Kentucky Banker Magazie - May/June

GOVERNMENT RELATIONS

KENTUCKY BANKER MAY JUNE 2018

COMPLIANCE & LEGAL

EDUCATION ALLIANCE

Dodd-Frank Takes One on the Chin

INSURANCE SOLUTIONS

PRODUCTS & SERVICES

HOPE OF KENTUCKY

KBPAC POLITICAL ACTION COMMITTEE

S.2155 Signed in to Law Where’s the Next Fight?

Kentucky Banker Magazine Official Publication of the KBA www.kybanks.com

f @kybankers

Mr. Barnes Goes to Washington Cause for Celebration Camila Haney Celebrates 45 Years!

Medical Marijuana Chairman Tim Barnes (right) shakes hands with Majority Leader Mitch McConnell (left) during the KBA’s trip to Washington D.C.

Sometimes you don’t know you need something better...

Until it comes along.

At The Bankers’ Bank of Kentucky, our goal is to show you what you and your clients may be missing. We’ve partnered with Elavon to provide Merchant Processing Solutions and we want to build a partnership with you for one simple reason…

You deserve the best.

• We are consistently rated among the top global payment providers • We process more than 3 billion transactions annually around the world • Our call centers are open 24/7, and our team is always ready to help • We partner with 1,700 financial institutions Contact The Bankers’ Bank of Kentucky for your Payment Processing needs.

Todd Beers CENTRAL KENTUCKY REGION tbeers@bbky.com 502-229-1123

©2018 Elavon. All rights reserved

David Fletcher EAST KENTUCKY REGION dfletcher@bbky.com 304-389-4431

Shawn O’Keefe WEST KENTUCKY REGION sokeefe@bbky.com 502-382-0460

P.O. BOX 713 FRANKFORT, KENTUCKY 40602-0713 www.bbky.com

KENTUCKY BANKER MAGAZINE

YOUR ASSOCIATION OUR COMMONWEALTH

Published bi-monthly by the Kentucky Bankers Association

MAY/JUNE 2018 IN THIS ISSUE

Duncan-Williams Senior Market Analyst Geetika Bansal addresses 2018 KBA Spring Conference attendees

2017-2018 OFFICERS Chairman Mr. Timothy E. Barnes President & CEO Hometown Bank

Vice Chairman Mr. David M. Bowling, CEO Citizens Union Bank of Shelbyville Treasurer Mr. Lloyd Hillard, Jr. President & CEO United Bank & Capital Trust Co. Past Chairman Mr. Michael H. Mercer President & CEO First State Bank

President & CEO Mr. Ballard W. Cassady, Jr. Kentucky Bankers Association

BOARD OF DIRECTORS Group Representatives

Representing Group 1 Mr. J. Brent Bugg President & CEO, Fredonia Valley Bank Representing Group 2 Ms. Lanie W. Gardner Community President First Southern National Bank Representing Group 3 Mr. John T. Taylor President & CEO, PBI Bank

Kentucky Bankers Association 600 West Main Street, Suite 400 Louisville, Kentucky 40202

Representing Group 4 Mr. Dan M. Harbison President & CEO The Farmers National Bank of Scottsville Representing Group 5 Mr. Gregory D. Goff, President & CEO First National Bank of Kentucky

Representing Group 6 Mr. Darin L. Young President & CEO, Century Bank of Kentucky Representing Group 7 Mr. Steve Tolliver, Market President The Monticello Banking Company Representing Group 8 Mr. Anthony Kinder President & CEO Peoples Bank of Kentucky

Representing Group 9 Mr. Jed Weinberg Chairman, Bank of Hindman

Representing Thrifts Ms. Shanda L. Smith, President & CEO Blue Grass Federal Savings & Loan

Representing Thrifts Kari R. Gough President & CEO, Winchester Federal Bank

Representing Bank Size

Assets of $1B or more Mr. James A. Hillebrand, President Stock Yards Bank & Trust Company

Assets at least $200M; less than $1B Mr. Dale Sights President, Field & Main Bank

KBA Benefits Trust Mr. W. Fred Brashear, II President & CEO, Hyden Citizens Bank

Chairman’s Corner................7 Straight Talk..........................8 Peoples Bank of KY..............11 Truly Special........................12 GBS Before & After..............13 Ashley McFarland................14 Bert Ely ABA FCW................17 Improving Plan Behavior......20 Springfield Bank...................22 Get a 2nd Opinion...............23 Medical Marijuana..............27 Not the Holy Grail................29 We Need True Fans..............33 Congress Passes S.2155.......37

GOVERNMENT RELATIONS

KENTUCKY BANKER MAY JUNE 2018

COMPLIANCE & LEGAL

EDUCATION ALLIANCE

Dodd-Frank Takes One on the Chin

INSURANCE SOLUTIONS

PRODUCTS & SERVICES

HOPE OF KENTUCKY

KBPAC POLITICAL ACTION COMMITTEE

S.2155 Signed in to Law Where’s the Next Fight?

Kentucky Banker Magazine Official Publication of the KBA www.kybanks.com

Chairman’s Corner: S.2155 Straight Talk: Long Time Coming S.2155 Photo Album

f @kybankers

Chairman Tim Barnes (right) shakes hands with Majority Leader Mitch McConnell (left) during the KBA’s trip to Washington D.C.

ON THE COVER

With the passage of Senate Bill 2155 comes regulatory relief for Kentucky bankers; but there are still fights on the card. What will be the next big bout?

Kentucky Banker Magazine (KBM) is the official bi-monthly periodical of the Kentucky Bankers Association (KBA). No part of KBM may be reproduced without written permission from the KBA. The KBA is not responsible for opinions expressed by outside contributors published in KBM. The KBA reserves the right to publish submissions at the discretion of the KBM editorial team. Subscriptions: $30/year for KBA members; $60/year for KBA non-members; single copies $5 each.

SUBMIT

jfischer@kybanks.com

QUESTIONS

jfischer@kybanks.com

ADVERTISE

jfischer@kybanks.com www.kybanks.com

KENTUCKY BANKERS ASSOCIATION STAFF 23 EMPLOYEES WITH 300+ YEARS OF COMBINED EXPERIENCE SERVING THE COMMONWEALTH

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

Jamie Hampton Education Services Coordinator jhampton@kybanks.com

Debra K. Stamper EVP & General Counsel dstamper@kybanks.com

Michelle Madison IT Manager mmadison@kybanks.com

Matthew E. Vance Chief Financial Officer mvance@kybanks.com

Tammy Nichols Events Coordinator Finance Officer, HOPE of KY tnichols@kybanks.com

Selina O. Parrish Director of Membership sparrish@kybanks.com Natalie Kaelin, Esq. Director of Education nkaelin@kybanks.com Josh Fischer Director of Communications jfischer@kybanks.com Billie Wade Executive Director, HOPE of KY bwade@kybanks.com Miriam Cole Executive Assistant mcole@kybanks.com John P. Cooper Legislative Solutions jcooper@kybanks.com Paula Cross Education Services Coordinator pcross@kybanks.com Casey Guernsey Enrollment and Billing Specialist cguernsey@kybanks.com KBA Facebook @kybankers

Katie Rajchel Staff Accountant krajchel@kybanks.com Steve Whitlow Systems Engineer swhitlow@kybanks.com Chuck Maggard President & CEO, KenBanc cmaggard@kybanks.com Lisa Mattingly Director of Sales & Service KBA Benefits Solutions lmattingly@kybanks.com Brandon Maggard Account Representative KenBanc Insurance Services bmaggard@kybanks.com Donna McCartin Benefit Support Specialist dmccartin@kybanks.com Audrey Whitaker Insurance Services Coordinator awhitaker@kybanks.com Allie Graves Benefit Support Specialist agraves@kybanks.com

Annual Washington D.C. Trip

Front row left to right: Ballard W. Cassady, Jr. - KBA; James Beach, III – Peoples Exchange Bank, Beattyville; John P. Cooper - KBA; Benjamin Caudill – Kentucky Bank, Moorehead; Luther Deaton, Jr. – Central Bank & Trust, Lexington; Timothy E. Barnes – Hometown Bank of Corbin, Inc.; Lloyd C. Hillard, Jr. – United Bank & Capital Trust Co., Frankfort; Julie C. Moore – First Federal Savings Bank of Kentucky, Frankfort; Nancy Mullen - KraftCPAs; Judy M. Rose – FHLB, Cincinnati; Kreg D. Denton – First Community Bank of the Heartland, Inc., Clinton; Second Row left to right: James A. Hillebrand – Stock Yards Bank & Trust, Louisville; Mark F. Wheeler – Central Bank, Louisville; David M. Bowling – Citizens Union Bank, Shelbyville; Mark D. Strother – Commercial Bank of Grayson; Chuck Maggard - KBA; Matthew J. Harris – River City Bank, Louisville; David W. Hobbs – River City Bank, Louisville; H. Lytle Thomas – Heritage Bank, Inc. of Erlanger, Burlington.

