Virginia Banking July/August 2015

July/August 2015

VBA Welcomes

Chairman

Gaylon Layfield

IN THIS ISSUE

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July/August 2015

2015-2016 Officers and Directors of the Virginia Bankers Association T. Gaylon Layfield, III, Chairman, Xenith Bankshares, Inc. John G. Stallings, Chairman-Elect, SunTrust Bank John R. Milleson, Immediate Past Chairman, Bank of Clarke County G. William Beale, Union Bank & Trust Christopher W. Bergstrom, Cardinal Bank Michael W. Clarke, Access National Bank Barry C. Elswick, TruPoint Bank Scott C. Harvard, First Bank, Strasburg William H. Hayter, First Bank & Trust Company Charles Henderson, Bank of America, NA Glen Kelley, Wells Fargo Bank, N.A. Brad E. Schwartz, Monarch Bank Joe A. Shearin, EVB Susan K. Still, HomeTown Bank Daniel G. Waetjen, BB&T Michael O. Walker, Benchmark Community Bank

cover

Q uestions 16 for Gaylon Layfield

Robert Wojciechowicz, Capital One Financial Corporation AT-LARGE MEMBERS VBA Benefits Corporation Chair J. Peter Clements, The Bank of Southside Virginia Management Services Inc. Chair M. Andrew McLean, Middleburg Bank Government Relations Committee Chair Ronald D. Haley, River Community Bank, NA

features

14

Virginia Bankers Association Holds Annual Convention with the West Virginia Bankers Association

22

Are You Asking the ‘Export’ Question?

24

Winners of the VBA Bank Day Scholarship Program

VBA Education Foundation Chair Charles H. Majors, American National Bank & Trust

EDITORIAL & EXECUTIVE OFFICES 4490 Cox Road Glen Allen, VA 23060 804-643-7469 Fax 804-643-6308 www.vabankers.org Bruce T. Whitehurst President and CEO Virginia Bankers Association Shannon Wagner Communications Coordinator Virginia Bankers Association

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280 Summer Street, Boston, MA 02210 Phone: 617-428-5100 Fax: 617-428-5118 www.thewarrengroup.com

SUBSCRIPTIONS If you would like to subscribe to Virginia Banking, contact Shannon Wagner at swagner@vabankers.org.

Virginia Banking is published bi-monthly. Copyright 2015.

Statements of fact and opinion are made on the responsibility of the authors alone and do not imply an opinion or endorsement on the part of the officers or members of VBA.

The Warren Group Design / Production / Advertising www.thewarrengroup.com custompubs@thewarrengroup.com

© 2015 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: custompubs@thewarrengroup.com Call 800-356-8805.

in every issue 4 Calendar of Events 6 Insights 8 Worth Noting 10 Legislative Update 12 Legal Line 13 Washington Update 20 New Associate Members 28 Compliance Corner 30 Bankers on the Move Send us your thoughts or ideas on Virginia Banking! Please email Shannon Wagner at swagner@vabankers.org. Has your information changed? Please email Shannon Wagner at swagner@vabankers.org with your new contact information.

Calendar of

Visit www.vabankers.org/event-calendar to learn more about these events.

INSTRUCTOR-LED SEMINARS

WEBINARS

CFO CONFERENCE – RICHMOND AUG. 24, 2015

UNDERSTANDING REAL ESTATE LOAN DOCUMENTS, PART 2 AUG. 27, 2015

BANK SECRECY ACT/ANTI-MONEY LAUNDERING COMPLIANCE MANAGEMENT – KINGSPORT, TN AUG. 24, 2015

ADVANCED CASH FLOW ANALYSIS SEPT. 9, 2015

CEO FORUM – WILLIAMSBURG SEPT. 14, 2015

COMMON MISTAKES IN MERGERS AND ACQUISITIONS SEPT. 09, 2015

CREDIT MANAGEMENT CONFERENCE – CHARLOTTESVILLE OCT. 5, 2015

FORMING AND USING THE BANK HOLDING COMPANY TO CREATE VALUE SEPT. 09, 2015

LEADERSHIP CONFERENCE – PEMBROKE OCT. 15-16, 2015

EASY TO USE AUDIT TOOLS THAT WON’T BREAK THE BANK SEPT. 10, 2015

COMMERCIAL LENDING SCHOOL – GLEN ALLEN OCT. 21, 2015

MONEY SAVING, MONEY MARKETING IDEAS SEPT. 10, 2015

ENTERPRISE RISK MANAGEMENT WORKSHOP – GLEN ALLEN OCT. 27, 2015

THREE WAYS TO IMPROVE YOUR STRATEGIC PLANNING SEPT. 10, 2015

MID-ATLANTIC EXECUTIVE CYBERSECURITY CONFERENCE – GAITHERSBURG, MD OCT. 29, 2015

BUSINESS CASH FLOW BASICS & GLOBAL CASH FLOW INTEGRATION ISSUES FOR LENDERS & ANALYSTS 3-PART SERIES SEPT. 15, 2015

WOMEN IN BANKING SEMINAR – RICHMOND NOV. 16, 2015

FINANCIAL EVALUATION OF MERGERS AND ACQUISITIONS SEPT. 15, 2015

WEBINARS BASICS OF FDIC DEPOSIT INSURANCE AUG. 10, 2015 ACH EXCEPTION PROCESSING: WHEN ACH PROCESSING ISN'T AS AUTOMATED AS YOU'D LIKE IT TO BE AUG. 11, 2015 CONDUCTING YOUR ANNUAL PHYSICAL SECURITY REVIEW AUG. 12, 2015 IT SECURITY ISSUES & SOLUTIONS AUG. 13, 2015 SBA LENDING: DEMYSTIFYING THE RISK OF MONITORING & COMPLIANCE AUG. 14, 2015 INTRODUCTION TO BANK MARKETING AUG. 17, 2015 LENDING BASICS FOR SUPPORT PERSONNEL AUG. 18, 2015 BSA/AML COMPLIANCE: RECENT DEVELOPMENTS & COMMON ERRORS AUG. 19, 2015 CONSUMER CONSTRUCTION LOANS AUG. 20, 2015 COMMERCIAL CONSTRUCTION LOANS AUG. 24, 2015 UNDERSTANDING LOAN DOCUMENTS, PART 1 AUG. 25, 2015

4 Virginia Banking | July/August 2015

FINANCIAL STATEMENT PROJECTIONS 3-PART SERIES SEPT. 15, 2015 GROUP POLICIES FOR SECURING YOUR MICROSOFT NETWORK SEPT. 15, 2015 UNDERSTANDING C&I LOAN STRUCTURING, AGREEMENTS & COVENANTS 3-PART SERIES SEPT. 15, 2015 CREATING COMPELLING ADVERTISING FOR COMMUNITY BANKS SEPT. 16, 2015 HSA BASICS SEPT. 16, 2015 MALICIOUS SOFTWARE: OVERVIEW AND IMPACT OF MALWARE ON THE BANKING INDUSTRY SEPT. 16, 2015 MANAGING THE CUSTOMER EXPERIENCE – IT'S A BOTTOM LINE NECESSITY SEPT. 16, 2015 CAPITAL PLANNING IN THE CURRENT ENVIRONMENT SEPT. 17, 2015 FIVE WAYS TO IMPROVE THE VALUE OF YOUR ORGANIZATION SEPT. 17, 2015 LINKEDIN VALUE STRATEGIES SEPT. 17, 2015 PROBLEM LOAN IDENTIFICATION AND PREVENTION SEPT. 17, 2015 LEADING THE PROSPECTING EFFORT SEPT. 21, 2015

www.vabankers.org

Virginia Bankers Association

Thanks You!

Board Members

Chairmen

Committee Members Thank you to all of our board members, committee members, chairmen, and the hundreds of bankers that attend our education and training events, support our legislative initiatives, and participate in our many programs. We appreciate your service and dedication to the industry!

Insights My VBA

T Bruce Whitehurst President and CEO, Virginia Bankers Association

he VBA’s 122nd Annual Convention in June saw the culmination of our most recent strategic planning process, where the VBA board of directors adopted the 2015-2018 Strategic Plan for the association.

Facilitated by John Sarvay of Floricane, Inc. in Richmond, our planning process included oneon-one stakeholder interviews, board member focus groups and significant input from the VBA staff. We also benefitted from the regular input the VBA receives from its 17 standing committees and four VBA entity boards of directors.

The VBA staff is energized by our new plan, which is built around four key statements we hope will resonate with bankers at all member banks: The VBA helps my bank plan to engage in the future of banking.

As students of the industry we serve and represent, the VBA staff stays up to date with banking industry trends. Several of us speak about industry trends, challenges and opportunities on a regular basis. The VBA also provides frequent opportunities for bankers to engage with peers at meetings, conferences and events throughout the year. Looking forward, the VBA staff will be even more intentional in knowing our industry and positioning the VBA as an even better resource to help our banks navigate industry changes.

The VBA provides my bank with the resources we need to build and develop a stronger team of banking professionals.

The VBA has long been a key provider of education and training for our member banks, with a wide range of offerings, both virtual and in person. As part of our new strategic plan, we will round out our education and training programs to make sure they offer valuable training for a banker’s entire career – from the time someone joins a bank until he or she participates in the last training program before retirement.

