CHAIRMAN’S CORNER TIMMY BARNES
Kentucky Banker Magazine November & December, Two Thousand Seventeen
by Mr. Tim Barnes, KBA Chairman
Yes, Kentucky, There is a Future in Community Bank Dear Editor: I am 51 years old. Some of my banking friends say there is no future in Community Banking. Mr. Cassady says, ‘If you see it in KENTUCKY BANKER it’s so.’ Please tell me the truth; is there a future in Community Banking? TIMMY BARNES 303 CLOVERBROOK LANE TIMMY, your friends are wrong. They have been affected by the overabundance of regulations in a regulated age. They do not believe except what they hear from the media, Wall Street bankers or Elizabeth Warren. They think that nothing can be which is not spoken by the naysayers listed above. All minds, TIMMY, whether they be Democrats, Republicans or Independents, are little. In this great banking universe of ours, man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole truth and knowledge.
Alas! how dreary would Kentucky be if there were no Community Banks Yes, TIMMY, there is a future in Community Banking. It exists as certainly as love and generosity and devotion that Community Bankers display in their individual markets. Alas! how dreary would Kentucky be if there were no Community Banks. It would be as dreary as if there were no TIMMYS. There would be no scoreboards at the Little League field, no local arts program, no volunteers to man the cotton candy booth or run the chamber of commerce. Who would make the small business loans or help the widow out by making a small loan to keep the electric on during a cold winter snap. The Community Banker would!
NOV/DEC 2017
HOMETOWN BANK, Feels Like Home
Community Banking lives and lives forever
Not believe in Community Banking! You might as well not believe in small towns, car shows, Friday nights under the lights, apple pie or Santa Claus. You may see signs at banks changing names, loan officers retiring, tellers coming and going. What does that prove? Nobody sees the Community Banker’s spirit. No one sees the Community Banker picking up trash in the community and challenging their competitors to do the same. No one sees the compassion a Community Banker feels when one of their customers has been harmed by the bad guy or a Nigerian Prince. How do you break the commitment of a Community Banker that has served as the Boy Scout leader or played drums in the church choir for more than twenty years? Few can conceive or imagine all that Community Bankers do throughout the Commonwealth. You can force a Community Banker to turn down a hard working customer because of some far reaching regulation that produced unattended consequences. Make Community Bankers check the same box seven times and compare Main Street bankers to Wall Street bankers if you need, but you cannot break the will of Community Banking. Open the bank’s vault and see what is inside. Sure it has dollars, coins and maybe even a few suckers or coloring books that they give away to young kids, but what you do not see is the heart of the Community Banker. Ah, KENTUCKY, few things in this world are as real as a Community Banker. No Community Banker? Think again and Thank God. Community Banking lives and lives forever. A thousand years from now, Timmy nay, ten times ten thousand years from now, Community Banking will remain the heart of America. * Loosely adapted from the “Is There a Santa Claus” unsigned editorial from September 21, 1897 in New York’s Sun newspaper. http://www.newseum.org/exhibits/online/yes-virginia/
KENTUCKY BANKER | PAGE 3
KENTUCKY BANKER MAGAZINE Published bi-monthly by the Kentucky Bankers Association
YOUR ASSOCIATION OUR COMMONWEALTH
NOV/DEC 2017 IN THIS ISSUE
OMNI GROVE PARK INN, ASHEVILLE, NC - SITE OF THE 2017 ANNUAL CONVENTION 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
Chairman’s Corner.............. 3 Staff Directory..................... 6 Straight Talk........................ 7 HOPE of Kentucky............... ..9 Stites & Harbison................10 Teller On Demand............... 12 Bob Jones Retires............... 14 Credibility Capital............... 16 Social Media Top 5............. 20 Banker’s Hot Rod................ 29 2018 Education Highlights.. 34 Government Relations....... 40 Stothers Turns 105............. 45 Student-Run Bank.............. 47
Representing Group 7 Mr. Steve Tolliver, Market President The Monticello Banking Company
ON THE COVER
The Christmas season is a time of hope where wishes sometime come true. Regulatory reform is at the top of the KBA’s wish list for Kentucky’s banks. Hear us Santa?
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
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
ADVERTISE
jfischer@kybanks.com
QUESTIONS
jfischer@kybanks.com www.kybanks.com
2017 KBA CONVENTION SCRAPBOOK More convention pictures on page 27 >>>
More convention pictures on page 27 >>>
2017 KBA CONVENTION SCRAPBOOK
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 Convention 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
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 Angie White Business Development awhite@kybanks.com
STRAIGHT TALK Ballard W. Cassady, Jr. | President & CEO
The Lessons of History
bcassady@kybanks.com
What Scotland’s Painful Past Teaches Us A recent trip to Scotland has had me thinking a lot about the ways those folks seem a little smarter than us. Scotland is a place of breathtaking beauty but also a place with a long and bloody history that the Scots actually know and use – even the painful history. As usual, my wife Marcy had lined up well-educated private guides everywhere we went, from Edinburgh to the Orkney Islands. Her focus is always history, but I was just as interested in current affairs. So our guides got peppered with questions from all over the board. We talked about socialized medicine, pension programs, retirement, job opportunities for the young, homelessness, etc. Their perspectives were rooted in their experience of a blend of socialism and capitalism. For the most part, the people we met seemed exceptionally happy, unlike Greece (100% Socialist) a few years ago where everyone was trying to find a way out. But I may have struck a nerve once with a question about medical care in the U.K. Instead of answering the question, the guide – obviously up on international news – pivoted to ask about how Americans got so fixated on statues. As I paused, wondering where to start, she said something like “every known world civilization was built on the backs of enslaved people of all colors, religions and origins.” Her implied question was clear: what makes America’s part of that history front page news in 2017?
knowledging that, in our very short history, we’ve saved the world twice from tyranny, that our innovation in health care and technology is a tide that lifts all boats. But as a people, we’re still young. And the young can lack some serious perspective. So I was ready to give history (and the desire to control history by selectively erasing bits of it) a break. But our Scottish guide was just getting warmed up – and she had plenty of material. Throughout Scotland, you continually encounter monuments and historical sites. Many commemorate the Jacobite rebellion of 1745, the last uprising in support of Scottish independence under its own kings. It ended with a British victory on Culloden Moor and the wholesale slaughter of many Scottish clans, followed by an era in which the Scots were subjected to hateful political persecution. Both the Brits and the Scots have been content to leave in place all the statues and monuments to that bitter episode in their common history. A year ago, that would have been unremarkable. But given the headlines just before we left for Scotland, it was now something we talked about with several of our Scottish guides.
For these Scots we came to know fairly well, it was as simple as it used to be for us. The telling of history can be manipulated here and there, but in its broad outlines, it is what it is. All of it has value, reminding us of who we were for a better perspective on who we I said something flippant, like “We’re speare. Showing us cause and effect. Giving us both models cial!” She was not amused. and cautionary tales. The Scots’ value their Jacobite monA few days later, we spent an afternoon at Skara Brae, a uments as reminders of not only a great defeat but of a village over 5000 years old. Americans, whose country is brave heritage, with lessons too important to be forgotten. all of 240 years old, tend to be a little more sobered by that than the locals. Our conversation turned to history again, The reminders of history that American activists are fightand how it’s handled. This time she was amused, saying, ing to remove from our public square offer lessons just as important. How ironic if it proves true that ignoring the “You can’t ‘handle’ history… it just is.” lessons of that history increases the risk of repeating it. She – actually, all of the people we came to know well – was very respectful of the U.S. They had no trouble ac-
“You can’t ‘handle’ history, it just is.”
NOV/DEC 2017
KENTUCKY BANKER | PAGE 7
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 ©2017 First Tennessee Bank National Association. Member FDIC.
Building a Brighter Future What is HOPE of Kentucky? HOPE of Kentucky is a Consortium of banks formed to pool funds in to make loans on affordable housing projects. What is the mission of HOPE of Kentucky? Our mission is to help build a brighter future for communities in Kentucky, and surrounding regions, by providing safe, well-built, affordable housing for workforce employees and seniors. What does HOPE of Kentucky provide banks? The HOPE of Kentucky Consortium limits credit and interest rate risks for banks by lending to multiple building projects. The HOPE of Kentucky Consortium’s approach gives banks the opportunity to participate in the highly technical world of the affordable housing industry. What do you mean by HOPE? We wanted to use a word that demonstrated our mission, and “hope” is the best word that encapsulates what we do. Why is affordable housing so important? HOPE of Kentucky believes everyone deserves the right to have safe, decent, affordable housing. With the current state of housing and economic development many Americans can no longer afford to own their own home, or rent market rate rental units. How can a bank become a member of HOPE of Kentucky? A bank can join the HOPE of Kentucky Consortium by completing a simple application and paying a one-time fee based on bank asset size. We also ask banks to pledge the total dollars they are willing to commit to lend over the next three-year time frame. This pledge allows us to know how many projects we can realistically fund. An interested bank can contact HOPE of Kentucky to obtain a current listing of members. Who leads HOPE of Kentucky? HOPE of Kentucky is being led by Executive Director Billie Wade. Mr. Wade is a CPA and former Kentucky banker who has 20-plus years of experience lending to, and investing in, affordable housing projects. Mr. Wade knows most all the major players in the industry: developers, syndicators, consultants, nonprofit groups; these parties are active in developing affordable housing. Mr. Wade can introduce developers to officials at HUD, FHLB of Cincinnati, Kentucky Housing Corporation, City Housing officials, all of whom provide funding sources.
CONTACT Billie Wade, Hope of Kentucky Executive Director DIRECT: 502-736-1285 CELL: 502-321-5000 EMAIL: bwade@hopeofkentucky.com
www.hopeofkentucky.com
KENTUCKY BANKERS ASSOCIATION
Banks, Loan Software, and UPL
by Richard A. Vance, Stites & Harbison PLLC
Only a few decades ago, most loans were documented by bank clerks typing numbers onto legal forms, without the guidance of lawyers. For more complicated, commercial deals, banks hired lawyers to draft loan documents, sometimes for thousands of dollars. For such deals, borrowers often hired their own lawyers to review the documents, explain the terms and negotiate language. In the deals without lawyers, issues of the Unauthorized Practice of Law (“UPL”) were sometimes raised. UPL is the Kentucky Supreme Court rule that prohibits non-lawyers from giving legal advice. The Kentucky General Assembly has also made it a criminal offense. The Kentucky Supreme Court has said that the purpose of the rule is not to give lawyers a monopoly, but to protect the public from erroneous legal advice or the consequences of transactions constructed by untrained individuals.
