Kentucky banker magazine september 2015

page 18

KY Charts Three Top Banks to Work For in USA

KENTUCKY BANKER

2015-2016 Board page 21

<< Louis Prichard, New KBA Chairman Michael Mercer, New KBA Vice Chairman Timothy Barnes, KBA Treasurer Nominee

INSIDE

My Two Cents: Military Lending Act page 8 KBPAC Annual Golf Outing page 10 << KBA INTERVIEW: H. Lytle Thomas page 12

September 2015

OFFICERS

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

Mr. Gordon Kidd United Cumberland Bank

Mr. William Alverson Traditional Bank, Inc.

Mr. Glenn Meyers Kentucky Federal Savings & Loan Association

CHAIRMAN Mr. H. Lytle Thomas Heritage Bank, Inc.

Mr. James W. Beach Peoples Bank & Trust Company

Mr. Michael Mineer Citizens Deposit Bank & Trust

VICE CHAIRMAN Mr. Louis Prichard Kentucky Bank

Mr. J. Wade Berry Farmers Bank & Trust

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

TREASURER Mr. Michael H. Mercer First Security Bank of Kentucky PAST CHAIRMAN Mr. Neil S. Bryan The Farmers Bank of Milton

Mr. William F. Brashear, II Hyden Citizens Bank Ms. Lanie W. Gardner First Southern National Ms. Elizabeth Griffin McCoy Planters Bank, Inc.

cover photo by

Nancy Stalls “Friends on the Farm”

Mr. Ryan Steger Town Square Bank Mr. Frank B. Wilson Wilson & Muir Bank & Trust Company 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

I

t seems impossible that another year has passed and we are once again on our way to fall convention. I guess it’s true that time flies when you are having fun! It has been a great honor to serve as chairman. I cherish the friendships that have been forged, the connections with fellow bankers and the knowledge that we are all in the same fight together… to better the regulatory burden on our banks.

passed both through the House and the Senate.

In addition to advances in regulatory relief, the KBA has had a banner year in education programs providing educational opportunities to over 4200 registrants.

The Emerging Leaders program is well on its way to another outstanding class of bankers who will lead our banks in the future. KBA Insurance Solutions continues to bring best-in-class service and product delivered by I began the year with a message of optimism. Many industry experts. And with thirty-six endorsed vendors looked at me with a tilted head and a pleasant smile as available, the KBA can deliver a solution for practically if to say, “You just wait and see how hopeless it really any need a bank may have. Congratulations on another great year of service to our banks! is.” But I am pleased to say that I wrap up my year with a renewed sense of optimism.

I am proud of the continued success of Our economy has improved. It is not where the KBA. Serving as Chairman has made we would like to see it, but it has improved. me even more cognizant of the important Loan demand has picked up. We see our work that our association does every day. banks reporting increased profitability, and I know that we will continue to thrive unwe have increased the volume of our voice der the Chairmanship of Louis Prichard. I in Washington with our elected delegation offer my assistance in any way to Louie as and with our regulators. we continue the fight for our industry.

It is not realistic to think that we can repeal Finally, I would like to thank the board of Dodd-Frank, but we have certainly moved directors and employees of Heritage Bank the tone of conversation in a positive direcwho have supported me over the last year tion for legislative relief for our community banks. The while growing a thriving bank. I thank the board of the process to make change begins in grassroots converKBA for their efforts and the many hours of dedication sation with our KBA member banks. We have all had to deal with new regulation…some of it not good and to our industry. I also want to give a heart-felt thank you some of it really awful. As we understand the impact to Ballard and the staff of the KBA for the outstanding to our banks, and to our customers, we bubble these job that they do. And most importantly, I want to thank concerns up to the KBA staff. They compile our con- my family for the support and love that make every day cerns and draft a common message, and that message a blessing! becomes the rally cry for us to take to the Hill in D.C. Thank you all!

In Kentucky, we have lead the charge in messaging around tailored regulation, privacy notices, eighteen month exam cycles, and qualified mortgage treatment for loans held in portfolio. All of these have a significant positive effect for our banks and our customers.

H. Lytle Thomas Most impressive is the fact that we have started the ball KBA Chairman moving on regulation relief for our banks with bills

by H. Lytle Thomas 2014-2015 KBA Chairman

“I wrap up my year with a renewed sense of optimism”

KBA INTERVIEW: H. Lytle Thomas | page 12 >>

Outgoing Chairman talks about his time leading the board.

September 2015 | 5

STRAIGHT TALK

am looking forward to the KBA’s 124th Annual Convention. I am looking forward to the beautiful location, Hilton Head, South Carolina. I am looking forward to the future. The response to this year’s Convention has been outstanding, as evidenced by the number of attendees and sold out room blocks.

due to mismanagement) that our member banks reflect during times of success. Another way that success can be measured is by the responsibility that Kentucky banks, and bankers who run them, take on for their communities and customers.

by Ballard Cassady KBA President and CEO

I

Navigating the Future in Changing Times

Kentucky bankers are a special breed. Kentucky bankBut, even though our annual Convention reflects the ers don’t flinch when the going gets rough and don’t welcoming of a “new” KBA year, I would be less than rest when times are good. Kentucky bankers know that candid if I did not admit that I spend a good part of their bank is a part of something bigger. That is seen my Convention preparation in reflecting on dramatically in the most recent ABA survey where we have been. The theme of this year’s of the top 50 banks to work. This was a naI am convention is “Navigating the Future in tional survey, or contest if you will. Out of looking Changing Times.” That could be our theme those 50, we would be happy if Kentucky reevery year and we would never run out of forward ceived one recipient of the designation... but, topics to cover. we received three!

to the future.

Additionally, a telephone poll conducted by The only difference in the changes we face Voter Consumer Research in February resultfrom one year to another, one decade to aned in a determination that customers trust and other, or even one century to another, is the pace and complexity of change — both of which are exponen- have confidence in their Kentucky bank, EVEN IF they tially increasing. And, that is where the relationship be- don’t trust the banking industry in general. These retween the KBA and its member banks becomes so vital. sponses reflect the impact that our member banks have on their employees, their customers and their commuThe success of a trade association is an unusual thing. nities and the KBA couldn’t be more proud to serve Unlike other companies which can establish success you. And serve we will. generally through financial reports, production of widgets or other objective criteria, a trade association’s The KBA staff continues to dedicate itself to the missuccess — the KBA’s success — is solely dependent sion of the KBA. I would place our staff against the upon the continued and measured success of the indus- staff of any other state banking association and expect try it represents. That success can be measured in so that they would display service and leadership qualities heads and shoulders above the others. The KBA board, many ways. consisting of 18 bankers representing banks of all sizes On the one hand, Kentucky banks have a strong repu- from all regions of Kentucky, keeps us on point. These tation of solid, conservative financials. That helped us board members take their responsibilities seriously and during good times and, more importantly, during bad. serve to assist on issues as needed. The KBA board is Further, although we have lost a number of banks dur- led by a Chairman selected by the membership. Our ing the most recent economic crisis, it was handled with most recent KBA Chairman, Lytle Thomas, has been the same level of professionalism and realistic planning a strong leader during his tenure, standing at the front (via voluntary transitions rather than forced closings navigating our way.

