KENTUCKY BANKER MAGAZINE Published bi-monthly by the Kentucky Bankers Association
YOUR ASSOCIATION OUR COMMONWEALTH
January/February 2017
Thank You! 2015-2016 Board of Directors
2016-2017 OFFICERS Chairman Mr. Michael H. Mercer President & CEO First State Bank Vice Chairman Mr. Timothy E. Barnes President & CEO Hometown Bank of Corbin Treasurer Mr. David M. Bowling, CEO Citizens Union Bank of Shelbyville Past Chairman Mr. Louis Prichard President & CEO, Kentucky Bank President & CEO Mr. Ballard W. Cassady, Jr. Kentucky Bankers Association
BOARD OF DIRECTORS Group Representatives Representing Group 1 Mr. J. Brent Bugg President & CEO, Fredonia Valley Bank Representing Group 2 Ms. Lanie W. Gardner Community President First Southern National Bank Representing Group 3 Mr. John T. Taylor President & CEO, PBI Bank Representing Group 4 Mr. Dan M. Harbison President & CEO The Farmers National Bank of Scottsville
Representing Group 5 Mr. Lloyd C. Hillard, Jr. President & CEO, Farmers Capital Bank Representing Group 6 Mr. Bill Allen President, Bank of the Bluegrass and Trust Representing Group 7 Mr. Gordon Kidd CEO, United Cumberland Bank
IN THIS ISSUE Chairman’s Corner........... 5 Staff Directory.................... 6 Straight Talk....................... 7 My Two Cents.................... 9 Education............................. 11 From Staff Reports........... 13 115th Congress................ 14 Battle Rages On................. 15 Education Calendar......... 20 Farm Credit Watch.......... 26 SEAY HR Checklist........... 32
ON THE COVER
Think 2017 will be the year community banks finally get a breakaway? Maybe. This issue Kentucky Banker explores what to expect and what needs to be done in the new political reality.
Representing Group 8 Mr. Mike Mineer President & CEO Citizens Deposit Bank & Trust Representing Group 9 Mr. Jed Weinberg Chairman, Bank of Hindman Representing Thrifts Mr. Ryan Curtis Steger Regional President, Town Square Bank Representing Thrifts Kari R. Gough President & CEO, Winchester Federal Bank
Representing Bank Size Assets of $1B or more Mr. James A. Hillebrand, President Stock Yards Bank & Trust Company Assets at least $200M; less than $1B Mr. Dale Sights President, Field & Main Bank PEC Committee Representing Participating Employer Committee Mr. W. Fred Brashear, II President & CEO, Hyden Citizens Bank
Kentucky Banker Magazine (KBM) is the official bi-monthly periodical of the Kentucky Bankers Association (KBA). No part of KBM may be reproduced without written permission from the KBA. The KBA is not responsible for opinions expressed by outside contributors published in KBM. The KBA reserves the right to publish submissions at the discretion of the KBM editorial team. Subscriptions: $30 year for KBA members; $60 year for KBA non-members; single copies $10. SUBMIT
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CHAIRMAN’S CORNER
2017 LEGISLATIVE UPDATE
Mike Mercer | Chariman Kentucky Bankers Association
TO WASHINGTON, WITH LOVE Representing the KBA in DC at the ABA-sponsored Freshman Fly In
As your Chairman, I try to represent you to the best of my abilities, no matter what some of my colleague’s feel that level is. On January 30th and 31st, I had the privilege to do just that as Ballard, John Cooper and I traveled to our nation’s capital to participate in the ABA-sponsored Freshman Fly In, where the new legislators are welcomed by their respective state banking associations. My district’s Congressman, Jamie Comer, is one of these freshmen. So, for my article this month, I am going to chronicle our trip in an effort to keep you as informed as Trump’s twitter account. While in Washington, we made the best use of our time and visited several of our Kentucky legislators. We went with a list of hopeful regulation repeals and new bills: 1). The Tailor Act 2). Portfolio Lending 3). CFPB Reform 4). CECL/BASEL II Repeal 5). Data Reporting for HMDA 6). Durbin Act Repeal and 7). Remove the Abusive “A” from UDAAP. Each legislator was given this list.
Senator Rand Paul We began on Monday the 30th by visiting Senator Rand Paul. The Senator was in favor of repealing as much of Dodd-Frank as possible. He brought to our attention a little known, and never used, Congressional Review Act (CRA) passed in 1996. CRA gives Congress the ability, with simple majorities, to overrule regulations from the executive branch. CRA requires any federal agency promulgating a rule to submit a report on it to the House and Senate. A 60-day clock starts when the rule is published or when Congress receives the report – whichever comes later. Senator Paul stated they are looking at what was written since 2009 that was not reported to Congress. It is felt then they can now be presented to Congress and the 60-day clock will start then and possibly be overturned.
Congressman Jamie Comer We then met with our freshman Congressman, Jamie Comer. The Congressman was the most enthusiastic of all our legislators. It was refreshing to meet with someone before he has been beat down. I feel the Congressman will be a friend of bankers. He stated he was in favor of repealing Dodd-Frank. Comer is an easy man to talk with who seems to understand the value of community banks. He has served as a bank director prior to his time in public office.
Congressman Andy Barr That evening we had dinner with Congressman Andy Barr and his soon-to-be Legislative Assistant, Kevin Wysocki. As has been the case, Congressman Barr was very informed on our issues. JAN/FEB 2017
He has an excellent grasp of our industry and what he doesn’t know, he wants to learn. With his appointment as chairman of the Monetary Policy and Trade sub-committee, he will be a great asset to us all. The Congressman discussed each of our issues with us. He gave us his realistic view on each. Specifically on the Durbin Amendment repeal, he stated that bankers need to step up our presence and voice to have any hope getting this through. He says the retail lobbying groups outnumber us 10 to 1. The Congressman brought up the Fin Tech issue and asked our opinions on this growing sector. As the CFPB and others look at ways to possibly regulate these companies, some of these Fin Tech companies are interested in getting bank charters.
Senator Mitch McConnell Our Tuesday morning began with an ABA breakfast and brief meeting to go over the ABA’s objectives. Ballard, John and I then went to the Capital to meet with Senator McConnell. The Senator was generous with his time, being the day his wife was being voted on for Transportation Secretary and President Trump was announcing his candidate for Supreme Court Justice. The tone of our meeting was upbeat starting with his Legislative Assistant, Elizabeth Strimer. Senator McConnell is a supporter of our positions and was interested in discussing our priorities. The obvious issue at hand is there has to be eight democrats vote with the republicans in the Senate in order to pass anything. Our meeting with the Senator was going well until I made a passionate plea for his help with the Tailor Act. I questioned why this did not have bi-partisan support since separating community banks from Wall Street banks should not be a problem for anyone. If I had only stopped there things would have been fine, BUT… I let my brain lose control of my tongue. I made the statement that even Elizabeth Warren should be able to vote for the Tailor Act because she still would be able to hate Wells Fargo, even I didn’t like Wells Fargo. He gently smiled and it seemed a l was good. We said our goodbyes and as we got to our vehicle to head to the airport, Ballard leans over to me and said “you know his wife is on the board of Wells Fargo don’t you?” Up to then, I was so proud I had made the trip without saying anything stupid, in my opinion. The last minute of the last meeting… you just can never take anything for granted. Oh well, even if I am placed on a no-fly list, I still enjoyed representing the KBA at the Freshman Fly In of 2017. KENTUCKY BANKER | PAGE 5
KENTUCKY BANKERS ASSOCIATION STAFF 22 EMPLOYEES WITH 300+ YEARS OF COMBINED EXPERIENCE SERVING THE COMMONWEALTH
Ballard W. Cassady Jr. President & CEO bcassady@kybanks.com
Michelle Madison IT Manager mmadison@kybanks.com
Debra K. Stamper EVP & General Counsel dstamper@kybanks.com
Tammy Nichols Convention Coordinator Finance Officer, HOPE of KY tnichols@kybanks.com
Matthew E. Vance Chief Financial Officer mvance@kybanks.com Selina O. Parrish Director of Vendor Solutions sparrish@kybanks.com Natalie Kaelin Director of Education nkaelin@kybanks.com Josh L. Fischer Director of Communications jfischer@kybanks.com Billie Wade Executive Director, HOPE of KY bwade@kybanks.com Miriam Cole Executive Assistant mcole@kybanks.com John P. Cooper Legislative Solutions jcooper@kybanks.com Paula Cross Education Services Coordinator pcross@kybanks.com Jamie Hampton Education Services Coordinator jhampton@kybanks.com Janet Lewis Assistant General Counsel jlewis@kybanks.com
Katie Rajchel Staff Accountant krajchel@kybanks.com Angie White Sponsorship Relations awhite@kybanks.com Steve Whitlow Systems Engineer swhitlow@kybanks.com Chuck Maggard President & CEO, KenBanc cmaggard@kybanks.com Lisa Mattingly Director of Sales & Service KBA Benefits Solutions lmattingly@kybanks.com Brandon Maggard Account Representative KenBanc Insurance Services bmaggard@kybanks.com Donna McCartin Benefit Support Specialist dmccartin@kybanks.com Audrey Whitaker Insurance Services Coordinator awhitaker@kybanks.com Kentucky Bankers Association 600 West Main Street, Suite 400 Louisville, Kentucky 40202 www.kybanks.com
STRAIGHT TALK
2017 LEGISLATIVE UPDATE
Ballard W. Cassady, Jr. | President & CEO bcassady@kybanks.com
DISCONCERTED & CONFUSED WOW!