1. Senator Mitch McConnell talking to a delegation of KBA members on the day after S.2155 passed; the bill provides significant relief for Kentucky’s community banks. The KBA group expresses their thanks for the Majority Senator’s help on this legislation.

1

2. A group of KBA members met with Senator Rand Paul in Washington D.C. on May 23 to discuss issues impacting Kentucky banking.

3. Congressman Andy Barr (KY-06) attended a White House signing ceremony today for S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act. This package includes two bills introduced by Congressman Barr – H.R. 2226, the Portfolio Lending and Mortgage Access Act, and H.R. 1699, the Preserving Access to Manufactured Housing Act.

2

3

WHITE HOUSE PHOTO

SINCE 1891

Mr. Barnes Goes to Washington Mr. Barnes Goes To Washington is projected to be a 2018 Summer Blockbuster according to bankers across the Commonwealth of Kentucky. A recent KBA press release touts the movie to be larger than past summer releases such as Jurassic World in 2015, Marvel’s Avengers in 2012 and the tragic Dodd-Frank in 2010.

The political comedy is set in the Georgetown neighborhood of our Nation’s Capital with the opening scene depicting several financiers bellied up to a hotel bar discussing why Kentucky Banks are #1 in the nation. (YES-KY Bankers pay the highest state tax in the US). After the mood turns negative toward our tax situation, Mr. Barnes tries to shift the group’s attention to the mission at hand:

Just as the coin lands CHAIRMAN’S CORNER on its edge, Mr. Tim Barnes 2017-2018 KBA Chairman Barnes’ hallucination is rudely interrupted when he awakes to hear Congresswoman Pelosi describe Community Bankers as greedy and headed toward the gates of hell.

Later during the debate, Congressman Barr can be heard giving a fiery speech defending the banking industry and the very bankers that serve communities across Kentucky such as Corbin, Louisville, Hyden, Lexington, Scottsville, Central City and Fredonia.

Just as a storm was brewing before the House vote on S2155, a monsoon developed over Capitol Hill. The KBA Senate Bill 2155 cast can be seen running to their chariot from which they will use modern technology (I Phone) to watch the 115th In an early morning bus ride to the ABA offices, conversaCongress approve S2155 – Economic Growth, Regulatory tion quickly turns from the wonderful showers at the Park Hyatt to how Mr. Deaton stood his ground during previ- Relief, and Consumer Protection Act in a much-needed bious trips to Washington in support of Community Banking. partisan manner.

Seconds led to minutes which turned into hours of listening to Government agencies explaining their need to help The next day finds Mr. Barnes Goes To Washington in a bankers do their jobs. By nightfall, the KBA cast was excited celebratory mood and the bankers return to Capitol Hill to about the next day’s lunch with Congressman Barr and the thank Senator Paul and Senator McConnell. In the closing act, bankers from across Kentucky are gathered with Senaprospects of a S2155 victory. tor McConnell as KBA President Ballard Cassady thanks the The KBA troupe awoke on the third day with warnings of Senator for his steadfast support of S2155 and Kentucky heavy rain and extra tight security as they travelled the Banks. tight and crowded streets of Foggy Bottom. Lunch with Congressman Barr seemed very appropriate since the As the numerous credits roll Congressman had written and supported much of the for Mr. Barnes Goes to Washregulatory relief outlined in the bipartisan S2155. Armed ington, Mr. Barnes and John with passes to watch the House debate on S2155, many Cooper can be seen walking of the bankers marched on to view history while others from the Washington Cathedral stayed behind to thank Congressman Barr, Comer, Guthrie, along Embassy Row and Mr. Massie and Rogers for their support of community banking Cooper thanks Mr. Barnes for in Kentucky and S2155. (Congressman Yarmuth’s fiction not making embarrassing comwas not appreciated.) ments about Wells Fargo.

In a very important scene, Mr. Barnes can be seen sitting with fellow bankers in VERY small chairs in the House chambers day dreaming and waiting on the S2155 debate.

Mr. Barnes dreams that Nancy Pelosi and Maxine Waters flip a coin to decide if they plan to support S2155.

MAY/JUNE 2018

Reviewers note: I hope you enjoy Mr. Barnes Goes To Washington as much as I did. If so, please take time to personally thank Senator McConnell, Congressman Barr, Ballard Cassady, John Cooper, Luther Deaton and all Community Bankers across the Commonwealth.

PAGE 7 | KENTUCKY BANKER

UNITED IN SERVICE

Cause for Celebration!

STRAIGHT TALK Ballard W. Cassady, Jr. President & CEO bcassady@kybanks.com

This has been a long time coming.

your customers, have had their hands tied by regulations that Senate Bill 2155 has now eliminated. Dodd-Frank On July 21, 2010 the so-called “Wall Street Reform and stifled Kentucky’s economic growth before the ink dried.

Consumer Protection Act” better known as Dodd-Frank Now, almost 8 years later, the regulatory nightmare isn’t became law. It’s said that bad facts make bad law, that the over, but maybe we’ve just reduced it to a bad dream. But, extreme case is a poor basis for a law that covers less ex- a panacea for our industry’s fundamental challenges? treme cases.

BATTLES STILL TO COME Indeed, the ‘bad facts’ of the 2008 financial crisis became the excuse for a really bad law that attempted to cudgel No, not at all. We have critically important battles on othoperationally complex Wall Street banks with a club so er fronts, and that fight continues unabated. My personal large and unwieldy that it fell most heavily on blameless gratitude to those who fought alongside us in loosening community banks. The price we’ve paid – the loss of lend- the Dodd-Frank stranglehold is overwhelming. The leading discretion and new compliance costs that had nothing ership of Kentucky’s Senators, especially Majority Leader to do with safety and soundness – has been shared by our Mitch McConnell, and 5 of our 6 Representatives in the customers, our communities, and our economic recovery House, especially Congressman Andy Barr, was absolutely rate. essential to both the passage of this regulatory relief and From that turbulent summer of 2010 to the spring of 2018, the fact that it has some real meat. we fought for relief for community banks from this singularly bad law. Along the way, we encountered massive misinformation about the events of 2008; we experienced the worst of political gridlock. But we didn’t give up because we couldn’t.

I am proud to have worked alongside bankers like Luther Deaton, Tim Barnes, and countless bankers across Kentucky that made calls to their Congressmen and Senators on our behalf, as well as our GR consultant John Cooper.

The list of names would stretch around the block, so I WHAT IT DOES can’t include them here, but I’ll never forget a single one of them. They’ve made the KBA stronger as an association On May 24, a small victory – Senate Bill 2155 – was signed and Kentucky’s economy stronger in every way. For our into law by President Trump. This Economic Growth, Reg- customers, our communities, our state, and our nation, we ulatory Relief and Consumer Protection Act provides, ac- have truly made a difference. cording to the White House, (1) exemptions to mortgage lending rules; (2) regulatory relief for community banks, bank holding companies, and securities regulations; (3) consumer protections for veterans and certain homeowners; and, (4) protections for student loan borrowers.

BACK TO THE FRAY Now, it’s back to the fray both in Washington and in Frankfort. The battles ahead will be every bit as challenging as rolling back parts of Dodd-Frank. (More on that later.) But we’ve proven as an association, in keeping with our state’s motto, that when we unite we can do more than just avoid a fall: we can effect real change.

But to us here in Kentucky, it provides so much more. The importance of this legislation to community banking in That knowledge is our greatest cause for celebration.

Kentucky cannot be overstated. Your banks, and especially

PAGE 8 | KENTUCKY BANKER

MAY/JUNE 2018

SINCE 1891

Barr Attends Signing Ceremony for Financial Regulatory Relief Package Legislation Includes Two of Congressman Barr’s Top Priorities

Congressman Andy Barr (KY-06) attended a White House signing ceremony today for S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, the most pro-growth regulatory relief legislation in a generation. This package includes two bills introduced by Congressman Barr – H.R. 2226, the Portfolio Lending and Mortgage Access Act, and H.R. 1699, the Preserving Access to Manufactured Housing Act.

