Kentucky Banker Magazine - March / April 2021

KENTUCKY BANKER Consider the Source

by Wade Berry Sad State of Affairs

by Ballard Cassady I Want it All and I Want it Now

by Debra Stamper

KENTUCKY BANKER MAGAZINE OFFICIAL KBA PUBLICATION MARCH/APRIL 2021

THE FOG IS LIFTING

KBA PARTNER & ENDORSED VENDOR DIRECTORY

WHO WE ARE: The KBA is 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.

Ballard W. Cassady Jr.

Brandon Maggard

President & CEO bcassady@kybanks.com

Account Representative KenBanc Insurance bmaggard@kybanks.com

Debra K. Stamper

Chuck Maggard

EVP & General Counsel dstamper@kybanks.com

Miriam Cole

President & CEO KenBanc Insurance cmaggard@kybanks.com

Lisa Mattingly

Executive Assistant mcole@kybanks.com

Director of Sales & Service KBA Benefit Solutions lmattingly@kybanks.com

John P. Cooper

Donna McCartin

Legislative Solutions jcooper@kybanks.com

Benefit Support Specialist dmccartin@kybanks.com

WHAT WE DO: 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 4 ways:

Paula Cross

Tammy Nichols

Education Coordinator pcross@kybanks.com

Finance Officer HOPE of Kentucky tnichols@kybanks.com

Josh Fischer

Selina O. Parrish

Nina K. Gottes

Timothy A. Schenk

1. Government relations & industry advocacy 2. Information interchange 3. Education 4. Products and services

Sponsorship & Business Development ngottes@kybanks.com

Assistant General Counsel tschenk@kybanks.com

Casey Guernsey

Jennifer Schlierf

kybanks.com KENTUCKY BANKERS ASSOCIATION 600 West Main Street, Suite 400 Louisville, Kentucky 40202 KENTUCKY BANKER is the official bi-monthly magazine of the Kentucky Bankers Association (KBA). No part of this magazine may be reproduced without express written permission from the KBA. The KBA is not responsible for opinions expressed by outside contributors published in KENTUCKY BANKER. The KBA reserves the right to publish submissions at the discretion of the KENTUCKY BANKER editorial team.

For more information, or to submit an article, pictures or pass on a story lead, contact Josh Fischer, Managing Editor, 502-736-1283 or jfischer@kybanks.com

Director of Communications jfischer@kybanks.com

Enrollment and Billing Specialist cguernsey@kybanks.com

Sales Support KBA Insurance Solutions jschlierf@kybanks.com

Jamie Hampton

Matthew E. Vance, CPA

Education Coordinator jhampton@kybanks.com

Chief Financial Officer mvance@kybanks.com

Natalie Kaelin, Esq.

Billie Wade

Director of Education Alliance nkaelin@kybanks.com

Executive Director HOPE of Kentucky bwade@kybanks.com

Tamuna Loladze

Audrey Whitaker

Chief Operating Officer HOPE of Kentucky tloladze@kybanks.com

Michelle Madison IT Manager mmadison@kybanks.com

McKenzie Just Caldwell

facebook.com/kybankers

Director of Membership sparrish@kybanks.com

Staff Accountant mcaldwell@kybanks.com

Insurance Services Coordinator awhitaker@kybanks.com

Steve Whitlow Systems Engineer swhitlow@kybanks.com

Bold frame denotes management team member.

Please feel free to email us, we are here to help!

2020-2021 OFFICERS & BOARD

KENTUCKY BANKER

CHAIRMAN J. Wade Berry, President & CEO

PAST CHAIRMAN David M. Bowling, CEO

Farmers Bank & Trust Co.

Citizens Union Bank of Shelbyville

MAR/APR 2021

VICE CHAIRMAN James A. Hillebrand, CEO

KBA PRESIDENT & CEO Ballard W. Cassady, Jr.

Stock Yards Bank & Trust Co.

Kentucky Bankers Association

3 7 9 10 11 14 15 17 20 22 35 39 41

TREASURER Ruth O’Bryan Bale, Chairman South Central Bancshares of KY, Inc. GROUP REPRESENTATIVES Represents Group 1 Randell Blackburn Market President McCracken Co. Community Financial Services Bank Represents Group 2 J. Jason Hawkins President & CEO First United Bank and Trust Co. Represents Group 3 John W. Key President Commonwealth Bank & Trust Co. Represents Group 4 Michelle Coleman CEO Bank of Edmonson County

Represents Group 8 Anthony Kinder President & CEO Peoples Bank of Kentucky, Inc. Represents Group 9 Andrew Jones Regional President Community Trust Bank, Inc. Represents Thrifts Jaime Coffey President & CEO First Federal Savings & Loan of Hazard Represents Bank Size Assets of $1B+ Elmer K. Whitaker President & CEO Whitaker Bank

Represents Group 5 Gregory D. Goff Chairman/CEO First National Bank of Kentucky

Represents Bank Size Assets at Least $200M; < $1B David W. Hobbs President River City Bank, Inc.

Represents Group 6 Charles Beach, III Chairman Peoples Exchange Bank

KBA Education Alliance, non-voting Lanie W. Gardner Community President First Southern National

Represents Group 7 D. Alex Cook President & CEO Home Federal Bank

KBA Benefits Trust, non-voting W. Fred Brashear, II President & CEO Hyden Citizens Bank

ADVERTISE IN KENTUCKY BANKER Would you like to advertise in KENTUCKY BANKER magazine?

CONTACT Nina Gottes Sponsorship & Business Development ngottes@kybanks.com 513-293-2467

WANT TO BECOME A KBA SPONSOR? Visit: kbasponsorship.com

Sponsors Chairman’s Corner STRAIGHT TALK Spring Conference My Two Cents Group Meetings Bankers Title CK Turns 20 75 Years for Central Bank Compliance Corner KBA Partners & Vendors NetGain Endorsed by KBA Hemp Need-to-Knows SolarWinds Breach

KBA PARTNER AND ENDORSED VENDOR DIRECTORY PAGES 22-32

DEBRA’S TWO CENTS Someone paid $60 MILLION for this digital piece of art...

PAGE 11

Banc Consulting Partners can help your bank analyze how BOLI can increase bottom line earnings. BOLI has been used for decades as a high earning, credit worthy asset for community banks. When you want the best for your institution and a dedicated long-term partner, talk to Lou Moore and Lon P. Haines at Banc Consulting Partners.

WHEN IT COMES TO

BANK OWNED LIFE INSURANCE (BOLI)

You Need A Long-Term Partner.

“CUB began working with Banc Consulting Partners in 2020 on a strategic BOLI implementation. BCP was knowledgeable and professional every step of the way and anticipated our every need. They were able to make a relatively complex issue easy to understand and quick to implement. Their experience with any regulatory issues or concerns was also important. We recommend them highly.”

— DAVID M. BOWLING, CEO CITIZENS UNION BANK

“The relationship that Farmers Bank & Trust Company’s Management Team and Board of Directors has with Lou Moore and his team at Banc Consulting Partners is one of the closest and most valuable relationships that we have. Our partnership with Lou consistently produces highly efficient earnings while helping us recruit and retain key employees and offset rising benefits costs. For nearly 20 years, Lou has consistently exceeded our expectations of performance, service, and character. I highly recommend Lou Moore and Banc Consulting Partners to Kentucky’s community banks.”

— J. WADE BERRY, PRES. & CEO, FARMERS BANK & TRUST CO.

Lou Moore

MANAGING PRINCIPAL 440.356.8860 PHONE 216.789.8889 MOBILE 440.730.3130 FAX lmoore@yourbankpartner.com

Lon P. Haines

MANAGING PRINCIPAL 267.773.7617 PHONE 856.577.7305 MOBILE lphaines@yourbankpartner.com

CHAIRMAN’S CORNER by Mr. J. Wade Berry President & CEO, Farmers Bank & Trust Co. 2020-2021 KBA Chairman

Consider the Source For some of us, the signs that we were destined to become bankers were on display early in life. As a small child, I converted one of my grandfather’s empty cigar boxes into a personal safe where I kept every penny of birthday and Christmas money that I would receive from that day forward. Friends and family would encourage me to spend at least some of my money, but I simply didn’t see any potential purchases that could stand up to my personal cost – benefit analysis. When I became a teenager, I finally found reasons to make withdrawals from my cigar box. The first big purchase I planned to make with my own money was an aftermarket car stereo system. After all, it wasn’t just me who needed to hear the music I was listening to at the time. Everyone within a quarter mile radius of me needed to hear it too. I knew I needed expert help to decide which stereo system to buy, where I should buy it, and how much I should spend. I just didn’t know where to get the help I needed. I certainly didn’t trust the 20-year-old salesman at the electronics store to help me with my decision. I needed to find a reliable source that had spent considerable time evaluating the features of the product and the company that stood behind it. Enter Consumer Reports magazine…

KBA Services, Inc. has already conducted its own intensive, independent evaluation of each vendor they’ve chosen to endorse. Following is a partial list of the information that must be provided by vendors seeking KBA Endorsed Vendor status:

Consumer Reports has guided me through the vast majority of purchases I’ve made since I was a 16-year-old looking for a car stereo in 1986. The products and services I’m considering have changed. I’ve gone from car stereos to car seats. From diapers to diet plans. From sports cars to sedans. But I’ve always looked to the same trusted source for my information: Consumer Reports. In full disclosure, I have to admit that my life-long interest in pre-purchase evaluations has created more than a few awkward situations for me at the local store. I just can’t stand by quietly and watch someone thoughtlessly pitch a can of insect repellant into their cart without telling them that their selection finished dead last in April’s Consumer Reports insect repellent ratings.

Dead last!

It shouldn’t be difficult to convince community bankers in Kentucky to utilize endorsed vendors. That’s because the arguments community bankers use when we ask potential customers to bank with us instead of large out of state banks are almost mirror images of the reasons that KBA members should utilize vendors endorsed by the KBA. For example, community banks emphasize the value of banking with people you know and trust. We believe there is value in banking with the person you sit beside at church or work alongside at the local ballpark.

KBA Endorsed Vendors have allowed us to know and understand their companies in great detail and we get to regularly interact with their people on a one-on-one basis at KBA events. Community bankers often jokingly tell our customers that we couldn’t afford to treat them poorly even if we wanted to because they would tell everybody! It’s safe to say that a KBA Endorsed Vendor wouldn’t enjoy endorsed vendor status for very long if KBA members began to have bad experiences with their company. Perhaps most importantly, we tell our potential customers that they should bank with us because banking with us allows us to give back to our local communities through financial support and volunteerism. All KBA Endorsed Vendors agree to support the association financially and to support the KBA with their energy and with their efforts at KBA sponsored events.

On the surface, you might think that our country is starting to trend in my direction when it comes to evaluating potential purchases. Nearly nine out of ten consumers say they take the time to read online product reviews before they buy. That’s good, right? Not necessarily. One study found that 61% of electronics reviews on Amazon were fake. A popular review-tracking website estimates that over a third of the reviews on popular websites like Walmart.com are fake. Instead of “fake news,” we now have “fake reviews!” Even when you know that a particular review is legitimate, honest, and well-intended, how helpful can it be when you don’t know all of the factors that influenced the review?

If you’re like me and you prefer a rigorous, systematic evaluation process over a word-of-mouth review from one or two people, the KBA Endorsed Vendor List should be an ideal resource for you. Vendors provide critical services and expertise that most community banks can’t afford to have on staff full-time. They effectively become an extension of our own team as they partner with us to help us achieve our goals.

