Kentucky Banker Magazine - Summer August 2018

GOVERNMENT RELATIONS

KENTUCKY BANKER SUMMER AUGUST 2018

COMPLIANCE & LEGAL

EDUCATION ALLIANCE

INSURANCE SOLUTIONS

PRODUCTS & SERVICES

HOPE OF KENTUCKY

A Dog’s Eye View of Banking

KBPAC POLITICAL ACTION COMMITTEE

Life Lessons From Man’s Best Friend

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

f @kybankers

Stupid is as Stupid Does Debra’s “My Two Cents” is Back!

Vickie Reiter Joins 50-Year Club Luther Deaton ABA Treasurer United Bank presented Charlie Cammack (left) with 50 Years Award

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KENTUCKY BANKER MAGAZINE Published bi-monthly by the Kentucky Bankers Association

YOUR ASSOCIATION OUR COMMONWEALTH

JULY/AUGUST 2018 IN THIS ISSUE

Katie Rajchel, KBA staff accountant, celebrated her 30th birthday in July; KBA staff helped her mark the day by decorating her office.

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................7 Straight Talk..........................8 My Two Cents.....................11 Charlie Cammack 50............12 Luther Deaton.....................13 KBA Calendar Contest.........14 Reciprocal Deposits.............17 Risk To-Do List......................20 Bert Ely................................22 Value of Validating...............23 Morgan & Pottinger.............26 FinCEN.................................27 Cooper Promoted................28 Resolutions.....................32-35

Representing Group 7 Mr. Steve Tolliver, Market President The Monticello Banking Company

ON THE COVER

This is Champ. He has never met a frisbee he didn’t like; and, he will teach us all about banking and life. Read all about it in this issue’s Chairman’s Corner.

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

QUESTIONS

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ADVERTISE

jfischer@kybanks.com www.kybanks.com

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

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

Jamie Hampton Education Services Coordinator jhampton@kybanks.com

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

Michelle Madison IT Manager mmadison@kybanks.com

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

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

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

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

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

Main: 404-848-1571

Direct: 704-228-0557

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SINCE 1891

The World According to Champ A Dog’s Eye View of Banking

I just returned from my summer vacation or as my family and friends call it: the Griswold vacation. Dee “Ellen”, Abe “Rusty”, and I “Clark” flew into Salt Lake City and drove 3200 miles through six beautiful states; Utah, Idaho, Oregon, Washington, Montana, and Wyoming. We saw Olympians train in Park City, potatoes, potatoes, and more potatoes. We placed gum on the gum wall in the Pike Place Market and looked down on Seattle from the 73th floor of the Columbia Center. We rode a jet boat up and down the Willamette River in Portland and I hit a deer while playing frisbee golf. We saw bison, eagles, moose, osprey, big horn sheep, mountain goats and even chased down a wolf in Yellowstone named Little T. We hiked through snow covered fields in Glacier National Park and explored hidden lakes. We floated down the Snake River past Harrison Ford’s estate and had peanut butter and jelly picnic lunches along several rivers and lakes. It was fun and as Rusty (Abe) said “very long”, but something was missing…my best friend Champ.

CHAIRMAN’S CORNER Tim Barnes 2017-2018 KBA Chairman

Here are a few of my favorites: • “I go wild with adoration every time my human walks in the door.” = recognition and acknowledgment.

• “I get a lot of mileage out of my puppy eyes.” = appropriate eye contact.

• “When you’re mad at me, I won’t get mad right back.” = does not get defensive or argue.

• “I can tell when you are sad or tired. And I feel your pain.” = empathize and listen.

• “I’m always eager to serve.” = great attitude and happy • “When you’re in front of me; I give you my full attention.” = focus.

A wise banker once told me, “We all have checking and savings accounts, teller lines, loans, brick & mortar and now mobile banking, what sits our industry apart is customer service!” Well said my friend, well said!

Champ is my three-year-old golden retriever. Dee and I found ourselves saying “I wish Champ was here,” “Champ As I finish drafting this article, Champ is sitting beside of would love to see the bison,” or “Champ would have en- me, patiently waiting for me to throw his frisbee. That is joyed this hike.” Heck, we even facetimed Champ a few his reward for being my best friend. times.

A life’s lesson from a man’s best friend.

My love for dogs goes back to my early childhood. I can never remember not having a dog in my house. Dogs are loyal, give unconditional love, and don’t care if you are rich or poor, black or white, tall or short. Dogs are consistent.

The human race could learn a few things from Champ, Buddy, Scooter, Blaze, Roxy, and other four-legged friends.

One thing to learn from the dogs is customer service tips.

It would be great if our front-line folks greeted customers at the door like Champ greets me when I get home.

Micah Solomon, a customer service expert pens an article titled “My Dog, The Customer Service Expert …,” in the October 2016 issue of Forbes. Solomon lists parallels bePhoto Credit: Front cover, and the above image of Champ, by Dee Barnes tween dogs and customer service.

JULY/AUGUST 2018

PAGE 7 | KENTUCKY BANKER

UNITED IN SERVICE

Stupid is as Stupid Does Do you ever feel like stupidity is on the rise all around you?

I use the word stupidity with some care. I even looked up the definition: having or showing a great lack of intelligence or common sense.” It’s not a pretty word, but neither is what it describes.

Albert Einstein famously said, “The difference between stupidity and genius is that genius has its limits.” So, maybe common sense has never been all that common.

My granny was a little more nuanced when she said that how smart or stupid you are depends on where you’re standing. Put a banker and a miner in the back of a deep mine and tell them to find their way out - you may never see the banker again. Put that same banker and miner in a bank board room and tell them to grow the bank - most miners will feel just as lost. That kind of stupid applies to all of us some part of every day.

But the stupidity I see growing is different. There’s a strong flavor of arrogance and the indifference that comes with too little accountability.