Ballard Cassady KBA President & CEO

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

by Debra Stamper KBA General Counsel and Executive Vice President

Ignorance is Bliss No Longer

Updates to the Military Lending Act

A

s if we don’t have enough to worry about So what does that mean? with the banking regulators, our industry must also follow the mandates of many oth- It means that a regulation that banks have typically ers as well. One of the most recent agencies to been able to avoid will now significantly impact jump on the banking bandwagon is the Depart- the bank’s consumer lending. ment of Defense (“DoD”). On July 22, 2015, the Under the MLA rule amendments, the lender must DoD published final amendments, effective Octo- first determine whether the borrower is covered by ber 1, 2015 with compliance required by October the MLA. A covered borrower is a consumer who 3, 2016, to Military Lending Act (“MLA”) regu- “at the time the consumer becomes obligated on a lations—amendments which significonsumer credit transaction or escantly expand military lending relief tablishes an account for consumer ...a regulation from only certain delineated loans is a covered member… or that banks have credit, to ALL consumer credit, except for dependent.” A covered member is residential mortgages and purchase typically been a member of the armed forces servmoney loans. ing on active duty or active guard

able to avoid will

The Military Lending Act, which has now significantly and reserve duty or a “dependent,” which includes spouses; children up been in place since 2006, restricts impact the bank’s to age 23 if in school; certain widcertain lending terms on “consumowed spouses; parents and in-laws consumer er credit” to military personnel and if supported; certain ex-spouses, lending. their spouses and dependents. This etc. So before the bank even begins to offer credit options for the Act and its implementing regulations consumer, the bank will really need to determine have not impacted lending in the past because the scope of the Act was very narrow. The Act cur- if the consumer will be a covered borrower under the MLA. No particular method of determining the rently only covers (1) closed end credit with a term covered status of a borrower is mandated by the of not more than 91 days and an amount not ex- MLA or rules. However, the rules allow for a safeceeding $2000; (2) loans secured by cars where the harbor if a lender uses the MLA Database for deterpurpose of the loan was not the purchase of the car; mination. and (3) loans where the lender requires post-dated The rules require that covered borrower status must checks to repay the loan. be determined at the time (1) an applicant initiates Most banks either never made these types of loans or stopped making them because the restrictions were too cumbersome. The DoD, with these new rules, had decided to amend the rules to be consistent with “consumer credit” as that term is defined

by TILA: credit offered or extended to a covered borrower primarily for personal, family or household purpose and payable in accordance with a written contract with at least four installments— with limited exceptions being residential mortgages, vehicle purchase loans, purchase money loans for personal property.

a transaction or 30 days prior to that time; (2) an applicant applies to establish the account or 30 days prior to that time; or (3) the creditor develops or processes a “firm offer of credit” that includes the status of the consumer so long as the consumer responds to the offer no later than 60 days after the creditor provided the offer.

If the bank determines that the consumer is a covered borrower, the bank then must determine if the request for credit would be a covered loan. A covered loan is defined as “credit offered or extended continued on next page

September 2015 | 8

KENTUCKY BANKER continued from previous page

primarily for personal family, or household purpose and that is subject to a finance charge or is payable by written agreement in more than four installments.” The amendments exclude residential mortgages and purchase money loans. However, overdraft lines of credit (not simply overdraft protection) and most deposit advance products will be covered.

If the lender determines the consumer and the loan are both covered under the MLA rules then the MLA rule restrictions must be followed.

The first restriction is the prohibition of a military annual percentage rate (“MAPR”) that exceeds 36% on a covered loan. This is different from the APR under TILA because the calculation includes fees that would not be considered “finance charges” under TILA. The MAPR calculation includes participation fees (such as annual fees), fees and premiums for credit insurance, debt cancellation, debt suspension, fees for credit-related ancillary products sold in connection with the credit transaction for closed-end and credit or an account for open-end credit. The MAPR also includes fees for any ancillary product sold with an extension of credit to a covered borrower so long as that ancillary product is associated with an extension of credit. If the credit extension is for a credit card or certain “small amount loans” as defined by the regulation, there are certain bona fide fees which may be excluded.

This change, a new calculation for MAPR, is very important because it is ongoing, based on the customer’s actual balance and actual fees for open-end credit. This requirement could potentially trigger a violation during the term of an ongoing open account for consumer credit. Thus, even small, modest fees may trigger an MAPR in excess of 36%.

DoD guidance on the rule provides “a creditor reasonably could be expected to estimate at the outset of a billing cycle whether charges to a covered bor-

DEBRA STAMPER kba evp & general counsel

rower can produce an APR in excess of the limit.”

Beyond the MAPR cap, there are other prohibitions on consumer credit to covered borrowers. Lenders may not: - Require arbitration; - Require unreasonable notice for legal action; - Require waivers of the right to legal recourse under state or federal law; - Use of a check or other method of access to a bank account (targets payday like practices of ensuring payment by obtaining an advance check) with a few exceptions; and - Require prepayment penalties, among other things.

Specific disclosures are also required by the lender to the covered borrower. These disclosures must be provided orally and in writing. The oral disclosure may be provided in person or by phone or with the written disclosures and must both be provided before the borrower becomes obligated on the transaction or establishes an account for the consumer credit. These disclosures include: - MAPR Statement which describes the charges the creditor may impose to calculate the MAPR but there is no requirement to disclose the numerical MAPR (model statement Section 232.6(c)(2)); and - Clear description of the payment obligation of the covered borrower (for closed end credit a payment schedule, and for open end credit the account opening disclosures under Reg. Z).

The new MLA rules will create significant changes to consumer lending. It is very important that banks read the rule and determine what policies and procedures need to be changed. The penalties are harsh and include criminal penalties!

Let me know what you think. dstamper@kybanks.com September 2015 | 9

KENTUCKY BANKER

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KBA INTERVIEW

2014-15 Chairman H. Lytle Thomas H. Lytle Thomas is completing his year as KBA Chairman. We sat down with Mr. Thomas recently to discuss his name, family, farming, his time in banking and his time with the KBA. So what did you think the H. stood for?

What does the H. stand for?

I preface by saying the name is from Welsh descent. My father is from Wales. My first name is Hywel. I sign my name H. Lytle Thomas because people think that my name is Thomas Lytle, instead of Lytle Thomas. So I do that so they know that Thomas is my last name, not my first.

