to anyone if a borrower pays off a loan or not? Still don’t have it? One more hint: who prints their own money? Yes, the Federal Government!

The U.S. Federal Government has the ability to make and subsidize loans, has the ability to forgo collection and is exempt from so many of the restrictions placed on private entities. And, to top it all off, our federal overlords have an existing vehicle for this latest massive power grab all ready to go—the U.S. Postal Service.

The U.S. Postal Service’s inspector general on Thursday (5/21/15) released a report offering examples of how USPS could expand its financial services offerings and

arguing that these services “could be extremely popular.”

YES, THE U.S. POST OFFICE! That bastion of good management, prudent oversight, fiscal responsibility and high employee morale. Despite the USPS history of failure and decline, the progressive left, Socialist/ Communist wing of our party system has decided that the USPS is the best place for people to go get small loans. (As an aside, I want to point out that the USPS has also started delivering packages for UPS and FedEx. I can’t help but wonder how much money the Federal Government is losing on that deal, as the systems used

by USPS are antiques compared to those of the private companies. But we have to keep the service going!)

SO, what makes the people in charge think that the USPS is the way to go? Here are some possible examples of their reasoning. Taxpayers shouldn’t be put at risk by allowing banks to handle risk, such as by making small loans. Oops, wait a second – the post office is subsidized directly through tax dollars and the banks are not, so that doesn’t work! How about, if they dare to be transparent, telling the truth, USPS doesn’t have all those nasty stringent rules like debt-to-equity or loanto-income ratios like banks have – they aren’t subject to Dodd/Frank and don’t have all that overhead expense; therefore they can make the loans at a lower rate and really help the consumer! They also reason that they have a built in staff already designed that goes door to door—people don’t even have to leave the comfort of their home to take out a loan and if the demand is high enough, it can create jobs because the delivery of mail will be slower! It’s enough to make one wonder just how long this scheme to nationalize a segment of the banking industry has been on their drawing board.

Just think this out before you wonder if I have lost my wits. The USPS employees could, as they deliver the mail, put flyers in mailboxes, offering small loans up to $25K for starters. Borrowers just fill out the forms and drop them back in the box – Voilà, you just got a loan even though you didn’t have good enough credit (according to the government) to get a loan at a bank. That should stir memories of the foundations of the Farm

Let me know what you think: bcassady@kybanks.com June 2015 | 6

Credit System – just small loans to help small farmers who did not qualify for market loans through banks – that grew up to make $400+ million dollar loans to Verizon and the like. And, what if it turns out that the Post Office is no better at making consumer loans than it is at managing its current functions and suffers crushing losses? Does this juggernaut banking competitor have to fold its tent and go home? No, the federal government just raises taxes or prints more¬¬ money! Come to think of it if they print more money they will have to raise taxes to compensate so, either way …. they will raise your taxes!

It should concern every American who understands the fundamentals of a free society.

Every American should be watching these clear trends of nationalization with fear and trembling, in health care and now in banking. Dodd-Frank’s blight on community banking in tandem with a scheme that increases dependency on government should concern more than bankers.

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Wrap-Up of Spring Conference

“What’s Trending In The Industry” was the theme of the 2015 Spring Conference in Lexington. This year’s theme was very appropriate for me as an up and coming leader at Heritage Bank. The conference allowed the 2015 class of Emerging Leaders to have real world conversations with experienced bankers and vendors as well as providing insight into current, relevant trends in banking that can be adapted and adopted at our institution immediately if appropriate.

The conference launched Sunday evening with the opening reception. I was fortunate to attend the spring conference with my grandfather and father. They are the Chairman and Vice Chairman of Heritage Bank. It was a very unique and memorable opportunity to have three generations who work for the same community bank attend the spring conference. The reception was a great kick-off to the conference because it allowed our class to reconvene.

I also enjoyed meeting other bankers from around the state that our bank had worked with previously.

Of all the guest speakers gracing the stage, the absolute stand out for me was Mr. Pat Williams , the Senior Vice President and Co-Founder of the Orlando Magic. He spoke of seven leadership skills that make leaders successful. I was so inspired by Mr. Williams that I purchased both of his books for additional study on my own. His leadership talk included 7 characteristics of a highly effective leader. The seven were: -

Vision - Leaders who are able to see further down the road than others and see the finished product.

-

Communicating your vision - Believing that it is important to be a business that communicates.

