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Ohio Record spring 2010


spring 2010 issue

Contents A Comprehensive Resource for the Ohio Banking Industry

Other News

4 Chairman’s Corner 6 Random Thoughts 18 Steps of the

Features

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D.C. Fly-in in Pictures

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Statehouse

24 Excellence through Education

45 Around the Industry

Ohio Bankers a Big Part of Grassroots Initiatives on Reg Restructuring Proposal Partners in Each Others Futures First OBL Economic Summit in Pictures

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The Bank M&A Market Where Have All the Deals Gone?

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Are your Compensation and Executive Benefit Programs Ready for 2010? A Profitable CRA Investment

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Senior Housing Crime Prevention Foundation to Aid Elderly Veterans

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Taking the Pain Out of Loan Participations OBL Launches New Online Marketplace

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The Ohio Bankers Benefits Trust The Health Plan Designed by Bankers for Banks

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The Road Ahead Changes in Labor and Employment Law for 2010

35 39

Walk the Walk Ohio BankPac – Making a Difference

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BANKERS SPEAK OUT AGAINST CREDIT UNION BILL AT STATEHOUSE 4249 Easton Way, Suite 150 Columbus, Ohio 43219-6170 Tel. (614) 340-7595 Fax (614) 340-7596 Toll Free 800-686-6755 James Thurston, Editor Susan Poling, Features Association Staff Michael Adelman Vice President of State Government Relations madelman@ohiobankersleague.com Brenda Arnold, Administrative Assistant OBL BankServices barnold@ohiobankersleague.com Mike Baker, VP & Executive Director, OBL BankServices mbaker@ohiobankersleague.com Dan Conklin, BankPac/Government Relations Specialist dconklin@ohiobankersleague.com Michelle Crume, Vice President & Regional Director OBL/Infinex Partnership mcrume@ohiobankersleague.com Pam Foster, Compliance Consultant pfoster@ohiobankersleague.com

OBL members Howard Boyle and Randy Herron testified against a bill that would permit Ohio credit unions to hold public deposits at the Statehouse recently. If credit unions gain the authority to accept public deposits they in turn should become subject to the same taxation and regulation as other financial institutions, the bankers told the told the House Financial Institutions, Real Estate and Securities Committee. Boyle, president & CEO of Home Savings Bank, Kent, (pictured, right, with the OBL’s Mike Adelman and Herron, center) testified, “This bill is about choice. It is about choosing whether the tax-preferred credit unions should be permitted to become more bank-like with or without the same taxation and regulatory obligations.” Herron, president & CEO of Mutual Federal Savings Bank in Sidney, asked, “The tax subsidization enjoyed by Ohio’s credit union industry is greater than $20 million per year annually. That is to say that Ohio is already depositing over $20 million per year in the credit unions. How much more do they need?” The bill is sponsored by Reps. Tracy Maxwell Heard (D-Columbus) and Peter Ujvagi (D-Toledo).

Carol Halkias, Accounting chalkias@ohiobankersleague.com Wendy Hench, Administrator Ohio Bankers Benefits Trust whench@ohiobankersleague.com Julie Kiplinger, Manager of Professional Seminars & In-Bank Training jkiplinger@ohiobankersleague.com Sue Leppert, Administrative Assistant sleppert@ohiobankersleague.com Lynn Moore, Accounting Coordinator, OBL BankServices Compliance Coordinator, OBL Compliance Services lmoore@ohiobankersleague.com Susan Poling, Communications Manager spoling@ohiobankersleague.com Jeff Quayle, SVP & General Counsel jquayle@ohiobankersleague.com Stacy Schindler, Manager, Professional Schools sschindler@ohiobankersleague.com Bill Showalter, OBL Compliance Services wshowalter@ohiobankersleague.com Gary Sutter, Employee Benefits Manager, OBL BankServices gsutter@ohiobankersleague.com James Thurston, Communications Manager jthurston@ohiobankersleague.com Sue Turner, Executive Assistant sturner@ohiobankersleague.com Mike Van Buskirk, President & CEO mvanbuskirk@ohiobankersleague.com Melea Wachtman, Senior Vice President of Administration mwachtman@ohiobankersleague.com The Ohio Record is published quarterly by OBL BankServices. Member subscriptions may be purchased for $25 per year; Non-member subscriptions may be purchased for $50 per year. POSTMASTER: Send address changes to Ohio Record at the address listed above. spring 2010 Ohio Record

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random thoughts Vices of the Political System of the United States Last month, several of us on the OBL staff headed to Washington D.C. along with a small army of more than 30 Ohio bankers to try to help the Ohio Congressional delegation, and bank agency heads, gain insights to lead to regulatory modernization that might actually work. The stakes are very high for the industry, which is why those bankers found time to go to Washington and why I will fly back there again and again during the coming weeks. The recent history of Congressional action may not be encouraging but dropping out of the fight would make real disaster a certainty. Much has been written about the causes of our current recession - some of it thoughtful, much not. Those of you who have read this column in the past will understand why our communications staff doesn’t think I understand the term “brief.” My intent, therefore, is to keep my focus today narrow. Hopefully, you will be able to judge the thoughtfulness, or lack thereof, relatively soon. By 1787 our founding fathers had concluded that the Confederation formed following the American Revolution was fatally flawed. They convened a constitutional convention in Philadelphia. Its proceedings were secret. What we now know of them come from private notes made by James Madison that were published four years after his death. Madison had brought with him to Philadelphia two carefully researched background pieces on the shortcomings of the Confederation. One was titled, “Vices of the Political System of the United States” which might essentially be the theme for this column. We know the framers consciously designed checks and balances. They sketched out a House of Representatives, whose members would be popularly elected, giving larger states greater power. They designed a Senate, whose members initially were elected by state legislatures, with states equally represented giving the more numerous, smaller states more power.

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Most power remained on state turf. Congress’s focus was limited, allowing careful deliberation. While some elements of the Articles of Confederation remained, most were new, and that which was not was carefully modified to fit the new model. Clearly, the world was much different then. While the size of both the House of Representatives and Senate has grown over the years, and Senators are now popularly elected, the framers’ environment

“Most members of Congress are hardworking and bright; but the system breeds selfish interest.” informed the design of what still governs us more than two centuries later. That it works at all is a testimony to the genius of the framers. However, my theme in this edition is that, in critically important ways, our legislative process is broken. Essentially we expect that those who represent us in Congress, supported by relatively small staffs, will be experts on everything in the universe. Our world is infinitely more complex that in 1787. Those whose lives Congress touches collectively provide a Niagara Falls of information and opinion. Members of Congress and their staffs don’t have time to separate truth from artifice. In the House, most Representatives serve on two committees, one major, one minor. When they have an idea, almost all stemming from incomplete knowledge, they are motivated by House rules to write a bill so it will be referred to a committee they serve on. Essentially, they’ll butcher their proposed remedy to fit a committee where their influence will be greatest. Committees have limited jurisdiction so they must write their solution so its implementing rules will be written by an agency under their committee. If some agency, not under the jurisdiction of the committee, is

Michael M. Van Buskirk President & CEO

contributing to the problem only rarely will the bill address that agency. That would require a “sequential referral,” almost always a kiss of death for any bill. So the result is layer upon layer of overlapping, often inconsistent, often conflicting rule and regulation. Each of us votes to elect a Representative to Congress from our district and two Senators from our state. The shear volume of issues that overwhelms those we elect to Congress also keeps we individual voters from learning much about what they really do. Instead most votes are based on slick election commercials, news releases about federal programs they’ve won (often earmarks) that can’t be justified as a national priority and which collectively drive mind boggling federal deficits. Now you know why you are required prepare 40 to 100 pages to give consumers at a mortgage closing, disclosures that because of their shear volume, few are willing to read? Most members of Congress are hardworking and bright; but the system breeds selfish interest. Consider the “bribes” paid to assemble the majority vote in the Senate on a health insurance bill giving citizens of a few states material advantage over others. Few Americans, including most of those who work in Congress, have read either the of the massive House and Senate health insurance bills. We individually face much the same problem as Congress. We have challenges in our own personal and business lives. We have lots of information, but in an Internet age we too cannot cope with our own Niagara Falls of data, particularly since in this transition age the news media no longer serve as a effective path to the truth, if they ever did. Why do public opinion polls oppose what few understand? We fear Congress with justification. As Congress continues consideration of sweeping financial regulatory modernization - I would argue their first step


should heed the advice, “Physician, heal thyself.” Our legislative machinery is broken. It is time for another constitutional convention. Even if you agree with me, no constitutional convention will take place anytime soon so please stay in close touch with your own legislators and their aides. Most are well intentioned. The machinery may be broken but we can still influence positive change. They’ll need your active help if we hope to keep Congress from killing the patients they were elected to heal.

Find Us on the Web Go to www.ohiobankersleague.com to catch up with the latest news as it happens in the Ohio banking community. View our calendar of events; get involved in online political grassroots campaigns; find a product or service; browse our banking news section; or enroll in the latest in banker education programs. It’s all there.

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“I found it interesting that OBL was able to get appointments with the actual members of congress rather than staffers. Obviously that is a result of OBL’s hard work and the industry’s standing with our elected officials.” — TOM WISEMAN, OHIO VALLEY BANK

Ohio Bankers a Big Part

Banks from across the size spectrum attended the 2010 Fly-in. Here, US Bank’s Kurt Treu talks legislation with Sen. Sherrod Brown

OF THE

Grassroots Initiatives ON THE

Reg Restructuring Proposal

By Jeffery D. Quayle, OBL SVP & General Council

Pending laws and regulations could impact banking for the next generation. Ohio bankers are responding to the challenge by rolling up their sleeves and going to work educating policymakers on how the current bill will impact constituents and the local economy. In March, 34 bankers made the trek to Washington D.C. as a part of the OBL annual D.C. Fly-in to state the case on behalf of the banking industry. OBL Chairman Tom Moore said the pending regulatory reform bill played a big role for this year’s bankers. “Our goal was to continue to focus our attention on the sections of the bill that will impact all Ohio banks,” he reported. “While it still contains several provisions that will unnecessarily add costs and interfere with serving our customers, the many improvements incorporated over the objection of the President and Speaker of the House are the result of the clear, consistent message delivered by thoughtful bankers from every community in the country. Ohio bankers have played a big role in delivering that message.” Tom Wiseman, president & COO for Ohio Valley Bank commented “I was extremely impressed with the organization and content of the OBL event. I found it interesting that OBL was able to get appointments with the actual members of Congress rather than staffers. Obviously that is a result of OBL’s hard work and the industry’s standing with our elected officials.”

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More than 30 bankers were in D.C.