Consider the Federal Accounting Standards Board (FASB) and its new way of reserving for loan losses that is coming in 2020. The acronym will be CECL (Current Expected Credit Losses). Basically, a bank will be forced to set up an expected loss account – on Day One – for every loan that it makes. Common sense begs the question, “If I’m expecting a loss, why would I make the loan?”

Let’s say you make a $100,000 loan to a person worth $50 million with no other liabilities. You still have to assign a possible loss to this loan and reserve for on the day you make it! Sure, there could be an economic downturn that could wipe out the borrower’s entire $50 million net worth. (And why don’t we factor in a zombie apocalypse while we’re at it?)

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

FASB-types tout CECL as “forward looking” and superior to looking back at historical losses on the same type of loans. (The rest of us suspect it’s more truly a new basis of billable hours for the accounting industry.) The seven individuals who make up the FASB board may have a ton of knowledge but their common sense deficits rise to the level of stupid. It’s that arrogant and indifferent kind of stupidity that pretty well guarantees they won’t revisit this new policy.

Meanwhile, banking continues to be the go-to villain for power-hungry activists. Have you heard that banks are to blame when rising property values lead to low-income renters being displaced? No, I’m not making this up. According to an American Banker article published July 27, activists are claiming that banks are at fault when it happens because their multi-family development loans are based on rents at going market rates.

One activist group in California targeted a bank and urged it to adopt a ‘code of conduct’ that included underwriting multi-family loans based on current rents and avoiding landlords with a track record of evictions; never mind that this “code of conduct” would be tantamount to redlining and violate fair-lending laws.

The bank responded with the common sense position that rental rates are “determined by the larger forces of supply and demand that are well beyond the control of any financial institution.” Unfortunately, appeals to common sense have a low success rate with people who have none. It will all end up in the courts eventually, where it’ll be good for a few more headlines that affirm Einstein’s General Theory of Stupidity.

Go ahead and add a few of your own encounters with stupidity to these, as many as you can without falling into a depression.

Then you tell me: is it a rising tide, or just business as usual?

Either way, I’m happy to have something to resist.

PAGE 8 | KENTUCKY BANKER

JULY/AUGUST 2018

SINCE 1891

KBA Contributes to ABA PAC

Representatives of the KBA present a contribution to the American Bankers Association PAC. From Left to right: Rob Nichols, President & CEO, ABA; Ballard Cassady, Jr. (President & CEO, KBA); Luther Deaton, Jr. (President, CEO, of Central Bank, Lexington); Kenneth L. Burgess, Jr. Chairman, ABA; KBA Chairman Tim Barnes, President & CEO, Hometown Bank.

Please join us in congratulating the 2018-2019 KBA Emerging Leaders class. Pictured (L to R) in front Jessica Watts, Kelcey Dane Rock, Eleshia Brandon, Amber Smith and Logan Raley; in back (L to R) R. Taylor Rousey, Hayley Thomas, Jake M. Pepper and Mackenzie Carter.

JULY/AUGUST 2018

PAGE 9 | KENTUCKY BANKER

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SINCE 1891

I am thrilled to be back helping you guys!!!

If you need me, call me...

MY TWO CENTS Debra Stamper EVP & General Counsel dstamper@kybanks.com

I have been back in the office for just over a month now.

I was out for about 8 months (working from home when I could) successfully battling cancer. I won’t bore you with the details, but I just want everyone to know that I am back in the office pretty much every day. I still leave in the afternoons for radiation, but I have just a few short weeks left of that, and FULL TIME HERE I COME!

I cannot express how much I appreciate the thoughts, cards, flowers that I received from my extended KBA family.

If you did not know what I was going through, the attached picture shows me now so that you can see me with no hair…but, looking otherwise happy and healthy. Now, back to business.

I am thrilled to be back helping you guys. Get those emails and phone calls rolling. I will be reaching out to ensure that you have not forgotten my passion for KBPAC and to see what I can do to help your bank reach its goal.

I am also working on a page on our website which will allow Bank Counsel Members to post information about unpublished decisions so that we can have a better system for tracking those cases. I am also jumping feet first in planning for next year’s legislative session.

Debra Stamper

I am also excited about getting to know our new class of Emerging Leaders.

Let me know what issues are weighing heavy on your bank right now, so that I can include those on my list of battles to conquer!!

SINCE 1891

General Counsel ph 502-736-1272 Executive VP fx 502-584-6390 e dstamper@kybanks.com 600 W Main Street, Suite 400 Louisville, Kentucky 40202 www.kybanks.com f @kybankers t @KBADebra

JULY/AUGUST 2018

PAGE 11 | KENTUCKY BANKER

UNITED IN SERVICE

United Bank Celebrates Charlie Cammack with 50 Years in Banking Award

#kbabankshots

BANK SHOTS!

United Bank & Capital Trust Company (the “Bank”) presented Charlie Cammack with the Kentucky Bankers Association’s 50 Years in Banking Award this past spring at the monthly Advisory Board Meeting.

Mr. Cammack (pictured below at left), a Lawrenceburg native, started his career in banking in May 1967 with Lawrenceburg National Bank (which joined the Farmers Capital Bank Corporation in 1985). He was President and CEO of Lawrenceburg National Bank until their merger with Farmers Bank & Capital Trust Co. in 2010. Charlie was at the helm in 1985 when Lawrenceburg National Bank celebrated 100 years of service to Lawrenceburg and Anderson County.

After retiring, Charlie continued his tenure by serving on the Farmers Bank & Capital Trust Co. board until the United Bank merger last year. He now serves as an advisory director for the Bourbon Region of the Bank.

“It’s rare in this day and age to see someone remain in an industry for their entire career”, said Lloyd W. Hillard (pictured at right below), President & CEO of Farmers Capital Bank Corporation. “Charlie has been able to do so much for his community and the entire staff at United Bank. United Bank salutes Charlie for 50 years of service and commitment to our organization and the banking industry as a whole.”