KBA SIDEBAR There are approximately 5,700 men in the world with the name Hywel, or around 0.001% of the population. It means “the eminent one” and was the name of the 10th-century king of Wales.* At left: Image from a Welsh manuscript depicting King Hywel Dda (Hywel the Good).**

How did you come to be called Lytle?

Lytle is a family name from my mom’s family. It’s a family name passed down from my mom’s father, Lytle Moloney. He ran the Farmers Liberty Bank of Augusta Kentucky for 48 years. So he was a banker, and I think that is what drove my interest in banking because I was the oldest grandson. I hung out with my grandfather all the time at the family farm. We talked banking and business and farming. He had a great deal of influence on me.

You list your interests outside of banking as hunting, fishing and farming. What is it about farming that interests you?

My grandparents lived on a farm in Bracken County, which is in between Maysville and Burlington. So I grew up in the summer working on the farm. It connected me to the history and the culture of Kentucky as a rural state. I wanted my children to have that same experience, so I have a farm just down in Crittenden, which is about 20 minutes away from here. We spend quite a bit of time down there. We just raise hay, and we have a garden, that the wildlife eats up. But the kids get to have the experience of enjoying the outdoors, and understanding farming and the hard work it takes and what that culture is all about. We’ve been able to enjoy that together.

Tell us about your children. (Editor’s note: Lytle, and wife Stephanie, have 2 children: William age 9, Gwyneth age 12.)

William is a first degree black belt. He does seasonal sports, right now he plays fall baseball and football, in addition to his karate. I would say he is a typical 4th grade boy, full of adventure and big ideas. Daughter Gwyneth is a third degree black belt, and she’s quite good. (Editor’s note: Lytle is a black belt in Taekwondo.) She’s into dancing - ballet, tap and modern jazz.

Tell us about your wife. (Editor’s note: Lytle and Stephanie have been married for 18 years.)

Stephanie is a partner at Bahl and Gaynor investment firm. She is a very bright lady. She has a charter financial analyst designation, which is the highest accreditation you can get in the investment world. She manages institutional money, pension, profit sharing for universities and big hospital systems. She’s great.

It’s pretty amazing to me, we both have pretty busy professional lives, and we both are very dedicated parents, and she is able to manage the kid’s school, homework, all the games and all the practices. How she organizes all that in addition to her professional life amazes me.

How did you come to Heritage Bank?

Fifth Third Bank, in the time that I was there, experienced around 100 billion dollars of growth. It was basically a community bank when I started and it grew into a significant regional bank. I really wanted to get back closer to the customer, and the opportunities with the bigger banks were not necessarily local.

I have so many local ties with family, and with the history here, I just didn’t want to move (away), and so I made the move to Heritage Bank. I chose Heritage Bank because when I was at Fifth Third, when we would call Heritage customers they would never sit down and visit with us. They always spoke about how delighted they were with the service and relationship they had with Heritage Bank. When I had the opportunity to become a part of that, I was thrilled to make the move. It has really been fantastic working for Heritage Bank and its customers.

KBA SIDEBAR About H. Lytle Thomas Current President and CEO, Heritage Bank. Graduated Transylvania University (B.A. in Business Management); MBA from Northern Kentucky University; worked at Fifth Third Bank for 19 years; at the main office in Cincinnati for fourteen years; graduate of Leadership Northern Kentucky and Leadership Kentucky.

During your more-than-two decades in the banking industry, what are some of the things you have seen that are significant changes and challenges for today’s Kentucky banker?

We lived through a tough economic cycle, and Kentucky banks faired pretty well. It wasn’t fun, we didn’t enjoy it at all, but Kentucky banks held their own financially. But, there’s still an uncertainty present since the passage of Dodd-Frank, so as an investor would you put your money in something with an uncertain future? As a bank, do you look at investing in your bank and bringing on new products, and new people, and new locations in a time when you have an uncertain regulatory burden staring at you out there? The cost for regulatory compliance for our bank in the last five years has gone up from just under $100,000 to just under $450,000. Yes our bank has grown in that time, but that is a tremendous increase in cost, and it is a real cost for our bank. continued on next page

September 2015 | 12

*Source: themeaningofthename.com and behindthename.com. **Image: King Hywel Dda (Hywel the Good) enthroned. The Peniarth Manuscripts, National Library of Wales. Public domain.

KBA INTERVIEW continued from previous page

The other piece that I think is a challenge for our banks right now is the pace of technology changing. We have the baby boomers who want to come in and visit with us, and talk and sign something and walk out with their loan. Then we have the millennials that want to bank entirely electronically. That’s a challenge for our industry, how do we take care of both customers? How do we keep up with the changing technology? I think we have to invest in technology, and we also have to constantly monitor the risk. Technology obviously brings new risk. It used to be banks were concerned about a guy walking in the door and robbing the teller line. Now banks have far more risk and worry with someone hacking in and taking over accounts. That is far more concerning now that even just a couple years ago. Online banks will continue to pressure us, so community banks will have to continue to invest in technology and the marketing of that technology. My vision for our bank is to be the friendly community bank where you come in and visit, and you see people you know, but we also offer the state-of-the-art technology that makes us competitive with any competitor. That, I think, is the winning combination.

How did your relationship start with the KBA? And, how has your relationship grown with the KBA? My predecessor (at Heritage Bank) was involved in the KBA and always attended KBA conventions, events, education and KBA schools. I had taken some KBA classes, so I was pretty familiar with the education side of the KBA. I became involved with the Northern Kentucky Chamber of Commerce and was doing some advocacy for the Northern Kentucky Chamber. When I was in Frankfort I saw Ballard’s ability to get stuff done for bankers, which was impressive. He’s obviously bright, and he does his homework, so he knows the topics inside and out. He is passionate about doing the right thing, which really comes through. He’s really done a tremendous job in the state. But I have also learned through my experiences with the ABA that he is also recognized as the leader in the room as far as all the state associations go and he is a significant player at the national level. When you combine that with Senator McConnell and Congressman Barr and Congressman Rogers and the delegation from Kentucky, it puts the KBA in a position where we really have been able to get things accomplished. Just in this calendar year we have moved the needle on things that will improve our banks in Kentucky.

(Laughs) He’ll look great. (Laughs) Seriously, I’m really proud of the efforts we have been able to make. We have been able to get tailored regulation through the House. If it passes the Senate, we’re really going to be able to affect some things that are everyday issues for us -- like the mortgages we hold on our books, they will enjoy the safe harbor of qualified mortgages, which is a big deal for community banks. Another example is the burden of sending annual privacy notices -- for us the cost of mailing out privacy notices every year is about $18,000. We have that burden every year. These are things that we have done and will do that will create bottom line savings that will help our banks.