How confused are you? I have to tell you, I’m flabbergasted. I looked up the origin of the word flabbergasted and it’s perfect, it has an “uncertain origin.” Even the word flabbergasted is confused. So, in an effort to accurately describe what’s going on with me, I asked my wife Marci for help. She offered the adjective disconcerted. That one fits, but whatever it is I finally am, it is the first time I have been this way in a long time. Why is this the winter of my disconcert? What is the cause of my perplexity? PEOPLE.
Now it is a clear minority of people who are inspiring my confusion, but from this rare uncertainty I have to ask: what the hell is going on in this country? We had an election, we elected a President. (Note: Even though he didn’t get the popular vote, this isn’t the first time that has happened. As a matter of fact, it has happened five times before Trump’s victory.) Then all of a sudden a small minority of people take to the streets and start blowing things up and setting fire to their schools all in the name of… …CRICKETS. That’s what is perplexing me so much. I don’t know what this small minority of people want, or what they are trying to communicate. I watched as the UC Berkeley campus had a handful of Liberal protestors (when a conservative group organizes the media calls them rioters) break out windows, set fire to furniture and pepper sprayed a single young girl who disagreed with them. This all happened because they didn’t want to hear a “fascist conservative speaker.”
stitution, especially on college campuses. When a speaker opposes the Left’s ideology, an active minority, like what I saw on the UC Berkeley campus, acts as though the First Amendment only applies to them. If this era teaches us anything, it teaches us how intolerant we are as a country for ideas that differ from our own.
Here’s an example of what I mean. Evidently Trump is the first President in U.S. history who has 100% of his appointees to Cabinet positions be “bad people.” This is according to Nancy Pelosi (D-Cal.). Now I have to tell you, although I have never met Trump’s appointees personally, I have looked at their resumes and they are more than qualified for these positions, more than anyone I have historically ever met or seen, in fact. Did Pelosi and her fellow Democrats really think that Trump was going to appoint people who agreed with their left policies? Hmmm. CONGRESS, you are our elected officials. In the interest of getting on with the business of government, give President Trump his cabinet appointments! Let’s get going as a country! It appears that the Left are going to fight everything, straight down party lines. When has this ever worked? Even the Republicans gave Obama his appointments (granted with the exception of his Supreme Court guy but, there was precedent) AND helped on a few legislative compromises, a couple of which were led by Sen. McConnell (R-Ky) in concert with Sen. Harry Reid (D-Nev). So now my question to Congress is: when has it ever been better for the country to not show up for votes, call people that are obvious successes in their fields “idiots” and by any standard, waste our tax dollars acting like impetuous little children? It never has, and it never will. My confusion grows.
P.S. If you took all of President Obama’s Cabinet SecretarThe only fascists I saw were the protestors who were ies, they had a total of 5 years all together as CEO’s of ANYkeeping the majority of students from practicing their First THING. President Trumps’ have 80 years of CEO experience Amendment Right of hearing a conservative voice speak in the field they will be representing. See my confusion? on a college campus. The Left has a subjective relationship with the freedom of speech guaranteed by the Con2017 LEGISLATIVE UPDATE CONTINUES ON PAGE 15 JAN/FEB 2017
see Battle Rages On For Banks & Bankers KENTUCKY BANKER | PAGE 7
PAGE 8 | KENTUCKY BANKER
JAN/FEB 2017
MY TWO CENTS Debra Stamper | General Counsel & EVP
HOW IS YOUR BANK ADAPTING TO TECHNOLOGY?
dstamper@kybanks.com t @KBADebra
BEYOND YOUR COMFORT ZONE
This week I went into a local branch to transact some very That expectation doesn’t stop where technology begins. simple business. I waited in line, showed my ID, explained Of course, each market is different, so your bank may not what I needed and left with my cash. need the same tools or gadgets as Bank of America. But, your bank does need something that distinguishes itself As I walked out I saw a poster in the lobby which adver- from the competition and that affirms that your bank is tised their ITM, an Interactive Teller Machine. With this forward thinking. machine you can transact simple business from your car while speaking to a remote, but real, live person. And, you Ask your customers. don’t need your ATM card. No business can survive doing business the way it always This begs the question, how does this differ from an ATM has. Look at your bank from the perspective of your customers or hold roundtables to see what your customers drive-thru teller, or even entering the bank? really want or need. 1 First, you have the convenience of staying in your Don’t ask for specific technology gimmicks. Ask them to car, everyone likes that. explain what services they use and problems that they ex2 Second, technology-based identification is used so perience. that it is unnecessary to have your ATM card. Ask them what they would like to do or get accomplished 3 Third, it is different, and sometimes that makes a through the bank. You might be surprised at some of the suggestions, complaints or observations. difference.
4 Fourth, you see a face, not just hear a distant
voice.
5 And fifth, from the bank’s perspective, you can
have a single employee manning multiple loca- tions, allowing for extended hours.
Do you have the right person for the job? Assuming that you have selected the correct person for the job and that they are incented the proper way, you have a face to face ambassador for other banks services. But, as unique as this seemed to me at the time, it really points to the fact that banks have to adapt to the needs and wishes of their customers.
Do your research. Once you get customer feedback, do your research. See how you can provide what the customers want in a way that does not exclude others. Keep in mind that the youth of today are your core customers of tomorrow, but don’t accommodate them to the detriment of your current best customers.
Think beyond your comfort zone. Is there any way to use existing technology or platforms to do what you want to do? Can you utilize Facebook messenger or text messages to communicate non-sensitive information?
A fountain of resource.
Do your CSR’s have simple and accessible technology to Banks are still thought of as a fountain of resource. Cus- scan or take photos of forms to send to customers? tomers don’t approach bank employees only to make withdrawals and deposits. They also want advice, whether Your bank and its leaders are in a better place than anyone it is for loan availability or the need for a new business in else to help shape the future of your community through town. Customers expect their banker to be in the know. bank services. JAN/FEB 2017
KENTUCKY BANKER | PAGE 9
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2017 ANNUAL KBA
CONVENTION SEPTEMBER 24-27
EDUCATION
BANK SHOTS!
Natalie L. Kaelin, Esq. | Director of Education
#kbabankshots
nkaelin@kybanks.com
EDUCATION EXPERIENCE
Many of you know me as your “go-to” Compliance contact – don’t worry – that has NOT changed! However, I have now taken on a new role at the Kentucky Bankers Association as the Director of Education. CAMI CLAYTON First United Bank announced the promotion of Cami Clayton to Assistant Vice President/ Controller. Ms. Clayton has been with the bank since 2016.
Many people ask – why is an attorney in charge of Education? Well, you may not know that I was a Corporate Trainer for a locally-owned bank before I was an attorney which gives me insight into what type of people make great teachers. I also believe my experience as an attorney, and in the compliance world, provides me with a unique insight to the types of training and topics that are essential to banking RIGHT NOW. I hope you will take this journey with me! We have so many exciting programs coming up including two of our biggest – Spring Conference (April 17-19) and our General Banking School (June 11-16).
BILL RUDD First United Bank announced the recent promotion of Bill Rudd to Senior Vice President/ Commercial Banker. Mr. Rudd joined First United Bank in 2012.
We work tirelessly to find the best topics, the best speakers and put together an overall terrific yearly education program for ALL of our bankers. Please check out our website and see what we have to offer. If you have questions or feedback, my door is always open (nkaelin@kybanks. com or (502) 736-1299); or you can literally come to my door at my office and visit me.
