Kentucky banker magazine october 2015

INSIDE

Convention Recap page 7 << Convention Picture Pages page 10/11/28 Bankers on the Move page 20

October 2015

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OFFICERS

BOARD OF DIRECTORS Mr. Bill Allen Bank of the Bluegrass and Trust Company Mr. William Alverson Traditional Bank, Inc.

CHAIRMAN Mr. Louis Prichard Kentucky Bank VICE CHAIRMAN Mr. Michael H. Mercer First Security Bank of Kentucky TREASURER Mr. Timothy Barnes Hometown Bank of Corbin PAST CHAIRMAN Mr. H. Lytle Thomas Heritage Bank, Inc.

Mr. James W. Beach Peoples Bank & Trust Company

Mr. Gordon Kidd United Cumberland Bank Mr. Glenn Meyers Kentucky Federal Savings & Loan Association Mr. Michael Mineer Citizens Deposit Bank & Trust

Mr. J. Wade Berry Farmers Bank & Trust

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

Mr. William F. Brashear, II Hyden Citizens Bank

Mr. Ryan Steger Town Square Bank

Ms. Lanie W. Gardner First Southern National

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

Ms. Elizabeth Griffin McCoy Planters Bank, Inc.

cover photo by

Alecia Marcum “Taste of Fall”

Mr. Greg A. Wilson The First Commonwealth Bank

from scenes of kentucky photo contest

KBA STAFF Ballard W. Cassady Jr. bcassady@kybanks.com President and CEO Debra K. Stamper dstamper@kybanks.com EVP / General Counsel & Director of Compliance Matthew E. Vance mvance@kybanks.com Chief Financial Officer Selina O. Parrish sparrish@kybanks.com Director of Vendor Solutions Paula B. Cravens Sturgeon pcravens@kybanks.com Director of Education Solutions Josh Fischer jfischer@kybanks.com Director of Communication Solutions & Managing Editor, Kentucky Banker Magazine Miriam Cole mcole@kybanks.com Executive Assistant Paula Cross pcross@kybanks.com Education Services Coordinator

Jamie Hampton jhampton@kybanks.com Education Services Coordinator

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

Natalie Kaelin HOPE of KENTUCKY nkaelin@kybanks.com Assistant General Counsel Billie Wade bwade@kybanks.com Michelle Madison Executive Director mmadison@kybanks.com IT Manager KBA INSURANCE Lanie Minton lminton@kybanks.com Administrative Assistant

SOLUTIONS

Chuck Maggard cmaggard@kybanks.com President & CEO

Tammy Nichols tnichols@kybanks.com Lisa Mattingly Finance Officer and lmattingly@kybanks.com Asset Manager, HOPE & KBA Director of Sales & Service Convention Coordinator Katie Rajchel krajchel@kybanks.com Staff Accountant Yvonne Savage ysavage@kybanks.com PAC Services Coordinator Angie White awhite@kybanks.com

Sponsorship Relations and Sales

Steve Whitlow swhitlow@kybanks.com Systems Engineer

Brandon Maggard bmaggard@kybanks.com Account Representative Tim Abbott tabbott@kybanks.com Account Representative Audrey Whitaker awhitaker@kybanks.com Insurance Services Coordinator Donna McCartin dmccartin@kybanks.com Benefit Support Specialist

Story Idea? Questions? Contact Josh Fischer, Kentucky Banker Managing Editor. Call 502-736-1283. Email jfischer@kybanks.com Kentucky Banker magazine is a monthly periodical publication of the Kentucky Bankers Association. Published in Louisville, KY, USA Contact the KBA: 600 W Main Street, Suite 400, Louisville, KY 40202. Phone: 502-582-2453 Fax: 502-584-6390 www.kybanks.com

One Voice, Unifying Banking in the BlueGrass Welcome to the KBA, a nonprofit trade association that has been providing legislative, legal, compliance and educational services to its member institutions since 1891. KBA’s directors and staff work together with its members to make the financial services industry a more effective and successful place to work. The strength of the KBA is bankers unifying as an industry to speak as one voice.

Mission Statement The purpose of the Kentucky Bankers Association is to provide effective advocacy for the financial services industry both in Kentucky and on a national level; to serve as a reliable and responsive source of information and education about areas of interest to the industry; and to provide a catalyst and forum for collective industry action.

The KBA does this in four ways:

1. Government relations

and industry advocacy

2. Information interchange

3. Education

4. Products and services

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CHAIRMAN’S CORNER

Continuing the Path of Excellence

T

his letter will be the first of my month- state’s performance ratios compared to the ly correspondence with KBA mem- ratios of banks in contiguous states, we exbers. Over the next year I hope our cel in virtually every category. membership will find some value in them.