But maybe more importantly, I think the biggest frustration for community banks with all the new regulation, is not necessarily the extra cost or the extra work, although those things have burdens, but it’s this feeling that most of this regulation is not helping our customers feel safer or be safer, or providing them with credit, or helping them in any way. If we are able to relieve some of that burden, maybe that will start us down a path where we are doing the right thing for customers, and for the banks.

What is your vision for the KBA? Think of what the KBA has lived through in its 125 years – the Industrial Revolution, the Great Depression, and two World Wars.

It’s unbelievable. One thing that has been consistent about the KBA through its 125 years is that it has always helped banks recognize what the challenges were, and what the solutions are.

I think that is a winning formula that never goes away. I think the KBA will continue to serve Kentucky bankers well.

So often when you talk to a banker you have met through the KBA, or the KBA staff, or an endorsed vendor, about a challenge you are facing you find the solution -- you don’t need to reinvent the wheel that somebody has already invented, and all you have to do is put the wheel on your chassis. I think that need is never going to go away. As the pace of change increases, the need for the KBA increases in my mind. Without a doubt.

How do you feel about your year as KBA chairman?

Louis (Prichard, 2015-2016 KBA Chairman) and I have become pretty good friends on the (KBA) Board, and I feel like I have him set up for a great year. (Laughs) I have his budget all set for him, I have his education program all set for him. I’ve got all the advocacy hard work done, all he has to do is accept the awards.

Pictured above: H. Lytle Thomas, wife Stephanie, daughter Gwyneth and son William. At right: Mr. Thomas at the Heritage Bank vault.

September 2015 | 13

KBA VENDOR SOLUTIONS

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We know how important information technology is to the modern financial institution, and we recognize NetGain Technologies as Kentucky bankers’ best choice to reduce risks, enhance efficiency, and help to meet audit requirements.

NetGain Technologies is uniquely qualified to work with banks in the region as an active member of banking associations throughout the company’s six-state, seven-market regional footp int. The KBA recommends NetGain’s Technology OneSource managed services to its members.

IT department of a multitude of banks across the state.

The customized solution encompasses 24 x 7 network monitoring, on-site support and maintenance, software updates, and around-the-clock helpdesk services provided by a team of Kentucky-based remote support engineers. Technology OneSource offers a scalable technology solution at a fixed monthly fee, eliminating the need for growing banks to worry about IT hiring and staffing challenges or budget overruns.

Because community banks present a highly regulated and security-focused environment, NetGain Technologies has achieved SOC 2 Type II certification to better protect the security, integrity, availability, confidentiality, and privacy of client data. Technology OneSource additionally offers on-site support to banks as they undergo regulatory compliance reviews. NetGain’s experts stand shoulder-to-shoulder with financial clients during the actual audit.

For more information about NetGain Technologies and how they can become your bank’s IT department, please contact Selina Parrish at the KBA at (502) 7361282 or sparrish@kybanks.com. The Kentucky Bankers Association is confident that Technology OneSource Technology OneSource is a managed information tech- will enable our member banks to become more efficient nology service for the financial and other professional and more secure while allowing you to focus on bankindustries. NetGain Technologies serves as the full-time ing rather than technology.

The Lighter Side of Banking

Shakespeare is not a Banker A young man was newly appointed as a clerk in a bank.

The manager of that branch was fond of Literature.

She asked the new clerk: ”Do you know William Shakespeare?”

The clerk replied: ”No. What branch does he work at?”

September 2015 | 14

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FCS Southwest Finally Reveals Cost of Massive Loan Fraud

F

CS Southwest, which serves most of Arizona, has finally issued revised financial statements reflecting the cost of a massive loan fraud stretching back into the last decade. According to a July 29 letter to its borrower/stockholders, FCS Southwest reported that “cumulative losses resulting from [certain] identifiable loans totaled $49.7 million.” After discovering this problem during the third quarter of 2014, FCS Southwest withdrew its annual reports dating back to the 2010. At the same time, the Farm Credit Administration (FCA) pulled from its website all FCS Southwest call reports filed after 2009, pending an audit and restatement of FCS Southwest’s financial statements from 2010 forward. The year that it took FCS Southwest to complete this restatement is an indication of the complexity of this mess. Despite this loss, FCS Southwest remains adequately capitalized, assuming no further losses emerge. Quite troubling, though, restated call reports for FCS Southwest have not yet been posted on the FCA website. From a call-report perspective, FCS Southwest has not existed since 2009. How many other FCS associations face this type of problem? Is this the tip of an iceberg?

The FCS Southwest letter went on to state that “after evaluating strategic alternatives and considering many factors, including the events of 2014 described above, our efforts to comply with the supervisory letters and the volatility that agriculture in our region has experienced over the past years, in January 2015 your Board ultimately decided to enter into a letter of intent to merge with Farm Credit West.”

Translation: FCS Southwest has been so badly managed that the FCA and CoBank, FCS Southwest’s funding bank, are forcing it to merge with Farm Credit West, which is also funded by CoBank. Interestingly, the borrower/shareholders of both institutions are supposed to vote on the merger this month or next yet there is no indication on the website of either institution that disclosure materials pertaining to the merger have been sent to the borrower/stockholders, which suggests that perhaps this shotgun merger is not moving ahead as fast as the FCA and CoBank would like.

FCA issues whistleblower guidance to FCS institutions

[FCS] institution must have an effective internal control process as required [by an FCA regulation], and a WB program can be a key part of the process.” One can reasonably wonder if the large loan fraud caper at FCS Southwest sparked the launch of this WB program, for in its second paragraph the memorandum states: “A WB program provides ways to confidentially report complaints or tips about a violation of law, regulation, or policy, as well as fraud, corruption, or operational Upcoming Events ABA’s Take Your Lawmaker to Work Week September 21-25, 2015 Register ABA and Farmer Mac: The Alliance that Brings Dividends.

Register now weaknesses. A WB program is most effective when both internal parties (directors, officers, and employees) and external parties (borrowers, shareholders, applicants and others) can report a complaint, misconduct, or tip for corrective action.”

The “others” referred to presumably includes bankers, who can file WB complaints about FCS lending abuses. Hopefully bankers will be aggressive in filing WB complaints.

The guidance goes on to provide that WB “reports can be made through WB links on the institution’s website with a best practice of having the WB link available on all website pages.” The challenge today for bankers and others will be to find the WB link. For example, CoBank has done a good job of burying the link to its WB reporting page. Only by scrolling to the bottom of a very long site map for CoBank’s website did I find a link to CoBank’s whistleblower webpage, which happens to be: http://www.reportlineweb.com/ cobank. Hopefully this link will get lots of use. Checking the websites of a few other large FCS institutions revealed some interesting anomalies. For example, FCS America does not use the word “whistleblower.” Instead, it merely has a link to “anonymous reporting,” whatever that is supposed to mean. A search on its website for “whistleblower” turned “0 search results.” Farm Credit Mid-America does not have a search mechanism for its website but clicking down through several levels of its website brings an avid searcher to “Anonymous Reporting.” Again no use of the word “whistleblower” under Corporate Governance.