Now, we must build on our success to provide additional relief from burdensome financial regulations and continue our work to unleash economic growth in our communities.”

“Kentucky banks have been closing their doors at an alarming pace since the enactment of the 2,300-page Dodd-Frank Act,” said Congressman Andy Barr. “Endless red tape has led to led to Kentucky consumers being unable to access the credit they need to purchase a home, start a business, or finance their American Dream. I am proud that more than half of the provisions included in this bill originated from the House Financial Services Committee, including my Portfolio Lending and Mortgage Access Act and Preserving Access to Manufactured Housing Act.

Practical solutions for the FASB road ahead The FASB has been as active as the regulatory environment seems to be calming. Financial institutions not only have the behemoth of CECL in front of us, but also other major FASB pronouncements addressing the accounting treatment for such areas as leases and revenue recognition. The timing of adoption of all of these new pronouncements will be based on the their determination as a public business entity.

MCM can help. Let our Financial Institution Services Team’s thought leadership and expertise guide you through this complicated process.

Lee Groza, CPA Assurance Partner Lee.Groza@mcmcpa.com

Debbie Smith, CPA Assurance Partner Debbie.Smith@mcmcpa.com

Sam LaFollette, CTP Assurance Principal Sam.LaFollette@mcmcpa.com

Expert guidance, beyond the bottom line.

MAY/JUNE 2018

888.587.1719 | www.mcmcpa.com PAGE 9 | KENTUCKY BANKER

When it comes to BOLI,

we are committed to Kentucky!

Lou Moore

MANAGING PRINCIPAL

We have been working with Kentucky community banks for

440.356.8860 PHONE

15 plus years and meaningful, long-term relationships remain

216.789.8889 MOBILE 440.730.3130 FAX

the foundation of our business. Banc Consulting Partners

lmoore@yourbankpartner.com

(BCP) is a national leader in the design, implementation, and administration of Bank-Owned Life Insurance (BOLI).

We are endorsed by the Kentucky Bankers Association and have earned the trust of more Kentucky community banks than any firm in the country.

So when you want the best for your BOLI portfolio and a firm that is dedicated to Kentucky community banks, talk to Lou Moore & Lon Haines at Banc Consulting Partners.

Lon P. Haines

MANAGING PRINCIPAL 267.773.7617 PHONE 856.577.7305 MOBILE lphaines@yourbankpartner.com

www.bancconsultingpartners.com

SINCE 1891

The Peoples Bank Breaks Ground “Hometown” Bank Shows Continued Growth

Peoples Bank of Kentucky has been a “hometown” bank since 1906, when Charles Rhodes chartered the bank in Flemingsburg, KY. Our early beginnings were humble: monthly rent on the office was $25 and the bank’s assets were secured in a simple storage box.

From these simple beginnings, many dreams took root and grew. Because of Peoples Bank of Kentucky, families throughout the area were able to realize the dream of owning their first home. Farmers were able to acquire land and grow their businesses. For 112 years, Peoples Bank of Kentucky has provided a safe place for hard-working people to save their hard-earned dollars. This was Mr. Rhodes philosophy in 1906, and it is still our philosophy in 2018.

Because we are local in the truest sense, we want to do everything we can to ensure that the communities we serve continue to prosper. Banking decisions are made locally.

Our bankers are intimately involved in the local community, are involved in business development, and the bank’s Board of Directors is comprised of local leaders.

For us, the name Peoples Bank of Kentucky is so much more than a name… it is who we are … the people of KENTUCKY. We are proud of our heritage, and excited to be able to continue our growth, delivering services that are focused on the families, communities, and businesses of this region.

An independent, locally owned bank, Peoples Bank of Kentucky has grown to include multiple offices in Bath, Fleming, and Mason counties. In December, we anticipate the opening of a new branch to serve the people of Montgomery County and Mount Sterling, at 202 Bentley Drive.

Peoples Bank of Kentucky has been the bank of choice for generations of area residents and serves customers with respect and appreciation. We maintain a strong commitment to personal and community service.

MAY/JUNE 2018

PAGE 11 | KENTUCKY BANKER

UNITED IN SERVICE

Truly Special

#kbabankshots

BANK SHOTS!

AMANDA REED Farmers National Bank of Lebanon announced Amanda (Cook) Reed joined their staff as Internal Audit Coordinator.

People’s Bank & Trust Company of Madison County President Patrick Ballinger, and staff, helped at the Softball Throw event at the 2018 Special Olympics Summer Games in Richmond, Kentucky, June first and second.

BANK SHOT! Camila Haney Celebrates 45 Years at First National Bank of Grayson PAGE 12 | KENTUCKY BANKER

Reed graduated Summa Cum Laude from the University of Kentucky with a Bachelor of Business Administration. She later went on to graduate from the University of Kentucky College of Law with a Juris Doctorate and passed the bar exam the same year.

“Amanda brings her expertise and experience in law, legal research, and internal control procedures to her role in the Audit Department,” says President Melissa Knight. “We are excited to have her join our organization as she leads the Bank’s internal audit function. She will also have an independent, consultative role with our compliance activities. This will better position us to address the critical and complex requirements of the highly regulated industry in which we operate.”

Reed said, “I am excited about the opportunity and look forward to joining the FNB team.”

KBA BANK SHOTS! highlight your achievements; this is where we publish your successes & acknowledge your milestones. email jfischer@kybanks.com @kybankers #kbabankshots

MAY/JUNE 2018

SINCE 1891

#kbabankshots

BANK SHOTS!

ANGELA MOTT

2018 General Banking School BEFORE & AFTER

First Kentucky Bank announced the promotion of Angela Mott to Branch Manager. Angela Mott will manage the Bardwell Office. Mott joined First Kentucky two years ago and transfers from the Cunningham Office to Bardwell. Angela is a graduate of Murray State University with a BS in Criminal Justice.

She and her husband John reside in Arlington, Kentucky and are the parents of two children.

BEFORE DEBORAH PERRY First Kentucky Bank announced the promotion of Deborah Perry to Branch Manager.

Perry will be managing First Kentucky’s Cunningham Office. She joined the First Kentucky team in 2013 and has worked in various positions since that time.

Perry lives in Cunningham with her husband Eric. They are the parents of three girls that keep them very busy. In her spare time, Deb loves documentaries and research.

MAY/JUNE 2018

AFTER PAGE 13 | KENTUCKY BANKER

SINCE 1891

Community Trust Bank Establishes Brynlee Hamilton Scholarship Fund PIKEVILLE, KY – Community Trust Bank, Inc. has announced the establishment of a scholarship fund for Brynlee Hamilton, the infant daughter of City of Pikeville, Kentucky Police Officer Scotty Hamilton who was killed in the line of duty on March 13, 2018. Anyone may donate to this savings account by going to any one of Community Trust Bank’s 80 branch offices, or send to:

JASON L. AYERS

Community Trust and Investment Company announced Jason L. Ayers has joined CTIC’s Wealth and Trust Management (WTM) team as a Relationship Officer for Private Wealth Services.

Brynlee Elizabeth Hamilton Scholarship Fund Community Trust Bank P.O. Box 2947 Pikeville, KY 41502-2947

CASA Honors Kentucky Banker

Ashley McFarland

BARRY FRAZIER Peoples Exchange Bank announced Barry Frazier has been named Vice President of Commercial Lending for the Mt. Sterling market.

CASA (Court Appointed Special Advocates) trains and supervises volunteers that act as advocates through the family court system, to ensure all victims of child abuse and neglect are provided a safe and permanent home. Ashley McFarland, Kentucky Bank Brokerage Sales Assistant, has been recognized by CASA for her community service and induction into the “I Am for the Child Society.”

Ashley has dedicated her time with CASA by volunteering with Camp CASA, The Superhero Run, and Bourbon and Bayou. She has been an enthusiastic advocate of the CASA goals and programs, which mainly serve Fayette and Bourbon counties.

In 2017, CASA of Lexington provided 529 children with an advocate. Unfortunately, more than 1,711 children need assistance.

McFarland has been with Kentucky Bank for 5 years and resides in Bourbon County with her husband and two children. Ashley attended the University of Kentucky. Along with being a member of CASA, Ashley is actively involved in the community as Co-chair of the Paris-Bourbon County Chamber Young Professionals Group, and a Board Member of both the Paris Rotary Club and the Farm Bureau Paris-Bourbon County Chamber.