As we look to the upcoming year, my goal This year’s convention was not only ex- will be to communicate that optimism tremely well attended, but had some of the through these letters. Each month these letbest presenters and topics that we could have ters will attempt to focus on a particular experienced. It seemed as though the subject effort that we, as bankers and as an assomatter was timely and extremely informa- ciation, need in order to be successful. The tive. When we get a chance, we should ex- first letter will be entitled “How You Think press our appreciation to the staff for put- is Everything!” Always be positive. Think ting together such a stellar event. As we all success, not failure. know, it takes a great deal of work to make Our Association is one of the most, if not it so successful. the most, highly regarded associations in We want to thank Lytle Thomas for his ex- the country. Our Association is made up of cellent leadership as our most recent chair. bankers and banks who, despite all of the He is an outstanding banker committed not headwinds we face, are ready, willing, and only to his bank, its customers, and its share- able to “Navigate the Future through Chalholders; but also committed to ensuring that lenging Times.” the Kentucky Bankers Association remains In addition, we have a staff of tremendously a strong advocate for our industry. experienced and capable people. I want to We also want to thank the board for its time, thank Ballard and all of his associates, in adtalents, and efforts in providing insight and vance, for all they do for us. That, too, gives support to your Association. While a worth- me optimism. while endeavor, it takes a great deal of time away from our banks. I look forward to Finally, I look forward to working with all working with the board in the future, as I’ll of our members to add value to our Associaneed their help to carry on with our goals for tion and to continue the path of excellence that has been already created for us.

2016.

As I said in my comments to the convention, despite the regulatory burdens, the competition from unregulated or barely regulated “shadow banking” providers, an anemic economic recovery, and continued stress on margins, I am truly optimistic about our future in Kentucky. When we look at our

Louis Prichard KBA Chairman

October 2015 | 5

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STRAIGHT TALK

2015 KBA Convention Recap: Looking Back & Learning Looking back, our 124th Annual KBA Convention held at The Westin Resort in Hilton Head, South Carolina, might just be our most successful outing in recent history. I want to thank all our members, sponsors, vendors and special guests in making it such a memorable and educational event. I know I learned a lot.

interests of banks and other creditors in the Commonwealth. He has a strong interest and involvement in Kentucky politics and is the father of one of our up and coming state senators, Morgan McGarvey. John moderated our proceedings with a professionalism that perhaps few could.

By having it in Hilton Head I learned (or, should I say, was reminded) that bankers love beaches. This bodes well for our 125th anniversary celebration convention to be held at The Breakers in Palm Beach, Florida, in 2016. The attendance was gratifying; we filled up the grand ballroom of The Westin for every session, dinner and speaker. KBA families packed the beach and pool area. We were a presence, representing our state and industry with distinction.

KBA Convention speakers included some very interesting personalities, with a variety of experiences and information. An example is our first speaker on Monday, Jay Morelock, an economist with FTN Financial. Jay has appeared on CNBC’s Squawk Box and is frequently quoted in the Wall Street Journal, New York Times, Bloomberg, and BBC. He got our first morning off to a thought-provoking start.

At Saturday’s Joint Dinner held at the Westin’s Oceanfront Pavilion, we recognized 3 new members of the KBA Fifty-Year Club. Clay Parker Davis of The Citizens National Bank in Somerset, Rita Owen of First United Bank and Trust Company in Madisonville and Bob Wells of The Sacramento Deposit Bank in Sacramento were all added to the half-century ranks.

...might just be our most successful (convention) in recent history.

After our annual KBA Golf Tournament at Robber’s Row Golf Course Sunday, the Governmental Affairs Committee met. Chaired by Lanie Gardner, we welcomed Representative Jeff Greer, who offered his insight on how the state should, and must, move forward on the strength and importance of a strong community banking industry. (Senator Tom Buford was unable to make it this year.) Our Emerging Leaders were on hand. It was good to see our future efforts will be in good hands.

At our first day of General Session, on Monday, our Chairman, Lytle Thomas, opened the proceedings by drawing attention to the blue KBPAC star and KBPAC flag logo on member’s name badges. These symbols are important for the very reasons discussed during the Governmental Affairs committee; the strength of our industry and its reputation in Frankfort and DC. The star indicates an individual contribution to the KBPAC while the flag celebrates member banks that meet their KBPAC goal. I want to express my appreciation to everyone who participated in this year’s PAC. Our host for both sessions was John McGarvey of Morgan & Pottinger, P.S.C. John is a recognized attorney representing the

Ballard Cassady KBA President & CEO

Not to be outdone, Dr. Lacy H. Hunt, another internationally acclaimed economist, added his economic perspective to the crowd on Tuesday. Although some may characterize his presentation as “doom and gloom,” it not only prompted A LOT of discussion, but was found to be very accurate just a week later.

And, of course, we cannot thank enough our industry’s champion, Congressman Andy Barr, for his willingness to speak to our attendees regarding the state of legislation in Washington that has bearing on our interests and concerns.