The VBA will also seek ways to highlight banking as an excellent career option for high school and college students to consider. Re-

6 Virginia Banking | July/August 2015

cruiting young people to banking was a consistent request we received during our planning process and we look forward to finding ways to bring banking to the minds of students getting ready to enter the workforce.

Our employee benefit programs and other products and services make a meaningful difference for our member banks, as Gaylon Layfield, our new chairman, describes in the feature article in this issue of Virginia Banking. We will measure the scope of our products and services against evolving industry needs and add new offerings that add value for our members.

The VBA creates new ways for my bank to strengthen our position and impact in the communities we serve.

We love telling the story of banking and we tell it at every opportunity. It’s a story of great people doing great things in the communities they serve. As bankers, you help people realize their dreams and aspirations by making that student loan, that mortgage loan or that small business loan. You lead in your communities; are there any civic or nonprofit organizations that lack a banker presence? The work you do in community service, financial literacy and philanthropy makes a meaningful impact and we want to do all we can to make the role of banks even clearer to legislators, the media and the general public.

This is why you will see the VBA continue to be a strong and effective advocate for banking and for maintaining Virginia as a top state for business. This is why you will see the VBA continue its leading role in financial literacy, doing even more in the years ahead to make connections between banks and financial literacy providers. Most importantly, this is why we will continue to tell the story of banking at every turn; it’s a compelling one.

The VBA team knows and understands our industry and they are proactive partners in growing the banking industry in Virginia.

As the VBA’s president and CEO, I could not be prouder of our VBA staff and I get compliments about them all the time. So, it was no surprise when the staff expressed a desire to www.vabankers.org

learn even more about banking as part of our planning process. They understand that the more they know your industry, the better they can serve and represent you. To accomplish this objective, we will find various ways to expose our staff to banking through a combination of training, guest speakers and shadowing at banks. Do you want to help us accomplish this important goal? If so, please contact me at the email address below.

We also understand the importance and power of collaboration, especially as the industry we serve continues to consolidate through mergers and acquisitions. We have partnered with neighboring state bankers associations and the Virginia Association of Community Banks in various ways for many years. Look for

us to take collaboration to a much higher level in the years ahead, any time that collaboration will result in quality outcomes for our member banks.

These four member outcomes have resonated with the VBA Board and staff. They also remind us that this is your VBA and those of us on the VBA staff want every banker to feel a pride of ownership when you think, “this is my VBA and it is an invaluable partner for my bank and for me.”

We look forward to executing the new VBA Strategic Plan and reporting the results of our actions. As Winston Churchill said, “However beautiful the strategy, you should occasionally look at the results.” That, I can assure you, we will do.

Email Bruce Whitehurst at bwhitehurst@vabankers.org with any comments on this article.

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July/August 2015 | Virginia Banking 7

Noting

Worth

COMMUNITY BANKERS’ BANK FINANCIAL CORP. ELECTS NEW CHAIRMAN AND VICE CHAIRMAN A meeting of the board of directors of Community Bankers’ Bank Financial Corp. was held in May. Director Charles K. Collum Jr. was elected to serve as chairman of the board for the 2015-2016 year and Director Ellis L. Gutshall was elected vice chairman. Collum succeeds G. Lyn Hayth Jr., who served as chairman for 2014-2015 and as a director for nine years. Also retiring from the board is Robert R. Chapman III, who served as a director for 10 years and as chairman for 2008-2009.

The new board of directors of CBB Financial Corp. has the following members: • Charles K. Collum Jr., John Marshall Bank, Alexandria, Va. • Ellis L. Gutshall, Valley Bank, Roanoke, Va. • John E. Stringer, The Bank of Marion, Marion, Va. • Tom N. Rasmussen, New Windsor State Bank, Taneytown, Md. • Howard F. Pisons, Community Bankers’ Bank, Midlothian, Va. • William H. McFaddin, retired, Richmond, Va. • Christopher J. Honenberger, Clearpoint Financial Solutions, Inc., Richmond, Va. • Thomas Whaling, West Union Bank, West Union, W.Va. • Jerri D. Cowan, Human Resources Consultants, Richmond, Va. • Earl W. Worley Jr., KS Bank, Inc., Smithfield, N.C.

NORMAN C. SMILEY III BECOMES REGIONAL PRESIDENT FOR FIRST BANK Norman C. (Butch) Smiley III has joined Strasburgbased First Bank as regional president of the newly formed South region. First Bank formed the region following its acquisition of six branches from Bank of America in

Staunton, Dillwyn, Elkton, Farmville, Waynesboro and Woodstock.

Butch most recently served as the president and CEO of Community Bank in Staunton.

He began his banking career in 1982 and resides in Staunton where he is active in the community. He will work out of the company’s newly established Staunton regional headquarters, which is undergoing renovations over the next several months.

First Bank is a subsidiary of First National Corp.

RICHMOND FED NAMES NEW CHAIR OF PAYMENTS ADVISORY COUNCIL

The Federal Reserve Bank of Richmond has appointed E. Stephen Lilly, chief operating officer of First Community Bancshares Inc. and First Community Bank of Bluefield, Va., as chair of the Richmond Fed's Payments Advisory Council (PAC). The PAC serves as a forum for communication with financial institutions about the Federal Reserve's financial services and helps the bank respond to the evolving needs of their banking constituency. Council members

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Washington VBAKey KeyContact ContactBankers Bankersare areencouraged encouraged to to invite invite their their assigned assigned legislators legislators to VBA to visit visit their their bank bank facilities facilitiesand andmeet meetwith withthe theboard boardand andother other employeestotodiscuss discusslocal localeconomic economic development development and and banking banking issues. issues. employees VBAKey KeyContact ContactBankers Bankersare areencouraged encouraged to to introduce introduce their their assigned assigned legislators VBA legislators to to other other bankers, bankers, within withinor oroutside outsideyour yourorganization, organization,toto reinforceand andbroaden broadenour ourindustry industryimpact. impact. reinforce VBAKey KeyContact ContactBankers Bankersare areencouraged encouraged to to maintain maintain their their relationships relationships with VBA with their their assigned assigned legislators legislatorsthrough throughperiodic periodiccommunication. communication.

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Banker? Visit Visit us us online online at at www.vabankers.org www.vabankers.org or Want or contact contactBobbi BobbiWeimer Weimeratatbweimer@vabankers.org. bweimer@vabankers.org.

8 Virginia Banking | July/August 2015

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represent various types of financial institutions within each 5th District state. Lilly, who has served on the council since 2001 and its steering committee since 2012, succeeds Martin Patterson as chair. Patterson, senior vice president for banking operations for SunTrust Banks, has served as a PAC member since 1993 and as chair since 2002. The Richmond Fed also named Robert E. Dael, president and CEO of the Mid-Atlantic Payments Association, to the council.

M&T BANK NAMES NEW MARKET PRESIDENT FOR CENTRAL AND SOUTHERN VIRGINIA Cecilia Hodges is taking over as the new market president of M&T Bank after the retirement of Hugh Newton. Hodges has been in banking for 28 years and most recently ran M&T’s commercial real estate banking operations in central and northern Virginia. She grew up in Rocky Mount, Va. and graduated from Virginia Tech. She began her career in banking in Northern Virginia and has been with previous incarnations of M&T for 18 years.

VBA ANNOUNCES THREE NEW STAFF PROMOTIONS Matt Bruning has been named senior vice president of VBA. Matt will continue to lead our government relations area and will also oversee member services and products and services, with primary staff responsibility for the MSI board.

Courtney Fleming has been named senior vice president of VBA. Courtney will continue to oversee education and training and communications and will also have primary staff responsibility for the VBA Education Foundation Board.

Stacy Puckett has been named CFO of VBA. Stacy will continue to oversee accounting for VBA and all related entities except Bankers Insurance and will also work more closely with information technology and provide valuable support in other ways.

Congratulations to these three teammates on their promotions! www.vabankers.org

From left, Watts Steger, Brandon Atkins, Robert Shorter and Mary Nester.

CONGRATULATIONS TO THE VIRGINIA GRADUATES OF THE GRADUATE SCHOOL OF BANKING AT LSU On June 5, 2015 168 bankers from 15 states and Mexico received graduation diplomas from the president of the Graduate School of Banking at Louisiana State University, Watts Steger, chairman, Bank of Botetourt, Buchanan, Va. Receiving diplomas from Virginia were: • Brandon D. Atkins – American National Bank & Trust, Danville • Mary S. Nester – American National Bank & Trust, Martinsville • Robert W. Shorter – Franklin Community Bank, Hardy Sponsored by 15 southern state bankers associations in cooperation with the Division of Continuing Education at LSU, the banking school requires attendance on campus for three years, with extensive bank study assignments between sessions. The faculty consists of bankers, business and professional leaders, and educators from all parts of the U.S. During their three years at the Graduate School of Banking, students receive 180 hours of classroom instruction, 30 hours of reviews, planned evening study and written final examinations at the end of each session.

Congratulations to all on this significant accomplishment.