With the rise of computers and software of ever-increasing sophistication, many banks and financial institutions have turned to loan document preparation software. These programs save time and money by allowing non-attorney employees to use software to create forms to assemble standard documents. Although more sophisticated, this software is the functional equivalent of the typist filling in the blanks on a sheaf of forms – a ministerial practice approved by the Kentucky Supreme Court in Federal Intermediate Credit Bank v. Kentucky Bar Association, 540 S.W.2d 14 (Ky. 1976). The landmark case on the subject is Countrywide Home Loans, Inc., et al. v. Kentucky Bar Association, 113 S.W.3d 105 (Ky. 2003), where the Supreme Court considered whether the conduct of residential real estate closings constituted the Unauthorized Practice of Law as determined by the Bar Association. In that case, a group of title companies challenged the Kentucky Bar Association’s opinion in court. After weeks of fact-finding and depositions, an unusual occurrence in the Supreme Court, Justice James PAGE 10 | KENTUCKY BANKER
Keller issued the Court’s opinion. He reasoned that an activity is the practice of law if “(1) it requires legal knowledge or legal advice; (2) involves representation, counsel or advocacy on behalf of another person; and (3) involves the rights, duties, obligations, liabilities, or business relations of that other party.” In the conduct of a real estate closing in Kentucky, the settlement agent is invariably the agent of the lender, and whether a lawyer or not, not in a position to give legal advice to the borrower. The Court recognized that most legal issues have been addressed before the closing, and that if legal questions arise, the closing should be halted to allow the borrower to seek legal advice from a lawyer that represents him or her (and not the bank!). The same rationale applies in many bank commercial loan closings. The loan documents are generated by proprietary software for the benefit of the bank. The closing is typically “point and sign” as it was for the real estate closings in the Countrywide case. As such, it is “ministerial” in nature, and does not involve representation, counsel or advocacy on behalf of another person. Although the use of document assembly software generally does not violate UPL rules, there are three important caveats. The most important is that a settlement agent or bank officer may not give the customer “legal advice.” KBA v. Brooks, 325 S.W.3d 283 (Ky. 2010). Rather, the only advice that can be given is “if this question is important to you, we can stop this closing so you can consult your own lawyer.” It is not a substitute to have the bank’s lawyer NOV/DEC 2017
KENTUCKY BANKERS ASSOCIATION continued from page 10
give legal advice – that lawyer is ethically bound to zealously advance the bank’s interest, not the borrower’s.
function of legal counsel and an opportunity to strengthen the lending documents of the bank. Some borrowers in default have made lender liability arA second important limitation is that it takes a lawyer to guments that banks are engaged in UPL by using legal represent a client in court proceedings, including probate, software. Such arguments are plainly incorrect; so long divorce, and bankruptcy actions. as no legal advice is given, the documents are created for the bank’s benefit (not the borrower’s), and lawyers have Third, in Kentucky, certain instruments must be “prepared” signed off on the certain documents requiring a preparer’s by a lawyer. The courts have recognized in previous cas- statement. es that real estate title opinions can only be rendered by lawyers, and that deeds and mortgages must be prepared To guard against such claims, banks should consider reby lawyers. Howton v. Morrow, 106 S.W.2d 81 (Ky. 1937). quiring the customer to sign a disclosure acknowledging While lay people may fill out forms, a lawyer must sign that the bank cannot give legal advice, and that the cusoff on the legal efficacy of these instruments. Federal In- tomer has a right to consult with its own counsel. termediate Credit Bank v. Kentucky Bar Association, 540 S.W.2d 14 (Ky. 1976) Document preparation software offers financial institutions and their customers significant savings of both time Bank lawyers can help make the software more effective. and money. As long as they are utilized in a way that does Many software packages have administrative and config- not run afoul of Kentucky’s unauthorized practice of law uration “choices” that can effect a variety of policy deter- authority, there is no reason why both lenders and borminations of the bank. Reviewing this language and the rowers should not enjoy the benefits of this increased efchoices made and controlled by the bank is an important ficiency.
PRACTICAL SOLUTIONS FOR CECL IMPLEMENTATION McM has the experience and knowledge necessary to assist banks in preparedness and implementation of the new current expected credit loss (cecl) model. McM’s team members’ backgrounds culminate to create a practical approach to overcome the expected challenges in meeting fasb and regulatory expectations. We have your bank’s best interests in mind. Henry Hawkins, CPA partner henry.hawkins@mcmcpa.com
Debbie Smith, CPA partner debbie.smith@mcmcpa.com
Sam LaFollette, CTP principal sam.lafollette@mcmcpa.com
Lee Groza, CPA partner lee.groza@mcmcpa.com
80
th
ranked
firM in the
U.S.
75
+
financial institution clients
www.mcmcpa.com | 888.587.1719
25
+
consultants specializing in hr, it, succession planning and business operations solutions
100
50
+
different certifications
+
combined years of financial institution experience among partners
Expert guidance, beyond the bottom line.
KENTUCKY BANKERS ASSOCIATION
Farmers National Bank Introduces Teller on Demand
BANK SHOTS! BANK SHOTS! highlight you, the members of the KBA, and the banks you work for. Formerly Bankers on the Move and Bank Happenings, BANK SHOTS! is where we publish your successes and acknowledge your milestones. Email your BANK SHOTS! jfischer@kybanks.com
Farmers National Bank has introduced Teller on Demand, an innovative technology that allows customers to conduct machine-based transactions with the assistance of a live bank representative. Teller on Demand specialists, who speak and assist customers on a video screen, can perform most of the same transactions and service customers receive inbranch through an Interactive Teller Machine. Customers can speak to a Danville-based Farmers National Bank representative by simply touching the screen. It is open during extended hours for added convenience: 8 a.m.-6 p.m. Monday-Friday, and 9 a.m.-2 p.m. on Saturdays. Teller on Demand is available at the drive-thru of the bank’s new Garland Drive location at the corner of the South Danville Bypass and Hustonville Road, as well as at the Greenleaf Shopping Center. Teller on Demand can also be used for ATM transactions as well, 24 hours a day. Teller on Demand carries on Farmers National Bank’s tradition of blending technology with personal service. Farmers National Bank opened Danville’s first drive through facility in 1959, and offered Danville’s first ATM in 1978. “We are excited about the new technologies and services we have introduced this year and those we have planned for the future,” says Marty Gibson, President of Farmers National Bank. “Each of these investments were based on customer and community needs and feedback. Solutions like Teller on Demand allows us to offer in-demand products and services, to supplement our in-branch service from knowledgeable, caring people.” PAGE 12 | KENTUCKY BANKER
TALISA LAY Talisa Lay, Assistant VP, has been named the Branch Manager for the new Farmers National Bank Garland Drive banking center. A 14-year team member at Farmers National Bank, Lay will lead the newly opened branch located at the corner of the South Danville Bypass and Hustonville Road. The Garland Drive location will offer an innovative in-branch design to provide customers with a personal, one-on-one experience. Garland Drive will also have extended drive-thru hours of operation (8 a.m.-6 p.m. M-F; and 9 a.m.2 p.m. on Saturdays) through Teller on Demand, the first technology of its kind in Danville. Through an ATM-like machine, customers can speak to a live Farmers National Bank teller through video technology. Lay, who attended the KBA’s General Banking School, was formerly the Branch Manager at the Farmers National Bank’s Burgin location. She has served as a volunteer for the Heart of Kentucky United Way and Big Brothers/Big Sisters of the Bluegrass.
FACEBOOK #kbabankshots
BANK SHOTS! #kbabankshots
JT BAKER First Kentucky Bank announced John Thomas (JT) Baker has accepted the position of Branch Manager for the Benton Office. In addition to his current role as Consumer Lender, he will be supervising daily operations for the branch and serving customers with all of their personal banking needs. Branch Administration Officer, Corie Young commented, “JT is dedicated, driven, and diligent in his ability to be a good leader and banker. He enjoys being involved in the community and having a hand in business development. I believe he will continue to impress our team and clients as he moves forward in his new role as Branch Manager!” Baker previously worked as a Teller at First Kentucky. He has over three years of banking experience. He shared, “I’m excited to help lead as Branch Manager, and I’m eagerly anticipating the challenges and opportunities that will come with this new position. I look forward to engaging more with the community, and I hope to continue growing both personally and professionally at First Kentucky.”
KENTUCKY BANKERS ASSOCIATION
Tim Barnes Installed as the 2017-2018 Board Chairman
Mike Mercer (left), President and CEO of First State Bank and KBA Past Chairman, pins the KBA Chairman’s pin on Tim Barnes, President and CEO of Hometown Bank of Corbin and the 2017-2018 KBA Board Chairman.
Tim Barnes, president and CEO of Hometown Bank, was installed as Board Chairman of the Kentucky Bankers Association on Sept. 27 at the KBA’s Annual Convention. The term runs from September 2017 to September 2018. “Tim is becoming our board chairman at a crucial time,” Ballard Cassady, president and CEO of the Kentucky Bankers Association said. “After the financial crisis of 2008, regulations have severely limited a community bank’s ability to serve its community. Lawmakers in Washington did not differentiate between banks on Wall Street and banks on Main Street.” Barnes told the Times-Tribune his appointment as Board Chairman of the KBA is “a privilege,” and said he hopes this opportunity will not only allow him to impact Corbin, but other communities as well. “The work of the KBA is to try and find some relief for Kentucky’s community banks and Tim has been an integral part of our team for the past three years,” Cassady added. “Having literally built Hometown Bank from day one, no one knows more about a community bank’s operations than Tim. He knows what it takes to build a successful bank, and that knowledge will be invaluable for the fight ahead.” “We’re always working on deregulation of the banking industry and to hopefully get some regulations out from under the Dodd-Frank that have really harmed community banks,” Barnes said. “We got harmed when they considered us Wall Street when we’re really Main Street.”
SANTA CLAUS
North Pole Community Bank (NPCB) would like to congratulate Mr. Santa Claus on his recent promotion. Despite his busy December schedule he continues to offer elves low interest loans and financial advice. Merry Christmas!
Barnes, who admits there are lots of activities that go on inside the Kentucky Bankers Association, said with the new position there is more travel involved. “There are trips to D.C. and trips to see the other bankers throughout the state,” Barnes said. “On behalf of the KBA, I want to thank Hometown Bank’s Board of Directors, staff, and the community of Corbin for loaning us Tim,” Cassady said. “You are well represented.” KENTUCKY BANKER | PAGE 13
KENTUCKY BANKERS ASSOCIATION
Bob Jones To Retire As President & CEO at First National Bank & Trust
BANK SHOTS!
Randell Brewer, Chairman of the Board of Directors at First National Bank & Trust, announced that bank President and CEO Robert D. Jones retired September 30, 2017. Jones’ retirement brings to an end his 11 years at the London-based bank.
