The Official Publication of the Illinois Bankers Association ilbanker.com
IBES is New Licensee for THE STOCK MARKET GAMETM
IBA Announces Scholarship Winners
5 Ways
to Use Digital Tools to Connect with Customers During COVID-19
September-October 2020
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September-October 2020 • Vol. 105 / No. 5 • ilbanker.com
TABLE OF CONTENTS
34
12 DEPARTMENTS 5 Message from the President and CEO 6 Compliance Corner 8 Washington Update 24 Scholarships
27 Preferred Vendor Spotlight
18
10
FEATURES
18
29 Events Calendar 30 News & Notes 32 New Member Banks 32 New Associate Members
10 Illinois Bankers Education Services Secures License for The Stock Market GameTM in Illinois
32 Ad Index
12 COVID-19 Loan Modifications
34 The Last Page
33 On the Move
14 Seeking New Growth? Consider Cannabis Banking 15 Boost Your Recruiting Efforts with Inbound Marketing 18 Five Ways to Connect with Customers During COVID-19 20 COVID-19 Insurance? 22 PsyberSecurity: Where Computer Security Meets Psychology
Our Mission: Advocacy. Education. Industry Resource...for all Illinois bankers. Our Vision: Connecting Bankers. Advancing Banking.® Our Core Values: The Illinois Bankers Association will place our members’ interests first, be responsive to their needs, and provide them with the highest level of professionalism and service. The IBA staff is the Association’s greatest asset. We will conduct ourselves with integrity and respect. We will work together as a team, share information, build upon our strengths, embrace new ideas, and recognize and celebrate accomplishments.
OFFICERS AND EXECUTIVE COMMITTEE MEMBERS C. Brant Ahrens Chairman CIBC, Chicago
Michelle L. Gross Chairman-Elect State Bank of Bement
William P. Gleason Vice Chairman The Leaders Bank, Oak Brook
BOARD OF DIRECTORS REGION 1
REGION 4
Clark Delanois The Northern Trust Company, Chicago
Tom Gihl INB, Springfield
Joan Heggen U.S. Bank, Chicago
Anthony G. Nestler Hickory Point Bank and Trust, Decatur
REGION 2
REGION 5
Gary S. Collins Old Second National Bank, Aurora
T.J. Burge Community Partners Savings Bank, Salem
Rick M. Francois American Community Bank & Trust, Woodstock
Richard J. Knebel The Bradford National Bank of Greenville
REGION 3
AT LARGE
Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville
Dane Cleven Community Savings Bank, Chicago
Tyler Rouse First Federal Savings Bank of ChampaignUrbana
Megan Collins Bank of America, Chicago
Jeff Fauver Catlin Bank James R. Hannon First Security Trust and Savings Bank, Elmwood Park Quint Harmon Pioneer State Bank, Earlville James H. Huiskamp Blackhawk Bank and Trust, Milan Richard J. Mahoney First Midwest Bank, Chicago
Pamela A. ShararStoppel Wheaton Bank & Trust Co. Matthew Smith First Mid Bank & Trust, Mattoon Simon P. Yohanan First Bank of Highland Park Andrew Butts Bank of Belleville (non-voting member)
Rick R. Parks First National Bank of Waterloo Steven F. Rosenbaum Hoyne Savings Bank, Chicago
ILLINOIS BANKERS ASSOCIATION STAFF DIRECTORY Two Offices to Serve You! Springfield Office: 800-783-2265 • Chicago Office: 800-878-2265 To connect with our staff, use this email format: firstinitiallastname@ilbanker.com
Betsy Johnson Treasurer Forreston State Bank
Executive Administration Randy Hultgren, President and CEO Erich J. Bloxdorf, Executive Vice President & COO Mary Curl, Executive Assistant & HR Manager
Thomas J. Chamberlain Member-at-Large Iroquois Federal Savings & Loan, Danville
Pam Macha, Springfield Office Coordinator Legal and Compliance Carolyn Settanni, Executive Vice President and General Counsel Carly Berard, Senior Counsel Michael Schasane, Staff Attorney Amy Giacomucci, Law Assistant
Anthony G. Nestler Member-at-Large Hickory Point Bank and Trust Co., Decatur
Bank and Partner Relations
Communications/Marketing/ Associate Membership
Illinois Bankers Business Services, Inc.
Debbie Jemison, CAE, Vice President
Brian Hoffman, President
Tammy Squires, Assistant Vice President Robin Lane, Director, Associate Membership Finance and Administration Mark Bennett, CPA, CFO and Vice President Marcia Stratton, CPA, Director Marie Ann South, Financial Assistant Government Relations Ben Jackson, Vice President
Phil Talley, Vice President, Insurance Services Casey Widholm, Marketing Manager Illinois Bankers Education Services, Inc. Callan Stapleton, President Kevin Klug, Vice President Bob Anderson, Manager, Education Relations & IT Support Cassie Mattson, Manager, Event Management and FLA Denise Perez, Manager, Education & Training
Julie Winterbauer, Vice President
Aimee Winebaugh, Assistant Vice President;
Amy Sale, Education Assistant
Linda Koch, CAE, Member/Business Relations Manager
Sarah Cowan, Membership and Government Relations Assistant
Illinois Bankers Group Insurance Trust
David Barbeau, Senior Banking Advisor (dbarbeau@htc.net)
Erich J. Bloxdorf, Plan Administrator
Sarah Cowan, Membership and Government Relations Assistant
Mike Mahorney, Senior Trust Advisor Hillary Meyers, Trust Manager
Kevin L. Olson Immediate Past Chairman Grundy Bank, Morris
Randy Hultgren Secretary President and CEO Springfield
•4•
• September-October 2020
Editorial Office 3201 West White Oaks Drive, Ste. 400, Springfield, IL 62704 217-789-9340 FAX 217-789-5410 www.ilbanker.com Debbie Jemison, Editor With the exception of official announcements, the Illinois Bankers Association disclaims all responsibility for opinions expressed and statements made in articles published in Illinois Banker. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Illinois Banker (ISSN 0019-185X) is published bi-monthly and is available at a cost of $45 per year for members and $90 per year for nonmembers. Regular issue single copy price is $8.50. Postmaster, send address change to Illinois Bankers Association, 3201 W. White Oaks Drive, Ste. 400, Springfield, IL 62704. News items from members of the Illinois Bankers Association are invited and are due on the first of the month preceding publication. © Copyright 2020 by Illinois Bankers Association (unless individual articles list copyright). Reproduction of any material in the Illinois Banker is strictly prohibited without written permission of the publisher.