WE WILL MISS …

Former House Minority Leader Franklin Perkins Hall, a Democrat who represented most of South Richmond and northern Chesterfield County in the House of Delegates from 1976 to 2009, died at age 76 after battling cancer. He was a former president of the Richmond Jaycees, the Virginia Metro Jaycees and the Richmond Area Young Democrats, and a former chairman of Cardinal Savings & Loan Association. Frank opened Commonwealth Bank in 1986 and served on the board of First Community Bank. Our thoughts are with his family.

July/August 2015 | Virginia Banking 9

Legislative

Update

State Legislative Election Preview

T Matt Bruning Senior Vice President, Government Relations, Virginia Bankers Association

his Oct. 3, Virginia voters will return to the election polls to cast their ballots for all 140 state legislative races. Along with several local government and constitutional officer slots in many localities, each of the 100 House of Delegates and 40 Virginia Senate members will be selected. With the party primary elections and candidate filing deadline occurring on June 9, the ballots are largely set for the fall.

This year’s state general elections are critical for a number of reasons – both on the impact of policy and political purposes. Currently, the Virginia Senate has a closely divided 21-19 Republican majority. With a 67-seat Republican majority in the House – and control assured to remain with the Republicans post-election in that chamber – the Senate will be the focal point at the state level. The Senate Democratic Caucus needs only a one seat pick-up to regain control of the chamber by virtue of Lieutenant Ralph Northam, a Democrat, being the tie-breaking vote.

The composition of the Senate is of greater significance as Gov. Terry McAuliffe, a Democrat, enters the third year of his term. Stymied by Republican majorities in the House and last fall in the Senate on several legislative priorities, the governor has made securing his party’s upper hand

policy agenda is not the only motivating factor for McAuliffe. He, and other state and national Democratic leaders, understand the importance of mobilizing and energizing Democratic voters in advance of the 2016 presidential election.

McAuliffe’s past ties with former President Bill Clinton and former Sen. Hillary Clinton draw an obvious line to his desire to cultivate the best possible environment – in voter identification, partisan base engagement, issue framing, fundraising, etc. – for next year, assuming Hillary is the nominee.

With the policy and partisan stakes identified, where is the action going to be this fall? In the House, less than one-third of all districts have candidates from both major parties. Democrats have identified several races for potential pick-ups, including open seats in Reston and Loudoun and challengers in Northern Virginia and the Peninsula. Republicans hope to secure their incumbents and open seats while reaching to flip seats in places such as Stafford and Williamsburg. Some of the more noteworthy elections in the House occurred in the primary, as Speaker Bill Howell (R-Stafford) overwhelmingly defeated his Tea Party opponent while the Tea Party backed Republican

"While all eyes will be on the Senate, 15 districts have only one person on the ballot and several others have token opposition in heavily red and blue areas." in the Senate a major focus. With his national reach of donors and previous fundraising prowess, the governor has indicated he will do all he can to raise financial support for his party’s efforts this fall.

While a Democratic Senate would not represent a clear path for enactment of the governor’s agenda – the House will still be solidly Republican – it does create additional pressure as the governor likely would claim a potential mandate from the voters should Democrats regain control.

Bringing successful Democratic candidates across the line to assist in moving the governor’s 10 Virginia Banking | July/August 2015

incumbent Mark Berg fell to challenger Chris Collins in a Winchester-based seat. Longtime incumbent and moderate Democratic Delegate Johnny Joannou of Portsmouth was ousted by a challenger favored by the governor and other establishment party leaders.

While all eyes will be on the Senate, 15 districts have only one person on the ballot and several others have token opposition in heavily red or blue areas. It is looking like there will be six Senate races that will be the deciding factors in the balance of power www.vabankers.org

come November. First are two open seats, created by the retirements of Republican John Watkins and Democrat Chuck Colgan. Watkins’ 10th District – stretching from south of Richmond city through Chesterfield to Powhatan – has generated the most buzz amongst the Capitol Square crowd. Chesterfield Supervisor Dan Gecker, a local developer, garnered the Democratic nomination after spending over $100,000 of his own money to fend off two opponents. Republican Glen Sturdevant, a current member of the Richmond School Board, avoided a primary. Both sides likely will see a tremendous amount of outside money pumped into the race, as this is the epicenter of the battle. The Prince William seat vacated by Colgan’s retirement profiles as a reliably Democratic district, but Republicans view Manassas Mayor Hal Parrish’s longtime service in local government and family ties to the community as the best opportunity to gain a seat.

A three-way Democratic primary ended with Jeremy McPike, who was narrowly defeated by a Republican incumbent for a House seat in 2013, as the party nominee.

Other key races to watch include the 6th District, covering Virginia’s Eastern Shore and part of Norfolk, where incumbent Democrat Lynwood Lewis, who squeaked out a nine-vote victory in a special election in January 2014, takes on Republican Richard Ottinger, a Norfolk attorney making his first run at elected office. Nearby in Virginia Beach’s 7th District, longtime incumbent Republican and businessman Frank Wagner – poised to chair the Senate Commerce and Labor Committee where much of the banking www.vabankers.org

legislation is heard – faces Gary McCollum, a former executive with Cox Communications. The Loudoun County-based 13th District pits incumbent conservative Republican Dick Black against first-time candidate Dr. Jill McCabe, a local pediatric emergency physician, in a Republican leaning district. Finally, the Roanokecentered 21st fields three candidates in a traditionally Democratic district.

Longtime incumbent Democratic Sen. John Edwards seeks to fend off Republican Nancy Dye, a physician and small business owner, as well as Independent candidate Don Caldwell,

the long-serving Roanoke City commonwealth attorney and former local Democratic party chair whose entrance complicates the projections.

Those in competitive districts will tire of the television ads, political mailers and robo-calls, but we encourage you to exercise your fundamental right to make your voice heard in our democratic process, no matter where you live or who is on your ballot, this November.

Email Matt Bruning at mbruning@ vabankers.org with any comments on this article.

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July/August 2015 | Virginia Banking 11

Line

Legal

Changes in Store for Residential Mortgage Loan Closings

B Mel Tull General Counsel, Virginia Bankers Association

eginning Oct. 3, the borrowing public will experience fundamental changes in the closing process for most residential mortgage loans as lenders implement the new TILA/RESPA integrated disclosure rules (TRID). Lenders are well prepared to implement the new rules, having spent countless hours studying the rules, revamping their systems and retraining their employees.

On the other hand, the general public and other real estate market participants may not be aware of the changes that are in store for residential mortgage loan closings. To ease the transition and adjust expectations, lenders may want to provide borrowers and other real estate market participants with some basic information about TRID, how it will impact closings, and things they can do to facilitate timely closings.

TRID replaces the good faith estimate form and initial Truth in Lending disclosure with a loan estimate form that contains estimated loan closing costs and must be delivered or mailed to the borrower no later than three business days after receipt of a loan application and at least seven business days before consummation. TRID also replaces the HUD-1 form and final Truth in Lending disclosure with a closing disclosure form that contains final closing costs and must be received by the borrower at least three business days prior to consummation. The substance and layout of the new forms are materially different from the old forms. In addition, lenders are primarily responsible for the content and delivery of the new forms, which has led many lenders to change their Continued on page 23

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Update

Washington

Take Your Lawmaker to Work

T Frank Keating President and CEO, American Bankers Association

his fall, your bank can become a hands-on workshop for your lawmakers to learn about what you do for your customers and your community.

That’s the idea behind our first-ever “Take Your Lawmaker to Work Week,” Sept. 21-25.

It’s a time already set aside by members of Congress to be back home in their districts and states. While those lawmakers are back home, we want them to spend time with you learning more about your bank.

Your lawmakers on both sides of the aisle need to see, in person, how banks operate, serve customers and deliver value to their communities. Just one day at a local bank will help lawmakers understand how regulations can hinder your abilities to serve customers effectively, create jobs and grow the economy.

This can be a powerful teaching and learning tool. By participating in “Take Your Lawmaker to Work,” you will have the chance on your home turf to offer insights and expertise demonstrating how important your institution is to your hometown. A glimpse into a typical “day in the life” of a banker – and a chance to meet a bank’s customers – will show lawmakers first-hand how many of the

issues on their agenda in Washington affect the work bankers like you do on a daily basis.

Registration is free and includes resource materials to help you and your bank’s staff make an effective and lasting impression on lawmakers. These resources include invitation templates, step-by-step instructions for hosting a bank visit and tips for follow-up communication.

You can register to participate at aba.com/ lawmakersatwork. Mark your calendar and start planning today to invite your senators and representative into your bank.

A “day in the life” of your bank and the community it serves will help keep our industry’s legislative priorities – the Agenda for America’s Hometown Banks – top-ofmind and front and center in Washington.

By participating in this program, you’ll have the chance to offer valuable insights and expertise that show just how important banks are to your hometown. All the materials you need – including invitation templates, resources to prep your staff and tips for follow-up communication – are available for download, making participation easy.

Get involved, become engaged and take your lawmaker to work this year.

Email Frank Keating at keating@aba.com with any comments on this article.

Thank you to everyone who contributed to VBA BankPAC:

Goal: $425,000 Raised to Date: $438,249!