BROOKE WILES FNB Bank announced the recent promotion of Brooke Wiles to Vice President. Brooke (Harris) Wiles, from Mayfield, KY, has been with the bank since 2008 and serves as the Director of Marketing and CRA Officer. She earned her Bachelor’s degree in Organizational Communication and Master’s Degree in Mass Communications from Murray State University and is also a graduate of the Mayfield-Graves County Chamber Leadership Program.

Brooke currently serves on the Board of Directors for the Icehouse Art Gallery, Gourd Festival Planning Board, Mayfield/ Graves Co. Area Technology Center Advisory Committee, Chamber Ambassador with the Mayfield-Graves County Chamber of Commerce and a member of the Chamber’s Young Professionals.

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

PAGE 12 | KENTUCKY BANKER

JULY/AUGUST 2018

SINCE 1891

#kbabankshots

BANK SHOTS!

CLINT ROBERTS FNB Bank announced the recent promotion of Clint Roberts to Security Officer. Roberts, from Paducah, KY, has been with the bank since 2014 and has previously served as a Teller and Customer Service Representative.

Clint earned his Associates degree in Science from WKCTC and has attended Murray State University.

Luther Deaton Nominated to Serve as ABA Treasurer Luther Deaton, Jr. Chairman, President & CEO of Central Bank, and a past Chairman of the KBA, has been nominated to serve as the treasurer of the American Bankers Association. The American Bankers Association’s Nominating Committee has selected the official slate of candidates for ABA officers for election at the association’s annual convention to be held in New York, October 21-23.

“We’re grateful that the nominating committee has delivered such a terrific slate of officers for the coming year,” said Rob Nichols, ABA president and CEO. “These passionate industry leaders dedicate a tremendous amount of their time to represent America’s banks before Congress, regulatory agencies and across the globe. We appreciate their expertise, leadership, and dedication to our industry.”

“I am honored by the opportunity to serve in this capacity and to represent community banks at the national level,” stated Deaton. “I am eager to work with the other nominees to address important issues affecting banks across the country.”

Vickie Reiter Named to 50-Year Club DAVID WOLFROM David Wolfrom has joined the Paducah Bank Finance Department as Senior Profitability Analyst.

Wolfrom has been a CPA for 16 years, and been a financial auditor, a CFO for a local medical practice and most recently as a financial analyst with CSI. He serves on the Finance Committee of First Presbyterian Church , and is Treasurer of Cub Scout Pack 470. Wolfrom has a Bachelor’s degree in Accounting and an MBA from University of Kentucky.

From all of us at the KBA, we want to congratulate Republic Bank & Trust Company’s Vickie Reiter for her entry into the Fifty-Year Club. Mr. Steve E. Trager, Chairman and CEO of Republic Bank, presents Vickie with a plaque recognizing her 50 years of service to the banking industry.

JULY/AUGUST 2018

PAGE 13 | KENTUCKY BANKER

SINCE 1891

Kentucky Thrift Foundation and Central Kentucky League of Savings 2018-2019 Officers At the 24th Annual Meeting of the Kentucky Thrift Foundation (KTF) held this past June in Lexington, officers were named for the 2018-2019 fiscal year. Mrs. Kari R. Gough, President/CEO at WinFirst Bank, Winchester, serves as President of the KTF, and Mrs. Shanda L. Smith, President/CEO at Blue Grass Federal Savings & Loan, Paris, serves as Vice President of the KTF. Both also serve on the KBA Board of Directors representing thrift institutions.

Following the KTF annual meeting, a joint dinner was held with the Central Kentucky League of Savings Institutions where Past Presidents of the Kentucky League of Savings Institutions gather for the joint dinner and meeting of the Central Kentucky League of Savings Institutions. Those attending the dinner were: Mr. Bill Woodward, Past President of the Kentucky League in 1969, Mr. Arthur Raderer, Past President of the Kentucky League in 1973, Mr. Dennis Kirtley, Past President of the Kentucky League in 1987; Mr. Tony Whitaker, Past President of the Kentucky League in 1988, and Mr. Larry Hatfield, Past President of the Kentucky League in 1990.

The Kentucky League of Savings Institutions was founded in 1896 and merged with the Kentucky Bankers Association in 1995. There are currently nine thrifts participating in the Kentucky Thrift Foundation.

JOANNA GWINN-ESTILL

Central Bank announced the promotion of Joanna Gwinn-Estill to commercial lines CSR supervisor. Joanna began her career as a commercial lines CSR in 2014. She is a graduate of Transylvania University.

KRISTY GABHART Community Trust Bank announced that Kristy Gabhart has been promoted to the position of Vice President, Regional Residential Loan Reviewer.

KYLE HAMILTON Central Bank announced the promotion of Kyle Hamilton to technology services officer. He began his career at Central Bank as a teller in 2001.

PAST PRESIDENTS PHOTO – left to right, back row: Mr. Larry Hatfield, 1990 Past President; Mr. Tony Whitaker, 1988 Past President; left to right, front row: Mr. Arthur Raderer, 1973 Past President; Mr. Bill Woodward, 1969 Past President; Mr. Dennis Kirtley, 1987 Past President.

PAGE 14 | KENTUCKY BANKER

JORDAN DUNN Jordan Dunn was added to the PBK Bank team as IT Specialist in March.

He had previously served 4 years in the United States Air Force.

JULY/AUGUST 2018

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2020

Scenes of Kentucky Photo Contest

PHOTO DEADLINE: DECEMBER 1, 2018

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

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

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

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

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

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

Example:

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

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

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

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

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

2020 Scenes of Kentucky

Photo Contest

Name of Banker Bank

1 2 3 File Name Photo By Photo of

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

File Name Photo By Photo of

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

File Name Photo By Photo of

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

Banker’s Phone Banker’s Email

4 5 6 File Name Photo By Photo of

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

File Name Photo By Photo of

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

File Name Photo By Photo of

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

SINCE 1891

Reciprocal Deposits

A Win-Win for Banks and the Communities They Serve KELLEY WORKMAN

Planters Bank announced the promotion of Kelley Workman to President.