IN PICTURES

Huntington’s Barbara Benham meets First Senior Deputy Comptroller and OCC Chief Counsel Julie Williams

KeyBank’s Ann Feleppelle; the OBL’s Jeff Quayle; Rep. Steve Austria (R-7); Nationwide Bank’s Brian Bacon and Lynn Greenstein; and Community Bancshares’ Tom Will

First State Bank President & CEO Mike Pell reads up before legislative meetings

First National Bank of Dennison’s Blair Hillyer talks regulation with OCC staffers

OBL staffer Jeff Quayle; First National Bank of Dennison’s Blair Hillyer; and the OCC’s Jennifer Kelly and Julie Williams

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The Bank M&A Market

Where Have All the Deals Gone? Charlie Crowley Managing Director Stifel Nicolaus

Michael Voinovich Managing Director Stifel Nicolaus

Between Jan. 1, 1988 and Jan. 1, 2008, the number of independent banks and thrifts in the United States decreased from approximately 17,300 to approximately 8,500. In most years in the 2003-2007 timeframe, 250-300 mergers per year were being announced nationwide. This reflected a normal “survival of the fittest� progression in which an industry plagued by too many competitors went through an orderly consolidation process. Then the industry hit the wall -- hard. From June 30, 2007, when the first cracks in the subprime mortgage market began to register in the eyes of investors, until the first quarter of 2010, the SNL Bank and Thrift indices were down by roughly 55-65 percent. Seemingly overnight, we have gone from a strong economy to a very fragile economy. The banking industry, generally respected until very recently, has borne the brunt of governmental and media attacks which have created a different perspective. With such a dramatic shock to the system, it is no wonder that healthy bank M&A activity has pretty much come to a standstill. A large number of transactions were terminated during the market plunge of 2008, and most industry players have chosen to hunker down and stay focused internally on asset quality and capital measures since then. The drop off in activity has been dramatic:

M&A Transactions 350 300 250 200 150 100 50 0 2003-07 Average

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2008

2009

2010 Annualized


The results above are obviously the result of decisions being made (or not made) in board rooms around Ohio and around the nation. Among the reasons that activity has been slow (and will remain slow for a little while) are the following: •Weakened purchasing power. A prospective buyer that has seen its stock price cut in half is not necessarily in the mood to issue a lot of new shares in an acquisition. Just like traveling to a foreign country when the dollar is weak, the relative price of an acquisition seems way too expensive when the buyer is spending a depressed currency. •Need to preserve capital. Banks of all sizes have experienced higher loan provisions, higher FDIC premiums and other headwinds that have dramatically weakened earnings. Along with that unfortunate trend, the regulators (and shareholders) are pushing for significantly higher levels of capital than had been the norm until recently. Since most M&A deals stretch the tangible equity levels of a bank, any strategic benefits (or EPS accretion benefits) have been outweighed by capital preservation needs. •Lack of trust in asset quality. Pretty much every bank has seen some surprises in its own loan portfolio. Whether a bank considers itself to be a buyer or a seller, there is an understandable hesitation to take on somebody else’s credit problems, when the bank already has too many of its own. •FDIC deal overhang. For the relatively small slice of the industry that is large enough and healthy enough to consider acquisitions, the thought of pursuing generous FDIC loss-sharing deals seems more enticing than the risk of a “healthy” bank acquisition. Thus, even in a state like Ohio which has seen very little FDIC deal activity, the perception of possible FDIC deals to come has been a factor in limiting overall M&A volume.

•Relatively poor multiples for the seller. M&A activity is at a 20 year low, and so are M&A multiples, at least on a price to tangible book basis (a P/E basis is another matter). Many banks that would like to sell for one reason or another are simply choosing to wait for a better environment. Particularly if the bank has some issues of its own, this may be the prudent thing to do. It is tough to sell a distressed property into a distressed market while hoping to achieve optimal results. So much for the bad news. Will the market eventually turn? Of course it will. And in the meantime, this represents a terrific opportunity for strong and entrepreneurial buyers to enhance their franchises. Banks such as FirstMerit and First Financial have been able to make bold expansion moves on financially attractive terms with FDIC deals. NB&T Financial recently expanded into attractive adjoining markets at a reasonable price by acquiring Community National in Franklin. Excel Financial completed a creative recapitalization transaction with Ohio Legacy in Wooster. Other Ohio banks are in the process of raising capital and buying branches. One opportunity that hasn’t played out yet is the strategic merger. In the good old days of a few years ago, if a bank trading at 160 percent of book wanted to acquire a slightly smaller company that may have been trading at 150 percent of book, the math did not work. The amount of goodwill created would have killed the leverage ratio and the tangible book value per share of the buyer, and the combination would have stayed on the drawing board. Today, one of those banks may be trading at book and the other one may be trading at 80 percent of book. As long as both boards can take a longer term view, and realize that shareholder value is not being maximized in the short run, a very interesting and attractive deal could occur. The combined entity could cut costs, have a higher

lending limit, etc. The social issues impact on customers, employees and the community would be fairly benign. And both sets of shareholders could emerge from this difficult environment with a more liquid and more valuable stock. Way too many banks are stuck on what they may have been worth a few years ago, and they are ignoring the potential to unlock considerable value right now. If a company sells for cash, it has the certainty of cash but gives up the potential upside of a recovering economy and market. If a company swaps its stock for a better stock, even if the multiple is disappointing today, the bank’s shareholders can get a substantial market premium today, and they can ride back up with the buyer’s shareholders as the market continues to recover. Every environment offers challenges as well as opportunities. This period has certainly offered more challenges than anyone would have ever wanted to encounter. Bank stocks have started to recover from the depths of early 2009. If we can get any sort of real improvement in the economy, in unemployment levels and in real estate values, additional capital will come back to the banking industry. When it does, bank stock prices and bank M&A prices should increase as well. At that point, FDIC deals will hopefully be more infrequent, and there will be some pent-up demand by increasingly healthy buyers. We believe that the next few years will present some great opportunities for growth and profitability, and for the recovery of shareholder value. Views expressed in this article are solely those of the authors. Charlie Crowley and Michael Voinovich are Managing Directors in Stifel Nicolaus’ Financial Institutions Investment Banking Group. They are based in Cleveland and can be reached at 216-593-7306 and 216-593-7309, respectively. They specialize in merger advisory work and capital raising for financial services companies. Founded in 1890, Stifel Nicolaus is one of the nation’s leading investment banks serving the financial services sector.

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Are your Compensation and Executive Benefit Programs Ready for 2010?

Michael Blanchard Blanchard Chase

Lou Moore Clark Consulting

Bank compensation has been much scrutinized over the past two years due to the economic environment and government intervention. Headlines across the nation focus on excessive bonuses, rich severance packages, and luxury expenses for executive officers and lenders. As a result, the Treasury, Bank Regulators, and the international Financial Stability Board have released various compensation guidelines and proposals. Most of the recent bank compensation proposals and guidelines focus on the design and features of annual incentive plans, long-term incentives, and executive benefits. With limited base salary increases, many banks rely on appropriately designed incentive programs and benefits to motivate key officers and employees.

Annual Incentive Plan Trends Do your annual incentive plans encourage unnecessary risk? This is the question that has been asked by the Treasury, Regulators and the SEC. As a result, many banks are reviewing their incentive plans for risk and to determine if payout opportunities are reasonable. Per regulatory guidance, lender and producer incentive should account for the risk horizon or timeframe of the product or services sold. Many incentive plans that have traditionally paid lenders on a monthly or quarterly basis are adding a holdback provision

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where a portion of the incentive is held until the end of the year to ensure credit quality. Other banks may hold or defer a portion of the payment for two to three years and some are paying a portion of annual incentives in stock, with two to three year vesting schedules. Many banks are now taking a closer look at the performance criteria utilized in the annual incentive plan. Historically, the most common criteria have been profitability measures such as Return on Average Equity, Return on Average Assets, Net Income and Earnings per Share. Most banks still use profitability measures to calculate a portion of the annual incentive plan payout. However many banks are moving towards a combined approach, where profitability counts for 50-75 percent of the incentive calculations and the achievement of strategic goals account for the remaining 50-25 percent. For lenders, banks are moving away from the sole use of loan production. Loan profitability goals and asset quality goals are becoming more prevalent and help mitigate risk in these plans. Other types of performance criteria in annual incentive plans include the following: 1) Deposit Growth: In the past two to three years, deposit growth has become the second most popular overall bank criteria utilized. Most banks are focusing on “core” deposits such as checking accounts, money market accounts, and other low interest deposits. 2) Asset Quality: As the focus shifts from growing loans to managing loans, asset quality goals (such as non-current to current loans, nonperforming assets, and classified assets) are being incorporated as a factor in incentive plans. 3) Regulatory Ratings: Regulatory ratings are commonly used as a qualifier that must be achieved in order to receive any incentive payout. In the past this may have been a CAMELS rating of two; however in this

environment some banks are trying to achieve a rating of three. 4) Discretionary Payouts: Some banks will base 25 percent of the annual incentive on a discretionary measure such as an individual performance evaluation or achievement of strategic goals that support the long-term viability of the bank. 5) Capital Raising: Many banks are now focused on raising capital and incorporating this measure into their incentive plan. This allows the Bank to reward key officers that spend a significant amount of time raising capital. 6) Peer Group Comparisons: Using regional peer group data to help set overall bank performance goals has become more prevalent. Incorporating peer group data into goal setting for the incentive plan allows for the consideration of economic conditions and as a check that overall bank goals are realistic.

Long-Term Incentive Plans Long-term incentives are designed to align the executive’s interest with the shareholder and are usually linked to increases in stock price (for public banks) or book value (for private banks). Most stock banks will use stock options or restricted stock to motivate and retain their executives and key producers. The market decline has rendered many option grants “underwater”, which means that they have an exercise price greater than the actual stock price. While many banks have explored re-pricing or exchanging these options, most have decided to leave the underwater options alone. Restricted stock (full value shares with a time or performance-based vesting) is becoming more popular in today’s economic environment. Some proponents of restricted stock suggest that stock options can be risky because they are based solely on stock appreciation and there is no downside or real loss for the recipient if the stock fails to appreciate. Others like the retention aspect of restricted stock as these shares maintain a value, even when stock price decreases. Another advantage of restricted stock is that it preserves shares in a plan, as fewer restricted shares are needed to match the same expense value of stock option grants

(usually a 3:1 or 4:1 ratio). Stock ownership guidelines for executive officers and Board of Directors are also becoming more common. Typical ownership guidelines are a multiple (two to three times) of base salary or annual director compensation. Some banks are also adding equity holding requirements which may require the executive to hold a certain portion of stock grants (i.e., 50 percent) until retirement or until the equity ownership guidelines are met.

Executive Benefit Programs Many banks are taking a close examination of benefit programs including non-qualified retirement plans for executive officers and directors. These types of programs are designed to help offset shortfalls in benefits for executive officers due to governmental limitations on qualified plans such as a 401(k) plan. These plans also act as a strong retention and recruitment device as the executive must stay with the bank for an extended period of time to receive this benefit. Typically supplemental executive retirement plans are designed to replace 60 percent to 80 percent of the executive’s final pay (factoring in social security and bank sponsored qualified benefits). The objective is to provide a level of compensation in retirement similar to other individuals in the organization that are not limited by government regulations. A recent trend is performance-based retirement programs, where the annual retirement accruals or the final retirement benefit is linked to the achievement of overall bank or individual performance factors. These performance factors can impact the dollar amount that is accrued for the benefit plan on an annual basis (i.e., annual accruals are linked to a percentage of base salary dependent on the achievement of annual performance goals, similar to an annual incentive plan). Another methodology is to link performance to the target percentage of income replacement amount for the officer (i.e., depending on annual performance over a 10-15 year period of time, an executive would receive a target retirement benefit between 20 percent to 40 percent of final base salary).

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Review Now Now is the time to review the compensation and executive benefit programs for your executives, producers, employees, and the Board. Typically the review is conducted by the bank’s compensation committee with assistance from Human Resources, the Risk Assessment Officer, and Management. Having a defined compensation philosophy that sets “guidelines” for compensation decisions and reliable market research will help you design programs that are linked to the long-term viability of your bank and keep your bank’s compensation out of the front page headlines. Louis L. Moore (CA Lic # OC58738) is a registered representative of, and securities products are offered through, Clark Securities, Inc., DBA CCFS, Inc. in Texas, 2100 Ross Avenue, Suite 2200, Dallas, TX 75201-7906, Ph. 1.800.999.3125, member FINRA and SIPC.