As our official campaign draws to an end, we would like to take this time to thank each person who contributed to VBA BankPAC this year.

Thank you for all you do throughout the year for VBA advocacy.

Remember - what you do makes a difference!

$438,249!

*Goal*

$425,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000

*Goals Set By VBA Government Relations Committee.

www.vabankers.org

July/August 2015 | Virginia Banking 13

VBA

Events

Virginia Bankers Association Holds Annual Convention with the West Virginia Bankers Association

2

Ken Farmer, of Quinn & Farmer Auctions and "Antiques Roadshow", was on-hand during our spouse program this year.

Tucker Carlson was the keynote speaker on Tuesday morning.

John Stallings, his wife Celeste and Johnny Milleson during John's installation as chairman-elect of the VBA. 14 Virginia Banking | July/August 2015

014-2015 VBA Chairman Johnny Milleson of Bank of Clarke County co-presided with WVBA Chairman Skip Hageboeck of City National Bank over a joint convention at The Homestead on June 21-24.

Sunday began with registration and a viewing of the U.S. Open. The convention kicked off with a Welcome Reception in the Exhibit Hall – a new addition for the VBA – and a Welcome Dinner.

Monday morning’s business session launched with an American Bankers Association (ABA) Leadership Panel featuring Billy Beale, Union Bankshares Corporation president and CEO and ABA treasurer; Dan Blanton, Georgia Bank & Trust CEO and ABA chair-elect; and Jeff Plagge, Northwest Financial Corporation president and CEO and ABA immediate past-chair. We closed our business session that day with Lee Wetherington, AAP, director of Strategic Insight for Profit-Stars, a division of Jack Henry & Associates. Industry favorite Wetherington discussed what it takes to innovate successfully in financial services.

Family members of the bankers participated in an array of activities during the morning session, including a boot camp class taught by Genise Whitehurst, wife of VBA president and CEO, Bruce Whitehurst, and the Spouse Program, which was an appraisals session featuring Ken Farmer of “Antiques Roadshow.” Ken kicked off the program with a discussion on “Tales from the Road and New Discoveries” – interesting experiences and items Ken has encountered while traveling the United States as well as since he moved to the Charlottesville area. Afterward, he appraised and discussed 20 items that attendees had submitted.

Almost 150 people participated in the two golf tournaments Monday afternoon, held at the Cascades and Old Courses, and kids of all ages joined us that afternoon in Downtime, the arcade and game room at The Homestead.

On Monday night, a game night and reception was held in the Exhibit Hall. Bankers had the exciting opportunity to test their hand-eye coordination with challenges at exhibit booths with top vendors in the banking industry. Playing a game at the individual booths gave each banker the opportunity to earn a ticket to enter into a raffle to win one of many prizes.

Tuesday morning started with break-out sessions on www.vabankers.org

the latest in M&A, cybersecurity, unauthorized electronic transfers, and how to increase branch profitability. Each banker had the chance to attend two out of the four sessions.

Following the morning’s breakout sessions, the second general session focused on association business and ended with a keynote, delivered by veteran journalist and political commentator Tucker Carlson.

Congratulations to 2015-2016 VBA Chairman Gaylon Layfield of Xenith Bank, and VBA Chairman-Elect John Stallings of SunTrust Bank, who were elected and installed during the Tuesday business session. They were officially installed later that night at the Tuesday night banquet, which was preceded by a chairmen’s reception and silent auction.

Thank you to the contributors and sponsors who made the silent auction a success again this year.

After the installation, the event closed with a live auction and entertainment from the band Three Sheets to the Wind, America’s No. 1 tribute to yacht rock.

Thank you to the nearly 675 bankers, sponsors, exhibitors, associates and guests that attended for making our convention a success. Please save the date for our 2016 convention, June 19-22, at The Greenbrier in White Sulphur Springs, W.Va.

Entertainment by Yacht Rock band, Three Sheets to the Wind, closed out the Tuesday night event.

From left, Jeff Plagge, Billy Beale and Dan Blanton on the ABA Leadership Panel during Monday's business session.

Two golf tournaments were held this year.

Melissa Layfield looks on as her husband, Gaylon, provides some remarks after his installation as VBA chairman. www.vabankers.org

The BankPAC Silent Auction was packed this year as attendees browsed and bid on 65 items.

July/August 2015 | Virginia Banking 15

New Chairman

Questions for Gaylon Layfield

Gaylon Layfield, president and CEO of Richmond-based Xenith Bank, is the new chairman of the Virginia Bankers Association.

Here, he answers a few questions so members can get to know him a little better.

How did you become a banker?

It’s a bit of a story. When I was about 5 years old, my father and a group of businessmen organized the first de novo bank in Henrico County. It was in a storefront adjacent to his automobile dealership. My dad was never actively engaged as part of management, but he was chairman of the board. I remember attending the opening night reception – there was a prize drawing and I had the high honor of pulling out the winning ticket. I didn’t know what a bank did, but it sure was exciting!

The bank was sold a number of years later to a statewide bank and my dad remained involved as a director. Toward the end of my first year in college, I was looking for a summer job; my dad suggested that I talk to the president of the bank. That led to a summer teller job that lasted for all of my college years. I remember well wanting to head for the beach on Friday afternoons, getting stuck with duty for “extended hours” and then having to find the inevitable “last penny” so that everyone on the teller line settled (we actually had six to eight tellers in the branch back then). That said, over the summers I gained a familiarity with banking and an interest in the business.

16 Virginia Banking | July/August 2015

www.vabankers.org

Following college, I moved on to graduate school for a master’s of business administration. In the mid-’70s, money center banks and some larger regionals were heavily recruiting new MBAs as the banking industry was growing, becoming more complex and being forced to attract younger talent with different skills. It seemed like a good fit with my interests, so when it came time to interview for a job, I focused on commercial banking. I debated going to New York or Chicago, but ultimately accepted an offer to work for Bank of Virginia in Richmond – believe it or not, in their International Division (a whole different story).

What kind of challenges have you faced so far in your career, and what do you believe is the biggest challenge facing the industry today?

For over 200 years, the banking industry in this country has faced crisis after crisis and has always rebounded, stronger, larger, more relevant and more prosperous. A remarkable record of adaptation, learning and creativity. During the downturn of ’08 through ’09, our industry suffered its worst crisis since the 1929 depression. We continue our path to recovery; however, challenges abound. The current macroeconomic environment, characterized by persistent slow GDP growth, low inflation and extraordinarily low interest rates, combined with the current political and regulatory landscape, admittedly fueled in a few cases by very visible bad behavior by a small minority of banks and bankers, has resulted in a business environment that remains a daunting challenge.

Our challenge as individual banks and as an industry is to respond in ways that rebuild trust, enhance financial performance and influence politicians and regulators to adopt laws and regulation that support and protect our free enterprise system and in turn the banking industry. We must be persistent and compelling, while at the same time being rational and persuasive. We cannot become frustrated on the legislative/regulatory front and withdraw, and we should not engage in pricing, underwriting, product development or other business practices that fail to recognize the need to provide our shareholders with attractive risk adjusted returns.

After almost 35 years in the industry, it seems like I’ve been faced with about every challenge that can come down the road. With the advantage of hindsight, I’d say that over time, the biggest challenge has been the recruitment, retention and motivation of extraordinary talent. Talented people have lots of options. It takes a combination of culture, leadership, job content and satisfaction, and of course compensation, to assemble and maintain high performing people and teams.

One thing I’ve learned, we are all unique. And while we may be highly motivated and capable, we are all just folks. I was once attempting to sort things out with a large highly dysfunctional team that I had inherited. After some false starts, I thankfully engaged a woman, much smarter than I, to help sort out the pieces. After a particularly long day, with little result, we were

working late into the evening. I was admittedly frustrated and said to my associate, “How in the world can a group of smart, motivated individuals end up in a state of complete dysfunction?” Carol’s answer was prophetic, “Well, Gaylon, you hire workers and people show up.” We worked through the crisis and ultimately built a high-performing team that achieved great success. I’ve never forgotten the lesson learned – we are all people. Inspired leadership is about connecting with people – I believe it’s our biggest challenge.

When and why did you first become involved in the VBA, and how has your involvement impacted your career?

I don’t remember my first involvement, but I do recall that soon after joining Bank of Virginia, I began to hear about the VBA. Our leadership was actively engaged and encouraged participation in training opportunities and on committees.

Our CEO, Rick Deane, had served as chairman of the VBA and was especially interested in advocacy. It was a time of significant change in bank regulation, particularly related to interstate banking, and trips to Washington by Rick were frequent. Somewhere along the line, Rick decided he needed an occasional driver, someone to tote luggage and to act as a scribe. I got the nod and have yet to escape the influence of the VBA. On a relative basis, at that time, Bank of Virginia and its successor, Signet Bank, were considered “big banks.” Our primary reliance on the VBA was in the lobbying arena. Since becoming involved with Xenith, I have come to have a high appreciation for the other services provided by the VBA. As a “smaller” institution, we simply do not have the internal resources to deal effectively with the training, compliance, employee benefit and other programs that are a necessary part of managing a bank. We consider the VBA to be a valued partner.

