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KENTUCKY BANKER MAGAZINE August 2013

As we celebrate our 25th Anniversary, we express our sincere appreciation for the support and loyalty of our customers.

Our goal, like that of the Community Banks we serve, continues to be delivering the leading, strongest customer service in the correspondent banking industry. We look forward to the future and the continued opportunity to care for our customers.

800.248.3229 | 502.695.3000 | www.bbky.com

Board Officers

David P. Heintzman KBA Chairman Stock Yards Bank & Trust Company Louisville Richard Barto KBA Vice Chairman Citizens Bank of Northern Kentucky Newport Neil S. Bryan KBA Treasurer The Farmer’s Bank of Milton Milton Tony D. Whitaker KBA Past Chairman First Federal Savings & Loan Association Hazard Ballard W. Cassady, Jr. KBA President & CEO Group Representatives R. Bruce Kimbell- Group 1 First Community Bank Clinton Michael Mercer- Group 2 First Security Bank of KY Central City Frank B. Wilson- Group 3 Wilson & Muir Bank & Trust Company Bardstown Owen Lambert- Group 4 South Central Bank Glasgow James W. Beach- Group 5 People’s Bank & Trust Company Owenton Anthony Busseni- Group 6 Century Bank of Kentucky Lawrenceburg Katherine Capps- Group 7 First State Financial Middlesboro Stephen Miller- Group 8 Peoples Bank of Kentucky Flemingsburg Greg A. Wilson- Group 9 The First Commonwealth Bank Prestonsburg THRIFT REPRESENTATIVES Don Jennings First Federal Savings Bank of Frankfort Frankfort Glenn Meyers Kentucky Federal Savings & Loan Covington BANK SIZE REPRESENTATIVES Luther Deaton Central Bank Lexington Elizabeth Griffin McCoy Planters Bank Hopkinsville EDUCATION ALLIANCE REPRESENTATIVE Lanie W. Gardner First National Bank of Muhlenberg County Central City PEC REPRESENTATIVE Fred Brashear, II Hyden Citizens Bank Hyden

CONTENTS STAFF Management Team Ballard W. Cassady, Jr. President & CEO Debra K. Stamper EVP/General Counsel/Director of Compliance Paula B. Cravens Sturgeon Director of Education Solutions Selina O. Parrish Director of Vendor Solutions Matthew E. Vance Chief Financial Officer

STAFF Miriam Cole Executive Assistant Paula Cross Education Solutions Coordinator Jamie Hampton Education Solutions Coordinator Natalie Kaelin Assistant General Counsel Chris Kelso Manager of AIB Education Solutions Michelle Madison IT Manager Lanie Minton Administrative Assistant Tammy J. Nichols Convention & Member Services Coordinator Katie Rajchel Staff Accountant Yvonne Savage PAC Services Coordinator Steve Whitlow Systems Engineer CONSULTANTS John P. Cooper Governmental Affairs

Cover

Bee On Coneflower Photo shot by Robin Miller for the 2013 Scenes of Kentucky Photo Contest

COLUMNS Chairman’s Corner.........................5 Straight Talk.................................6

Departments Education....................................21 Products and Services..................23 Making News...............................24 On the Move................................27

KBA Insurance Solutions Chuck Maggard President & CEO Brandon Maggard Account Representative Audrey Whitaker Insurance Services Coordinator

Features

KBA BENEFIT SOLUTIONS Lisa Mattingly Director Sales & Service Lane Hettich Service Manager Donna McCartin Account Representative

One on One Update......................13

HOPE OF kENTUCKY Billie Wade Executive Director

Crews Resolution ...........................8 Emerging Leader Spotlight..............9 Thrift Foundation Officers..............11 U.S. Bank Celebrates 150..............14 Your Most Important Assets..........18 SIEMple Compliance.....................25

August 2013 | 3

Jim McKenzie

Correspondent Banking

Count on us.

In today’s environment, Correspondent relationships are more important than ever and Stock Yards Bank & Trust is committed to working with the community banks in Kentucky. As one of the largest and strongest Kentucky based community banks, we understand the complex issues your bank is facing today. When your bank has needs around capital, liquidity, acquisition financing, stock buy backs, retirement plans or trust services we want to be your bank’s trusted Correspondent partner.

Chances are we know you, your bank and your community. Give James or Jim a call and put our experienced team to work for your bank.

James Brown

Correspondent Banking

The Correspondent Banking Team Jim McKenzie has over 40 years of banking experience, 36 years of those years as a correspondent banker.

James Brown has over 20 years of banking experience in Retail, Small Business, Corporate and Correspondent Banking.

(502) 625-0878 jim.mckenzie@syb.com

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

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Chairman’s corner membership has roots tied to employment but banks have always opened their doors to virtually everyone.

As you all well know, most of us compete head-to-head with these tax-exempt credit unions. If your bank is a C Corp, then you pay at the marginal federal rate of 35%. That gives a credit union a 35% advantage over your bank on pricing of a loan or deposit. The ABA reported that Kentucky banks paid over $173 million in income taxes for 2012 while the credit unions paid zero. This exemption costs the U.S. Treasury $2 billion annually.

Here in Kentucky, Fort Knox Federal Credit Union, with $1.1 billion in assets, is the largest credit union.