Compensation Risk Management Garners Expanded Focus in Annual Bank Compensation & Benefits Survey By Melea Wachtman, OBL SVP of Administration Paying for performance is big business in many U.S. workplaces. Employers now spend almost twice as much on incentive-based compensation as they did 15 years ago and, in 2010, national surveys predict variable pay will account for almost 12 percent of the typical employer’s compensation budget. Not just how much, but on what basis you pay your top performers and executives has taken center stage for the banking industry as Congress and bank regulators look to factor compensation risk management into everything from TARP funds, to safety & soundness exams, to FDIC premiums. Like it or not, compensation must be a component of your bank’s risk management strategy. To help Ohio banks noodle through these strategic issues, we’re gathering more data than ever before on incentive compensation plans and practices. New questions have been incorporated into the 2010 OBL Bank Compensation & Benefits Survey to help you determine how your plans align with those of your peers. We’re also conducting a special compensation strategies Webinar - free for all survey participants.

Strategic Compensation Webinar: Compensation Planning and Design for 2010 Tuesday, April 13, 2010 – 2:30 p.m. In this session, facilitated by leading bank compensation consultant Mike Blanchard and experts from Clark Consulting, we will explore how banks are compensating executives, key officers, and producers in these tough economic times. The program will cover all elements of compensation including base pay, annual cash incentives, long-term incentives, and executive benefits. We’ll share what banks are doing in respect to designing annual incentive plans in light of the current economic conditions and new regulatory/governmental guidelines. We’ll also examine equity pay and how deep in the organization a bank should utilize stock-related programs. Finally, we will look at how executive benefit programs have been impacted by the current environment including non-qualified deferred compensation programs, changein-control agreements, and executive perquisites. In addition to an expanded compensation strategies section, this year’s survey will again include recessionrelevant questions designed to help gage the tenor of the impact of the economy on human resources practices at Ohio financial institutions. For more information about the 2010 survey or to purchase your copy of the report, contact Melea Wachtman at (614) 340-7606.

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From the

Steps of the Statehouse By Michael J. Adelman, OBL Vice President of State Government Relations

Finding the time to draft this column has been a real chore. You see, given the frenetic pace of the legislature this year, I’m operating in fits and starts. The glamorous life of government relations seems to have thrust me into the arcade world of Whac-A-Mole at the Statehouse. WHACK! WHACK! WHACK! Yet, from one day to the next it isn’t always apparent if I’m going to do the whacking or dodging the mallet. Foreclosures, mediation, toxic titles, credit union public deposits, small business lending, condo association “super” liens, appraisal management companies, and IOLTA/IOTA are the moles and swinging mallets this year. Those are the highest priority banking-related issues out of the 700-plus bills that have been introduced between the House and Senate this session. WHACK! In addition to the policy issues, this of course, is an election year. That spells good news, if your preference is for less government, because the elected officials want to be back home in the districts as much as possible so that can remind voters why they should get another term in office. In addition to all 99 House seats and 17 of the 33 Senate seats, the statewide offices (governor, attorney general, treasurer, secretary of state, and auditor) will be voted on this year. The stakes are especially high since the state apportionment board, the body that draws the legislative districts following the census, is at stake.

— —

! Wh ac k

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— — Wh

ac k ! Wh ac k!

Foreclosures

WHACK! Earlier this year, I testified on behalf of the industry in Senate committee to deliver our objections with the package of harmful foreclosure bills: HB 3 – six-month moratorium, $750 filing fee, notifications, data collection and servicer regulation, HB 9 – tenant foreclosure notification, and SB 197 – mandatory residential mediation. Our message continues to be that banks and thrifts don’t want to foreclose if they don’t have to. Yet, given the continued tough economy and mounting Ohio job losses along with borrowers’ finances being thrown off-track due to catastrophic health issues, death and divorce, many Ohioans can no longer afford their homes. So if foreclosure is the only resort, all parties benefit when it is consummated promptly. Fortunately, the Senate


appears skeptical, if not concerned, that HB 3 and SB 197 could cause more harm than good by delaying the foreclosure process further and creating new fees ($1,250 between the two bills) that erect barriers to accessing the courts and disincentives for lenders to make mortgages in Ohio. HB 9 seeks to create new notification requirements to protect tenants of foreclosed rental units. The people that have faithfully paid their rents, yet wind up on the curb, are the true victims of foreclosures. Improved notification by the landlord would seem helpful. Converting existing leases to month-to-month contracts would not. Besides the fact lenders are not in the landlord business, assuming an ongoing rental agreement may have the unintended impact of suppressing potential buyers at sale. Interestingly, federal law took effect last year, but there might be desire in going a little further in Ohio law.

Credit Union’s Want to be Public Depositories WHACK! Our most pressing fight at the Statehouse as this goes to print, is the credit unions’ request to become public depositories, HB 317. There has been considerable legislative turnover and change of party control since the last time we found ourselves in this battle. We fought with great success in 2004; the issue died in House committee. Articulating those same concerns should still resonate in 2010. Two OBL member bankers and I had the pleasure of testifying in House committee in opposition to this bill in March. Proponents advocate local governments deserve “choice” in where they place their deposits and with public deposits credit unions will foster economic development. They are adamant that taxation has no place in the debate. But, how can’t it? For one, public deposits are tax dollars. Second, this bill would harm the public entities they think they’d help. “How is that?” you ask. For every dollar deposited in a credit union versus a bank or thrift there is a corresponding decrease in the amount of taxes that will be paid by banks and thrifts. As the banks and thrifts pay less taxes there will be fewer public deposits. If that isn’t convincing enough, most people probably haven’t grasped that

currently the State of Ohio effectively deposits approximately $20 million per year in credit unions. You see, the credit unions are exempt from the financial institutions tax, which is paid by banks and thrifts. Harkening back to my days with the Ohio Dept. of Taxation, this exemption creates a tax expenditure for the State. So just like an appropriation, continuation of tax exemptions costs the State money. Since the State is not collecting that approximately $20 million per year, it is depositing that money in credit unions. Taxation, though, is only part of the objection bankers have with requests for expanded credit union powers like HB 317. Bankers oppose efforts to enable credit unions to evolve into more bank-like financial institutions without all of the same regulatory obligations. Top on the list is the Community Reinvestment Act (CRA). If credit unions really still serve “people of small means,” as spelled out in their original mission that afforded them a tax-preferred status, becoming subject to a state CRA shouldn’t be a problem. On public policy grounds, a number of concerning safety and soundness issues have been raised in my meetings with legislators. First, being a public depository isn’t cheap. Depositories must set aside 105 percent of the amount of the public deposit. This over-collateralization means funds above and beyond what they receive from the public entity must be set aside and can’t be loaned out. The credit unions testified that on average they have seven to eight-percent capitalization. Maybe that’s adequate. But, unlike a credit union’s NCUA insurance, this can’t be booked on both sides of their ledger. Second, there are liquidity questions. Why do the credit unions seem so interested in gaining these public deposits that tend to be shorter term funds: 30, 60, 90 or maybe up to 180-day money? Third, there are a number of privately insured Ohio credit unions. Should they be permitted to hold taxpayer funds? I’ve learned this was a deciding factor in the defeat of a similar bill in Colorado earlier this year. Fourth, a credit union’s customers are its owners. So does the placement of a public deposit in a credit union also translate into ownership of that credit union by the public

entity? If it does, then is it appropriate for the public entity to take on the risks of loan losses, etc, which they’d bear like every other owner of a credit union? Fifth, being a public depository requires a level of sophistication on the part of both the financial institution as well as the regulator with regards to securities pledging. Are the credit unions and their regulators up for the awesome responsibility of guarding the funds entrusted in them by the public?

Star Ohio It’s ironic to me that some public officials have testified that they need more choices to deposit their funds. They’ve all expressed the need to increase their yields. This is puzzling because it seems they should first be focused on safety. But, also, local governments haven’t been shy about choosing to deposit funds in STAR Ohio. Bankers have long given me an earful about their objections to this statesubsidized competitor. Created in the days when banks and thrifts couldn’t branch into multiple counties, the State Treasury Asset Reserve Ohio program is a State Treasury investment tool that gathers billions of dollars per year from communities across the State. Bankers tell me that with the exception of the recent historically low interest rates, STAR Ohio has set rates around the state for the past three decades. Many times banks and thrifts found it tough to match the seemingly unrealistic rates local government officials were chasing with the state-subsidized competitor. The last thing they need are 400 more tax-subsidized credit unions competing for deposits. This bill seems to be the last thing the state and local coffers need as well. WHACK! Don’t forget to register for the OBL’s annual Day at the Capitol, the Ohio banking industry’s premier grassroots event. This year’s program is Tuesday, May 11, at the Athletic Club of Columbus. Your OBL government relations staff will brief you on pertinent issues relating to banking before sending you off to meet with your state senator and representative. I hope that you are able to join fellow bankers at the Statehouse for this critically important and fun grassroots event.

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Senior Housing Crime Prevention Foundation to Aid Elderly Veterans Ohio has a long and storied history of Lori L. Millar sending brave men and women to serve in Vice President our nation’s armed forces. To support veterSenior Housing Crime ans for their service, the Ohio Bankers Prevention Foundation League has joined the American Bankers Association, the Independent Community Bankers of America, OBL’s endorsed partner, the Senior Housing Crime Prevention Foundation, the Armed Forces Veterans Homes Foundation and the National Association of State Veterans Homes to ensure that 40,000 veterans living in 160 veterans nursing homes in the United States will have the benefit of the Senior Housing Crime Prevention Foundation’s Senior Crimestoppers program. The men and women who live in our nation’s veterans homes should be allowed to live out the remainder of their lives in safe and secure environments that are free from the daily fear of crime, abuse, neglect, hostility and deprivation of personal freedom. According to Senior Housing Crime Prevention Foundation Chairman Charles “Chuck” King, “Protecting our nation’s 40,000 elderly veterans living in long-term care is a need that must be addressed, and I can’t think of a better way to get this done than by asking every bank in the country to allocate a portion of their annual Community Reinvestment Act (CRA) budget to secure the Foundation’s successful Senior Crimestoppers program.” Many Ohio banks have actively participated in the Senior Crimestoppers program for nursing homes since the association endorsed the program in 2002. The program is administered by the Senior Housing Crime Prevention Foundation, a non-profit organization established in collaboration with the Office of the Comptroller of the Currency to provide a vehicle for banks to earn CRA credit through support of low-to-moderate income nursing home residents. The program has a proven track record of 92.76 percent nationwide and 91.03 percent in Ohio. Under this initiative, each veteran resident will be provided a specially designated personal lockbox and access to an anonymous, toll-free tip line that pays cash rewards up to $1,000 on each incident reported. In addition, the Foundation will provide each state veterans nursing home with its annual Time of Your Life video series for the residents’ enjoyment, and each facility will receive an annual cash contribution for a Wish Comes True grant to be given to select veterans. Ohio banks will be asked to support this program by making a direct, no-risk, fully collateralized CRA loan or investment to the Foundation. The loans or investments will range from $250,000, which sponsors 10 veterans in the program, to $2.5 million, which sponsors 100 veterans. Participating banks benefit from the program, just as do the veterans. They receive dollar-for-dollar CRA credit for the loans and investments funded and also receive excellent exposure and positive public relations for participating in the program and supporting the veterans. The Foundation provides banks with support regarding public relations efforts and marketing. Support the nation’s veterans and join the thousands of banks that we expect to participate in this program, and help the men and women who defended our freedom by committing to helping our nation’s veterans. At a time when the banking industry’s image is somewhat tarnished in the eyes of many, what better way to get some positive publicity in your local community?