While there’s no substitute for performing our own internal due diligence on potential vendors, it’s a great comfort to know that the team at

• • • • • • • •

Detailed history of the company and its key officers Financial disclosures including the company’s balance sheet and income statement Information regarding the company’s audits and internal controls A description of the company’s regulatory compliance practices Details regarding how the company protects sensitive customer data Disclosure of ongoing litigation or supervisory actions filed against the company A description of the company’s business continuity plans Details regarding the service and cost savings that KBA members can expect.

In the same way that Consumer Reports is where I begin my search for products and services that I utilize at home, the KBA Endorsed Vendor List is where I always begin my search for vendors to help our bank.

I’ve learned the hard way that all opinions and all reviews are not created equal. Whether I’m looking to buy a television for my home or to hire a vendor for our bank, I always “consider the source” of the advice I’m being given. I can tell you from personal experience that you can’t find a more efficient way to begin your vendor search than by taking a look at the KBA Endorsed Vendor List at kybanks.com.

KENTUCKY BANKER MAGAZINE | 7

$

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0 foreclosures

I welcome your inquiries and the opportunity to discuss the benefits and features this CRA investment provides.

Jonathan Welty Executive Vice President 614.561.9356 JWelty@occh.org

++++++++++++++++++++++++++++++++++++ Kentucky Bank ++++++++++++++++++++++++++++++++++++ + + + +CDC ++++++++++++++++++++++++++++++++ Key ++++++++++++++++++++++++++++++++++++ + + + + + + + + + + +Life + + + Insurance ++++++++++++++++++++++ Nationwide ++++++++++++++++++++++++++++++++++++ Company ++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ Peoples + + + + + + + +Exchange + + + + + + + + + Bank +++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ PNC Bank +++++ +++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ Republic Bank +++++++++ +++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ Springfield + + + + + + + + + + +State + + + + +Bank ++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ Stock Yards Bank & Trust ++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ Truist ++++++++++++++++++++++++++++++++++++ + + + + Bancorp + + + + + + + + +CDC +++++++++++++++++++++++ U.S. ++++++++++++++++++++++++++++++++++++ + + + + + + + + + + Bank ++++++++++++++++++++++++++ WesBanco

++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++++++++++++++ ++ + + + + + +Cawthon, + + + + + + +President + + + + + +and + + +CEO ++++++++++++ Catherine

88 East Broad Street, Suite 1800 Columbus, Ohio 43215 614.224.8446 | www.occh.org

STRAIGHT TALK by Ballard Cassady KBA President & CEO bcassady@kybanks.com

Sad State of Affairs “The greatest dangers to liberty lurk in the insidious encroachment by men of zeal, well-meaning but without understanding.”

Associate Justice of the Supreme Court Louis Brandeis

Nothing has made me sadder from a business standpoint From this point forward these CEO’s will be asked how than the announcement that 100 CEO’s were gathering to they and their companies feel about …. (fill in the blank). discuss voting laws in America.

Everything from abortion to fossil fuels from the second amendment gun rights to freedom of speech on public platHistorically, voting laws have been decided state by state. forms. The list doesn’t stop there either.

That indicates that these CEO’s are likely to focus on a “national voting law.” Unfortunately, there’s one on the table Every single state’s right to establish their own laws on any ready to go that could be tempting. It’s called H.R. 1, and issue will be up for “a stated position.” its dangers are made clear by its very name.

And with every pronouncement, the divisions in America An exceptionally intelligent Congressman once told me the will be driven deeper and more lasting. As a result, we’ll first thing they learned in Congress is, “Don’t ever vote for a see more violence, more embittering partisan politics, and bill with a single digit. Those are the ULTRA partisan wish more pressure on individuals and corporations to publicly list bills, no matter which party proposed it.” That certainly choose a side. Nothing could be more calculated to postsums up H.R. 1 during a historical moment a single party pone any viable efforts at solving the complex problems at +++++++++++++++++++++++++ both chambers of Congress the heart of our national controversies. + + + + +controls + + + + + +the + + +White + + + + +House + + + + + and + + + + + +–– + +and + + +the + + +word + + + +‘overreaching’ ++++++++ has lost its meaning. +++++++++++++++++++++++++ The good news… all this could create demand for new +++++++++++++++++++++++++ + + + + +What + + + + saddens + + + + + + +me + + +the + + +most + + + is that these CEO’s, no mat- businesses led by CEO’s too smart to get dragged onto this +++++++++++++++++++++++++ + + + + +ter + + how + + + + well + + + + intentioned, + + + + + + + + + +either don’t know where they kabuki theater stage. So, all you entrepreneurs out there, + + + + +are + + +headed ++++++ + +know +++++ + + + + where they are headed, with if these 100 CEO’s come out telling the world how they or exactly +++++++++++++++++++++++++ + + + + +both + + + +being + + + + +equally + + + + + +scary. + + + + +States’ rights, as expressed by should feel and vote, you’ll have a golden opportunity for + + + + +Associate + + + + + + + +Justice + + + + + +of + +the + + +Supreme + Court Louis Brandeis a competing startup. +++++++++++++++++++++++++ the way was from Louisville, KY., + + + + +(1916-1939), + + + + + + + + + +who + + + +by +++ +++ + + + + +stated + + + + in + + the + + +New + + + +State + + + + Ice + + +Co. V Liebman decision, allow +++++++++++++++++++++++++ may, if its citizens choose, + + + + +that + + +"a + +single + + + + +courageous + + + + + + + + +State + + + + + +serve + + + + as +++ + + + + + + + + + + + + + a laboratory; and try novel social and economic +++++++++++++++++++++++++ experiments risk + + + + + + + + + + + + + + without +++++++ + + +to + the rest of the country." Asso+ + + + +ciate + + + +Justice ++++++ + + + + + + + + + Brandeis also+ said, “The greatest dangers to +++++++++++++++++++++++++ in+ +the + + + + +liberty + + + + +lurk ++++ + + insidious + + + + + + + encroachment by men of zeal, + + + + +well-meaning + + + + + + + + + + but + + +without + + + + + + understanding.” +

+++++++++++++++++++++++++ +++++++++++++++++++++++++ + + + + +What + + + + these + + + + +CEO’s ++++++ + + +be + + doing to themselves and their will +++++++++++++++++++++++++ is+ +simple—sticking their noses into politics. + + + + +companies +++++++++ +++++++++

And, once you stick your nose (publicly) in politics you are ALL in.

KENTUCKY BANKER MAGAZINE | 9

SCENES FROM FRENCH LICK RESORT APRIL 18-20, 2021

Emcee Lanie Gardner (Community President, First Southern National Bank) kicks off the 2021 KBA Spring Conference. Kentucky bankers attended the annual event, following safety precautions, at the French Lick Resort April 18-21, 2021.

Battling Margin Compression by Kamal Hosein, Stifel Financial

It wouldn’t be Spring Conference without Lanie Gardner at the podium.

Magician Fred Becker and Jeremy Hudson with Endorsed Vendor Ameriprise.

BANKING HOT TOPICS PANEL: Debra Stamper, KBA EVP and General Counsel; Commissioner Charles Vice, Kentucky Department of Financial Institutions; Attorney Richard Vance, Stites & Harbison; Mr. Wayne Hancock, Executive Vice President, Community Trust Bancorp, Inc.

MY TWO CENTS by Debra Stamper KBA Executive Vice President & General Counsel dstamper@kybanks.com

I Want It All, I Want It All, I Want It All and I Want It Now… These are times of economic confusion. Our national debt is so large that pundits wonder if it really means anything anymore. Recovery bills pass Congress boasting over a TRILLION dollars in aid as if we have a money tree in DC. The stock market reacts more to trends and viral videos, rather than to financial data. And it isn’t just in the United States. It feels like the entire world is “banking” with play money.

Everyone except banks, that is. Banks still have to play by very strict rules while other “financial” systems are giddy with the overwhelming sense of immortality.

Let’s look first at Bitcoin. Do you really know what Bitcoin is? Bitcoin is just one of many crypto-currencies—crypto for those in the know!

There are others—Ethereum, Litecoin etc. Regardless of which one you look at; they are all the same thing—a crypto dream. Right now, Bitcoin is the favored crypto, “trading” at over $58K per Bitcoin at the time I am writing this. And, why this value? Because someone is willing to pay that amount for it—although very few purchase an entire Bitcoin. Despite hopes and dreams of traders, Bitcoin is backed by nothing and isn’t even traded on a regulated exchange.

The Fed has looked at the need for a crypto-currency as part of the legally accepted payments system, but has decided that faster payment transactions—real time—are more valuable. And, the Fed has made it VERY CLEAR that if a crypto (or as the Fed likes to call it, a digital currency) is needed, it WILL NOT be Bitcoin or any of the other cryptos that have been developed outside the rules and security of the Federal Payment System. This position is taken for a number of reasons, the first of which is the fact that Bitcoin is backed by nothing and is not legal tender. No one is required to accept it and there is no way to “cash out” unless you can find another private borrower. (Think about this, if you forget the password to your crypto wallet or if someone steals your computer, you have lost the entire value of your holdings.)

Bitcoin has been the digital darling for quite a while and some companies are even paying employees with Bitcoin. I wonder how that sits with an employee—you get “paid” with $500 in Bitcoin (or Bitcash) and by the time you are able to convert it the value has reduced to $450.

It seems like a budgeting nightmare. I guess some will spend it with companies that accept Bitcoin, but there must still be a transactional settling up—sort of like when you go abroad on vacation and come

home to realize that the miniature Eifel Tower that you thought was $5 dollars was actually $5.89 plus conversion fees.

The oddest thing to me is how long the Bitcoin train has continued to run. I keep thinking that it will eventually crash, but it doesn’t; and, THEN I hear of a new crazy concept of value. It is the NFT (non-fungible token).

WHAT IS AN NFT? An NFT is something that is unique and cannot be replaced with another same item, although it has a sense of value so you can trade it for something different. In the real world, you could consider an original Van Gogh painting as an NFT. You can trade the Van Gogh for money or for another NFT, but you cannot trade it for the same Van Gogh.

In the digital world NFTs are a little more confusing. You have to consider the word “token”. A token is generally defined as some item that represents another item. For instance, a one-dollar bill is a token for the underlying value of $1. An NFT, in the digital world, can be anything digital that you purchase. The buzz right now is NFTs in the digital art world.

I can’t explain it further than that other than by providing examples.

Just this month someone purchased a digital art work for more than $60 MILLION at Christie’s (see above).The purchaser can print and display this digital file. He can also send copies to all of his friends on a digital Christmas card if he wants. But the original digital file is his alone. The co-founder of Twitter has sold his first tweet (which by the nature of Twitter is already in the public space) for over $3 Million.

WHAT??? Yet another artist sold thousands of digital files of a piece of digital art (I guess like the concept of prints) for a mere $4K each and made a pretty good take on it. continued on the following page KENTUCKY BANKER MAGAZINE | 11

continued: I Want It All, I Want It All, I Want It All and I Want It Now… I guess I am showing my age, but I just can’t wrap my head around the value of looking at a digital piece of art that I own on my laptop, as opposed to seeing it on my wall. If you want to go down a rabbit hole, just google “NFT marketplaces” and look around at what you can buy.

But, now, back to the real world.

I hope this helps eliminate some of the economic confusion that is out there. There’s a lot to take in, and it changes every day. If you have any questions, don’t hesitate to email me.

Congress is pushing to legislate bank accounts for the unbanked. Some are even advocating for the federal government to offer and manage simple, no fee bank accounts for the unbanked. Neither financial institutions, nor banking regulators, want either of these plans to happen.