They are larger than 94% of Kentucky based banks yet they paid no federal taxes. Is that fair? And here in Kentucky, credit unions have used this advantage David Heintzman to grow their deposits. From June 2002 to June 2012 KBA Chairman credit union deposits in Kentucky had an annualized growth of 6.4%, more than double that of Kentucky By the time this letter reaches your desk, a lucky banks at 3%. Community banks need an even playing winner will have been drawn for a complimentary field. The success of your bank is at risk along with two night stay at The Greenbrier during the KBA the impact it has on the towns and communities it annual convention to recognize their fifty years in serves. Convince your customers that the credit banking. Since the KBA’s request for banks to submit union industry is not what it used to be, and that an previously unrecognized employees with fifty years in industry this large and profitable should pay taxes banking to be honored, eight new people have been like every other American. identified. Congratulations to the winner. If your bank has an honoree, please consider sending that person The credit unions will not take this attack on their to the convention to be recognized publicly for their exemption without a fight. Misinformation will be achievement. Fifty years is a lifetime in an industry. everywhere. The ABA site is full of facts, figures, Their wisdom is immense, and I look forward to speeches, ads and slide shows. Use them and let’s meeting them in September. join the battle. Credit unions……”It’s time to pay”.

In early August, the ABA hosted a webinar called “It’s Time to Pay”. This webinar was a kickoff of the ABA’s new campaign to end credit unions’ outdated tax exemption.

As Congress examines all tax exemptions and special treatments in an attempt to raise revenue and stem growing debt levels, bankers believe it appropriate that credit unions be taxed as they have clearly morphed from their mission to serve people of modest means.

Quite simply, the message is…”If credit unions want to act like banks, they should be taxed like banks”.

Plain and simple. A 2006 study by the GAO found banks, rather than credit unions, to have a greater percentage of low and moderate income customers.

Twenty four percent of bank customers were low income compared to 14% for credit unions, while upper income customers accounted for 41% of bank customers but a staggering 49% at credit unions. If you think about it, it makes sense. Most credit union August 2013 | 5

Straight Talk

Accountability Barr also discussed his repeal of some Dodd/Frank regulations which are killing small community banks, tying up loans to small businesses, and crippling home sales. We thank Congressman Andy Barr for his time and commitment to our cause.

As voters, it is our obligation to be informed on the issues our elected officials support and don’t support. Additionally, we must educate our elected officials on the reasons we support certain issues.

If Dodd/Frank did little more than cause our industry to re-arrange some deck chairs I wouldn’t stand atop my soapbox for hours on end. But the fallout of this legislation is bleeding our community banks dry and thus those communities they serve. The interpretation of these laws (which is the responsibility of the regulators) is even more ludicrous and damning.

On July 12th, Congressman Andy Barr visited the KBA office to hear from a few of our bankers and staff. Barr recognizes what our industry needs, and in my opinion, he does a respectable job establishing our industry’s position in Washington.

I know all politicians seek re-election, and some make that goal more important than their platform.

But there are a few who further their cause because they understand it’s the only way for Kentucky, and the rest of the country, to move forward. In his meeting, Barr stressed that reigning in regulation is necessary for our nation’s stability (not to mention growth). The red tape coming out of Washington creates a destructive environment and uncertainty in the private sector for nearly every industry, not just ours. Health care, oil, gas and coal all face dizzying regulations of their own. According to Barr, government regulations cost our economy over $1.75 trillion per year, or nearly 12% of GDP. The 2011 Federal Register, which is the official journal of the federal government and contains all proposed and final regulations, stands at 81,247 pages (for reference, Dostoyevsky’s Crime and Punishment is around 700 pages). You can hear his speech on the house floor here: http://barr.house.gov/mediacenter/videos/the-reins-act-critical-tool-in-battleagainst-overregulation-0

We must start holding our elected officials accountable. Lord knows I have had a lot of friends in elected office over the years and when I was younger I was the worst kind of voter, I voted for my friends regardless of what kind of job they were doing. Those days have changed. Why? Because I have children and now I worry about what they are facing if our elected officials don’t start doing what is best for the country instead of what is best for them. It’s a two way street, we have to hold them accountable. Wouldn’t it be a perfect world if our politicians “lived” in the same world we do? Where they had the same retirement plan we have and the same health insurance plan we have. Maybe then they could maintain their focus on what is best for the country. You see, the way it is it doesn’t matter if they screw up because they still get full retirement and full health care when they leave office. Maybe if they had to survive like the rest of us, in the mess they created, they would think twice about voting for a bill like Dodd/Frank or Obama Care. If you ask any voter, fiscal responsibility of the government should be a given, not an issue to focus on every few years.

Let me know what you think: bcassady@kybanks.com August 2013 | 6

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Emerging Leader Spotlight: Justin Dixon As many of you may know the KBA has established an Emerging Leaders Program and the inaugural class’s progress has been chronicled in the monthly KBA magazine. Throughout the year we have discussed many different topics and visited many different places as Emerging Leaders. This past month we met at the KBA’s headquarters in Louisville, Kentucky to continue our educational experience by listening to and discussing with more seasoned veterans in the banking industry.

We began our discussion with Hank Allen, Chairman/President and Chief Executive Officer of Commercial Bank in West Liberty Kentucky. Hank brought to the Emerging Leaders a vast knowledge for the disaster recovery process. As many of you may know West Liberty, Kentucky was struck by a F3 tornado that literally destroyed the entire town. Hank stated that this event was a one in 1,000 year event. In the foothills of the Appalachian Mountains you never really consider the chance of a tornado hitting your town; however, on March 2, 2012 at approximately 5:30PM in West Liberty, Kentucky that all changed. Hank discussed in detail about the devastation that took place in his hometown and the struggles West Liberty faced in the following days and continues to face. Hank showed us a video that was created by two high school students and in that video they played a song named “The Heart of this Town”. The song’s name, at a glance, doesn’t really stand out; but in the next few days, weeks, and months following the tornado Commercial Bank and their employees became the heart of West Liberty. The bank made a conscious effort to open on Monday with or without a building or location. The employees of Commercial Bank got together and came up with a plan to open and on Monday “The Heart of the Town” opened their doors for business, but definitely not as usual.