MESSAGE The Stock Market GameTM Brings New Financial Literacy Option to Schools
M
Randy Hultgren
IBA President and CEO
artin Cabrera grew up on the southside of Chicago, in a hard-working, blue collar family. His family did not have much interest or opportunity in finance, banking, or investments. Martin’s dream was to become an architect. It was a high school teacher who pushed Martin to take Economics and join the school’s Stock Market GameTM team. Martin fell in love with finance and markets during that class. He went on to graduate with a finance degree from Northern Illinois University and now runs Cabrera Capital Markets, one of the largest Hispanic financial services firms in the country. Martin Cabrera continues to give back by sponsoring thousands of high school students to learn and grow in financial literacy from The Stock Market GameTM in their school at no cost to the student or school. The Illinois Bankers Association has been given an amazing opportunity and has become the Illinois licensee of The Stock Market GameTM. (See page 10.) The SIFMA Foundation’s curriculum-based Stock Market Game features a high-tech, online investment simulation of stocks, bonds, mutual funds, ETFs and ESG investments to give students a better understanding of capital markets, global economic trends and fiscal policy. The Stock Market GameTM explores the fundamentals of personal finance and investing, while practicing content and skills in math, English language arts, economics, social studies, and other subjects. Students build and manage an investment portfolio in a real-world, dynamic marketplace, analyze and make decisions, explore the consequences of their choices, and seek new ways to strategize for success. Founded in 1977 by academics at Buffalo State, The Stock Market GameTM has since expanded through a national network of educational nonprofit organizations to reach nearly 19 million students. An independent study by Learning Point Associates found that students
who participated in The Stock Market GameTM scored significantly higher on mathematics and financial literacy tests than their peers who did not participate. They also found that teachers who taught The Stock Market GameTM reported that the program motivated them to better plan for their own financial futures. The Stock Market GameTM has been named the only program that successfully increased scores on the Jumpstart Coalition’s test of high school students’ financial literacy. The Illinois Bankers Association is committed to increasing the financial literacy and understanding of all individuals in Illinois, and especially young people. We believe The Stock Market GameTM fits perfectly within the mission of our impactful Illinois Bankers Education Services and will add to the strong educational programming, the Future Leaders Alliance, and our growing IBA scholarships to bring proven financial training to high school students from every part of Illinois. We need you, the great Members of the IBA, to help bring this fantastic tool to more students. You know your communities and are committed to helping families and businesses grow. You can make sure students in your community have access to this proven tool by calling your local teacher, principal, or superintendent to confirm that they know about and are using The Stock Market GameTM in their school. Would you be willing to mentor and advise a local teacher or a team of students on what you have learned about finance and banking? The Stock Market GameTM is already impacting tens of thousands of students in Illinois. The current uncertainty for schools is the perfect time to reap the benefits of this on-line curriculum. Be the catalyst so your young people do not miss out. Together, our bankers and the IBA can help thousands more students gain this priceless financial training.
For more information, visit www.stockmarketgame.org. Additionally, more details on how Illinois schools can register for the program is available at www.ilbanker.com/Education-Events/The-Stock-Market-Game. September-October 2020 •
•5•
COMPLIANCE CORNER The IBA Law Department
QUESTION
Are we prohibited from allowing customers to transfer funds from a business account to a personal account through online banking transfers?
ANSWER No, we are not aware of any law or regulation that would prohibit you from allowing a customer to transfer funds from a business account to a personal account using online banking — provided the customer is
authorized by the business to make such transfers from the business account, and your bank is unaware of any wrongdoing by the customer in transferring business funds to a personal account (which could have
several innocent explanations, such as to pay a salary or other expenses). We also recommend reviewing the account agreement for your business account to determine whether such transfers are allowed.
QUESTION
The new Regulation CC changes that became effective July 1 modified the amounts that must be made available during holds and required notification to our customers within thirty days of the change. However, our initial disclosures do not reference the dollar amounts of available funds during various holds. Do we need to begin disclosing these hold amounts to our customers, or may we simply notify them that the hold amounts have changed and are available if they wish to view them? Currently, we use the basic funds availability policy (Model C-1) in Appendix C to Regulation CC.
ANSWER We do not believe you need to include the dollar amounts of available funds during holds in your initial Regulation CC disclosures, provided that the model availability policy you are using (Model C-1) accurately reflects the specific availability policy followed by your bank in most cases. Under Regulation CC, banks must provide potential customers (and any person who makes an oral or written request) with the bank’s applicable specific availability policy disclosure. According to the official commentary to Regulation CC, the disclosure “must reflect the availability policy followed by the bank in most cases, even though a bank may in some cases make funds available sooner or impose a longer delay.” Whether a bank’s disclosure must reflect specific hold amounts depends
•6•
on the availability policy followed by that bank. For example, “a bank that makes deposited funds available for withdrawal on the business day following the day of deposit need simply disclose that deposited funds will be available for withdrawal on the first business day after the day of deposit, the bank’s business days, and when deposits are considered received.” Banks with such an availability policy may use Regulation CC’s Model C-1 (next-day availability) policy disclosure, which does not reference specific hold amounts. However, banks that have a policy of routinely delaying the time when deposited funds are available for withdrawal on a blanket basis or have a combination of next-day availability and blanket delays would need more detailed disclosures that reference hold amounts (such as those reflected in Model C-2 and Model C-3).
• September-October 2020
Regarding the new Regulation CC dollar amounts that took effect July 1, 2020, Regulation CC states that a “bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank’s availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation.” Since the funds banks must make available to customers during holds is increasing, we agree that you may provide notice of the change within thirty days after the change is implemented. We also agree that you do not need to include the dollar amounts of the funds available during holds in your notice, since they are not referenced in your availability policy.
QUESTION
We paid five checks that turned out to be forgeries for a business customer. Our customer notified us of the forgeries shortly after receiving their account statement, and we returned them to the depository bank, but the returns were after the midnight deadline. Our account agreement provides that we are not responsible for any unauthorized signature or alteration that would not be identified by a reasonable inspection of the item. Our account agreement does not mention or offer specific fraud detection services. Can we avoid liability on this basis?
ANSWER We would not recommend relying on your account agreement to avoid liability to a customer for forged checks that your customer reported in a timely manner, but we note that we cannot provide legal advice. We recommend working with bank counsel to review and analyze your account agreement’s provisions with respect to the customer’s responsibility for fraudulent items in light of the Uniform Commercial Code (UCC) provisions and case law discussed below. Your customer is likely entitled to reimbursement from your bank for the forged checks since the customer notified you of the fraud with “reasonable promptness,” and your question does not suggest that your customer was negligent in a way that contributed to the forgeries. Under the Uniform Commercial Code (UCC), your customer generally should not be held liable on a check unless it signed the check, and a check with a forged drawer’s signature or indorsement is not properly payable.
The UCC does permit account agreements to vary the effect of its provisions, and Illinois courts have allowed banks and customers to agree to narrow the timeframe that customers have to report unauthorized payments. However, the UCC also expressly provides that a bank cannot disclaim its responsibility for its lack of good faith or failure to exercise ordinary care. Additionally, any variations in an agreement must not be “manifestly unreasonable.” While we are not aware of any Illinois case law on this point, at least two out-of-state courts have examined the validity of provisions in account agreements that disclaim a bank’s liability for fraudulent checks. In a Minnesota case, the court concluded that a bank’s deposit agreement could require a customer to disclaim liability for fraudulent checks when Positive Pay (a fraud detection service) was offered to and declined by its customer. The bank in that case was not required to reimburse its customer. However, in
a similar case before a federal appellate court, the court concluded that an account agreement improperly disclaimed the bank’s duties to act in good faith and exercise ordinary care. In that case, the account agreement absolved the bank of liability for any fraudulent transactions when the customer declined to enroll in nondescript anti-fraud products designed to discover or prevent the type of fraud at issue. Based on the reasoning in these cases, it does not appear that your bank could rely on the disclaimer of liability in your account agreement to avoid liability for the timely-reported forged checks. While we have not reviewed your bank’s account agreement, it appears that it did not mention or offer fraud detection services to your customer—a fact that was present in both of the cases discussed above, only one of which found in the bank’s favor.