What still excites you about the banking industry?

Fundamentally, the same thing excites me about banking today that attracted me to the industry in 1975. If you like business, banking is at the epicenter. The free enterprise system that we enjoy in this country is dependent on the banking industry to facilitate the flow of money. As a banker, in addition to the challenge of managing the business of banking, we also have a seat at the table with our customers, both consumers and businesses, as they plan and manage their financial matters. It’s a great opportunity to learn and serve. Banking is a front row seat at the theater of economic activity in this country.

As an added bonus, if you’re relatively early in your banking career, you have entered the industry at a time when banks face a shortage of qualified talent due to decades of underinvestment in training and development. What an opportunity!

Continued on page 18

New Chairman Continued from page 17 What would you like to see accomplished in the banking industry and what are your goals for the VBA in 2015-2016?

As I mentioned earlier, our industry faces the headwinds that remain from the ’08/’09 financial crisis. We must continue our efforts to return our industry to its historical place as a respected contributor to the economic fabric of our country and an industry that offers stakeholders attractive financial and personal returns.

The VBA is a catalyst for this recovery. Through advocacy, education and the offer of value added services to its members, the VBA fills a crucial role. We have just completed a strategic assessment of the VBA and are in the process of implementing our enhanced plan. Our core strategy and focus remains consistent, but with important new initiatives, especially in education. My goal is to assist the VBA team in successfully communicating and implementing the enhanced plan. It will be a busy and exciting year.

Who has been your most valuable mentor and why?

This is a tough one. I’ve been fortunate to have a number of mentors over my career; three individuals come to mind.

All modeled certain behavior – impeccable integrity – no questions about it, ever. All were good communicators, although one did a lot of learning on the job, and all genuinely cared about people. All had a sense of humor. I was given opportunity for which I had not necessarily demonstrated the skill or gained the experience to predict success. But they held me accountable. I was never made to feel as though I couldn’t make a mistake.

As effective as these individuals were in modeling exceptional behavior, they weren’t perfect and admitted the same. I learned from that as well.

From my experience, a good mentor models effective behavior, teaches through day to day involvement and sets expectations. My job was to observe and learn and then put in to practice those new skills so as to reach ever increasing levels of achievement.

Looking back at yourself, just starting out at Signet Bank in 1975, what would you do differently? What would you not change at all?

If I had the chance to rewind the tape, I would begin with the knowledge that effective leaders are genuine. Without question, I spent too much time early on worrying about trying to fit a template that I expect was perpetuated along the way in college and business school as the model of a successful executive. It is far better to recognize the real attributes of inspired leadership and chart your own path that is a true representation of who you really are. I’m not sure any of us ever perfect the art – I certainly haven’t. The list of what I wouldn’t change is mighty long … I’ve been amazingly fortunate.

18 Virginia Banking | July/August 2015

What advice would you give to a young person graduating with a degree in economics from the University of Virginia today?

Consider banking as a career – it’s a window on the world of business. Economics is a terrific discipline to prepare you for the business of banking. There is outstanding opportunity for smart, motivated young talent in the industry today.

How do you pass on valuable messages and encourage aspiring leaders at your bank?

You can probably conclude from my comments about mentors how I attempt to encourage folks in my organization.

I try to model behavior, communicate often and broadly about objectives and expectations and be honest in my assessments.

At the same time, I try to recognize that my natural style, influenced by what I found effective in other leaders, isn’t always the best approach with certain folks or under certain circumstances. In those cases I try to “flex” my style to make myself as effective as possible. It’s an art and, like my mentors, I’m far from perfect.

Why do you value membership in the Virginia Bankers Association?

I personally really value the opportunity to interact with great bankers all over the state. They are a smart, committed and passionate group of individuals that are just plain fun to be around. And I’m always learning something new.

From a day to day practical business perspective, the VBA is an invaluable resource to Xenith Bank. I’m thankful every day for the support we get in running our bank.

At the industry level, our association makes us proud. The VBA is one of a handful of nationally recognized bank association leaders. Our team makes a difference at the national, regional and state level. It’s important work that directly impacts the health of our industry and they do it exceptionally well.

Finish the statement: Success comes from…

Integrity, valuing others, determination, hard work, balance, taking thoughtful risks – both personally and professionally, humility and a sense of humor.

What is your strongest character trait?

I’m not really sure. But if I have to choose, I’d say reliability.

I may not know much, but you can depend on my showing up!

Tell us something about yourself that would surprise your fellow bankers.

At one point I was a Coast Guard licensed master and captain for commercial vessels to 100 tons (think “Deadliest Catch”type fishing boats). In recent years banking has intervened – there’s an annual requirement for “time at the wheel.” Maybe in a few years. www.vabankers.org

Welcome Thank You GAYLON LAYFIELD

JOHNNY MILLESON

Xenith Bankshares, Inc.

Bank of Clarke County

2015 - 2016 Virginia Bankers Association Chairman

2014 - 2015 Virginia Bankers Association Chairman

Thank you, and welcome Gaylon Layfield, as the new Virginia Bankers Association Chairman. We join you in your support of the VBA and its valued community of bankers.

Jim Carter Assurance Partner

Thank you Johnny Milleson, for your outstanding service to the Virginia Bankers Association as its Chairman this past year.

We wish you and Bank of Clarke County well.

Steven A. Powless CEO

Loc Pfeiffer Partner

Michael Condyles Partner

Best Wishes, Principals & Staff Mark Sollenberger, Managing Director

S.R. Snodgrass, P.C.

Bob Newman Michael Glotz, Founding Partner Rob Mitchell, Partner

James F. Dray, President

Bob Newman President & CEO

Welcome

New Associate Members

ASSOCIATIONS

CREDIT & LENDING RESOURCES

First Data Corporation

CBSi/TransUnion

Address: 6902 Pine St. Omaha, NE 68106

Address: 1186 Shipwreck Drive New Market,VA 22844

CONTACT: KONNIE CHRONISTER Phone: (402) 222-1921 Email: konnie.chronister@firstdata.com

CONTACT: HOPE BAIN Phone: (540) 335-1088 Email: hope.bain@creditbureau.com

First Data’s easy-to-use banking solutions help you satisfy your customers’ desires for greater convenience with technology that makes every transaction simpler and more secure. Deepen relationships and seize new opportunities for growth with First Data's world-class portfolio of offerings empowering financial institutions to deliver easier, faster, safer and smarter electronic commerce.

Transunion is one of the three credit repositories and offers banks a variety of services related to lending, marketing and account management.

BANK ANALYSIS & DESIGN, CORE PROCESSING

CONTACT: BRANDI HAYMORE Phone: (980) 297-7118 Email: bhaymore@precisionlender.com

Cummins Allison Corp.

Address: 3526 Mayland Ct. Richmond,VA 23233-1421 CONTACT: MARK RUTKA Phone: (804) 747-5924 Fax: (804) 747-5926 Email: rutkam@cumminsallison.com CUMMINS ALLISON is a comprehensive ATM solution provider, enhancing branch Transformation with efficiency and quality. A global leader with a 128 year heritage, CUMMINS ALLSION provides solutions in developing advanced systems and equipment for counting, sorting, imaging and authenticating currency, checks and coins.

BANK CARD SERVICERS AND PROVIDERS, CORE PROCESSING

NYMBUS Address: 1000 5th St., Suite 1311 Miami, FL 33139 CONTACT: SUSIE DOUGHERTY Phone: (888) 840-0089 Email: sdougherty@nymbus.com NYMBUS partners with banks who are looking to take the next important step in their evolution, modernizing their IT infrastructure while utilizing an impressive suite of apps to improve workflows, automate processes and engage their customers – all in an environment that reduces technology challenges and nurtures constant innovation.

Precision Lender Address: 1255 Crescent Green, Suite 200 Cary, NC 27518

PrecisionLender is a web-based pricing solution used by thousands of lenders daily to price nearly $10 billion in loans and deposits each month. With PrecisionLender, loan officers can have constructive conversations focusing on the borrower’s needs, allowing them to hand-craft a solution that works for both the borrower and bank.

Sageworks Address: 5565 Centerview Drive Raleigh, NC 27606 CONTACT: BILLY BURNET Phone: (919) 851-7474 Fax: (866) 381-7474 Email: billy.burnet@sageworks.com Sageworks helps banks grow their portfolios and mitigate risk through a suite of credit risk and portfolio management solutions.

Used jointly or individually, the suite covers the allowance for loan and lease losses (ALLL), stress testing, credit analysis, loan administration, risk ratings and workflow.

COMPLIANCE SERVICES

OTC Markets Group Address: 304 Hudson St., 3rd Floor New York, NY 10013 CONTACT: CHRIS KING Phone: (212) 896-4459 Fax: (212) 652-5920 Email: cking@otcmarkets.com OTC Markets (10,000+ U.S. and global securities) operates the first U.S. public marketplace designed to meet the unique needs of regional and community banks. The best banks looking to create a healthy market for their stock trade on OTCQX. OTCQX for banks incorporates rules, requirements, and services tailored specifically for banks typically seeking improved liquidity, greater visibility, greater and new investor engagement, and fair valuation. Their mission is to create better informed and more efficient financial marketplaces.