BRIAN R. ARTERBURN First State Financial announced that Brian R. Arterburn has joined the bank as Regional President for the Williamsburg region. Mr. Arterburn has over 18 years’ experience in the insurance and banking industries.
I am excited to work with Jamie Hampton and Paula Cross to build on the foundation laid by them with the leadership of Paula Cravens. There will be changes in the future, such as on demand programming offerings and potential certificate programs offered by the KBA. One change is a new icon Josh Fischer, our Director of Communications, has been working on for us. I believe it shows exactly why we are here – to educate our bankers so their careers continue on an upward path, which in turn continues to strengthen our Kentucky banks. We look forward to working with each of you!
BRUCE MCHONE Central Bank announced the promotion of Bruce McHone to Deposit Services Officer. Mr. McHone joined Central Bank in 1994 and is a graduate of Berea College.
BANK SHOTS! FACEBOOK @kybankers
Natalie
2017 EDUCATION CALENDAR | PAGES 20 & 21 KENTUCKY BANKER | PAGE 11
KENTUCKY BANKERS ASSOCIATION
Betty Carol Armstrong Retires After 58 Years of Service! December 31, 2016 was not only the end of a year, it was the end of an era at The Peoples Bank in Taylorsville, KY. That was the day Betty Carol Armstrong retired from the Bank after 58 years of service. She began her career at The Peoples Bank in January of 1959 as a part-time Bookkeeper and left as an Assistant Vice President.
Betty will be remembered for her tireless service to our customers, employees and community. Many customers will miss her friendly voice on the phone and her help with their deposit accounts. She made each employee of the Bank feel special by remembering their birthday each year with a homemade birthday cake. Her homemade caramel and cream cheese icings are legendary, the bank reported. Although many changes occurred in the banking industry throughout her tenure, Betty changed with the times, embracing new processes and technologies that evolved over her 58 years. Betty’s friendly smile, patience with customers and concern for co-workers will be greatly missed.
WHAT ARE BANK SHOTS!? BANK SHOTS! highlight you, the members of the KBA, and the banks you work for. Formerly Bankers on the Move and Bank Happenings, BANK SHOTS! is where we publish your successes and acknowledge your milestones. Your BANK SHOTS! are published in Kentucky Banker magazine and on the KBA’s official FACEBOOK page: @kybankers (we use the hashtag #kbabankshots) Email your BANK SHOTS! jfischer@kybanks.com
PICTURED ABOVE: Betty Carol Armstrong and Steve Bowman, CEO/President Everyone at The Peoples Bank, along with staff and membership of the KBA, wishes Betty a long and happy retirement!
2017 LEGISLATIVE UPDATE
KBA Officials Meet Rep. James Comer (KY-01)
MELISSA YATES Melissa Yates has joined the team of The Paducah Bank and Trust Company as Trust Sales Manager. Yates earned a Bachelor of Arts degree in psychology and a Law Degree from Southern Illinois University. She was a partner with Denton & Keuler Law Firm for 14 years and most recently served as executive director of the Housing Authority of Paducah. “I am excited to welcome Melissa to our team,” said Paducah Bank President Mardie Herndon. “As we plan for accelerated growth, ensuring we provide the most capable experts to our clients is the cornerstone of our strategy. Melissa’s addition to our team will strengthen our company and enhance our ability to provide the highest quality Trust and Estate Planning services within our region. The unique and distinct culture of Paducah Bank continues to evolve into a dynamic, client-first operating structure that seeks the most capable talent in our area.”
BANK RESOLUTIONS POLICY Bank Resolutions will be published in special sections of designated issues in the 2017 calendar year.
See the article on page 15 about this visit PICTURED left to right: Ballard Cassady, KBA President and CEO; Mike Mercer, KBA Chairman and President and CEO, First State Bank; United States Congressman James Comer (KY-01); John Cooper, KBA Legislative Solutions. PAGE 12 | KENTUCKY BANKER
Email your Bank Resolution to: jfischer@kybanks.com Submit Bank Resolutions in high quality (300 dpi optimal resolution) PDF or jpeg files. If you cannot provide a high resolution file mail to: Kentucky Bankers Association, c/o KBM Resolutions, 600 W. Main St., Suite 400, Louisville, KY, 40202
FROM STAFF REPORTS
BANK SHOTS!
Janet Lewis | Assistant General Counsel
#kbabankshots
jlewis@kybanks.com
Dear KBA Friends, You’re probably wondering, “who is this person?” And, “why is she calling me her friend?” Well, let me jump right in to explain. My name is Janet A. Lewis and I am the new Assistant General Counsel here at the Kentucky Bankers Association. Now, how do I tell you about the 29 years it took me to get to the KBA? Well, in four-parts: (1) educational background, (2) career experience, (3) personal life and (4) my role here at the KBA.
AMY TURNER Central Bank announced the promotion of Amy Turner to VP, Mortgage Lending in Winchester. Turner joined the bank in 2011 and has 19 years of mortgage lending experience.
CHRIS COLDIRON Traditional Bank announced the promotion of Mr. Chris Coldiron to Consumer Lender at its Short Street Banking Center.
CHRIS FINDLEY First United Bank announced the promotion of Chris Findley to Senior Vice President/Mortgage Banking Manager. Mr. Findley has been with the bank since 2008.
In 2009, I graduated from a private, Lutheran college (that you probably have never heard of) Capital University with two Bachelor of Art degrees in Political Science (PreLaw) and Spanish. After a brief break, I entered law school at the University of Louisville Brandeis School of Law, graduating May 2015. I returned back to Ohio and obtained my Ohio license to practice law as of May 2016. Remember that “brief break” I mentioned? During my time off from school, I entered the banking industry working with JPMorgan Chase at their Home Finance Department. Yes, the mortgage world in 2009 was a scary place to be, but one I believe helped equip me for my role in the KBA today. After leaving JPMorgan Chase, I began employment with Nationwide Insurance as a licensed insurance agent. That is where the break ends and law school begins. After law school, I began working for Wendy’s International on reimage projects and renewing franchisee contracts. After obtaining my license, I began looking for an opportunity to get back into the banking world from which I left to pursue my degree and was blessed to find the KBA. Personally, I am from Hilliard, Ohio - a small suburb of Columbus. I am a HUGE Buckeye fan, Eagles fanatic, Cavs junkie, Blue Jackets-goer, and Cleveland Tribe watcher. Overall, I am the most Ohioan person you’ll meet - though I do have a heart for the Cardinals (since I sort of should, as I am paying student loans to the school in return for my degree). I have a four-legged, barking child named Daisy who loves taking pictures and barking at anyone or anything that thinks of coming within 50 feet of our windows. Most importantly, I am happy to be here in the great state of Kentucky and be a part of a great group of professionals at the KBA. As Assistant General Counsel with the KBA, my roles here are to become well-versed in banking laws and regulations, gain more knowledge on compliance issues, and come to know our community banks. Some of the ways I am achieving these goals are attending conferences, looking up a barrage of banking-related questions, and conversing with Debra about everything I am learning so that I can absorb her expansive knowledge. I hope to meet each one of you very soon and, while your time is money (probably the worst banking joke you have heard, but made me laugh so all is well in the world), I would like to hear from each one of you soon. Best,
DEBRA RIGGS First United Bank announced the promotion of Debra Riggs to Vice President/Senior Credit Analyst. She joined the bank in 2016 and has 33 years of experience in the banking industry. BANK SHOTS! FACEBOOK @kybankers
Janet A. Lewis, ESQ. Assistant General Counsel Kentucky Bankers Association KENTUCKY BANKER | PAGE 13
KENTUCKY BANKERS ASSOCIATION
Founded: March 4, 1789 115th Session began: January 3, 2017 President of the Senate: Mike Pence (R-IN/VP) Speaker of the House: Paul Ryan (R-WI) President pro tempore: Orrin Hatch (R-UT) Seats: 535 voting members
House Membership 238 Republicans 193 Democrats 4 Vacant
Senate Membership 52 Republicans 46 Democrats 2 Independents
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KENTUCKY BANKERS ASSOCIATION Ballard W. Cassady, Jr. | President & CEO bcassady@kybanks.com
2017 LEGISLATIVE UPDATE
Battle Rages On For Banks & Bankers “The truth of the matter is very little has changed on the legislative front.” Our Chairman, Mike Mercer, our legislative consultant, John Cooper, and I just got back from a trip to Washington DC. It was a timely visit. We were able to help welcome newly-minted Congressman Jamie Comer to his office. Like most new Congressmen he was excited to get to work and eager to help us move our agenda forward. In addition to Congressman Comer, we were able to meet with Congressman Andy Barr, Senator Rand Paul and Senator Mitch McConnell. I wish I could report that the banking industry’s agenda is moving forward with the speed it deserves but, I would be lying to you. The truth of the matter is very little has changed on the legislative front.