They were back to the “good ole days” which encompassed doing all the daily work by hand. Hank stated “That many customers only called to make sure that there was a person on the other end of the phone line.” Being able to speak with someone directly from the bank was a sign of confidence for the community of West Liberty that they will overcome this tragedy. The impact that Hank and Commercial Bank had on West Liberty can’t be placed into words. They truly have been “The Heart of this Town” throughout this tragic disaster.

For the second half of our class, in July, we discussed the operational procedures for a Board of Directors with Billie Wade. Billie discussed that there are not any two Board of Directors created equal and that we should keep that in mind as we go throughout our discussion. Billie stated that it is vital to the success of any organization that the Board of Directors has a passion for their particular organization. The Emerging Leaders were able to learn from Billie’s presentation the importance of the directorate’s fiduciary responsibility. These important Board duties included Corporate Governance, Board Oversight, Financial Analysis, and Policies and Procedures. We also discussed the operational procedures of board of directors in depth. Most of the Emerging Leaders have not had the opportunity to learn by physically participating on Board meetings at their particular banks. We, however, will be much more prepared for that opportunity after discussing with Billie the ways directorates operate, function, and flow.

The Emerging Leaders program through July has truly been a blessing to my banking career. I have learned from many astute bankers throughout this process, and I am ecstatic for the opportunities that this program will offer to our class throughout the remaining portion of the year.

Justin Dixon Business Development Officer, Citizens Guaranty Bank Irvine August 2013 | 9

Kentucky Thrift Foundation & Central Kentucky League of Savings Name Officers for 2013-2014 At the 19th Annual Meeting of the Kentucky Thrift Foundation (KTF) held on June 27, 2013 at the Marriott’s Griffin Gate Resort in Lexington, officers were named for the 2013-2014 fiscal year.

Mr. Don Jennings, CEO, First Federal Savings Bank, Frankfort will serve as President of the KTF and currently serves on the KBA’s Board of Directors. Mr. Glenn Meyers, CEO, Kentucky Federal Savings & Loan Association, Covington was elected to serve a three-year term on the KBA’s Board beginning at the close of the convention on September 17, 2013. Mr. Meyers, currently serves on the KBA’s board filling the unfinished term of Mr. Bill James.

Mr. Meyers will serve as Vice President of the KTF.

Left to right – Bob Farmer, Glenn Meyers, Don Jennings, Guest Speaker, Bob Farmer is welcomed to the dinner by KTF Officers, Glenn Meyers and Don Jennings.

Also, at the June 27th joint meeting of the Kentucky Thrift Foundation and Central Kentucky League of Savings Institutions, Mr. Glenn Meyers, CEO, Kentucky Federal Savings & Loan Association, Covington was elected to serve as President of the Central Kentucky League of Savings Institutions for 2013-2014; and Mr. Ryan Steger, President/CEO, Commonwealth Bank, FSB, Mt. Sterling, was elected to serve as Vice President of the Central Kentucky League for the coming fiscal year.

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Following the KTF annual meeting, a joint dinner was held with the Central Kentucky League of Savings Institutions where Past Presidents/Chairmen of the Kentucky League Savings are invited to gather for the joint dinner and meeting of the Central Kentucky League. Mr. Bill Woodward, past President of the Kentucky League in 1969, attended the dinner.

Guest Speaker, Mr. Bob Farmer, speaker-humorist-motivator and member of the Central Kentucky League, provided the after dinner entertainment for the audience.

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August 2013 | 11

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Most leaders in banking understand ‘Service Organizational Controls (SOC) 1’ as it relates to financial reporting. What about SOC 2 specifically designed for I.T. managed services, and many other technology and cloud-computing based businesses? When considering I.T. service providers, ask about their SOC 2 status. Some boast SOC compliance but merely outsource their responsibility to a 3rd party data center. NetGain Technologies holds itself to a higher standard.

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Jerry Claunch of Citizens National Bank presents a check to Carol Sexton, Pulaski County Public Library’s director of child services. The “Imagination Library” is a nonprofit organization founded by Dolly Parton. It was designed to improve literacy and school-readiness in children under five years of age. Every enrolled child receives one age appropriate book per month delivered to their home, at no cost to the child’s family. The Pulaski Country affiliate replicates this program for the entire Pulaski County region.

Who is Going One on One? Win-Win Citizens National Bank (Lebanon)

e KBA’s “One on One With My Community” initiative is focused on aring the Kentucky banking industry’s commitment to community across entucky. Each time that a bank or banker goes “One on One” to share s message with their local community, the KBA will donate $50 to a cal charity of that bank’s choice. Help us share the truth about our dustry with our neighbors and support local charities in the process.

Senior Vice President Jim Reed presenting a check to local St. Baldrick’s coordinator Sheila Buckman-Lanham.

Louisa Community Bank Louisa Community Bank’s CFO, Charlotte Enix, presenting the One On One check to the Louisa East Academic Team Coaches. The donation went to purchase supplies for the 2013 academic school year.

August 2013 | 13

U.S. Bank Celebrates 150th Anniversary This Year On July 13, 2013, U.S. Bank celebrated its 150th anniversary. The bank’s national charter was signed in 1863 during Abraham Lincoln’s presidency while the Civil War raged just across the Ohio River. Since then, U.S. Bank has grown tremendously in Kentucky and nationwide to become the fifth-largest commercial bank in the United States. In Kentucky, the bank’s roots date back 125 years to the forming of Citizens Bank and Trust Co. in Paducah, Ky. In the late 1990s, Citizens was acquired by Mercantile Bancorporation and ultimately merged into Firstar Bank at the turn of the 21st century. Shortly thereafter, Firstar merged with U.S. Bancorp of Portland, Oregon and became what is known today as U.S. Bank.