About the IBA Law Department Our IBA Law Department provides many resources to help our bank members meet their compliance challenges, including a toll-free Compliance Hotline (1-800-GO-TO-IBA) and a dedicated compliance website (www.GoToIBA.com). We also publish a free weekly e-newsletter highlighting the latest regulatory developments, select recent Q&As, and other useful information – let us know if you want to subscribe! Note: This information does not constitute legal advice. You should consult bank counsel for legal advice, even if the facts are similar to those discussed above.
September-October 2020 •
•7•
WASHINGTON UPDATE
By Rob Nichols, President and CEO, American Bankers Association
Running Toward the Challenge Is racism baked into our nation’s systems of justice, health and education, or are there disproportionate correlations between race, poverty and crime? Are people too quick to accuse others of racism, or are those in positions of power too slow to recognize their role in perpetuating racial inequities? Is it fair that I posed these as either/or questions, or is all of the above true? While issues surrounding racial justice and inequities are demanding the nation’s attention, honest conversations seem too perilous to hold because of the way some frame the debate as binary. But that ignores the vast common and principled ground on which we all stand and distracts from a focus on meaningful solutions. Bankers are community leaders, which means you run toward a challenge, not away from it. So as fraught as the situation may feel, ABA is engaging in an open dialogue of how the banking industry, both as employers and as facilitators of wealth creation, can further the principles everyone agrees on: That all Americans should have a truly equal opportunity to prosper and that economic inclusion is essential to creating such opportunity. Implicit in this discussion is the belief that we each have a role to play in addressing longstanding inequities. Some may feel the problem lies elsewhere— in another community, city or •8•
state—and therefore so must the solution. Others may think they’ve done all they can, to either great or limited effect. But we are an industry that in recent years has developed entirely new ways of banking, and in recent months demonstrated remarkable fortitude and commitment to serving our customers through the pandemic. There is more we can—and must—do to address disparities and promote prosperity for all. Many banks recognized this long before the pandemic hit and disproportionately harmed Black Americans, and long before the nationwide protests over the killing of George Floyd and others. Some in recent years have built rigorous diversity, equity and inclusion programs that are both inward facing (focused on employees) and external facing (focused on customers, communities and vendors). Some have pioneered new ways to qualify borrowers and bring those who have been marginalized into the banking system. We celebrate them every year with the ABA Foundation’s Community Commitment Awards. Still others have partnered with Minority Depository Institutions and Community Development Financial Institutions to share compliance resources, expertise and more to better enable those institutions to meet the needs of their often underbanked customers. ABA is tapping the experiences of these banks and leveraging the expertise of our own staff experts on diversity, equity and inclusion to provide others with tools and
• September-October 2020
resources to make a difference at their own institutions. A new peer group for institutions with robust DE&I programs met for the first time in February and is helping us identify leading industry practices in this space that we can share with members. In April, we convened our Diversity, Equity & Inclusion Advisory Group, which is composed of individuals from banks of all sizes and whose mission is to help us nurture bank DE&I efforts. I was also pleased to announce a strategic partnership this year with the National Bankers Association, the leading trade association for MDIs, to promote the health and well-being of underrepresented communities. And we are collaborating with and promoting MinBanc, which reimburses educational and professional development expenses of MDI bankers. This is all to say that both ABA and the industry have a strong foundation upon which to build. And build we must. Unacceptable racial disparities in health, wealth, income, education and other measures of opportunity continue to grow—and the pandemic has laid bare these disparities. Proportionately, two and half times more Black Americans have lost their lives to COVID-19 than white Americans. We cannot shrug our shoulders and declare these inequities someone else’s problem. We cannot fail to engage. We are bankers, we are civic leaders and we must be part of the solution. E-mail Rob Nichols at nichols@aba.com.
Howard & Howard— Embracing Change for More Than 150 Years From storefront community banking to interstate banking... From walk-up tellers to virtual banking... Through the savings and loan crisis and beyond the mortgage crisis... We have continued to evolve with our community bank clients since 1869, and we’re here to stay. We’re excited about the future of banking—and helping you achieve your goals.
OUR BANKING LEADERS
Donna Goelz
Mark Ryerson
Joe Silvia
dmg@h2law.com 309.999.6324
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www.howardandhoward.com 312.372.4000 Chicago, IL | Peoria, IL | Detroit, MI Las Vegas, NV | Los Angeles, CA
September-October 2020 •
•9•
Illinois Bankers Education Services Secures License for The Stock Market GameTM in Illinois Great News! The Stock Market GameTM is back for the 2020-2021 school year!
I
llinois Bankers Education Services (IBES), a subsidiary of the Illinois Bankers Association, is excited to be the new licensee of The Stock Market GameTM in the state of Illinois. The SIFMA Foundation’s curriculum-based Stock Market Game features a high-tech, online investment simulation of stocks, bonds, mutual funds, ETFs and ESG investments to give students a better understanding of capital markets, global economic trends and fiscal policy. The Stock Market GameTM explores the fundamentals of personal finance and investing, while practicing content and skills in math, English language arts, economics, social studies, and other subjects. Students build and manage an investment portfolio in a real-world, dynamic marketplace, analyze and make decisions, explore the consequences of their choices, and seek new ways to strategize for success. Participants and instructors can expect the same friendly service from the same people they’ve come to know over the years as the licensing of the program moves from Econ Illinois to IBES. Northern Illinois University will remain the program administrator. Founded in 1977 by academics at Buffalo State, The Stock Market GameTM has since expanded through a national network of educational nonprofit organizations to reach nearly 19 million students. An independent study by Learning Point Associates found that students who participated in The Stock Market GameTM scored significantly higher on mathematics and financial literacy tests than their peers who did not participate. They also found that teachers who taught The Stock Market GameTM reported that the program motivated them to better plan for their own financial futures. The Stock Market GameTM has been named the only program that successfully increased scores on the Jumpstart Coalition’s test of high school students’ financial literacy. For more information, visit stockmarketgame. org. Illinois banks are encouraged to bring The Stock Market GameTM to their local school districts and partner with them to sponsor the program at no cost to the school. See more at ilbanker.com/ Education-Events/The-Stock-Market-Game. To learn more, contact Debbie Kerman at dkerman@niu.edu.
• 10 •
• September-October 2020
What is The Stock Market Game? • A media-blended project-based learning simulation in
which student teams work collaboratively to invest a $100,000 virtual cash account in stocks, mutual funds and bonds. • A competition between grade 4-12 student teams by region and grade level. • A robust teacher resource center with lessons, activities and assessments, searchable by subject and grade level and aligned to Illinois and national Common Core Standards.