PAGE 14 | KENTUCKY BANKER

SHEILA CARMACK Central Bank announced the promotion of Sheila Carmack to retail banking officer. Mrs. Carmack began her career at Central Bank as a personal banker in 2006.

CHELSEY MADDING Community Financial Services Bank announced Credit Risk Analyst Chelsey Madding will become a Commercial Lending Administrative Assistant with the Graves County Banking Center.

#kbabankshots MAY/JUNE 2018

KENTUCKY BANKERS ASSOCIATION / BANK SHOTS!

CHRIS LeMASTER

JACKIE PYLAND-TIPMORE

Kentucky Bank added Chris LeMaster to their lending team in Fayette County.

LeMaster has fourteen years of experience as a banker. He earned a degree in Finance from Miami University (OH).

Jackie Pyland-Tipmore has been named Assistant Vice President, Banking Center Manager at First Security Bank. She will be managing the South Frederica Branch.

CYNDI CALDWELL WHITMER

JAMIE ROBY JOHNSON

JUSTIN CARROLL

Central Bank promoted Cyndi Caldwell Whitmer to Vice President, Commercial Mortgage. She began her career at Central Bank in 2015.

Jamie Roby Johnson has been named the new Marketing Specialist at First Security Bank. She will be located at corporate headquarters in Owensboro.

United Bank & Capital Trust Company announced the hiring of Justin Carroll as VP. He will join the Bank’s 100 United Drive office as a Commercial Lender.

ANNA CLAYTON

EARL TWINAM

JOE BERRY

Central Bank promoted Anna Clayton to Senior VP, Technology Services. She began her career at Central Bank in 1995 and has worked in retail banking and technology services.

Earl Twinam, Business Development Officer at First & Peoples Bank and Trust Co., was selected as the 2018 KY Financial Services Advocate of the Year

by U.S. Small Business Administration.

DALANA JONES

JENEAN ANDERSON

Dalana Jones has been named Commercial Banking Officer at First Security Bank in the main Bowling Green Banking Center. She has over 20 years experience in sales and banking.

Wilson and Muir Bank and Trust Co. announced Jenean Anderson, Manager of their Big Clifty Office, has been promoted to Vice President.

JEREMY BROWN

Forcht Bank welcomed Jeremy Brown as the Richmond Market President.

Brown has a wealth of banking experience in commercial and consumer lending.

Joe Berry, Executive VP of the Greater Owensboro Economic Development Corporation, has been named the new Vice President of Community Development for First Security Bank.

KEVIN WILSON Kevin Wilson has joined the team of The Paducah Bank and Trust Company as Commercial Relationship Manager.

He has 30 years of service in community and commercial banking.

KENTUCKY BANKERS ASSOCIATION / BANK SHOTS!

2020

Scenes of Kentucky Photo Contest

PHOTO DEADLINE: DECEMBER 1, 2018

The Kentucky Bankers Association is now accepting photos for the 2020 customized calendar, “Scenes of Kentucky.� If you are a Kentucky banker, member of the board of directors (or a family member of either) and are an amateur photographer you are eligible to submit your photo entries. If you would like the opportunity to have your creativity displayed in homes across Kentucky, send us your photos of farms, barns, agricultural activities, historical Kentucky locations, county fairs, carnivals, parades or festivals, fall colors, winter snowfalls, spring flowers or summer fun. Any photo that shows the history and beauty of our great state is welcome!

Photo winners will be notified. *Digital photos only please.

Terms of Agreement By submitting to us your photographs and other material, you represent to us that you are the sole creator and owner of your work and that it is original, does not infringe the rights of any other person or entity, does not defame or invade the privacy of any person, and that you have the right and authority to grant to us the following right of use. You agree that the Kentucky Bankers Association may publish, post online, edit, revise, and otherwise make unrestricted use of part or all of your work for commercial or non-commercial purposes, including, without limitation, publishing all or part of your work in the Scenes of Kentucky calendar, the KBA Exchange, in print or online, or other works, or in advertising for the same or for Kentucky Banker Association publications. You agree that this grant of use is royalty-free and perpetual. By submitting to KBA your work, you agree that we may use your name, image, city, and state of residence and other biographical information that you may provide if we use your work, however, KBA cannot guarantee that it will be able to provide acknowledgement in connection with all uses. In a case where KBA cannot or does not provide such acknowledgement, you agree to waive any right to the same. Rights to use of the photos become the property of the KBA. The KBA cannot be responsible for lost or misdirected photos.

For more information contact Josh Fischer 502.736.1283 jfischer@kybanks.com

How to Enter: 1. Please name the photo file(s) using your first and last name.

If you are entering more than one file, add a number to the end of your name starting with the number two. Include the month the photo was taken at the end in all caps.

Example:

JohnDoeMAY.jpeg JohnDoe2JUNE.jpeg JohnDoe3JULY.jpeg - etc.

2. Photos must be sent as high resolution JPEG files. Resolution should be at least 300 dpi. Any file resolution smaller than that can only be used as a small photo within the calendar.

3. Complete the entry form provided on the next page.

4. Save the provided entry form as a PDF to your computer.

Please rename the document using your first and last name; for example: JohnDoe.pdf 5. Email both the digital photo(s) and your saved copy of the entry form to: jfischer@kybanks.com

2020 Scenes of Kentucky

Photo Contest

Name of Banker Bank

1 2 3 File Name Photo By Photo of

Location of Photo Month Photo Taken Photographer’s Address Photographer’s Phone Photographer’s Email

File Name Photo By Photo of

Location of Photo Month Photo Taken Photographer’s Address Photographer’s Phone Photographer’s Email

File Name Photo By Photo of

Location of Photo Month Photo Taken Photographer’s Address Photographer’s Phone Photographer’s Email

Banker’s Phone Banker’s Email

4 5 6 File Name Photo By Photo of

Location of Photo Month Photo Taken Photographer’s Address Photographer’s Phone Photographer’s Email

File Name Photo By Photo of

Location of Photo Month Photo Taken Photographer’s Address Photographer’s Phone Photographer’s Email

File Name Photo By Photo of

Location of Photo Month Photo Taken Photographer’s Address Photographer’s Phone Photographer’s Email

SINCE 1891

Kentucky Graduates Bankers from LSU Graduate School MARY PENDER

The Murray Bank presented Mary Pender with the Employee of the Year award at the Bank’s recent employee meeting. Pender currently works as the Executive Administrative Assistant at The Murray Bank.

“The Murray Bank is such a great place to work, and the people are truly amazing,” said Pender. “It’s such a pleasure to come to work every single day in an environment that fosters success with people who lead by example!”

In addition to her strong work ethic and ongoing support of the Bank’s mission, she is recognized for her outstanding performance in all aspects of her job.

Pender started working at The Murray Bank in October of 2013. She is married to Bob Pender and they reside in New Concord, KY. The Pender’s have two children, a daughter Alicia, married to Wayne Dieken, and a son Austin, married to Kristel Pender. They also have two granddaughters, Peyton and Kodi.

Pictured are students from Kentucky who participated in the 2018 session of the Graduate School of Banking at LSU. The students in the picture range from freshman to seniors. KBA Board Member Dan Harbison, pictured fourth from the left in the front row and a teacher during the session, represented the KBA at the school.

JENNIFER APPLE Community Financial Services Bank (CFSB) promoted Senior VP of Business Development Officer Jennifer Apple to Chief Client Officer. This was one in a series of promotions that CFSB CEO/Chair Betsy Flynn and CFSP Board of Directors unanimously approved. Flynn said: “CFSB has a 20 year growth plan and will remain an independent community bank reinvesting in our community. The promotions ensure extraordinary client service for the future! Jennifer is very creative, an exceptional leader and motivator, encouraging all Team members to be the very best they can be!”

Apple, with 35 years of experience at CFSB, oversees several areas of the bank including marketing, public relations, client services center and business services. She has worked with many different teams within the bank including deposit operations, proof operations, electronic banking, teller, relationship banker, marketing, public relations and business development.

MAY/JUNE 2018

Tim Stark Named VP of Marketing

The Murray Bank announced the promotion of Tim Stark to the position of Vice President of Marketing. Stark joined The Murray Bank as a Marketing Coordinator in March of 2014. “In our role as a true community bank, the lines of communication we share with our customers and our community is vital,” said Bob Hargrove, President and CEO of The Murray Bank. “I commend Tim on his promotion and look forward to his continued leadership in our marketing program.” Originally from Murray, Stark went to Murray State University, earning a BS in Public Relations and a Masters in Mass Communications. As VP he will continue his responsibilities as overseeing marketing, advertising and public relations for The Murray Bank.