Prior to her recent appointment as President of Planters Bank, she served as Executive Vice President and Chief Credit Officer of Planters Bank. A native of Hopkinsville and a graduate of Christian County High School, Kelley graduated from the University of Kentucky with a B.B.A. in Finance and Marketing as well as the Graduate School of Banking of the South at LSU. Kelley is a 1989 graduate of Leadership Hopkinsville-Christian County and a 2011 graduate of Leadership Kentucky.

She currently serves as Chairman of the Hopkinsville Surface and Stormwater Utility, and recently served as Chairman of the Jennie Stuart Medical Center Board of Trustees. Kelley has been the Treasurer of the University Heights Academy Board of Trustees.

The recent Wall Street Journal headline couldn’t be clearer: “The Biggest Banks Are Gobbling Up Deposits.” Competition is expected to tighten . . . especially for retail deposits. Rates are expected to rise. Yes, you have your challenges. But, as always, we’re here to help you.

Kentucky Bankers Association worked hard to get the community bank regulatory relief bill, the Economic Growth, Regulatory Relief, and Consumer Protection Act, passed and signed into law. Now that it is, most reciprocal deposits will no longer be treated by regulators as brokered.

Reciprocal deposits are deposits that a bank receives through a deposit placement network in return for placing a matching amount of deposits at other network banks.

Now is the time to use reciprocal deposits to lock in more low-cost funding and to build more large-dollar relationships. Now is the time to grow in profitability and in size.

In effect, reciprocal deposits enable you to get to keep your customer’s entire deposit on your bank’s books, fending off the competition for them from New York City, or North Carolina, or a nonbank institution down the street, or on the Internet.

Promontory Interfinancial Network, LLC, the largest provider, invented reciprocal deposits sixteen years ago. Today, roughly half of the banks in the country are members of Promontory Network.

LEIGH DURDEN Planters Bank announced the promotion of Leigh Durden to Chief Credit Officer. Prior to her recent appointment as Chief Credit Officer, Leigh Durden joined Planters Bank in 1999 and most recently served as Senior Vice President Corporate Banking. A native of Hopkinsville and a graduate of Hopkinsville High School, Leigh graduated from Austin Peay State University in 1997 with a Bachelor’s degree in Business Administration with a concentration in Finance and Accounting.

Leigh graduated from the Graduate School of Banking of the South at LSU in 2009. She is also a graduate of Leadership Hopkinsville and Leadership Clarksville. She served as a member of the Chamber of Commerce Board of Directors and as the Board Treasurer for Saint Luke’s Free Clinic from 2011 through 2017. Leigh currently serves on the Renaissance Design Review Board and is a Board Member of the Solid Waste Enterprise Board.

JULY/AUGUST 2018

Want information on Promontory?

Contact Selina Parrish / sparrish@kybanks.com

Testimonial Paducah Bank has had a relationship with the Promontory Network for over 10 years. It started with CDARS reciprocal deposits for a large public fund and we added ICS both the checking and savings products when they became available. We also added the CDARS “1-way” funding to supplement our borrowing needs and use that product weekly. Our bank recommends these services as an efficient way to secure local deposits and supplement funding needs.

John Durbin, Chief Financial Officer, Paducah Bank

PAGE 19 | KENTUCKY BANKER

SINCE 1891

Your Risk To-Do List: Following Up on New Customer Due Diligence Rules Chances are you were ready when FinCEN’s new customer due diligence (CDD) rules requiring the establishment of beneficial ownership for business relationships took effect May 11. But do you know if your policies and procedures are working as intended? If you haven’t addressed risk and put effective controls in place, then you don’t.

Implementing CDD isn’t just about adding a few steps to the account opening process. It’s understanding how these rules impact your Bank Secrecy Act/Anti Money Laundering (BSA/ AML) program and your institution as a whole. Potential issues include liquidity risk, compliance risk, reputation risk, strategic risk, operational risk, and transactional risk.

CDD Risks There are plenty of things that can go wrong when it comes to CDD. An institution can fail to implement it or implement it incorrectly. It can fail to correctly identify consumer and business accounts, letting misclassified accounts slip through the cracks.

Procedures and processes may not be properly followed.

CDD Controls Potential risks can be mitigated with controls. For example, the risk of failing to identify business clients and collect proper data can be mitigated by controls like: • Account opening checklists that to remind staff to identify whether or not it’s a business account.

• Periodic reviews of CDD policy and procedure compliance.

• Reviewing a sampling of beneficial ownership, OFAC, and 314a accounts to ensure both initial and ongoing collection of ownership data.

• Review sampling of business relationships to ensure beneficial ownership data was collected and is retrievable.

• Use beneficial ownership form.

• Staff training.

• Increasing management, committee and board awareness through ongoing reporting.

Assessing CDD Control Effectiveness It’s not enough to have controls. They need to be monitored for effectiveness. Each control should be assigned a staff member responsible for monitoring it on a regular basis, whether it’s weekly, monthly, quarterly or some other prescribed period of time. This must be done on time and documented. Examining just one control is like looking at one frame of a movie. It captures a lot of information about one moment, but it doesn’t tell PAGE 20 | KENTUCKY BANKER

the whole story. That’s why controls must be put together to assess the big picture. Not every control is the same. Some, like audits, are absolutely essential. Others, like checklists, are nice to have but may be less important. When a control’s effectiveness is measured against its importance, it shows how much a control contributes to increasing or decreasing residual risk. If the most important controls are moderately to mostly effective, it can indicate strong controls and low residual risk even if a few unimportant controls aren’t working as well as anticipated.

On the other hand, an institution might discover that it’s doing a fantastic job with minor controls but blowing it on the big ones.

The fact that a few minor controls are working well may not do much to decrease residual risk in light of the more important controls’ failure.