How it works…
With The Stock Market Game™ program, students learn core competencies, critical thinking skills and teamwork while engaging your students in real world applications. In building a portfolio, students research, evaluate and make decisions based upon their research. Teams trade equities; earn interest on cash balances; and pay commission on all trades. To better understand stock and overall market performance, they need to know how the economy works, and to calculate their returns they need to do math. Learning is a natural part of the experience.
How you can help…
• Contact your local school to see if they participate and, if
they do not, connect them with the SMG site to register (stockmarketgame.org). • Offer to sponsor your local school’s teams (just $10 per team). • Volunteer to help be a mentor or facilitator. • Volunteer to be a judge for the InvestWrite competition, a highly-successful extension of the SMG program designed to help students sharpen critical thinking skills as they compose essays on investment-related topics.
ALREADY SOLVING YOUR NEXT CHALLENGE. From regulatory requirements to working toward enhancing your financial institution’s performance, the challenges are growing even more demanding by the day. Fortunately, we understand what you’re up against. We can help you navigate the many complexities of your operation with confidence, as well as provide you with solutions that are backed by our own experience and resources. We know how to get you there, because we’ve already been there. Learn more at www.bokfinancial.com/institutions.
Bank dealer services offered through Institutional Investments, Bank of Oklahoma, which operates as a separately identifiable trading department of BOKF, NA. Services may be offered under our trade name, BOK Financial Institutions Group. BOKF, NA is the bank subsidiary of BOK Financial Corporation. Some services may be offered through BOK Financial Securities, Inc., member FINRA/SIPC, and an affiliate of BOKF, NA. Investment products are: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE
September-October 2020 •
• 11 •
COVID-19 LOAN MODIFICATIONS:
It is more than just a TDR issue By Scott Polakoff, FinPro
Many banks across the country are at risk of CAMELS downgrades, increased deposit insurance assessment premiums, and regulatory enforcement actions due to inadequate risk management practices for their COVID-19 Loan Modification Program. Loan modifications have been part of most banks’ lending operations for many years. Before the coronavirus, such modifications were often prompted by a borrower’s “financial distress.” Banks would attempt to work with the financially distressed borrower by granting a “concession” that the bank otherwise would not consider for other borrowers with a similar risk profile. An example of such a loan modification might be an interest rate reduction from 5% to 3% for 12 months to help a financially distressed borrower. Generally speaking, this type of loan modification would be categorized as a Troubled Debt Restructure (“TDR”) under accounting literature (ASC 310-40) and captured as such in Call Reports. TDRs are considered impaired loans. • 12 •
• September-October 2020
Many banks have COVID-19 Loan Modifications approximating 25% of their commercial portfolio. When the country became engulfed with the coronavirus, both Congress (Section 4013 of the CARES Act) and the Regulators (April 2020 Interagency Guidance) issued material to guide banks on TDR designation for COVID-19 related loan modifications. It is critical for bankers to understand that while Section 4013 and the April 2020 Interagency Guidance both discuss the applicability of TDRs, they have materially different requirements (modification duration, date of record for current/ delinquency status, etc.) for determining when the TDR designation is necessary. FinPro urges all banks to specifically designate whether the COVID-19 Loan Modification was approved under Section 4013 of the CARES ACT or under the April 2020 Interagency Guidance.
This document should be in each loan modification file and address the following items:
Was the borrower im pa Yes _____ No _____ Was the modificatio n Yes _____ No _____
cted by COVID-19?
pursuant to Section
4013?
• If yes, was the loan current as of Decemb er 31, 2019? Yes _____ No _____ • If yes, was the loan modification between March 1, 2020 and December 31, 2020? Yes _____ No _____ Was the modificatio n pursuant to the In teragency Guidance? Yes _____ No _____ • If yes, was the loan current at time of mo dification? Yes _____ No _____ • If yes, was the loan modification short term (i.e. 6 months)? Yes __ ___ No ___
Remember that banks must maintain records on the number and dollar amount of loan modifications approved under Section 4013 and under the Interagency Guidance and report this data to the Board of Directors on a regular basis. The TDR determination is only the first step in the COVID-19 Loan Modification process. Unfortunately, too many banks neglect to implement the second step in the COVID-19 Loan Modification process, which is vital to accurately identify, measure, monitor, and control the bank’s risk profile. Banks must properly “Risk Rate” COVID-19 Loan Modifications and incorporate such risk ratings into their ALLL/ACL calculations. Loans modified under Section 4013 or the Interagency Guidance pertain ONLY to borrowers who have been impacted
by the coronavirus. By definition, these borrowers have financial performance less robust than before COVID-19. In some cases, these borrowers may have serious cash flow problems driven by the coronavirus that impact their ability to service their debt. It is incumbent on banks to accurately “Risk Rate” these borrowers at the time of loan modification and on a regular basis going forward. FinPro has observed that many banks have internally “risk rated” their COVID-19 loan modifications to a “watch” category. Moreover, these new risk ratings must be incorporated into the ALLL/ACL calculation. One “best practice” observed for community banks across the country is to establish a “homogenous pool sub-tier” within the ALLL/ACL methodology to break out all such loan modifications within each homogenous pool. Noteworthy, this approach is often used in conjunction with a new “COVID-19 Q-Factor” that many banks now incorporate their ALLL/ACL methodology. Some banks have actually appended a one- or two-digit code to COVID-19 loan modifications to ensure easy identification over time. Lastly, effective Corporate Governance is critical to avoid CAMELS downgrades and enforcement actions. Corporate Governance starts with a comprehensive documentation process. As noted earlier, banks must maintain records of all COVID19 loan modifications, specifically noting whether such modifications were executed under Section 4013 of the CARES Act or the Interagency Guidance. Remember, modifications cannot fall under both categories since they have different (and competing) requirements. This information should be reported to the Board of Directors on a regular basis. Similarly, the management must inform the Board of Risk Rating trends for COVID-19 loan modifications and how such ratings have impacted the Bank’s ALLL/ ACL. These actions, together with updated policies and procedures to incorporate coronavirus actions, robust MIS and Risk Management practices, and comprehensive Internal Controls will properly prepare banks to address any regulatory concerns. About the author: Scott Polakoff, CAMS, is Executive Vice President with FinPro, a full-service management consulting firm specializing in providing advisory services to the financial institutions industry. He can be reached at spolakoff@finpro.us, www.finpro.us.
September-October 2020 •
• 13 •
Seeking new growth? Consider Cannabis Banking In January, Illinois became the 11th state in the country to legalize recreational cannabis. Fast forward six months, amidst a global pandemic and one of the worst unemployment crises in American history, Illinois marijuana retailers saw their busiest month on record in June, reaching more than $47.6 million in sales. Eventually, the state’s cannabis program is expected to generate up to $2.5 billion in annual revenue. Yet, much of this industry remains unbanked. The ongoing conflict between state and federal law on cannabis has kept many financial institutions on the sidelines of this lucrative industry. However, other enterprising bankers are making cannabis banking part of their growth strategy, using the tools and technologies available today to bank this industry compliantly and cost-effectively.