So, the Bank On Movement was started. Under the standards set by Bank On, virtually all core service providers have agreed to offer qualifying accounts. Bank On accounts are low cost, basic accounts. When a consumer opens a Bank On account, they can be certain of certain features, such as low or no fees, no overdraft charges and online bill pay. The purpose of this program is to get the unbanked into the banking system, while keeping Congress from passing unnecessary bills to get it done.

If your bank already offers these basic accounts, make sure that they are Bank On Certified. If you are not sure, talk to your core provider or go to joinbankon.org.

KBA_ halfpg_2020_v3.pdf 3 8/14/2020 8:35:51 AM

Count on us…

JAMES BROWN James Brown has over 25 years of banking experience in Retail, Small Business, Corporate and Correspondent Banking.

(502) 625-9330 james.brown@syb.com

CORRESPONDENT BANKING LENDING SERVICES DEPOSIT & TREASURY SERVICES INTERNATIONAL SERVICES MEMBER FDIC

EQUAL HOUSING LENDER

WEALTH MANAGEMENT & TRUST NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

Nice work Kentucky Bankers! JOB WELL DONE.

YOU showed your power during this Kentucky legislative session! Your power to both advocate for good bills (SB5) and against bad bills (HB175) made the difference.

SB5 Senate Bill 5 is one of the most important and necessary bills to pass during these uncertain times; it passed just under the wire on March 30, 2021. SB5 protects businesses, both large and small, from COVID-19 liability claims, if that business follows orders and guidelines declared by the Governor, the President, and state and federal agencies. The bill further provides that essential service providers “shall not be liable for any COVID-19 claim” and makes it clear that financial institutions are essential service providers. There are sure to be lawsuits challenging this bill, but they will be faced with a steep climb. Your contact with members of the General Assembly got us the successful contacts needed to pass this bill and we recognize that and thank you.

HB175 House Bill 175 was presented to legislators as a Second Amendment Rights bill, which was initially overwhelmingly supported in a state with a strong and respectable history of responsible gun use. But, when you took to the phones and emails to reach out to the General Assembly and explained the dangerous precedent set by advocating with whom and how banks must do business, they got it! This bill is being introduced across the country and even federally, but Kentucky banks can be proud that they stopped it in its tracks here in Kentucky!

Group Meetings We will provide detailed information on the final outcome of all bills passed, and some that failed, during this year’s Group Meetings. Please plan to attend these meetings, which we are scheduling to be in-person so that we can thank you again and answer your questions! See info at right.

Group Meetings are when the KBA comes to you! They are an opportunity to get together, network and stay up to date on the issues and trends that impact you.

Below are times and locations for each Group Number.

To register go to kybanks.com/groupmeetings Monday, May 17, 2021 Group 3/5 8:30 AM - 11:00 AM Commonwealth Bank & Trust Company, Louisville Group 4 1:30 PM - 4:00 PM (CT) WKU Knicely Convention Center, Bowling Green Tuesday, May 18, 2021 Group 1 8:30 AM - 11:00 AM (CT) Commerce Center, Paducah Group 2 1:30 PM - 4:00 PM (CT) Madisonville Community College Wednesday, May 19, 2021 Group 6 8:30 AM - 11:00 AM Indiana Wesleyan University, Lexington Group 9 2:00 PM - 4:30 PM Mountain Arts Center, Prestonburg Thursday, May 20, 2021 Group 7 8:30 AM - 11:00 AM The Corbin Center, Corbin Group 8 1:30 PM - 4:00 PM Central Bank, Florence Go to kybanks.com/groupmeetings for detailed information on locations and schedules. Questions? email Miriam Cole: mcole@kybanks.com

14 | KENTUCKY BANKER MAGAZINE

Preparing For Growth, Increasing Competitiveness and Managing Interest Rate Risk

by Chad McKeithen, Managing Director of Strategies Duncan-Williams Inc/SSB During the first quarter economic green shoots continued to emerge.

Rates have started to rise and with it interest rate risk has started to push back up the worry index for many banks. While loan growth is still low it will pick up as asset quality is strong and liquidity is historically elevated. Many forecasters are already calling for increased loan growth later in 2021. Banks are beginning to set themselves up for that future loan growth while also keeping an eye on managing the risk. Many borrowers, especially commercial borrowers, are going to want to lock in long-term fixed rate financing. This will introduce interest rate risk.

This demand is already surfacing and competition for commercial borrowers is going to be fierce.

A method that banks historically used to be competitive, generate fee income but also manage interest rate risk is using floating rate commercial loans partnered with interest rate swaps. The old version of this involved a bank issuing a floating rate loan to a borrower and then selling the borrower an interest rate swap. The bank would then execute a back-to-back swap with another counterparty. This fixed the borrowers rate for whatever period they chose but allowed the bank to have a floating rate (i.e. LIBOR +2.50%). This was called a back-to-back swap program and if it sounds complex it’s because it was. The borrower had to be involved in the swap and most of the time the borrower was not sophisticated enough to understand the intricacies of a deriva-

tive. It also introduced the dirty word of “hedge accounting” to banks.

Back-to-back swap programs are still used at very large organizations and it does allow a bank to provide its clients with fixed rate financing, convert it to a floating rate and generate fees but there is a much more improved method for community banks to provide competitive fixed rate commercial financing to targeted commercial borrowers.

An adjustable-rate conversion program (ARC) provides the same fixed rate to the borrower and floating rate to the bank but without the borrower or the bank having to be involved in a derivative instrument or having to perform any hedge accounting. Neither the bank or the borrower is involved in the swap because the interest rate protection is embedded into the loan docs not sold as a stand-alone interest rate swap.

The bank simply develops a desired borrower specific credit spread that is applied to an index (e.g. 1m LIBOR +2.50%). Then they apply that spread to the corresponding fixed rate and that is the borrowers fixed rate. For example, if a client wants a 5-year fixed rate and the bank wants 1m LIBOR + 2.50% the bank would look at the ARC 5-year fixed conversion rate of 1.06% (rate moves with market movement) and would apply the 2.50% to the 1.06%. The borrower would have 5-year fixed rate financing at 3.56% and the bank would have a 5-year floating rate of 1m LIBOR +2.50%.

ARC programs allow the bank to satisfy borrower needs, revenue needs and interest rate risk needs. It also is an improvement over the older back-to-back swap models of the past.

Bankers Title of Central Kentucky Marks Milestone Bankers Title of Central Kentucky LLC recently announced that 2021 represents its twentieth year of providing valuable title insurance underwriting expertise and unmatched customer service to its customers.

In recognition of this important milestone, the agency’s team members and owner banks will be presented with a commemorative award during an upcoming board meeting.

Bankers Title of Central Kentucky was founded to provide title insurance services to customers statewide on October 15, 2001, by Investors Title Insurance Company, eight community banks, and the Kentucky Bankers Association. The agency is currently owned by the six community banks noted below, which includes five original founders.

Bankers Title of Central Kentucky provides comprehensive title insurance and professional services for residential and commercial real estate transactions and prides itself in maintaining long-lasting relationships with customers. They are an agent of Investors Title Insurance Compa-

ny, an underwriter that consistently achieves the highest financial stability ratings offered by industry rating firms. For more information, please visit btcentralky. com and invtitle.com.

Bankers Title of Central Kentucky Bank Owners: Citizens Guaranty Bank (Irvine), Commercial Bank (West Liberty), Community Trust Inc. (Pikeville), First State Bank of the Southeast Inc. (Middlesboro), Peoples Exchange Bank (Winchester), and The Farmers National Bank of Danville (Danville).

KENTUCKY BANKER MAGAZINE | 15

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Celebrating 75 Years of Central Bank In 1938, J.D. Purcell and Harry W. Moores organized The Central Exchange Bank at the corner of Short Street and Upper Street in downtown Lexington.

Later, in 1945, Garvice D. Kincaid purchased the Bank from the estate of Mr. Purcell and shortened the name to Central Bank. By April 1946, Central Bank opened for business.

Mr. Kincaid founded Central Bank on the idea that banks can and should be pillars of their communities – in good times and in bad. As a result of his dedication to this core tenet, Central Bank has grown significantly from its humble beginnings at the corner of Short and Upper streets. Today, the Bank is proud to be community fixtures in eight counties, serving the cities of Berea, Crestview Hills, Florence, Ft. Mitchell, Georgetown, Lexington, Louisville, Nicholasville, Richmond, Union and Winchester.

“We are now and have always been a community bank,” said Luther Deaton, Jr., Chairman, President & CEO. “Yet, being a bit smaller than other banks has not kept us from introducing an impressive list of financial innovations – all designed to make our customers’ financial lives easier.”

Central Bank was the first bank in Central Kentucky to install a vault (1951), offer Saturday morning hours (1956), and provide drive-through banking facilities (1962) and online ATMs (1978). Today, they remain committed to offering the latest digital conveniences to our customers through our online, mobile and phone banking services.

Old Central Bank Building (Lexington Building)

“While we pride ourselves on offering a robust suite of products and services, we are most proud of our reputation for excellent customer service and dedication to personal, relationship banking,” added Deaton. “In the words of our founder, and our owner Joan Kincaid’s father, ‘No one person is responsible for our success. It has been a team effort.’

“Joan and I echo Mr. Kincaid’s sentiments as we thank our loyal customers and dedicated employees without which the last 75 years would not have been possible. As we celebrate Central Bank’s 75th anniversary throughout 2021, we hope you will share in our excitement and pride.”

Central Bank Ad from 1949 KENTUCKY BANKER MAGAZINE | 17

KENTUCKY BANKER POLITICAL ACTION COMMITTEE

kbpac.com The KBPAC supports legislators and others who have supported the banking industry. That helps the banking industry stay strong.

Some of the changes that have been made in the last decade have attempted to push banking into formula-type services, without regard to the needs of individuals in various communities. Formula-type services reduces the need for bankers and allows reliance on automation to the detriment of employees. By supporting like-minded individuals, KBPAC helps us keep some of the best jobs in the country!

18 | KENTUCKY BANKER MAGAZINE

KBPAC is less interested in party affiliation than it is with industry support. KBPAC does not limit its contributions to one political party. KBPAC contributions are public.

KBPAC contributions do not guarantee that a candidate will vote our way. That is against the law. It does mean we are doing all we can to help legislators who understand our issues stay in office.

Contributions to Kentucky Bankers PAC and Kentucky Bankers Committee for State Government (each referred to as KBPAC in this disclosure) will be used in connection with state and federal elections, respectively. Contributions to KBPAC are voluntary and may not be deducted as charitable contributions.

KBPAC may not accept corporate contributions. Contributions will be reported to the Kentucky Registry of Election Finance and the Federal Election Commission, as required. You may decline to contribute without fear of reprisal. You may contribute more or less than the amounts suggested and you will not benefit or be disadvantaged because of the amount contributed or decision to participate at all.

Mathews & Muir Retire After a Combined 94 Years Wilson & Muir Bank congratulates Senior VP, Sharron Mathews and CSR, Susan Muir, as they begin their retirement after an astounding tenure of 45 years and 49 years respectively. “If the Board of Directors is the head and the employees the body of the institution, Susan and Sharron are the key parts of the heart and soul,” said Frank B. Wilson, President and CEO of Wilson & Muir.

Sharron Mathews began her career with WMB in 1975 holding positions in New Accounts; Loan Administration and Operations; Mortgage Lending; and Branch Management. Sharron has played a key role throughout her tenure including her position as Secretary to the Board since 2006. She remains passionate about her community with involvement in local charities.

Banking has been a family affair for Susan Muir who began her career working after school at the bank in 1971 at the Muir Wilson & Muir Bank in Bloomfield where her father, Nat J. “Sonny” Muir, Jr. was Vice President. Following that bank’s merger with Wilson & Muir Bank & Trust Co. in 1983, Susan moved to the Main office in Bardstown where she would become a Client Service Representative.