There were many others, but let’s not forget our official business.

During our second day of General Session Louis Prichard was installed as the KBA 2015-16 chairman. We are going to be in good hands with Louis as we approach our 125th year. We look forward to reading his monthly columns in the magazine.

Our 124th Annual Convention was wrapped up at our Annual Banquet. After honoring Lytle for his year of service as chairman, we concluded with an energetic address by Bill Courtney regarding the lessons he has learned as a high school football coach in inner-city Memphis, Tennessee. The story was so compelling that the documentary film regarding his experience, Undefeated, won the 2012 Academy Award for Best Feature Length Documentary.

It was a convention designed to help us all navigate the future in changing times. With the contribution of all I have mentioned here, and dozens of others that I did not, I know I learned a little more about our destination. See you next year at The Breakers.

Let me know what you think. bcassady@kybanks.com

KENTUCKY BANKER

What it Takes to Score a High-Performing Advisor in Your Community Bank

by Investment Professionals, Inc.

Your Support Team

We all know the name of the game in financial advisor recruiting: big name broker-dealers and even bigger checks often take the cake in scoring quality financial advisors. As a community banker, it can feel like you’re faced with more than just an uphill battle. We get it.

Not only do you need an experienced, talented, high-performing advisor, but you also need one that is a glove-like fit with your culture, customers, and community. The solution? Partner with a brokerdealer that specializes in recruiting high-caliber community bank financial consultants for your on-site investment program.

The best broker-dealers will have a dedicated team in place to ensure your advisor expectations are not only met but exceeded.

Working with a broker-dealer to support your recruiting needs will help ensure you’re not only proactively growing your non-deposit income through your program, but that your program is something you’re proud of. Having the right advisor will bring enormous value to your program, bank and relationships – the increased non-deposit income is the icing on the cake!

As a community banker, you still want the cream of the crop even if you’re not one of the colossal banks of the world. And frankly, you deserve it. You need a financial advisor that has the ability, the attitude and the cultural fit. In the same breath, the high-performing advisor you just described isn’t just going to move their practice with no return on their relocation … and we don’t necessarily mean cash.

What’s Your Advisor Value Proposition?

In today’s financial services environment, financial advisor recruiting is continuously evolving. While there are many more options and opportunities to choose from than in years past, the evolving regulatory landscape doesn’t necessarily make it easy for an advisor to convert their practice to a different broker-dealer. As a community banker, you need a partner that provides your prospective financial advisor with a sound value proposition that speaks to his/ her needs in addition to the value proposition the bank itself and the opportunity offers.

Partnering with a broker-dealer that creates a tailor-made environment for top community bank financial institutions and their advisors to thrive in is key. When you work with a full service brokerdealer created by financial consultants, for financial consultants, the firm will understand what makes the foremost performing advisors tick, how to help them excel even more, and how to keep them happy. At the end of the day, your success stems from your advisor’s success.

While top-producing advisors are all profitable, they all have different approaches to their business. That’s what makes an open product platform a vital solution to the success of a bank’s investment program.

One of the biggest advantages you can give your advisor – and one of the biggest returns on your investment – is partnering with a broker-dealer that provides an open product platform. This freedom allows your advisor access to more products and services, so he or she can do what’s best for their client’s needs, not the broker-dealer’s.

Not pushing broker-dealer proprietary products means your industry-leading advisor has the freedom to choose from a wide array of independent product choices without the pressure of promoting a preferred vendor or broker-dealer motive. They can continue to be the successful advisor they have been through their most effective and preferred business approach.

October 2015 | 8

The foremost broker-dealer recruiting teams will conclude a highly proactive search that includes a range of best practices to source candidates based on the individual institution’s profile and needs.

These recruiting teams will come to you with a refined list of highcaliber candidates whom they know inside and out. They’ll understand how each candidate does business and have a real understanding of who the individual is and their presence in the community.

These broker-dealers will actively complete the upmost due diligence prior to reaching you and your team in order to make the process seamless and the candidate list high-quality.

Understanding Your Candidates Processes like performing predictive index analyses on the mostfitting candidates is crucial to understanding what motivates them and how they build their business. Ensure your broker-dealer uses these types of tools to help you fully understand your future financial advisor and make certain he or she is the right fit for your bank, community and customers.

Questions you want to know like, “How did their clients become their clients,” “Who are their clients, and will they fit in with our bank clientele,” and “Is he or she capable of building their own clientele rather than simply capitalizing on our customers?” should all be answered by your broker-dealer recruiting team prior to you ever speaking with the candidate.

The Right Partner Have you considered partnering with a broker-dealer specializing in helping community banks increase their non-deposit income via an investment program fully equipped with an industry-leading financial advisor that will afford you the performance you need coupled with the same culture and values as the communities you serve?