National City Bank acquired London Bank & Trust in 1995, and Jones eventually was named President and Board Chairman for National City Bank’s Southeastern Community Bank. He retired from National City Bank in 2005, but quickly discovered a restlessness to return to banking. He joined Whitaker A native of Laurel County, Jones is a Bank Corporation as a Lender prior to graduate of Hazel Green School and being named President and CEO at First earned his degree in Mathematics National Bank & Trust in July, 2006. from Sue Bennett Junior College. Upon completion of his studies there, Jones Throughout his banking career, Jones served as a Data Analysis Specialist in has been active in a host of civic and the United States Army for two years. economic development organizations. He is a past President of the London/ He began his finance career by serving Laurel County Chamber of Commerce as the Branch Manager of Credit Thrift and a past President of the London of America, prior to beginning work Rotary Club. Jones, and his wife, Toni, with London Bank & Trust. Over the have three sons: Kevin, Jerry and John course of the next 18 years, he served along with five grandchildren. They atin various capacities including Con- tend Faith Assembly of God Church. sumer Credit Officer, Executive Vice President and member of the Board of “The past 11 years have been an era of Directors. During his tenure at London great accomplishment at First NationBank & Trust, Jones earned a degree in al Bank & Trust,” Brewer said. “Bob’s Accounting from Eastern Kentucky Uni- leadership and vision for this bank have versity, Richmond, and also completed been exceptional and we are well-posistudies at both the Kentucky School of tioned for continued success. I invite his Banking, conducted at the University of friends and our customers across the Kentucky and the Graduate School of area to join us for Bob’s reception as we Banking of the South, held at LSU. honor him for a job well-done.”
MICHAEL ADAMS Forcht Bank is proud to welcome Michael Adams as Commercial Banking Relationship Manager at the Forcht Bank Lansdowne Banking Center. Mr. Adams brings a wealth of knowledge and business banking experience with him to assist current and future Forcht Bank customers. “It’s always a pleasure to add someone like Michael to our team,” said Houston Hall, Lexington Market President of Forcht Bank. “His energy combined with his desire to serve his customers and community makes him a valuable addition to the Forcht Bank family.” Mr. Adams grew up in Pontiac, Michigan where his passion for sports relocated him to Kentucky State University on a football scholarship. He enjoys spending his spare time with his 4 year-old son Noah, reading, and serving his community.
TRISH OSBORN
Central Bank announced Trish Osborn has joined Central Bank as Private Banking Officer. She brings more than 25 years of experience in finance to her new role, including past experience managing a private client group.
PAGE 14 | KENTUCKY BANKER
FACEBOOK #kbabankshots
WHAT ABOUT SHAZAM CORE SERVICES? THEY PROVIDE EXCEPTIONAL VALUE FOR AN ALL-INCLUSIVE PRICE. I'M SO TIRED OF THESE UNEXPECTED MONTHLY FEES FROM OUR CORE PROVIDER. A HIGH LEVEL OF FLEXIBILITY SO YOU CAN SELECT APPLICATIONS YOU WANT TO USE.
WE NEED A TRUE PARTNER, WHAT ELSE DO THEY OFFER?
ALSO, CLIENT SERVICE & SUPPORT FROM INDUSTRY EXPERTS THAT UNDERSTAND OUR NEEDS. NOW THAT'S...
SHAZAM’s focused on strengthening community financial institutions by offering choice and flexibility for all your core processing needs. Call us today to learn more about SHAZAM Core Services.
Now that’s epic.
Strengthening Community Financial Institutions shazam.net/epic | 855.314.1212 | @SHAZAMNetwork
KENTUCKY BANKERS ASSOCIATION
Enhance your Digital Lending Strategy with Credibility Capital’s Technology Platform
The time is now for banks to digitally transform the way they operate. Credibility Capital, a commercial digital lending platform partnered with Dun & Bradstreet and FIS Global, can help.
1. Capital Deployment - Commercial Loans • Credibility Capital’s technology platform originates A-paper quality whole small business loans from $10,000 to $350,000 at rates starting at 8.00% • 12-, 24- or 36-month fully-amortizing monthly-pay loans • Transparent, plain-vanilla product offering minimizing regulatory risks • Rebalance loan-to-deposit ratio and/or CRE-to-C&I ratio 2. Customer Acquisition • Borrower acquisition requires time, money and human resources • Exclusive partnership with Dun & Bradstreet to source creditworthy borrowers • Robust API sends Dun & Bradstreet small business data directly to the Credibility Capital platform • Opportunity for banks to cross-market its own products and services to small businesses 3. White Label Digital Application • Credibility Capital’s technology platform developed using Google coding language • Banks can use Credibility Capital’s application to source their own applications as well as external applications • No need to integrate technology with current bank core system How to Get Started To learn more about Credibility Capital, simply contact Selina Parrish at (502) 736-1282 and she will be glad to provide information to you and your staff on this valuable new offering.
Spring Conference
April 16 – 18, 2018 | Marriott Griffin Gate, Lexington
We are in the planning stages for our 2018 Spring Conference. Watch for announcements in our weekly email, Kentucky Bankers Tidbits. If you have ideas or topics you would like to see at our annual conference, we’d love to hear it. Please send any information to Natalie Kaelin at nkaelin@kybanks.com. Look for registration to open January 2018 with an early bird discount!
PAGE 16 | KENTUCKY BANKER
NOV/DEC 2017
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
KENTUCKY BANKERS ASSOCIATION
Independence Bank Investing In St. Matthews Bank Breaks Ground on New State of the Art Building that Pays Tribute to History
Independence Bank showed their commitment to the St. Matthews community in Louisville during a ceremonial ground breaking on what will be their permanent location, a two-story replica of Independence Hall in the heart of St. Matthews. The building will be state of the art both inside and out, incorporating the latest in technology and design while paying tribute to our nation’s history.
Louisville Bank President, Louis R. Straub II said, “This project will stimulate growth during the construction phase as well as after completion. The new In“The new Independence dependence Bank location will be called ‘St. Matthews Square’ Bank location will be not only because it’s physicalcalled ‘St. Matthews ly located in St. Matthews, but Square’ not only because also in honor of St. Matthew, it’s physically located in the patron saint of bankers.”
St. Matthews, but also in honor of St. Matthew, the The future bank site also has a deeper connection for Straub; patron saint of bankers.” his great-uncle, Karl Straub,
“Independence Bank deeply invests in people. By utilizing local talent and board representation, the direction is focused on the community we love and live in,” Straub said.
served as President of St. Matthews National Bank which later merged with First National Bank of Louisville in 1954, on the very ground where the new location will be built. Calhoun Construction Service will be building the new office and utilizing local subcontractors throughout the build. Construction is slated to begin the first part of December with an estimated 12-18 month construction timeline.
Louis R. Straub II
Since joining in April of this year, Straub has focused on growing his team of talented bankers and assembling a board of directors to provide a new direction and vision to the market.
PAGE 18 | KENTUCKY BANKER
NOV/DEC 2017
BANK SHOTS! #kbabankshots
LEIGH ANN YOUNG
Central Bank promoted Leigh Ann Young to Trust Officer. Leigh Ann brings 15 years of Trust Operations experience and is a native of Owensboro.
KENTUCKY BANKERS ASSOCIATION
The Murray Bank Names Lanier as Employee of the Quarter
STEPHEN MALLORY Central Bank promoted Stephen Mallory to Vice President, Commercial Mortgage Lending. He began his career at Central Bank in 2003.
The Murray Bank President and CEO, Bob Hargrove (pictured left), presented Catherine Lanier (pictured right) with the Employee of the Quarter award at the Bank’s recent employee meeting. Lanier currently works as the Human Resources Coordinator of The Murray Bank.
JORDAN OWENS Central Bank recently promoted Jordan Owens to Vice President, Commercial Mortgage Lending.
“It is an honor to be recognized by the employees at The Murray Bank,” said Lanier. “We have a great team that works daily to serve our customers, and I’m grateful that I can contribute to our overall success.” In addition to her strong work ethic and ongoing support of the Bank’s mission, she was recognized for her outstanding performance in all aspects of her job. “Catherine is the kind of employee we are grateful to have on our Human Resources team,” said Hargrove. “She has only worked with us for a short time, but has already proven herself to be an asset to our office. I couldn’t be more pleased that the employees recognized her for her great work.”
CHRIS COPELAND Bank of the Bluegrass & Trust Co. promoted Christopher F. Copeland to VP, Senior Compliance Officer. He has been with the bank for 3 years and has 7 years of banking experience. BANK SHOTS! FACEBOOK @kybankers
Lanier is originally from Trenton, TN and a graduate of Murray State University in 1999 with an Undergraduate and Master’s degree in Organizational Communication. Lanier resides in Calloway County with her husband Alan and their three children, daughters Elizabeth (10) and Emma (6), and son William (8). The Employee of the Quarter award is decided by the vote of fellow employees. KENTUCKY BANKER | PAGE 19
KENTUCKY BANKERS ASSOCIATION
Combining Community Engagement with Social Media Ways to Promote Your Bank by Joel Brashear, Hyden Citizens Bank Guest Contributor
5
and Your Community Online
It’s not breaking any ground to say that social media should be a key part of any marketing strategy. But when looking at how banks in Kentucky are utilizing Facebook, Twitter and other social media platforms, most of us are not taking advantage of this easy-to-use, and more importantly, FREE, medium. And of course we want to promote our club accounts and personal loans to a large base of regional consumers, but in today’s market, it’s not enough to slap a flyer together and throw it online.
er teams, or clubs, we sponsor monthly awards. A bank employee is pictured giving the student the award and we write a brief news article about the player’s achievements that week. We post these on our Facebook and Twitter and they are sent to the local paper.
1
2
Every article features a quote from a bank employee reinforcing commitment to the community from the bank, or something similar, and we always have the coaching staff select who receives the award so that the bank is left out You have to have continuous, meaningful content that not of that process. Due to the success of the Sports Awards, only attracts new followers to your page, but keeps them the school actually approached our bank about doing a sharing your content to reach a wider audience. Why not program based on academics as well. It works similarly to promote your local community and get some CRA credit the sports process in that the school uses GPA and ACT while you are at it, right? Here are 5 ideas for ways to in- scores to determine a Student of the Month and the Most corporate Community Engagement and Social Media: Improved Student of the Month.