The Choice Act The House will pass several pro-banking bills, with the Choice Act being the first. Inside the Choice Act we have several pieces of regulatory reform including:
SENATE UPDATE
The bulk of the Choice Act will pass the House, and then go to languish in the Senate. Senate Republican Majority Leader McConnell is actually worse off this year compared to last because he only has 52 Republican Senators, as opposed to 54 last year. This means he has to find eight Democratic Senators to pass any legislative changes to Dodd-Frank (probably an impossible task). So, how do we, as an indus- “Each election sends a try, get relief? Most of the message to the losing banking industry’s relief will party, sometimes it is come from Presidential Execheard and sometimes utive Orders, regulatory head it isn’t. Either way, changes and the defunding of certain areas that require banking as we once federal monies to carry out. knew it may hang in The budget reconciliation the balance.” process, along with the appropriations process (mentioned above), will also be used. What is put in, and what is left out, is still up in the air. We won’t know much more until around June or July of this year.
• Tailoring regulations to the size and complexity of the institution; • Portfolio lending bill allowing banks to hold non-QM bills in their portfolio; The Battle Rages On • Consumer Financial Protection Bureau reform; The battle rages on for banks and bankers. We need to re• Durbin repeal, and much more. main focused. We need to be laser sharp in our efforts. There will be numerous attempts over the next two years to get reThe Durbin repeal portion (credit card exchange fees going lief for our industry so it all depends on how many Democrats to the retailers) will probably be amended out on the House we can convince to help us (gulp). Then, in two years, there is floor during debate. We are fighting hard to leave it in, but another election. If the Republicans can pick up eight seats, right now the retailers are overpowering the banking industhen they will have control (60 votes) of the Senate, but even try on this issue. The Durbin repeal is strictly a numbers game if they only pick up a handful, our chances improve. at this point; for every banker who calls Congress, 11 retailers call.
Sometimes Heard, Sometimes Not
Consumer Financial Protection Bureau (CFPB) The CFPB will probably be dealt with in two ways: 1. The possible removal of CFPB Director, Richard Cordray. 2. Creation of an advisory panel for the CFPB. JAN/FEB 2017
Each election sends a message to the losing party, sometimes it is heard and sometimes it isn’t (like the Presidential Election). Either way, banking as we once knew it may hang in the balance.
KENTUCKY BANKER | PAGE 15
BANK SHOTS!
KENTUCKY BANKERS ASSOCIATION
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Additionally, The Newburgh Group’s banking team all have previous financial services experience with combined We know how important locating and banking experience exceeding 50 years retaining talent is to financial institu- and recruiting experience in financial tions, and we recognize The Newburgh services in excess of 25 years. The NewGroup as Kentucky bankers’ best choice burgh Group’s banking team knows the to locate and recruit the top financial industry, the people, the language and talent available. With over 16 years in better understands your needs. The the executive recruitment business, The KBA recommends and endorses The Newburgh Group knows how to find Newburgh Group for your Executive Requality executives that can bring imme- cruitment and related needs. diate value to your management team. The KBA is confident that The NewThe Newburgh Group is uniquely quali- burgh Group can provide the answer fied to work with banks in the Common- to your recruiting needs. For more inwealth of Kentucky and the U.S. by hav- formation about The Newburgh Group ing an association with Management and its dedicated team of professional Recruiters International, the largest executive recruiters, please contact: recruiting organization of its kind in the world. That association assists in proSelina Parrish at the KBA viding The Newburgh Group with ad(502) 736-1282 ditional resources to help locate those sparrish@kybanks.com
GARRY SMITH After 30 years, many contributions and a stabilizing influence through changes in the financial industry, CFSB’s Chief Lending Officer/Executive Vice President Garry Smith has announced his retirement effective December 31, 2016. Smith has provided conservative leadership at the helm of CFSB’s lending activities. When the financial crisis of 2008 hit, CFSB was in a position to meet the credit needs of our community due to the conservative lending practices maintained during the ‘boom’ years. Consequently, the bank has grown profitably in subsequent years. Smith graduated from South Marshall High School a member of the Class of 1973. He also holds a Bachelor of Science Degree majoring in Communications from Murray State. Smith started his career with CFSB in August 1986 as the Assistant VP of the Secondary Market and Trust Department.
BANK SHOTS!
NEIL BYRNE Stock Yards Bank & Trust Company announced the addition of Neil Byrne, JD, LLM, CPA, to its Wealth Management Group in Louisville. Commenting on the announcement, Kathy C. Thompson, Senior Executive V.P. of Stock Yards Bank & Trust’s Wealth Management Group, said, “As both an attorney and a CPA, Neil is uniquely qualified to assist Wealth Management clients and prospects with financial planning and estate planning services. His expertise and broad range of experience should further enhance the ability of the Wealth Management Group to fully service Stock Yards Bank & Trust’s clients in Louisville and surrounding areas.”
BANKERS GIVE BACK! Traditional Bank gives big check to the Dubois Community Center Project!
PAGE 16 | KENTUCKY BANKER
Byrne received his Bachelor’s degree from Indiana University Bloomington, his Master’s degree from Dartmouth College, and both his Juris Doctorate and Master of Laws in Taxation from the Villanova University School of Law. BANK SHOTS! FACEBOOK @kybankers
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BANK SHOTS! #kbabankshots
EVAN SIZEMORE Traditional Bank announced the promotion of Evan Sizemore to Consumer Lending at its Palomar Banking Center. Sizemore is a graduate of Transylvania and has been with the bank since 2013.
J. JASON HAWKINS First United Bank & Trust Company named J. Jason Hawkins as President/ CEO. He joined the bank in 2005 and has 25+ years of banking experience.
KENTUCKY BANKERS ASSOCIATION
KENTUCKY BANKER SPOTLIGHT
The Murray Bank Names Leanne Gibbs as Employee of the Quarter The Murray Bank President and CEO, Bob Hargrove, presented Leanne Gibbs with the Employee of the Quarter award at the Bank’s recent employee meeting (pictured below). Gibbs currently works as a Full-Time Teller at The Murray Bank.
“Leanne’s experience as a Teller, coupled with her inherent desire to help others, makes her an exemplary member of our team,” said Hargrove. “We appreciate that commitment and dedication demonstrated to our customers, our bank and the community we serve.”
“Receiving the employee of the quarter is such a huge honor, not only because of the award, but knowing it was voted on by my coworkers,” said Gibbs. “I’m proud to work for an organization that gives back so much to our community and happy to be a part of Murray’s only hometown bank!”
Born and raised in Calloway County, Gibbs has worked at The Murray Bank for over two years, and currently resides in Kirksey with her husband Todd.
In addition to her strong work ethic and ongoing support of the Bank’s mission, she was recognized for her outstanding performance in all aspects of her job.
Founded in Murray, KY, The Murray Bank is proud to be Murray and Calloway County’s only locally owned and operated bank.
The Murray Bank’s Employee of the Quarter award is decided by the vote of fellow bank employees.
JARRED PAULL Traditional Bank is excited to welcome Jarred Paull as a Commercial Loan Officer in the Lexington market. Paull is a graduate of the UK and has 13 years of banking experience.