If your broker-dealer and their recruiting team is truly the partner it should be, you will feel not only confident but proud in your candidate decision and the outlook of your program. Collaborate with the broker-dealer that provides you the support and expertise you need, and the rest simply falls into place.

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124th Annual KBA Convention

October 2015 | 10

124th Annual KBA Convention, Hilton Head, South Carolina

124th Annual KBA Convention

124th Annual KBA Convention, Hilton Head, South Carolina

October 2015 | 11

KENTUCKY BANKER

Building Relationships…

the Heartbeat of the Universal Banker

By Anthony Burnett Community based financial institutions (FI’s) are the heart and soul of America. These locally-owned and operated institutions are woven into the fabric of the communities we live in, work in, raise our families and build our lives. That building involves our careers, our hobbies and our futures. That future in large depends on…money, investment and risk.

Most of us are not born with the equity we need to see our hopes and dreams come true. We need money to finance our education, our houses, cars and businesses.

We need equipment, tools, facilities and employees to make our lives work. The local community bank steps in to make all of this possible. It is the reason they were created, and fuels the local economy and future.

choose a “non-human” interfacing channel.

However, the more complex the interaction, the more likely the consumer prefers a physical channel…especially when it comes to sales.

Over the last decade, FI’s have been moving toward a different branch delivery model based on these preferences by consumers, so they can continue to deepen wallet share, reach more households, businesses and boost margins. What was born are Universal Bankers who do so much more than the routine…they now educate, advise and teach consumers as they discuss products, introduce experts and create deeper relationships with their customer in the process. In fact, NCR estimates Universal Bankers can handle up to 95% of customer requests; the remaining 5% are referred to subject matter experts.

In today’s changing consumer environment, where omni-channel delivery is the norm, community banks are also challenged with delivering services in a way that deepens their wallet share, household penetration and margins…so they can continue to fuel the American spirit.

In years past, that service was almost universally delivered the same way. A customer interacted with a “banker” in a branch across three feet of mahogany. Most interactions were transactional in purpose…check cashing, payments and order filling. The world had fewer channels for consumers to access financial resources and the delivery model…worked. No, it worked great!

However, today we have smart phones, the Internet, and global mobilization thanks to technology. Routine components of all things financial are now automated. Checking balances, moving money, making payments and even loan applications are handled via smart phones, tablets, laptops, drive thru’s, and ATMs. Therefore, the purpose of the physical channel i.e. the branch has changed and with it the identity of the banker.

The deepening of relationships with the customer is the key. Consumers today are becoming so much better at research and analysis, but they need help making decisions and choosing a partner. So, they’ll ask a friend or a thought leader, and then go and meet the people others also trust.

A 2014 study by Ernst & Young sheds tremendous light FIs can strengthen these interactions and introductions on what is happening, and what FI’s have done to adapt. by following these steps as they develop their own UniThe graph below shows consumer channel preference versal Bankers: by banking task. The study found the more routine and automated the task, the more likely the consumer is to continued on next page October 2015 | 12

KENTUCKY BANKER continued from previous page

1. Hire people who like people and are engaging. Cus- marketing materials to communicate your unique brand tomer engagement is a culture shift that moves away message. Promote your value proposition so the community and customer know what you are about. from transactions and toward conversations.

2. Train the banker to ask questions. Educate the consumer before offering solutions. The Banker’s job is to listen first, and then speak from his/her wealth of knowledge or bring in experts…when needed.

3. Invest in tools that automate routine activities and create margin for the banker to invest time with their customers. Scheduling tools, staffing models, cash handling equipment, ATMs, and or Interactive Teller Machines (ITMs) are examples of such investments.

Banks that embrace this model often see dramatic results. According to FDIC reports, a community bank in the Southwest organically grew its assets from $1.0 billion to $3.5 billion in five years with this engagement model. Furthermore, loan and asset data prove a financial institution in Tennessee grew its loan portfolio by 50% in four years and another in the Carolinas grew its book of business by over $100 million in a similar period. These are real results, from real financial institutions who have embraced the Universal Banker model engaging customers in a new way…and there are more.

4. Remove the barriers to the customer. Often this involves eliminating fixtures that separate the customer Investment in people and creating an environment that from the banker, but it doesn’t have to be radical. The fosters engagement can change cultures. And, that culkey is the facilitation of the desired experience. ture is about building relationships…the heartbeat of the Universal Banker.

5. Promote the bank’s brand in the physical environment. Stay away from artwork and use flat screens and

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KBA VENDOR SOLUTIONS

Professional Bank Services, Inc. is a KBA Vendor Solution KBA is pleased to announce that Professional Bank Services, Inc. (“PBS”) is a KBA Vendor Solution!

Founded in 1978, PBS has been employee owned since 2003. Throughout our 37-year history, we have remained a leader in providing consulting and education service to the financial industry by providing authoritative and practical advice on credit evaluation and administration, operations and technology, consumer compliance, audit services and other operational and strategic issues facing financial institutions. PBS’ loan and compliance review services and internal and IT audit services have easily withstood regulatory scrutiny throughout the company’s history as well as through the recent financial crisis.