It’s also necessary to understand how CDD is functioning as a piece of your institution’s overall BSA/AML program. If your BSA/AML program is strong, but your CDD program is not, it increases overall BSA/AML risk, increasing the risk of regulatory issues and fines. An institution needs to quantify how much CDD compliance impacts its overall BSA/AML program.

Don’t assume your CDD program is working. Know just how much risk your institution is taking on by regularly monitoring CDD and other programs. By taking the time to quantitatively measure their effectiveness and determine their importance, you can increase transparency and nip bad surprises in the bud.

That’s just diligent business.

Want information on NCONTRACTS? Contact Selina Parrish / sparrish@kybanks.com

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UNITED IN SERVICE

Bert Ely’s Farm Credit Watch

Frontier Communications Should Repay all of its CoBank Loan In the June 2015 FCW I reported that Frontier Communications Corp. had entered into a $350 million “credit agreement” with CoBank to partially finance Frontier’s $2 billion acquisition of AT&T’s wireline business in Connecticut. Frontier is an investor-owned, Nasdaq-listed telecommunications company with $24.7 billion of assets at March 31, 2018; it is hardly a local telephone co-operative Congress intended CoBank to finance. In October 2016, Frontier entered into a nd credit agreement with CoBank for a $315 million term loan, raising the total amount CoBank lent to Frontier to $665 million. According to Frontier’s March 31, 2018, SEC 10-Q report, the two-term loans had been paid down to $504 million. On July 3 of this year, Frontier borrowed $240 million from another lender so that it could fully repay its 2014 loan from CoBank and partially repay its 2016 CoBank loan.

Barring subsequent loan pay downs, Frontier still owes $264 million to CoBank. While Frontier does not have great credit ratings (Moody’s B2 and S&P B+ on senior secured debt) the fact that Frontier recently borrowed $240 million from another lender clearly indicates that it can readily access the capital markets, which raises this question: Why did Frontier not pay off all of its CoBank debt or, to pose this question another way, why didn’t CoBank ask Frontier to repay its entire CoBank borrowing so that CoBank could erase this inappropriate loan from its balance sheet? The Farm Credit Administration (FCA), CoBank’s regulator, certainly should lean on CoBank to terminate its relationship with Frontier.

LINDSAY DUNN

Lindsay Dunn was recently promoted to Assistant Compliance Officer. She previously served as our Compliance Specialist. Lindsay has been with PBK Bank since 2007.

LISA DRIVER Community Financial Services Bank promoted Assistant Vice President and Indirect Lending Team Leader Lisa Driver to Vice President.

ArborOne video misrepresents itself and its patronage dividend A banker recently sent me this short (2 minute-plus) video produced by ArborOne Farm Credit to describe its patronage dividend program. I encourage FCW readers to view it as it concisely illustrates some common misrepresentations by FCS associations in pitching loans to prospective borrowers. ArborOne is a relatively small (assets of $473 million) FCS association serving 12 counties in eastern South Carolina. While ArborOne mentions on its website’s home page that it is federally chartered and separately that it is a “proud member of the Farm Credit System,” it does not explain that the FCS is a GSE which enjoys substantial tax advantages and federal backing by virtue of being a GSE. While the video mentions twice that it is a cooperative, twice it also refers to itself as a company, but it makes no reference to the Farm Credit System or to ArborOne’s GSE status.

Especially disturbing are implied promises in the video about ArborOne’s patronage program. The video gives an illustration of how the patronage dividend or “distribution” is calculated and paid — some in cash and some in a deferred pay-out — but strongly implies that a patronage dividend is guaranteed to be paid every year. Worse, the example presented in the video suggests that on a 6 percent loan, the dividend or interest rebate would be 1 percent of the loan amount; at another point, the video states that ArborOne’s goal is to rebate 25 percent of the interest paid. While noting that the ArborOne board decides each year how much to rebate to borrowers, what is not pointed out is there could be years in which no patronage is paid, as has occurred elsewhere in the FCS. As part of its ongoing oversight of FCS institutions, the FCA should evaluate FCS websites and promotional videos to ensure that they are factually correct and do not misrepresent the GSE status of FCS institutions.

PAGE 22 | KENTUCKY BANKER

MARK MINTON Central Bank announced that Mark Minton has joined Central Bank as vice president, retail banking officer. Mark will be stationed at Central Bank’s new Union banking center.

PAUL SCOTT FNB Bank promoted Paul Scott to Executive Vice President. He has been with FNB Bank for 16 years, serving as Chief Financial Officer since 2004.

JULY/AUGUST 2018

SINCE 1891

continued: Bert Ely’s Farm Credit Watch Senate Farm Bill would expand definition of YBS borrowers

SANDRA STANLEY

Central Bank announced Sandra Stanley has joined Central Bank as assistant vice president, credit analyst officer.

Sandra brings more than 17 years of banking experience to her new role.

A provision in the Senate version of the Farm Bill, which was passed on June 27, would expand the definition of young, beginning, and small (YBS) farmers and ranchers to include “socially disadvantaged farmers and ranchers.” Under existing law, such farmers and ranchers are members of a group “whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities.” Whether the House will accept this provision is unknown. A question to consider: Why is this provision even needed since FCS lenders should not discriminate against prospective borrowers because of their race or ethnicity?

If this provision is included in the final version of the next Farm Bill, the FCA will have to draft a regulation incorporating the collection of data on FCS lending to socially disadvantaged farmers and ranchers into the existing procedures that quantify FCS lending to YBS farmers. As I have explained in previous FCWs the YBS lending data the FCA now publishes is a mess; adding in data on FCS lending to socially disadvantaged farmers and ranchers would make this data even more misleading.

PAUL THORNSBERRY Central Bank announced the promotion of Paul Thornsberry to director of commercial lending. He began his career at Central Bank in 2004.

SEAN STINNETT Sean Stinnett has been named the new Relationship Banker at First Security Bank. He will be assisting customers and guiding them through their banking experience.