“There is no way to replace either of them because each brings such a unique enthusiasm and energy to the workplace,” said Wilson. “They have clearly left their indelible mark on me and there are dozens, perhaps, hundreds in the WMB bloodline that feel the same. I am eternally grateful they have blessed us with their talents, their work ethic, their positive and rosy attitude and mostly their dear friendship. We may not be the same without them, but we are better because of them.”

Sharron Mathews

Susan Muir

COMPLIANCE CORNER with Timothy A. Schenk KBA Assistant General Counsel tschenk@kybanks.com

COMPLIANCE QUESTIONS & ANSWERS

Last month we hosted compliance, risk and trust roundtables that created good discussions about pertinent compliance issues. We wanted to share highlights of those discussions and answers.

Please feel free to reach out to me at tschenk@kybanks.com with additional questions.

We have been receiving EIP stimulus payments under the latest stimulus bill for customers who deceased in 2020.

How should these payments be handled?

Payments for customers who deceased in 2020 under the third stimulus must be returned.

The IRS provided specific instructions for returning an economic impact payment (EIP) sent to a person who deceased in 2020 and received a EIP under the third stimulus bill. The information is available at iris.gov (https://www.irs.gov/newsroom/returning-an-economic-impact-payment), but in summary: If the payment was a paper check and it hasn’t been cashed: • Write “Void” in the endorsement section on the back of the check.

• Mail the voided Treasury check immediately to the appropriate IRS location for your state.

• Don’t staple, bend or paper clip the check.

• Include a note stating the reason for returning the check.

If the payment was a paper check and you have cashed it, or if the payment was a direct deposit:

We are only doing escrow accounts for loans that are HPML. We have one loan on the books that was done back in 2013 that is not a HPML. The Loan Officer let them do an escrow account because they wanted it. Our bank assets are less than 200,000,000. We also originated less than 1,000 loans during the previous calendar year. We are in a distressed and underserved county in Kentucky. Do we still have to do escrow accounts on a HPML under the new rule?

Also, how does this new rule interplay with the escrow requirements for flood insurance?

The best way to explain it is that there are two buckets: one for HPML and one for flood. The two are mutually exclusive.

Let’s start with the HPML escrow exemption.

The new rule, “TILA section 129D(c)(2), as amended by the EGRRCPA, requires the Bureau to issue regulations to exempt from the HPML escrow requirement any loan made by an insured depository institution or insured credit union secured by a first lien on the principal dwelling of a consumer if: (1) the institution has assets of $10 billion or less; (Meet).

(2) the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; (Meet).

(3) certain of the existing Regulation Z HPML escrow exemption criteria, or those of any successor regulation, are met.”

Those criteria, referenced in part three (3) above, are:

• Submit a personal check, money order, etc., immediately to the appropriate IRS location for your state.

• Write on the check/money order made payable to “U.S. Treasury” and write “2020EIP,” and the taxpayer identification number (Social Security number, or individual taxpayer identification number) of the recipient of the check.

• Include a brief explanation of the reason for returning the EIP. For Kentucky residents, the check must be returned to: Atlanta Refund Inquiry Unit, 4800 Buford Highway, Mail Stop 112, Chamblee, Georgia 30341.

20 | KENTUCKY BANKER MAGAZINE

(1) the requirement that the creditor extend credit in a rural or underserved area (§ 1026.35(b)(2)(iii)(A)); (Most likely a yes, but the official comment on the criteria states): A. In general, whether the rural-or-underserved test is satisfied depends on the creditor’s activity during the preceding calendar year. However, if the application for the loan in question was received before April 1 of the current calendar year, the creditor may instead meet the rural-or-underserved test based on its activity during the next-to-last calendar year. This provides creditors with a grace period if their activity meets the rural-or-underserved test (in § 1026.35(b) (2)(iii)(A)) in one calendar year but fails to meet it in the next calendar year.

B. A creditor meets the rural-or-underserved test for any higher-priced mortgage loan consummated during a calendar year if it extended a first-lien covered transaction in the preceding calendar year secured by a property located in a rural-or-underserved area. If the creditor does not meet the rural-or-underserved test in the preceding calendar year, the creditor meets this condition for a higher-priced mortgage loan consummated during the current calendar year only if the application for the loan was received before April 1 of the current calendar year and the creditor extended a first-lien covered transaction during the next-to-last calendar year that is secured by a property located in a rural or underserved area.

.

(C) The premium for which is paid by the condominium association, cooperative, homeowners association, or other applicable group as a common expense; (iv) The loan is a home equity line of credit; (v) The loan is a nonperforming loan, which is a loan that is 90 or more days past due and remains nonperforming until it is permanently modified or until the entire amount past due, including principal, accrued interest, and penalty interest incurred as the result of past due status, is collected or otherwise discharged in full; or (vi) The loan has a term of not longer than 12 months.

Within that rule you also have the small lender exception:

(2) the exclusion from exemption eligibility of transactions involving forward purchase commitments (§ 1026.35(b)(2) (v)); and (Do you have any purchase commitments or are you keeping them in-house?);

(c) Small lender exception—(1) Qualification. Except as may be required under applicable State law, paragraphs (a), (b) and (d) of this section do not apply to an FDIC-supervised institution:

(3) the prerequisite that the institution and its affiliates not maintain an escrow account other than either (a) those established for HPMLs at a time when the creditor may have been required by the HPML escrow rule to do so, (This will resolve itself so long as you are going to do away with escrows going forward for new loans). or (b) those established after consummation as an accommodation to distressed consumers (§ 1026.35(b)(2)(iii)(D)) (not applicable here).

(i) That has total assets of less than $1 billion as of December 31 of either of the two prior calendar years; and

Based on that criteria, it appears that you most likely meet the criteria for the HPML escrow exemption.

The exemption for flood is separate from the HPML escrow requirements and are available at: https://www.ecfr.gov/cgi-bin/ text-idx?SID=aac7593dfe181e41c34de5a68e343a9f&mc=true &node=se12.5.339_15&rgn=div8

(ii) On or before July 6, 2012: (A) Was not required under Federal or State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of any loan secured by residential improved real estate or a mobile home; and (B) Did not have a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or any other charges in an escrow account for any loans secured by residential improved real estate or a mobile home.

You may or may not meet the exceptions for flood escrow but that is a fact intensive question separate from the HPML escrow requirements.

Those exemptions state: (2) Exceptions. Paragraph (a)(1) of this section does not apply if: (i) The loan is an extension of credit primarily for business, commercial, or agricultural purposes; (ii) The loan is in a subordinate position to a senior lien secured by the same residential improved real estate or mobile home for which the borrower has obtained flood insurance coverage that meets the requirements of §339.3(a); (iii) Flood insurance coverage for the residential improved real estate or mobile home is provided by a policy that: (A) Meets the requirements of §339.3(a); (B) Is provided by a condominium association, cooperative, homeowners association, or other applicable group; and KENTUCKY BANKER MAGAZINE | 21

KBA PARTNER DIRECTORY

HOPE OF KENTUCKY Building a Brighter Future HOPE is a consortium of banks formed to pool funds to make permanent loans on affordable housing projects financed primarily through the federal tax credits program. HOPE’s mission is to help build a brighter future for communities by helping to preserve or increase the supply of safe, well-built and affordable housing.

We saw as one of the obstacles the shortage of longer term debt financing for affordable housing projects. By creating a consortium funding structure, HOPE enables more banks of all sizes to participate in funding these much-needed projects. In particular, banks are able to limit their overall exposure and interest rate risk, while diversifying their credit risk through lending to multiple projects across the region.

While our home base is in Kentucky, we are committed to providing our lending services across the Midwest region. We’ve built relationships with developers throughout Kentucky, Ohio, Indiana, and other states, having done projects as far south as Georgia and as far west as Oregon.

Whether you’re a bank or a project developer, we welcome the opportunity to work together to continue building a brighter future for our neighborhoods and communities near and far!

HOPE BY THE NUMBERS 2,000+ Units constructed since inception. $220M+ Loans originated since inception. $130M+ Loans currently servicing.

9 Tax-exempt bond projects originated.

ZERO! Loss history or defaults.

22 | KENTUCKY BANKER MAGAZINE

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

Tamuna Loladze Chief Operating Officer HOPE of Kentucky tloladze@kybanks.com

Tammy Nichols Finance Officer HOPE of Kentucky tnichols@kybanks.com

KBA PARTNER DIRECTORY

Not just a compliance solution, KBA Partner Compliance Alliance (C/A), a division of Bankers Alliance, is a regulatory bank compliance advisory that works in partnership with your institution. Comprehensive and all-inclusive, C/A mitigates your organizational consumer and federal compliance risk while lifting the burden of your day-to-day regulatory compliance efforts.

Get Your Bank Exam-Ready with Monitoring and Reporting Tools

HOW DO WE DO THIS?

Send Your Bank Document for Compliance Review

Start Consolidating Bank Compliance Costs

Highlighting discrepancies, while providing recommendations, and best practices for all your advertising and marketing, policies, procedures, disclosures and new products, our experienced attorneys and compliance specialists review your documents for compliance with federal regulations as part of our two-stage system.

Multiple providers for offsite bank compliance training, regulatory compliance webinars, in-house audit prep, offline document reviews, risk-assessment software, travel to accredited compliance programs—it all adds up. Managing the costs, schedules, and readiness of every employee and bank function has a cost too. Start addressing your requirements and consolidating your costs.

Download and Edit Bank Compliance Policies and Procedures Compliance Alliance’s responsive tool creation system, and vast banking compliance library of tools and products moves with the ever-changing regulatory landscape.

Sorted by Departmental Bank Function and Bank Compliance Tool Types, our system is easy to use and available 24 hours a day from anywhere.

Deliver Online Bank Compliance Training to Everyone C/A’s complements the OBL’s suite of compliance offerings; both the successful Community Bankers for Compliance program and the Compliance Coach online learning platform. We do so by granting unlimited access to every summary, training tool and toolkit—from webinars and refresher videos to monthly magazines and weekly newsletters—to every employee without reservation.

Members access 100s of products designed for monitoring and reporting; from checklists, worksheets and procedures, to templates, policies and schedules—covering every area and banking function of the bank.

Your Guide Through a Changing Federal Regulatory Environment C/A’s Hotline Service—by chat, email, or phone—is the workhorse of the system; putting your staff directly in touch with attorneys and compliance specialist who are there to ensure your daily efforts are aligned with federal regulations. We constantly update your regulatory calendar, provide federal regulatory guidance quick links, and send a Daily News email that delivers important topics and updates, so you keep focused on what you need to do.

Bank Compliance Experts are Standing By Call (888) 353-3933 to speak with knowledgeable experts who are standing by to discuss your unique bank compliance challenges, explain our complete array of services or schedule you and your team for one of C/A’s weekly live demos. Or, send an email to info@compliancealliance.com.

For more info on C/A, go to: compliancealliance.com KENTUCKY BANKER MAGAZINE | 23

KBA PARTNER DIRECTORY

EDUCATION ALLIANCE Natalie Kaelin, Esq. Director of Education Alliance nkaelin@kybanks.com

Jamie Hampton Education Coordinator jhampton@kybanks.com

Paula Cross Education Coordinator pcross@kybanks.com

KBA Education Alliance is your one-stop shop for all your education needs. We strive to offer everything you and your employees need to enrich, enhance and prepare your bank operations and inspire employee excellence. From fundamentals to advanced topics, our Schools and Seminars are dynamic learning environments that are both foundational and in-step with the challenges and opportunities facing the current financial industry. We’re here to serve you, so if you don’t see something in our offerings, contact us and let us know.