Providing consulting and education services to the financial industry is what PBS does. PBS’ internal education and consulting staff produce training material long touted as the industry best. PBS provided faculty to train the FDIC and OTS examiners for over thirteen years on compliance, commercial and consumer lending topics. We use our knowledge and experience in not only developing top education programs, but in conducting hundreds of loan review, compliance/BSA and audit consulting services on these very topics.

PBS’ consultant staff is composed of professionals highly experienced in providing credit review, operations reviews, compliance, internal audit, technology services, corporate governance, HR and mergers and acquisitions.

The staff includes former regulators and/or bankers, attorneys, CPAs, Certified Internal Auditors (CIA), Certified Risk Managers (CRM), Certified Loan Review Professionals (CLRP), Certified Regulatory Compliance Managers (CRCM), Certified Information Systems Auditors (CISA), Certified in Risk and Information Systems Control (CRISC), Accredited ACH Professionals (AAP), Certified Anti-Money Laundering Specialist (CAMS), a Certified General Appraiser licensed in Kentucky, Tennessee and Indiana, and financial analysts.

PBS investment banking services provided include Purchase and Sale Strategy, Due Diligence Reviews, Fairness Opinions, ESOP Appraisals, Stock Redemption Analysis and Secondary Stock Offerings.

PBS is available to provide the following services to KBA member financial institutions: • • • • • • • • • • • • • • • •

Loan Review ALLL Methodology and Validations Commercial Appraisal Review Services Consumer Compliance Reviews BSA reviews Information Technology Planning Information Technology Audits Information Security Audits & Reviews Vulnerability/Intrusion Testing Internal Audit Staffing and Compensation Studies Asset Liability Management Validations Deposit Decay and Beta Studies Capital Planning & Stress Testing Strategic planning Stock valuation and ESOP appraisal services

October 2015 | 14

By engaging PBS, the KBA members will also have access to a ready source of information through the use of our 1-800 telephone number or email for timely responses to day to day questions. There is normally no charge for this service, provided the inquiry does not require significant investment in time, research and reporting.

For more information, contact Selina Parrish (502) 736-1282 or sparrish@kybanks.com

A community bank’s greatest ally for over years.

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BANK HAPPENINGS

FNB Donates to the Murray and Calloway County Schools Family Resource Centers Mayfield, KY - FNB Bank donated $3,100 to the Family Resources Centers of Murray Independent Schools and Calloway County Schools as a result of the bank’s 2015 philanthropy efforts in MurrayCalloway County. Fundraising dollars will be put toward assisting with the holiday assistance programs, the Santa Project and Tiger Christmas. In addition, the money will be used for fulfilling basic needs, family assistance efforts, providing clothing/shoes and so much more.

FNB employees coordinated and participated in numerous fundraising events benefiting the Family Resource Centers throughout 2015, including various jean days and a September Cookout. In addition, FNB employees from the Murray Office assisted with serving 2,400 meals during the Summer Feeding in the Park program, providing a “personal” shopper for new school clothes and shoes to 83 students at the First Loves Murray event, as well as distributing school supplies to 171 students at both school systems at the Back to School Blast.

“We are all so proud to help volunteer and fundraise for such a great cause, that helps so many families in our community,” stated Angelique Jones, FNB’s Murray Office Manager. “The partnership between the family resource centers at both school systems and FNB has been a huge success this first year and we hope to continue that same success for years to come.”

October 2015 | 17

KENTUCKY BANKER

John McGarvey receives top honor from Best Lawyers in America for Banking and Finance Law in Louisville LOUISVILLE, KY – Best Lawyers in America has named John McGarvey the “Lawyer of the Year” for Banking and Finance Law in Louisville. Only one lawyer per practice area is honored in each community. McGarvey is a shareholder with Morgan & Pottinger, P.S.C. McGarvey was also selected by his peers for inclusion in the 22nd Edition of Best Lawyers in America in the practice areas of: Banking and Finance Law; Litigation Banking and Finance.

McGarvey’s practice concentrates on secured transactions, municipal law, the representation of banks and other lenders in litigation, and matters under the Uniform Commercial Code. He was recently appointed to serve as a Division Chair for the Uniform Law Commission and to the Permanent Editorial Board for the Uniform Commercial Code.

McGarvey’s legal accomplishments have been recognized by his election to the American Law Institute and inclusion in lists such as Best Lawyers in America, Super Lawyers, Top Lawyers and Preeminent Attorneys. He is an adjunct secured transactions professor at the University of Kentucky College of Law, and has taught hundreds of seminars on legal issues involving financial institutions and credit extenders.

McGarvey is chairperson of Morgan & Pottinger’s Executive Committee and a member of the firm’s Marketing Committee.