PAGE 19 | KENTUCKY BANKER

SINCE 1891

Improving Plan Participants Behavior Kevin Blair, Senior Business Development PNC Capital Advisors A 401(k) plan is like any tool—its effectiveness is a function of the skill of the person employing it. Plan sponsors can help their employees achieve their retirement planning goals by helping them avoid 5 common mistakes: 1. NOT ENROLLING The primary reasons employees do not participate in a 401(k) plan are inertia, limited financial resources, and the sense that retirement is a distant event.

Action Steps: Plan sponsors may want to implement an auto-enrollment feature for new employees, as well as for existing employees not currently participating. Research has shown that only a small percentage of employees opt out of plan participation after automatic enrollment, evidencing that most employees appreciate this “nudge” (or at least won’t actively rebel against it).

Plan sponsors also should consider adding topics such as household budgeting to their educational content to help teach employees how to better manage living expenses, which may free up funds to make 401(k) plan contributions. Education that focuses on sensitizing younger employees that retirement, like a home mortgage, is a long-term debt they owe to themselves also can be helpful.

2. NOT SAVING ENOUGH Sometimes, it is appropriate for employees to start by investing whatever they can afford, even if it’s less than what is required to obtain their company’s full matching contribution under their 401(k) plan. Once employees start contributing, plan sponsors may be able to influence them to invest more.

Action Steps: By instituting an auto-escalation feature, plan sponsors can help employees increase their contributions incrementally over time.

3. MISGUIDED ALLOCATION AND INVESTMENT SELECTIONS For the investment novice, selecting from a menu of investment options can be daunting. Faced with uncertainty, a participant may opt to avoid risk, adopt an inappropriate asset allocation or choose funds in conflict with his or her risk tolerance and longterm needs.

Action Steps: Education is crucial to helping employees make appropriate investment decisions. But sometimes it’s not enough.

Plan sponsors should consider offering a suite of target date funds

PAGE 20 | KENTUCKY BANKER

that can ease these difficult decisions. Access to an objective source of investment advice can also help individuals build better portfolios.

4. POOR INVESTMENT DECISIONS The list of bad investment decisions is a long one — panic-based trades, chasing returns, and market timing play the leading roles in this horror flick.

Action Steps: Education may help with employee investment missteps, but plan sponsors may want to review account activity, such as excessive fund switching or disproportionate allocations, to ascertain the extent and nature of poor decision-making that may be occurring within their plans.

5. BORROWING 401(k) plan balances are a tempting funding source to meet current financial needs, but borrowing from them can undermine employees’ retirement goals.

Action Steps: One option is simply not to offer loans, but prohibiting access entirely may harm employee participation. Limiting loans to one per year may keep individuals from using their 401(k) plan accounts as a default funding source. Education also can help employees appreciate the true cost of borrowing from their future.

DOING WELL BY DOING GOOD When employees fall short of their retirement goals, there may be consequences for plan sponsors, such as: • Increased compensation and healthcare costs as older workers delay retirement; • Lower employee morale as older workers are forced to work longer than expected and younger workers are locked out of advancement opportunities; • Reduced new hiring, which may stifle ideas and energy; and • Retirement planning failure, which may lead to future lawsuits and regulatory scrutiny.

So, by helping employees to succeed, plan sponsors can help drive their own business success, and enjoy the bonus benefit of taking satisfaction of performing a social good — putting a dent in America’s looming retirement crisis.

MAY/JUNE 2018

With Expertise Comes Confidence Banks value the deep specialization offered by Crowe.

For more information, contact: Jennifer Monaghan Partner +1 502 420 4509 jennifer.monaghan@crowe.com

Audit / Tax / Advisory / Risk / Performance

Smart decisions. Lasting value.™

Visit www.crowe.com/disclosure for more information about Crowe LLP, its subsidiaries, and Crowe Global. Š 2018 Crowe LLP.

UNITED IN SERVICE

SYDNEY ROGERS

Sydney Rogers was promoted to Accountant in the Finance Department at Paducah Bank. Sydney has been with Paducah Bank for three years and was previously a relationship banker.

Commonwealth of Kentucky Awards Springfield State Bank The Commonwealth of Kentucky’s state preservation agency, the Kentucky Heritage Council, presented the “Outstanding Main Street Partner” award to the Springfield State Bank. The award was presented to the local bank on Jan. 24 in the Capitol Rotunda in Frankfort. The City of Springfield and Springfield Main Street Program submitted the award nomination for the Springfield State Bank’s dedication to the growth and development of the town’s Main Street corridor.

ALAN STEWART Central Bank promoted Alan Stewart to Physical Security Officer. He began his career at Central Bank in the Security Department in 2006.

Springfield Mayor Debbie Wakefield said, “since its incorporation over 100 years ago, Springfield State Bank has had a tremendous presence as a locally owned bank situated in the heart of downtown Springfield.”

The award nomination, prepared by the Springfield Main Street Committee, stated many reasons for the nomination. Current President and CEO Robbie Polin is a lifelong resident of Springfield and is dedicated to the development and growth of Springfield.

He has always been a champion of the Main Street Program. Polin was instrumental in purchasing the historic Meekes/Craycroft Saddler’s Shop (former Hale Realty) next to the modern bank facility on Main Street and insured that the building was renovated to maintain its historic integrity. The new addition has become a showplace with high-tech conference rooms and offices.

RICK CLEMENTS United Bank announced Rick Clements was promoted to Senior Vice President.

He has over 42 years of experience in the banking industry.

Polin said the award would not have been possible without Wakefield, Nell Haydon and the Springfield Main Street Program.

“I was very excited and (thrilled) that Springfield Mayor Debbie Wakefield and the Springfield Main Street Program nominated us to receive this state award,” Polin said. He said it was an honor for the bank.

“We were one of only two Main Street partners in the state that received this outstanding Main Street partner award,” Polin said. “It’s special to us, it means a lot to the bank and to Springfield.”

PAGE 22 | KENTUCKY BANKER

RICHARD PAGE United Bank announced the addition of Richard Page to its Heartland Region commercial lending staff in Elizabethtown. He holds a Bachelor’s Degree from the University of Louisville.

MAY/JUNE 2018

SINCE 1891

Don’t Sign That Contract Without a Second Opinion KEVIN LIPPERT

Central Bank promoted Kevin Lippert to Senior Vice President, Technology Services. He has been with Central Bank since 2000, when he began his career as a teller.

by Kelly Flynn, National Director John M. Floyd & Associates Before you buy a used car, you take it to a mechanic. When you’re under the weather, you go to a doctor. When you face a dilemma, you consult a trusted friend. We’re all accustomed to getting a second opinion for the simple reason that we don’t know what we don’t know.

So, when it comes to negotiating vendor contracts for your bank, looking for a second opinion should absolutely be part of the process. A third-party review by experts who know the ins and outs of vendor contracts will give you reliable advice, along with confirmation for a number of significant concerns, such as:

MATT MURPHY Central Bank promoted Matt Murphy to Credit Analysis Officer. He began his career at Central Bank as a teller in 2010.

SOMEONE The Murray Bank presented Julie Carson with the Employee of the Quarter award. Carson currently works as a Teller/CSR inside the Hazel Office of The Murray Bank.

• • • • • • • •

Am I getting the best deal?

Am I getting the best terms?

Am I missing out on signing bonuses?

Are there other vendors I should be looking at?

Are other financial institutions negotiating more aggressively?

Are other financial institutions getting better concessions?

Can I consolidate line items or bundle services to save money?

Am I leaving any additional incentives on the table?

When you get a second opinion, you arm yourself with more complete information and a different perspective.

Are you leaving money on the table? Get that valuable second opinion on your vendor contracts to confirm just how much you could be saving your financial institution.

For the past 38 years John M. Floyd & Associates has been considered one of the most trusted names in the industry helping community banks improve their performance and profitability.

Visit www.JMFA.com

CHRISTA WALTON FNB Bank announced Christa Walton has joined the bank as a Business Deposit Sales Representative. Christa brings with her more than 23 years of banking experience

MAY/JUNE 2018

PAGE 23 | KENTUCKY BANKER

Pleased to welcome Tom Dooley and Nick Bicking to the

Community Bank & Wealth Management Group Proven Leaders Advising Community Banks • Public trading for “private banks” • Converting customers to shareholders • Reducing the threat of unwanted outside shareholders • Enhanced stock listings • Reaching beyond your community

Put the Strength of Advice to work for you.