In a July 9 Informational Memorandum, the FCA issued Checking the websites of a few other large FCS institutions guidance to FCS institutions on implementing whistle- produced mixed results, from no obvious whistleblower blower (WB) programs. According to this guidance, “every link to Farm Credit East, where typing “whistleblower” September 2015 | 16

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KENTUCKY BANKER continued from previous page

into its search mechanism provided a link for reporting complaints anonymously with a third party, www.ethicspoint.com. How well this whistleblower reporting system will work has not yet been tested. Clearly the FCA has a lot of work to do in getting every FCS institution to install highly visible, easy-to-use whistleblower reporting procedures on key pages of their websites. The FCA should set an example by clearly providing on its website a link for whistleblowers to register complaints about FCS lending abuses. At present, the FCA link (http://www.fca.gov/home/inspector/whistleblower_protection.html) only receives complaints related to FCA employment practices.

Curry noted that “rural banks face a number of challenges,” including agricultural borrowers who “almost certainly face the prospect of reduced net income. At the same time, some of your competitors, including Farm Credit institutions, have pricing advantages that make it more difficult for you to compete with them.”

Hopefully this acknowledgement of the FCS’s competitive edge by a key banking regulator will help to spark congressional hearings on the unlevel playing field on which bankers must compete against the FCS as well as the FCS’s increasingly outrageous lending abuses.

Report FCS Lending Abuses

Bankers are continuing to send FCW reports of FCS lending abuses, such as FCS loans for rural estates, In an August 4 speech, Comptroller of the Currency weekend getaways, and hunting preserves. Email reThomas Curry candidly acknowledged the unfair com- ports of similar lending abuses in your market to: petition bankers face from the FCS. In speaking at an In- greenacres@ely-co.com teragency Outreach Meeting on the Economic Growth and Regulatory Paperwork Reduction Act, Comptroller Comptroller Curry acknowledges FCS competition

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“American Banker” Names Trio of Kentucky Banks to Their ‘Best Banks to Work For’ List No. 14: Independence Bank Location: Owensboro, Kentucky Assets: $1.6 billion Employees: 289 President and CEO: Chris Reid << Pictured at left: Each year, local high school seniors receive scholarships from Independence Bank. 2015 saw $91,800 awarded.

Popular with employees: Independence charters a bus once a year for employees to go to Nashville for a shopping day.

No. 27: United Community Bank of West Kentucky Location: Morganfield, Kentucky Assets: $223 million Employees: 53 CEO: Garland Certain << Pictured at left: Ugly Sweater competition; customers voted for their favorite.

Popular with employees: The fitness room is always open, and free pedometers are supplied to everyone.

No. 38: Central Bank Location: Lexington, Kentucky Assets: $2 billion Employees: 503 Chairman, President and CEO: Luther Deaton << Pictured at left: Central Bank employees at the ALS Walk.

Popular with employees: Central employees can buy up to three extra vacation days per year and get reimbursed if they fail to use them.

September 2015 | 18

KBA EMERGING LEADERS

KBA Emerging Leaders Break Out

Front row left to right: Audrey Lillpop, Joel Brasher, Andrew Davis Back row left to right: Jonathon Lewis, Brian Gohmann, Buddy Schneider, David Rambo, John Kenkel

Left to right: Jonathon Lewis, Brian Gohmann, Natalie Kaelin, Buddy Schneider, Andrew Davis

LEXINGTON – On August 19 KBA’s Emerging Leaders took their talents to The Breakout Games in Lexington. “The real-life escape adventure.” Along with the KBA’s Natalie Kaelin and Josh Fischer, the Emerging Leaders divided into two groups, one group took the challenge of solving The Derby Heist Game, while the other group tested their wits with the Island Escape Game. The team captained by Josh finished at 49:52 minutes while the team captained by Natalie broke out of their room in 52:40 minutes.

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BANKERS ON THE MOVE Brian Arterburn Brian R. Arterburn has been named a new Commercial Lender, Vice President, at Community Trust Bank’s London North office. Brian has more than 17 years of experience in the banking and insurance fields. He attended Sue Bennett College in London, Kentucky and Eastern Kentucky University in Richmond, Kentucky.

Brian graduated from Laurel County High School in London, Kentucky.

2015-2016 kba treasurer nominee

Timothy Barnes The KBA Board of Directors will place into nomination at the General Session on Tuesday morning, September 22, for the office of KBA Treasurer, Timothy E. Barnes, President & CEO, Hometown Bank of Corbin, Inc. Corbin, Kentucky. Tim is a graduate of Paintsville High School and holds a Bachelor of Arts degree in Economics from Centre College in Danville, Kentucky.

Anthony Miles

Joe Rudder

Anthony Miles has been promoted to Vice President, Information Technology Manager, at Your Community Bank, where he will manage all aspects of technology for the bank and its holding company, Your Community Bankshares, Inc. Miles joined Your Community Bank in 2007.

Farmers Bank & Capital Trust Co. is pleased to announce that Joe Rudder has joined the Commercial Loan Department as Assistant Vice President. Joe is well known in Frankfort financial circles having previously worked at several local institutions in his 18-year banking career.

Joe is a Frankfort native and Western Hills High School graduate who holds a degree in Advertising from the University of Kentucky.

Chip Clements

Leisha Maynard

Carl “Chip” Clements has joined Forcht Bank as Executive Vice President of Mortgage and Loan Operations.

Most recently, he was the Senior Vice President of Lending Operations and Loan Servicing for Republic Bank & Trust in Louisville. Clements has been in the financial services and loan operations industry since 1998.

The Board of Directors is pleased to announce CFO Leisha Maynard promoted to Executive Vice President. Leisha came to the bank in March of 2009 as AVP/Controller with several years’ experience in banking and also as a CPA. She earned her masters in Business Administration from the University of Kentucky in 1996. Leisha was promoted to Vice President\Controller in February of 2011 and to SVP\CFO in October 2014.

Chris Davis

Rose Wheeler

Chris Davis recently began working in the lending area of Farmers National Bank in the Lancaster Banking Center. Davis earned his bachelor’s degree in agriculture from Eastern Kentucky University and master’s degree from Union College. He joins Farmers National Bank after working in education for the last eight years at Garrard County High School. A lifelong Garrard County resident, Davis currently serves as mayor of Lancaster.