Shield Compliance supports banks serving the legal cannabis market in Illinois, and in states across the U.S. Our platform operationalizes critical risk-management processes and automates the collection of data required to bank this industry safely, while also facilitating the new client onboarding process. Designed by bankers for bankers, our approach to compliant cannabis banking allows financial institutions to operate more efficiently so they can scale their programs to meet the growing demand for their services.
As the coronavirus pandemic continues to cause economic disruption, the legal cannabis industry offers banks the opportunity to expand and diversify their portfolios, as well as build a low-cost funding engine that allows them to keep the cost of funds under control in an eventual rising rate environment. While there are many benefits associated with serving this industry, here are three ways cannabis banking can support your bank’s growth strategy now and into the future.
1.
Cannabis banking can provide reliable non-interest income. As net interest margins compress, banks should look to non-interest income business lines to support overall profitability. Cannabis companies are in dire need of quality banking solutions and are willing to pay upwards of ten times the amount of traditional business service charges. Assessing substantially higher base account charges, often without the benefit of an earnings credit to offset those charges, means there are untapped cash management fee opportunities. Together, these fees can fully offset the operational cost of providing a cannabis banking program.
2.
Compliance technologies can reduce costs and support remote banking. Many banks serving cannabis customers are using valuable human capital to manage their compliance. Platform technologies, like those offered by Shield, make it possible to automate these processes, significantly reducing the labor and expense required to conduct the systematic due diligence this industry demands. Cannabis banking technologies can also enable contactless payments, and handle client applications, account underwriting, and risk assessment via remote, online processes.
3.
Longer-term, cannabis banking can provide a source of low-cost deposits. The pressure to grow and attract low-cost deposits may wane momentarily but will continue to be a long-term driver of bank profitability. Increasing those deposits now will protect future profitability as the economy improves.
While your bank may want to wait for federal legalization before providing financial services to this industry, there is a significant first-mover advantage for banks serving this industry today. The ability to build new customer relationships, earn enhanced fee income, and gain access to new sources of low-cost deposits early on could be a game-changer when federal legalization eventually occurs.
Let us show you how Shield Compliance is helping banks earn the benefits of a cannabis banking program. Please visit our website at shieldbanking.com or contact us directly: Brian Storey: brian@shieldbanking.com 425-276-8235
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• September-October 2020
Boost Your Recruiting Efforts with Inbound Marketing By Tom Blackwell, Angott Search Group
A
lthough we’re still in the midst of coping with the pandemic, we’re beginning to see glimmers of hope for recovery. It may not be business as usual, but for many companies, it will mean ramping up their workforce again. Unemployment rates have soared to new highs after a period of extremely low rates that led to stiff competition for top job candidates, and while it may be some time before they are substantially lower, forward-thinking companies will be looking to replace critical talent and gear up for pent-up demand for goods and services. So, this is a good time to consider how to attract the talent you need ahead of your competitors. Companies need to stop selling and start generating demand. Begin by creating and distributing quality content that gets the attention of your desired audience. To build trust among relevant individuals, provide information that enhances your reputation as a thought leader in your space. Illustrate your values and highlight your company culture to enhance your employer brand. “Inbound marketing is all about creating interest, warming up relationships, and getting people to come to you and your organization,” says Tom Blackwell, Director of Angott Search Group.
connections they’re looking for and solves problems they already have.” With this in mind, here’s how your organization can use inbound marketing to attract top talent. “First,” says Blackwell, “it’s essential that you have a well-defined idea of the type of person you aim to hire for your company so that you can market to them effectively.” To do this, the publication Social Media Today recommends that you create “candidate personas” to form a clear picture of the audience you want to target. “What education is needed, what essential skills are required, what other factors are pertinent to the specific position? Probe these areas with your team so you can target the people who fit your needs,” advises Blackwell.” This process helps you to refine your inbound marketing efforts and streamline your campaigns on social media platforms such as LinkedIn.” Second, you should think strategically about the content on your website. “Not every person that comes across your content or website is ready to apply for a position,” as noted by Social Media Today. “Some people are curious, passively seeing what opportunities are out there or simply
What exactly is inbound marketing?
According to Hubspot, a marketing software firm, “Inbound marketing is a business methodology that attracts customers by creating valuable content and experiences tailored to them. While outbound marketing interrupts your audience with content they don’t want, inbound marketing forms
September-October 2020 •
• 15 •
researching, and this is precisely why it’s important for you to create and publish as many useful content types as possible to support them.”
This type of content can take the form of white papers, eBooks, webinars and articles. “Keep giving, keep educating, and don’t ask for anything in return.
Eventually, these people will come to you,” says Blackwell. “If you’re searching for a pipeline of potential applicants, take a look at those who opt-in for more content via email and YouTube subscriptions – and reach out to those who engage with your social posts.” Remember that inbound marketing revolves around providing outstanding content. This means that even after you have caught the attention of your target audience, you must continue to engage them with dynamic content that keeps them coming back and instills the idea that your company is a good place to work.
Is your bank keeping up with 2020’s rapid changes? In a four-webinar series, the Community Banking Forum will provide you with insight into current topics impacting community banks today. These webinars have been designed exclusively for executives and board members. October 7 Lessons learned from the past year of unanticipated change
October 21 The employee experience: What’s ahead?
October 14 What is your M&A strategy (or not)?
October 27 2020 U.S. presidential election: Impact on the economy, business and jobs
Visit wipfli.com/CBForum2020 to register.
• 16 •
• September-October 2020
“Of course, as an employer, you can research and implement an effective inbound program on your own. But in today’s fast changing social media environment, you may want to consult with a professional recruitment firm that’s well versed in emerging media platforms, proficient in developing ongoing thought leadership content, and experts in managing the pipeline of applicants to ensure the true game changing talent rises to the top,” noted Blackwell. About the author: Tom Blackwell is Director with Angott Search Group. He may be reached at tblackwell@asgteam. com. IBA Associate Member
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Fall Golf Outing September 28 Pekin Country Club Pekin, IL
The ONE Conference March 4-5 Embassy Suites East Peoria, IL
Fall Golf Outing TBA Pekin, IL
Midwest Trust and Wealth Management Hybrid Conference September 30-October 2 The Inn at St. John’s Plymouth, MI
Women’s Leadership Symposium Spring
OCTOBER 2020 Spring Golf Outing October 1 St. Clair Country Club Belleville, IL BankTech Conference October 6 A Virtual Experience Women In Banking Conference October 15 A Virtual Experience 2020 Delaware Trust Conference October 19-20 A Virtual Experience Compliance Conference October 20 A Virtual Experience
NOVEMBER 2020 Midwest Bank Leaders Conference November 5 A Virtual Experience
DECEMBER 2020
APRIL 2021 Spring Law Review TBA Springfield, IL Economic Investment Day TBA Springfield, IL
MAY 2021 Spring Golf Outing TBA St. Clair Country Club Belleville, IL Compliance Conference May 14 Hyatt Regency Lisle Lisle, IL
Washington Visit TBA Washington, DC
OCTOBER 2021 BankTech Conference October 7 Chicago Marriott Southwest at Burr Ridge Burr Ridge, IL Women In Banking Conference October 28-29 Crowne Plaza Springfield Springfield, IL Fall Compliance Conference TBA
NOVEMBER 2021 Midwest Bank Leaders Conference TBA
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DECEMBER 2021
Annual Conference June 13-16 Branson Convention Center Branson, MO
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AUGUST 2021 Ag Banking Conference August 25-26 Crowne Plaza Springfield Springfield, IL
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Bank Counsel Conference December 4 A Virtual Experience
Dates and locations are subject to change. Rev. 8/31/2020
5Ways Your Financial Institution Can Use Digital Tools
to Connect with Customers During COVID-19
By John Reynolds, CSI
1. Electronic Document Delivery
n response to the continuing challenges related to COVID-19, many financial institutions are relying on digital tools, including document management systems, to keep some semblance of normality.