“We’re proud of our history in Kentucky, and excited as we continue to grow in the region,” said Bill Jones, division President for U.S. Bank. Today, U.S. Bank employs more than 3,100 people in Kentucky and has 126 branches across the state, operating in more counties in the Commonwealth than any other bank.

“In the past several years alone, U.S. Bank in Kentucky has added jobs, funded essential projects like affordable housing and urban revitalizations and spent thousands of hours volunteering with local nonprofits.” Located in Paducah, Jones has been with U.S. Bank since 1985, and oversees the company’s community banking operations in multiple states, including Kentucky. “While much has changed over the decades since our formation, the one thing that continues to set U.S. Bank apart is its people,” said Jones. “In every community we serve, from one end of the state to the other, we have dedicated bankers serving on numerous civic and community boards: United Way organizations, school boards and everything in between.”

Paducah U.S. Bank’s history in Kentucky began with the formation of Citizens Bank and Trust Company in 1888. At the time of construction, its ten-story headquarters was the largest building in western Kentucky. Today, U.S. Bank has more than 100 employees in Paducah. The original Citizens Bank building remains the primary center of commerce in the downtown business district today and houses U.S. Bank employees and as well as a broad variety other businesses.

“We are very proud to play a vital role in the ongoing economic growth of the community,” said Scott Powell, regional president for U.S. Bank in Paducah. “We take our role seriously as being a business advocate and community steward.”

Picture far left - One of the most common meeting spots in downtown Paducah was on the corner of 4th and Broadway, home of Citizens’ 10-story building.

Picture to left - Citizens Savings Bank at the crest of the flood in 1937.

August 2013 | 14

Louisville U.S. Bank’s history in Louisville goes back to Great Financial Bank, and the company still houses employees in the former Great Financial headquarters at One Financial Square in the city. Throughout its history in the area, the bank has made significant community development investments and helped revitalize the city’s urban core. Notable recent commitments include: • Funding for Cardinal Towne student housing at University of Louisville, a four-story development that included student housing and retail space (200-plus new jobs created) • Financing for Home of the Innocents to rehabilitate an old stockyard into facilities for the agency to better provide services to children who have been abused, abandoned, or neglected (200-plus new jobs created) • First Choice Market in downtown Louisville’s Park DuValle neighborhood, a 20,000 sq. ft. full-service grocery store that will anchor Wilson Ave. Shopping Center (40-plus new jobs created).

“We’re proud to be an engaged member of the close-knit Louisville business community,” said David Wombwell, head of commercial banking for U.S. Bank in Louisville. “As someone who grew up in Louisville, I’ve learned to appreciate the rich history of this thriving city and I’m proud to know that U.S. Bank will grow alongside it.”

Owensboro

Greater Louisville main office on Market Street in the 1950s

U.S. Bank’s mortgage company, U.S. Bank Home Mortgage, has grown to become one of the largest mortgage originators in the country over the past decade, and has significant operations in Owensboro.

In March 2013, U.S. Bank and Governor Steve Beshear announced further expansion of its mortgage operations in Owensboro with a new facility and the addition of 332 jobs locally.

This photo was taken in front of the old converted Coke bottling plant around 1992.

The company’s history in Owensboro dates back to Lincoln Service Mortgage Corporation.

Chartered in the early 1970s, Lincoln became active in 1976 as a subsidiary of Lincoln Federal Savings and Loan Association of Owensboro. The mortgage operation was acquired in 1998 by Star Bank – now U.S. Bank. Today, its service centers support U.S. Bank’s companywide portfolio of more than 1.6 million mortgage loans. “U.S. Bank first opened a mortgage servicing center in Owensboro in the ‘70s,” said Bob Smiley, executive vice president and head of servicing for U.S. Bank Home Mortgage. “Since then, we’ve grown to nearly 1,900 employees in the area.”

Fred May, community president of U.S. Bank in Owensboro, added “Certainly, our impact as one of the area’s largest employers provides economic benefit to our region, but we are also honored to support the community through sponsorships, donations, and volunteer hours.”

August 2013 | 15

Bowling Green U.S. Bank’s roots in Bowling Green are traced back to the founding of Citizens National Bank in 1901. The bank was renamed Trans Financial Bank in 1991, before its 1998 acquisition by Star Bank – now U.S. Bank.

The bank has a storied partnership with Western Kentucky University (WKU) in the city. The partnership spans from sponsoring community and student-based events such as “U.S. Bank Celebration of the Arts” and student scholarships to being the exclusive banking partner of WKU Athletics.

Recently, U.S. Bank provided partial funding to a private developer for restoration of the former Bowling Green High School. Built in the early 1940s, the school had been vacant and blighted for many years. With a majority of the exterior facade remaining saved, the old campus now serves as state-of-the-art housing for WKU students. In recent years, the bank also provided tax-credit financing to the county’s economic development authority, helping bring professional minor league baseball to downtown Bowling Green and supporting the revitalization of a blighted downtown area into a hotbed for the arts, public gatherings, entertainment and jobs.

“Our bank has a long history of being a community leader in Bowling Green. Our partnership with WKU and sponsorship of United Way-fundraising event ‘U.S. Bank Balloons, Tunes and BBQ Festival’ are ways that we are proud to give back to this historic community,” said Craig Browning, regional president for U.S. Bank in South Central Kentucky.

Northern Kentucky / Greater Cincinnati U.S. Bank’s national charter was established in 1863 under the First National Bank of Cincinnati. First National Bank not only survived, but continued to thrive through the Civil War, two World Wars and the Great Depression, growing into Star Bank and U.S. Bank. The story stayed the same during the most recent economic downturn, as U.S. Bank increased its number of Cincinnati-area employees by over 12 percent since 2008, to a total of more than 3,200 today.