-

People Skills - Great leaders love people, are visible and available, good listeners, empower people and delegate.

-

Character - A successful leader is honest, responsible and humble.

-

Competence - Leaders are great at what they do.

They are able to solve problems, spot talent and teach. They are also always learning and continuing their education.

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-

Boldness - Leaders make decisions and do not quiver whether they made the correct decision or not.

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Serving Heart - Being able to serve the people that you work with, as well as people in your community.

Being able to hear Pat speak allowed me to see a successful leader that took these skills and used them everyday his entire business career and now leverages them to inspire other leaders in his path.

This conference allowed our class to learn two very important keys to being a leader. Constantly being in the know of what is changing and effective leadership skills that most leaders can take for granted when they achieve leadership positions.

Our respective banks are looking at us, the next generation of community bankers, to continue the legacy and the high standards of integrity that our prior and current leaders exhibit on a day to day basis. That is why it is extremely important for us to be successful leaders so that we can pass along to future generations what it truly means to be a successful leader in community banking.

I would like to extend my warmest thanks and gratitude to the KBA Staff & Directors as well as Mr. Lytle Thomas and Mr. Ballard Cassady for an insightful and successful 2015 Spring Conference.

Steven Caddell Heritage Bank, Burlington, KY

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Wilson & Muir: 150 of Success Part II President and CEO, Frank Wilson, recognizes the importance of the bank’s milestone anniversary, but he doesn’t reflect for long. “The 150th anniversary is a landmark achievement, something we are very proud of….but it’s also a call for celebration. Not only celebrating our past, but also celebrating our future.” Wilson knows that being successful means constantly evolving, serving the needs of the community, and keeping a pulse on the changing businesses Wilson & Muir serves. With branches in four Kentucky counties, Wilson and Muir remains an independent community bank focused on exceptional customer service. That service keeps customers in the door and attracts talent seeking employment- a win-win for the bank and the community.

Davis “Tiger” Huston III, Senior VP explained, “All banks have the same products, what distinguishes Wilson and Muir Bank is customer service.” Customer Will Harris of

(Photo above: Bardstown, KY 1910)

Will Harris Homes, LLC explained, “We partnered with Wilson and Muir Bank when we launched Magnolia Farms… they were believers in us when this was just a cornfield (pointing to the Magnolia Farms neighborhood development).” Harris, and many others, sometimes find that the rigors of owning their own business is a challenge, but find solace in the fact their bank has respect for their work, their time, and their investment in the community.

Wilson and Muir invest dollars and manpower back into the communities, and that is critical for the people in the communities they serve. Wilson and Muir’s Leitchfield

Branch hosts a farmer’s appreciation lunch, while the Bloomfield office is the permanent home of the Bloomfield High School Alumni Association. It seems that everywhere you go in the community Wilson & Muir has impacted businesses and non- profit organizations in a positive way.

“One hundred and fifty years for a business to survive is amazing,” said Bill Newcomb, VP Newcomb Oil Company.

Newcomb’s family business has worked with Wilson Muir since 1924 specifically because the bank processes hundreds of their transactions and understands the nature of the business. Established as a one location, one vehicle distributor of Gulf Oil, Newcomb Oil now owns and operates over sixty convenience stores in 29 communities across Kentucky and Indiana. Employing 800 persons, Newcomb Oil Co. still calls Bardstown its hometown.

“We don’t have to explain our transactions,” explains Bill Newcomb, “and that’s important.” Ease of transaction and friendly people seems like a simple equation for success Dr. Paul E. Tran of Tran Orthodontics shared a similar story. He transferred his company’s business from a large regional bank to Wilson and Muir nearly 20 years ago. “It’s amazing how much faster a local bank can make decisions when they know your financial capability.” Dr. Tran transferred his personal accounts to the bank following the success with his business accounts.

Operating the bank in a respectful manner is important inside the bank walls as well. To commemorate employee anniversaries within the bank publicly acknowledges staff using social media. In depth articles alongside photographs detail each employee’s milestone. Recently, Mr. Robert J. Hatfield was recognized for thirty years of service in the Big Clifty office. Mr. Hatfield concluded his thoughts with a poignant line, “My prayer is that we would all appreciate our positions as an asset to this community and look forward to the future.” Sage words from a banker representing such a successful business in the community.

Angie White, Communications Manager/Contributing Editor, KBA Lane Hettich, Contributing Editor

150 yrs and counting....

Thank You!