RICK DAVIES Rick Davies has been named Mortgage Loan Officer at First Security Bank.

He will be working with all mortgage clients and their home purchase, construction or refinance needs.

JULY/AUGUST 2018

Presently, a loan to a young (age 35 years or younger), beginning (engaged in farming 10 or fewer years), and/or small (annual gross agricultural or aquatic sales less than $250,000) gets counted three times in the YBS data — once as a young, once as a beginning, and again as a small farmer. If a YBS farmer or rancher also was classified as socially disadvantaged, then a loan to such a farmer would have to be counted four times. If that farmer had three FCS loans, then the loans to that farmer would be counted twelve times in the YBS data, greatly exaggerating FCS lending to YBS and socially disadvantaged farmers and ranchers. The ABA has long opposed this double and triple-counting because doing so exaggerates the extent of the FCS’s YBS lending. In other reports, the FCS has demonstrated that it can aggregate all loans to a farmer or rancher so that it can show the total amount of credit the FCS has provided to a particular borrower. This means the FCA, if it was so inclined or was directed by the ag committees, could publish data on lending to designated types of famers without exaggerating that data by double, triple, or quadruple counting individual loans to a particular farmer.

Does the FCA need Dodd-Frank-like resolution powers?

Another section of the Senate version of the Farm Bill not in the House version would greatly expand the powers of the Farm Credit System Insurance Corporation (FCSIC) to act as a conservator or receiver for any FCS institution. This provision accounts for about 10 percent of the total length of the Senate version of the Farm Bill. The Farm Credit Act already sets out, although not in great detail, the powers the FCA and FCSIC need in order to resolve an insolvent FCS institution. Whether the FCA requested this expansion of its resolution powers is not known, but given the length and legal complexity of the provision, the FCA most likely is its sponsor. If so, then the question is why now? Why is the FCA seeking these more extensive resolution powers, which are modeled in part on resolution provisions in the Dodd-Frank Act? Does the FCA see some looming financial problems within American agriculture that could lead to the failure of some FCS institutions, as occurred in the 1980s as a result of that decade’s ag crisis. Hopefully these questions will be addressed when a House-Senate conference committee resolves the differences between the two farm bills.

PAGE 23 | KENTUCKY BANKER

SINCE 1891

The Value of Validating Kelly Flynn, National Director

Other benefits of consulting an expert negotiator

Are you a go-getter, confident in your skills and rarely dele- Aside from securing the best deal and becoming a shingating the big, important tasks to ensure they’re done cor- ing star at your institution, a third-party review of your rectly? I respect that. I have met a lot of talented people contracts can also: with the do-it-yourself attitude toward contract negotia• save you time so you can focus on your day-to-day tions. But whether you’re a skilled negotiator, an experitasks and long-term goals; enced financial expert or a talented researcher, nothing • bring you additional vendor perks like signing bonuscompares to an insider who spends their days exclusively es, more favorable terms, and retroactive pricing; and securing the best deals for financial institutions.

• allow your institution to reinvest the savings into account holder services and improvements or employee That’s me, and my contract negotiation team at JMFA. We loyalty and retention efforts. negotiate vendor contracts for banks and credit unions day in and day out, and have seen it all. So when a do-it-yourselfer says to me, “I’m happy with my current vendor, and Time is of the essence I’ve already negotiated a great renewal contract,” I reply: To negotiate the greatest savings on your contracts, it’s ad“Let’s check it out!” visable to get the ball rolling 12-18 months before the contract is set to expire. It is possible to experience substantial Why seek validation? savings and additional vendor terms, like when Garden IsA second opinion and some validation never hurt anyone. land Federal Credit Union — was in a pinch with less than In fact, it’s likely to help you save even more, even if you seven months left on a contract. But, earlier is definitely think you’ve got the best deal already. Plus, when the ne- better so you can have the upper hand and evaluate all gotiations come with a 100% contingency-based fee struc- your options. ture, you have nothing to lose. In other words, if you don’t The first step is simple: request an analysis of your consave money, you shouldn’t pay a fee! tract(s) and learn more about the process. Then, you and But one thing you can gain is a reputation as a stellar nego- your financial institution will be well on the way to not tiator. Whether you’re one of the 98% we help find savings only discovering, but experiencing, the value of getting a or the 2% we evaluate who have scored the best deal on second opinion. You might even get that well-deserved pat their own, you’ll have the validation that a third-party in- on the back from management and the even the board. dustry expert has looked over your contracts to make sure How’s that for validation? you’re not overpaying. Having a well-known expert in contract negotiations to double check your work can earn you the trust of your board members and upper management.

And, they’ll likely remember that when bigger opportunities arise.

ABOUT JOHN M. FLOYD & ASSOCIATES (JMFA) For more than 38 years JMFA has been considered one of the most trusted names in the industry—helping community banks improve their performance and profitability. To learn more contact your local representative or call us at (800) 809-2307.

PAGE 24 | KENTUCKY BANKER

JULY/AUGUST 2018

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New Legislation Clears Confusion About Collection of Interest on Charged-Off Debts

by John T. McGarvey

The Kentucky Legislature has cleared any confusion about the right of banks to collect interest on charged-off debts. House Bill 369, which becomes law on July 14, clarifies existing law that banks can collect post charge-off contract John T. McGarvey rate interest on most debts and, going forward, allows collection of interest at the 8% legal rate on debts where a contract rate no longer exists.

The confusion about interest accrual on charged-off debts arose because bad facts make bad law, a lawyer adage that applies to the decision of the Kentucky Supreme Court in Unifund CCR Partners v. Harrell.

credit card debt but not tightly written: “[A]t the point Citibank charged-off Harrell’s account, it waived its right to collect the agreed-to interest on the account.” That has led to claims that when banks charge-off assets, they waive the right to collect any additional interest on the charged-off debt.