“In addition to investing in the community by funding affordable housing and helping small businesses, our 3,000plus employees in the area routinely give back through volunteerism and nonprofit leadership,” said Mike Prescott, Cincinnati market president for U.S. Bank. “Whether we’re out cleaning up parks as part of the Mayor’s Challenge or fundraising for our companywide United Way campaign each year, we’re proud of the impact we have on this region in ‘Year 150’ and beyond.”

This July, Magnolia Glen Apartments will open in Florence, Ky., south of Cincinnati. U.S. Bank provided more than $1.2 million in funding for the 60-unit of affordable housing complex.

Magnolia Glen Apartments in Florence, Ky. Opened in July 2013.

August 2013 | 16

Lexington U.S. Bank’s history in Lexington begins with Lexington Federal Savings and Loan established in 1924. It was acquired by Great Financial Bank in 1996.

While it began as a federally-chartered savings and loan association and savings bank under Lexington Federal Savings, Great Financial was converted to a full-service commercial bank in 1994. Today, U.S. Bank employs more than 75 people in Lexington and more than 300 in the region.

“There’s no shortage of tradition in Lexington and Central Kentucky, given the region’s history with the equine industries, Keeneland, Transylvania University and the University of Kentucky,” said Perry Allen, regional president for U.S. Bank in Central and Northeast Kentucky. “U.S. Bank is proud to be growing alongside those traditions and we’re eager to continue our support of Central Kentucky’s leaders as our communities move forward.”

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Don’t Play Games With Your Most Important Assests: The Opening & Closing Process

By Kevin Mullins & Dana Turner

creating and maintaining a professional-grade security environment that is, at all times, simple enough so that employees understand and implement the process correctly – but that is also invisible and secure enough that a robber would not be able to commit the crime successfully.

Many bankers have used the phrase “Monopoly Money” when describing the handling of large amounts of currency within their institutions. It is true that we desensitize ourselves to the fact that the money is only paper and therefore doesn’t seem real. However, if you are ever the victim of a bank robbery, the money becomes very real. Still not as real as the potential damage to employees, however. Your employees really are your most valuable assets.

Here are some added points your branch staff should consider in addition to their normal opening procedures:

A typical holdup lasts only a few seconds; it involves limited amounts of cash held in teller drawers; and a robbery seldom results in injury to a bank employee.

Maintaining a strong Security Program that includes the use of contemporary security devices and protocols is essential for preventing a robbery. Using time-delay vaults, interior cameras, dye packs, man-traps and electronic tracking devices have caused a decrease in the hold-up style bank robbery over the past several years.

Drive completely around the facility before entering the building -- twice. Employees should take the time to really observe the facility and the surrounding environment -- and robbers won’t expect a second drive-by. The more attention that is paid to the normal setting, the more likely that out-of-order observations will be obvious.

Make certain that the facility does not have places where someone could hide, like hedges, bushes, signage, or fenced-in dumpsters near a door.

Do Not Pass Go (or Collect $200)

Always use the facility’s front door to enter and leave the building. Of course employees often use the back door because that’s where they are supposed to park when they arrive for work, leaving the front parking lot spaces for customers. It’s convenient – and riskier. Insure that they enter where they can see and be seen. Employees can re-park their vehicles later if they need to. That back door should only be used during an emergency evacuation.

Many areas of the country continue to experience an increase in the more violent take-over or “morning glory”style robbery. These types of robberies are committed by one or more persons who have carefully calculated the risks and then planned the assault. These robbers take the time to “case” your bank and then they likely know the timing of your branch opening; whether one or more persons are involved in the opening process; whether the employees are cautious or careless; and most frighteningly, your “all clear” signal.

These types of robberies last longer and are much more devastating than a conventional “stand-up” or “notepass” robbery. A hostage or “takeover” situation occurs in 100% of morning glory robberies as the robbers must forcibly control multiple employees for a longer period of time. In addition to the direct financial loss, these types of robberies often result in significant, long-term psychological and emotional trauma; lost work time for employees; and distrust of the bank because it failed to protect them. For so many reasons, diligent opening and closing procedures should be a top priority for every bank.

The best practice for the prevention of an opening or closing robbery involves creating a layered process, combining facility design techniques with equipment acquisition and placement, and using well-designed policies with well-executed procedures. The best practice to protect your most valuable assets continues to be August 2013 | 18

Take a Chance? Tips For Protecting Your Employees

Look for strange persons loitering in non-common gathering areas. How are they dressed? Is this person between the employee and the door to the facility? Is someone watching too closely? If such persons are present, ask employees to leave the area and call police for an escort. Look for vehicles in close proximity to the building and your entrance. Look for vehicles of a type that do not fit with the environment, such as vans with no markings; mini-vans; or out-of-state license plates.

Professionals often use vehicles – usually stolen -- that allow them to transport their “haul” and that offer as little notice as possible.

Keep eyes up and open. Employees should have keys in their hands before exiting their vehicles. They should never walk up to the door of the facility and then look away to find keys. If one is available, have a panic alarm in the hand of every employee.

If approached by someone in the parking lot, stay in the

open. A robber wants to get the primary employee and as many other employees as possible inside the bank. Once the robber has the right employees inside – the ones with the keys and combinations -- he/she has absolute access to the vault, teller drawers and the night depository. If the employee is approached in the parking lot, he/she should re-enter his/her vehicle as fast as possible, drive away and call police.

Search carefully and completely. Once inside the building, employees should search carefully through closets, in restrooms and under desks. Searching multiple floors may require more employees. A “sleep-over” bandit will know where to hide and how to avoid motion detection devices.

Once entry is completed and the building is secured, display the “all-clear” signal. The all-clear signal should be non-obvious, auditable and changed often. The allclear signal is not just for the second employee coming in the bank – it is for every employee. In a morning glory robbery, the danger to hostages increases dramatically as each employee enters the facility.