20 Virginia Banking | July/August 2015

www.vabankers.org

FINANCIAL INSTITUTIONS & INVESTMENT BANKING

Performance Trust Capital Partners, LLC Address: 500 W. Madison, Suite 450 Chicago, IL 60661-2767

and focus necessary to structure, negotiate and successfully close strategic transactions.

INVESTMENT & TRUST SERVICES

CONTACT: GARY PENROSE Phone: (804) 334-8741 Email: gpenrose@performancetrust.com

Cetera Financial Institutions

Performance Trust Capital Partners, LLC strategically partners with community financial institutions, with the aim of producing consistent, significant improvement in their long-term performance.

Using their unique, disciplined approach, they challenge traditional thinking and unveil common misconceptions through their strategic financial advisory and investment banking services. Rather than simply telling clients what decisions they should make, they teach clients their analytical approach through Performance Trust University, a premier fixed-income portfolio education program designed to help clients acquire the tools to ask the right questions and make beneficial decisions for their institutions. They complement their strategic financial advisory services with best in class investment banking services relating to, among other things, M&A transactions, strategic options, capital alternatives, fairness opinions, valuations and strategic business plans.

CONTACT: ANGELA GOMAN Phone: (320) 529-4506 Email: angela.goman@ceterafi.com

INVESTMENT BANKING

Hovde Group Address: 3400 Peachtree Road NE Atlanta, GA 30356 CONTACT: WARD RICE Phone: (847) 991-6622 Fax: (847) 991-5928 Email: lboyle@hovdegroup.com Hovde Group is a leading U.S. financial advisory group that provides a full-service suite of investment banking, capital markets, and financial advisory services focused exclusively on the banking and thrift industry. As a leading specialist in the banking sector for over 25 years, Hovde Group consistently ranks among the top firms in mergers and acquisitions and capital markets transactions for U.S.based bank and thrift institutions. Their experienced professionals provide clients across all 50 states with the expertise, resources

Address: 400 1st St. S. Saint Cloud, MN 56301

Cetera Financial Institutions is a marketing name of Cetera Investment Services LLC, a self-clearing registered broker-dealer that delivers customized investment and insurance solutions to financial institutions nationwide. Cetera Financial Institutions helps institutions expand their financial offerings, which allows clients to pursue their financial goals through sound and strong financial solutions.

IT CONSULTING & SERVICES

ACBB-BITS, LLC Address: 24 Commerce St., 8th Floor Newark, NJ 07102-4005 CONTACT: KEVIN W. MULLINS Phone: (276) 393-1592 Email: kevin.mullins@bitsnetwork.com Website: www.bitsnetwork.com BITS is a subsidiary of Atlantic Community Bankers Bank offering best-in-class telecommunications services exclusively to community banks. They offer a complete hosted platform of next generation telecommunication services, specifically for community banks. Their services provide cost savings, unmatched efficiencies, risk reduction, streamlined solutions and support. BITS is solely owned by community banks. Their services were designed to help community banks add basis points to their ROA by reducing existing costs for all data, voice, internet, network security, core and ATM circuits. BITS simplifies compliance and reduces the regulatory burden community banks encounter through best practice efficiencies, documentation and process.

VBA ASSOCIATE MEMBERSHIP VBA member banks consider VBA associate members primary candidates when searching for vendors to perform services for the banks. In addition to increasing your exposure and helping you form partnerships with member banks, associate membership with the VBA provides extra opportunities for your organization.

Becoming an associate member of the VBA allows you to take advantage of the following benefits: • A free subscription to and opportunity to advertise in Virginia Banking magazine.

• Your organization may be eligible to participate in a number of the VBA’s employee benefit programs.

• Receive all conference and seminar notices and first notice of exhibitor and sponsorship opportunities plus an invitation to attend our Annual Convention.

• Networking opportunities at many major VBA workshops and symposiums.

• Your company description and contact information will appear in the VBA Online Directory.

PLEASE EMAIL CINDY BEAZLEY AT CBEAZLEY@VABANKERS.ORG IF YOU WOULD LIKE MORE INFORMATION OR TO APPLY FOR MEMBERSHIP. www.vabankers.org

July/August 2015 | Virginia Banking 21

Are You Asking the ‘Export’ Question?

By William R. Houck Regional Manager, Export Solutions Group, Office of International Trade

Rank --1 2 3 4 5 6 7 8

Country Total Virginia Canada China Mexico United Kingdom Germany Japan Singapore Belgium

2011 Value 18,125 2,925 1,757 902 1,101 867 489 417 413

2012 Value 18,286 3,194 2,006 1,055 1,077 922 476 427 386

2013 Value 17,945 3,228 1,872 1,052 996 790 576 526 435

2014 Value 19,194 3,670 1,921 1,219 969 894 554 528 526

Totals are in millions, USD

I

f you are not providing export financing to your commercial customers, you are missing out on millions of dollars of financing opportunities. As you can see above, Virginia has maintained a healthy export sales volume in the last four years, with Virginia reporting $19.2 billion in goods, a record year. This figure does not include the export of services or indirect exports (sales to U.S. companies that do export). If you have been presented with export finance opportunities and passed because “we just don’t understand export financing” or have been concerned about foreign buyer nonpayment of export receivables, worry no more. For you Small Business Administration lenders, did you know SBA has loan guarantees programs specifically for exports? Here is a summary of the three programs: EXPORT EXPRESS • 90 percent guarantee for amounts up to $350,000 (for up to seven years) • 75 percent guarantee for amounts between $350,000 and $500,000 (for up to seven years) • Lender uses its own loan approval process and documents • For financing of inventory, accounts receivable and export development activities, fixed assets, real estate and permanent working capital 22 Virginia Banking | July/August 2015

EXPORT WORKING CAPITAL PROGRAM • 90 percent guarantee for amounts up to $5 million • Use of funds for purchase order financing, accounts receivable and inventory financing, or stand-by letters of credit INTERNATIONAL TRADE LOAN PROGRAM • 90 percent guarantee for amounts up to $5 million • For working capital term loans for financing and refinancing of fixed assets used for exporting (loan tenures up to 10 years for plant and equipment and 25 years for real estate).

From taking marketing trips overseas to financing fixed assets and real estate, banks of all shapes and sizes can finance any phase of a customer’s/prospect's export initiative backed by a 90 percent SBA guarantee. If you are worried about managing and servicing such loans, there are SBA-approved, third-party loan servicing providers that can manage the entire SBA process, all you have to do is originate. It’s that simple.

It’s not uncommon for a relationship to grow 10 to 20 percent annually once exporting becomes a strategic part of a company’s business model.

So, don’t miss out on valuable lending www.vabankers.org

opportunities, become an SBA export lender. Get out there and ask your commercial customers, “Do you export?” You will be surprised how many say, “Yes, we do,” or “We need to export to grow.” Be their hero and help them grow.

William R. Houck, Regional Manager, Export Solutions Group, Office of International Trade, may be reached at (703) 235-0061 or william.houck@sba.gov.

Changes in Store for Residential Mortgage Loan Closings Continued from page 12 procedures for collecting information and preparing and distributing the forms. Similar to the old rules, TRID sets limits on how much some costs can change from the loan estimate to the closing disclosure. The new rules limit changes to certain items after delivery of the closing disclosure, which may delay closing until three business days after the borrower receives a revised closing disclosure.

The Dodd-Frank Act directed the Consumer Financial Protection Bureau (CFPB) to simplify and clarify the required residential mortgage loan disclosures. The CFPB conducted a multiyear study that evaluated several iterations of the new forms involving numerous different borrowers, loan products and lenders. The TRID rules and forms are the result of that process and are intended to help consumers understand key features, costs and risks of a mortgage loan.

The new forms provide consumers with many benefits. The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments and costs to close the loan. They also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different www.vabankers.org

loan offers, including the cost of the loans over time. Importantly, the new timing rules will prevent borrowers from being surprised by additional loan costs on the day of closing.

To facilitate timely closings and avoid delays, borrowers, loan originators and real estate brokers should conduct inspections and walk-throughs as early in the process as possible to allow ample time to react to any adverse discoveries. All loan-related cost information, such as title insurance premiums, home owners’ association dues and special assessments, should be provided to the lender as soon as possible and no later than seven business days prior to closing. In many instances, lenders may mail the closing disclosure six business days prior to closing to ensure it is deemed received by the borrower at least three business days prior to the scheduled closing.

Borrowers, loan originators and real estate agents are encouraged to anticipate delays and take precautions to mitigate the impact of delays as the entire real estate industry adjusts to the new rules, forms and closing procedures. Allotting more time between the execution of a purchase contract and the scheduled closing may be advisable (such as 60 days rather than 30 days).

Longer interest rate locks may be prudent

(again, 60 days may be more appropriate than 30 days). It may be a good idea not to schedule multiple contingent closings close in time, given the increased risk that any one of the transactions could be delayed. For example, back-to-back closings where the proceeds of a sale transaction in the morning are used to close on a purchase in the afternoon are risky given that the morning transaction could be delayed three days to deliver a revised closing disclosure.