To connect with customers, many financial institutions are using digital statements. With digital eStatements and eNotices, your customers can securely view a dynamic, interactive statement or bank notice online. Using these digital tools, your institution can reduce your paper and postage costs while offering convenience and physical safety during the COVID-19 pandemic.
I
Document management systems are among the digital solutions that help your institution streamline operations and external communication. As financial institutions navigate this unprecedented situation while providing essential services to customers, maintaining productivity remains a priority. Follow these best practices to ensure your institution is operating efficiently while continuing to serve your customers during this time.
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• September-October 2020
2. Centralized Document Library Another way to provide customers with easy access to their financial information is through the use of a centralized document library. With user-friendly search tools, your customers can find the information they need without coming into a physical
location, resulting in their questions being resolved more quickly.
3. Customer Communication In this evolving situation, your customers need up-to-date information from your institution. Using digital marketing tools like statement marketing banners, your financial institution can effectively communicate with customers through personalized messages, such as information on a virtual wealth management seminar, community and public health concerns or new policies at your institution.
4. Digital Delivery Channels Many bankers are facing a variety of concerns due to the circumstances surrounding COVID-19, primarily the safety of their employees and customers, prompting them to promote digital delivery channels as an alternative to branches. If your customers are not participating in digital or mobile banking, encourage that option so your customers will have access to their accounts at any time.
5. Personalized Customer Experiences In today’s world, customers demand personalized experiences in every interaction, and the ability to provide that, especially in uncertain times, will set your financial institution apart. As digital transformation continues to drive innovation in our industry, consider how your institution will use technology, such as cloud migration or digital platforms, to enhance or create new customer experiences to meet their changing needs. As financial institutions continue adapting to the challenges stemming from this global pandemic, any investment—from digital statements to digital banking—that allows your institution to boost its capabilities, increase efficiency or better meet your customers’ needs is worth considering. With the many changes brought on by COVID-19, financial institutions that choose to embrace digital transformation and rethink their business technology will be ahead of their competition. About the author: John Reynolds is vice president of Sales, Document Services at CSI. IBA Associate Member
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September-October 2020 •
• 19 •
COVID-19 Insurance? By Joshua Miller and David Guerino, KeyState Captive Management, LLC
Community banks more commonly find relief in their Captive Insurance when Commercial Insurance excludes so many things like pandemics COVID-19 presents significant challenges for US businesses across every industry, and community banks have had to respond to some unique circumstances. As we focus on moving toward recovery, nearly everyone agrees that some changes to operating environments will be permanent and this is the “new normal.” When community banks adjust to these changes, it will be critical for each bank to evaluate their insurance and risk management programs to ensure they can respond in the future. Community banks have incurred significant expenses in responding to COVID-19 and nearly every major commercial insurer is asserting that losses related to the pandemic are excluded under their policy language. Public health experts indicate that the vaccine for COVID-19 may not be widely available until mid-2021 and that future, significant and severe pandemics are inevitable. All companies must have a plan to address the future challenges and considering a more holistic and comprehensive insurance program that identifies and addresses risks that commercial insurers will not.
exclusions. The captive does not replace a bank’s commercial insurance program. It wraps around the commercial insurance, covering commercial deductible layers, providing some excess coverage, and filling in gaps and exclusions. The current crisis demonstrated the significant financial benefit a captive can provide to a bank.
This is where a captive comes in. A captive is a legally licensed, limited purpose, property and casualty insurance company owned by the bank holding company, which can provide customized policies for the bank (and any affiliated subsidiaries) where the bank’s commercial policies have limits and
• Expenses related to deep clean branches or facilities that have had exposure to COVID-19
• 20 •
• September-October 2020
HOW CAN A CAPTIVE BENEFIT A BANK IN THE CURRENT ENVIRONMENT? Pandemic Insurance Coverage Nearly all commercial property policies exclude coverage for a pandemic. The captive has comprehensive business interruption coverage that is providing its banks with needed relief, covering expenses such as: • A portion of expenses related to the purchase or lease of computers and equipment for employees to work from home
• Costs associated with installing plexiglass barriers for tellers in bank branches
• Expenses associated with the purchase of personal protective equipment (PPE) to keep their employees and customers safe through the pandemic
Increasing Commercial Insurance Rates At a time when community banks are worried about the potential impact of a serious recession on their institutions, they are hearing from their commercial insurance brokers that they can expect up to 30% increases in D&O coverage and an average of 12% increase for their FI Bond. A captive insurance company has always been an excellent tool for companies to help manage the hardening commercial insurance market. Banks can evaluate higher commercial deductibles to offset these increased commercial premiums. They can then self-insure these larger deductibles through their captives.
Increased Potential for Cyber and Crime Losses The remote, work-from-home environment has presented significant challenges for community banks and their commercial customer base. Banks are concerned about the increased risk related to cyber-crimes. The purchase of additional cyber coverage on the commercial market has skyrocketed, but most do not fully understand what these coverages exclude. A captive can provide a solid backstop for a community bank, stepping in to provide coverage when a commercial coverage is denied because of an exclusion.