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October 2015 | 18

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BANKERS ON THE MOVE Allison Carter

Shelia Plymale

Allison Carter has joined Central Bank as Assistant Vice President, Cash Management Officer. Allison joins Central Bank with nearly ten years of experience in the banking industry, including past experience with Central Bank. A graduate of the University of Kentucky, Carter holds a bachelor’s degree in integrated strategic communications.

Central Bank has announced the promotion of Shelia Plymale to Senior Vice President of Human Resources.

Mrs. Plymale has been with Central Bank for nearly 30 years. A graduate of both Eastern Kentucky University and the General Bank School at the University of Louisville, Shelia currently lives in Lexington with her husband.

Amy Manning

Tyler McGuffey

Central Bank announces the promotion of Amy Manning to Senior Vice President of Human Resources. Amy has been with Central Bank for nearly ten years and has more than 22 years of experience in human resources.

Mrs. Manning earned her Business Degree from UK with additional work toward an MBA from Morehead State University; she also holds the prestigious designation of Senior Professional in Human Resources.

PBK Bank is proud to announce the promotion of Tyler McGuffey to Loan Officer at the Danville location. Tyler previously served as Compliance Officer. He is a Lincoln County native and currently resides in Boyle County with his wife, Kelsey.

Bryce Goldbach

Hannah Schafer

Community Trust and Investment Company announced that Bryce Goldbach has been promoted to Assistant Vice President, Portfolio Manager with CTIC’s Wealth and Trust Management (WTM) division. Mr. Goldbach has been with CTIC’s Wealth and Trust Management Company since 2011.

First Security Bank announced Hannah Schafer will be the Banking Center Manager at their Downtown Evansville location. Schafer has over six years experience in management, business development, and sales. She was previously a Branch Manager of Springleaf Financial Services in Henderson, Ky. A graduate of University of Southern Indiana, Hannah received her Bachelor of Science degree in Management.

Casilee Kidd

Shasta Ligon

Traditional Bank is proud to announce the promotion of Casilee Kidd from Loan Assistant to Consumer Loan Officer. Kidd has worked for Traditional Bank since 2012 and has 12 years banking experience. Kidd, graduate of Eastern Kentucky University, is a native of Lexington, Kentucky. She is an active member of Clays Mill Elementary PTA, Western Little League and Southland Christian Church.

First Security Bank announced Shasta Ligon joined First Security Bank as the Green River Road Banking Center Manager. Ligon comes to First Security Bank with over nine years experience in management, sales, and in retail banking. She was most recently Vice President/Retail Officer at BankTrust Financial/Field & Main Bank. Ligon holds a BA in Business Administration and Marketing from Middle Tennessee State University.

David Greenwell

Linda Rumpke

Town & Country Bank and Trust Co. recently announced the promotion of David Greenwell to Vice President and Credit Officer. David joined Town & Country Bank and Trust Co. as a Lender in 2011 and has most recently served as Assistant Vice President and Credit Officer. In his role as Credit Officer, David manages credit risk and the Bank’s underwriting practices.

Traditional Bank announced the addition of Linda Rumpke to its Regional Board. Rumpke was recently named by Columbia Gas of Kentucky as the company’s new Director of Finance, resigning her position as Commercial Loan Officer and Senior Vice President with Traditional Bank.

Greg Branam

Mary Moorhouse

Greg Branam was recently promoted to Assistant Vice President, Internal Auditor at Farmers National Bank.

He joined the organization in 2008 and has been involved with March of Dimes and Heart of Kentucky United Way. Branam is a graduate of Eastern Kentucky University and the Kentucky Bankers Association’s Essentials of Banking and General Banking Schools.

Mary Moorhouse has joined First Security Bank in a newly created position as Corporate In-House Counsel.

Moorhouse has over eight years experience in legal services and was most recently with Daymar College where she served as Director of Legal Services and Director of Benefit Administration and Associate Relations.

Want to announce a promotion? Email photos & announcements to Josh Fischer: jfischer@kybanks.com October 2015 | 20

BANK HAPPENINGS

Traditional Bank Supports Programs for Seniors in Menifee County Traditional Bank presented a ceremonial check in the amount of $20,000 to the Menifee County Regional Kitchen and Senior Center during the ground breaking ceremony on Wednesday, September 2, 2015. Representing Traditional Bank were CEO Bill Alverson, President Andy Baker and Menifee Market Leader Sheila Mullins-Cecil. Also in attendance were Kentucky’s Lieutenant Governor, Crit Luallen, State Senator Albert Robinson, State Representative David Hale and Menifee County Judge Executive George Justice.

The Menifee County Regional Kitchen will combine with the Senior Citizen Center. The new facilty will provide 5,000 square feet to house a dining and recreation area, activity rooms, a kitchen and a mechanical room. The facility will allow for expanded services to be offered such as health and wellness programs as well as GED and computer classes.