Local School Interaction Few things define our
Blog Posts This is an idea that we have used sev-
eral times as both a service to our customers and local communities more than our schools. At our bank we sponsor a “Hyden Citizens Bank Player of the as a way to promote bank products. “15 Tips to Improve Week” award for the teams at our high school. For small- Saving Money” or “12 Ways to Fight Consumer Fraud” are
PAGE 20 | KENTUCKY BANKER
NOV/DEC 2017
KENTUCKY BANKERS ASSOCIATION 5 Ways to Promote Your Bank and Your Community Online continued
just some of the ideas we’ve used to present our customers with useful information while at the same time offering products and services. Daily blog posts of no more than a paragraph or two that run for two weeks every quarter creates a pattern of expectation for your followers.
pull out the big check for every donation we make, but we try to promote every donation made by our organization to show how active and committed we are to investing in our community. However, I would recommend that you have a strong contributions policy before beginning this, as promoting your donations will see an increase in the Community Activities This is a 2-for-1! How of- number of requests you will receive. ten does your bank sponsor an event in your community? Parades, festivals and other events in our towns The key to a successful social media program, at least for simply can’t operate in most cases without donations from our bank, has been engaging content and user interaction, organizations like us. Let folks know that you are support- providing content that connects with your community and ing these events by going out and taking some pictures actively communicating with our audience. (or better yet, video!) of the event and posting it to your Facebook page. Not only are you promoting the event, you Your bank is probably doing tons of great things in your are showing your entire community that your bank is ac- community already, so use social media to promote it. It tively involved. You can take it one step further and hold will save money on your marketing budget in the long run and create deeper connections with your customers. the event right in your bank!
3
Also, how about renting a big screen TV or three and showing a big sporting event in your lobby? We host pumpkin decorating parties every Halloween at our bank and Santa visits us every December for FREE! pictures that we post online! We see tons of new faces in the bank and even more interaction online from these.
4
Promotional Videos Don’t be thinking that vid-
eo production is too expensive for your social media campaigns. In fact, that new teller you just hired can probably take his or her cell phone and make something as good as you’ll find from a TV station! Have an employee or two tell why they enjoy working at the bank, or have some that are long-tenured share how the bank has changed over the years. We recently shared a picture of an old thermometer that our bank used to give away that sparked several discussions online. Have a loan officer explain the benefits of owning a home vs. renting. Our last video was simply telling why we loved our local community. It included historic milestones, current challenges and hope for the future. Facebook algorithms love videos, so they are more likely to be put in front of potential customers than any other type of post. So use this to your advantage!
5
Bring out the big check! Every bank makes donations. It’s just a fact of doing business. Some are large and some are small when it comes to dollar amount, but they are all important to the recipient. So, why not make every donation a big deal and promote it? We don’t NOV/DEC 2017
FOLLOW THE KBA ON FACEBOOK LIKE OUR PAGE! @kybankers KENTUCKY BANKER | PAGE 21
KENTUCKY BANKERS ASSOCIATION
M&A Deal Prices Continue to Climb Mid-South FDIC region, including western Kentucky, only district in the U.S. seeing increasing bank mergers and acquisitions in the third quarter.
Integrated Legacy Solutions (ILS), the leading provider of image and data conversion and migration technology, released its quarterly research on recent bank merger and acquisition data for the third quarter of 2017. The research concluded that the Mid-South FDIC region, including western Kentucky, was the only district in the U.S. to experience an increase in bank mergers and acquisitions in the third quarter of this year. Derived from data provided by the Federal Reserve System, the research quantifies all U.S. bank M&A activity occurring between July 2017 and September 2017 to monitor larger trends in the space, such as total mergers and acquisitions, activity by state and region, the asset sizes of acquired and acquiring banks and transaction pricing, among other insights.
number of acquisitions in comparison to years past, the M&A sector is very much still a viable portion of the banking industry as evident by continually increasing deal prices each quarter.” Other notable insights from the 2017Q3 research include: • The Mid-South FDIC region was the only district to experience a positive change in comparison to the third quarter of 2016, reporting a 33% increase as a result of 8 acquisitions. • Georgia completed the most bank acquisitions in Q3 (5 total), led by the acquisition of $5 billion Nebraska-based credit card bank, The World’s Foremost Bank, by Columbus, Ga.-based Synovus Bank ($30 billion) and Capital One. • Year-to-Date, the top acquiring states are Kansas (14), Illinois (11) and Wisconsin (10). • The largest acquired bank in 2017Q3 was Missouri-based Scott Trade Bank, with $17 billion in assets. The bank was purchased by TD Bank in Delaware, which possessed $268.2 billion in assets. • The price of M&A transactions is rising, which could account for the continued dip in total acquisitions this year. At the end of 2017Q3, the average was 1.74 times book, up from 1.13 times book from the third quarter of last year.
The third quarter of 2017 saw 54 total bank mergers and acquisitions across the United States (down slightly from Q2), bringing the total number of M&A transactions up to 179 during the first three quarters of this year. The total year-to-date M&A activity continued to decrease, down 17% from 2016 and currently sits 18% below the five year average. The research also shows that the size of acquiring banks is diversifying. The median asset size of acquiring banks continues to decrease, dropping from an average of $1.7 billion in the first half of 2017 $920 million in Q32017, suggesting that smaller banks continue to play a key role in today’s mergers and acquisitions space. “Reviewing national M&A activity in comparison to last quarter or last year, it is easy to see that the industry is Although the total number of acquisitions is down com- continuing to shift in the face of a rapidly evolving financial pared to 2016, as well as the five year average, overall deal environment,” said Kris Bishop, president and founder of price continues to steadily increase along with bank stocks. ILS. “Newly introduced regulatory, legislative and economDuring the third quarter of 2017 alone, the industry saw a ic changes will most likely continue to impact the M&A 14% increase in average deal price and a 41% increase in space as we move forward, however they will also result price compared to 2016Q3. in banks taking a more strategic approach to mergers and acquisitions as they seek to diversify and grow their busi“As banks continue to factor M&A opportunities into their nesses.” on-going business strategies, we’re seeing a definite shift in the overall activity, which is not necessarily a bad thing,” To download a copy of the ILS 2017Q3 M&A Review with said Martin Webster, director of business development for charts, maps and tables, visit http://www.integratedlegaILS. “While we’re continuing to see a decline in the total cy.com/Q32017_Review PAGE 24 | KENTUCKY BANKER
NOV/DEC 2017
BANK SHOTS! #kbabankshots
KENTUCKY BANKERS ASSOCIATION
United Bank Supports USA Cares
United Bank is pleased to lend its support to USA Cares, an organization that provides financial and advocacy assistance to post-9/11 active duty US military service personnel, veterans, and their families. Pictured are David Hunt and Marilyn Ford, United Bank, presenting the contribution to Hank Patton with USA Cares.
ANDREW ALEXANDER
Central Insurance Services announced Andrew Alexander has joined Central Insurance Services as a Commercial Insurance Officer. He is a graduate of Eastern Kentucky University.
MARK TRANBARGER United Bank & Capital Trust Company hired Mark Allen Tranbarger as Executive VP. Mr. Tranbarger will join the Bank’s Newport office.
FNB Bank Donates to MHS LINKS
GRANT ORR Community Financial Services Bank (CFSB) promoted Assistant Cashier/ Real Estate Loan Officer Grant Orr to Assistant Vice President. He has a BS in Finance from Murray State University.
FNB proudly donated $1,000 to the new Mayfield High School LINKS Program in support of their upcoming Mini Clinics. The MHS LINKS program is dedicated to connecting students to the community, to colleges and to careers. The Mini Clinics will allow students to get hands on training and work experience at local businesses throughout Mayfield. The funds donated to the Mini Clinics will go to “pay” the students for their time working at the participating businesses, if they successfully complete their work assignment.
APRIL FORD April Ford has been hired as Vice President/Business Development Officer at Citizens Union Bank. She will work out of the bank’s Elizabethtown, Kentucky location. BANK SHOTS! FACEBOOK @kybankers
KENTUCKY BANKER | PAGE 25
Giving you that extra oomph. Your team pushes hard to get the job done, but a little boost never hurts when challenges get steep. When accounting horsepower is what’s missing, our careful, committed pros can help propel your bank past obstacles and toward your goals.
Everyone needs a trusted advisor. Who’s yours?
502.581.0435 | bkd.com/fs
2017 KBA CONVENTION SCRAPBOOK HELD AT THE HISTORIC OMNI GROVE PARK INN, ASHEVILLE, NORTH CAROLINA
2018 ANNUAL CONVENTION JOIN US IN 2018 AT THE BELMOND CHARLESTON PLACE, CHARLESTON, SOUTH CAROLINA
KENTUCKY BANKERS ASSOCIATION
First & Peoples Bank and Trust Company Provides Safe and Secure Living For Seniors Thanks to First & Peoples Bank, residents of South Shore Nursing Home in South Shore, Kentucky will live in a safer and even more secure living environment. First & Peoples Bank recently joined CRA Partners and is helping vulnerable seniors by funding the Senior Crimestoppers program to protect those who live and work in this local care facility. CRA Partners, powered by the Senior Housing Crime Prevention Foundation, is a national organization that guarantees banks federally mandated CRA credit through the operation of the turn-key Senior Crimestoppers program providing safe and secure living environments for our nation’s low to moderate income seniors. Through flexible funding options such as CRA-qualified community development loans, investments or grants, banks provide the program in senior housing facilities, HUD communities and state Veterans homes while garnering positive public relations exposure in their communities.
through the operation of the Senior Crimestoppers program in nursing homes and assisted living facilities. Senior Crimestoppers is a coordinated set of components that work together to create a zero tolerance to crime platform in senior housing facilities. Components include cash rewards up to $1,000 paid anonymously for information about wrongdoing of any kind, personal lockboxes for the residents, and effective, on-going education and training for staff members and residents. Senior Crimestoppers has reduced all aspects of crime in participating facilities by 94%.
“Senior Crimestoppers is a way for an administrator to further enhance the lives of the residents they serve. They all work very hard to provide safe, secure, comfortable living environments and their desire to implement the program is just one more example of this. Implementing this program does not mean that the facility currently has a crime problem, but that the administrator is proactively finding Crime against the elderly in our society is a longstand- a way to keep problems from occurring in the future,” said ing, constant battle that can be reduced and prevented Terry Rooker, president of Senior Crimestoppers.
PAGE 28 | KENTUCKY BANKER
NOV/DEC 2017
KENTUCKY BANKERS ASSOCIATION
1940 Buick Century “The Banker’s Hot Rod”
Walk around the Omni Grove Park Inn, in Asheville, NC where the 2017 Annual Convention was held, and you will come across a world class Antique Car Museum. The Buick Century, pictured below, is on display; produced from 1936 to 1942 it was powered by a 320 cubic inch engine yielding 165 hp. The super car was capable of sustained speeds of 100 mph - hence the name “Century” and the nickname “the banker’s hot rod.”