5050 Blazer Parkway | Suite 103 | Dublin, OH | (800) 394-9230

D.A. Davidson & Co. member SIPC | dadavidson.com | communitybankgroup.com

A community bank’s trusted ally for over a century.

First Tennessee Correspondent Services offers a range of robust financial and business solutions to support community banks. When you work with First Tennessee, you’ll get the personal attention that has made us a continuous provider of correspondent services for over 100 years.

TALK TO A RELATIONSHIP MANAGER ABOUT YOUR BANK’S NEEDS. CALL 800-453-7686 OR EMAIL CORRESPONDENTSERVICES@FTB.COM Holding Company Loans | Fed Funds | Letters of Credit | International Services Image Cash Letter | Settlement Services | Commercial Safekeeping ©2018 First Tennessee Bank National Association operating as First Tennessee Bank and Capital Bank. Member FDIC.

SINCE 1891

Medical Marijuana Up In Smoke?

by Darlia Fogarty, Compliance Alliance

long-time outspoken opponent of marijuana use. In April of 2017, Sessions wrote a letter to congressional leaders emphasizing the dangers of marijuana and requested they not approve an appropriations rider barring the use of federal funds to prevent certain states from implementing state laws permitting possession, cultivation, distribution, or use of medical marijuana. A federal district and appellate court have interpreted that rider to include a prohibition on prosecutions of both state officials and private individuals. Questions remain as to the applicability of the rider to recreational use, but the likely answer is that it does apply to both medical and recreational use. Despite Sessions’ efforts, the rider was approved and remained in effect until February 8, 2018, at which point all federal appropriations require renewal.

Though it is still early in the year, 2018 has already made its mark on banks nationwide. From laborious HMDA amendment implementation to digesting Consumer Financial Protection Bureau (CFPB) policy metamorphosis, banking professionals occupy an uneasy space to say the least. Adding smoke to the fire, U.S. Attorney General Jeff Sessions announced in early January the rescission of the so-called “Cole Memo,” which had instructed federal prosecutors nationwide not to dedicate resources to marijuana activities increasingly deemed legal under state laws. The Cole Memo had provided some breathing room for financial institutions to engage in providing services to marijuana-related businesses (MRBs), leading to nearly 400 institutions nationwide providing such services by the end of 2017.

Financial institutions are left in a precarious position regarding banking MRBs. Arguments abound on either side, The original memo and subsequent clarifications provid- with more conservative voices advocating that banks not ed space for federal prosecutors to forego comprehensive engage with MRBs in any respect, and voices of those less enforcement of the Controlled Substance Act (CSA), which risk-averse providing suggestions for banks in managing is a federal law prohibiting the production, processing, or MRB relationships. The latter voices view recent events sale of marijuana. This direction was issued based on the as merely one more stepping stone to full legalization. growing number of state laws initially permitting medicinal Regardless of which side your bank may take, there are use of the substance, and eventually provisions permitting strong arguments being made by key players that the fedthe recreational use of the drug. The memo was clear that eral government must provide a legitimate infrastructure federal resources should be dedicated to those marijuana in which to bank MRBs. Issues made worse by precluding crimes with the most severe implications, such as crimes MRBs from establishing a banking relationship include ininvolving minors, guns, or criminal enterprises. creased risk for money laundering and other criminal activity, security concerns around large cash amounts, lack of The memo indicated the former administration’s perspec- ability to track a large segment of the economy, and lack of tive on enforcement of the CSA with regard to marijuana, accurate taxation. and opened up dialogue between MRBs and potential service providers, including banking institutions. The Financial Efforts under way to alleviate the disconnect between Crimes Enforcement Network (FinCEN) issued guidance for state legalization, federal prohibition, industry need, and financial institutions in 2014 to provide a framework for banking compliance include both federal and state level dealing with MRB relationships and transactions. The in- initiatives. The Attorney Generals of nineteen states signed dustry appeared to be well on its way to achieving legiti- a letter to congressional leaders urging them to pass legismacy status, though the dragon in the room that everyone lation to permit a safe harbor for banks to provide services increasingly ignored was the continued existence of a fed- to MRBs. The U.S. Attorney from Colorado has indicated eral law prohibiting the very activities in which the MRBs that their office will continue efforts as they were before were engaged. Enter U.S. Attorney General Jeff Sessions, Sessions issued the rescission, and California and MasCONTINUED ON THE NEXT PAGE

MAY/JUNE 2018

PAGE 27 | KENTUCKY BANKER

UNITED IN SERVICE

continued: Medical Marijuana Up In Smoke? sachusetts have proposed laws in the last few weeks as a result of the rescission. California’s proposal focuses on permitting banks to provide services to MRBs, while Massachusetts takes a more direct aim at the rescission by proposing to prohibit local and state law enforcement from assisting federal prosecutorial efforts in marijuana-related cases.

While an industry representing $6.7 billion in sales at the end of 2016 and projected to reach $20 billion by 2021 is nothing to sneeze at, banks must mind the consequences of engaging with MRBs. Should the federal government proceed with efforts to enforce the CSA, repercussions could include asset forfeiture, criminal aiding and abetting, and racketeering charges, not to mention violations of the Bank Secrecy Act and regulations pertaining to anti-money laundering. Indeed, Sessions mentions these specific laws by name in his announcement, thus making it clear that the Department of Justice may scrutinize financial in-

stitutions choosing to bank MRBs. Investors could also be subject to prosecution or civil liability.

Banks with a less conservative approach and those already tied up in the industry can mitigate risk through use of technology platforms to track and monitor accounts, comprehensive and real time cash transaction monitoring, use of multiple sources for data comparison, ensuring complete transparency and documentation, performing regular and thorough risk assessments of policies and procedures for banking MRBs, and working with customers and colleagues to remain proactive in employing best practices and ensuring communication. Finally, refer to the FinCEN guidance on banking MRBs and ensure the timely and accurate filing of reports in accordance with that guidance.

CLIENTS ASK FOR APARTMENT LENDING?

Partner with a Leading Multifamily Lender.

•

Collaborate with a Non-Bank Lender

•

Expand Your Product Offering to Existing/New Clients

•

Say “Yes” to No Single Borrower Loan Limits

•

Earn More Per Transaction & Additional Fee Income

•

Save your Capital Allocation & Leave Room on Your Balance Sheet

TO LEARN MORE:

MISTY READ | 312-405-4244 misty.read@huntcompanies.com PAGE 28 | KENTUCKY BANKER

huntmortgagegroup.com MAY/JUNE 2018

SINCE 1891

Even with Amazon, a Single Product is Not the Holy Grail...

Achim Griesel, President, Haberfeld Holdings Every week financial service publications print new articles or commission studies connecting Amazon, Uber, or other companies that have forced dramatic changes in other industries, to banking. Here’s a sampling: • American Banker, in its article from March 5, sees it as a positive for community-based financial institutions (FIs) that Amazon may look to team up with one of the mega banks.

• A Bain study from March 6 states that in five years Amazon could amass 70 million checking customers in the U.S. The same study puts this in context noting this is about the same number of customers that Wells Fargo currently has.

• A variety of other publications talk about what Amazon would do if they entered the banking space and other research and publications add the name Amazon when it comes to some of their research on customer wants and desires.

Commissioned studies may be biased based on who commissioned them, but both, these studies and articles written about the topic, ignore a few facts. The Bain study above states Amazon could have up to 70 million checking accounts if they truly were entering the space. It also states by teaming up with one mega bank, the other large banks will be the ones that will feel the impact the most.

On the positive side, the impact on community based financial institutions may be less, but on the negative side there would be little community financial institutions can do, outside of growing their own franchises. If and how Amazon would enter the checking account space is unknown, but related to community banking, there are a few things to consider when making the connection with Amazon or Uber. When Amazon or Uber revolutionized their respective industries, they changed the delivery channel, not the core of the product. Uber still takes you from place A to place B, and the majority of products Amazon sells are not newly invented. Amazon and Uber both found a better way to deliver to their audience through superior technology. If Amazon would follow the same model, executing basic banking needs through Alexa sounds like an intriguing approach.

When it comes to the actual core product, one of the recent articles discusses whether customers would be more interested in free checking account or a fee-based value added checking product, if Amazon was to offer it. The article concludes that a slightly larger portion of consumers would prefer a fee-based product with additional value-add-ons over a free product.