The banking industry has been preparing for TRID for months and has adopted the necessary process improvements to continue providing homebuyers with the credit they need with as little disruption as possible. Change in general can be disconcerting for many people. Bankers can ease the transition for borrowers and other real estate market participants by reminding them of the benefits of the TRID forms and timing requirements and suggesting ways to minimize and cope with potential delays.

For more information about TRID contact Mel Tull, VBA general counsel, at mtull@vabankers.org or (804) 819-4710.

This article has been prepared for informational purposes only and is not legal advice and does not create an attorney-client relationship.

July/August 2015 | Virginia Banking 23

Bank Day

Scholarships

Congratulations to the Winners of the VBA Bank Day Scholarship Program

CENTRAL/SOUTHSIDE REGIONAL WINNER: Bonnie McGowan, Northside High School, Bank of Botetourt COLLEGE ATTENDING IN THE FALL: Virginia Tech FAVORITE THING ABOUT BANK DAY: My favorite thing about Bank Day was the opportunity to feel respected by a group of successful people. The Bank of Botetourt employees spoke to us as though we were equals instead of as a professional board addressing a group of high school students.

Atter spending a day with a local bank as a part of Bank Day, 275 students were given the opportunity to write essays based on their experience. Six regional college scholarships ($2,000) and one statewide scholarship ($4,000) were awarded to the winning students. Additionally, this year six $500 honorable mention scholarships were chosen, one in each of the regions.

The Virginia Bankers Association, together with the

Linda Doolittle, vice president, business development, Bank of Botetourt, presents the scholarship to Bonnie McGowan at the awards ceremony at Northside High School.

VBA Education Foundation and the VBA Leadership Division, congratulate Haley Alban, who shadowed at Sonabank, for winning the statewide VBA Bank Day scholarship award. As the statewide winner, Haley will receive a total of $6,000 in scholarships as she heads to New River Community College this fall. Congratulations to Haley, as well as to the 11 other winners of Bank Day scholarships.

The VBA Bank Day Scholarship Program will take place again next year on March 16. Please contact Chandler Owdom at cowdom@vabankers.org to learn how to get involved.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: I learned how diverse the career path is within the bank corporation. It takes a variety of skill sets to run a successful banking company.

FUN FACT ABOUT YOURSELF: I spent a week in Haiti on a mission trip.

HAMPTON ROADS/EASTERN SHORE REGIONAL WINNER: Cassandra Downey, Colonial Beach High School, Bank of Lancaster COLLEGE ATTENDING IN THE FALL: Virginia Commonwealth University FAVORITE THING ABOUT BANK DAY: I loved the bank employees’ friendly and dedicated attitudes.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: I learned how intricately connected banks are to society and how they shape us into responsible citizens.

ONE FUN FACT ABOUT YOURSELF: I enjoy fashion and the arts.

Get to Know the Regional Winners of the VBA Bank Day Scholarship Program

NORTHERN VIRGINIA REGIONAL WINNER:

CAPITOL REGIONAL WINNER:

Laura Vasquez-Bolanos,

Rachel McLevain, Powhatan High School, C&F Bank

Tuscarora High School, MainStreet Bank

COLLEGE ATTENDING IN THE FALL: Virginia Tech

COLLEGE ATTENDING IN THE FALL: Cornell University

FAVORITE THING ABOUT BANK DAY: I enjoyed meeting new people, as well as seeing how the bank operates behind the scenes.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: I didn't realize how involved C&F Bank was in our local community, and I think that is a great way to connect with their members, as well as reach out to potential members.

ONE FUN FACT ABOUT YOURSELF: I love yoga, and it has had a strong influence on my lifestyle.

24 Virginia Banking | July/August 2015

Tom Lackey, senior vice president, chief banking officer, MainStreet Bank, presents Laura VasquezBolanos’s scholarship to her.

FAVORITE THING ABOUT BANK DAY: I really enjoyed meeting all of the diverse employees who taught us that there is a lot more to banking than meets the eye.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: On Bank Day, I www.vabankers.org

learned about what a community bank is exactly, because I thought all banks were the same. It was neat to also be in an actual community bank.

ONE FUN FACT ABOUT YOURSELF: A fun fact about me is that I was born in the salsa dancing capital of the world – Cali, Colombia – and I have dual citizenship with Colombia and the United States.

Get to Know the Honorable Mention Bank Day Scholarship Winners CAPITOL REGION HONORABLE MENTION WINNER: Michael Falat, Deep Run High School, Union Bank & Trust

SOUTHWEST VIRGINIA REGIONAL WINNER: Grant Anders, George Wythe High School, Bank of Marion COLLEGE ATTENDING IN THE FALL: Radford University

Tammy Shuler, marketing assistant at The Bank of Marion, presents Grant Anders with his scholarship.

FAVORITE THING ABOUT BANK DAY: My favorite thing about Bank Day was being able to see how a community bank in my area operates on a daily and long-term basis. It was informative and enjoyable to speak to executives and staff in the bank.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: On Bank Day I learned how involved a bank can be in a community. I learned about the sponsorship the Bank of Marion provides to community events as well as programs offered to its customers.

ONE FUN FACT ABOUT YOURSELF: A fun fact about me is that I really enjoy the outdoors. I love to fish, hunt, hike and run as much as I can.

COLLEGE ATTENDING IN THE FALL: James Madison University FAVORITE THING ABOUT BANK DAY: Learning about how, despite the recent economic hardships in America, Union Bank always strived to make sure they helped those in the community that needed it most.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: Union Bank has no central headquarters, which allows them to be flexible with their policies in each branch’s respective community, as opposed to one central office controlling each branch statewide.

ONE FUN FACT ABOUT YOURSELF: I’m a health nut; I love fitness and nutrition and could talk all day long about eating healthy foods.

CENTRAL/SOUTHSIDE HONORABLE MENTION WINNER: Katherine Carrington, E.C. Glass, First National Bank of Altavista COLLEGE ATTENDING IN THE FALL: University of North Carolina at Chapel Hill FAVORITE THING ABOUT BANK DAY: I loved the positivity and enthusiasm of each banker in welcoming the students to their work area.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: I learned that the vault of the bank does not indeed have stacks of money in it.

ONE FUN FACT ABOUT YOURSELF: I can sing the alphabet backwards!

HAMPTON ROADS/ EASTERN SHORE HONORABLE MENTION WINNER:

VALLEY REGIONAL WINNER/STATEWIDE WINNER: Haley Alban, Covington High School, Sonabank

Kadera Lyburn, Colonial Beach High School, Bank of Lancaster

COLLEGE ATTENDING IN THE FALL: New River Community College

COLLEGE ATTENDING IN THE FALL: Hampton University FAVORITE THING ABOUT BANK DAY: My favorite thing about bank day was gaining knowledge about finances.

FAVORITE THING ABOUT BANK DAY: Listening to all of the ladies’ stories.

Kevin Persinger, Vice President of Sonabank, was on hand at Haley’s awards ceremony at Covington High School to present her scholarship.

www.vabankers.org

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: That I need to open a savings account for a retirement fund.

ONE FUN FACT ABOUT YOURSELF: I can play almost every concert instrument and guitar.

Both Kadera Lyburn (left) and Cassandra Downey (right) shadowed at Bank of Lancaster with Senior Vice President Hazel Farmer (middle).

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: I learned that banks are more than just money lenders; they are very strong attributes to their community.

ONE FUN FACT ABOUT YOURSELF: I like to sing and style fashionable outfits.

July/August 2015 | Virginia Banking 25

Bank Day

Scholarships

NORTHERN VIRGINIA HONORABLE MENTION WINNER:

and adventures, requiring a lot of background in many different career areas. Commercial lenders, such as Russell Rose at New Peoples Bank, really help the community to grow.

Ethan Tyler, Loudoun County High School, Middleburg Bank COLLEGE ATTENDING IN THE FALL: James Madison University FAVORITE THING ABOUT BANK DAY: Watching the interaction between the teller and their client.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: There is a vast degree of specialization within a bank; it’s not just tellers and loan officers that make a bank run.

ONE FUN FACT ABOUT YOURSELF: I have been a Virginia Tech Hokie fan my whole life, but now I am a West Virginia Mountaineer.

ONE FUN FACT ABOUT YOURSELF: I’m a member of the LCHS Varsity Ultimate Frisbee Club Team.

Pictured, from left: Tina Blankenship, retail branch officer, New Peoples Bank; Caroline Johnson; and Jane Carter, branch manager, New Peoples Bank.

SOUTHWEST VIRGINIA HONORABLE MENTION WINNER:

VALLEY HONORABLE MENTION WINNER:

Caroline Johnson, Graham High School, New Peoples Bank COLLEGE ATTENDING IN THE FALL: West Virginia University FAVORITE THING ABOUT BANK DAY: Overall just learning about the banking system as a whole was very beneficial to me. I am not sure that I have one favorite thing about the day. I would just have to say that I wish that more students were given the opportunity to experience Bank Day. ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN’T KNOW BEFORE: I learned many things that I did not know, but just one thing would be about commercial lenders. Before Bank Day, I thought it was just a boring desk job, but I came to find out that it entails many risks

Rosie Clifton, Stonewall Jackson High School, Farmers & Merchants Bank COLLEGE ATTENDING IN THE FALL: Barton College FAVORITE THING ABOUT BANK DAY: Learning about the counterfeiting process.