Banks Facing Margin Compression Banks are facing uncertain times and continue to see their earnings come under pressure. Depending on the structure, captive coverages and claims experience, community banks with captives can experience a 1-2% annual average increase to earnings per share. The captives have begun to reimburse its owner/ affiliated entities for reasonable expenses that are
not covered by its commercial policy. Therefore, the extra expenses spent on laptops, software, extra IT work, cleaning due to infected employees and/or customers entering a branch, temporary barricades in teller lines, etc. are covered by a captive managed by KeyState under Extra Expense and Difference in Conditions policies. Recently, KeyState hosted a virtual educational seminar with 60 community banks with captives from across the country, joining to understand how their captive policies would respond as the pandemic developed. After the session, KeyState surveyed the banks (average asset size between $1B - $10B) and found that on average, banks estimated $50,000$100,000 in extra expenses associated with COVID19 with some of the larger institutions estimating expenses over $250,000. Although the banks remain disappointed that their commercial insurance does not respond to these losses, they have been thankful to have the captive structure in place to respond to these extra expenses related to the pandemic. Of course, this solution of forming and operating a captive insurance company is not a fit for every bank. This solution should only be implemented by banks with sufficient capital and earnings. Holding companies that want to form a captive must be well managed and well-capitalized. We expect to see continued growth in community banks forming captive insurance companies. As banks become more aware of their unfunded risks through ongoing enterprise risk management, a captive offers a unique and customized approach to help identify and fund for those risks on an annual basis. About the authors: Joshua Miller, CEO of KeyState Captive Management, LLC, launched KeyState’s Bank Captive Program in 2012. David Guerino, SVP & Managing Director – Captive Insurance of KeyState Captive Management, LLC., recently joined the company and brings with him over 23 years of captive management experience. Since launching the Bank Captive Program in 2012, KeyState has had 85 banks join the program. Banks interested in exploring whether a captive insurance company is a good fit for their institution should contact David Guerino at (802)233-2624 or dguerino@key-state.com or Travis Holdman at (260)227-0265 or tholdman@key-state.com. IBA Preferred Vendor
September-October 2020 •
• 21 •
PsyberSecurity:
Where Computer Security Meets Psychology Understanding How Hackers Exploit Our Brains to Manipulate Us By John Streff, Vantage Point
W
e have all heard stories of computers being hacked, but did you know that your brain can also be hacked? High-tech computer hacking can be difficult, especially when the target organization has invested many resources into cybersecurity technologies.
Because of this difficulty, many cyber-attackers have discovered that it is often easier to convince someone with access to the target system or information to share this access with the attacker (either knowingly or unknowingly). Attackers essentially “hack” the individual’s brain to elicit compliance with their requests. To accomplish this, attackers use a technique known as social engineering, which relies on a phenomenon known as amygdala (pronounced uh-MIG-duhluh) hijacking. Let’s look at how this works and what you can do to prevent your brain from being exploited in this way. The amygdala is a small structure located near the bottom of the brain and is very important
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• September-October 2020
in the way we process emotions. When we experience strong emotions such as fear, anger, or anxiety, the amygdala automatically triggers our fight-or-flight response, which prepares us to flee or confront the source of the strong emotion immediately and without thought. For example, think of a time someone startled you so much that your body reacted involuntarily. Perhaps your arms attempted to stop the perceived threat from coming closer. Your body reacted to the perceived threat before any thought transpired. When the stressor activates the amygdala in this way, it also inhibits the activity of the prefrontal cortex, which we consciously control to perform reasoning, critical thinking, and decision making. When the strong response of the amygdala produces an impulsive overreaction to a situation, this is known as what psychologist Daniel Goleman called an “amygdala hijack” in his book, Emotional Intelligence: Why It Can Matter More Than IQ. Just as computer systems have technical vulnerabilities that render them weak in the face of an attacker, the amygdala hijack can be seen
as a vulnerability of humans that, when properly exploited, can manipulate an individual to take an impulsive, unfortunate action. In the context of cybersecurity, that action might involve clicking a link to a malicious website, opening a malicious email attachment, or giving attackers information that they can use in later stages of their attacks. Attackers try to create a sense of fear, anxiety, urgency, panic, or even excitement to convince their targets to act impulsively and without thinking that maybe the situation is dangerous and intended to ensnare unsuspecting users. Attackers try to take advantage of their social skills combined with our innate desire to help and trust others, especially in rural areas. These non-technical methods for carrying out cyberattacks have come to be known as “social engineering.”
username and password to “verify their identity” for the registration process. Of course, attackers then collect the credentials to use in further stages of their attacks. Alternatively, some attackers send emails pretending to be technical support. These emails tell recipients that they just clicked on a link in a phishing email and that they need to download and run a program to clean up any malware on their computers and make them secure again. In reality, this program gives the attacker covert, remote access to the victims’ computers. When sending these kinds of emails, attackers create excitement by offering the chance to enter a drawing, and they create fear and panic when they tell the victim about the possibility of a malware infection. Both pretexts elicit a strong emotional response and impulsive behavior.
While it may be difficult to resist these kinds of attacks, there is a way to defend yourself. Ask yourself whether the request is normal or makes sense. A recent example of social engineering / amygdala hijacking in action is the myriad of scams relating to the COVID-19 virus. The thought of catching this virus has terrified an overwhelming number of people, and many are interested in wearing masks to protect themselves from illness. This is a great opportunity for malicious social engineers. People who are terrified of catching the virus would not hesitate to click on a link that claims to take them to a website from which they can purchase high-quality masks at an affordable price. An attacker could easily set up a fake e-commerce website that infects victims’ computers with malware once they visit the site. In this scenario, the attacker creates a powerful sense of excitement that triggers an automatic, almost desperate response because of the long-term fear that has plagued the victim. The amygdala takes over and inhibits the activity of the prefrontal cortex, so the unsuspecting user does not stop to think that the link may not be legitimate. Another common social engineering scam is offering the victim the chance to enter to win a valuable item, such as a phone. An attacker could send an email to hundreds of a company’s employees offering them the chance to click on a link and enter their work computer’s
The attacker has successfully exploited the amygdala hijack vulnerability to manipulate the victims’ behavior and obtain usernames, passwords, and remote access to computers. The preceding examples demonstrate that amygdala hijacking is a simple yet effective technique for manipulating an individual to assist in carrying out a cyber-attack based on human weakness. While it may be difficult to resist these kinds of attacks, there is a way to defend yourself. If an email or phone call causes you to feel anxiety, fear, or great excitement and is asking you to do something, take a minute to relax and slow the situation down. Take some deep breaths and rationally think through the situation. Ask yourself whether the request is normal or makes sense. Ensure that the request comes from someone you trust, and do not assume the person is who he/she claims to be. Intentionally relaxing and consciously thinking will help your prefrontal cortex to regain control and help prevent bad decisions. Awareness of attackers’ techniques as well as your own reactions to stress will help prevent you from becoming a victim of the amygdala hijack. About the author: John Streff is IT Security Specialist with Vantage Point. In this role, he helps banks secure their data networks through penetration testing, vulnerability management, policy and other measures. IBA Associate Member
September-October 2020 •
• 23 •
SCHOLARSHIPS Your Support Helps
Build the Banking Industry Talent Pool Thank you for your support and commitment to building a quality talent pool for the future. Because of you, we awarded four $1,000 scholarships to students who are interested in a career in banking.
Consider making a contribution to support the future of banking. Mobile Text: 44-321 with the message “IBGIVE” Mail:
Each applicant answered the question,
“Why are you considering a career in the banking industry?” All of the applications were reviewed by the Illinois Bankers Scholarship Committee. At the Rewired Annual Conference, the committee, along with the Past Chairmen of the IBA, announced the creation of an additional scholarship fund — the Linda J. Koch Scholarship. Winners of this special scholarship must show exemplary leadership and service characteristics, with a minimum GPA of 3.0.