The Board of Directors for Citizens National Bank, announces the appointment of Rose Wheeler as Chief Information Officer (CIO). Wheeler has 35 years banking experience with the last 15 of those years being in Operations and Information Systems. As the bank’s first CIO, she will help guide the organization’s strategic initiatives and grow its current systems and infrastructure.

Matthew Galbraith

Sarah Middleton

Matthew R. Galbraith has joined CTIC’s Wealth and Trust Management (WTM) team as Vice President, Investment Sales Officer. As a key member of the new business development team, Mr. Galbraith’s responsibilities include initiating new relationships with high net worth individuals and institutions for actively managed fee-based business.

Sarah Middleton has been promoted to the position of Branch Manager at Community Trust Bank’s London North office. Sarah’s responsibilities include providing consumer, residential, and commercial lending options to new and existing client relationships by providing financial solutions to individuals and businesses in South Central Kentucky.

Heath Majors

Diana Webster

Heath Majors has joined King Southern Bank as Vice President and Director of Business and Private Banking.

He brings with him 14 years of experience in lending.

Heath has a BS in Finance from Western Kentucky University where he was an Honorable Mention Academic All-American on their Division 1 tennis team. He holds an MBA from Bellarmine University where he was a member of Beta Gamma Sigma.

Diana Webster has joined Central Bank as Vice President, Retail Banking Officer in Northern Kentucky. Diana brings over 29 years of experience in retail banking to her new role. A native of Walton, KY, she is a graduate of Thomas More College where she earned her degree in banking. Diana will be working out of the Turfway location in Northern Kentucky.

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

BANKERS ON THE MOVE

Prichard Takes Over as Chairman The KBA’s current Vice Chairman, Louis Prichard, and current Treasurer, Michael Mercer, both automatically succeed to the office of Chairman and Vice Chairman respectively at the conclusion of the Annual KBA Convention on September 22 held this year in Hilton Head, South Carolina.

Mr. Louis Prichard, 2015-2016 Chairman Mr. Prichard joined Kentucky Bank in 2003 and serves as President and Chief Executive Officer of both Kentucky Bank and Kentucky Bancshares, Inc. Prior to his move to Kentucky Bank, he was Chairman and CEO of Farmers National Bank of Danville. During his time in Danville, he served as President of the Danville Boyle County Chamber of Commerce and Chairman of Leadership Boyle County. Mr. Prichard serves on the board of Bluegrass Tomorrow, and is a current board member of the Prichard Committee for Academic Excellence. He is a former Trustee of Centre College, and a former Trustee of Shakertown. He has also served as former Chair of the Governor’s Higher Education Nominating Committee. He is a graduate of Centre College and also of Stonier Graduate School of Banking.

Mr. Prichard

Mr. Michael Mercer, 2015-2016 Vice Chairman Mr. Mercer is President/CEO and Director of First Security Bank of Kentucky, Inc. He has been in banking for 34 years. He is a Board Member of the Muhlenberg Alliance for Progress; Madisonville Community College Foundation and the Central City Convention Center; Current Treasurer of the Green River Regional Development Authority (Bluegrass Crossings); and Chairman of the Everly Brothers Foundation of Central City. Mr. Mercer is a graduate of the University of Kentucky and The Graduate School of Banking of the South.

Mr. Mercer

Paducah Bank’s Susan Guess given Kentucky Volunteer Service Award Susan Guess, Senior Vice President of Marketing for Paducah Bank, has been named the Kentucky Volunteer Service Award winner by Governor Steve Beshear. She received her award last month at the Governor’s Mansion in Frankfort. Guess was selected for her antibullying advocacy work. She and her daughter, Morgan, began the Guess Anti-Bullying Foundation nearly four years ago after Morgan experienced bullying.

“My initial goal was to teach my daughter that bad things are going to happen in life and we can choose to ignore them, blame others, or be a part of the solution,” Guess said in a press release. “My hope was for her to find her own voice and to see that she could make a difference.

What we discovered was that we had a chance to give hope to those suffering in silence and that we could help young people all over the Commonwealth find their own voice.”

“Providing service to others is a rich part of Kentucky’s heritage,” Governor Beshear said in a statement. “It is a calling that many engage in every day individually or through faith-based organizations, community groups, schools, and other entities that address a variety of critical needs – and these folks deserve our sincere gratitude.”

September 2015 | 21

BANK HAPPENINGS

Forbes Recognizes Community Trust Bancorp, Inc. For the 2nd Consecutive Year as One of “America’s 50 Most Trustworthy Financial Companies” PIKEVILLE, KY – Jean R. Hale, Chairman, President, and CEO of Community Trust Bancorp, Inc. (NASDAQ: CTBI), announced today that Community Trust Bancorp, Inc. has been recognized by Forbes magazine for the second consecutive year as one of “America’s 50 Most Trustworthy Financial Companies.” Community Trust was ranked second in the “Small Cap” category ($250 million to $1 billion).

The Forbes list, released on August 3, 2015 includes publicly-traded North American banks and insurance companies. According to Forbes, “MSCI ESG Research reviews the accounting and governance behaviors of more than 700 publicly-traded North American companies with market caps of $250 million or greater for the year ending March 2015. In assessing each company, factors including high-risk events, revenue and expense recognition methods, SEC actions, and bankruptcy risk are all considered as indicators of a company’s credibility. These factors are used to develop ‘Aggressive Accounting and Governance

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“We are pleased and humbled that Community Trust has been recognized once again in this Forbes survey,” said Ms. Hale. “Stewardship of our Company’s shareholder assets is a fundamental responsibility which we strive to discharge through stringent corporate governance and accounting processes. Community Trust strongly believes in serving its constituents, its shareholders, its customers, its employees and its communities with the core values of fairness, respect and integrity. Our history of investment returns continues to demonstrate the viability of our stock as a long-term core value investment.”

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BANK HAPPENINGS

Paducah Bank Announced as a Top Community Bank Leader in Social Media WASHINGTON, DC – Social media is now a main stream communication channel that consumers and small businesses across the nation utilize daily. The Independent Community Bankers of America (ICBA) is proud to highlight outstanding community banks and community bankers who make social media an integral part of their marketing and communications strategy.

communications part of their overall marketing and communications strategy.”

More than 6,000 community banks throughout the nation were eligible to be part of ICBA’s list. ICBA sought nominations from the nation’s community banks from May to June and received nearly 300 nominations. Community banks were scored based on their engagement with fans and followers, the content distributed on their social media ICBA today released its Top 50 Community Bank Lead- platforms, the number of followers they have and the freers in Social Media. This is the third year the association quency of posting new content. has held this contest, which was sponsored by Shazam and The community banks and community bankers featured on highlights social media trailblazers among the community ICBA’s Top 50 Community Bank Leaders in Social Media bank industry. Paducah Bank was featured as the ONLY and the Top 25 Community Bank Influencers on Twitter Kentucky bank on this list. will be profiled in September’s issue of ICBA Independent Banker, ICBA’s award-winning magazine.