To resolve any confusion, House Bill 369 amends KRS 360.010 to state that a bank entitled to interest at a rate specified in a written contract shall be entitled to interest after default at that rate. It also provides that when a contract rate no longer applies, such as a charged-off credit card, interest can be recovered at the legal rate.

HB369 also creates a new section of KRS Chapter 371, which specifies that the obligation of an obligor to pay a debt is not adversely affected by the internal action of a creditor to treat the obligation as not collectible, or by any external reporting of the debt as charged-off.

The facts involved collection of a Citibank credit card debt that, prior to charge-off, carried a 27.24% APR. Before selling the account to a debt buyer, Citibank charged-off the account, stopped sending monthly statements and, under Reg. Z, could no longer charge contract interest.

Unifund, the second assignee of the charged-off account, argued that the balance was a liquidated debt on which it could collect interest from the date of charge-off at the 8% legal rate in KRS 360.010.

That statute allows a higher rate if agreed to in a written contract, and provides that the debtor “shall be bound for such rate of interest..., and no law…limiting interest rates shall apply to any such agreement….”

The Kentucky Supreme Court interpreted that language to mean that a creditor which had opted to charge a higher contract rate of interest was “bound” by the contract and after charge-off could not opt back into the legal rate.

The action of the Legislature in HB369 should be deemed as changing the law only regarding the narrow fact situation of charged-off consumer revolving credit debt, as addressed in Unifund, to allow collection of interest at the legal rate on the charged-off balance.

Otherwise, HB369 is a clarification of existing law to prevent over reading of the charge-off and waiver language in the Unifund decision.

Morgan & Pottinger is proud to have worked with the Kentucky Bankers Association on this important issue for the industry.

M&P is a leading banking and finance law firm representing financial institutions, businesses and individual clients throughout Kentucky and Indiana.

Debtors’ attorneys have tried to expand the holding of Unifund from revolving consumer credit accounts to all debts. They cite language clearly aimed at the MorganandPottinger.com

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SINCE 1891

FinCEN Announces Update to the Suspicious Activity Report (SAR) Chance Williams, CRCM Compliance Specialist In late January of 2018, FinCEN announced the update to the Suspicious Activity Report (SAR) that will be available on June 22, 2018. The updated SAR form has been revised and includes half a dozen changes. These changes include: a new field that will alert FinCEN to the SAR being filed in response to specific geographic targeting orders (GTO), advisories, or other activity, a new field for type of suspicious activity “Cyber Event”, a new field in the “Cyber Event” indicator field that allows the filer to report various events such as Command and control IP addresses, Ports, suspicious files names, and more. In conjunction with the new field, there were updates to existing fields such as: subtype selections associated with various suspicious activity types, revisions to date and time stamp fields relating to activities being conducted on a schedule or random in nature, selections associated with suspicious activity product types, and subtypes associated with Securities and Futures. In addition to the above noted revisions, batch filers will be required to submit SAR information in a XML file format rather than in fixed-length file delimitation, such as the current ASCII. First, let’s discuss the new field, located in Filing Institution note to FinCEN, which will alert FinCEN to the SAR being filed in response to specific GTO, advisories, or other activity. FinCEN announced in 2016 they were concerned that all-cash purchases may be conducted by individuals attempting to hide assets and their identity, by making those purchases through shell companies. To better understand the role GTOs play, FinCEN began doing the needed research. FinCEN Acting Director Jamal El-Hindi stated: “The information we have obtained from our initial GTOs suggests that we are on the right track,” “By expanding the GTOs to other major cities, we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course.” This new field will further assist FinCEN in protecting against the abuses of illicit actors on a larger scale.

The second new field to discuss is located in Part II. This new field is designed to capture “Cyber events” as they pertain to suspicious activity. FinCEN has defined these types of events as: Cyber-Event: An attempt to compromise or gain unauthorized electronic access to electronic systems, services, resources, or information, Cyber-Enabled Crime: Illegal activi-

JULY/AUGUST 2018

ties (e.g., fraud, money laundering, identity theft) carried out or facilitated by electronic systems and devices, such as networks and computers, Cyber-Related Information: Information that describes technical details of electronic activity and behavior, such as IP addresses, timestamps, and Indicators of Compromise (IOCs). Cyber-related information also includes, but is not limited to, data regarding the digital footprint of individuals and their behavior. Many times a cyber-event that targets a financial institution constitutes some type of illicit activity and can serve as a conduit to commit numerous types of wide-ranging crimes. This has resulted in the additional subtype selections being added to Part II. The new subtypes are: new or modified options for Structuring, Fraud, Gaming, Money Laundering, Identification/Documentation, activities around Securities, Futures, Options, and Mortgage Fraud.

Due to these events becoming more prevalent, FinCEN has issued situations in which a SAR filing is required.

Third, in Part II the new field, for “Cyber-Event” indicator field that allows the filer to report various events such as Command and control IP addresses, Ports, suspicious files names, and more, was added. This addition was due to the continued and increasing use of electronic systems and resources that are often utilized to perpetrate illicit activities. This increased use of electronic means requires institutions to capture information associated with Cyber-related activities. It is becoming ever more important for BSA and IT departments to work closely together to implement tracking and reporting of potential cyber-related incidents to ensure the institution is aware of all possible suspicious activities occurring. The cooperation between BSA and IT can help to better understand the possible cyber-related occurrences and know if there is a pattern or practice being utilized when illicit actors are perpetrating these activities.

Next, let’s discuss the revisions made to the SAR form that are not due to additional fields. The first revision is located in Part II and allows for subtype selections associated with various suspicious activity types to be made. Selecting these will help the institution better capture the true activity being conducted. FinCEN can also better determine any course of action in regard to the suspicious activity. Looking next at the revised date and time stamp fields, located in Part II, help determine if the activities are being conducted on a schedule or are random in nature. Information of this nature can assist in being prepared for future activities.