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Look for information from the Ohio Bankers League office regarding informative webinars to educate you and your staff on the program and its benefits to Ohio veterans and to your bank. If you would like information immediately, contact Mike Baker at mbaker@ohiobankersleague.com or Terry Rooker at terry.rooker@shcpfoundation.org


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Excellence Through Education

New Community Bankers for Compliance Program a Success Susan Poling OBL Communications Manager

Not joined this valuable program? Become a member by May 17 As a provider of top-quality education programs, it is no surprise that the nationally-recognized Community Bankers for Compliance Program – the most successful and longest running compliance training program in the country – kicked off the 2010 training calendar with a bang. More than 60 bankers attended the first quarter seminar on Fair Lending & The SAFE Act at the OBL Training Center on Feb. 19, presented by Young & Associates, Inc. – and all returned to their bank armed with a detailed and highly-coveted 220-page reference manual. These bankers will return to Columbus on Tuesday, May 18 for an intensive program on Regulation E and Open-End Regulation Z. “These CBC quarterly seminars are just one of the many benefits of CBC Program membership, but the face-to-face training is one of the most common reasons banks join,” explained Julie Kiplinger, OBL manager of professional seminars and in-bank training. “Members may also take advantage of a detailed monthly online newsletter that provides regulatory updates and a compliance calendar, as well as access to a tollfree Compliance Hotline and a CBC members-only Web page.” Dawn Kincaid, compliance officer at The Ohio State Bank, found the entire program to be “excellent” and found the best feature to be the “great manual and the useful application examples from the presenter.” Most all participants agreed with Kincaid and note the manual as a tool that will be put to use again and again. “The CBC Program is designed to assist members in getting timely answers to their questions, as well as testing techniques before they are implemented in the bank,” said presenter Bill Elliott, senior consultant and manager of compliance, Young & Associates, Inc. “In addition, each program features regulatory updates that our participants find invaluable – and that the regulators approve not only for its comprehensiveness, but also for its practicality.”

Who Should Participate? In today’s times, it is essential that your bank’s compliance officer participate in this program; however, since regulatory compliance is approached from a team perspective, it is beneficial to send additional employees from the customer service, lending or operations departments to sessions on topics that relate directly to their positions in the bank.

Pro-Rated Program Membership: April – December 2010 “We know this program is one from which every one of our member banks will benefit. But since it was new in 2010 and had an early start date – we have decided to extend an opportunity for others to join at a pro-rated CBC Program membership

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Presenter Bill Elliott, Young & Associates, Inc., and Bill Showalter, OBL Compliance Services consultant, form a unified team for OBL member banks, as between the two, areas covered include audit and consulting services, as well as education and training

More than 60 bankers attended the first Community Bankers for Compliance Program seminar on Fair Lending & The SAFE Act. All returned with a detailed 220-page reference manual

There are currently only 10 seats available.* They will be filled on a first-come, first-served basis at the following cost: For members of the Ohio Bankers League, the pro-rated price of the program is $1,000 from April through December. This includes attendance at each of the three remaining quarterly seminars for one (1) representative from your bank, detailed manuals, the monthly Compliance Update newsletter, and on-line and toll-free access to Young & Associates for compliance questions that arise between meetings. Or, your bank can send two (2) representatives from your bank to all four sessions for just $1,250 if you register in advance (additional representative is just $250). For banks that are not members of the OBL, the pro-rated price of the program is $2,500. Or, your bank can send two (2) representatives from your bank to the three sessions for $2,750 (additional representative is $250). Based on a two-person CBC Program membership, this equates to an average of just $208 per person per seminar, making the CBC Program cost-effectiveness unbeatable. *Please note: If your bank is already registered as a CBC Program member and you attended the February CBC program, you are already registered for the May seminar.

Individual Sessions For members of the OBL and the CBC Program, the price to send additional representatives from your bank to an individual session will remain $255 per person per session. For banks that are not members of the OBL, but are members of the CBC Program, the price to send additional representatives to an individual session from the bank will remain $375 per person per session. Check the OBL Web site for online registration or contact Julie Kiplinger at 614-340-7612 with any questions or to request a copy of the brochure.

Regulation E & Open-End Regulation Z – May 18 The next CBC Program seminar will cover all aspects of Regulation E, with a focus on the upcoming July 1, 2010 changes. This presentation will focus on the requirements of the regulation, and will be presented in a format that allows for staff training. The open-end Regulation Z changes will include some credit card issues; however, there are additional changes that will impact other open-end accounts, including home equity lines of credit. In addition to these regulations, the program will cover two more sections of the FACT Act that are effective on July 1, 2010, including Accuracy and Integrity and Direct Dispute. While neither of these sections should present major problems for banks, they do have requirements for formal policies and bank procedures that will need to be modified to accommodate the new requirements.

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Education Calendar Highlights 2010 Dates to Save “OBL educational programs provide us with timely and relevant insights into the issues bankers face daily. With the expertise provided at these programs, we gain the ability to prepare and develop our staff to manage these daily challenges.” — Cynthia Sparling Vice President Human Resources & Retail Banking Farmers Citizens Bank

Keep this current listing of professional training & development opportunities and check the OBL Web site at www.ohiobankersleague.com for additional programs.

Special Events

Classroom Seminars

CEO Symposium

Appraisal Review

May 25 – 26

April 13

OBL & CBAO Bankers’ Day Reception June 29

Ohio Bankers’ Day 2010 June 30

OBL Joint Convention Sept. 9 – 12 (French Lick, IN)

Annual Meeting & Professional Development Event Nov. 3

CEO Symposium May 25 – 26

Compensation Risk Management, Avoiding Liability and The New ‘Norm’ for Capital are just a few of the topics expected to be addressed at the 2010 CEO Symposium, May 25 & 26 at the Hilton Columbus at Easton. The first day will also feature the informative and well-received Regulatory Panel with the FDIC, OCC, OTS and Ohio Division of Financial Institutions. Registration will begin at 1 p.m. on May 25 and will include an afternoon of programming, followed by an evening reception. Sessions on May 26 will run from 8:30 a.m. – 3 p.m. A discounted room rate is available for $179 at the Hilton (614-414-5000) until May 3. Be sure to mention you are with the OBL. Questions can be directed to Stacy Schindler at 614-340-7608.

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Ohio Deposit Documentation Seminar April 15 & Sept. 8

Regulatory & Accounting Banking Fundamentals April 27 – 28

Regional Directors Workshop, OBL Training Center, Columbus April 27

Regional Directors Workshop, Findlay Inn & Conference Center April 28

Regional Directors Workshop, Hilton Garden – Cleveland

Attendees at the 2009 Directors Workshop at the OBL Training Center. More than 100 bankers attended the programs in Columbus and Findlay

Regulation E – A Community Bankers for Compliance Program May 18

Safe Deposit Security, Liability & Legal Issues May 27

Collection Seminar for Ohio Bankers June 10

Loan Review: Today’s Expectations July 13 – 14

Today’s Community Banking Model: There is No “Normal” Anymore July 15

April 29

Auditing Real Estate Loans

Understanding & Preparing the Federal Call Report

Aug. 26 – 27

May 4 & Oct. 20

Sept. 2

Basics of Loan Decision Making for Lending Support Personnel

Bank Security Workshop

May 11

Electronic Banking & Regulatory Compliance

Personal & Business Financial Statement Analysis

ALM Seminar Sept. 15 – 16

Oct. 13

May 12

Banking 101: Overview of Fundamental Banking Principles May 13

Directors Training Held across Ohio each spring, the 2010 Directors Workshops will feature the Role of the Board in Risk Monitoring and Strategic Planning. Designed to be both practical and relevant to the current environment, the program is once again led by Jim Clarke, Ph.D., a nationally recognized asset/liability management consultant. • COLUMBUS - OBL Training Center, Columbus – April 27 • FINDLAY - Findlay Inn & Conference Center – April 28 • CLEVELAND - Hilton Garden Inn – Cleveland Airport – April 29


Schools & Conferences BSA/AML Conference April 22 – 23

Lending Essentials School May 19 – 20

Mortgage Lending School Aug. 18 – 20 (Indianapolis)

Advanced Agricultural Lending Conference Deb Schenk, The Mechanics Savings Bank, receives an autographed book from keynote speaker Jim Beardon at the 2009 CEO Symposium

Sept. 1 – 2 (Purdue University)

Advanced Compliance School Sept. 21 – 22 (Indianapolis)

OBL Bank Management School Sept. 26 – Oct. 1

Bond Math University Sept. 28 – 30

Thanks for offering yesterday’s seminar on information security. I picked up a great deal of valuable information, and the speakers were extremely knowledgeable. — Rick Bagby Compliance Officer Standing Stone National Bank

School of Bank Compliance Oct. 25 – 29 (Indianapolis)

OBL School of Commercial Lending Essentials Nov. 17 – 19

Midwest Agricultural Banking School Nov. 29 – Dec. 1 (Purdue University)

OBL Bank Management School Sept. 26 – Oct. 1

Let the graduates speak for themselves. One hundred percent of the 2009 OBL Bank Management School students would recommend this School to their friends or colleagues as the program met 100 percent of the graduates’ expectations! This intensive one-year bank management course curriculum and participation in a Bank Executive Simulation provide excellent training for those interested in gaining a competitive edge for their career and institution. Graduates become a valuable asset to their bank as the students gain a comprehensive and practical overview of the financial services industry and the interrelationships of each banking function. Advance coursework can begin today – with the first project deadline set for May 24. Just $250 is due upon registration with the balance not due until Sept. 1, 2010.

E-Learning Busy Days Don’t Always Allow for Necessary Training. That’s why the OBL is extending a special offer to OBL members. Throughout 2010, for every five OBL Webinars and On Demand programs your bank purchases through the OBL, you will get one FREE!* That is a $255 value - nearly a 20 percent savings. Any topic - any day! It is up to you and your staff to select areas where training is needed most. Check the Education/Webinar listing on the OBL Web site for a complete listing of available Webinars or the E-Learning listing for a wide variety of On Demand programs on such topics as RESPA, Fair Lending and new Overdraft Protection Rules. *(Please note this offer does not apply to GSB Webinars).

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THE OHIO BANKERS BENEFITS TRUST

The Health Plan Designed by Bankers for Banks The Ohio Bankers League represents Ohio’s finest financial institutions by not only offering products and services to satisfy compliance, education, communications and government relations but also by offering a health plan designed by community bankers. The Ohio Bankers Benefits Trust is a self-funded health plan sponsored by the Ohio Bankers League. Established in 1952, the OBBT has grown to nearly 80 participating members and insures over 2,000 lives. The Trust offers a cafeteria style program including medical, dental, vision, and life benefits. This comprehensive menu of insurance options allows employers to meet their budget goals while allowing employees to meet their family needs. The OBBT is governed by six trustees, who are both bank presidents and OBBT members. The current serving trustees are Tom Moore (chairman), First Federal Bank of Ohio; Courtney Haning, The Peoples National Bank; Ronald Keaton, Fairfield Federal Savings & Loan; John Malanowski, First Federal Savings & Loan; Paul Reed, Farmers Bank & Savings; and Thomas Will, Community BancShares.