June 2015 | 13

Focus on Education

Scan the QR code to visit our Education Resources page

A full library of schools, seminars, trainings, webinars, and Education Solutions to keep you on top of your game this year Please visit kybanks.com and browse through our educational resources

June 2015 | 15

Citizens Bank Helps Keep Seniors Safe Rockcastle Health & Rehabilitation Center, Brodhead, Kentucky

Thanks to Citizens Bank, residents of Rockcastle Health & Rehabilitation Center in Brodhead, Kentucky will live in a safer and even more secure environment. Citizens Bank recently joined the Senior Housing Crime Prevention Foundation (SHCPF), and is helping to protect those seniors by funding the Senior Crimestoppers program for seniors residing in this care facility.

The Senior Housing Crime Prevention Foundation is a national organization that serves as a way for banks to use to fulfill their federally mandated Community Reinvestment Act (CRA) requirements through providing aid to low and moderate income individuals in their local community. The Foundation’s mission is to provide safe and secure living environments for our nation’s senior nursing home residents, many of whom are low and moderate income individuals, through the operation of the nationally-acclaimed Senior Crimestoppers program.

Crime against the elderly in our society is a longstanding, constant battle that can be reduced and prevented through the operation of the Senior Crimestoppers program in nursing homes and assisted living facilities. Senior Crimestoppers is a coordinated set of components that work together to create a zero tolerance to crime platform in senior housing facilities. Components include personal lockboxes for the residents, cash rewards up to $1,000 paid anonymously for information about wrongdoing of any kind, and effective, on-going education and training for staff members and residents.

Senior Crimestoppers has reduced all aspects of crime in participating facilities by 94%.

“Senior Crimestoppers is a way for an administrator to further enhance the lives of the residents they serve. They all work very hard to provide safe, secure, comfortable living environments and their desire to implement the program is just one more example of this. Implementing this program does not mean that the facility currently has a crime problem, but that the administrator is proactively finding a way to keep problems from occurring in the future,” said Terry Rooker, president of Senior Crimestoppers.

Left to right: Shannon McDonald, George Clinard, Alicia Bullock, Corey Craig

June 2015 | 16

Citizens Bank Helps Keep Seniors Safe Cont.

“Citizens Bank is proud to be the sponsor of this wonderful program for the residents of the Rockcastle Health and Rehabilitation Center. Our community is blessed to have this wonderful facility and Citizens Bank is excited to be partnering with them to bring these much needed services. Citizens Bank is committed to partnering with local business and organizations to help make the lives of those who live in our communities better,” said Corey Craig, President/CEO of Citizens Bank

For more information about Senior Crimestoppers contact Terry Rooker at 800-529-9096 or visit us on the web at www.SeniorCrimestoppers.org.

Established in 1904, Citizens Bank is a full-service community bank offering personalized service, commitment to the community, and sound management. They offer a variety of products and services such as: competitive rates, innovative banking services, retail, commercial and mortgage lending, as well as acquisition, development and construction financing. ATM, traditional safe deposit boxes, and drive-in banking are also provided. But they don’t stop with products. Delivering excellent customer service is at the top of their list as they want to give every customer an extraordinary customer service experience every time they come in the bank. They believe that just doing what’s expected is not enough. The management team, lending staff, and customer associates are all seasoned bankers with an abundant appreciation for their customers.

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June 2015 | 19

CoBank gets more aggressive in lending outside its charter CoBank, the FCS’s sole authorized lender to utility and agricultural cooperatives, has ranged further afield in lending to investor-owned utilities and energy companies, and taking on more credit risk in doing so. As I have reported in the past, CoBank has purchased participations in debt raised by large, well-known investor-owned telecommunication companies – Verizon, AT&T, U.S. Cellular and Frontier Communications. CoBank lent a total of $1.5 billion to these companies. I am now learning that CoBank also has been lending to smaller, less credit worthy investor-owned companies.

In April, CoBank provided $50 million of a new $300 million unsecured two-year term loan to Black Hills Corp., rated BBB. The interest rate on the loan is LIBOR plus 90 basis points. Since the FCS can borrow for approximately 10 basis points below one-month LIBOR, CoBank’s spread on this loan is about 100 basis points. Black Hills serves 785,000 natural gas and electric utility customers in seven western states. It also generates wholesale electricity and produces natural gas, oil and coal. Leaving aside whether CoBank should provide taxpayer-subsidized credit to any investor-owned company, the underlined activities hardly fit within the scope of the activities the FCS is authorized to finance.