Go Directly To Jail

The Bank Protection Act specifies that financial institutions must have opening and closing policies, procedures and training programs to help minimize employees’ vulnerability to the crime of robbery. These procedures must be compliant, at a minimum, to “… provide for a system of internal controls to assure ongoing compliance; and provide for independent testing for compliance to be conducted by bank personnel or by an outside party.”

Often we focus on the opening process but fail to develop and follow proper closing procedures -- and the bank’s closing procedures are just as important as the opening procedures. Pulling the drive-thru shade down, locking the teller drawers and putting the drive-thru shade back up is not an effective closing practice. In addition to your normal closing process, consider the following procedures for added employee safety: Be especially mindful of persons inside and outside the facility in advance of the scheduled closing time. Take an “observation walk” fifteen minutes before closing every day. Does someone appear to be waiting for something or someone, either in the lobby or in the parking lot? Employees should contact the police directly if they believe

they are being watched and immediately lock the facility’s doors.

Once the doors are locked, they should not be opened for entering customers. Be mindful of those coming to the door as the last customer is leaving -- or other persons in need of a last minute transaction as the branch is closing. Consider keeping the branch opened five minutes longer than the posted closing time – this provides for a formal, set closing time without locking the door in the face of a customer. Remember that the drive-up window may be a more attractive safety alternative.

If a customer remains in the facility after closing, post an employee at the door until they leave. This employee will unlock and lock the door again as the customer leaves.

Do not always depend on those employees with whom the customer had an appointment to properly escort that person to the exit.

Conduct a thorough inspection of the interior of the facility. Employees should inspect closets, public restrooms, elevators, under desks and any other place that offers concealment. Employees should carry a panic alarm if one is available.

Make sure that employees get to their vehicles safely.

Develop an exit process and consider supplying remote electronic devices to ensure that each employee exits the facility and leaves the parking lot safely.

Train all your staff. The Bank Protection Act requires that closing procedures, just like opening procedures, must be taught to all employees. Studies show that when a crime event occurs, back-office employees are inevitably in the bank at the time of the robbery. The more frequently that robbery training is performed, the better the chance of a safe work day for everyone.

Get Out Of Jail Free (Or Bank Error In Your Favor - Collect $200)

There is never a good time to ignore your security procedures and there is never a time to roll the dice with your most valuable asset – your employees. The more you can do to enhance your opening and closing procedures, the safer your staff will be. When it comes to employee safety, a lot of caution and a little paranoia is a good thing. After all, it’s not just about the money. But it’s always about the people.

Kevin Mullins speaks from experience as a former Chief Operating Officer and bank director. One of his branches was the victim of a morning-glory robbery that resulted in multiple hostages and losses to the bank. In his current role as CEO of All Clear System, LLC he is constantly searching for the safest, securest and most auditable branch opening and closing process.

Dana Turner is a nationally-recognized security trainer, consultant and expert witness regarding financial institution crimes. Dana has also served as a law enforcement officer in several capacities -- including the investigation of business and banking crimes. Dana serves as a security consultant to All Clear System.

August 2013 | 19

focus2013 Investment Strategies and Interest Rate Risk Seminar

In a volatile economic environment where remarkable changes are rapidly becoming the norm for the banking industry, it is imperative that financial institutions maintain focus on the things that are critical to their success.

Designed specifically for managers of financial institutions, The Baker Group’s Investment Strategies and Interest Rate Risk Seminar is an in-depth examination of current topics and the economic outlook.

October 17-18, 2013 Oklahoma City, Oklahoma The Skirvin Hilton One Park Avenue Oklahoma City, OK

Agenda Featured Speaker

Who Should Attend

dr. gary shilling is president of A. Gary Shilling & Company, Inc., the economic consulting firm he founded in 1978. Best known for analyzing and forecasting economic and financial developments in the u.s. and abroad, shilling’s commentaries appear regularly in Forbes Magazine, The New York Times, and The Wall Street Journal.

financial institutions’ CeOs, CfOs, investment officers, board members, and those who are directly or indirectly responsible fo r f i n a n c i a l m a n a g e m e n t functions will benefit from this seminar. There is no cost for this seminar.

Cpe credits will be earned for your attendance.

Thursday, October 17 golf and dinner included

Friday, October 18 Breakfast, seminar, and lunch

Registration register online at GoBaker.com/ seminars. for more information, call skoshi heron at 888.990.0010.

Focused A/L Management. Focused Strategies. Focused Education. memBer: finra & sipC www.gOBaker.COm OklahOma City, Ok | austin, tX | Birmingham, al | indianapOlis, in | salt lake City, ut | springfield, il

Congratulations 2013 Financial Skills Graduates ALEXANDRIA Andrew Perrin Jordan Racke BARBOURVILLE David Garrison Morgan George Brandi Huff BARDSTOWN Devan Chaney Latrell Floyd Sarah Hicks Anna Jones Brooke Livers Michael Miller Jonathan Skaggs Hannah Welch Victoria Yocum BATTLETOWN Taylor Powers BENTON Chase Clark BEREA Jared Niceley Victoria Rousey BRANDENBURG Alicia Lee Charles Mattingly James Warren BUTLER Dylan Mains CAMPBELLSVILLE John Eastridge Elijah Myers Rebecca Orberson CANNON Austin Hodge CLAY CITY Amber Caudill Sandra Perkins