KBA Blue Pride
Casey Guernsey (left), KBA Enrollment and Billing Specialist and Katie Rajchel (right) KBA Staff Accountant, show off their KBA Blue Pride.
KENTUCKY BANKERS ASSOCIATION
CFSB Named as Extraordinary Bank Community Financial Services Bank (CFSB), a Western Kentucky icon, has again been named one of the top extraordinary banks in the United States by the Institute for Extraordinary Banking. CFSB was recognized as the winner among banks with $500 million to $1 billion in assets in the Institute’s Money Smarts Banky Category of Excellence Award for Financial Literacy Education because of their extraordinary service to their clients and their community through a commitment to financial literacy programs.
We also are proud to use Banzai Online Financial Literacy for both middle and high school students as well as financial expert Dave Ramsey’s Foundations in Personal Finance, High School and College Editions. All of these financial literacy programs are This is CFSB’s second consecutive award from the Institute. available to each of the In 2016, CFSB attained the highest internal culture survey school districts and centers score, proving that the bank is a remarkable organization for higher education in our to have a career that allows the CFSB team to bring excel- four county market footprint. We also are honored to offer Ramsey’s Financial Peace University (FPU) for individulence to our clients. als and couples at various times throughout the year.” CFSB Chief Executive Officer/Head Coach Betsy Flynn said, “CFSB has long been involved in financial literacy for our clients and community. For more than 25 years, the bank has been involved in the student-run bank at Marshall County High School and we are now in our third year with a similar student-run bank at McCracken County High School. Our team makes regular visits to classrooms at all levels of the education system, teaching elementary students with The Centsables, an interactive learning system that can be found on our website at www.yourlifeyourbank.com.
The Extraordinary Banking Awards exist to highlight the vital, yet often overlooked, role that local, community banks play in our economy. Consumers use the Grammys to guide their music purchases, the Emmys to lead them to the best of television, and the Tonys to discover outstanding live theater…And now, consumers have the Banky™ Awards as their guide to discovering the very best, most extraordinary banks in their communities, and in the country. This year, the Bankys recognized the top 1-percent of all community banks—The Best Banks in America.
Paducah Bank Donates Eclipse Glasses Proceeds
Paducah Bank presented a check for $2,500 to the Challenger Learning Center at Paducah with proceeds from the bank’s solar eclipse glasses sales for the total solar eclipse celebrated across the country on August 21. “This was a once in a lifetime event, and we are extremely happy to donate these monies to the college. We appreciate the Challenger Learning Center and all they do for our kids and for the communities they serve,” said Mardie Herndon, Paducah Bank president and chief operating officer. “We’re always looking for ways to support our community and the eclipse provided us with a way to provide our customers a safe way to view this special event and also support the work of the Challenger Learning Center.”
When it comes to the banking industry, KraftCPAs has the bases covered.
Serving the banking industry for more than 50 years. -
external & internal audit compliance reviews SOX documentation & testing tax planning & compliance loan reviews & grading systems employee benefit plan audits merger/acquisition assistance valuation services FFIEC audits risk assurance & advisory services IT risk assessment & audits enterprise risk management (ERP) social engineering forensic accounting network vulnerability & penetration testing
Contacts: Beverly Horner
Member Financial Institutions Team 615-346-2431
Michael Davis
Member Financial Institutions Team 615-346-2487
Gina Pruitt
Member Risk Assurance & Advisory Services 615-782-4207
www.kraftcpas.com
All I Want for Christmas is... …health for my family and friends. TimBarnes, President & CEO, Hometown Bank
…leadership in Washington willing to do more than provide lip service regarding helping community banking. David Bowling, CEO, Citizens Union Bank of Shelbyville …a fair tax plan that will stimulate economic growth for our state and country as a whole! Lloyd Hillard, Jr., President & CEO United Bank & Capital Trust Co.
…an Adidas contract for my bank’s logo wear. Then I can move to Miami and live next to Rick Pitino. Ho! Ho! Ho! Mike Mercer, President & CEO, First State Bank …regulatory relief! Steve Tolliver, Market President The Monticello Banking Company
…all of my needed CECL data wrapped up in a nice, neat bow or realistically a Disney Cruise. Darin Young, President & CEO Century Bank of Kentucky
…to live every single moment of this life filled with compassion, joy, laughter, generosity, family and friends. Lanie Gardner, Community President First Southern National Bank …all to have a safe & joyous holiday with family & friends! Gregory Goff, President & CEO First National Bank of Kentucky …my family to experience good health and happiness. Dan Harbison, President & CEO The Farmers National Bank of Scottsville
…a Greater Measure of Human Equality & Peace on Earth Dale Sights, President, Field & Main Bank
…to watch our grandson Tucker enjoy Christmas, playing with his John Deere tractors, while the whole family is together. Brent Bugg, President & CEO, Fredonia Valley Bank …to continue to be surrounded by my family and for them to stay happy and healthy. Shanda Smith, President & CEO Blue Grass Federal Savings & Loan …regulatory reform for banks. Ballard W. Cassady Jr., President & CEO …everything I already have. Miriam Cole, Executive Assistant
…healthy family and friends. Paula Cross, Education Services Coordinator
…to finish remodeling my old farmhouse so I can move in! Casey Guernsey, Enrollment and Billing Specialist
…my girls to be happy & safe; proof of extraterrestrial life. Josh Fischer, Director of Communications …health and happiness for my friends and family. Jamie Hampton, Education Services Coordinator
…a healthy baby girl in Feb. & continued health of my family. Natalie Kaelin, Director of Education …someone to do the Christmas shopping. Michelle Madison, IT Manager
…health and happiness for all. Brandon Maggard, KenBanc Insurance Services …Red Ryder BB Gun Chuck Maggard, KenBanc Insurance Services
…health, happiness & peace for our members, friends & family! Lisa Mattingly, KBA Benefits Solutions …a healthy family and peace on Earth! Donna McCartin, Benefit Support Specialist
…health and happiness for my friends and family. Tammy Nichols, Convention Coordinator
…to spend time with family & friends making more memories! Selina O. Parrish, Director of Membership …snow, a warm fire, healthy family & Peanut M&Ms! Katie Rajchel, Staff Accountant
…successful treatment of Alzheimer’s. Truly the world’s most tragic disease. Debra K. Stamper, EVP & General Counsel …a ninth championship banner for the Wildcats! Matt Vance, Chief Financial Officer
…someone to take away the President’s Twitter access. Billie Wade, Executive Director, HOPE of KY
t
…to celebrate the Season with my family and friends! Audrey Whitaker, Insurance Services Coordinator
…a family vacation with my mom, nieces, nephews, everyone! Angie White, Business Development …Smith & Wesson M&P 2.0 Steve Whitlow, Systems Engineer
LEXINGTON
|
LOUISVILLE
|
LITTLE ROCK
|
CINCINNATI
|
CHATTANOOGA
|
ST. LOUIS
|
BIRMINGHAM
Discover how well your technology supports your business Streamline your current I.T., innovate for growth, and achieve competitive advantage Many bank executives fear their current I.T. approach isn’t delivering the results they need to achieve their business objectives. We created a workshop that delivers a roadmap to success which allows you to gain clarity, confidence, and command of your I.T. management. Call us today at (844) 777-6278 and learn if the workshop is right for your business.
Executive Workshop The Kentucky Bankers Association endorses Technology OneSource managed I.T. services provided by NetGain Technologies.
To learn more about solutions for your organization, go to www.NetGainIT.com or call 844-77-SMART.
2018 Education Highlights
General Banking School
plans. Is your organization properly addressing the connection and overlap of vendor management and business continuity planning?
This year held at a new location! Marriott Griffin Gate, Lexington. The General Banking School is a two-year program designed to give bankers an understanding of the business of managing a bank. Everything from the financial decisions that must be made, how each bank department is inter-related to the economic environment of the business of banking. There is an intersession exercise and activity day between Year I and Year II. The Year II curriculum is centered around the BankExec computer simulation in which learning is reinforced by managing a bank, learning the cause and effect of day-to-day decisions.
Consumer Lending School
June 3 – 8, 2018 Lexington
Bond University
March 6 – 7 Louisville
This two-day school introduces the consumer lending process from the initial application to closing and documentation. It will follow the steps required to successful consumer lending including the: Application, Investigation, Evaluation, Decision, Regulation and Documentation. The method of instruction will include lectures, visual presentations and case studies to reinforce the concepts presented in the course.
Flood Insurance Seminar
February 21 Louisville Provides an in-depth look at the bond portfolio and how it should be managed to compliment loan, deposit and A/L decisions that community banks make.
Business Continuity Planning Seminar February 22 Louisville
Financial institutions aren’t just responsible for their own business continuity plans – they must also ensure that critical vendors have properly drafted, executed and tested
April 12 Louisville
At the end of the presentation, you should be able to identify transactions and buildings that are covered by the rule, understand how to calculate the minimum amount of flood insurance required, and be able to determine what policies, procedures, and notices are required for compliance.
We’re also working on our annual Regulators Forum, a CECL Seminar and a Security Seminar.
Visit www.kybanks.com for details!
Graduate School Scholarship Recipients Graduate School of Banking at LSU Scholarship: Mr. Nathaniel Hamblin, Bank of the Bluegrass and Trust Company and Ms. Haley Clark, The First National Bank of Brooksville
PAGE 34 | KENTUCKY BANKER
Graduate School of Banking at Colorado Scholarship: Ms. Christina Michelle Cook, Whitaker Bank Graduate School of Banking at the University of Wisconsin – Madison Scholarship: Mr. Ammon Cooper, Citizens Deposit Bank & Trust NOV/DEC 2017
THIS IS AN ADVERTISEMENT
HOTEL REVENUE DOES NOT QUALIFY AS RENT by Melinda T. Sunderland
Melinda T. Sunderland
In a recent opinion of the United States Bankruptcy Court for the Eastern District of Kentucky, In re Lexington Hospitality Group, LLC, the Court held the secured creditor did not have a perfected lien on revenue from the debtor hotel’s room receipts and was not entitled to adequate protection payments for the debtor’s continued use of such revenue post-petition.