MAY/JUNE 2018

1

First, if Amazon was entering the checking account space, they

would not do so with a product that traditional financial institutions have offered for many years. It would make more sense to add value out of their current offerings. Offers like Amazon Merchant Rewards, or Amazon Prime Checking come to mind immediately.

2

Secondly, this research approach has a disconnect as it ties the

world’s largest online retailer to the evaluation of product offerings at community-based financial institutions. The conclusions drawn by asking an audience the question of what they would do if Amazon was offering certain products are not the same conclusions one would draw when taking the name Amazon out of the equation.

Lastly, survey results can be questionable. The way questions are worded or the above mentioned inclusion of buzz names like Amazon, will dramatically impact the outcome of a survey. While surveys may provide some general insights, actual data and consumer behaviors will always trump survey results. For example, fee-based accounts – with or without value-add-ons – will always have higher attrition. This is especially true when a financial institution pushes consumers to certain account types. Data from millions of actual accounts at over 150 community-based financial institutions shows the addition of value added and fee-based products increases fee income in the short-term, but it is not the recipe for long term growth.

It is impossible to have a long term, strategic impact if growth is limited but attrition is higher.

All of that said, product should not be an either/or decision. If a third of your new customers or members want a free product, and another 25% prefer an interest rate, rewards-driven, or value added product, it doesn’t make sense to limit your financial institution’s opportunities by offering only one of these three products. To achieve strategic growth your organization must develop a customer-centric sales and service culture. If your product does not appeal to two thirds of the consumers in your markets, that’s not possible. Checking accounts that position your financial institution for organic growth have to appeal to a large segment of potential consumers.

Again, looking at actual consumer behavior, it shows implementation of a checking product, no matter if free, value-added, or rewards-based, does not drive growth. Strategic long-term growth requires good product mix paired with extraordinary execution from your team as well as the ability of marketing to capitalize on brand and product advantages by driving traffic to your online and branch channels.

PAGE 29 | KENTUCKY BANKER

Lee Burrows www.BanksStreetPartners.com Matt Kennedy Direct: 404-848-8480

Main: 404-848-1571

Direct: 704-228-0557

SERVING BANKS, FINANCIAL TECHNOLOGY AND FINANCIAL SERVICES COMPANIES ACROSS THE GREATER SOUTH

CAPITAL RAISING | MERGER & ACQUISITION ADVISORY | STOCK VALUATIONS | STRATEGIC PLANNING | MUTUALTO-STOCK CONVERSIONS AND MHC REORGANIZATIONS

SINCE 1891

ASHLEY CONN

Community Trust Bank announced Ashley Conn has been promoted to the position of Residential Lending Manager, Senior Vice President.

Congress is Rolling Back Regulations.

Can You Roll Back on Risk Management?

by Michael Berman, Founder & CEO, Ncontracts

BRIDGET L. EVANS

Community Trust Bank announced that Bridget L. Evans has been promoted to the position of Branch Manager, Assistant Vice President.

Community banks across the country are rejoicing at the passage of the Economic Growth, Regulatory Relief and Consumer Protection Act. This much-awaited law rolls back many provisions of the Dodd-Frank Act, reducing regulatory burden at some financial institutions.

Now that some community banks can roll back compliance efforts in a few areas, many are wondering if they can also do less when it comes to risk management.

Compliance vs. Risk Management

Sorry, but the answer is no.

Compliance and risk management are separate activities.

SHAWN FULLER Community Trust Bank announced that Shawn Fuller has been promoted to the position of Branch Manager, Assistant Vice President.

Compliance is having policies, procedures, and programs in place to ensure an

institution doesn’t knowingly or accidentally violate a law, regulation, rule, or an institution’s own internal policies.

Compliance activities are influenced by what Congress does or doesn’t do. When a new law is passed, whether it increases or decreases regulation, it impacts compliance. At first, it creates more work as the institution must adjust policies and procedures and train staff to adopt the new rule. Once implemented, deregulation should result in less compliance burden.

JEREMY CRON Kentucky Bank welcomes Jeremy Cron as a Vice President, Commercial Lender. Cron will be working with customers throughout Central Kentucky.

For instance, Congress’s new law will provide qualified mortgage status for many financial institutions and expand eligibility of the 18-month exam cycle to more community banks. That means less paperwork and fewer exams for some institutions, which directly impacts compliance. continued on page 39

MAY/JUNE 2018

PAGE 31 | KENTUCKY BANKER

Endorsed by

If you need non-interest income, WE CAN HELP.

SOLUTIONS FOR YOUR CUSTOMERS. PROFITS FOR YOUR BANK.

William J Lavender Senior Business Development Officer

(210) 288-1981

jay.lavender@invpro.com www.invpro.com

NO BANK GUARANTEE | NOT A DEPOSIT | NOT FDIC INSURED | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE All Securities and Investment Advisory Services offered through Investment Professionals, Inc. (IPI), a Broker/ Dealer, member FINRA/SIPC & a Registered Investment Advisor.

SINCE 1891

The Banking Industry Must Turn Employees Into Fans JORDIN TOLLE

Jordin Tolle has been named as the new Banking Center Manager at First Security Bank. She will be managing both of the Lexington Banking Centers.

BRANDI KISER

Community Trust Bank announced that Brandi Kiser has been promoted to the position of Branch Manager, Assistant Vice President.

MATT WILLIS Matt Willis has been named the new Banking Center Manager at First Security Bank. He will be managing the Downtown Branch in Owensboro located at 313 Frederica Street.

by Howard M. Headlee, President & CEO Utah Bankers Association Bank employees are the foundation upon which the success of the banking industry is built. From customer satisfaction and loyalty, to earnings, public perception and even public policy, employees play a critical role, yet we spend little time or energy learning about or influencing their perceptions of the industry and how they view their relationship to it.

Who are our bank employees? How is that demographic changing? Do they see themselves as bankers? What are their perceptions of the industry? What troubles them most about the industry? Are they proud of what their bank does? Are they proud of the role the banking industry plays in their community? Do they know what the banking industry is doing? Do they speak up to defend the industry? Do they have enough information/resources to feel comfortable speaking out? What would it take to get them to write a letter to an elected leader?

Most banks successfully build employee engagement by focusing internally on issues that drive loyalty and enthusiasm for their brand. Nonetheless, the sagging image of the banking industry weighs heavily on the minds of most bank employees and therefore erodes the industry’s foundation for success. The public image of the industry is a weight our employees carry every day, to church, to school, to the gym, to parties, and other community events.

Even banks with strong cultures of employee enthusiasm have to work to offset the decline in the image of the industry. By engaging in a campaign to lift the cloud that hangs over banking in the eyes of our employees and restore their sense of pride in the role of the banking industry, we are investing in the foundation of industry’s success.

Industry-Wide Employee Engagement Initiative STEP 1 Research: We need to understand how bank employees perceive the industry, how they see themselves in relation to the industry, what they perceive to be the key issues driving industry image, and what messages best resonate with them. This would include periodic surveys and segmentation analysis.

MIKE KEMPH Town & Country Bank and Trust Co. is pleased to announce the hiring of Mike Kempf, as a new VP and Commercial Relationship Manager.

MAY/JUNE 2018

STEP 2 Develop a communication plan that will effectively educate, motivate and inspire various employee segments. This plan will have to be creative, ongoing and targeted.

STEP 3 Execute the plan, measure the success, and make adjustments to the plan.

PAGE 33 | KENTUCKY BANKER

SINCE 1891

Enhance your Digital Lending Strategy Credibility Capital is a digital platform sourcing, originating and servicing whole loans for banks. Started in 2013, the company sources its borrowers through proprietary channels, including a multi-­year exclusive sourcing partnership with Dun & Bradstreet.

SAM MAHAN

FNB Bank announced that Sam Mahan was recently named Senior Operations Officer. Mahan has 15 years of banking experience

Credibility Capital provides two lending service partnership opportunities: 1. Capital Deployment – Commercial Loans • Credibility Capital’s technology platform originates A-­paper quality small business loans • Banks own whole loans (not fractional ownership) • Loans range from $10k to $350k rates starting at 8% • 12/24/36-­month fully-­amortizing monthly-­pay loans • Transparent, plain-­vanilla product offering • Exclusive partnerships with Dun & Bradstreet and others to source creditworthy borrowers across 46 U.S. States • Robust API sends Dun & Bradstreet small business data directly to Credibility Capital • Enable banks to improve loan-­to-­deposit ratio and/or balance C&I-­to-­CRE exposure 2. White-­label Opportunity • Credibility Capital’s technology platform developed using Google coding language • Banks can white-­label Credibility Capital’s application and / or loan origination platform to service its own customers • Banks can utilize Credibility Capital’s referral network for declined applicants providing additional products more suitable to its customers • No need to integrate technology with core system

Tim Richardson

Tim Richardson has been named VP Commercial Banking Officer at First Security Bank. He will be working with small business and commercial clients.