JAYNE MYERS HUNDLEY First United Bank announced the promotion of Jayne Myers Hundley to Senior Vice President Marketing and Public Relations. She has been with the First United Bank for 11 years. BANK SHOTS! FACEBOOK @kybankers
KENTUCKY BANKER | PAGE 19
KBA EDUCATION
2017 CALENDAR
KBA/PBS Compliance School Feb 27 – Mar 3 Louisville Business Continuity Planning Seminar March 3 Lexington Supervisors Boot Camp March 14 -16 Louisville Training for Loan Assistants and Loan Processors Seminar March 23 Louisville Bank Security Seminar April 13 Louisville KBA Spring Conference April 17 – 19 Lexington Appraisal Compliance Review Seminar: Identifying Common Mistakes May 18 Lexington General Banking School June 11 – 16 Louisville Regulators Forum June 22 Lexington June 23 Bowling Green HR Seminar July 13 Louisville Enterprise Risk Management Seminar July 19 Louisville SBS Certified Banking Cybersecurity Manager School July 25 – 26 Louisville
Commercial Lending School August 7 – 11 Louisville Certified Teller Seminar A New Approach to Fraud Prevention August 15 Paducah August 16 Bowling Green August 23 Grayson August 24 Nicholasville Business and Personal Tax Return Analysis Seminar August 23 Louisville Bank Marketing Seminar August 29 Louisville Numbers Talk and Lenders Need to Listen Seminar September 14 Louisville Cybersecurity Seminar October 4 Bowling Green October 5 Lexington Mortgage Lending School November 6 – 10 Louisville Essentials of Banking School December 4 – 8 Louisville
Kentucky Bankers Association 600 W. Main St., Suite 400, Louisville, KY 40202 Phone 502-582-2453 or 800-392-4045 www.kybanks.com Natalie L. Kaelin, Esq. Director of Education nkaelin@kybanks.com
COMPLIANCE
SEMINARS & WEBINARS
2017 PBS SEMINARS Feb 27 - Mar 3 Mar 28 Mar 29 Mar 30 May 16 May 17 May 18 June 5 June 6 - 8 Sept 12 Sept 13 Nov 1 Nov 3 Nov 9
PBS Compliance School, Louisville Managing Fair Lending Risk, Lexington Mastering HMDA Transitioning to the New Rules CRA Compliance for Community Banks, Lexington Managing Fair Lending Risk, Bowling Green Mastering HMDA: Transitioning to the New Rules Bowling Green CRA Compliance for Community Banks Bowling Green Loan Products Workshop, Lexington Real Estate Lending Compliance, Lexington IRA Rules and Regulations - Basic Issues, Lexington IRA Rules and Regulations Intermediate/ Advanced Issues, Lexington ACH Processing Compliance, Louisville ACH Processing Compliance, Bowling Green ACH Processing Compliance, Lexington
2017 PBS WEBINARS Feb 21 Feb 23 Mar 7 Mar 8 Mar 9 Mar 6
Garnishment of Accounts Containing Federal Benefit Payments Revising the Loan Estimate & Correcting the Closing Disclosure: When & How to Provide Additional Disclosures Government Monitoring Information: When and How to Get GMI Past Due/Delinquent Borrowers: Understanding the Compliance Rules Military Lending Act Changes: Taking Stock and Addressing Common Questions HMDA for Loan Officers
FOR MORE INFORMATION CONTACT Paula Cross 502-736-1276 pcross@kybanks.com
2017 PEGASUS SEMINARS Business Account Administration in Kentucky Mar 20 Paducah Mar 21 Bowling Green Mar 22 Elizabethtown Mar 23 Lexington BSA/AML Compliance School May 9 – 10 Lexington Deposit Compliance Fundamentals Aug 8 Paducah Aug 9 Bowling Green Aug 10 Somerset Aug 22 Elizabethtown Aug 24 Lexington New Accounts in Kentucky Aug 15 Paducah Aug 16 Bowling Green Aug 17 Elizabethtown Aug 18 Lexington Aug 22 Morehead Aug 23 Hazard Aug 24 Somerset IRA Basics Nov 7 Nov 8 Nov 9 Nov 14 Nov 15 Nov 16 Nov 17
Morehead Hazard Somerset Paducah Bowling Green Elizabethtown Lexington
IRA Administration Dec 5 Paducah Dec 6 Bowling Green Dec 7 Somerset Dec 8 Elizabethtown Dec 13 Lexington
KENTUCKY BANKERS ASSOCIATION
This is not where the problem lies.
Letter to the Editor: Louisville Courier-Journal re. Do lenders discriminate? Fischer wants to know Feb. 20, 2017 Sheldon S. Shafer
The federal government, through the Federal Housing Administration (FHA) began a program in 1935 which established the foundation for continued urban blight and decay. This program identified areas of cities (graded from A-D) believed to be poor risks for home lending, often on the basis of blatant discrimination. In order for borrowers to qualify for FHA insurance and lending programs, lenders had to follow the criteria and underwriting standards to the letter. During the late 60’s and early 70’s the FHA’s standards were abandoned. Corrective federal action was taken, including the Community Reinvestment Act which requires banks to lend and invest in all areas of their service community equally. This has resulted in banks creating special programs and products specifically designed to assist many of these “redlined” areas in overcoming that stigma. The Fair Housing Act was also implemented, which prohibits discrimination in the terms or availability of real estate lending, leasing and other real estate and housing transactions. The Home Mortgage Disclosure Act requires banks to submit detailed information regarding loans made and denied. This data is analyzed by banking regulators to look for evidence of “redlining” and other prohibited practices. Banks are also subject to challenge under Unfair, Deceptive or Abusive Acts or Practices law. The standards contained in that law are very broad because it prohibits unfair acts, regardless of whether or not they are shown to be discriminatory. All Kentucky banks are examined regularly by state or federal regulators to evaluate each bank’s compliance with regard to these and other laws. Failure to comply with the standards of any of the legislation I’ve just listed leaves Kentucky banks with penalties that are stiff and includes heavy fines and restrictions on certain activities. Despite the fact that the problems with redlining was originally created by the government, you can see there is no shortage of federal laws and regulations, or of consequences to ensure that banks do not reinforce that legacy. This is not where the problem lies. At least part of the problem, exacerbated by the regulatory nightmare of Dodd-Frank, lies with the tug of war Kentucky banks are subject between the mandates of federal regulations and the needs of the borrower. Our banks are forced to spend more resources to PAGE 22 | KENTUCKY BANKER
assure compliance and are prohibited, in many cases, from considering unique and personal circumstances and needs of the customer during the lending process. This dysfunction restricts banks from addressing the needs of individuals in their service communities, both urban and rural, and has been a continued challenge to Kentucky’s community banks. Borrowers in Kentucky have felt it too, whether they know it or not. Due to the burdens placed on regulated state and national banks “shadow lenders” have entered the market. Shadow lenders exist in the unregulated, or lightly regulated, peripheries of the lending world. These sometimes predatory lenders will manipulate paperwork and data to secure loans for those who can’t afford to pay them back, charge extreme rates and fees and are often less than transparent about payment terms. Where does this leave the borrowers and homeowners? More times than not in a worse position than they were in before the loan was made. While I don’t claim to understand the thought process of politicians, I will assume that the recent “Mapping Inequality” project brought to the Mayor’s attention the government’s imposed discrimination in the 1930’s and has incited him to action in 2016. Because of the strict laws and oversight imposed on community banks from several different agencies, I would be shocked to see any federally insured banking institution in Kentucky involved in “redlining.” But, if by some strange reason it exists anywhere, it should be stopped. But, if Mayor Fischer really wants to make a difference in the lives of Louisville’s citizens, especially those who are subjected to the legacy of “redlining,” I would suggest that he look into the unfairness of the third party tax purchaser program and have Metro Government refuse to participate in such programs in the future. These programs do nothing but harm homeowners. Rather than look for the possibility of discrimination in areas where federal laws and regulations are already in full force and focus, the Mayor should instead make a commitment to ensure that corporations cannot take possession of a person’s home for the mere offense of failing to pay a tax bill in a timely fashion.
Ballard W. Cassady, Jr. President and CEO Kentucky Bankers Association JAN/FEB 2017
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BERT ELY’S FARM CREDIT WATCH
FCA Chairman has Message for the FCS On February 1, Dallas Tonsager, the new chairman and CEO of the Farm Credit Administration (FCA), gave his maiden speech as FCA chairman at the Farm Credit Council’s annual meeting. The Council is the trade association for the FCS’s banks and associations.