Much more questionable is CoBank’s long-term lending relationship with Otelco, Inc., a NASDAQ-listed telephone company with operations in seven states scattered from Maine to Missouri. CoBank’s Otelco loan came to my attention due to a disclosure in a recent Otelco SEC filing that it had received a $1.1 million patronage dividend for 2014 from CoBank. According to other SEC filings, CoBank’s lending to Otelco dates to before October 2008, for that is when CoBank nearly doubled its credit exposure to Otelco, to $55 million, as a participant in a senior credit facility led by GE Capital.

CoBank also provided a $5 million revolving loan commitment. At that time, Otelco was leveraged 12.6 to 1 on a GAAP-accounting basis, its profits were weak, and it had a negative tangible capital of $125 million, due to goodwill and other intangible assets accounting for $143 million of its total assets of $228 million.

By May 2013, when Otelco went through a Chapter 11 bankruptcy reorganization, CoBank held a 31.4% ($41.85 million) participation in Otelco’s senior credit facility. CoBank was lucky as the credit facility was restructured with no loss of principal. Periodic principal payments should reduce CoBank’s credit exposure to $36.6 million when the facility matures on April 30, 2016.

Whether Otelco will be able in April 2016 to repay or refinance its remaining senior debt of $116.64 million, including the $36.6 million owed to CoBank, is questionable given Otelco’s current financial condition. At March 31, 2015, Otelco had total assets of $121 million, long-term notes totaling $109 million, and a negative GAAP net worth of $21.7 million. Worse, Otelco had $48 million of goodwill and other intangible assets on that date, so its tangible net worth was a negative $69.6 million. Quite troubling, over the 2010-14 period, Otelco’s revenues declined from $104 million to $74 million and declined again in the first quarter of 2015 compared to first quarter of 2014. Although the company has been modestly profitable since its Chapter 11 restructuring, it is highly unlikely to regain a positive net worth by next April, when its debt to CoBank comes due. Consequently, Otelco could generate a large loss on a loan CoBank should never have made. The extent to which CoBank has lent to other smaller, riskier investor-owned utilities is unknown at this time but it is an issue Congress should explore.

Cracker Barrel is an eligible FCS borrower???

CoBank is not the only FCS institution lending to investor-owned companies – FCS associations have lent to Cracker Barrel Old Country Store, Inc., which operates over 600 stores. In its last fiscal year, ended August 1, 2014, Cracker Barrel reported sales of $2.68 billion and after-tax profits of $132 million. It had total assets on that date of $1.43 billion and shareholders’ equity of $529 million. Cracker Barrel clearly is strong financially and it is hardly an agricultural

June 2015 | 20

business, unless McDonalds, Burger King, and other restaurant chains could be viewed as such because they sell prepared food, too.

According to a January 9, 2015, news release, Cracker Barrel negotiated a five-year, $750 million revolving line-ofcredit with 15 financial institutions, including Greenstone FCS, which serves Michigan and part of Wisconsin. The credit agreement for this line-of-credit did not list participation amounts for the fifteen institutions but with an average of $50 million, it is reasonable to assume that Greenstone is in this deal for at least $25 million. An earlier 2011 line-ofcredit had many of the same participants as the 2015 line-of-credit with one notable exception – the 2011 line-of-credit included three other FCS institutions beside Greenstone that did not participate in the 2015 line of credit – 1st FCS, AgChoice and FCS Financial. Why those three are not in the 2015 line-of-credit was not disclosed.

It would be reasonable for Congress to ask how many other large, non-agricultural, investor-owned corporations are borrowing from the FCS. Such loans clearly are not authorized by the Farm Credit Act that the Farm Credit Administration is charged with enforcing.

One other point is worth mentioning – Greenstone is listed in the news release announcing the 2015 agreement as “Greenstone Farm Credit Services ACA/FLCA,” which suggests that Greenstone is putting loans under this credit agreement in its tax-exempt Federal Land Credit Association (FLCA) subsidiary, which is limited to loans secured by real estate. As best I can determine, the 2015 line-of-credit is not directly secured

by Cracker Barrel real estate, which suggests that any FCS loan to Cracker Barrel cannot be put on the books of an FCS association’s tax-exempt FLCA subsidiary.