COLD SPRING Kylyn Schnelle

JENKINS Cassidy Miracle

CORYDON Leah Jemilla Posey

KEVIL Shelbi Wiggins

DANVILLE Mitchell Landry

LANCASTER Derek Mendenhall Jacob Wix

EKRON Jessica McCoy ELK HORN Chelsea Duplantis EWING Taylor Hunt Matthew McCord FLEMINGSBURG Alex Armstrong Heath Burnett Carlee Jolley FRANKFORT Alexander Bullock Macy Johnson Prem Patel Sydney Preston Hannah Robertson Jacob Semones Michael Stacy William Stinnett Austin Wicker GLASGOW Rebekah Thompson Raleigh Wilson GRAY Ashlyn Cobb HENDERSON Austin Mayfield Sara Mitchell John Nation Vince Wheeler Nikoli Williams

LEBANON JUNCTION Amanda Clark Ian Hobbs Trever Walker LOUISVILLE Titus Lamb Sandra Martinez Dayanis Tamayo

OWINGSVILLE Blake Maze Whitley Purvis Keegan Sammons

PERRYVILLE Samantha Adams

SOMERSET Kelsie Adams Tyler Dodson Sahar Farshi Mackenzie Flynn Jevonte’ Groves Sydney Hale Chelsea Holsomback Jordan Mounce Justin Schulz

PIKEVILLE Steven George

SYMSONIA Olivia Hunt

RICHMOND Rmon Commare

UNION Christina Muenchen

SALT LICK Christopher Stull

UTICA Austin Hertzler Andrew Roberts

PAINTSVILLE Peyton Jennings

MANCHESTER Austin Carnahan

SCIENCE HILL Alex Wilson

MAYFIELD Taylor Via

SCOTTSVILLE Kaitlyn Waddle

MONTICELLO Samantha Gregory Whitney Simpson

SHEPHERDSVILLE Anastasia Arnett Ashley Asay Jessie Atkinson Tiffany Bivens Gabriel Buehler Phoenix Corbett Jason David Brent Dewitt Andrew Fox Cameron George Andrea Johnson Chris Johnson Kaitlyn Morrison Dylan Neal Zack Patton Brianna Porter McKenzie Pruitt Emily Ratliff Casey Sanders Roxanne Tesseneer Jade Whitehouse

MT. STERLING Samuel Hart MT WASHINGTON Taylor Boston NANCY Lucas Troxell OLIVE HILL Joshua Caplinger OLYMPIA Stephen Becraft OWENSBORO Stevie Ford Hannah Roach

VINE GROVE Ashley Nikolao VIRGIE Cynthia Tackett WINCHESTER Ryan Frye Andrew Haggard WORTHINGTON Timothy Thomas

If you would like to submit to the Kentucky Banker Magazine please contact: Lane Hettich at lhettich@kybanks.com August 2013 | 21

Specializing in Correspondent Banking yesterday, today, and tomorrow.

Leadership, experience, technology, innovation, strength, and satisfaction…these are the expectations of our correspondent banking clients. As one of the leading correspondent banks in the country, we are uniquely qualified to deliver on these expectations.

We understand this business inside and out. We know where it’s been, and where it’s going. Let us put our expertise to work for your bank today.

1-800-644-3330 • bbvacompass.com/correspondent Rusty Davis • VP - Senior Correspondent Officer - 615.585.4779 T. Ray Sandefur • SVP - Credit Services Michael Burnap • SVP - Customer Service Bob Freeman • EVP - Correspondent Banking

All loans and accounts subject to approval, including credit approval.

BBVA Compass is a trade name of Compass Bank, a member of the BBVA Group. Compass Bank, Member FDIC.

Products and Services

Would you like to . . .

nCino can show you how!

In keeping with our mission of identifying products and services that are beneficial to our members, the KBA is pleased to announce our due diligence has been completed on nCino, LLC, the leader in secure cloud based bank operating solutions that sits on top of your bank’s core that enables each bank stakeholder to access and interact with their defined portfolio of products at every level and for every stage in the customer relationship.

Many of you may remember Chip Mahan who previously served as Chairman/CEO of Cardinal Bancshares in Lexington and then created the nation’s first internet-only bank in Pineville, Kentucky (Security First). Chip is now Chairman/CEO at Live Oak Bank in Wilmington, North Carolina that opened in May 2008, and where nCino was created. Included is a link to the June 1, 2013 American Banker article on Chip entitled, “Lending in the Cloud: Man Behind First Web Bank is Back.” http://www.americanbanker.com/magazine/123_6/live-oaks-chip-mahan-the-serial-strategist1059173-1.html?zkPrintable=true Developed within the live banking environment, nCino provides small- to mid-sized financial institutions with superior transparency and clarity into their existing loan production pipelines, portfolios, and across all lines of business. After implementing the Bank Operating System, nCino customer banks have experienced the following results:     

19% increase in loan volume 34% reduction in loan closing time 22% increase in staff efficiency 54% reduction in policy exceptions 17% reduction in operating costs

nCino has dedicated Natalie Waggett and Mary Ellis Gabriel as their Kentucky representatives.

They are very knowledgeable and professional. KBA members are encouraged to see the benefits of nCino by scheduling a webinar demonstration. After seeing nCino's bank operating system, we feel strongly that it can have a positive impact on operational efficiency, loan growth and regulatory compliance at your bank. Get a competitive advantage with nCino! To schedule a time for a demonstration, please contact Selina Parrish at the KBA (502) 736-1282 or sparrish@kybanks.com.

August 2013 | 23

Making News

It’s Here: A SIEMple Way to Check Your Compliance Box

DataEveryone security within needs the banking has become SIEM is Here to Help aindustry superhero sidekick. a critical subject, particularly in the past 10 years. The analysis of this log data is challenging, as the comWith rapid technological advances, confidential data puting systems of even the smallest banks typically is quickly more vulnerable.

Banks save must take generate several hundred thousand log events per day.