Traditional Bank president Andy Baker said, “When this project was introduced to our bank in 2013, we felt it an honor to be asked to participate. Our board and management are excited to offer the bank’s finanicial support and help this important initiative move forward.”

“Our team here in Menifee County is extremely proud to see Traditional Bank get behind this project,” said Sheila Mullins-Cecil, Vice President and Menifee market leader. “We see this as an opportunity to make a real difference for seniors in our community.”

The new center will serve seniors in the five-county Gateway Area Development District: Menifee, Bath, Montgomery, Morgan and Rowan counties.

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Your Community Bank Wins Partners in Philanthropy Award Regional bank honored as area’s most philanthropic medium-sized company Your Community Bank was named the “Most Philanthropic Company” among medium companies (revenue $10 million - $49.99 million) by Louisville Business First. Representatives from the company accepted the award during the publication’s Partners in Philanthropy event. This is the third time the company has received an award in the medium company category.

“Your Community Bank is our name and our employees try to live up to that every day,” said James Rickard, CEO of Your Community Bankshares, Inc., the holding company for Your Community Bank. “We’re grateful to be honored and this recognition encourages us to do more.”

Partners in Philanthropy is an annual event presented by Louisville Business First, awarding companies that show leadership and financial support to local charities and organizations.

In 2013, Your Community Bank was ranked number one in the medium company category. Last year, they ranked in the top five for the medium company category. This year, they brought home the number one ranking in the same category for a second time.

Your Community Bank’s philanthropic efforts focus on education, health care and regional economic development. In 2014, Your Community Bank and its Charitable Foundation awarded $309,715 to deserving organizations whose work positively impacts and improves the communities where its employees live and work. Your Community Bank’s employees also donated more than 4,000 volunteer hours to worthy causes in 2014.

“Your Community Bank is driven by the belief that relationships are at the core of our success,” said Kevin Cecil, President and Chief Executive Officer of Your Community Bank. “We uphold a commitment to support the communities where we live and work. The company has chosen to specifically support education, healthcare and regional economic development because we believe they are essential to the overall development and well-being of our communities.”

At left: (from left to right) Mark Haney President of Kentucky Farm Bureau; Kevin Cecil President and Chief Executive Officer of Your Community Bank; Krysteen Cissell Louisville Business First Advertising Director. Your Community Bank was recently named the “Most Philanthropic Company” among medium companies by Louisville Business First. Kevin Cecil accepted the award during the publication’s Partners in Philanthropy luncheon. Your Community Bank’s philanthropic efforts focus on education, health care and regional economic development.

October 2015 | 22

BANK HAPPENINGS

Bank of the Bluegrass Presents Rescue Mission with copy machine Lexington, KY - Mark Herren, CEO for Bank of the Bluegrass & Trust Co., recently presented The Lexington Rescue Mission with a multi-functional copy machine. The Lexington Rescue Mission is a non-profit organization dedicated to meeting the physical, emotional, and spiritual needs of hurting people in the greater Lexington area. On Sept. 1, the Mission launched a staffing service, Advance Lexington, to provide temporary employment to local job-seekers. “This service is an extension of our employment rediness program, Jobs for Life, and is operated in partnership with Jubilee Jobs and the New Life Day Center,” said Jim Connell, Executive Director for The Lexington Rescue Mission.

The Mission hires Jobs for Life graduates who do not yet have jobs and places them into temporary work assignments where they will receive wages, on-the-job training, and job placement services to help transition them into regular employment.

Advance Lexington is located at the New Life Day Center at 224 Martin Luther King Boulevard in the heart of downtown Lexington. Laura Carr, Director of Development with The Mission said, “The equipment provided by Bank of the Bluegrass will enable this new staffing servcie to have a functional office for staff and communicate with prospective employers in the community.”

Mark Herren, CEO with Bank of the Bluegrass & Trust Co. said, “The bank has partnered with The Lexington Rescue Mission on several occasions and our employees donate their personal time to support The Mission by volunteering to help serve lunch every Tuesday. When we determined we had this piece of equipment available to donate, The Lexington Rescue Mission was the first non-profit organization we considered because of their contribution to the Lexington community.”

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October 2015 | 23

KENTUCKY BANKER

Current Expected Credit Loss (CECL) It is coming. Will you be prepared?

There are unknown nuances to a final pronouncement on CECL. Preparing may seem premature, but be assured it is coming. When it arrives you will experience a significant change in practices, processes and resources required to be compliant. While it is almost assured you will experience a need to increase reserves, proper preparation will help you to foresee that need and manage process change effectively. Changes can be made today that will provide help in the future implementation of CECL and enhance current calculation of the ALLL under today’s methodology.

within the portfolio. Establishing these linkages will immediately allow for heightened clarity on when changes in ALLL coverage is necessary under today’s modeling. These linkages will aid in the transition to the CECL model when implemented. Having a defensible methodology for qualitative factor adjustments may also aid in the exam and audit process today.