Perhaps the most interesting aspect of Tonsager’s talk was his focus on the FCS’s structure, stating that he “would like to propose a year of dialogue between the [FCS] and FCA on this issue.” He noted that in recent years “there’s been a lot of talk about the right number of banks and associations. I don’t know if there is a right number of Tonsager sent a powerful message to the FCS that can associations. However, since the banks are jointly and sevbe characterized by one word – confidence – which ap- erally liable for [FCS] debt, I believe there is a point where peared 23 times in his speech. According to Tonsager, the the [FCS] could be left with too few banks.” Today, there FCS must maintain the confidence of the various publics it are just four FCS banks, with AgFirst and Farm Credit Bank deals with, including those it lends to, those “to whom it of Texas, if combined, about one-half the size of AgriBank does not lend,” and investors in FCS debt. Most important and less than half the size of CoBank. of all, Tonsager counseled, “the [FCS] must also be mindful of the confidence that Congress has in it. It only takes one Tonsager went on to say that “both the [FCS] and FCA will example to raise doubts and questions among members need to reflect more closely on the reasons and ramificaof Congress.” tions for mergers and other changes in [FCS] structure.” Interestingly, Tonsager ignored the very important role Those doubts and questions were starkly evident during that Congress and the FCS’s taxpaying competitors should the most recent oversight hearings the House and Sen- play in that discussion. ate Agriculture Committees held on FCS activities and the FCA’s regulation of the FCS. Possibly the “one example” Farm Credit Mid-America almost certainly faces a loss on a Tonsager had in mind was CoBank, which was widely crit- loan to a bankrupt college it should never have made. icized at the two hearings for its numerous loan to large, investor-owned utilities and to other borrowers hardly in Two years ago, in the January 2015 FCW, I wrote about a $27 million loan Farm Credit Mid-America (FCMA) made need of taxpayer-subsidized financing. in May 2013 to St. Joseph’s College in Rensselaer, Indiana. Although members of the ag committees criticized the FCMA, the second-largest FCS association, is headquarnumerous instances when FCS institutions have lent out- tered in Louisville. side the limits of the Farm Credit Act or otherwise provided services not authorized by the act, Tonsager seemed According to a news release St. Joseph’s issued at that to encourage FCS institutions to lend and provide services time, the college refinanced “its long term debt obligabeyond those authorized by the act, including partnering tions through partnerships with DeMotte State Bank [of “with veterans’ groups, land grant universities, and urban DeMotte, Indiana] and [FCMA].” The loan “will be locked communities,” noting that some of these partnerships in at a fixed interest rate for a 20 year term.” Reportedly, “have resulted in new hospitals, schools, nursing homes, the bank merely serviced the loan on behalf of FCMA. and other community facilities.” On February 3, 2017, St. Joseph’s announced that its board There is one problem – the Farm Credit Act does not autho- had “voted to suspend activities on [its] campus at the end rize FCS institutions to finance such facilities even though of the current semester” due to “a ‘dire’ financial situation they may be in rural America. Most troubling, Tonsager at the more than 125-year-old institution.” According to stated that “as your regulator, we will continue to work to one school official, “the school’s financial issues had been bring clarity to the approval process for these projects so ‘brewing’ for the past 10 to 15 years, or longer;” that is, that you can continue to participate in them.” Translation: long before it obtained the FCMA loan. The school’s presThe FCA will ignore the limits and restrictions of the Farm ident stated that “a total of $100 million would be needed to sustain [the school] in its current state for five or more Credit Act when it is so inclined. PAGE 26 | KENTUCKY BANKER
JAN/FEB 2017
continued from the previous page
BERT ELY’S FARM CREDIT WATCH
years,” including paying off $27 million of debt, presumably the FCMA loan.In my article about the FCMA loan, I raised two huge problems with the loan. First, I questioned if the college was an eligible FCS . That is, was it a “bona fide” farmer, as that phrase is used in the Farm Credit Act. In November of 2014, I asked the FCA if St. Joseph’s could be considered to be a “bona fide” farmer and therefore eligible to borrow from the FCS. Michael Stokke, the FCA’s Director of Congressional and Public Affairs, responding to my email, stated that my inquiry “does not involve a loan for which you are obligated,” which is how the FCA often blows off complaints about improper FCS lending. Stokke, who is still with the FCA, then stated that “we assure you that, under our examination authority, we have reviewed [FCMA’s] relationship with the College and determined that, in its business dealings with the College, [FCMA] has complied with our regulations.”
was gifted with 7,634 acres of farmland with an estimated value of $40 million, more than enough to pay off the FCMA loan. However, the donor of that land, a very savvy businesswoman most likely quite aware of the school’s financial difficulties, “stipulated in her will and written agreements with the college that neither the college nor the [Catholic] church could sell the farmland.”
Reportedly, the new beneficiary of the income produced by this farmland will be an unrelated charitable institution. It will be interesting to see if FCMA tries to establish a claim on that land so as to reduce its loss on the loan. Given the substantial loss FCMA is facing on its St. Joseph’s loan, FCMA should discuss in its 2016 annual report how it justified making a clearly undercollateralized loan to a clearly ineligible borrower. Perhaps FCMA sold participations in this loan to other FCS institutions, which should raise this question among those buyers: Why did we buy a According to a well-placed source, FCMA has a lien on all piece of such a lousy loan? The FCA should reexamine and of St. Joseph’s real estate, which comprises campus build- publicly explain whether it should have approved this loan ings as well as 8,000 acres of farmland that had been gifted after being questioned about it. The ag committees should to the college. Assuming that St. Joseph’s does not reopen, ask why the FCA stated that “in its business dealings with as has been the case with many other small colleges that the College, [FCMA] has complied with [the FCA’s] regulahave closed in recent years, its campus, located in north- tions.” Does the Farm Credit Act actually permit partially west Indiana, 80 miles south of Chicago, will net FCMA collateralized loans to private colleges? This loan could be little, if anything, after taking into account substantial de- yet one more instance where an FCS loan raises “doubts ferred maintenance costs and its location in a town with a and questions among members of Congress.” Hopefully population of 6,000. The farmland might bring at least $6 that will be the case. million, so FCMA is likely facing a loss of at least $20 million on this loan. As I reported in 2015, in 2010 St. Joseph’s Report FCS lending abuses to: green-acres@ely-co.com
MAY 21-24 R REGISTER TODAY R 2017
KBA Annual Washington D.C. Trip The KBA Annual Washington Trip is a three- day event! We kick off with a welcome reception and briefing Sunday evening. Monday (all day) and Tuesday morning consist of Agency briefings with the ABA, Treasury, FHFA, OCC, CFPB, Federal Reserve, and the FDIC. Tuesday Afternoon and Wednesday morning are scheduled Congressional visits and a briefing with delegates on the Hill. We will attempt to end meetings by 2 P.M. on Wednesday, May 24, so please do not book return airfare prior to 5 P.M. Overnight Accommodations: There is a room block at the Hay Adams Hotel, 800 16th St. NW, Washington, DC 20006. Please call the reservations line directly at 1-800-424-5054; identify yourself with the KBA room block. “(The) KBA’s annual trip to Washington is a great way to learn how the government functions and how bankers must be engaged with both our legislators and regulators. With the banking industry being one of the most - if not the most - highly regulated industry in the country, it is vital that we present our points of view effectively and help to shape the laws and regulations affecting our industry so that we can continue to serve our customers and communities effectively.” Mr. George B. Spragens, CEO/Chairman, The Farmers National Bank, Lebanon
R To register, or for more info, contact Natalie Kaelin nkaelin@kybanks.com R
KENTUCKY BANKERS ASSOCIATION
Payments: The Bumpy Road Ahead
by Paul Waltz, SHAZAM President and CEO
Some argue the PIN is static, but so is the token saved in your mobile wallet. Some say the cryptogram is dynamAs we begin a new year, the change in the US payments ic because the value changes each time, but the PIN is system continues at breakneck speed. Driven in large part owned, controlled and can be changed by the consumer. by the migration to EMV, the introduction of tokenization, The challenge is not all transactions require a PIN. If they and the focus on faster payments, the change will contin- did, much of this complexity could’ve been avoided. The ue throughout 2017. From issuers to merchants, there are security improvements of the chip technology are valuable lessons to be learned from our experience so far, and op- and, combined with a PIN, make the card a much more portunities to take advantage of moving forward. secure payment device. In 2016, merchants and issuers continued the migration toward EMV. Thousands of merchants, eager to prepare for the liability shift, rushed payments solutions to their brick and mortar stores before routing solutions were available for EMV. Most didn’t fully understand the costs and benefits of those machines. Issuers did the same thing hoping to beat an artificial deadline imposed by a few organizations with significant market influence. Most merchants didn’t realize, and are only starting to now understand, the impact of not programming their terminals with the routing choice and capability they wanted. Instead, they got out-of-the-box proprietary solutions that restricted routing choice. This proprietary technology started many merchants and issuers down a path that eventually could evolve into the elimination of routing choice altogether. As proprietary technology is more widely adopted and open standards left behind, interoperability is harmed and the owner of the technology gains power and control.