Fitch Ratings tells the truth – FCS debt is government-backed On April 21, Fitch Ratings, one of the three major credit-rating organizations, affirmed the FCS’s long-term and shortterm “issuer default ratings,” or IDR, as AAA/F1+, Fitch’s highest credit ratings. Fitch also assigned AA-/F1+ IDRs to the FCS’s four banks – AgFirst, AgriBank, CoBank and Farm Credit Bank of Texas. “These rating actions follow Fitch’s affirmation of the U.S. Government’s ‘AAA’ IDR and Stable Outlook.” The Fitch news release then stated what bankers have long known: “the FCS benefits from implicit government support. Therefore, the ratings and Outlook of the FCS are directly linked to the U.S. Sovereign rating. . . and will continue to move in tandem.”

Most importantly, Fitch stated: “if at some point in the future, Fitch views government support [of the FCS] as being reduced, the ratings of the GSEs may be delinked from the sovereign and downgraded.” This statement reinforces a key aspect of the competitive edge the FCS has over taxpaying banks, especially in financing long-term, fixed-rate real estate loans – the FCS can borrow cheaply only because it is a taxpayer-backed GSE. The high (AA-) credit rating Fitch gave the FCS banks reflects its assessment that “the likelihood of support at the [FCS] bank level to be incrementally greater than for systemically important commercial banks given the banks’ public mission and GSE status.”

June 2015 | 21

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Ncontracts Secures Growth Equity Investment from Mainsail Partners Brentwood, TN – May 12, 2015 - Ncontracts, the nation’s leading provider of vendor compliance and contract management software and services, announced it has secured a significant growth equity investment from Mainsail Partners. Mainsail Partners is a San Francisco-based growth equity firm focused on investing in rapidly growing and profitable companies.

“We are very pleased to announce this important milestone in our company’s growth plan,” said Michael Berman, CEO and founder of Ncontracts. “Vendor management and compliance are hot button issues, especially for financial institutions. Organizations need to manage new and changing risks arising from constantly evolving regulations and emerging technologies and services. The combination of Mainsail’s company-building experience and the infusion of growth capital will allow us to accelerate innovation, continue to deliver best-in-class products and services for our customers, and power the next phase of growth for Ncontracts.”

Ncontracts offers its customers a combination of SaaS software and compliance services, which allows them to streamline a very labor intensive process and mitigate operational risk. The company plans to use the growth capital to grow its product development, compliance services and sales and marketing teams, as well as to pursue potential acquisitions. Ncontracts marks Mainsail’s second investment in the greater Nashville metropolitan area in the last year.

“Ncontracts’ software and compliance services are guided by an exceptional executive leadership team. The company has proven it is a trusted partner of bank and credit union executives throughout the country,” said Stephen Wolfe, a partner at Mainsail Partners.

To learn more about Ncontracts’ solution, visit www.ncontracts.com or call (888) 370-5552.

About Ncontracts Ncontracts® is a leading provider of vendor and contract management services for the financial institution industry. Ncontracts combines turnkey vendor management services with a comprehensive and fullycustomizable vendor and contract management SaaS platform. Insightful summaries of vendor contracts and alert notifications assist clients in proactively managing vendor relationships. Together, these services and features give clients the ability to reduce expenses, enhance profitability, and improve internal efficiencies.

About Mainsail Partners Mainsail Partners is a leading growth equity firm that invests exclusively in bootstrapped, growing and profitable companies. The San Francisco-based firm has a team of experienced operating professionals to help outstanding entrepreneurs scale their businesses and accelerate growth. Mainsail’s recent investments include nCourt, Netchemia, Paylease, Playmaker CRM, Steelwedge and Zen Planner. The firm has raised nearly $400 million in committed capital. For further information, please visit www.mainsailpartners.com.

Ncontracts

| 214 Overlook Circle, Suite 152

Brentwood, TN 37027

888-370-5552

www.ncontracts.com

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June 2015 | 24

Bank Happenings On April 23rd, The Bank of Edmonson County broke ground on their new Smiths Grove location. Bank employees, board members, and city and county government officials all tossed the first scoop of dirt.

“We were extremely pleased with the number of people that came out to celebrate this new opportunity, for both the people of Smiths Grove and Bank of Edmonson County,” said Bank CEO Michelle Coleman. “We hope that the excitement of today will be a sign of great things to come when the bank is open for business this fall.”

James D. Rickard, Baptist Health Board Chairman during 2013 and 2014, was honored May 8 with the Kentucky Hospital Association’s Governance Leadership Award for “dedication in assuring the availability of healthcare and the viability” of Baptist Health.