Board and Senior Management Training

There will be many decisions that must be made prior to the implementation of CECL. It is of the utmost importance to ensure that the Board and its Senior ManData Management agement be proactive in meeting the coming challengThe most precise and effective calculation under a es. Developing a training program and establishing the CECL model will require a strong grasp on many pre- framework by which policies, procedures and practices cise loan portfolio attributes. Many of these attributes will be changed are actionable items best implemented are currently untracked or haphazardly tracked at many immediately. institutions. A strong tracking mechanism must be planned now so that data will be available and reliable MCM will be happy to assist in the evaluation of your when new CECL rules are implemented. A lack of this Allowance processes and programs to help you prepare information could make your institution more reliant for CECL. Contact MCM’s Financial Institution Seron peer data and provide for additional volatility when vices Team for more information.

CECL calculations are implemented.

Vintage Analysis – Segregation of similar loan types by reasonable periods where underwriting is similar Loan Segmentation – Strengthened separation of loans by product, type, repayment characteristics LTV Tracking – Reliability of LTV tracking and expansion of tracking detail Attribute and Exception Tracking – Institutionalized tracking of loan policy attributes and exceptions

Henry Hawkins, CPA Henry.Hawkins@mcmcpa.com, 502.882.4490

Correlation of Losses – Developing tracking mechanisms on each loss (full and partial) to determine evidence of correlation of loss to tracked data attributes Enhancement of Qualitative Support The qualitative factoring used in today’s models should be refined and tied to key metrics which are identifiable, documented and repeatable. Changes in these metrics need to be monitored and correlated to increased risk

October 2015 | 24

Jason Keith, CIA Jason.Keith@mcmcpa.com, 502.882.4371

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HOPE of Kentucky

Who Are The Credit Invisibles?

by Brian Waters

differences start early in life and continue throughout adulthood in these populations, contributing to an onTake a second and think about the last time you ap- going cycle of lack of access to credit. plied for a loan? There was an application and multiple disclosures and then the waiting period for ap- So what does this mean for CRA? Considering proval while a bank reviewed your income and pay- that each bank is examined on their ability to lend ment history and creditworthiness. At the end of the in low-income areas, the fact that nearly half of lowday, we all know that a key piece of the underwriting income individuals don’t fit into a traditional credit puzzle was your credit score. We see commercials underwriting process can, at best, present challenges every day telling us to order our free credit report, and at worst, restrict credit. Add to that the Black and track our credit score changes, or even increase our Hispanic applicants who face the same credit score credit score to get a free dilemmas, and sudottoman. But what if denly disparate impact you don’t have a credit and lack of assistance score? What if you’re claims start to materialcredit invisible? ize during fair lending conversations.

A recent CFPB study found that nearly 189 A different approach is million Americans needed. have a credit score. But Embracing the tenants in the same study pubof CRA, banks need to lished May 2015, the provide loans to lowCFPB also uncovered income neighborhoods that 26 million Ameriby offering innovative cans are credit invisproducts with flexible ible, roughly 10% of underwriting. the population. What that means is that those Banks need to consider 26 million people don’t non-traditional underwriting that evaluates more than have a credit score. In addition, another 19 million just credit scores.

Americans are credit unscorable, meaning they either don’t have enough credit history to generate a score At the same time, the effort to increase financial liter(9.9 million) or their credit history is too stale to cre- acy must be championed, educating credit invisibles ate a score (9.6 million). In total, that’s 45 million and unscorables not only on the importance of credit people struggling with credit. And remember, these reports but how to effectively manage credit and inindividuals don’t represent bad credit – they’re not crease their overall score. The ABA recently offered bankrupt or delinquent. a quick guide that provides six ways to improve an individual’s credit score.

I know what you’re thinking – “okay…let’s concentrate on the 189 million people with credit.” That The fact that every community has underserved and seems to make sense. But let’s look a bit deeper into unbaked populations isn’t surprising. What the CFPB whom comprises these 45 million people. 30% of the has clearly illustrated is that if a bank’s answer is to credit invisibles and 15% of the credit unscorables roll out its existing products and underwriting stanlive in low-income neighborhoods. Black and His- dards into low-income neighborhoods, it’s likely to panic individuals are also more likely to be invisible fail to meet credit needs from the outset. Rethinking (13% of the population) or have unscorable credit the system of providing credit is critical for success. histories (12% of the population). The demographic October 2015 | 27

thank you for another great KBA convention!

See you next year at the Breakers for our 125th Convention

124th KBA Convention, Annual Banquet Grand Ballroom, The Westin Resort & Spa Hilton Head, South Carolina

H. Lytle Thomas KBA Past Chairman

Ballard W. Cassady Jr. KBA President & CEO