Gary L. Sutter OBL Employee Benefits Manager

What message would you like to send to both members and non-members regarding the advantages of the OBBT? Tom Moore: If a health insurance agent offers you a one year quote that appears to

be too good to be true, check their track record for rate increases the next year. The OBBT does not low ball bids for one year in order to get the business. Paul Reed: I remember one of the selling points of the Trust, besides cost, was the Wendy M. Hench OBL OBBT Administrator

involvement of bankers being a part of the decision making process. As a trustee I have the privilege of seeing how significant that is. Each year when we consider rate increases I am impressed how much weight is given to the impact on our member banks. Granted, the trustees must protect the interest of the trust and we must make certain our members are protected with adequate reserves but our discussions always address what is the minimum amount needed to meet those goals‌Not how much can we get away with. As a result, during the last few years, we have been able to increase the benefit offerings while keeping the rate increases to below industry averages. As trustee, what do you view as the single most accomplishment of the OBBT? Court Haning: The OBBT provides OBL members an alternative to open market

employee benefits and allows bank employees to share risks/cost with the like type enrollees. John Malanowski: The OBBT continues to offer a quality product with quality service for a fair price.

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Employee Health is in Your Hands Paul Reed, President & CEO Farmers Bank and Savings Company: This is our second year with IHS wellness screening and the results are encouraging. Last year our participating employees, upon receiving their results, established personal goals for the year. This year most of their numbers improved, giving us a healthier workforce. Thanks to the wellness benefit some employees made lifestyle changes and remain focused on their health goals. As a final note, I know of several local doctors who were impressed with the depth of the tests performed with one saying, “I wish our tests were that comprehensive.” I think the unsolicited endorsement from a highly trained physician reveals how significant that benefit is to our members. Greg Kirk, Vice President, Galion Building & Loan Bank: I highly recommend the health testing that IHS offers. It is a top notch service company. Everyone - from representatives at the home office in Chicago who answered questions to the plebotomist who did our testing - was professional, courteous and very helpful. We did our testing on a Friday and we had our results online just three business days later. We will continue to take the opportunity to do the IHS testing every year. Brenda Arnold, Administrative Assistant, OBL BankServices: Wendy Hench is the Administrator of the OBBT and we work together at the OBL. She and I became fast friends and I quickly discovered she is very passionate about her job. One of the benefits she is most passionate about is the IHS benefit.

WHY WELLNESS

With healthcare costs continuing to rise, you might be surprised to learn that only one percent of all healthcare cost is spent on prevention. The Ohio Bankers Benefits Trust has an answer to this dilemma, recognizing the important role improved health plays in decreasing the risk ultimately shared by all. A new comprehensive wellness program offers up to $1,000 annually in wellness expense per adult. Bankers insured by the OBBT receive preventative services without limitations for the first $1,000, with no out of pocket expense. In 2009 the OBBT partnered with Interactive Health Solutions to provide an on-site health risk assessment that combines a set of 34 diagnostic blood tests with blood pressure checks and personal health history. The tests evaluate cardiovascular disease risks, diabetes, liver and kidney disease and blood, bone, and muscle diseases. It is no longer a scheduling nightmare for employees. The program offers evaluations on-site that take less than 10 minutes to complete. In addition to the testing, each participant receives a personal health report, access to research and current health news based on individual results, and one-on-one lifestyle related courses on topics such as smoking cessation, weight loss, and better nutrition. The OBBT wellness program allows for all employee and spouses to participate in the testing. IHS handles the billing which is run through the OBBT and applies to the generous $1,000 benefit. The wellness maximum covers any and all preventive measures, tests, and vaccinations. The need for prevention has extended beyond workouts at the gym and diets. Be proactive, empower those around you to become aware, receive annual checkups, and be accountable.

Much to Wendy’s chagrin, I did not participate the first year this was made available to us at the OBL. I didn’t want to know what secret illnesses might be lurking in my system and was quite content to believe no news is good news. Not always such a good decision when it comes to your health. The second year I didn’t get off so easy with Wendy’s constant “nagging” and I took the assessment. I tested positive for hypothyroidism which causes fatigue and weight gain. My doctor confirmed the results and immediately started me on a regimen of Synthroid. Within weeks my energy level increased and I lost weight! Due to my findings, my twin sister discovered she also has this condition and is now on medicine. If I hadn’t accepted Wendy’s challenge, I would still be living in the shadow of hypothyroidism. Now I’m free. This changed my life. It might just change yours too.

Companies that act now can minimize their own cost and increase productivity of their organization. To learn more about the wellness program, or the OBBT in general, please contact us at whench@ohiobankersleague.com or gsutter@ohiobankersleague.com or call (614) 340-7595.

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The Road Aehs ineLaabod r and

Chang Employment Law for 2010

Many of the changes in the area of labor and employment law that we saw at the end of 2009 will set the stage for even more changes as we enter a new decade. What are the key changes that employers should be aware of going into 2010? Read on. WHAT HAS COME TO PASS. . .

Richard L. Moore Partner Vorys, Sater, Seymour and Pease LLP

The Americans with Disabilities Act Amendments Act of 2008 (“ADAAA”) The ADAAA took effect Jan. 1, 2009, but its real impact will likely be felt over the next decade as new cases are filed under the Act. The ADAAA retains the ADA’s basic definition of “disability” but changes the way that the term should be interpreted, which has the effect of enlarging the number of people protected by the law. The Act expands the definition of “major life activities” by including two non-exhaustive lists. The first list includes many activities that the EEOC has previously recognized (e.g., walking) as well as additional activities that have not been specifically recognized (e.g., reading and communicating). The second list includes major bodily functions (e.g., circulatory and reproductive functions). The Act also expands the number of potentially covered individuals by providing that mitigating measures, other than ordinary eyeglasses or contact lenses, are not considered in assessing whether an individual has a disability. Similarly, an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when it was active.

H1N1 On Oct. 9, 2009, the EEOC issued guidance for employers on dealing with the H1N1 virus. Entitled “Pandemic Preparedness in the Workplace and the Americans with Disabilities Act,” these guidelines suggest lawful approaches to dealing with a pandemic, such as: liberalizing sick leave policies, cross-training employees, and increasing permitted use of flex-time.

GINA The Genetic Information Non-discrimination Act (“GINA”) became effective November, 2009 and prohibits employers and health insurance carriers from discriminating against individuals based on genetic information. This represents the first new federally protected class in almost two decades.

New FMLA Law Beginning on Oct. 28, 2009, the “National Defense Authorization Act of 2010” Extends “Qualifying Exigency” leave to the spouse, son, daughter, or parent of active duty members in the regular armed forces who are deployed to a foreign country. The Act also extends “military caregiver” leave to care for a veteran who served during the five years preceding medical treatment and expands “military caregiver” leave to cover aggravation of existing or pre-existing injuries incurred while on active duty.

New FMLA Regulations On Nov. 17, 2008, the U.S. Department of Labor issued its final revised regulations to the FMLA. The new regulations went into effect Jan. 16, 2009.

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Some of the important changes include: clarifying that, in most cases, an employee providing FMLA notice must follow the employer’s usual procedures for reporting an absence and specifying that employers can count FMLA absences against employees when calculating perfect attendance as long as employees taking equivalent non-FMLA leave are treated the same. The new regulations also clarify medical re-certifications, make changes to the fitness for duty certification process, and clarify that light-duty does not constitute FMLA leave. In a significant concession to employers, the new FMLA regulations allow direct contact between an employer and the employee’s health care provider for purposes of clarification of a medical certification form. Importantly, the law requires that HIPAA and other medical privacy regulations are met and employers may not ask health care providers for information beyond what is required by the certification form. Also, the employer representative making the contact cannot be the employee’s direct supervisor. Instead, it must be a health care practitioner, an HR professional, a leave administrator, or a management official.

The Lilly Ledbetter Fair Pay Act Lilly Ledbetter worked at Goodyear for 19 years when she allegedly discovered she was being paid significantly less than her male counterparts. A jury agreed that she had been paid unfairly, and awarded her $223,776 in back pay, and over $3 million in punitive damages. The U.S. Supreme Court ultimately threw out the award and ruled that Ledbetter had waited too long to file her case. The Court said she should have complained within 180 days of a specific discriminatory event. Prior to this ruling, most courts that had considered the issue held that the statute of limitations began running afresh with each discriminatory paycheck under a “continuing violation” theory. Within weeks of the decision, the Lilly Ledbetter Fair Pay Act was introduced and on Jan. 29, 2009, President Obama chose the Act as the first bill he signed as president. The legislation amends anti-discrimination laws to clarify when discriminatory actions qualify as an “unlawful employment practice.” According to the legisla-

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tion, unlawful conduct occurs when: “(1) a discriminatory compensation decision or other practice is adopted; (2) an individual becomes subject to the decision or practice; or (3) an individual is affected by application of the decision or practice, including each time compensation is paid.”

2009 COBRA Stimulus The American Recovery and Reinvestment Act of 2009 includes a subsidy of COBRA premiums for individuals involuntarily terminated from employment between Sept. 1, 2008 and Feb. 28, 2010. Specifically, beginning March 1, 2009, eligible individuals are required to pay only 35 percent of the required COBRA premium. With limited exceptions, all employees let go on or after September 1, 2008, must receive notice of this subsidy.

WHAT WE MAY SEE. . . The Employee Free Choice Act As originally proposed, The Employee Free Choice Act (“EFCA”) would permit union organizers to avoid certification elections and thus make it easier to unionize workforces. As originally drafted, the EFCA would allow employees to secretly sign cards requesting union representation. When a majority of the employees sign the cards, the union wins. The EFCA is subject to on-going negotiations in Congress and several alternative, less controversial proposals have been submitted, like replacing the secret card check with expedited elections.

Healthy Families Act Would require employers with 15 or more employees to provide at least 7 paid sick days for employees working at least 30 hours per week. Those working between 20-30 hours per week would receive a pro rata share. Sick leave could be used for the medical needs of the employee or family members, including for preventative or diagnostic care.

Arbitration Fairness Act Prevents enforcement of pre-employment agreements to arbitrate discrimination claims.

Civil Rights Act of 2008 Among several changes that favor employees, this act would eliminate damage caps under the 1991 Civil Rights Act; add compensatory and punitive damages to the Fair Labor Standards Act; and make it easier for employees to recover litigation expenses.

Employment Non-Discrimination Act Prohibits discrimination on basis of sexual orientation.

FOREWARN Act Broadens application of the WARN Act and increases the length of advance notice required prior to a plant closing or mass layoffs.

Expansion of FMLA Would cover more employers, increase covered conditions, and provide for paid leave.

The “RESPECT” Act Changes definition of “supervisor” under NLRA to reduce the number of “supervisors”

Paycheck Fairness Act Amends the Equal Pay Act to revise remedies for sex discrimination in the payment of wages. The proposed legislation would permit unlimited punitive and compensatory damages, make it easier to bring class actions, and weaken available employer defenses.

Patriot Employer Act Provides tax breaks to companies that agree to remain neutral on union organizing and maintain employees in U.S.

MOVING FORWARD As we move forward into the new decade, it will be important for all employers, including banks, to be sure their policies and practices comply with existing laws and to monitor pending changes. Richard L. Moore is a partner in the Vorys Cincinnati office and a member of the litigation group and the firm’s e-discovery core team. He has a general litigation practice with specific expertise in the areas of electronic discovery, employment discrimination, workers' compensation, construction, medical malpractice and personal injury.


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Walk Walk THE

It’s a term we’ve all heard or used. You might have said, “Do what you say, say what you mean,” or “actions speak louder than words,” and one of my favorite quotes from my father, “the tongue in your shoe speaks louder than the tongue in your mouth.” Michael W. Hines Business Development Manager Floodplain Consultants Inc.