MORE INFORMATION kybanks.com/education

Testimonial

I cannot say enough about everything I took away from KBA General Banking School. Knowledge and friendship are just two of many qualities to bring home.

Mr. Clay Fedde Inez Deposit Bank

2021 EDUCATION SCHEDULE DATE/S PROGRAM

DATE/S PROGRAM

LOCATION

MAY 10 – 13 Consumer Lending School Louisville 19 CFO Forum Louisville

AUGUST 18 Call Report Seminar 25 – 26 Women in Banking

Louisville Louisville

JUNE 6 – 11 16 17 23 25

General Banking School Security Seminar Human Resources Seminar Regulators Forum Regulators Forum

SEPTEMBER 13 – 17 Commercial Lending School Louisville 15 Business Development Seminar Louisville 21 IRA Essentials Seminar Louisville 22 IRA Advanced Seminar Louisville

JULY 13 14 15 22

Safety and Soundness Exam Seminar Louisville Cash Flow Seminar Louisville Loan Review Seminar Louisville Bankruptcy Seminar Louisville

24 | KENTUCKY BANKER MAGAZINE | KBA PARTNERS

LOCATION

Lexington Louisville Louisville Bowling Green Lexington

OCTOBER 20 Cybersecurity Seminar 21 Internal Audit Seminar

Lexington Louisville

DECEMBER 6 – 10 Foundations of Banking School Louisville

KBA PARTNER DIRECTORY

INSURANCE SOLUTIONS Chuck Maggard President & CEO KenBanc Insurance cmaggard@kybanks.com

Brandon Maggard Account Representative KenBanc Insurance bmaggard@kybanks.com

Lisa Mattingly Director of Sales & Service KBA Benefit Solutions lmattingly@kybanks.com

Donna McCartin Benefit Support Specialist dmccartin@kybanks.com

Jennifer Schlierf Sales Support KBA Insurance Solutions jschlierf@kybanks.com

Audrey Whitaker Insurance Services Coordinator awhitaker@kybanks.com

KenBanc Insurance Services provides a full line of insurance products targeted specifically to meet the wide-ranging needs of financial institutions.

Our team is fully trained in analyzing your bank and its specific needs. We look closely for both gaps and overlaps in your various policies, and utilize peer analysis and benchmarking to make coverage recommendations.

Lastly, we complete a comprehensive due diligence review of all carriers and providers of insurance and other products offered.

TRUST US. WE KNOW BANKS.

BENEFIT SOLUTIONS KBA Benefit Solutions, a subsidiary of the Kentucky Bankers Association, is dedicated to providing affordable custom benefit plans tailored to your needs. We strive to be your agency of choice by providing benefits that work for your business and service that never stops.

Testimonial

I couldn’t be happier with Chuck and KBA Insurance Solutions. It’s comforting to know if I have an issue, a question, or just need advice, I can reach Chuck quickly and get the answer I need. I would highly recommend KBA Insurance Solutions to anyone who puts value on experience and great service!

Mr. John Moore

EVP Chief Risk Officer/Treasurer

Home Federal Bank Corporation, Middlesboro

KENTUCKY BANKER MAGAZINE | KBA PARTNERS | 25

KBA ENDORSED VENDOR DIRECTORY

When you do business with a KBA Endorsed Vendor, you are doing business with yourself.

3SI SECURITY SYSTEMS Josh Landers (502) 468-9109 josh_landers@3sisecurity.com 101 Lindenwood Drive Ste 200 Malvern, PA 19355 www.3sisecurity.com

BANC CARD OF AMERICA, INC. Tyler Cook (502) 494-6441 tyler.cook@banccard.com 605 Northshore Ste 201 Jeffersonville, IN 47130 www.banccard.com

3SI Security Systems is the world leader in asset protection systems designed to recover stolen cash and high value assets, apprehend criminals and deter crime. Innovative SOLUTIONS combat crime through GPS tracking, dye and ink staining technology. 3SI products are supported by a first class SERVICE organization, providing comprehensive installation and training as part of our professional service package.

Banc Card of America provides a proactive merchant services partnership, and delivers the most sophisticated, secure and reliable systems for their customers. Banc Card is strategically aligned with the top three processors in the industry, assuring you of the best systems available. Banc Card partners with more than 200 financial institutions in 22 states.

AMERICAN PROFIT RECOVERY Matt Moskowitz (800) 711-0023 matt.moskowitz@americanprofit.net 34505 W 12 Mile Rd Ste 333 Farmington, MI 48331 www.americanprofit.net American Profit Recovery was founded in 2004 and specializes in the recovery of DDA charge-off accounts. APR’s unique collection process is designed to help bring accounts positive while also retaining the customer. APR’s service takes a very diplomatic approach and provides the service for a very low cost of $22 or less per account submitted. APR allows the banks to save time and costs internally, while increasing the recoveries.

AMERIPRISE FINANCIAL SERVICES Jeremy Hudson (210) 582-2845 Jeremy.Hudson@ampf.com 16414 San Pedro Ave Ste 300 San Antonio, TX 78232-2245 www.ameriprise.com Top ten broker-dealer now available to Kentucky financial institutions. Ameriprise Financial Institutions Group (AFIG) specializes in partnering with banks to help their clients reach their financial goals through on-site investment programs. In 2017, Ameriprise Financial acquired Investments Professionals, Inc. (IPI).

26 | KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS

BANC CONSULTING PARTNERS, LLC Louis Moore (440) 356-8860 lmoore@yourbankpartner.com 2035 Crocker Rd #103 Westlake, OH 44145 www.bancconsultingpartners.com Banc Consulting Partners is a national leader in the design, implementation, and on-going administration of BOLI and non-qualified deferred compensation arrangements. BCP’s industry expertise, diagnostic approach, and client-centric philosophy have helped hundreds of institutions across the country to implement and finance the cost of valued benefit programs, while increasing net interest margin and improving overall financial performance.

BANCOGRAPHY Ms. Laura Levie (205) 252-6671 laura@bancography.com 1827 First Avenue N Ste 200 Birmingham, AL 35203 www.bancography.com Bancography provides consulting services, software tools and marketing research to financial institutions to support their branch, product and brand positioning strategies.

In support of our clients’ existing networks, Bancography performs primary marketing research to measure market and brand awareness and attrition factors and provides product and profitability assessments.

KBA ENDORSED VENDOR DIRECTORY

Contact Selina Parrish at the KBA if you have any questions: sparrish@kybanks.com

BANKER’S DASHBOARD A DELUXE COMPANY Barry Adcock (470) 386-9679 barry.adcock@deluxe.com www.deluxe.com/business-operations/bankers-dashboard/

Banker’s Dashboard unlocks a culture of performance management for community banks of all sizes. Arm your management team and staff with the daily financial information they need to make critical decisions that improve performance and profits. Get your hands on the tool our CFOs bring with them when they move to a new bank.

BANKERS TITLE OF CENTRAL KENTUCKY Christie Ellis (859) 281-6813 christie.ellis@btcentralky.com 1795 Alysheba Way Ste 6105 Lexington, KY 40509-2435 www.btcentralky.com Bankers Title of Central Kentucky, LLC (BTCK) is located in Lexington, Kentucky. They offer comprehensive title insurance and professional services for all types of residential and commercial real estate transactions. BTCK has been proudly providing title insurance services in Kentucky since 2001, and they remain committed to prompt issuance of lender and owner policies for purchase, refinance, and construction loans.

BHG BANK GROUP Jordyn Sollars (954) 829-1725 jsollars@bhg-inc.com 201 Solar Street Syracuse, NY 13204 www.bhgloanhub.com/KYBA Since 2001, BHG has originated over $7 billion in loan solutions to top-quality borrowers, which community & midsize banks can access through a state-of-the-art loan delivery platform: The BHG Loan Hub. 1,200+ bank partners have trusted this program as a proven source of interest income & diversification for their bank. To date, no bank has taken a loss on the BHG Core Loan Program and have earned a 3.25–6% return on average. Join the BHG Bank Network to leverage our professional network today!

BOX LAKE NETWORKS Curt Lyons (859) 771-1500 clyons@boxlake.com 400 Shoppers Drive Winchester, KY 40391 www.boxlake.com Box Lake Networks is a trusted and cost effective IT service provider with a focus on compliance and information security in the financial industry. We are a full-service technology partner to our clients and provide the expertise required to fulfill all of your technology needs. We build custom solutions for your specific needs and budget with best in class products and services while adhering to industry regulations.

CASTLEBRANCH, INC. Katie Giacalone (888) 723-4263 x7155 katieg@castlebranch.com 1844 Sir Tyler Dr Wilmington, NC 28405-8395 www.castlebranch.com For over a decade, Castle Branch has been helping businesses make safe and informed decisions by providing employment, business, and tenant screening, as well as drug testing and investigative services. Castle Branch Employment Screening provides employers with the tools to make informed hiring decisions, avoid costly litigation, and enhance productivity.

CRA PARTNERS Shea Gabrielleschi (901) 529-4773 shea@shcpfoundation.org 5100 Poplar Ave Ste 711 Memphis, TN 38137 www.shcpfoundation.org CRA Partners is a compliance solution you can feel good about. Banks earn meaningful CRA credit for ensuring safe, secure senior living environments through our turnkey crime prevention program, Senior Crimestoppers.

Funded exclusively by the banking industry and endorsed by the ICBA and bankers associations in over 40 states.

KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS | 27

KBA ENDORSED VENDOR DIRECTORY

When you do business with a KBA Endorsed Vendor, you are doing business with yourself.

DELUXE Ryan Nofziger (312) 343-6438 ryan.nofziger@deluxe.com 3660 Victoria St N Shoreview, MN 55126-2906 deluxe.com

FLOODPLAIN CONSULTANTS, INC. Craig M. Callahan (800) 945-0246 ccallahan@floodplain.com 800 E 56th St Brownsburg, IN 46112-9763 www.floodplain.com

At Deluxe, we champion businesses so communities can thrive. Our products and services help businesses, both big and small, start, grow and operate more efficiently. We do this with trusted and tech-forward solutions in areas like Cloud, Promotional Products, Payments and Checks, with more than 4,600 financial institutions clients and nearly 4.8mm small business customers across North America.

Based near Indianapolis, Floodplain Consultants has been an industry leader for over 30 years in providing the highest level of accuracy and customer care regarding flood certification services to lenders througout the United States.

EVERFI, INC. Ira Frankel (202) 455-8731 ira@everfi.com 2300 N Street NW Ste 500 Washington, DC 20037 www.everfi.com EVERFI is a financial education technology company used by more than 800 financial institutions across the country to strengthen their education solutions that are private-labeled, interactive, and measurable to impact learners at scale. EVERFI powers a network of 16+ million learners to increase the financial capability of entire communities including students, customers, employees and business partners.

FIDELITY NATIONAL INFORMATION SERVICES James Gukeisen (813) 260-0714 James.gukeisen@fisglobal.com 11601 Roosevelt Blvd N Saint Petersburg, FL 33716-2202 www.fisglobal.com Fidelity National Information Services (FIS) has been a leader in the card processing and servicing industry for well over 40 years. Our expertise in the small to medium sized financial institution market makes FIS and your organization an excellent fit for a partnership. Today, FIS provides credit and debit card processing, merchant processing, cardholder enhancements, and E-banking solutions.

28 | KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS

GLIA Jenn Markus (859) 663-7197 Jennifer.markus@glia.com 30 W 21st Street 4th Floor New York, NY 10010 www.glia.com/banking Glia’s solution enriches web and mobile experiences with digital communication choices, on-screen collaboration and AI-enabled assistance. Glia has partnered with more than 150 banks, insurance companies and other financial institutions across the globe to improve top and bottom-line results through Digital Customer Service. The company has won numerous awards for its innovation - most recently recognized

by Gartner as a Cool Vendor for 2020.