CONTINUED ON PAGE 31

PAGE 27 | KENTUCKY BANKER

Cooper Promoted to President

KBA Endorsed Vendor, The Newburgh Group, an executive recruiting firm headquartered in Newburgh, Indiana, announced today the promotion of Brandon Cooper to President. Brandon has been with the firm since 2002. Brandon replaced Dan Oates, a former owner in the business, who retired from the firm and sold his interest to the Coopers on April 30, 2018. Brandon became a partner in the firm in 2007.

Brandon also works with his partner in the business, M. Lynn Cooper, Chairman, who led a successful 40+ year career in banking in Kentucky and Indiana before rejoining the firm in 2016. The Newburgh Group, formerly known as Management Recruiters of Newburgh is associated with Management Recruiters International, the largest executive recruiting firm of its kind in the United States. MRI has in excess of 500 offices world-wide and was also named to the Forbes list of Top 10 Executive Search Firms in the U.S. for the last two years. The Newburgh Group specializes in executive search for Banks and other Financial Service Companies, as well as Medical Companies including Clinical Research, Research and Development and Medical Imaging. The Newburgh Group are the recipients of the prestigious President’s Club 14 times and the Pacesetter Award 4 times. The Newburgh Group is also the only endorsed Executive Recruiting firm for the KBA.

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SINCE 1891

Kentucky Bankers Receive Diplomas from Graduate School of Banking at Colorado The Graduate School of Banking at Colorado (GSBC) is pleased to announce the graduation of 12 Kentucky banking professionals as a part of the class of 2018. The graduates are pictured from left to right. Front Row: Andrew Dorton, Kentucky Department of Financial Institutions, Frankfort; Ellen Sharp, Central Bank & Trust Co., Lexington; Clarke Goucher, Kentucky Department of Financial Institutions, Frankfort; Patty Gibson, Commercial Bank, West Liberty; Charlie Riggs, Kentucky Department of Financial Institutions, Frankfort. Back Row: Andrew Davis, Hometown Bank of Corbin, Inc., Corbin; John Campbell, Kentucky Department of Financial Institutions, Frankfort; Adam Gray, First Federal Savings Bank, Danville; Josh Devore, South Central Bank of Barren County, Inc., Glasgow; Jason Redfern, First Southern National Bank, Princeton; Jamie Coffey, KBA_StockYardsBank-HlfPgAd_Aug2018.pdf 2 8/16/2018 3:39:49 PM First Federal Savings & Loan Association, Hazard; Lee Ann Hockensmith, First Federal Savings Bank, Frankfort.

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continued from page 27: FinCEN Announces Update to the Suspicious Activity Report ASHLEY TREECE

Community Trust Bank announced Ashley Treece has been promoted to the position of Commercial Loan Officer Trainee in the Community Trust Bank Middlesboro Market.

The third revision, located in Part II, expands on the suspicious activity relating to specific product types. The information gathered here helps both the institution and FinCEN determine if specific products are being exploited, and are resulting in illicit activities being perpetrated. The fourth revision, located in Part III/IV, deals with Securities and Futures. This revision was made to ensure that the institutions are capturing information in relation to where the activity occurred and filing instructions in case of illicit activity.

The final addition to the above noted additions and revisions are directed at batch filers. Batch filers will be required to submit SAR information in a XML file format rather than in fixed-length, file delimitation such as the current ASCII. The BSA E-filing system will continue to accept ASCII batch submissions until January 1, 2019 in order to give batch filers a six-month go-live date window from June 2018 until January 2019. This window allows financial institutions the opportunity to ensure they are ready to file batches using the new required XML file format prior to the required date.

TONY BUSHONG

Tony Bushong has recently been recognized by Paducah Bank for his outstanding work, and has been promoted to Information Security Officer.

Chance Williams brings a wealth of knowledge and practical experience to our banks.

Chance developed an expertise in compliance while working as a BSA and Compliance Officer in banks of all sizes during his career. He contributed as a member of Business Development Teams, Loan Committees, Audit Committees, Product Steering Committees, IT Committees and as a direct liaison with the regulatory agencies.

LYNN HALL Community Trust Bank nnounced Nicole Lynn Hall has been promoted to the position of Commercial Lending Assistant in the Community Trust Bank Middlesboro Market.

Chance also holds 10 years of experience as a compliance officer/auditor and 4 years as a senior compliance/audit consultant. As a Compliance Officer and Auditor, Chance has spent his career working with banks under enforcement action to strengthen bank compliance management systems. Chance holds the ICB CRCM certification; as well as ICBA certifications in BSA (CBAP), Compliance (CCBCO), and IT (CCBTO). He has worked in the banking industry for 20 years in all departments of the bank. He possesses a strong working knowledge of bank operations and compliance.

Testimonial BUDDY BISHOP Community Trust Bank announced that Charles “Buddy� Bishop is a Vice President, Commercial Loan Officer in the Community Trust Bank Middlesboro Market.

JULY/AUGUST 2018

After participating in a live demonstration of Compliance Alliance, it was exciting to see the numerous tools and resources provided by them, in addition to their toll-free hotline. Compliance Alliance is providing the solutions we need to sup port the ever increasing compliance and regulatory requirement at Planters Bank. I highly recommend Compliance Alliance for ALL banks!

LuAnn Fries, Compliance Officer/BSA, Planters Bank, Hopkinsville

PAGE 31 | KENTUCKY BANKER

Resolution First Federal Savings Bank of Kentucky in Honor of

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

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

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

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

• Geography • Branding • Marketing

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

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

Why the Newburgh Group?

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

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

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

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

• Associated with Management Recruit International, the largest recruiting fir in the world.

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

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

Why the Newburgh Group?

Yes, they are all important, but the most important ingredient is TALENT. Do you have the right talent at your company to be successful and do the best job pos If not, see us. We specialize in locating and placing the best talent available for your po • Geography • Branding • Marketing

What is the most important element of success?

GROWING? EXPANDING? Brandon Cooper

M. Lynn Cooper

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

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