Sadly, in the world today, whether it be in sports, government or even banking, it seems that “walking the walk” may actually be a thing of the past. Day in and day out I see plenty of the talk – people issuing their guarantees, posting their mission statements, even trailblazing “inconvenient” environmental movements. The problem is - I don’t see the walk. It’s a popular trend among many of the banks that I walk in every day. Some of these banks even have the words “community bank” in their title. They have core values and mission statements plastered all over their advertising material and websites. These same banks tell everyone: “Come experience the difference of a real community bank,” “see what you’ve been missing.” However, when I talk to them about providing their borrowers (or community) the most superior level of service and integrity, the only thing that they are truly worried about is price! Take a look at Mr. Albert Arnold “Al” Gore Jr. Whether you agree with his stance on global warming or not, you can see that he’s done everything possible to be a leader of this movement – except share the struggle. He’s led enormous rallies, put together rock concerts, won an Academy award for his documentary, An Inconvenient Truth, won a Grammy for “Best Spoken Word Album,” and oh, by the way - won a NOBEL PEACE PRIZE IN 2007! He flies around the country to convey the urgency of the problem to everyone, yet he still lives in a 10,000 square foot mansion that consumes as much as twelve times the amount of energy of the average household in Tennessee! Eventually Mr. Gore was called to the mat on his liberal use of energy, so he put in solar panels, new windows, and changed his light bulbs. Unfortunately, he still consumes up to ten times the amount of energy as an average Nashville home. So what’s the problem here? Al’s great at talking the talk, just not walking the walk. That’s the trend I am seeing in the “community banks” that I’m visiting. Regardless of what they say on their website or advertising material about being “customer first” and “only partnering with exceptional products and services,” what I really find out when I walk in is an inconvenient truth – it’s all about price. It really doesn’t matter to them what I have to offer in terms of exceptional accuracy, integrity, and service for their borrowers. It’s always price. Even after I prove to them the problems and inaccuracy of their current vendor spring 2010 Ohio Record

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(sometimes with a 30 percent error rate), if I can’t beat the current price of their vendor, they won’t move - even if it is the best thing for their borrower. I’ve even been told, “I don’t care if it’s wrong or right, it’s the customer’s problem to deal with.” This is coming from someone who says that they are a “community bank.” So, what makes a true community bank? Is it asset size? The FDIC’s definition of a community bank is “a bank with assets, or deposits, of $1 billion or less.” However, when interviewing both community bankers and their customers, I got a different answer. Upon discussion, it seems that it is not necessarily the asset size, but the level of service that distinguishes a community bank from the big bank across the street. Linda Boiman of North Side Bank & Trust in Cincinnati defined a community bank as “a bank that truly identifies with the people and the needs of the community which it serves by providing service and immediate attention.” Jackie Simmons of Farmer Savings Bank in Spencer told me it’s “a place where customer can walk in and say, “Hey...how’s the family?” to the president.” Well, if a community bank’s focus is really on providing a higher level of service, how does it influence their decision when it comes to choosing vendors? My clients tell me that “just like them, they want a vendor who knows the area and is better able to service it.” I was also told that, “a community bank is only as good as the vendors and outside services that it employs.” So what does that say about the banks that only choose their services based on price? Right now there is a movement called moveyourmoney.info. It’s a grassroots effort that’s main goal is to shift the power in the financial system away from Wall Street, and back to Main Street. Helping influence people to move their money out of “too big to fail” banks and into smaller, community-oriented financial institutions.

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On the site you can find community banks in your neighborhood, and move your money to an institution that knows your community, wants your business, and will offer better customer service. But will they? Or is that just what their website says? I ask this because a large portion of the OBL is made up of community banks Banks that I visit every day - Banks that bolster values and president’s messages of “community first!” - Banks that tell me, “I don’t care about the borrower, I want something cheaper.” When it comes down to the pecking order of your values, what is first? Is it “people,” “integrity,” or maybe “profit?” I know what your website says, but what is it really? Geoff Colvin of Fortune Magazine said it well, “Your words alone mean nothing. Your actions – and only your actions – speak. All successful leaders understand it, while failed leaders don’t.” So, you say you’re a community bank? Well then…..walk the walk. Floodplain Consultants Inc. is an endorsed business partner with the Ohio Bankers League. We give discounts to OBL members, give back to the OBL, and are in your community every week. We know your borrowers by name, and go to bat for them every day. At Floodplain Consultants Inc. we believe that you and your borrowers deserve more than just a piece of paper, and only work with local community banks. We were founded in 1991 out of the belief that banks and borrowers deserve more in the level of accuracy and service than is being given. We’ve seen the other flood companies being bought and sold, streamlined, and incorporated into giant software systems - all the while, losing their accuracy, service, and dependability. We are approached on a monthly basis by firms in India that want to “help” us with our efficiency, cut our costs, and boost our profits. However, in doing so, we would lose all of the values that our company was founded on. So we choose to stay regional, and provide you and your borrowers with the highest level of accuracy and service available – so that we may “Walk the Walk.”


It’s all about choice. We’re flexible – You decide. In today’s competitive marketplace, benefits have become as important as compensation when hiring or retaining the best and brightest employees. That’s why we believe it’s important for you to have as much input as possible when it comes to designing your bank’s employee benefits program. With the Ohio Bankers Benefits Trust, you can pick and choose one, all, or a combination of plans you want to offer your employees and determine how you want to allocate premium contributions. Plan options mean greater cost control. For more information about the OBL health plan options contact: Gary Sutter at 614-340-7615 or gsutter@ohiobankersleague.com

OHIO BANKERS BENEFITS TRUST

Working for Banks and Bankers spring 2010 Ohio Record

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Ohio Record spring 2010


Ohio BankPac in 2009 Making a Difference By Jeffrey D. Quayle, Senior Vice President & General Counsel

The continued success of our Political Action Committee reflects our industry’s commitment to a strong government relations program that in turn promotes a thriving and competitive banking system for Ohio. In 2009, the Ohio banking community pulled together to raise $97,000. We would like to thank our PAC Board of Directors, led by Trent B. Troyer, president & chief operating officer at First Federal Community Bank in Dover, for the effort and time commitment they put in during 2009. The primary reason for our continued success however goes to each of our contributors, so we would like to recognize below those bankers that have contributed more than $100. For more information about how you or your institution can get involved in Ohio BankPac, please contact OBL Government Relations Specialist Dan Conklin at (614) 340-7607 or dconklin@ohiobankersleague.com.

Eagles Club ($500 or more)

John Kidd, Wesbanco Bank, Inc.

Michael Baker, OBL BankServices

Robert Kirkbride, Wesbanco Bank, Inc.

Howard Boyle II, Home Savings Bank

D. Bruce Knox, Wesbanco Bank, Inc.

Steven Hunter, The Vinton County National Bank

Ms. Laura Lewis, The Park National Bank

John Kozak, The Park National Bank

John Malanowski, First Federal Savings and Loan Assoc. of Lorain

Robert Lameier, Miami Savings Bank

Michael Melvin, Perpetual Federal Savings Bank

Timothy Lehman, The Park National Bank

Thomas Moore, First Federal Bank of Ohio

Mark Milligan, First Federal Savings and Loan Association

Larry Morrison, Farmers Citizens Bank

Daniel Schutt, The Union Bank Company

Thomas Pulfer, United Midwest Savings Bank

Trent Troyer, First Federal Community Bank

Jeff Quayle, Ohio Bankers League

Michael Van Buskirk, Ohio Bankers League Benedict Weissenrieder, The Hocking Valley Bank

Ms. Deborah Schenk, The Mechanics Savings Bank

Stephen Wilson, LCNB National Bank

Henry Schulhoff, Wesbanco Bank, Inc.

Brian Young, The Union Bank Company

Jeffrey Smith, The Ohio Valley Bank Company

Michael Pell, First State Bank

Robert Smith, American Savings Bank, FSB

Ambassadors Club ($300 - $499)

Mark Snider, The Hocking Valley Bank

Michael Adelman, Ohio Bankers League

Neil Strawser, Wesbanco Bank, Inc.

Mark Allio, CFBank

Ms. Mary Sullivan, The Franklin Savings and Loan Company

Joseph Bunke, Cincinnati Federal Savings and Loan Association

Gary Sutter, Ohio Bankers League

Coleman Clougherty, Farmers Citizens Bank

Roger Williams, The Ohio Valley Bank Company

C. Daniel DeLawder, The Park National Bank

Rev. Barry Windholtz, The Franklin Savings and Loan Company

Ms. Lynn Fawcett, The Park National Bank Steve Foster, LCNB National Bank

Gordon Yance, First-Knox National Bank

Blair Hillyer, The First National Bank of Dennison spring 2010 Ohio Record

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Sustaining Member ($175 - $299)

Brent Saunders, The Ohio Valley Bank Company

Ms. Mary Abel, The Hocking Valley Bank

Ms. Marilyn Sessions, Home Savings Bank

Jeffrey Benton, The Delaware County Bank and Trust Company

Ronald Shidaker, The Wilmington Savings Bank

Roger Blair, First Community Bank Ms. Sherran Blair, First Community Bank Mark Breitinger, Richland Bank-A Division of PNB

Thomas Siemers, The Franklin Savings and Loan Company Scott Stiegemeier, Home Savings Bank

Richard Brinkman Jr., First Federal Community Bank

Roger Stitzlein, First-Knox National Bank

Michael Brooks, The Hocking Valley Bank

David Thomas, The Ohio Valley Bank Company

Mrs. Maureen Buchwald, First-Knox National Bank

Paul Thompson, First Federal Savings and Loan Association

Terry Bumpus, First Federal Savings & Loan Assoc. of Centerburg

James Vincent, The Ottoville Bank Company

Donald Stone, United Bank - A Division of PNB

James Caldwell CPA, The Vinton County National Bank Jerry Caldwell, Benchmark Bank Peter Cassanos, The Park National Bank Michael Chambers, Richland Bank-A Division of PNB Ms. Margaret Chapman, Security National Bank - A Division of PNB Gary Clay, Van Wert Federal Savings Bank Stephen Clinton, First Federal Community Bank Martin Cole, The Andover Bank Steven Coutts, The First National Bank of Dennison

Brady Burt, The Park National Bank

Mrs. Sarah Wallace, First Federal Savings and Loan Association

Thomas Button, The Park National Bank

Thomas Will, Community Bancshares, Inc.

William Carr, Liberty National Bank

Mark Williams, The Wilmington Savings Bank

Steven Chapman, The Ohio Valley Bank Company

Charles Wingett, The Hocking Valley Bank

Ms. Lori Cramer, The Vinton County National Bank

Thomas Wiseman, The Ohio Valley Bank Company

Ms. Cynthia Crane, The Park National Bank

Michael Cone, Home Savings Bank

Supporting Member ($100 - $174)

Robert Daniel, The Ohio Valley Bank Company

Michael Cross, First Federal Savings and Loan Assoc. of Van Wert

Ronald Adams, Richland Bank-A Division of PNB

Ms. Ester Crownover, The Vinton County National Bank

Gregory Agresta, Wesbanco Bank, Inc.

Wayne Deschambeau, Second National Bank - A Division of PNB

Ronald Collins, The Vinton County National Bank

Robert Duncan, First Federal Savings and Loan Association

Donald Covert Sr., First Federal Bank of Ohio Timothy Cowen, The Farmers & Savings Bank - A Division of PNB

Spencer Cropper, LCNB National Bank

Ronald Eschbach, The Antwerp Exchange Bank Company

Douglas Ahlers, Versailles Savings and Loan Company

David Folkwein, The Delaware County Bank and Trust Company

John Allen Esq., The Community Bank - A Division of CSB

William Fralick, Security National Bank - A Division of PNB

Michael Allen, The Croghan Colonial Bank

Charles Dolezal, North Valley Bank

Harrold Anness, Cincinnati Federal Savings and Loan Association

David Dostal, Farmers Citizens Bank

Robert Gall, The Hocking Valley Bank Alan Geiger, The Hocking Valley Bank

Neil Diller, Second National Bank - A Division of PNB Robert Dillhoff, The Union Bank Company

James Downhower, The First National Bank of Pandora

Harold Howe, The Ohio Valley Bank Company

Dr. Stuart Anness M.D., Cincinnati Federal Savings and Loan Association

Peter Jaworski, Wesbanco Bank, Inc.