When payments are based on widely accepted standards, the system runs smoothly, competition for payments flourishes and the environment is ripe for innovation. When payments solutions are based on proprietary technology, controlled choice and flexibility and, ultimately, interoperability and competition are impacted. Unfortunately, 2017 holds more of the same. We’ll find out more about the legal challenges surrounding where and how consumers are allowed to use their cards, how merchants are allowed to protect those transactions and how that may impact you as the issuer. You’re REQUIRED to participate in more programs without any control of the what or the how. It’s also likely we’ll see more consumer frustration.
The news isn’t all bad though. The year 2017 also holds opportunities to expand choice and flexibility for merchants and issuers. The traditional PIN debit networks are providing new opportunities by extending their existing capabilities into traditionally signature-only market segments like We saw a challenge to that power in 2016. Lawsuits and le- online retail, restaurants and hotels. gal battles piled up as merchants began to push back over the issue of choice. Some merchants wanted to mandate PINless and new signature transactions can provide siguse of the PIN. They challenged rules restricting routing nificant benefits to issuers and merchants by extending choice based on how a consumer authenticates a trans- routing choice and payment competition. We think this action. may be the first of many instances to come where synergies emerge between the merchants and issuers. Future You have to ask: Could all of this confusion and conflict collaboration between these groups can lead to a better have been avoided? The answer is yes. We should require payments system for everyone. all transactions to have consumer authentication that’s captured at the point of purchase regardless of the form It’s been a bumpy migration as payments solutions continof payment. That authentication should then be passed to ue to evolve. The choices we make as an industry and how the issuer for validation. This authentication solution has well we learn from experience will largely determine how existed for more than 40 years in the form of the PIN. much we smooth the way forward in 2017 and beyond. PAGE 30 | KENTUCKY BANKER
JAN/FEB 2017
KENTUCKY BANKERS ASSOCIATION | ENDORSED VENDOR
HUMAN RESOURCES MANAGEMENT CHECKLIST The Seay Management Human Resources Management Checklist ensures that you implement best practices with policies, procedures, manuals and documents to hire and retain good employees and motivate them to superior performance. 1. EMPLOYEE HANDBOOK: This is your fundamental employment document because it describes how you will handle work issues that arise. To meet that goal, it should be comprehensive and detailed. Policies you need include: • EEO policy – This policy should include all protected categories under federal, state and local employment regulations. The policy should be reviewed annually to ensure all categories are listed. • Dress Code – address extreme hair color, potentially offensive tattoos, scents and aromas that bother other employees, and body piercings in places that could be distracting. • Cell Phone Use – talking or texting at work, even if set on vibrate, taking pictures and safety issues involved while driving on employer business. • Social Relationships at Work – Define appropriate and inappropriate work relationships. • Email/Internet Use at Work – We should train employees on how to compose emails and what Internet sites should be avoided and inform them that the email system is the property of the employer and that all emails are subject to being retrieved. • Discussing Wages – We should not have policies prohibiting employees from discussing wages, benefits and working conditions. 2. SOCIAL NETWORKING: Employers should develop a policy on the use of social networking at work, taking into consideration sites like Facebook, Twitter and Instagram, etc. • Employers should prohibit or restrict access to social networking sites during working time and employers should be aware that some material that employees post may be considered a protected concerted activity, even if it is critical of management. • Supervisors and managers should be required to stay off the personal social media pages or sites of their employees. We strongly recommend management not “friend” employees on social media and to “unfriend” them if it has already occurred. • On the basis of NLRB regulations, employers should refrain from instructing employees about what they can and cannot post on Facebook or other social networking sites. 3. SEXUAL HARASSMENT: Conduct Sexual Harassment Awareness Training annually for all managers and employees, to build a wall of protection around your company. 4. BULLYING IN THE WORKPLACE: We often say that “the workplace mirrors society” and that whatever behavior is occurring in society will ultimately find its way into the workplace. Today, we are seeing the emergence of bullying behavior in schools and in other parts of society. Bullying can be physical, emotional and/or relational and often occurs in cyberspace. To prevent, eliminate or reduce bullying at work, PAGE 32 | KENTUCKY BANKER
we recommend that you develop a strong anti-bullying policy and make absolutely sure you have a way for employees to report abuses, in a confidential and anonymous way. 5. DRUG FREE WORKPLACE PROGRAM: To help resolve potential drug issues at work and lower your Workers’ Compensation premium. 6. DISC PROFILE: To make sure you hire the best employees, that are the best “fit” for the job and the work culture, consider administering the DISC profile, which is a measure of working style: • Hard Driving Type A • People Oriented • Multi-tasker • Detail oriented
NOTE: The DISC lets you “look behind the curtain” to see if you really have the Wizard of Oz or if you have a pretender. We offer this service online.
7. AFFIRMATIVE ACTION PLAN: Complete the annual update of your Affirmative Action Plan according to the regulations, if you are a covered employer. To be covered, you must have 50 employees and federal government contracts of $50,000 or more. 8. EEO-1 AND VETS 4212 REPORTS: Beginning in 2017, the deadline for filing EEO-1 Reports is March 31, 2018. This will enable employers to apply payroll information from W-2 forms in conjunction with the new requirement to include pay data in the report. In compliance with the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) all VETS 4212 reports (you must do this if you have 100 employees or if you have 50 employees and an Affirmative Action Plan) are due on September 30th of each year. 9. NEW HIRE REPORTS: Regularly submit your New Hire Reports to the state employment agency database. 10. JOB DESCRIPTIONS: Ensure that you have detailed job descriptions for every job, in compliance with ADA, EEOC and Generally Accepted Principles of Human Resources Management. In addition to helping us manage, job descriptions are often a first line of defense, in the event of an EEOC or DOL investigation. Employers who are covered by the Affirmative Action regulations are required to have job descriptions. 11. MANAGEMENT TRAINING: Consider conducting several Management Training sessions this year on important subjects like: • How to Counsel and Dismiss Employees (When Necessary) • How to Conduct Performance Appraisal • How to Handle Difficult Employees • Diversity and Harassment Training 12. EMPLOYMENT LABOR POSTERS: Check that you have all current required employment posters, placed in prominent locations. Federal regulations require 6 posters; the various states require about 5 more. JAN/FEB 2017
KENTUCKY BANKERS ASSOCIATION | ENDORSED VENDOR 13. I-9 FORM: Review your I-9 forms for completion and keep on file for all employees. Verification requires employers to: • Examine and record documents under Columns A or B and C. • Make copies of the verification documents and attach them to the I-9 Form. • File the I-9 Forms in a separate location, not the regular employee file.
NOTE: Employers should be utilizing the I-9 form (expires 8/31/2019 for new hires). All previous versions were discontinued as of 1/22/2017.