Rickard, who remains a member of the Baptist Health board, is President and CEO of Community Bank Shares of Indiana in New Albany, Ind.

The SBA announced it’s small business award winners and two of our bankers were named as award recipients!

CONGRATULATIONS MARK STROTHER and MICHELLE GORMAN!

Mr. Mark Strother, President and CEO of The Commercial Bank of Grayson, is the 2015 Kentucky Financial Services Advocate of the Year Ms. Michelle Gorman, Small Business Specialist at US Bank in Bowling Green, is the 2015 Women Business Advocate of the Year

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Upcoming Education Events & Seminars Bankruptcy Seminar June 23 Louisville Human Resource Seminar June 25 Louisville BSA/AML School - Pegasus Program July 8-9 Lexington Personal & Business Tax Return Analysis Seminar August 11 Bowling Green August 12 Lexington New Accounts - Pegasus Seminar August 17 Morehead August 18 Hazard August 19 Somerset August 20 Elizabethtown August 24 Paducah August 25 Bowling Green August 26 Lexington Internal Audit Seminar August 19 & 20 Elizabethtown Lending Compliance School August 24 - 28 Louisville

Certified Teller Seminars August 31 Paducah September 1 Marion September 2 Owensboro September 3 Bowling Green September 14 Grayson September 15 Prestonsburg September 16 Somerset September 21 Carrollton September 22 London September 23 Elizabethtown Commercial Lending School September 21 – 25 Louisville PBS Live Seminars Sept 10 Flood Insurance Compliance - Lexington Sept 22 New Integrated Mortgage Disclosures Somerset Sept 23 Mortgage Lending Start To Finish - Somerset Sept 24 Mastering HMDA - Somerset Sept 29 ACH Processing Compliance - Bowling Green New Accounts Evening Program August 17 Morehead August 18 Hazard August 19 Somerset August 20 Elizabethtown August 24 Paducah August 25 Bowling Green August 26 Lexington

PBS Webinars July 7 - IRS Reporting and Compliance Webinar Series -Program 3: The IRS Penalty Notice August 11- IRS Reporting and Compliance Webinar Series -Program 4: Types of Backup Withholding A, B, C & D and the IRS B & C Notices

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When it comes to the banking industry, KraftCPAs has the bases covered.

Services • merger/acquisition assistance • valuation services • internal & external audit • information systems assurance & consulting • external & internal penetration testing • social engineering • compliance reviews

Wynne E. Baker - (615) 782-4230

• loan reviews & grading systems

Co-Industry Leader, Banking Industry Team

• enterprise risk management

Beverly L. Horner - (615) 346-2431

• forensic accounting

Co-Industry Leader, Banking Industry Team

Gina Pruitt - (615) 782-4207

• SOX documentation & testing • tax planning & compliance

Member-in-Charge, Risk Assurance & Advisory Services

Learn more at www.kraftcpas.com/banking.htm

What You are Saying...

"After signing up for a 48-hour trial period with Compliance Alliance, the online tools and resources are excellent, and the bank is now officially a member of Compliance Alliance. I highly recommend Compliance Alliance to other banks."

- Jerry Blevins, EVP, First Capital Bank of Kentucky, Louisville

We want to hear your feedback on KBA events, seminars, schools, and services. Tell us how you feel.

Contact awhite@kybanks.com June 2015 | 27

140th Birthday Celebration!

FNB has taken pride in being locally owned, locally operated and committed to the communities they serve since May of 1875. FNB has developed a rich tradition in banking wherein it remains as the 10th oldest bank in the state of Kentucky. FNB has taken this year to reflect on its history and celebrate its 140th Birthday. On May 9, 2015, FNB hosted a 140th Birthday Block Party at its Mayfield Main Office for their customers and community members. Over 1,000 people enjoyed the family oriented festivities. The free event offered BBQ from Midtown Drive In, a snow cone stand, inflatables, petting zoo, train rides, WKYQ live remote, giveaways and much more

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New Community Outreach Tool Created to Protect the Elderly from Financial Exploitation As a trusted provider of elder abuse prevention programs in our nation’s senior care facilities, people rely on the Senior Housing Crime Prevention Foundation as a resource for information on a wide range of issues both inside and outside of a traditional long-term care setting. Our knowledge of the older American population and their challenges led us to produce the “Preventing Elder Financial Abuse Video Toolkit” which now gives your bank the ability to educate your family, your friends, those in your social organizations and your community at large on how to look for signs of elder financial abuse and how to prevent it. The video information was adapted from the FDIC / CFPB Money Smart for Older Adults so you can rely on the information to be accurate and timely.