PCG Credit Partners, LLC (“PCG”), the secured creditor, secured its loan to Lexington Hospitality Group, LLC (“LHG”), the debtor, through a mortgage lien on the real estate, which included an assignment of leases and rents, and a security interest in, among other items, the debtor’s “accounts” and “general intangibles, including payment intangibles”. However, when filing a Financing Statement to perfect its lien on LHG’s personal property, PCG failed to include “general intangibles” or “payment intangibles” in its collateral description. Pursuant to Article 9, a payment intangible is a subset of general intangibles under which the account debtor’s principal obligation is a monetary obligation. LHG disputed PCG’s perfection of its lien on the hotel revenue and its right to adequate protection payments post-petition. PCG initially argued the hotel revenue constituted rents and its lien thereon was perfected via its mortgage. In considering this argument, the Court noted that a “long-standing majority of cases addressing this issue treat such revenues as personal property”. After finding the hotel revenue was personal property, and governed by Article 9, the Court looked to whether PCG had properly perfected its security interest. The Court noted hotel revenue was generated by both cash receipts and credit card receipts. As to cash receipts, the Court found PCG had not perfected its lien because perfection of a lien in money requires possession and perfection of a lien in deposit accounts requires control. As PCG had neither possession of the money nor control of LHG’s deposit accounts, it did not have a perfected lien in hotel revenue generated by cash receipts.
In considering credit card receipts, the Court found the receipts were payment intangibles. In reaching its holding, the Court relied on the Official Comments to Article 9, specifically Comment 5(d) to §9-102, which states the right of a merchant in a credit card transaction to receive payment in settlement of the transaction is a payment intangible. As PCG failed to include “payment intangibles” or “general intangibles” in the collateral description on its Financing Statement, its lien was not perfected. Nevertheless, PCG argued that because its collateral description referred to its security agreement by name, and that name included the term “All -Asset[s]”, it made an “all asset” filing. The Court held that a document reference did not provide a sufficient description of the collateral as required by Article 9. What should lenders take from this ruling? First, when lending to hotels, general intangibles and payment intangibles must be included as collateral in the security agreement. Second, it is crucial the collateral description in your Financing Statement accurately describe the full scope of collateral granted in the security agreement. Third, if you intend to have cash receipts as collateral, you must perfect your security interest in the borrower’s deposit accounts by control. Finally, when involved in a workout, a thorough review of both your loan documents and lien perfection should be conducted. PCG filed its Financing Statement on October 13, 2015. It entered into a Forbearance Agreement with LHG on February 9, 2017. LHG didn’t file for bankruptcy protection until August 3, 2017. It is possible the lack of perfection could have been resolved through an amendment to the Financing Statement made during the time the loan was in workout. M&P is a leading banking and finance law firm representing financial institutions, businesses and individual clients throughout Kentucky and Indiana.
MorganandPottinger.com LEXINGTON PAGE 36 | KENTUCKY BANKER
LOUISVILLE
NEW ALBANY
CORBIN
BOWLING GREEN NOV/DEC 2017
KENTUCKY BANKERS ASSOCIATION
FIRST NATIONAL BANK RIBBON CUTTING Pictured from left to right: Cathy Fornash, Chamber: Bill Ross, Interior Designer; Charlotte Wallace, Chamber;John Allen, Interior Designer; Heather Yocum, Chamber; Barb Quinn, Architect; Lisa Meadows, FNB; Karen Osborne, FNB; Jeff Woods, FNB; Sherry New, FNB; Malcolm Carraco, FNB; Maribeth Gosser, FNB; Stephen Kunselman, FNB; Teresa Gross, FNB; Gregory J. Ruebusch, FNB; Gregory D. Goff, FNB; Jack Wright, FNB; Amanda Villines, FNB; Lindsey Ford, FNB; Emily Williams, FNB; Bill Osborne, FNB; Luanne Simmons, FNB; Haley Franklin, City of Carrollton; Joe Dadisman, General Contractor.
The Murray Bank Representatives, Tim Stark, Marketing Coordinator at The Murray Bank, and Darren Jones, VP at The Murray Bank, are pictured with representatives from the MHS Soccer teams prior to their departure for the All A State Soccer Championship. The Murray Bank provided a significant monetary donation to support the Tigers travels. NOV/DEC 2017
KENTUCKY BANKER | PAGE 37
KENTUCKY BANKERS ASSOCIATION
FNB Donates To Local Schools Through Spirit Debit Card Program
FNB Bank is proud to announce that they have donated over $14,800 back to Mayfield, Graves County and Trigg County Schools through their Spirit Debit Card Program. These donations to the school systems are a result of FNB’s 3rd quarter Spirit Debit Card Reward Program. “We are proud to offer our exclusive FNB Spirit Debit Card Program to our local schools,” stated Brooke Wiles, FNB Marketing Director. “Our customers have pride in knowing that they are making a difference in the lives of our youth by simply swiping their Spirit Debit Cards at the checkout. The donated funds allow the school systems the opportunity to do more for their students and staff, which is an invaluable asset to our community.” The FNB Spirit Debit Card Rewards Program allows FNB and their customers the opportunity to give back to their local schools when they use their FNB debit card. FNB currently offers Spirit Debit Cards for Mayfield, Graves County and Trigg County Schools. The Spirit Card works like a traditional debit card and for each signature based transaction (not using your PIN), FNB donates $0.10 to the corresponding school. The tracking process is hassle free for the card holder, as FNB does all the tracking and submits the check to each school on a quarterly basis. The donated funds are utilized at the school’s discretion. In 2016, FNB donated over $51,000 to their participating schools through the Spirit Debit Card Program.
CFSB Donates to Graves Development Board
Community Financial Services Bank (CFSB) Graves County Market President Andrew Ellison was appointed to serve on the Graves County Economic Development (GCED) board during the October meeting at the Purchase Area Development District Office in Mayfield. To further extend CFSB’s commitment to Graves County and the Jackson Purchase, CFSB made a $5000 donation to the GCED. Ellison said, “It’s an honor to serve on this tremendous board. We will continue to strive to bring new jobs to this area!” Currently, construction is underway on the CFSB Graves County Banking Center at the corner of the 121 Bypass and Highway 45 on Mayfield’s North Side.
BIPARTISAN REGULATORY REFORM PACKAGE On Monday, November 13, the Senate Banking Committee Chairman Crapo and Senators Tester, Heitkamp, Donnelly and Warner announced an agreement on a package of regulatory reform proposals. This bill does impose thresholds and is a positive step in providing relief to a number of our member institutions and advancing a number of advocated provisions.
Section 103. Access to Affordable Mortgages. This section provides a tailored exemption from appraisal requirements under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for certain mortgage loans with a balance of less than $400,000 if the originator is unable to find a State certified or State licensed appraiser to perform an appraisal after a good faith effort to do so.
Section 104. Home Mortgage Disclosure Act Adjustment and Study. This section provides regulatory relief to small depository institutions that have originated less than 500 closed-end mortgage loans or less than 500 open-end lines of credit in each of the two preceding calendar years by exemptThe Committee announced the bipartisan agreement with ing them from certain disclosure requirements under the eight Democrats and one Independent (Joe Donnelly (D-Indi- Home Mortgage Disclosure Act. It also directs the Compana), Heidi Heitkamp (D-North Dakota), Jon Tester (D-Mon- troller General to conduct a study examining the impact on tana), Mark Warner (D-Virginia), Tim Kaine (D-Virginia), the amount of data available. Angus King (I-Maine), Joe Manchin (D-West Virginia), Claire McCaskill (D-Missouri), and Gary Peters (D-Michi- Section 105. Credit Union Residential Loans. gan) joining as original cosponsors of the bill. With that level This section provides that a 1- to 4-family dwelling that is of support the Committee will try to move the measure quickly not the primary residence of a member will not be conthrough the Committee to obtain time on the Senate calendar. sidered a member business loan under the Federal Credit Union Act. As of November 13, 2017, below is what legislative text we have at this time. Section 106. Eliminating Barriers to Jobs for Loan Originators. BIPARTISAN REGULATORY REFORM PACKAGE This section provides that an individual will be deemed to have temporary authority to act as a loan originator for 120 Title I: Improving Consumer Access to Mortgage Credit days under the S.A.F.E. Mortgage Licensing Act of 2008 if such person is (1) a registered loan originator who becomes Section 101. Minimum Standards for Residential Mort- employed by a state-licensed mortgage company or (2) a gage Loans. state-licensed loan originator who becomes employed by a This section provides that certain mortgage loans that are state-licensed mortgage company in a different state. originated and retained in portfolio by an insured depository institution or an insured credit union with less than $10 Section 107. Protecting Access to Manufactured Homes. billion in total consolidated assets will be deemed qualified This section amends TILA to exclude from the definition of mortgages under the Truth in Lending Act (TILA) while “mortgage originator” an employee of a retailer of manumaintaining consumer protections. factured or modular homes who does not receive compensation or gain for taking residential mortgage loan applicaSection 102. Safeguarding Access to Habitat for Habitat tions while maintaining consumer protections. for Humanity Homes. This section provides that appraisal services donated volun- Section 108. Real Property Retrofit Loans. tarily by a fee appraiser to an organization eligible to receive This section applies consumer protections to real property tax-deductible charitable contributions will be considered retrofit loans. “customary and reasonable” under TILA. continued on the next page Notably, the measure provides QM relief and other mortgage reforms, provides charter flexibility for federal savings associations, broadens the 18-month examination cycle to additional institutions, provides needed relief on stress testing and increases the SIFI threshold.
PAGE 40 | KENTUCKY BANKER
NOV/DEC 2017
BIPARTISAN REGULATORY REFORM PACKAGE Section 109. Escrow Requirements Relating to Certain Consumer Credit Transactions. This section provides an exemption from escrow requirements under TILA for certain loans made by an insured depository institution or an insured credit union.
Section 205. Short Form Call Reports. This section requires the Federal banking agencies to reduce reporting requirements for depository institutions with less than $5 billion in total consolidated assets that satisfy other criteria the Federal banking agencies deem appropriate.
Section 110. No Wait for Lower Mortgage Rates. This section (1) removes the three-day wait period required for the combined TILA/RESPA mortgage disclosure if a creditor extends to a consumer a second offer of credit with a lower annual percentage rate, and (2) expresses the sense of Congress that the CFPB should endeavor to provide clearer, authoritative guidance with respect to certain issues.
Section 206. Option for Federal Savings Associations to Operate as Covered Savings Associations. This section permits Federal savings associations with less than $15 billion in total consolidated assets to elect to operate with the same powers and duties as national banks without being required to convert their charters.
Title II Regulatory Relief and Protecting Consumers Access to Credit Section 201. Capital Simplification for Qualifying Community Banks. This section requires that the Federal banking agencies establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than eight percent and not more than 10 percent. Banks with less than $10 billion in total consolidated assets who maintain tangible equity in an amount that exceeds the community bank leverage ratio will be deemed to be in compliance with capital and leverage requirements.