14. EMPLOYEE FILES: Make sure your employee files are complete and that they include all the documents you need (such as the application form, disciplinary notices, commendations, performance appraisals, et. al.) but none of the documents that are problematic (such as polygraph records, drug test records, private/personal documents). Some employee documents are necessary for recordkeeping and reporting and are perfectly proper, but are of a personal, private or medical nature or have an EEO component. For these documents, have a confidential employee file, separate from the regular employee file. 15. COMMUNICATIONS WITH EMPLOYEES: Employers should have clear and frequent employee communications programs such as: • Open Door policy • Employee Complaint Procedure • Bulletin boards • Employee newsletter - printed or electronic newsletter 16. DOCUMENTATION: Make sure all of your Human Resources decisions and actions are fully and comprehensively documented, that you have developed and implemented a system of Progressive Discipline and that all of your supervisors and managers have been fully trained. 17. UNEMPLOYMENT: In an effort to reduce claims and benefits due to employees, keep the following in mind: • If you dismiss an employee within the 90 day probationary period, whatever benefits may be awarded should not be charged to your account. • Former employees should not be eligible for benefits if they are dismissed for misconduct or if they leave with “no good cause attributable to the employer.” • Employees who are dismissed for performance reasons will almost always be awarded benefits. 18. NATIONAL LABOR RELATIONS BOARD: This agency covers both union and non-union employees and enforces the “Unfair Labor Practices” requirements. In addition, union membership is at a historic low and union organizing campaigns are going to increase, so it’s critical to train your supervisors and managers in the landscape of what they can and can’t do. Under the provision of “protected concerted activity” two or more employees may discuss their wages, benefits or working conditions. As employers, we cannot counsel, discipline or dismiss them for engaging in this activity. 19. EMPLOYEE OPINION SURVEY: Consider conducting an employee opinion survey every 18-24 months to find out what your employees think and how they feel about their work and their jobs. Many a serious employee problem has been prevented by having an employee opinion survey. 20. TIME RECORDS: The Wage and Hour Division of the Department of Labor is targeting the question of “working time,” which regulations JAN/FEB 2017
define laboriously as whenever an employee is “suffered or permitted to work.” If an employee is working, the employer is responsible for paying for this time, even if you didn’t authorize it, and even if you didn’t know about it. This could include travel time, meal periods, time before and after regular work hours, homework and other time. Employers should have a clear policy on the use of smart phones and other devices at home and during other non-scheduled work hours to conduct company related business. Make sure all employees are recording all of their work time accurately and that you know when employees are working. 21. EXEMPT CLASSIFICATION: Verify all of your exempt employees are properly classified. Remember that one of the requirements for exemption is that employees must receive a guaranteed salary, not subject to deduction, in any week in which they perform any work at all. The 0current exempt salary level of $455 is fairly low so we expect that it will increase at some point, but not to the $913 level that was proposed recently by the Department of Labor. We project in the future to see an exempt salary level in the $600-$700 range. 22. ONLINE APPLICATION AND JOB POSTINGS: Consider having employees complete the application form online, through your website, rather than in person. This can be a more efficient and less expensive process and may more quickly identify those applicants who might be good candidates for the positions you have open. You might also want to list your open positions on your website. 23. HR MANAGEMENT COMPLIANCE AUDIT REVIEW: This will help you reduce or eliminate any potential liability or exposure, provide you with the comfort and assurance that you are in compliance with all of the employment regulations that cover you and check to see that you have the “best practices” you need to hire and retain good employees. We trust that this Human Resources Management Checklist will be helpful to you as you establish and refine your employment goals and objectives. Please contact Seay Management Consultants with any questions you may have. CONTACT
Toll Free: 888-245-6272 Email: admin@seay.us www.seay.us
TESTIMONIAL “Seay Management has been a tremendous resource for First Community Bank. They helped rewrite our bank’s Employee Handbook, and when other personnel issues are identified, calling the experts at Seay for legal guidance has been extremely helpful. All community banks can benefit from the support provided by Seay Management.” Ms. Cheryl Hartsell, Senior VP and COO First Community Bank of the Heartland Clinton, Kentucky KENTUCKY BANKER | PAGE 33
RESOLUTION OF RECOGNITION and APPRECIATION SOUTH CENTRAL BANK, INC.
Formerly South Central Bank of Daviess County, Inc.
GEORGE WARREN WHEREAS, the Shareholders, Board of Directors, Officers, and Staff of SOUTH CENTRAL BANK, INC.
hereby recognize and honor GEORGE WARREN for Sixteen years of dedicated service as a Director for this Bank;
WHEREAS, the service GEORGE WARREN has rendered in his role as Director, to the Bank, its Board, Officers and Staff exemplifies the highest professional, business and ethical standards; WHEREAS, his years of dedicated service, sound business judgment, integrity, wisdom, loyalty and leadership are appreciated by all who served with him over his long and distinguished years of service to this board, not only as a Director, but as a valued friend and community leader; WHEREAS, the Shareholders, Board of Directors, Officers and Staff, will be forever grateful for his creativity, savyness, humor and guidance that inspired us to achieve much; WHEREAS, when he joined the Board and with his friendship to the founder, James Kenneth Bale, and remaining a vital part of the Bank Board; AND SUPPORTING IT as his (Mr. Bale’s) children, Ruthie, Ellen, Billy, Tommy and Lester Bale, continued with the vision of the original charter mission to serve Owensboro and Daviess County; WHEREAS, SOUTH CENTRAL BANK, INC. is a better institution because of his involvement and WE ARE HONORED to have been the beneficiary of his concern and commitment, and recall with great gratitude all that he has said, all that he has done and all that he represents; and WHEREAS, he has resigned his board position to fully enjoy life, and retirement; NOW, THEREFORE BE IT RESOLVED, by official and permenant record of this NOTICE UPON ITS
BOOKS AND MINUTES, the SOUTH CENTRAL BANK, INC. Shareholders, Board of Directors, Officers and Staff express their deepest appreciation and gratitude to GEORGE WARREN for his faithful service, outstanding leadership, and numerous contributions to our Directorate, Officers, Staff, customers, and community; and FURTHERMORE AND HEREAFTER ALWAYS we collectively and sincerely express to him our best wishes for continued health, happiness and success; and
BE IT FURTHER RESOLVED, a copy of this RESOLUTION be presented to the Kentucky Bankers
Association for publication as a reminder to all, SOUTH CENTRAL BANK, INC.’s appreciation for his service. Unanimously, adopted this 20th day of December, 2016, by the Shareholders and Board of Directors of SOUTH CENTRAL BANK, INC.
_____________________
_____________________
Ruthie O’Bryan Bale, Chair
Ellen Lee Bale, Vice Chair
_____________________ William O’Bryan Bale, Secretary
BANK SHOTS! #kbabankshots ON FACEBOOK @kybankers
ASHLEY LAFFERTY
ETHAN CUNNINGHAM
RUFUS BAKER, JR.
JB SCHMIDT
Citizens Union Bank in Shelbyville announced the promotion of Ashley Lafferty to Assistant Vice President/Consumer Loan Manager.
First Community Bank (FCB) of the Heartland’s welcomes Ethan Cunningham to their credit administration team. Cunningham joined the FCB team in 2013 working parttime in customer service and other roles.
First United Bank announced the promotion of Rufus Baker, Jr. to Senior Vice President/ Commercial Banker. Mr. Baker started with the bank in 2010 and has 30 years of experience in the banking industry.
Central Bank announced the promotion of JB Schmidt to Commercial Lending Officer, Northern Kentucky. Mr. Schmidt began his career at the bank as a teller in 2010 and is a graduate of Xavier University.
CHRISTOPHER DEW
JUSTIN BADEAU
STEPHANIE ROARX
JOHN AUSTIN
Citizens Union Bank in Shelbyville announced the promotion of Christopher Dew, CPA to Executive Vice President/Chief Financial Officer.
Forcht Bank CFO Justin Badeau has been named to the bank’s Board of Directors. Badeau has been with Forcht Bank since 2002, and became CFO in 2012.
Winchester Federal Bank announced its recent hire of Stephanie Roarx as Assistant VP/ Commercial Loan Officer. Ms. Roarx has over 20 years’ experience in the banking industry.
Winchester Federal Bank announced John Austin has joined the bank as VP and Head of Lending. He has over 25 years in banking and is a graduate of Morehead State.
ERIN BUKOWSKI
MALLORY WINSTEAD
TYLER CAIN
LEE COLEMAN
Citizens Union Bank in Shelbyville announced the promotion of Erin Bukowski to Internal Audit Manager/Information Security Officer.
Community Financial Services Bank promoted Risk Analyst Mallory (McNeely) Winstead to Compliance Officer and Credit Analysis/ Loan Review Team Leader.
First Southern National Bank announced Tyler Cain has been promoted to the position of Community President in Richmond. Cain has served the bank in a Loan and Business Development role since January 2012.
Central Bank announced the promotion of Lee Coleman to VP, Mortgage Lending in the Winchester market. Ms. Coleman joined the bank in 2004 and has 12 years of mortgage lending experience. She is a graduate of EKU.
JOHN BRETT REYNOLDS
NEIL BYRNE
ALEX KELTNER
JEREMY MEADOWS
First Southern National Bank recently promoted John Brett Reynolds to Community President in Logan County. Reynolds is a lifelong resident of Logan County.
Stock Yards Bank & Trust Company announced the addition of Neil Byrne, JD, LLM, CPA, to its Wealth Management Group in Louisville.
First Southern National Bank recently promoted Alex Keltner to Senior Vice President, Chief Banking Officer. Keltner has served the bank for more than 22 years.
Central Bank announced the promotion of Jeremy Meadows to Retail Banking Officer, Berea. He first joined the bank in 2008 as a teller. Prior to the bank Mr. Meadows served in the U.S. Army National Guard in Iraq.
VETERAN
BANK SHOTS! highlight you, the members of the KBA, and the banks you work for. Formerly Bankers on the Move and Bank Happenings, BANK SHOTS! is where we publish your successes and acknowledge your milestones in Kentucky Banker magazine and on the KBA’s official FACEBOOK page: @kybankers (we use the hashtag #kbabankshots). Email your BANK SHOTS! jfischer@kybanks.com