INTRAFI NETWORK Dave Still (703) 292-3400 dstill@promnetwork.com 1300 N. 17th Street Ste 1800 Arlington, VA 22209 www.intrafi.com Promontory Interfinancial Network is now IntraFi NetworkSM. A trusted partner to nearly 3,000 financial institutions, our solutions can help your bank attract and maintain valuable customer relationships, grow reciprocal deposits, manage liquidity and generate fee income, diversify funding, and reduce collateralization, improving liquidity and returns. Visit Intrafi.com to learn more.

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KBA ENDORSED VENDOR DIRECTORY

Contact Selina Parrish at the KBA if you have any questions: sparrish@kybanks.com

INVESTORS TITLE INSURANCE COMPANY Norma B. Carroll (865) 384-7846 ncarroll@invtitle.com 121 North Columbia Street Chapel Hill, NC 27514 www.invtitle.com

MYCORPORATION, A DELUXE COMPANY Andrew Isenberg (612) 718-0410 andrew.isenberg@deluxe.com 26025 Mureau Rd Ste 120 Calabasas, CA 91302 www.mycorporation.com

The Kentucky Bankers Association and its wholly owned subsidiary, KBA Services, Inc. (KBAS) are bringing Kentucky banks a great opportunity to participate in the sale of title insurance. In the next several years, the delivery channels for these products will be evolving quickly, and the KBA is here to facilitate our members’ entry and participation in these markets.

MyCorporation is a leading provider of online document filing services for clients who wish to form a corporation or limited liability company. For more than twenty years, MyCorporation has helped small business clients meet banking requirements by incorporating their businesses in a reliable and affordable manner.

KENTUCKY TITLE CENTER, LLC Matthew Sexton (502) 631-2590 matthew.sexton@kentuckytitlecenter.com

10400 Linn Station Rd Ste 212 Louisville, KY 40223-3839 www.kentuckytitlecenter.com Kentucky Title Center, LLC (KTC) is located in Louisville, Kentucky. They offer comprehensive title insurance and professional services for all types of residential and commercial real estate transactions. KTC has been proudly providing title insurance services in Kentucky since 2003, and remain committed to delivering unsurpassed title insurance experience to their clients.

KEYSTATE COMPANIES Joshua Miller (702) 598-3738 jmiller@key-state.com 101 Convention Center Dr. #850 Las Vegas, NV 89109 www.key-state.com KeyState has been serving community banks for over 22 years providing Asset Liability Consulting, Nevada Investment Subsidiary Services, Captive Management, Municipal Credit Reviews, and Bank Portfolio Advisory Services (thru our affiliate, KeyState Advisory LLC). KeyState works with the KBA to offer a unique bank captive insurance program to its banks.

NCONTRACTS Marnie Keller (202) 329-3170 marnie.keller@ncontracts.com 214 Overlook Circle Ste 152 Brentwood, TN 37027 www.ncontracts.com Ncontracts is a leading provider of compliance and risk management solutions to the financial services industry. With over 3,700 customers, the company’s powerful combination of software and services provides financial institutions with an integrated, user-friendly cloud-based solution suite that encompasses the lifecycle of risk and compliance: vendor management, operational risk, audit and findings, and lending compliance.

NETGAIN TECHNOLOGIES Kim Kevin Hutton (859) 226-1940 khutton@NetGainIT.com 2031 Georgetown Road Lexington, KY 40511 www.netgainit.com Community banks rely on technology to support their goals of premier customer service, growth, digital transformation, and more. With over 100 technical staff, NetGain Technologies serves as a strategic partner for hundreds of organizations in the region that require managed IT services, IT security services, cloud, and IT consulting & projects. NetGain supports heavily regulated industries across the technology spectrum and is SOC 2-certified, to assure confidentiality, privacy, and security.

KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS | 29

KBA ENDORSED VENDOR DIRECTORY

When you do business with a KBA Endorsed Vendor, you are doing business with yourself.

OCCH - HOUSING INVESTMENT PARTNERSHIP OF KY Jonathan Welty (614) 591-9356 jwelty@occh.org Jennifer Seamons (614) 545-7823 jseamons@occh.org 88 E Broad St Ste 1800 Columbus, OH 43215 www.occh.org The Housing Investment Partnership of Kentucky (HIP) is a collaborative effort of OCCH and others to facilitate private investment in affordable housing throughout the Commonwealth of Kentucky. The purpose of HIP is to raise and invest corporate equity capital into quality, sustainable affordable rental housing funded through the Low Income Housing Tax Credit Program administered by the Kentucky Housing Corporation.

OFFICE DEPOT Isaac Mares (855) 337-6811 isaac.mares@officedepot.com business.offcedepot.com/banksignup Office Depot is more than just a supplier for Kentucky Bankers Association members. We also provide value-added services and solutions to help reduce costs and improve efficient product selection. KBA members can select from 1,300+ discounted items, customize a list of up to 75 additional items, receive free delivery on qualifying orders of $50 or more within local delivery areas, and access many more benefits.

PAYFWDS Eric Monks (502) 632-1688 emonks@payfwds.com 13100 Magisterial Dr. Ste 104 Louisville, KY 40223 www.payfwds.com PayFWDs focuses on pairing our local, personalized service with world-class technology to allow our clients to simplify their payroll and HR processes. We offer integration between payroll and benefits management, along with discounts on all service offerings, including ACA reporting, payroll and all HR automation services.

30 | KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS

PROFIT RESOURCES, INC William Zumvorde (513) 834-8832 Wzumvorde@profitresources.com 7292 Thompson Rd Cincinnati, OH 45247-2340 www.ProfitResources.com Profit Resources, Inc (PRI) strengthens banks by improving profitability and efficiency. PRI evaluates and negotiates CORE SYSTEM contracts, enhances DEBIT CARD profitability, and completes PROCESS IMPROVEMENT throughout every area of the bank. By taking a hands-on approach to consulting, the PRI team of seasoned banking professionals makes a measurable impact on the bottom line through income enhancement and expense reduction.

PROMONTORY MORTGAGEPATH LLC Kim Joyce (207) 229-2991 kim.joyce@mortgagepath.com 80117th Street NW Ste 430 Washington, DC 20006 www.mortgagepath.com Promontory MortgagePath LLC delivers comprehensive digital mortgage and fulfillment solutions delivered by seasoned mortgage experts. From models designed to introduce mortgage technology and boost processing power to complete solutions including licensed loan coordinators, PMP combines a digital-mortgage platform with comprehensive fulfillment services.

SEAY MANAGEMENT CONSULTANTS, INC. Kylie Luff (407) 722-7670 kylie@seay.us 3165 McCrory Place Ste 180 Orlando, FL 32803 www.seay.us Seay Management Consultants, Inc. is a full-service human resource management and labor relations consulting firm. Our goals are to: ensure compliance with all of the state and federal employment regulations and guidelines which affect employers; reduce or eliminate exposure in these areas; resolve employment problems and difficulties that arise.

KBA ENDORSED VENDOR DIRECTORY

Contact Selina Parrish at the KBA if you have any questions: sparrish@kybanks.com

SHAZAM Rob Buchanan (800) 717-4460 rbuchan@shazam.net 392 Empressor Cove Collierville, TN 38017-7163 www.shazam.net

TRIAD FINANCIAL SERVICES, INC. Darrell Boyd (888) 936-1179 dboyd@triadfs.com 19 Heritage Drive Bourbonnais, IL 60914 www.triadfs.com

SHAZAM (HQ) 6700 Pioneer Pkwy, Johnston, IA 50131 SHAZAM’s the only nationwide independent, member-owned debit network, processor and core provider supporting community banks and credit unions. We ensure our clients have the products and services they demand and expect in a cost-effective way. Founded in 1976 we have a simple mission: Strengthening community financial institutions.

Triad Financial Services is one of the oldest and most trusted lenders in the manufactured housing industry with over 50 years of lending experience. Triad provides financial institutions with high quality, higher yield secured consumer loans. Triad forms strategic alliances with banks that want to enter the expanding and lucrative manufactured home finance industry, but do not have the operational expertise to participate.

STREAMLINE PAYMENTS John J. Rice (502) 716-7268 jrice@streamlinepayments.com 9520 Ormsby Station Road Ste 150 Louisville, KY 40223 www.streamlinepayments.com Founded and headquartered in Louisville, we embody the values and hard work ethic of our city. With representatives located across the country, we serve thousands of clients for all their payment processing needs. Dedicated to faceto-face service, our customers receive personalized attention from a local account executive and a leadership team who is directly involved in client engagement. Streamline TITLE CENTER OF GREATER KENTUCKY, LLC Vanessa Newsome (502) 264-2391 vanessa.newsome@titlecentergreaterky.com 2935 Dolphin Drive Bldg 2 Ste 201 Elizabethtown, KY 42701-7902 www.titlecentergreaterky.com Title Center of Greater Kentucky, LLC (TCGK) is located in Elizabethtown, Kentucky. They offer comprehensive title insurance and professional services for all types of residential and commercial real estate transactions. TCGK has been proudly providing title insurance services in Kentucky since 2005, and they remain committed to provide their customers with a positive and unsurpassed customer service experience.

UNIFIED TECHNOLOGIES Bradley Ledford (502) 389-4482 bledford@unified-team.com 11500 Blankenbaker Access Drive Louisville, KY 40299 unified-team.com Unified Technologies has been endorsed by the KBA for telecommunications, business security, structured cabling, audio/video/web conferencing; and professional services. The most important step in choosing a telecommunications platform is the discovery process. Unified Technologies has a proven process for discovering and providing solutions that complement and enhance a business strategy.

UNITED PARCEL SERVICE (800)-Members (800) 636-2377 www.savewithups.com/kybanks UPS is pleased to help members save time and money through special services and shipping discounts. We put the power of logistics to work for you every day by providing speed, outstanding reliability and technology tools so you can focus on your business - not your shipping.

KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS | 31

KBA ENDORSED VENDOR DIRECTORY

Contact Selina Parrish at the KBA if you have any questions: sparrish@kybanks.com

VELOCITY SOLUTIONS, LLC Greg Stumler (954) 847-5800 x259 gstumler@myvelocity.com 501 SE 12th St Fort Lauderdale, FL 33316 www.MyVelocity.com

WORKS24 Frank DePrato (405) 843-4653 fdeprato@works24.com 3508 French Park Dr Ste 1 Edmond, OK 73034-7263 www.works24.com

Founded in 1995 and servicing the transaction accounts of over 30 million consumers and business owners, Velocity Solutions is the leading provider of revenue-driving solutions for community banks and credit unions. Our Velocity Intelligent Platform® powers all of Velocity’s solutions, using machine-led intelligence that delivers powerful analytics and drives revenue, loans, account holder engagement and non-interest income to our client financial institutions.

COMMUNICATION IS KEY AND MARKETING IS STILL KING! A Industry leader in both of these areas, designed to Educate, Cross Sell, Communicate and Appreciate your customers.

Nationally Recognized and Award Winning Services that include On Hold Music and Messaging, Full Motion Lobby Video and Overhead Music, with all of them controlled by one easy Web Driven and Cloud Based Platform. Point of Purchase Marketing and Communication at its best. 100% Risk Free Trials and Buyout programs available.