Section 207. Small Bank Holding Co. Policy Statement. This section raises the consolidated asset threshold of the Federal Reserve’s Small Bank Holding Company Policy Statement from $1 billion to $3 billion. Section 208. Application of the Expedited Funds Availability Act. This section applies the Expedited Funds Availability Act, which governs bank deposit holds, to American Samoa and the Commonwealth of the Northern Mariana Islands. Section 209. Mutual Holding Company Dividend Waiver. This section establishes that, in order for mutual holding companies to waive dividends of its subsidiaries, mutual holding company members must have voted to do so in the prior 24, rather than 12, months.
Section 202. Limited Exception for Reciprocal Deposits. This section provides that certain reciprocal deposits will Section 210. Small Public Housing Agencies. not be considered to be funds obtained, directly or indirect- This section streamlines certain requirements for small ly, by or through a deposit broker under the Federal Depos- public housing authorities operating in rural areas. it Insurance Act. Section 211. Examination Cycle. Section 203. Community Bank Relief. This section raises the consolidated asset threshold from $1 This section provides that banking entities will be exempt billion to $3 billion forwell managed and well capitalized from Section 13 of the Bank Holding Company Act if they banks to qualify for an 18-month examination cycle. have (1) less than $10 billion in total consolidated assets, and (2) total trading assets and trading liabilities that are Section 212. National Securities Exchange Parity. not more than five percent of total consolidated assets. This section would amend Section 18 of the Securities Act of 1933 to apply the exemption from State regulation of seSection 204. Removing Naming Restrictions. curities offerings to securities listed or authorized for listing This section permits certain funds to share the same name on “a national securities exchange” rather than naming speor variation of the same name as their bank-affiliated in- cific securities exchanges. vestment adviser. continued on the next page NOV/DEC 2017
KENTUCKY BANKER | PAGE 41
BIPARTISAN REGULATORY REFORM PACKAGE Title III Protections for Veterans, Consumers, and Homeowners
$50 billion and $100 billion will be exempt from enhanced prudential standards immediately, and bank holding companies with total consolidated assets between $100 billion and $250 billion will be exempt 18 months after the date of enactment (“effective date”).
Section 301. Protecting Consumers’ Credit. This section provides that credit bureaus will be required to include in the file of a consumer fraud alerts for at least a year under certain circumstances, provide consumers one For bank holding companies with total consolidated assets free freeze alert and one free unfreeze alert per year, and between $100 billion and $250 billion, the Federal Reserve will (1) have the authority to apply enhanced prudential provide further protections for minors. standards after the effective date, (2) be required to conduct a periodic supervisory stress test after the effective date, and Section 302. Protecting Veterans’ Credit. This section amends the Fair Credit Reporting Act to ex- (3) have the authority to exempt firms from enhanced pruclude from consumer report information: (1) certain medi- dential standards prior to the effective date. cal debt incurred by a veteran if the hospital care or medical services relating to the debt predates the credit report by Section 402. Supplementary Leverage Ratio for Custodiless than one year; and (2) a fully paid or settled veteran’s al Banks. medical debt that had been characterized as delinquent, This section requires the Federal banking agencies to amend charged off, or in collection. It also establishes a dispute the supplementary leverage ratio final rule (SLR) to specify process for consumer reporting agencies with respect to that funds of a custodial bank that are deposited with a central bank will not be taken into account when calculating such veterans’ medical debt. the SLR, subject to limitations. Section 303. Aiding Senior Protection. This section extends protections to certain individuals who, Section 403. Treatment of Certain Municipal Obligain good faith and with reasonable care, disclose the suspect- tions. ed exploitation of a senior citizen to a regulatory or law-en- This section directs the FDIC, the Federal Reserve, and the OCC to classify qualifying investment-grade, liquid and forcement agency. readily-marketable municipal securities as level 2B liquid Section 304. Restoration of the Protecting Tenants at assets under the agencies’ Liquidity Coverage Ratio final rule. Foreclosure Act of 2009. This section permanently restores the Protecting Tenants at Foreclosure Act, which was repealed as a result of a sunset Title V Studies provision that took effect on December 31, 2014. Section 501. Treasury Report on Risks of Cyber Threats. This section requires the Treasury Department to submit a Section 305. Remediating Lead and Asbestos Hazards. This section authorizes the Department of Treasury to use report to Congress on the risks of cyber threats to financial loan guarantees and credit enhancements as part of the institutions and the U.S. capital markets. Hardest Hit Fund to remediate lead and asbestos hazards in Section 502. SEC Study on Algorithmic Trading. residential properties. This section requires the SEC to report to Congress on the Title IV Tailoring Regulations for Certain Bank Holding risks and benefits of algorithmic trading in the U.S. capital markets. Companies Section 401 – Enhanced Prudential Standards for Certain Bank Holding Companies. This section raises the threshold for applying enhanced prudential standards from $50 billion to $250 billion. Bank holding companies with total consolidated assets between
KENTUCKY BANKERS ASSOCIATION
www.BankTalentHQ.com KBA Members: Post your openings on our premier career web site for the banking industry using this special offer! - Find qualified, entry level to executive candidates interested in banking careers. - Qualified entry level to executive candidates interested in banking careers. - Enhance your job posts with logos, videos, banner ads and profile pages. - Access a searchable database of resumes. - Read tips and articles on timely aspects of human resources.
Hiring quality employees has never been so easy!
Educating Professionals, Creating Leaders
Congratulations 2017 Graduates from Kentucky We congratulate you on completing the rigorous 25-month program and joining the more than 20,000 alumni who have gone on to leadership positions in their organizations, associations and the financial services industry. Best wishes for continued success! Connie Bunch Commonwealth Community Bank Greenville
Scott Norton Stock Yards Bank & Trust Company Louisville
Sponsored by:
5315 Wall Street #280, Madison, WI 53718
|
Ph. 800-755-6440
|
Please visit gsb.org
RESOLUTION OF RECOGNITION, ADMIRATION and APPRECIATION
SOUTH CENTRAL BANK, INC. RONALD J. PENCE
WHEREAS, the Shareholders, Board of Directors , Officers, and Staff of SOUTH CENTRAL BANK, INC. hereby recognize and honor RONALD J. (RONNIE) PENCE for the dedicated service as a founding Director/President/CEO of South Central Bank –Hardin market, formerly known as KENTUCKY NEIGHBORHOOD BANK (KNB); WHEREAS, the service RONALD J. (RONNIE) PENCE has rendered in his roles, to the Bank, its Board, Officers and Staff exemplifies the highest professional, business and ethical standards; WHEREAS, his years of dedicated service, sound business judgment, integrity, wisdom, loyalty and
leadership are appreciated by all who served with him over his long and distinguished career, not only as a Director, but as a valued friend and community leader;
WHEREAS, the Shareholders, Board of Directors, Officers and Staff, will be forever grateful for his creativity, savyness, humor and guidance that inspired us to achieve much; WHEREAS, from starting the de Novo chartered KENTUCKY NEIGHBORHOOD BANK (KNB), to negotiating and managing its merger/acquisition into SOUTH CENTRAL BANK, INC., RONALD J. (RONNIE) PENCE has loyally and honorably continued growing the bank while managing an evolving staff and serving his customers and community with friendship, fellowship and supreme customer service with the utmost integrity; WHEREAS, SOUTH CENTRAL BANK, INC. is a better institution because of his involvement, and the world a better place because of him, WE ARE HONORED to have been the beneficiary of his concern, commitment, and recall with great gratitude for all that he has said, all that he has done and all that he represents; and WHEREAS, he has resigned his board position as he addresses the next stage in his life; NOW, THEREFORE BE IT RESOLVED, by official and permenant record of this NOTICE UPON ITS BOOKS AND MINUTES, the SOUTH CENTRAL BANK, INC. Shareholders, Board of Directors, Officers and Staff express their deepest appreciation and gratitude to RONALD J. (RONNIE) PENCE for his faithful service, outstanding leadership, and numerous contributions to our Directorate, Officers, Staff, customers, and community; and FURTHERMORE AND HEREAFTER ALWAYS we collectively and sincerely express to him our highest level of thanks and gratitude; and BE IT FURTHER RESOLVED, a copy of this RESOLUTION be presented to the Kentucky Bankers Association for publication as a reminder to all of RONALD J. (RONNIE) PENCE’s service and dedication to SOUTH CENTRAL BANK, INC. and the Kentucky banking industry.
Unanimously, adopted this 21st day of November, 2017, by the Shareholders and Board of Directors of SOUTH CENTRAL BANK, INC. __________________________________ Ruthie O’Bryan Bale, Chair
___________________________ Ellen Lee Bale, Vice Chair
BANK SHOTS! #kbabankshots
KENTUCKY BANKERS ASSOCIATION
Ronnie Pence, Founder of KY Neighborhood Bank, Passes
Mr. Ronnie Pence died Sunday at his Elizabethtown home after a nearly 11-month battle with melanoma. JUNE CARPENTER
Central Bank announced the promotion of June Carpenter to Assistant Vice President, Human Resources. She began her career at Central Bank is 2006 as benefits manager.
In 1997, Mr. Pence was one of seven founders to launch Kentucky Neighborhood Bank (KNB), where he served as the bank’s president and CEO from its inception. KNB opened from a trailer and developed into a multibranch bank. A merger was announced in 2016 between KNB and South Central Bank; Pence remained after the sale as a regional president and director of South Central Bank.
“He was a brilliant banker and a brilliant person,” Brandon Fogle, senior market development director for South Central Bank, told The News-Enterprise CRYSTAL HUNT Central Bank announced the promotion of Crystal Hunt to Retail Banking Officer at the Pioneer Drive location. She began her career in 2009 as a teller.
Anita Reynolds, market president for South Central Bank, worked with Pence for 17 years. She told The News-Enterprise that the way he built relationships with others was among his strengths. “He was an amazing human being in so many ways,” she said. Pence was recognized last week during a South Central Bank board of directors meeting with a resolution of recognition (see previous page 44), admiration and appreciation for his years of service.
KAITLYN PICKENS Kentucky First announced Kaitlyn Pickens accepted the position of Commercial Lending Associate for the Purchase Region. She will be working directly with Commercial Lenders.
Commercial Bank of Grayson Celebrates Strother’s 105 Years
SELINA HEIDER Selina Heider was promoted to Vice President/Assistant Controller by the Paducah Bank Board of Directors. She has worked for Paducah Bank for 21 years. BANK SHOTS! FACEBOOK @kybankers
KENTUCKY BANKER | PAGE 45
KENTUCKY BANKERS ASSOCIATION
Calebs Named President & CEO At First National Bank & Trust
Randell Brewer, Chairman of the Board of Directors at First National Bank & Trust, announced that veteran banker Thurman Glenn Calebs, Jr., has been named President and Chief Executive Officer of the London-based bank. His duties officially began on October 1, on the heels of former President and CEO Bob Jones’ retirement, effective September 30, 2017. “For more than a decade, Glenn has been instrumental in our growth and prosperity,” Brewer said. “Our customers and our community will be well-served by his leadership and commitment to London and our region, for many years to come.”