The toolkit includes: • 30 minute video • Customizable companion handouts filled with important information • Customizable press release to let your community know the information you have to offer

You can be a hero for providing valuable financial education information to seniors in your community.

TO ORDER YOUR TOOLKIT: visit www.shcpfoundation.org or call 1-877-232-0859

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Bankers on the Move Ron Byrne has joined Wimsett & Company, an independent payments consulting firm in Louisville, as President of their banking division.

Ron brings with him 48 years of experience and executive leadership.

Hobbs Cheek of Farmers Bank & Capital Trust Co. has been promoted to Executive V.P. Cheeks had been a Senior V.P. and is the bank’s C.F.O. He has been with Farmers Bank & Capital Trust Co. since 1991.

Philip Rochester of Central Bank in Lexington was promoted to Assistant V.P. Retail Banking. Rochester has been with Central Bank for 20 years and began his career as a Personal Banker.

Nick Volk has joined First Kentucky Trust as V.P. and Fiduciary Officer with a focus on Estate Planning, Trust and Estate Administration, and Tax Planning. Prior to joining First Kentucky Trust, Nick served as a trust officer with a regional bank and an associate in the corporate and estate planning sections at a local law firm.

Travis Russell has joined American Bank & Trust as Branch Manager of the Peachtree Place branch. Travis holds a B.S. in Finance and an M.B.A. from the University of Kentucky.

Jennifer Cochran has been promoted to Assistant V.P. Bank Secrecy Act Officer of Farmers National Bank, Danville. Cochran began her career at Farmers National Bank as a Teller in 2006.

Bill Crouch has joined CSI, a provider of end to end technology solutions, as their New Business Development Director of the MidWest region. In his role, Crouch will be assisting financial institutions in making strategic IT decisions related to managed services and cloud-hosted technology.

Angie Friesz has been promoted to Assistant V.P., Retail Banking at Central Bank in Lexington. Friesz has been with Central Bank for nearly 20 years and began her career as a Teller.

William J. Howell has been named Market Director and Senior Trust Officer of the Lexington office of WealthSouth on E. Main Street.

First Citizens Bank would like to announce the promotion of Dee Kiger to Vice President/Chief Financial Officer. Kiger joined the bank in January, 2014, as Credit Analyst. Prior to joining the bank she was an accountant/auditor for Stiles, Carter, & Associates, PSC, in Elizabethtown.

Want to announce a promotion? Recognize a fellow banker? Send all photos and announcements to Angie White at awhite@kybanks.com

Gui Cozzi has joined SDGblue as the Director of Security & Consulting Group and Chief Information Security Officer. SDGblue is an information technology company with a focus on security and compliance consulting services.

Kentucky Bank is pleased to welcome Mike Williams to the Jessamine County advisory board of directors. Michael I. Williams is President and CEO of Blue Grass Energy, headquartered in Nicholasville, KY.

First Citizens Bank would like to announce the promotion of Leslie Curl to Assistant Vice President/Credit Analyst. She joined the bank in December, 2014. Prior to joining the bank, she also served as an accountant/auditor for Stiles, Carter, & Associates, PSC, in Elizabethtown.

Sharon Bradley has been promoted to Retail Banking Officer at Central Bank in Lexington.

Bradley brings more than ten years of experience with Central Bank to her new role. Sharon’s most recent positions at the Bank were as training specialist and retail manager. As retail officer, she will continue to manage the Versailles Road location.

American Bank & Trust is pleased to announce the promotion of Travis Renfrow to Vice President and Controller. Travis has been with American Bank & Trust for 14 years.

Proudly Serving KentucKy BanKS for 25 yearS t ax -f ree /t axaBle M uniciPal B ondS • uS t reaSurieS /a gencieS

Bill Barker Toll Free: 800.292.4563 bbarker@rsanet.com

One Riverfront Plaza • 401 W Main St, Suite 2110 • Louisville, KY 40202

Louisville ~ Lexington ~ Cincinnati -KBa a SSociate M eMBer Member FINRA and SIPC • Investment Products Not FDIC Insured • No Bank Guarantee • May lose value.

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