Let becoming KBA Benefi t Solutions you both proactive and reactive approaches to minimize Larger organizations face the challenge of reviewing time, money, and Health Care Reform the risks associated with data loss. In this spirit, GLBA several million log events generated per day. These volheadaches. requires financial institutions to perform log manage- umes make manual review of logs nearly impossible. ment which has both proactive and reactive functions. SIEM solutions effectively manage log data in a similar, The challenge this presents to financial institutions is more efficient way, which is why SIEM solutions are imhow to manage the millions of log events generated ev- perative for business processes and compliance needs. ery day; which poses questions for financial institutions such as: How SIEM Works SIEM solutions first collect logs from each of the log • What is the most cost effective way of satisfying our generating systems within an IT environment (servers, compliance requirements? firewalls, routers, applications, etc.). Second, the solu• Should I purchase and install my own systems? tions save the log data to a centralized repository. Next, • Should I hire and develop the staff necessary to sup- it scans the centralized log data based upon rules lookport these systems? ing for combinations of events that may indicate a se866-276-6630 • WhatCall risks do I have if I outsource these functions? curity threat. Finally, they communicate security threats www.kbabenefitsolutions@kybanks.com either through real time alerts or regularly scheduled In order to simplify log management requirements, the reports.

IT industry has developed automated tools that meet this need, collectively referred to as System Information and Event Management (SIEM) solutions.

Unlikely Superheroes are the best kind.

Tangled up in Health Care Reform?

We can help.

Call 866-276-6630 www.kbabenefitsolutions@kybanks.com

August 2013 | 24

To the Cloud or Not?

While this system of log management is an old technology that has been employed by large banks for decades, the shift of technology to the “cloud” has made SIEM solutions much more accessible to smaller banks. Generally, the cloud-based SIEM is more beneficial for small organizations; giving smaller banks an advantage when using a cloud-based SIEM for several reasons. Cloud-based SIEM solutions have a much lower cost of entry than on premise solutions. Smaller organizations also struggle to justify hiring staff with the level of security skill set required to manage the SIEM solution and are better positioned to outsource this role to a SIEM provider offering a hosted and managed SIEM solution. This eliminates most of the labor involved with compliance and leaves bank staff with only needing to address the security threats when they are identified. Cloud-based SIEM providers generally offer a variety of service levels from simply delivering alerts and reports to creating executive summarylevel reports to performing forensic analysis on an as-needed basis.

While smaller organizations find a cloud-based SIEM much more cost-efficient, larger organizations often find that an on-premise solution has a lower total cost of ownership. They often already have highly trained security staff who can effectively manage the SIEM solution, which is often the largest deterrent to smaller banks. Larger organizations may be less sensitive to the initial investment in software and hardware for an on-premise solution in lieu of monthly fees associated with a cloud-based solution.

Get Your Box Checked –Compliance Made SIEMple To learn more about SIEM compliance with log management requirements, KBA members are invited to attend a free webinar on Thursday, September 19, 2013 to see a demo of a cloud-based SIEM solution.

To sign-up for that event, go to https://www3.gotomeeting.com/ register/333622958

August 2013 | 25

on the move

Steven Allen

Darrell Stepp

Mark A. Gooch, President and CEO of Community Trust Bank, is pleased to announce the following promotions: Steven Allen has been promoted to the position of Vice President of Community Trust Bank, Inc. Mr. Allen’s duties as Deposit Services Manager include overseeing the daily operations of Item Processing, Statement Rendering, Adjustments, Research, Overdraft Services, Exception Item Processing, and ACHs. Mr. Allen’s office is located at the Community Trust Bank Operations Center in Pikeville, Kentucky.

Darrell Stepp has been promoted to the position of Floyd-Knott Market Assistant Vice President of Community Trust Bank, Inc. Darrell Stepp’s duties as Branch Manager include overseeing the daily operations of his branch office and calling on existing and prospective clients to develop new deposit and lending business and to retain and expand existing business.

Chris LeMaster, AVP, Small Business/ Mortgage Lender, Kentucky Bank, recently graduated from the American Bankers Association Stonier Graduate School of Banking in Philadelphia.

“Stonier has given me an unparalleled education from the best in the financial services industry, as well as the chance to exchange information and ideas with my peers,” said LeMaster.

Chris has been with the Kentucky

Chris LeMaster

Carla Miles

Bank since 2004. His well-rounded career has touched nearly all aspects of banking. LeMaster’s current position is AVP, Small Business/ Mortgage Lender. Prior to this position he was the Director of Training and a Consumer Lender.

Matthew Joefreda

Aprill Shepherd

Andy Waters President and CEO of Community Trust and Investment Company, is pleased to announce that Aprill E. Shepherd has been promoted to the position of Relationship Officer of Institutional and Retirement Services with Community Trust and Investment Company.

Carla Miles has been named Senior Vice President of Human Aprill Shepherd’s responsibilities Resources for the Frankfort-based include the administration of bank holding company. Farmers Institutional and Qualified Plan Capital Bank Corporation is a bank accounts. holding company and operates 36 banking locations in 23 communities throughout Our banking professionals are dedicated to finding the best answers for you. And admittedly, we believe that not everything Central and has to be a complicated equation. So we employ the latest data Northern mining techniques to ensure efficiency and overall quality.

Kentucky and a data processing company.

Matthew Joefreda has recently joined Kentucky Bank as Vice President and Commercial Lender. Matthew comes highly qualified and experienced, having worked 14 years in commercial lending for previous banking companies in Lexington.

Bowling Green Russellville (270) 782-0700 (270) 726-7151 CRIcpa.com | blog.cricpa.com INTERNAL AUDIT | EXTERNAL AUDIT | TAX | REGULATORY COMPLIANCE | LOAN REVIEW | IT SERVICES

August 2013 | 27

Share the Truth. $25,000 to Charity.

Win-Win