Calebs, a lifelong resident of Laurel County, is a graduate of Laurel County High School. He earned his Associates of Arts degree in Business from Sue Bennett College and then completed his Bachelor of Business Administration degree in Accounting, with emphasis in Finance, from Eastern Kentucky University. He is a graduate of the Kentucky School of Banking and a graduate of the Kentucky School of Banking Commercial Lending School.
Calebs has also completed several OCC Banking Relations Assessment courses. Calebs began his banking career in 1976 at London Bank & Trust Co., and has worked in a number of positions during his tenure there, including Market President. In 2006, he joined First National Bank & Trust, where he has served as Executive Vice President, Senior Lender and a member of the Board of Directors. He currently serves on the Board of Directors for the London/Laurel County Industrial Authority and Laurel County Older Persons Activity Center. He had previously served as Board Chairman of the Laurel County Public Library. Glenn and his wife Helen reside in Laurel County.
Student-Run Bank in 14th Year
In its fourteenth year, First Kentucky Bank sponsors GC Trust, a student-run bank inside Graves County High School. This year’s grand opening was held September 21.
Mechelle Gattis, Graves County High School Business Teacher, said: “GC Trust is one of my favorite features of GCHS for not only the students who operate the bank but also for the students who benefit from its services. For the students operating GC Trust, they experience and master so many enduring skills including customer service, professionalism, money handling, and problem solving that just can’t be simulated in a traditional classroom. The students taking advantage of the services GC Trust offers get to put their financial literacy skills to work and hopefully develop some new ones!” Every week, Tuesday through Friday, from 11:40 a.m. - 12:35 p.m., students can make savings deposits or take out small loans. First Kentucky makes a capital donation each year and then assists the GC Trust Class with running the bank. First Kentucky employees train students and visit them throughout the school year to make sure all of the accounts and loans are in order. “We love opportunities to partner with our school systems,” Laura Stinson said, director of marketing at First Kentucky. “Children are our future and it’s important for students to know how to save money and the responsibilities involved in borrowing money.” NOV/DEC 2017
KENTUCKY BANKER | PAGE 47
KENTUCKY BANKERS ASSOCIATION
Kentucky Banks and the KBA Help with Hurricane Disaster Relief Efforts The hurricane season hit the United States hard in 2017, especially folks in Florida, Puerto Rico and Texas. The KBA organized the KBA Disaster Relief Fund (a public charity) to accept monetary donations from member banks to be used in times of need. These donations went to bank employees impacted by the devastation so they could get back to helping bank customers in their communities rebuild. We would like to thank the following banks (and affiliated individuals) for their generous contributions:
Century Bank
Commercial Bank
Commercial Bank of Grayson
First & Peoples Bank & Trust Company
First Federal Savings & Loan Association
First Federal Savings Bank of Kentucky
First Southern National Bank
Heritage Bank
Hometown Bank
Hyden Citizens Bank
Kentucky Bank
South Central Bank
Traditional Bank
Want to Help? There is still time to donate to the KBA’s hurricane disaster relief efforts. Send a check, made out to KBA Disaster Relief Fund, to: Kentucky Bankers Association, 600 West Main Street, Suite 400, Louisville, KY 40206; or, email mvance@kybanks.com for details. PAGE 48 | KENTUCKY BANKER
NOV/DEC 2017
KENTUCKY BANKERS ASSOCIATION
FCS Deposit-Taking More Extensive Than Previously Reported
In the July FCW I wrote that the FCS effectively accepts deposits, through the cash management services some FCS associations offer to their member/borrowers. As the article described, many associations in two of the four FCS districts — those funded by CoBank and AgriBank — accept deposits on behalf of the bank that funds them. That bank then invests the deposited funds in interest-bearing bonds it issues. These bonds can then be redeemed at any time by the FCS member/borrower, apparently without penalty. These bonds are not insured by any federal agency.
Sept. 30 are especially troubling as they fund a portion of the associations’ activities, yet they are uninsured liabilities of the association. As the linked spreadsheet shows in column I, some associations rely on OI-BD for a not-insignificant portion of their funding — as high as 11.59 percent at Colusa-Glenn. The fourth-largest association, Farm Credit West, held $421 million of OI-BD as of Sept. 30, 2017, accounting for 5.32 percent of its funding.
The public disclosure of that uninsured status is sketchy, at best. AgTexas, which had $9.3 million of such deposits In particular, unlike the debt the FCS issues through the as of Sept. 30, 2017, states on its website that “Voluntary Federal Farm Credit Banks Funding Corporation, these ACP Accounts are not federally insured but are backed by bonds are not insured by the Farm Credit System Insur- the financial strength of AgTexas Farm Credit Services.” An ance Corporation, which does insure the timely payment FDIC-insured bank could never say that. of principal and interest on debt issued by the Funding Corporation. On Sept. 30, 2017, $2.35 billion of these Numerous associations actually state that they accept debonds were outstanding, down slightly from $2.43 billion posits when describing on their websites the cash manageon Dec. 31, 2016. ment services they offer; in other cases, the association’s eagerness to accept deposits can reasonably be inferred Additionally, based on Sept. 30, 2017, FCS call-report data, from the website. Column J in the linked spreadsheet flags 37 of the 69 FCS associations had a total of $1.15 billion the associations where deposit-taking can at least be inin liabilities called “Other Interest-Bearing Debt,” or OI-BD. ferred. As discussed below, all or a substantial portion of the OIBD effectively are readily withdrawable deposits held by Another Texas FCS association, the financially troubled these associations. Lone Star Ag Credit (see next article), states on its webpage that it offers “an interest-bearing ‘Funds-Held Account’ for There also were another $241 million of deposit-like liabil- its borrowers.” The Farm Credit Administration (FCA) has ities on the books of CoBank and AgriBank, for a total of removed from its website all Lone Star call reports since $3.74 billion of deposits and deposit-like liabilities owed the end of 2015 so we have no idea how much it is holding by FCS institutions on Sept. 30, 2017. Of course, Congress in uninsured OI-BD at this time; in 2015, the amounts were has not authorized FCS institutions to accept deposits. This quite small — just a few thousand dollars. debt is usually identified on the quarterly financial reports the associations publish on their websites as “Funds Held,” However, it is amazing that the FCA permits Lone Star, “Advanced Conditional Payments” (ACP), “Future Payment much less any FCS association, to hold for their members Funds,” or similar terms suggesting that they are deposits. any uninsured “Funds Held” or other euphemisms for deThe $1.15 billion of OI-BD held by the 37 associations on posits. The House Financial Services and Senate Banking PAGE 50 | KENTUCKY BANKER
NOV/DEC 2017
KENTUCKY BANKERS ASSOCIATION
Committees should investigate the deposit-taking as well as the other banking activities many FCS institutions engage in, none of which are subject to the Bank Secrecy Act, as I reported in the Sept. 2017 FCW.
Lone Star Ag Credit’s Problems and Lack of FCS Transparency
As I first reported in the Aug. 2017 FCW, Lone Star Ag Credit was hit by an accounting scandal that caused the association to withdraw its financial statements back to the first quarter of 2016, stating that they “should no longer be relied upon.” As noted in the previous article, the FCA removed from its website Lone Star call reports since the end of 2015. Earlier this month, Lone Star published a short update on its website stating that it could not issue “Third Quarter 2017 financial statements on a timely basis.”
outstanding at Sept. 30, 2017, or at the prior quarter-end either, which strongly implies that the FCA has not taken any enforcement actions against Lone Star despite its acknowledged appraisal and accounting irregularities. This is an astonishing example of a lack of transparency by the FCA as to what steps have been or are being taken to ensure there is not a repeat of such irregularities.
FCA Not Concerned FCS Banks are Called ‘Commercial Banks’
Last month I reported on a press release issued by the online magazine Global Finance in which the four FCS banks (CoBank, AgriBank, AgFirst, and Farm Credit Bank of Texas) were ranked among the world’s safest commercial banks.
The FCS banks, of course, are not commercial banks, or even banks as that term is generally understood. Instead, It also reported that an investigation into the “appraisal they are merely funding intermediaries between the Fundand accounting irregularities” that triggered the withdraw- ing Corporation, which issues FCS debt, and the FCS associal of its financial statements should be completed “during ations, which do the bulk of the FCS’s lending. As an aside, the fourth quarter of 2017,” after which it “will work dili- the four FCS banks could easily be folded into the Funding gently to prepare all prior reports once the investigation Corporation and agriculture and rural America would not is complete.” Beyond that, Lone Star has disclosed noth- notice the difference, but that is a topic for another day. ing about its serious accounting problems, including management changes that may have been triggered by those As I noted in the FCW, CoBank seems quite proud of being problems. In fact, unlike other FCS associations, Lone Star ranked among the world safest commercial banks, having does not even provide a list of its senior management on issued a news release to that effect, even though it knows its website. it is not a commercial bank. This lack of disclosure at Lone Star is just one more example of the lack of transparency within the FCS and at the FCA. For example, even though bank regulators routinely publish detailed enforcement orders against banks and thrifts, the FCA refuses to do so; all it will do is disclose quarterly how many enforcement orders, or “written agreements,” were outstanding at the end of the most recent calendar quarter. Amazingly, according to the Third Quarter 2017 Information Statement issued by the Federal Farm Credit Banks Funding Corporation, no FCA written agreements were NOV/DEC 2017
When I expressed my concern to the FCA about CoBank promoting its Global Finance ranking, the FCA replied that because the CoBank news release states that it is “a leading cooperative bank serving agribusinesses, rural infrastructure providers and Farm Credit associations throughout the United States,” that statement “is not misleading and does not warrant FCA concern.” Apparently the FCA is not concerned that CoBank does not mind being called a commercial bank.
KENTUCKY BANKER | PAGE 51
a A Wonderful Life with Community Banks b
“Doesn’t (Bedford Falls Building and Loan community bank) make them better citizens? Doesn’t it make them better customers? You... you (Potter), what’d you say just a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait! Wait for what? Until their children grow up and leave them? (Until Dodd-Frank is repealed?) Until they’re so old and broken down that they... do you know how long it takes a working man to save five thousand dollars!? Just remember this, Mr. Potter, that this rabble you’re talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? My father didn’t think so. People were human beings to him, but to you, a warped, frustrated old man, they’re cattle. Well, in my book he died a much richer man than you’ll ever be! This town needs this measly one-horse institution if only to have some place where people can come without crawling to you!” George Bailey, Community Banker It’s a Wonderful Life