32 | KENTUCKY BANKER MAGAZINE | DIRECTORY OF ENDORSED VENDORS

Where do I find the KBA? Where do I find Kentucky Financial Institution Data? Where do I find Member Institutions? Where do I find State Legislator contact information? Where do I find a list of KBA 2021 Event Sponsors to thank? Where do I find Federal Legislator contact information? Where do I find KBA Endorsed Vendor contact information? Where do I find KBA Partner contact information? Where do I find KBA staff contact information? Where do I find a listing of KBA Officers and Governmental Affairs Committee members? Where do I find a KBA Group Map? Where do I find KBA Associate Members? Where do I find KBA Bank Counsel Division members? Where can I find the KBA roster of Emerging Leaders? Where do I find all this and more?

kbadirectory.com VIEW FROM ANY DEVICE OR SCREEN, SIMPLY USE YOUR FAVORITE BROWSER AND VISIT www.kbadirectory.com

HOW DO I PURCHASE A SUBSCRIPTION TO THE INSTITUTIONS DATA?

LOOKING FOR A PRINTABLE VERSION OF THE INSTITUTIONS DATA?

Bank Members have full access to all areas of kbadirectory.com at no charge; Sign In with your kybanks.com username and password. Associate Members, Endorsed Vendors and Bank Counsel Divisions members will need to purchase a subscription to the INSTITUTIONS data; other areas of kbadirectory.com are included with membership. Email Michelle Madison mmadison@kybanks.com to purchase a subscription; cost is $106 annually (includes 6% KY sales tax).

A formatted PDF can be printed from kbadirectory.com.

Find it under INSTITUTIONS.

HAVE QUESTIONS? NEED HELP? Visit kbadirectory.com and click on HELP. For additional help email Michelle Madison mmadison@kybanks.com

NetGain Technologies Expanded Services Endorsed by KBA The KBA is excited to announce expanded endorsed services with NetGain Technologies are now available for KBA members! The KBA's endorsement now includes Essential Security and SOC-as-a-Service, in addition to NetGain's Technology OneSource program for managed IT services.

NetGain's Essential Security program provides comprehensive IT security solutions and services that every bank requires, including Virtual Chief Security Officer (VCSO) Strategic Consulting; Social Awareness; Security Assessments; Incident Response; and Email Protection.

Additional Security Services include: Endpoint/Server Protection; Advanced Threat; Risk Assessments; and SOC-as-a-Service. SOC-asa-Service provides your bank with an external team of cybersecurity experts and analysts to detect advanced threats to your network 24x7.

Community banks rely on technology to support their goals of premier customer service, growth, digital transformation, and more.

Take a look at what other like-minded organizations are saying about their experience with NetGain: • “We have enjoyed a long relationship with NetGain. They know our business and are instrumental in helping assess our future needs. The engineers are critical to our continued ability to keep our own IT staff small while still achieving our goals.”

• “Always very helpful and very easy to work with. NetGain has helped us through many problems. Choosing NetGain was the best decision we've made!”

• “The folks at NetGain are always responsive and very helpful even in late evening hours!”

FOR MORE INFORMATION CONTACT | Selina Parrish Director of Membership sparrish@kybanks.com

Taylor County Bank Congratulates Miller & Sabo on 20 Years of Service JIM MILLER IV

The Taylor County Bank board of directors congratulate bank President, Jim Miller on reaching the incredible milestone of 20 years of service. Mr. Miller has been the president of TCB since 2017, but quite literally grew up in the banking business. In 1937 his great grandfather, Jim Miller Sr., opened Taylor County Bank with $300,000 in assets. Since that time, the bank has had five presidents, and assets have grown to over $200 million. In his 20 years, Mr. Miller has worked in every department of the bank. This experience has not only given him great knowledge of banking, but tremendous perspective of both employees and customers. Mr. Miller is a graduate of Campbellsville University, and of the Graduate School of Banking at Louisiana State University School of Banking. He is married to Jenny Netherland Miller, and they have four children: Jack, Izzie, Sophie and Charlie.

ROGER SABO

The Taylor County Bank board of directors also congratulate Roger Sabo for his 20 years of service to the bank. Mr. Sabo began his career with Kentucky Utilities. When KU moved out of Campbellsville, Mr. Sabo was left with the difficult decision of moving with the company or staying in Campbellsville. He decided to stay, and in the summer of 2000 began his career as a loan officer with Taylor County Bank. Mr. Sabo was later promoted to Sr. Vice President, and is now the head of the loan department. “This has been the most rewarding and most challenging endeavor throughout my work career. During my 20-year career at the bank I have been afforded many opportunities to help others in this community,” says Mr. Sabo. Roger is married to Debbie Sabo, and has two children Matthew Sabo and Heather Graham. He enjoys spending time with them, and working on the family farm with his brothers and parents.

KENTUCKY BANKER MAGAZINE | 35

THIS IS AN ADVERTISEMENT

DDA FEE LITIGATION IN KENTUCKY mpmfirm.com During the last several years, law firms that specialize in consumer class action litigation have been suing banks and other financial institutions across the country about policies and practices on overdraft fees and returned item fees. In 2019, they arrived Thomas C. Fenton in Kentucky. Nine cases were filed in 2019 against Kentucky financial institutions. Eight of those were filed by the same trio of non-Kentucky lawyers, and the ninth by a national practice class action firm.

In the Kentucky lawsuits, the overdraft claims are narrowly focused on overdraft fees that result from a point-of-sale signature transaction by debit card.

The argument is this: (a) when the card issuing bank “authorizes” a POS signature transaction the bank has an obligation to pay the transaction; and (b) charging an overdraft fee on an authorized POS signature transaction if the settlement of the transaction causes the DDA balance to go negative (or more negative) breaches the contract between the bank and its customer.

The hope of the plaintiffs in these cases is twofold: first, they hope they can convince a judge and then a jury that the DDA agreement requires the bank to actually remove, set aside, hold, or “sequester” funds from the plaintiff’s account at the moment of authorization and the bank’s failure to do so is a breach of the agreement. Second, if that doesn’t succeed, they hope they can convince a judge that the contract is ambiguous, thus forcing a jury trial.

The plaintiffs argue that the DDA agreement does not specifically address debit card POS signature transactions and that the disclosures on overdraft policies are confusing to the consumer who cannot understand such terms as “available balance,” “available funds,” and “insufficient funds.” There have been many cases around the country in which this obfuscation has been quite successful.

Kentucky cases. (The plaintiff has appealed.) Morgan Pottinger McGarvey successfully argued that not only did the bank’s DDA agreement not require any set aside of funds upon a POS authorization, there was nothing in the agreement that would permit the bank to do so. The court also found the bank’s disclosure, which stated that an overdraft fee would be imposed for each item that is paid at evening processing according to daily funds requested, to be unambiguous on its face.

In February 2020, involving a second Kentucky case with a different bank, Morgan Pottinger McGarvey successfully obtained an agreed order of dismissal with prejudice of claims made regarding the bank’s current overdraft policies and disclosures (which had been in effect for many years). After review of Morgan Pottinger McGarvey’s motion for summary judgment, the plaintiff’s counsel conceded that those claims were without merit. (The case is continuing on other issues.)

To protect against claims like these, important points to consider include: 1. Review overdraft policies and practices, including calculation methodologies, to assure they comply with applicable regulations.

2. Review operations to assure the policies are implemented and followed.

3. Review disclosure statements to assure clarity, including definitions of banking terms as needed.

4. Revise 1 through 3 as needed.

With our experience in bank fee litigation and our long-standing focus on banking law, Morgan Pottinger McGarvey is uniquely qualified to assist any financial institution with evaluation of overdraft and return item fees and policies.

In December 2019, Morgan Pottinger McGarvey won summary judgment dismissing one of the

LEXINGTON

Morgan Pottinger McGarvey is a leading banking and finance law firm representing financial institutions, businesses and individual clients throughout Kentucky and Indiana.

LOUISVILLE

NEW ALBANY

Promontory Interfinancial Network has a new name...

And our product names have changed, too.

CDARS and ICS deposit solutions are now IntraFi Network Deposits , and ®

®

SM

SM

CDARS and ICS funding solutions are called IntraFi Funding .

SM

IntraFi Network Deposits can help your institution manage its balance sheet and provide its customers with access to millions in FDIC insurance.

And, we still offer our full range of wholesale funding solutions. IntraFi Funding offers flexible funding solutions to help banks of all sizes meet planned or unexpected needs, regardless of their liquidity position.

Same great products.

New names.

IntraFi.com Use of IntraFi Network Deposits and IntraFi Funding are subject to the terms, conditions, and disclosures set forth in the applicable program agreements, including the IntraFi Participating Institution Agreement. IntraFi, Network Deposits, IntraFi Funding, and the IntraFi logo are service marks, and ICS and CDARS are registered service marks, of IntraFi Network LLC. 38 | KENTUCKY BANKER MAGAZINE

What Banks Need to Know When Providing Financial Services to Hemp-Related Businesses

by Julia A. Gutierrez, KBA Partner Compliance Alliance

Requirements and Limitations

The production of industrial hemp is an especially fast-growing industry especially since the passing of the 2018 Hemp Bill which clarified from a federal perspective that the cultivation of hemp is legal and no longer restricted to pilot programs for research purposes. While the production of hemp is legal, it is critical that banks understand the requirements, restrictions, and expectations when it comes to the production of industrial hemp.

Banks choosing to provide financial services to hemp-related businesses should develop and implement a program that will allow for successful and compliant banking relationships.

The 2018 Farm Bill provided clarification for the cultivation of hemp. This means that it allows for the sale and possession of hemp-based products, provided these products are consistent with the constraints set forth in the Bill including those in the final rule. The Bill limits the level of tetrahydrocannabinol, better known as THC, to less than 0.3%. State departments of agriculture are required to create a regulatory framework or plan that would include collaboration between the state’s governor, law enforcement and the United States Department of Agriculture to license and regulate hemp. This plan must be approved by the USDA. For farmers in states that choose not to have a USDA-approved program, they can still grow hemp and produce hemp-based products, but they will be regulated at the federal government level. The key is that hemp producers must be licensed and regulated which will means some level of enhanced due diligence for financial institutions choosing to provide financial services for hemp-related customers. The Bill requires sampling and testing with the final rule extending the sampling period to 30 day from its original 15 days in the interim rule.

Background The 2018 Farm Bill legalized the production of industrial hemp when it was signed into law in December of 2018. Prior to the enactment of the Bill, the Controlled Substance Act (CSA) did not differentiate between marijuana and hemp meaning that hemp was considered a Schedule I substance which is illegal.

Because industrial hemp comes from the plant species cannabis sativa, there is still some confusion surrounding its legalization.

But to be clear, the Bill removed hemp from the definition of marijuana by the CSA. One thing to note is that despite the removal of hemp from the definition of marijuana, the Food and Drug Administration (FDA) still preserve authorities over hemp products; therefore, its products must meet all applicable requirements and standards.

In October of 2019, an interim final rule was issued which established a regulatory program for the domestic production of hemp to facilitate its legal production based on conditions set forth in the 2018 Farm Bill. The final rule was released on January 15, 2021, including changes to the interim final rule which are considered generally favorable for both the hemp industry and regulators alike. After the January 2021 release, the final rule was under review by the U.S. Department of Agriculture (USDA) but is now expected to move ahead as planned with an implementation date of March 22, 2021. There is one somewhat contentious aspect of the Bill which would require hemp testing labs to be registered by the Drug Enforcement Administration (DEA) that has been extended to December 2022.

States and tribes are also able to implement performance-based sampling protocols considering factors such as whether a producer has consistently produced hemp plants over an extended period of time which comply with requirements or whether the producer is conducting research on hemp at an institution of higher learning or one that is funded by federal, state, or tribal government. This provides states and tribes with more flexibility in the sampling process. The negligence threshold for testing increased from 0.5% to 1%. Therefore, if hemp tests above the 0.3% limit but below 1%, this will not be a negligent violation.