TREVOR FIELDS Town & Country Bank and Trust Co. announced the promotion of Trevor Fields to Officer. Fields is a Springfield native and began his career with the bank in 2016 as a Credit Analyst.

For more info: www.credibilitycapital.com ZACH HOSMAN Zach Hosman has been promoted to Director of Mortgage Services at Paducah Bank. Hosman has been with Paducah Bank for three years.

PAGE 36 | KENTUCKY BANKER

MAY/JUNE 2018

SINCE 1891

Congress Passes Banking Legislation S.2155 to Reduce Regulatory Burden

By Julie Stackhouse, Executive Vice President Federal Reserve Bank of St. Louis

The law also provides some regulatory relief for community banks.

Notable provisions include:

Last month, President Donald Trump signed into law “The Economic Growth, Regulatory Relief and Consumer Protection Act.” Billed as significant regulatory relief for banks by some—and not enough regulatory relief by others—the new law calibrates a massive piece of banking legislation enacted after the 2007-08 financial crisis. That law is the Dodd-Frank Act (the Act).

A Potential Simplified Capital Standard The simplified standard will be available only to community banks with assets of less than $10 billion that also meet any other criteria established by regulators. The capital standard will be in the form of a leverage ratio and will be set between 8 and 10 percent.

The Reason for Dodd-Frank • Improving the resiliency of the financial system • Reducing the likelihood that the federal government (and thus taxpayers) would someday again be in the position of rescuing faltering large financial institutions Among the many provisions in the Act are requirements for enhanced safety and standards for large banking organizations. In short, these enhanced standards raise the bar for banking firms with more than $50 billion in assets, creating strong incentives to strengthen capital and liquidity, among many things.

Legislators, regulators, bankers and others have gained experience with the legislation, its costs and benefits in the near decade since the Act’s enactment. Therefore, it is not surprising that Congress decided recently to modify provisions of the Act where the costs seemingly outweighed the social benefits.

Relief for Banks Big and Small Most news coverage of the law has focused on the raising of the $50 billion threshold for many enhanced standards to $250 billion. For institutions with assets of $50 billion to $100 billion, exemption from these standards is immediate. Institutions with assets of more than $100 billion will be exempt from most standards in 18 months; however, the Federal Reserve will continue to conduct capital stress tests of these institutions on a periodic basis.

Volcker Rule Exemption This would apply to institutions with less than $10 billion in total consolidated assets and total trading assets and liabilities of less than 5 percent of total consolidated assets. The purpose of the Volcker Rule is to eliminate unsafe “proprietary trading,” where a firm trades for simple corporate profit opportunities and not at the instruction of customers or to reduce other firm risks. The Volcker Rule has proven exceptionally difficult to implement, and small banks will no longer be concerned about how it might affect their normal banking operations.

Reduced Reporting There is also a reduction in the number of items reported on first- and third-quarter balance sheets/income statements for qualifying banks with consolidated assets of less than $5 billion. This provision is intended to reduce lower-value paperwork.

Reduced Cost of Mortgage Lending Small banks gain more flexibility in making mortgages and filing reports on them. For example, banks that originate a relatively small number of mortgages will no longer be required to submit expanded Home Mortgage Disclosure Act data.

A Delicate Balancing Act The Dodd-Frank Act was an important piece of legislation that has served to improve the safety of the financial system over the past eight years. But safety must be balanced with costs, and the provisions of the new legislation attempt to achieve this balance.

GOLF OUTING AUGUST 6, 2018 BIG SPRING GOLF CLUB / LOUISVILLE

Contact Tammy Nichols to Register / tnichols@kybanks.com Visit www.kybanks.com for more information

MAY/JUNE 2018

Help Raise Money For Your PAC!

PAGE 37 | KENTUCKY BANKER

Resolution First Federal Savings Bank of Kentucky in Honor of

William M. Johnson WHEREAS, William M. Johnson faithfully served on the Board of Directors of First Federal Savings Bank for 34 years; WHEREAS, Mr. Johnson practiced law, mostly in Frankfort, Kentucky, for 58 years; WHEREAS, Mr. Johnson also served for many years as legal counsel for the bank; WHEREAS, Mr. Johnson held many leadership roles within the legal profession including serving as Franklin County Master Commissioner, Franklin Circuit Court Friend of the Court, and a Trustee of the Kentucky Bar Center; WHEREAS, Mr. Johnson also held many charitable, civic, and leadership roles in the community with many organizations including, among others, the Frankfort YMCA and the Frankfort Cemetery; WHEREAS, the Board of Directors, officers, and employees of First Federal appreciate Mr. Johnson’s service to First Federal and our community; WHEREAS, Mr. Johnson passed away on March 12, 2018; NOW, THEREFORE, BE IT RESOLVED that First Federal Savings Bank, through its Board of Directors, does hereby acknowledge our gratitude, honor, and respect for Mr. Johnson and his long service to our bank, our community, and our industry.

BE IT FURTHER RESOLVED that as a tribute to Mr. Johnson, this resolution be made a part of the permanent and official minutes of the Bank; that a copy be furnished to his family, and that a copy be furnished to the Kentucky Bankers Association magazine for publication.

Adopted this 29th day of March, 2018 at the regular Board Meeting of First Federal Savings Bank.

SINCE 1891

continued from page 31

Congress is Rolling Back Regulations. Can You Roll Back on Risk Management?

Risk Management is the process of identifying, assess- The law doesn’t reduce the need for risk management, but ing, measuring, monitoring, and controlling the many risks an institution faces on a daily basis. These include credit risk, concentration risk, operational risk, compliance risk, transaction risk, cyber risk, IT risk, and reputation risk, among others. Risk management is an essential and ongoing process that constantly seeks to evaluate potential threats and opportunities so that the institution is prepared to best handle them.

it does impact a financial institution’s risk assessments. For example, compliance risk, or the risk that an institution won’t meet its compliance responsibilities, should be reassessed in light of potentially reduced burden. It may also impact credit risk.

Thus, risk management is a tool that helps an institution understand the impact of this and other new laws and developments in a way that goes far deeper than the compliance department. It helps institutions know when new While regulators provide guidance and best practices for controls are needed and when outdated controls can be risk management, it’s not something any smart financial eliminated. It helps it understand its strengths and weakinstitution would abandon, even if no one was looking. nesses and respond to changing conditions. It reduces the Monitoring risk is a natural part of running any business. likelihood of unwanted outcomes.

Ignoring risk is equivalent to stumbling around in the dark.

There is no way of knowing what hazards and rewards lay When it comes to risk management, there is no rolling in wait until you bump into them. back. We can only roll forward.

Congratulations Brad Salyer Certified by the American Board of Certification in Creditors’ Rights Known for banking and finance law.

Experienced in much more.

BANKING & FINANCE LAW COMMERCIAL LITIGATION EQUINE LAW GOVERNMENT LAW REAL ESTATE LAW

BOWLING GREEN

MAY/JUNE 2018

LEXINGTON

LOUISVILLE

Brad Salyer Brad is one of only two ABC board certified lawyers in Creditors’ Rights in Kentucky.

NEW ALBANY

MorganandPottinger.com PAGE 39 | KENTUCKY BANKER

GROWING? EXPANDING? What is the most important element of success?

• Geography • Branding • Marketing Yes, they are all important, but the most important ingredient is TALENT. Do you have the right talent at your company to be successful and do the best job possible?

If not, see us. We specialize in locating and placing the best talent available for your positions.

Why the Newburgh Group?

• KY Bankers Association’s only Endorsed Executive Recruiting Firm • KY Bankers Association members receive a discounted fee • Owned by two former KY Bankers with 47 years in banking • Recruiting for bankers for 18 years

• Associated with Management Recruiters International, the largest recruiting firm of its kind in the world.

• President’s Club Winner 14 times • Pacesetter Award 4 times • We partner with you to help you succeed.

Contact us today for a free consultative review of what we offer.

Brandon Cooper

M. Lynn Cooper

President and Partner 812.858.0807 BCooper@NewburghGroup.com www.NewburghGroup.com

Chairman and Founder 812-858-0810 LCooper@NewburghGroup.com