“Congratulations to Paducah Bank for being featured on ICBA’s Top 50 Community Bank Leaders in Social Media “Paducah Bank is pleased to be featured on ICBA’s Top list,” ICBA Executive Vice President and Chief Marketing 50 Community Bank Leaders in Social Media list,” said Officer Chris Lorence said. “These top community banks Paducah Bank President Mardie Herndon. “It is an honor understand that building a reputable financial brand goes for us to be recognized by ICBA for our efforts on social beyond just a physical presence on Main Street. They con- media because we see it as a unique, essential and vital sistently introduce fresh content and interact with their cus- channel for communicating with our customers and comtomers both in-person and online. ICBA is proud to high- munity. Paducah Bank’s digital presence has strengthened light Paducah Bank for making social media and digital ties with our communities and customers.”

Kentucky Bancshares Completes Acquisition PARIS, KY – Kentucky Bancshares, Inc. (KTYB), Paris, Kentucky, the holding company of Kentucky Bank, announced today completion of the acquisition of Madison Financial Corporation of Richmond, KY, into Kentucky Bancshares, Inc. Following the acquisition, Madison Bank, formerly a wholly-owned subsidiary bank of Madison Financial Corporation, was merged into Kentucky Bank. The three former locations of Madison Bank will be operated as financial centers of Kentucky Bank.

101; 660 University Shopping Center; and 724 West Main Street (Tates Creek). John Hamilton is Market President for Kentucky Bank’s Madison County region. Hamilton is a lifelong resident of Richmond, and has forty years of banking experience (mostly in Madison County), primarily in Commercial Banking and Administration.

“Richmond is a wonderful community,” says Louis Prichard, President and CEO of Kentucky Bancshares, Inc. “The reception we have received from Madison Bank customThe acquisition was first announced on January 21, 2015. ers has been gratifying. We plan to continue the forward Madison Financial Corporation shareholders approved the thinking customer service that has been Kentucky Bank’s acquisition on July 15, 2015 following the receipt of all hallmark. Our thanks go to the employees of both banks required regulatory approvals. who have worked so hard to ensure a smooth transition. We are looking forward to continuing the banking relationships With this transaction, Kentucky Bank now has three addi- with Madison Bank customers.” tional offices in Richmond: 1001 Gibson Bay Drive, Suite September 2015 | 23

BANK HAPPENINGS

Century Bank Lawrenceburg Celebrates 15th Anniversary!

Century Bank, Lawrenceburg, recently celebrated 15 years of banking business by hosting a week full of events for the entire community starting Monday July 6th to Friday, July 10th outside the bank’s main office. The festivities included free food, fellowship and a chance to win prizes.

President & CEO, Darin L. Young, has been with the bank since 2009. He attributes their 15 years of success from being “very familiar with their customers, providing a friendly atmosphere and being involved in the community.”

“It was great to have so many people stop by to celebrate with us. This is a special milestone not only for the bank but also for our customers, the people and organizations that we have relationships with our entire hometown,” said Young.

Century Bank opened in July 2000 as the only locally owned and operated financial institution in Anderson County and remains so today.

First Kentucky Helps Empty Bowls First Kentucky Director of Marketing, Laura Stinson (on the left in the picture at right), presents a $400 donation to Claudia Heath (on the right in the picture at right), Project Coordinator for the Mayfield/Graves County Empty Bowls Project. Since its beginning in Mayfield-Graves County, First Kentucky has donated a total of $1200 to the event.

Heath said, “I want to thank First Kentucky Bank for their generous donation to the Empty Bowls Project. They have been faithful in their support every year to this project. We appreciate all that they do to give back and support their community.” The Empty Bowls Project benefits the Mayfield-Graves County Food Pantry, which provides emergency food for local needy families.

September 2015 | 24

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KENTUCKY BANKER

How Regulation is Changing the Value of Public Funds for Kentucky’s Community Banks

By David Still

So what does this mean for Kentucky banks?

Regional Director, Promontory Interfinancial Network

Kentucky state law requires that governmental entities maintain protection on all public funds, and communiromontory recently published a white paper ty banks are well-positioned to provide this protection, about how shifting factors in the banking indus- potentially at a lower cost than in the past. try are making public fund deposits more availIncreased availability of public deposits, reduced price able to community banks. The paper notes that now competition for these funds from large banks, and fewer is a time when many government finance officers are alternatives for government finance officers may proconsidering shifting investments out of money market vide an opportunity to community banks in Kentucky funds into bank deposits. It also notes that many of the to access and make use of these funds at a time when nation’s largest banks do not want public fund deposits, overall funding costs are expected to rise and competias new regulations raise the cost of public unit deposits tion for deposits increases. to large banks (but not to smaller and mid-sized banks).

The new value of public funds could have benefits for Here’s an overview of what’s happening at the Federal the community, as well as community banks. Comlevel: munity banks have typically been the leading source • The Liquidity Coverage Ratio (LCR) is making of small business lending in the United States, and as public funds more expensive for large banks – The more deposits from governmental entities throughout largest banks (banks with assets of $50 billion or Kentucky are funneled into community banks in the state, this could substantially increase the funds availmore) hold more than half of the country’s public able for local lending. deposits. Basel III’s introduction of the LCR applies a 40% run-off rate to public funds at these larg- To grab hold of this potential opportunity, community est banks, making them more likely to forego public banks may want to revise their perception of public defund deposits. With less competition from the na- posits. What has often been looked at as a mixed blesstion’s largest players, these deposits may become ing may be a key to community banks thriving. more accessible and more affordable for community banks looking for inexpensive funding.

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• Changes to money market fund (MMF) rules are limiting where public funds can go – By the middle of 2016, changes to the rules that determine how prime MMFs calculate net asset value (NAV) will make it impossible for public funds to invest in prime MMFs. The general consensus is that this ruling will also apply to local government investment pools (LGIPs), either forcing LGIPs to invest in fully secure investments (e.g., Treasuries) or operate with a floating NAV. The change is likely to either reduce the yield from LGIPs or eliminate them as an investment option for public funds, giving community banks a better chance to compete for these funds – possibly without rate competition from large banks if they sit on the sidelines.

About Promontory Interfinancial Network Promontory is the leading provider of FDIC-insured deposit placement services. Their services include Insured Cash Sweep®, CDARS®, IND®, and Yankee Sweep®, which enable banks and other financial institutions to build strong, multi-million-dollar relationships; replace higher-cost deposits; reduce collateralization; and purchase cost-effective funding. For more information about Promontory and its services visit promnetwork.com or contact David Still at (866) 7766426 ext. 3439.