For hemp testing above the 0.3% THC, the final rule provides producers with additional options for disposal such as plowing under, mulching/composting the hemp, disking, shredding the biomass with a bush mower or chopper. Overall, the requirement and restrictions for industrial hemp production are clear and provide an increased level of leniency with the passing of the final rule. continued on the next page KENTUCKY BANKER MAGAZINE | 39

continued: What Banks Need to Know About Hemp Developing a Hemp Related Business Program Once the bank has decided to extend their services to hemp-related businesses, they should ensure that they follow guidance and develop a program which will allow for a successful and compliant relationship. Banks should rely on guidance issued by the agencies including the Financial Crimes Enforcement Network (FFIEC) when considering or providing financial services to hemp-related customers along with ensuring that these customers are compliant with the 2018 Farm Bill requirements to include the requirements in the final rule. Banks are expected to take a risk-based approach when developing a program for hemp-related businesses, one that commensurate with their size, complexity, and risk profile. This can be done creating a risk assessment which will identify risk factors such as regulatory risk, compliance risk, credit and liquidity risk, reputational risk and any other risks associated with this industry. Banks should develop or revise their system of internal controls to monitor and mitigate these risks. They must ensure that they understand the nature and purpose of its customer relationships when developing a hemp-related customer risk profile at the time in which the relationship begins.

Testimonial

The customer risk profile will affect the ongoing monitoring process used to identify risks posed and red flags which may indicate suspicious or illegal activity. A written program should also be part of the bank’s hemp-related business program. The written program should define a hemp-related business, it should outline the bank’s expectations for banking such businesses and provide guidance for the types of businesses which it will and will not serve. The written program should outline the bank’s expectations from account opening through the duration of the relationship with the hemp-related business customer to include steps for terminating the relationship should the risk exceed the risk level of the bank. Ongoing monitoring, to include monitoring on a risk basis, should identify and report suspicious transactions and maintain and update the hemp-related businesses customer information. Finally, the financial institutions should consult their regulators and their bank’s legal counsel.

Julia A. Gutierrez is a Compliance Officer at Compliance Alliance, where she is a reviewer and presenter for the Education department.

“We attended a live demonstration with Compliance Alliance and it’s been a long time since I have seen anything in the banking world that impressed me this much. We signed up immediately! Bank employees have labeled this purchase as “Christmas in July”. It appears to be a game-changer for our bank.”

Ms. Edna H. Hughes, President/CEO

Lewisburg Banking Company, Russellville

ON THE TOPIC OF CYBERSECURITY

What are You Doing to Secure Your Data?

You may be aware of a major and widely publicized cybersecurity breach involving SolarWinds software, which is used by over 300,000 customers, including U.S. government agencies and most of the U.S. Fortune 500 companies. Threat actors, believed to be from Russia, inserted malicious code into SolarWinds software to gain access to confidential information of SolarWinds’ customers.

Because the SolarWinds’ technology (legitimate SolarWinds software) was leveraged to compromise its clients’ infrastructure, the incident was labelled as a “supply chain attack.” Successful attacks tied to SolarWinds came to light as a sophisticated combination of leveraging the compromised SolarWinds components and stealthy movements in the victims’ network environment in order to access and extract confidential information.

While known indicators related to compromise have been released, there was no “quick fix” to fully identify and recover from these attacks because the threat actors basically had an “open door” deep in the victim’s networks—potentially dating as far back as March 2020. The follow-up activities would be specific for each impacted organization.

SolarWinds Breach While we do not yet know the full impact of the attack, banking institutions need to think through cybersecurity risk management.

It is important to emphasize that most financial institutions need to implement pragmatic security measures based on their threat model. Different threat actors have different motivations, techniques, and capabilities. Your IT service provider should design its assessment and planning process around a capability based maturity model which helps you determine the correct control levels needed for your organizations threat model.

By assessing your cyber risk and prioritizing remediation activities based on real world threats, your provider can help your organization building a strong, resilient, and cost-effective information security program.

While we do not yet know the full impact of the attack, banking institutions need to think through cybersecurity risk management. It could be tempting to dismiss doing anything about cybersecurity: after all, the U.S. Treasury, the Departments of Homeland Security, State, Defense, and Commerce, and big security companies like Microsoft and FireEye were compromised—so what could your financial institution do to prevent the risk of cyber-attacks if these giants were unable to do so?

First and foremost, if your organization, or the managed IT service provider who is supporting your organization, is using SolarWinds, you may need to perform a comprehensive security risk in order to fully understand the potential exposure. The backdoor was activated for a few organizations but if the compromised SolarWinds components were installed, it will be necessary to look through logs for indicators of compromise activity released.

Supply chain security is not something most organizations have the resource to implement—which is why it is important to focus on detective controls and look for anomalous behavior. It is never too late to start becoming more proactive with your cybersecurity posture and this is an opportunity to get your organization in gear to begin defending against more advanced threats.

Dean Dorton Cybersecurity offers a comprehensive portfolio of services designed to meet all your organization’s information security needs, from understanding your information security posture, building and maintaining an effective information security program, to responding to incidents.

To learn more about Dean Dorton Cybersecurity, visit deandorton.com/cybersecurity.

KBA ENDORSED VENDOR

The True Cost of Contract Management

by Michael Berman, Founder & CEO, Ncontracts Keeping a lid on expenses is a top concern for banks, credit unions, and other financial service companies. Is your institution overlooking a prime opportunity to improve efficiency and better control costs?

Poor contract management costs American companies billions of dollars every year. Experts estimate that failing to properly manage contracts and engage in vendor risk management can impact the bottom line by as much as 9 percent of annual revenue. Another study from research group Aberdeen estimates collective losses of around $153 billion annually.

What Is Contract Management?

Contract management is the process a financial institution uses to organize and oversee third-party vendor contracts and agreements. A good contract management system creates value by ensuring contracts are accessible, tracking key dates, and making it easy to identify important contract terms, including cost and performance expectations.

Many financial institutions rely on manual and uncoordinated contract management processes. Contracts are stored in desk drawers, filing cabinets, personal hard drives instead of a centralized location, making them difficult to retrieve and review.

Contracts can be lost when the person who filed it forgets where he or she puts it—or leaves the company. They can be damaged or destroyed in a fire, flood, or other disasters. The contract may be at one company’s location when it’s needed at another—or needed by someone working from home.

As a result, employees responsible for monitoring vendor performance (including IT, compliance, and accounting) don’t have all the data they need. This includes contract information relating to: • • • • • • • • •

Nature and scope of the arrangement Pricing Performance measures, benchmarks, and reporting Audit and remediation Compliance and complaint management Data security Liability, dispute resolution, and termination Business continuity and resiliency Subcontracting

42 | KENTUCKY BANKER MAGAZINE

More than a simple document, a third-party vendor contract serves as a blueprint for the entire relationship. It contains the basic building blocks needed for vendor management—a regulatory requirement for banks and credit unions. Vendor management the process of identifying, measuring, monitoring, and controlling the risk of third-party vendor relationships. This includes vendor risk assessment, vendor due diligence, contract structuring and review, and oversight.

Why Mismanaging Contracts Is Expensive From cost and performance impacts to compliance risks, poor contract management can hurt a financial institution’s bottom line in many ways.

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Contract creation, routing, filing, and retrieval all take unnecessary time and trouble.

Amendments and other changes aren’t attached to the original contract, leaving the impression the original contract is complete and curent.

Off-contracting buying can happen because the relationship isn’t documented. It’s usually at a higher price than was negotiated, and it can invalidate lucrative contracts with important suppliers.

When there is no previous contract to draw on or refer to, sourcing and sales cycles are longer because document drafting and approvals take longer. The contract ultimately negotiated may be uncompetitive or even risky because any well-crafted terms used in the past (prices, protective clauses, restrictions, and penalties) aren’t included.

If those charged with monitoring a vendor’s performance aren’t aware of contract stipulations and service level agreements (SLAs), the vendor may fall short.

Regulators make no distinction between the action of a financial institution and the action of a vendor working on an institution’s behalf. If financial institutions can’t access contracts, they can’t monitor performance.

Rebates and discounts may be unclaimed or lost.

Inadvertent renewals (auto-renewals) may prolong an unprofitable relationship or cause an institution to miss an opportunity to negotiate for better rates or terms.

Inadvertent terminations may cause an institution to incur fees, spend significant time reinstating the agreement, or find itself suddenly unable to provide a product or service. continued on next page

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Sarbanes-Oxley (SOX) makes executives at publicly traded companies attest to the company’s adherence to contract terms. They are putting themselves and their companies at risk if they don’t have access to the contracts.

Duplicate vendors resulting in overpayment for goods and services.

Failing to meet regulatory requirements for vendor management due to missing information.

Any one of these oversights can cost a financial institution. Put several of them together and the cost of poor contract management really starts to add up.

Four Tips for Better Contract Management While poor contract management is expensive, good contract management helps an institution save a great deal of money with minimal expense. Here are four ways to improve your contract management.

1. Store contracts in a secure, centralized location. Make sure all your contracts are stored in one centralized location, giving employees access to the most up-to-date vendor agreements and information. Consider cloud storage as a solution.

Cloud storage provides extra layers of security by storing your contract information off-site and online, making it possible for staff to access contracts regardless of location. Restricting access to data is also easier because many standard cloud storage security protocols require permission-based logins.

2. Identify key dates and provisions. When it comes to critical vendor contracts, invest the time to identify key dates (like renewals and expirations) and provisions (pricing, performance expectations, compliance controls, etc.). This lets you know when action is needed and gives your vendor management team the information it needs to effectively manage the vendor relationship.

3. Use proactive task management tools. Reminders are an essential part of contract management, but not every reminder is built the same. Calendar alerts are great when setting an appointment, but when it comes to reminding the institution of a pending contract expiration, it’s a high-risk gambit. Staff turnover is a prime source of missing calendar alerts on longterm contracts. There is always the possibility that contract calendar alerts can be overlooked or deleted.

Spreadsheets are also a common tool at financial institutions, but they aren’t the best fit for contract management. Spreadsheets can’t proactively alert you to action items. Spread-

sheets can be lost, deleted, or corrupted. You can end up with multiple versions when staff download or make a copy of the spreadsheet, or they can also be overwritten. It’s a classic case of a so-called “free” tool costing more than you think. Find a contract management solution that proactively alerts the institution of contract deadlines and makes it easy to document activity.

4. Provide adequate oversight tools. Escalated notifications, incident tracking, extensive reporting, and dashboards allow senior management to spend less time on contract management while giving them deeper insights.

Good contract management has many benefits, including the ability to fully realize contractual discounts and rebates, better manage regulatory compliance, and save on administrative costs. Have you considered what your current contract management practices are costing your institution? Don’t wait for a contract management mistake to find out.

Michael Berman is the founder and CEO of Ncontracts, a leading provider of risk management solutions. His extensive background in legal and regulatory matters has afforded him unique insights into solving operational risk management challenges and drives Ncontracts’ mission to efficiently and effectively manage operational risk.

FOR MORE INFORMATION CONTACT | Selina Parrish Director of Membership sparrish@kybanks.com

Testimonial

“Without Ncontract’s executive summaries that are being provided, I can’t imagine coming up with the time to thoroughly review annual reports ranging from SOC/SSAE reviews, audited financials, business continuity plans and reviews and determining how well our vendors have performed, it would be overwhelming!”

Mr. Jonas Billingsley Vendor Management German American Bank, Owensboro

KENTUCKY BANKER MAGAZINE | 43

130th Annual KBA Convention September 19-22, 2021 The Omni Grove Park Inn Asheville, NC