Ms. Patricia Arnett, Liberty National Bank

Ms. Lynne Karla, The Park National Bank Todd Mason, The First National Bank of Pandora

Ms. Tyeis Baker-Baumann, Second National Bank - A Division of PNB

Ms. Carol Michaels, Richland Bank-A Division of PNB

Joseph Barker, The Antwerp Exchange Bank Company

Ms. Shirley Monica, Richland Bank-A Division of PNB

David Beckett, LCNB National Bank

Richard Ekin, First Federal Bank of Ohio

Robert Bedinghaus, Cincinnati Federal Savings and Loan Association

Thomas Elder, The Croghan Colonial Bank

Robert Benroth, The Union Bank Company

Scott Everson, The Citizens Savings Bank

Kevin Motley, The Wilmington Savings Bank

Brian Bialik, Home Savings Bank

Dr. Leon Favede, The Citizens Savings Bank

Terry Myers, The Park National Bank

Ms. Tammy Bobo, The Hocking Valley Bank

Scott Nisley, The Hocking Valley Bank

Dr. Steven Bohl, Perpetual Federal Savings Bank

Richard Finan, The Franklin Savings and Loan Company

John Nolting, The Franklin Savings and Loan Company

Herman Borkoski, The Citizens Savings Bank

Scott Finnell, First Federal Community Bank

Jerry Borton, The Farmers & Merchants State Bank

Mark Fleck, Mercer Savings Bank

Carl Bowman, Monroe Federal Savings and Loan Assoc.

Steven Futrell, The Croghan Colonial Bank

Robert Brosky, First Federal Savings and Loan Assoc. of Lorain

Ms. Carolyn Garner, Wesbanco Bank, Inc.

Robert Montagnese, First Federal Savings and Loan Association

Robert Norris, The Hocking Valley Bank Earl Osborne, Guardian Finance Company Michael Putman, The Hocking Valley Bank Paul Reed, Farmers Bank and Savings Company Richard Riesbeck, The Citizens Savings Bank Joseph Risch, The Vinton County National Bank David Roach, The Union Bank Company

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Paul Siebenmorgen, The Farmers & Merchants State Bank

Mrs. Patrica Byerly, The Farmers & Savings Bank - A Division of PNB

Ohio Record spring 2010

John Brown, Unity National Bank - A Division of SNB William Burke, American Savings Bank, FSB

Kevin Drees, Versailles Savings and Loan Company David Dygert, Farmers Citizens Bank Charles Earick, Citizens Federal S&L Assoc. of Bellefontaine William Edwards, Perpetual Federal Savings Bank

Dr. M. Boyd Epperson, First Federal Bank of Ohio

Ms. Joan Franks, The Park National Bank Michael Gampp, American Savings Bank, FSB William Garrett Jr., The Vinton County National Bank Terry George, First Community Bank


Eric Geyer, First Federal Bank of Ohio

Thomas Lammers Esq., Mercer Savings Bank

Gary Pendleton, The Ohio State Bank

Ms. Vicky Gilbert, The Union Bank Company

Michael Lamping Sr., The Ohio State Bank

William Perry, The Union Bank Company

Ms. Mary Goddard, Security National Bank - A Division of PNB

Daniel Lease, The Croghan Colonial Bank

Andrew Phillips, The Citizens Savings Bank

George Leasure, LCNB National Bank

Jeffrey Point, The Union Bank Company

David Gooch, Richland Bank-A Division of PNB

Elmer Leeper, The Citizens Savings Bank

Ms. Kathleen Porter Stolle, LCNB National Bank

Thomas Goodfellow, Security National Bank - A Division of PNB

Edward Leininger, The Farmers & Merchants State Bank

Douglas Postler, Bramble Savings Bank

Theodore Graham, The Ohio State Bank

W. Douglas Leonard, First-Knox National Bank

Todd Graham, The Farmers & Merchants State Bank

Mark Ramser, First-Knox National Bank

William Levering Sr., First-Knox National Bank

James Ransbottom, North Valley Bank

Michael Lewis, Home Savings Bank

Theodore Reed, Farmers Bank and Savings Company

J. Richard Gray, First Federal Community Bank

Peter Rafaniello, The Union Bank Company

Scott Green, The Park National Bank

James Lingenfelter, The Farmers & Savings Bank - A Division of PNB

James Greenfield, The Andover Bank

Thomas Linneman, Cheviot Savings Bank

Randall Greenwood, The Citizens Savings Bank

James Reynolds, The Union Bank Company

Michael Lloyd, The Citizens Savings Bank

Danny Grooms, Ripley Federal Savings Bank

Enos Loader, First Federal Community Bank

Dr. Robin Rhodes M.D., The Citizens Savings Bank

Leonard Gundy, First Federal Community Bank

Max Long, The Union Bank Company

Ms. Karen Rice, The Park National Bank

Donald Harris Jr., Richland Bank-A Division of PNB

Christopher Lute, American Savings Bank, FSB

Harold Rigel, The Union Bank Company

Lindley Mann, Mutual Federal Savings Bank, A FSB

Barry Ritchey, Standing Stone National Bank

John Hatcher, Citizens Federal S&L Assoc. of Bellefontaine

Lewis Renollet, The Union Bank Company

Bryan Marshall, Liberty National Bank

Ronald Roth, Cincinnati Federal Savings and Loan Association

Thurman Mathews, The Ohio State Bank

Keith Rothe, First Community Bank

Carl Mayer, The Park National Bank William McConnell, The Park National Bank

Tom Ruetenik, Security National Bank - A Division of PNB

Ted McKinniss, The Ohio State Bank

Errol Sambuco, The Citizens Savings Bank

Ronald McNeely, The Union Bank Company

Ms. Vickie Sant, First-Knox National Bank

Ms. Diarmuid McSweeney, First Federal Savings and Loan Association

Ms. Stacy Schindler, Ohio Bankers League

James Meagle Jr., The Settlers Bank

Norman Schnipke, The Union Bank Company

Larry Meredith, American Savings Bank, FSB Ms. Lori Michael, Wesbanco Bank, Inc.

John Schuler, Cincinnati Federal Savings and Loan Association

Harold Migias, Wesbanco Bank, Inc.

Robert Schulte, The Union Bank Company

Ms. Lydia Miller, The Park National Bank

Philip Schumann, Mercer Savings Bank

Matthew Miller, The Park National Bank

Joseph Schwarz, LCNB National Bank

Daniel Hunt, The Park National Bank

Grant Milliron, Richland Bank-A Division of PNB

Andrew Irick, Security National Bank - A Division of PNB

Ms. Suzanne Moeller, Wesbanco Bank, Inc.

Carmen Scott, Citizens Federal S&L Assoc. of Bellefontaine

Steven Hausfeld, Cheviot Savings Bank Ronald Hawk, First-Knox National Bank Jesse Henson, Perpetual Federal Savings Bank John Herzig, The Citizens Savings Bank Gary Hewitt, The Andover Bank Jeffrey Hittle, Second National Bank - A Division of PNB John Hofmann, Citizens Federal S&L Assoc. of Bellefontaine Mark Honigford, The Union Bank Company John Hoopingarner, The Citizens Savings Bank R. Duane Hord, Farmers Citizens Bank Ms. Teresa Hoyt PHR, Security National Bank - A Division of PNB

Oliver Schneider Jr., Home Savings Bank

Robert Sensel, First Federal Community Bank

John Irmscher, Mercer Savings Bank

Bill Moore, The Community Bank - A Division of CSB

Gerald Jenkins, American Savings Bank, FSB

Richard Morgan, American Savings Bank, FSB

Larry Shreffler, The Mechanics Savings Bank

Wesley Jetter, Second National Bank - A Division of PNB

Larry Mosher, The First National Bank of Dennison

John Smith, Cheviot Savings Bank

Samuel Jones, The Citizens Savings Bank

Richard Mosier CPA, Mercer Savings Bank

Ms. Linda Smith, Richland Bank-A Division of PNB

Thomas Karr, Farmers Bank and Savings Company

Richard Mountain, Liberty Federal Savings Bank

R. Daniel Snyder, First-Knox National Bank

Dennis Muzilla, First Federal Savings and Loan Assoc. of Lorain

Robert Springer, The Park National Bank

David Kaufman, First Federal Community Bank Ms. Linda Kay, Wesbanco Bank, Inc. Timothy Kelley, The Citizens Savings Bank Ms. Candy Kemmerer, The Hocking Valley Bank Jeffrey Kessler, Benchmark Bank Garry Kleer, Mutual Federal Savings Bank, A FSB Thomas Knapke, Mercer Savings Bank Bradley Kopf, Cincinnati Federal Savings and Loan Association Richard Kotila, The Andover Bank Thomas Krick, Mercer Savings Bank

Hobert Neiswander, Perpetual Federal Savings Bank Andew Nurre, Cincinnati Federal Savings and Loan Association

R. Michael Shannon, The Park National Bank

Marvin Stammen, Second National Bank - A Division of PNB Michael Steen, The Community Bank - A Division of CSB Jack Stephenson, American Savings Bank, FSB

Fred O'Dell, North Valley Bank

Michael Stewart, Liberty Federal Savings Bank

Ms. Joaanna Pagnanelli, Wesbanco Bank, Inc.

C. Edward Stocksdale, Perpetual Federal Savings Bank

Kenneth Parr Jr., United Bank - A Division of PNB

Ms. Kathleen Stolle Porter, LCNB National Bank

Noel Parrish, First-Knox National Bank

Ms. Julie Strohacker, The Park National Bank

Ms. Patricia Partch, LCNB National Bank

Jeff Swaim, The Hocking Valley Bank

Jeffrey Parton, Richland Bank-A Division of PNB spring 2010 Ohio Record

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John Swallow, Second National Bank - A Division of PNB Craig Sweeney, The Hocking Valley Bank Charles Sweeting, Perpetual Federal Savings Bank

…And a Special Thanks to our BankPac Silent Auction Contributors

Rick Taylor, Richland Bank-A Division of PNB Robert Taylor, The Andover Bank

Michael Adelman, Ohio Bankers League

Thomas Moore, First Federal Bank of Ohio

J. Douglas Temple, Mercer Savings Bank

Barbara Benham, The Huntington National Bank

Samuel Munafo, First Financial Bank, National Association

Jason Buckley, ATM Solutions, Inc. Jack Casey, Elan Financial Services

Lawrence Nash, The Peoples National Bank of New Lexington

David Trautman, Park National Corporation

Coleman Clougherty, The Farmers Citizens Bank

R. Douglas Naylor, The First National Bank of Blanchester

Chris Tuttle, The Farmers & Savings Bank - A Division of PNB

James Coe, First Federal Savings and Loan Association

Jeffrey Quayle, Ohio Bankers League

Stan Uchida, The Park National Bank

J. Michelle Crume, OBL BankServices

John Uible, The Park National Bank

James DeRoberts, Gardiner Allen DeRoberts

Paul Reed, Farmers Bank and Savings Company

Jeffrey Urban, First Federal Community Bank of Bucyrus

Philip Evans, Kingston National Bank

Paul Reynolds, Fifth Third Bank

Joseph Valore, Perpetual Federal Savings Bank

Calvin Gebhart, The Citizens Bank of Ashville, Ohio

Barry Ritchey, Standing Stone National Bank

Stephen Varckette, The Andover Bank

Katie Gordon, Gardiner Allen DeRoberts

Ms. Melea Wachtman, Ohio Bankers League

G. Courtney Haning, The Peoples National Bank of New Lexington

Deborah Schenk, The Mechanics Savings Bank

Martin Terry, The First National Bank of Pandora Matthew Thomas, The Citizens Savings Bank Lowell Thurston, The Ohio State Bank

Charles Walker, First Federal Bank of Ohio

Chip Harper, ATM Solutions, Inc.