September 2015 | 27

KENTUCKY BANKER

What it Takes to Score a Top Notch Advisor in Your Community Bank 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 opportue all know the name of the game in financial nity offers. advisor recruiting: big name broker-dealers and even bigger checks often take the cake Partnering with a broker-dealer that creates a tailorin scoring quality financial advisors. As a made environment for top community bank financial community banker, it can feel like you’re faced with institutions and their advisors to thrive in is key. When more than just an uphill battle. We get it. Not only do you work with a full service broker-dealer created by you need an experienced, talented, high-performing ad- financial consultants, for financial consultants, the firm visor, but you also need one that is a glove-like fit with will understand what makes the foremost performing your culture, customers, and community. The solution? advisors tick, how to help them excel even more, and Partner with a broker-dealer that specializes in recruit- how to keep them happy. At the end of the day, your ing high-caliber community bank financial consultants success stems from your advisor’s success. for your on-site investment program.

While top-producing advisors are all profitable, they all As a community banker, you still want the cream of have different approaches to their business. That’s what the crop even if you’re not one of the colossal banks makes an open product platform a vital solution to the of the world. And frankly, you deserve it. You need a success of a bank’s investment program. financial advisor that has the ability, the attitude and the cultural fit. In the same breath, the high-performing One of the biggest advantages you can give your adadvisor you just described isn’t just going to move their visor – and one of the biggest returns on your investpractice with no return on their relocation … and we ment – is partnering with a broker-dealer that provides an open product platform. This freedom allows your don’t necessarily mean cash. advisor access to more products and services, so he or she can do what’s best for their client’s needs, not the What’s Your Advisor Value Proposition? broker-dealer’s. Not pushing broker-dealer proprietary In today’s financial services environment, financial ad- products means your industry-leading advisor has the visor recruiting is continuously evolving. While there freedom to choose from a wide array of independent are many more options and opportunities to choose product choices without the pressure of promoting a from than in years past, the evolving regulatory land- preferred vendor or broker-dealer motive. They can scape doesn’t necessarily make it easy for an advisor continue to be the successful advisor they have been to convert their practice to a different broker-dealer. As through their most effective and preferred business apa community banker, you need a partner that provides proach.

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CYBERSECURITY SEMINAR Come one, come all. . . security officers, technology staff, CEOs, senior managers, operations personnel and anyone with responsibilities or interest in bank security and technology . . . Join us for a look into Cybersecurity. Register Today! Two Locations: BOWLING GREEN October 22, 2015 @ Hilton Garden Inn

LEXINGTON October 23, 2015 @ Marriott Griffin Gate

Online registration is available at: www.kybanks.com (Education Solutions/Seminars) September 2015 | 28

KENTUCKY BANKER Your Support Team 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!

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

Have you considered partnering with a broker-dealer These recruiting teams will come to you with a refined specializing in helping community banks increase their list of high-caliber candidates whom they know inside non-deposit income via an investment program fully and out. They’ll understand how each candidate does equipped with an industry-leading financial advisor business and have a real understanding of who the in- that will afford you the performance you need coupled dividual is and their presence in the community. These with the same culture and values as the communities broker-dealers will actively complete the upmost due you serve? diligence prior to reaching you and your team in order to make the process seamless and the candidate list If your broker-dealer and their recruiting team is truly the partner it should be, you will feel not only confident high-quality. but proud in your candidate decision and the outlook of your program. Collaborate with the broker-dealer that Understanding Your Candidates provides you the support and expertise you need, and Processes like performing predictive index analyses on the rest simply falls into place.

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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.

September 2015 | 29

KBA EDUCATION SOLUTIONS EVENTS & SEMINARS CALENDAR Certified Teller Seminars

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 â&#x20AC;&#x201C; 25 Louisville

CONTACT US

EMAIL

PBS Live Seminars

September 10

Flood Insurance Compliance Lexington September 22

New Integrated Mortgage

Disclosures - Somerset September 23

Mortgage Lending Start

To Finish - Somerset September 24

Mastering HMDA - Somerset September 29

ACH Processing Compliance

Bowling Green

kbaeducationsolutions@kybanks.com

CALL

502-582-2453

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Gearing up for 2015’s anticipated time of transition, bank managers are equipping themselves with the information they need to face the unique challenges and opportunities that lie before them. Making a successful transition requires the right tools, techniques, and processes.

The Kentucky Bankers Association’s Interest Rate Risk and

October 7, 2015

Investment Strategies Seminar, presented by The Baker Group, is developed specifically for managers of financial institutions.

Designed to meet the transition challenges of 2015, it is an

LOCATION

in-depth examination of current topics including:

Kentucky Bankers Association

• Bank Performance Trends and Industry Landscape • Asset/Liability Management: Finding Keys to High Performance • Game-Plans for a Shifting Rate Environment • Managing Investment Risk: Strategy and Tactics • Regulatory Expectations for Interest Rate Risk and Investments • Modeling Assumptions and Key Simulations for Interest Rate Risk • Security Selection Decisions: Cash Flow and Relative Value • Sector-Specific Risk Management: MBS Prepays and Municipal Bond Credit Analysis • Liquidity, Cash Flow, and the Bond Portfolio The Baker Group will again this year provide each bank in attendance a customized “bank sheet” reflecting numbers unique to their bank.

First Floor Training Room 600 West Main Street Louisville, KY

Speakers The Baker Group Jeffrey F. Caughron Lester F. Murray

Agenda 9:30 a.m. — 4:00 p.m.

Breakfast Seminar Lunch

Who Should Attend Financial institutions’ CEOs, CFOs, investment officers, board members, and those who are directly or indirectly responsible fo r

financial

management

functions will benefit from this

Please contact Jamie Hampton at 502.582.2453 or jhampton@ kybanks.com. For a complete listing of KBA programs, or to register online, please visit www.kybanks.com. Dress is business casual.

seminar.

CPE credits will be earned for your attendance.

Presented by

Kentucky Bankers Association | 600 West Main Street, Suite 400 | Louisville, KY 40202 | f 502.584.6390 | 502.582.2453

KENTUCKY PROUD BANKER

Kentucky Banking Professionals Complete Graduate School of Banking at Colorado BOULDER, CO â&#x20AC;&#x201D; The Graduate School of Banking at Colorado (GSBC) announced the graduation of three Kentucky banking professionals as a part of the class of 2015. The graduates pictured above are, from left to right: Bryan Calhoun (Kentucky Department of Financial Institutions, Frankfort), Arnold Akers III (First Southern National Bank, Lancaster) and Nicholas Oller (Independence Bank, Owensboro). GSBC awarded 157 total graduates from across the nation with a certificate in banking in a ceremony which took place this summer at the Folsom Field Skyboxes on the University of Colorado Boulder campus. A total of 11 Kentucky bankers attended the 65th Annual School Session, including the graduates above.