ONE THING YOU LEARNED ON BANK DAY THAT YOU DIDN'T KNOW BEFORE: I learned about a lot of the amazing opportunities that the bank provides to the community.

ONE FUN FACT ABOUT YOURSELF: I am the first person in my family who is going to graduate from college!

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MID-ATLANTIC EXECUTIVE CYBERSECURITY CONFERENCE Hosted by the Delaware, Maryland, Pennsylvania, and Virginia Bankers Associations

SAVE THE DATE: OCTOBER 29,2015 National Institute of Standards and Technology|Gaithersburg, MD 100 Bureau Drive|Gaithersburg, MD

This event, designed for bank CEOs and Directors, will provide a greater understanding of the important role you play in your banks to ensure you have the appropriate strategy and resources in place to address the cybersecurity threat enterprise-wide.

Topics covered include: • Current and emerging threats • The regulatory landscape including the regulators interest in banks’ use of the NIST cybersecurity standards in their banks and with their third party vendors • Role playing, through table top exercises, of potential scenarios and the bank’s response Registration Rates: $295 - Member Banks of DBA, MBA, PA Bankers and VBA $445 - Non-Member Banks of All Associations For an agenda and registration information, visit www.vabankers.org.

For More Information, Contact: Virginia-Amy Binns|abinns@vabankers.org Delaware-Margaret Cregan|margaret.cregan@debankers.com Maryland-Alex Choi|achoi@mdbankers.com Pennsylvania-Jackie Catalano|jcatalano@pabanker.com

Compliance

Corner

Consumer Compliance Applies to Commercial Credit?

By Darlia Fogarty, Director of Compliance, Compliance Alliance

W

hen your compliance officer informs you that loan officers who only work with the bank’s commercial portfolio should be trained on consumer compliance, it is not a joke. We hear complaints from loan officers on a daily basis about the compliance officer insisting they attend consumer compliance trainings.

Whether that be webinars or online training, we agree.

Let’s talk about the reasoning behind this recommendation. While the classification of these regulations as consumer compliance or consumer protections, and even the name of the new government agency, Consumer Financial Protection Bureau, understandably would lead a reasonable person to believe these regulations would only apply to consumers, there is a group of these regulations that extend their protections to commercial customers. This makes it imperative for commercial loan officers to not only know the regulations exist, but to also understand how the regulations apply to commercial customers.

That being said, which consumer regulations extend protection to commercial products and services? The best place to start is always at the beginning.

In the beginning, banks determine the credit needs of their communities. The Community Reinvestment Act (CRA) and related Regulation BB require that determination to be strategically planned and executed. CRA requires large banks to collect and report their CRA small business and small farm lending activities. While this leaves the smaller banks breathing a sigh of relief, you may want to familiarize (train) the bank’s staff with the reporting requirements, especially in this time of mergers and acquisitions, because it is within the realm of possibility that your bank could go from an intermediate-small sized bank, for CRA purposes, to a large bank rather quickly.

Next we will move on to regulations that will affect your bank, no matter what the asset size is. The first ones that comes to mind are the Equal Credit Opportunity Act

28 Virginia Banking | July/August 2015

(ECOA) and Regulation B. These regulations prohibit the bank from discriminating on a prohibited basis in any aspect of a credit transaction (loan). The prohibited bases include race, color, religion, national origin, sex, marital status or age. These protections apply to all consumers as well as commercial transactions. Don’t forget a part of ECOA is also the Notice of Action Taken, commonly referred to Adverse Action Notice. This requirement is a little different for commercial customers than for consumers, but it still applies. Additionally, I would be remiss if I did not state that the record retention period for commercial customers under the ECOA requirements is different than the consumer customer requirement. Commercial credit records are to be retained 12 months after the customer is made aware of the action taken, whereas the consumer customer requirement is 25 months. The differences between the commercial versus consumer requirements are reasons to require your commercial officers to have training for ECOA. Additional regulations that apply across business lines are the Flood Disaster Protection Act (FDPA) and Regulation H. The FDPA mandates that banks cannot make, increase, extend or renew a loan secured by a building or mobile home located in a special flood hazard area unless it is covered by flood insurance for the term of the loan. What determines if flood insurance is required? The type and location of the collateral, however the purpose of the loan (whether it is consumer or commercial), does not matter at all. While we are talking about typical consumer protection regulations that are not typically considered when discussing requirements for commercial lenders, we must discuss the Servicemembers Civil Relief Act (SCRA). This regulation provides protection to service members, and in some cases, their spouses, dependents and other persons covered by the SCRA. These protections apply to loans contracted prior to entering military service, and while serving the SCRA does not make a distinction between consumer and commercial credit. www.vabankers.org

Are there other regulations that make no distinction between consumer and commercial customers? Yes, there are. Others include the requirements under the Home Mortgage Disclosure Act (HMDA) and Regulation C. Even though residential mortgages are the primary focus for the requirements in these regulations, there are implications for certain commercial loans. HMDA requires reporting of multi-family loans which are typically commercial loans.

There are also some nuances that can lead to confusion. For example, if a customer takes out a loan for a business purpose to be secured by the customer’s primary residence, the loan would not be HMDA reportable at origination, but if it were refinanced, then it would become reportable.

Why, you ask? Well, the regulation requires all refinancings of dwelling secured loans to be reported. Now you are beginning to see the need for training.

Another regulation that may be overlooked when listing regulations that have implications for commercial compliance is the Fair Credit Reporting Act (FCRA). While the regulation specifically states it is to regulate the furnish-

ing and collecting of consumer credit information, there are instances where commercial credit transactions involve a consumer. For instance, guarantors or co-makers in many cases are consumers. You will also find adverse action requirements in this regulation as well.

If the above regulations and the implications for commercial credit are not enough to persuade the commercial credit side of the house to participate in consumer compliance training, remind them of the monetary penalties that accompany violations of many of these regulations, and hopefully training will be readily accepted.

After 12 years as a commissioned national bank examiner with the OCC, Darlia Fogarty, director of compliance, developed an expertise in compliance while administering examinations in banks of all sizes. Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933, visit compliancealliance.com, or email info@compliancealliance.com.

2015 LEADERSHIP CONFERENCE: A MOUNTAIN OF: NG

NETWORKI

ENT DEVELOPM

KNOWLEDG

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Save the Date • October 15-16, 2015 • Pembroke,VA Mountain Lake Lodge www.vabankers.org

July/August 2015 | Virginia Banking 29

Move

Are your bankers on the move?

Email submissions to swagner@vabankers.org

Bankers on the

Scott

McGuire

Spangler

Reeves

Lemon

Holland

Gibson

Hair

Clark

Hilliard

Michniak

Crump

Lichter

Lubbers

Carter

Eldridge

Gardner

Wood

Sharpe

Russell

Woody

Griffin

Hall

Wallace

Alderman

Murray

Helton

Cox

Coleman

American National Bank & Trust Co. Debra B. Scott, Assistant Vice President & Mortgage Loan Officer Dianne F. McGuire, Retail Relationship Manager Lisa D. Spangler, Financial Center Manager Kelly R. Reeves, Sales & Market Coordinator Adonna J. Lemon, Financial Center Manager Chelsea J. Holland, Customer Support Manager Christopher Gibson, Financial Advisor Sue B. Hair, Vice President & Retail Banking Manager Bank of America Eric Morales, Vice President & Client Manager Aaron Metrick, Assistant Vice President & Commercial Associate Burke & Herbert Bank Leonard Clark, Jr., Vice President, Commercial Relationship Manager William J. Hilliard, Vice President, Credit Officer Yvette M. Golladay, Principal Vice President, Brand Manager Mary Ann Michniak, Principal Vice President, Auditor Karen Clinton, Vice President, Compliance Officer Betty L. Crump, Vice President, Commercial Relationship Manager Jane Petty Lichter, Vice President, Community Marketing Director Marina Lubbers, Vice President, Branch Manager

Carter Bank & Trust Worth H. Carter, III, Assistant Vice President Leland J. Eldridge, Assistant Vice President John A. Gardner, Assistant Vice President David Josiah Wood, Assistant Vice President Tammy C. Sharpe, Assistant Vice President & Cashier Deborah P. Russell, Assistant Cashier Terri L. Woody, Assistant Cashier Gloria C. Griffin, Bank Secrecy Act Officer April D. Hall, Branch Manager Jalissa T. Wallace, Branch Manager Andrea T. Alderman, Branch Manager Amy G. Murray, Branch Manager Brytonie R. Helton, Branch Manager EVB Jeromy E. Cox, Senior Vice President/Retail Administration Manager First Sentinel Bank Austin Crumpton, AVP/Branch Manager Virginia Commonwealth Bank Angela E. Coleman, Senior Vice President/Assistant Chief Credit Officer

rePRINTS You can order a professional reprint of any article in the VIRGINIA BANKING.

To learn more about rePRINTS click below:

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