Michael Warnecke, Security National Bank - A Division of PNB

Blair Hillyer, The First National Bank of Dennison

David Weber, Farmers Bank and Savings Company

Michael Hines, Floodplain Consultants, Inc.

Thomas Weithman, First Federal Bank of Ohio Vernon Westbay, Citizens Federal S&L Assoc. of Bellefontaine

Mark Johnson, The First Citizens National Bank of Upper Sandusky

Jon Park, Westfield Bank

Gretchen Schmidt, The Franklin Savings and Loan Company Jeffery Smith, Bricker & Eckler, LLP Michael Stewart, Liberty Federal Savings Bank David Summers, Monroe Federal Savings and Loan Assoc. J. Douglas Temple, Mercer Savings Bank

Kurt Kratzer, RDSI Banking Systems, Inc.

David Trautman, The Park National Bank

John Whitacre Jr., The Bank of Magnolia Company

John Limbert, The National Bank and Trust Company

Trent Troyer, First Federal Community Bank

Fred White, The Ohio State Bank

Larry Lindamood, The Peoples National Bank of New Lexington

Melea Wachtman, Ohio Bankers League

Edward McKeon, Western Reserve Bank

Thomas Will, The Vinton County National Bank

William Whitmoyer, Wesbanco Bank, Inc. Ms. Barbara Wilson, The Park National Bank Douglas Wilson, United Bank - A Division of PNB Jeffrey Wilson, The Park National Bank

Michael Melvin, Perpetual Federal Savings Bank Dean Miller, The First National Bank of Bellevue

Michael Van Buskirk, Ohio Bankers League William Wendt, The Henry County Bank

Uma Zielinski, Deluxe Financial Service, Inc. Ronald Zimmerly, Liberty National Bank

Ms. Lisa Wiswasser, The Union Bank Company Bernard Wright Jr., LCNB National Bank Ms. Terri Wyatt, Security National Bank - A Division of PNB Russel Yenser, The Antwerp Exchange Bank Company Ms. Susan Zimmer, Liberty National Bank Ronald Zimmerly, Liberty National Bank

Are you looking for that Spark? Creative print is more than just ink on paper It’s about gaining Attention for your business It’s about stimulating Interest in your products It’s about creating Desire for your services That’s where Ohio Record comes in To reach over 4,000 key banking decision-makers contact James Thurston at (614) 340-7621 or jthurston@ohiobankersleague.com.

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Ohio Record spring 2010


Tell Us About It

NO COST ONLINE COMPLIANCE TRAINING STILL AVAILABLE IN 2010 Individually, a bank might spend up to $5,000 for a Compliance Coach membership - but with the collective power of the OBL - this nationally-known online compliance training continues to be available at no cost to member banks. The more than 100 OBL member banks that are also Compliance Coach clients have access to 35 FREE interactive online compliance courses 24/7 in high risk areas - 11 of which are approved for CRCM credits, including: RESPA: HUD-1/1A; Currency Transaction Reporting; and HMDA: Reporting and Disclosure. “We were very satisfied with the Compliance Coach training programs we utilized last year and we will continue to use the product in the future,” said Lisa Eadler, operations officer, Greenville National Bank. “We found the program a valuable tool, as we were able to customize annual training specific to employee jobs and responsibilities and document results to follow up with any additional training that was needed.” The OBL introduced this program to its members as a benefit in January 2009 and is pleased to continue this no-fee program in 2010. If your bank is not already registered, visit the OBL Web site for more details or contact Julie Kiplinger at 614-340-7612.

Have an interesting story to tell, recent promotions, innovative program or other bank announcements? If it’s news you think we need to know… tell us about it. We’re interested in keeping up to date on the activities of our members. Please put the OBL Communications Department on your media mail or e-mail lists. Send your news to: James Thurston Editor, Ohio Record, jthurston@ohiobankersleague.com, 4249 Easton Way, Suite 150, Columbus, OH 43219-6170.

spring 2010 Ohio Record

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CLEVELAND

GRANVILLE

NEWARK

Forty Ohio banks that purchase D&O and fidelity bond insurance from OBL business partner the ABA Insurance Program will share $87,602 in profit distributions this year from the program’s reinsurer, American Bankers Mutual Insurance Ltd. This is the program’s 20th consecutive profit-sharing distribution— $71,500,000 has been declared since the first distribution in 1991 based on the mutual program’s success and profitability. The total distributed to Ohio banks is over $1,900,000. Participating banks nationwide will receive checks this year ranging up to $50,000 with $3,900 being the average amount. The Federal Reserve Bank of Cleveland announced Dale Roskom has been appointed vice president and chief operating officer.

OBL affiliate member Dixon, Davis, Bagent & Company announced that Brian A. Snow, consultant recently completed the BSA/AML Institute, a professional certification program, sponsored by the Independent Community Bankers of America.

The First Federal Savings & Loan Assoc. of Newark announced the promotions of Jennie Jo Hall and Lindsay Englefield to vice president.

COLUMBUS OBL affiliate member Bricker & Eckler LLP announced the election of Kurtis Tunnell to managing partner. Tunnell succeeds Richard C. Simpson, who served in Kurtis Tunnell the same position from 2000 to 2010. Huntington Bank announced that David Clifton has joined as executive vice president, chief customer and marketing officer. Carol Mount Peterson, the long-time chair of OBL business partner the Ohio Capital Corporation for Housing’s board of directors, passed away recently. Mount Peterson had been on the OCCH Board since 1993 and became chair in 1998. In addition to her leadership at OCCH, she served as senior vice president and director of housing and community development at the Federal Home Loan Bank of Cincinnati, where she served for 36 years.

DEFIANCE Rurban Financial Corp. announced that the appointment of Anthony Cosentino as executive vice president.

GREENVILLE Greenville Federal announced the appointment of Jeff D. Kniese to CEO. Kniese replaces outgoing CEO David Kepler, who recently retired. Jeff D. Kniese

MANSFIELD Jim Courtney, former president of The Mechanics Savings Bank, passed away recently. Courtney was named president of the bank in 1988 and previously served as senior operating officer. He retired in 2003.

MARIETTA Settlers Bank announced the election of Donn Schafer, chief financial officer and executive vice president, to its board of directors. Schafer is a graduate of Marietta Senior High School and the Ohio State University with a B.S. degree in Finance. Donn Schafer

PORTSMOUTH American National Bank has promoted Michael Gampp to executive vice president. Gampp has been with the bank since 2000 and his role as CFO will be Michael Gampp expanded to assist president and CEO Bob Smith in the overall administration of the company.

WESTFIELD CENTER Westfield Bank has earned a top five-star “Superior” rating from BauerFinancial, an independent rating company analyzing and reporting on the performance of U.S. banks and credit unions since 1983. Westfield Bank has now been recommended by BauerFinancial for 28 consecutive quarters.

WILMINGTON NB&T Financial Group, Inc. announced that is has acquired, through its subsidiary, The National Bank and Trust Company, the banking operations of American National Bank, the subsidiary bank of American National Bancorp, through a purchase and assumption agreement with the Federal Deposit Insurance Corporation.

YOUNGSTOWN The Home Savings and Loan Company, a subsidiary of United Community Financial Corp. announced the promotions of Nick Berardino and Patrice L. Burkle to vice presidents, commercial lending. Their primary responsibilities include managing their respective commercial loan portfolios while seeking out new business opportunities through referrals, centers of influence and existing client expansion. Kevin P. Gluntz was named vice president and deputy general counsel. Kevin P. Gluntz

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Focus On… GSB Scholarships Awarded to Ohio Bankers For many years, the OBL has awarded scholarships to the Graduate School of Banking in Madison through the Blythe School of Banking (now known as the OBL Bank Management School) and the Bank Leadership Institute Program. For the first time, the OBL also awarded a 2010 GSB Scholarship to a general employee of an OBL member bank. As a bonus, all applicants received a $350 application refund to the school. The OBL has named Delmar C. Schiferl, vice president & chief lending officer with Miami Savings Bank in Miamitown, OH, the recipient of the Prochnow Educational Foundation/Ohio Bankers League Scholarship. He will

receive a $1,250 discount from the regularly charged fees for each of the three years of the Graduate School of Banking at the University of Wisconsin-Madison (Aug. 8 – 20). The Graduate School of Banking’s Human Resource Management School Scholarship was awarded to Heather A. Brayshaw, HR director & banking officer with First-Knox National Bank in Mount Vernon, OH. She will receive an $800 discount from the regularly charged fees for the GSB HR Management School at the University of Wisconsin-Madison (Aug. 8 – 13). “The banking industry and the communities we serve have a bright future

because of the leadership of bankers such as Del and Heather,” said Stacy Schindler, OBL manager of professional schools and conferences. “We are thrilled they both have the opportunity to further their education and their careers, while helping their banks save valuable training dollars.” Established and funded by the Herbert V. Prochnow Educational Foundation, the scholarships, made available annually to selected individuals who demonstrate outstanding leadership and a commitment to his or her community and to the banking industry, furthers the goal of supporting banker education.

Tri-State League of Financial Institutions One of the OBL’s fellow Ohio banking trade associations is the Tri-State League of Financial Institutions. The league, which recently celebrated its fiftieth birthday, was formed in 1960 as a result of a merger between Greater Cincinnati Savings and Loan Exchange and the Greater Hamilton County Savings and Loan League. The league and its predecessors have been in existence since 1868. Ohio Record recently discussed the league’s plans for 2010 with current President Annie Iverson, marketing director at Cheviot Savings Bank.

Ohio Record: Tell us a little bit about yourself. How did you become a banker? Iverson: I actually graduated with a marketing degree but had a cooperative work/education experience with a bank – that’s what started the whole banking thing for me. After getting to know professionals in the field, I’ve progressed from there. Ohio Record: What are the league’s big plans for 2010? Iverson: For 2010, the Tri-State League will continue to look for and provide training opportunities in areas such Annie Iverson as compliance, operations, lending and any other hot topics that may arise throughout the year. We provide discussions and seminars on each of these topics. The objectives of the league are to foster and encourage the financial institutions industry in Southwestern Ohio, Northern Kentucky and Southeastern Indiana through the exchange of ideas and practices gained from mutual discussion and study, to cooperate with other financial institutions in the promotion of the industry, to publicize its services and those of its members, and to do any and all things necessary to the accomplishment of these purposes. Ohio Record: How did you first become involved with the Tri-State League? Iverson: I became involved with the Tri-State League through my ability to produce

marketing materials. I had worked with some of the social committee chairs who asked if I would produce the flyers for their socials… and it grew from there! Next thing you know, after a couple years of producing the flyers, I became more involved in the social activities and was then asked to be a board member for the Tri State League. It’s been great and fun – I wouldn’t trade it!

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Ohio Record spring 2010


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Ohio Bankers League Spring 2010 Magazine