Amazon Smile: Place your orders thru Smile.Amazon.com (Illinois Bankers Education Services Inc.) Visit:
ilbanker.com/Scholarship
*All donations to the Illinois Bankers Scholarship Fund will be paid into and held in a segregated fund within Illinois Bankers Education Services, a not-for-profit subsidiary, EIN 36-4271815, of the Illinois Bankers Association, and will be used exclusively for the purpose of granting scholarships under this program to further professional careers in banking. Donations paid into and held in this fund may be tax deductible as charitable contributions to the extent permitted by law. No proceeds from this fund will be used for government advocacy or other purposes.
We are pleased to announce that we were able to raise more than $65,000 for this fund in less than five weeks.
• 24 •
Illinois Bankers Education Services, Inc. 3201 W White Oaks Drive, Suite 400, Springfield, IL 62704 Checks made payable to Illinois Bankers Education Services Inc.
• September-October 2020
p i h s r a l o Sch Winners 2020 Illinois Bankers Scholarship
The scholarship program provides funding to high school graduates and college students seeking a degree in the financial services industry.
DREW BROGE Aquin High School SCHOOL University of Wisconsin-Platteville
NICOLE FILIP Maine South High School SCHOOL Indiana University
BANK SPONSOR Betsy Johnson Forreston State Bank
KYLIE ERNSTING Steeleville High School
BANK SPONSOR Jack Vainisi Forest Park National Bank & Trust
MELISSA SAPUTO Crystal Lake South High School
SCHOOL Southern Illinois University
BANK SPONSOR Amy Craig First National Bank of Steeleville
BANK SPONSOR Robert Cormier Home State Bank, N.A.
SCHOOL Northern Illinois University
September-October 2020 •
• 25 •
NEW LOOK, NEW NAME, SAME TRUSTED SERVICE ABA INSURANCE SERVICES Richard Flenner | 800-274-5222 ext. 1325 APPI ENERGY Jamie Polend | 800-520-6685 ASCENSUS Joe Doolittle | 800-346-3860
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Phil Talley | 855.422.4756 | ptalley@ilbanker.com 30 years of experience in the insurance industry!
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• September-October 2020
BANKER’S DASHBOARD Bob Reid | 800-933-2211 ext. 159305 BANKMARKETINGCENTER.COM Neal Reynolds | 678-528-6688 BANKTALENTHQ.COM Brian Hoffman | 217-789-9340 CARDINAL BOARD SERVICES Jim Zuehlke | 952-314-4636 DELUXE Bob Reid | 800-933-2211 ext. 159305 FLOODPLAIN CONSULTANTS INC. Craig Callahan | 317-858-4420 IBA 401(K) EPIC RETIREMENT PLAN SERVICES Pat Bearss | 309-397-5039 INVESTORS TITLE INSURANCE GROUP Dana Lyons | 217-622-0299 KEYSTATE CAPTIVE MANAGEMENT Travis Holdman | 260-227-0265 LIQUID CAPITAL Tom Stamborski | 847-842-3300 OFFICE DEPOT Isaac Mares | 855-337-6811 ext. 12878 SBS CYBERSECURITY Ethan Landon | 605-270-3321 STRATEGIC RESOURCE MANAGEMENT Uma Zielinksi | 901-681-0204 UFS, LLC Tom Szews | 262-376-3000
TAKE A CRUISE WITH OUR PREFERRED VENDORS! ilbanker.com/Preferred-Vendors 217-789-9340
PREFERRED VENDOR
Illinois Bankers Association Announces Liquid Capital as Its Newest Preferred Vendor By Brian Hoffman, President, Illinois Bankers Business Services
The board of Illinois Bankers Business Services, the for-profit division of the Illinois Bankers Association, has approved Liquid Capital Corp. and their Bank Alliance Program, as a Preferred Vendor. Established in 1999, Liquid Capital Corp. is a direct funding source that provides strategic alternative financing solutions for business to business companies. They address issues such as constrained cash flow, supplier payments and asset-based lines of credit. They have administrative offices in Toronto and Montreal, Canada as well as Irving and Austin, Texas and a network of 45 sales offices spanning North America. To date, Liquid Capital has deployed over $3 billion in financing transactions.
Facing Challenges – Seizing Opportunities – The Impact of COVID19 To say that we’re experiencing substantial economic and social changes would be an understatement. At the center of this maelstrom is a viral enemy that has affected the globe in a profound and deadly way. It has dramatically challenged our healthcare capabilities and supporting supply chain. It has crippled numerous
As an expansion of Liquid Capital’s experience in working with banks, they have developed the Bank Alliance Program. Recognizing the need for banks to compete and present a more broad-based approach in addressing the financing needs of prospective and current customers, the Bank Alliance Program provides a proactive offering of alternative financing options when traditional lending is not available or is limited. The structure of the program is developed in collaboration with the bank based on their needs and preferences as an enhancement to their business and strategic plans. The goal is to provide the bank the opportunity to increase their customer acquisition and retain the business and loyalty of current customers.
industries, with resultant massive unemployment, while overtaxing industries charged, willingly or unwillingly, with providing crucial goods and services. It has forced a social society to be distant and rightfully fearful. It has exposed our vulnerabilities on many different levels. Having to deal with so many unknowns both current and going forward, challenges our emotions and ability to cope. No one knows for sure what the “new normal” will look
In achieving preferred vendor status, Tom Stamborski, the program’s developer and manager, said, “Liquid Capital is honored to be approved as a preferred vendor and excited to play a part in the continuing history of the IBA in its delivery of products and services to its members. The IBA is seen as a lead innovator among state banker associations and we look forward to complimenting their efforts by delivering to their member banks financing products and support that will contribute to their growth and success.” For more information, contact: Brian Hoffman, President, Illinois Bankers Business Services, 217-7899340, bhoffman@ilbanker.com Tom Stamborski, Program Manager, Liquid Capital/Bank Alliance Program, 847-842-3300, tstamborski@liquid capitalcorp.com
like and what will be required to adapt to it. To be sure, America and the world is being severely tested. While the above scenario is troubling to say the least, there is a massive effort to contend with it and somehow prevail. Heroic actions by healthcare professionals and first responders as well as governmental efforts to shore up the economy and assist its citizens in their time of need gives rise to the fundamental mantra that
September-October 2020 •
• 27 •
PREFERRED VENDOR provides needed solace at this time – Together, we will get through this crisis. To be sure, there’s no lack of commentary by the news channels, medical experts, economists, money managers, governmental agencies and the like that hypothesize and even predict what the US and the world will look like going forward. The overall impact will not be known fully for some time. Clearly, all industries will be impacted, most negatively but some, ironically, positively. Some businesses will fail altogether, some will have reduced capabilities, some will change their industry focus and operations. From the supply chain, all the way through to the end customer, all will be affected in some way. One constant that will be dramatically accentuated during this evolving scenario is businesses’ need for financing.
• 28 •
Banks are working diligently to assist their customers with understanding and implementing current and upcoming governmental programs. Currently, banks are in the process of reviewing their portfolios as to risk levels and deciding what modifications might be necessary. Banks will do whatever is in their power to guide, counsel and accommodate current and prospective customers. In some instances, traditional bank lending programs will be sufficient to address the business owner’s needs but, in other instances, that may not be possible. In a more severe scenario, the bank may choose to exit the relationship altogether. Delivering less than positive news to a prospect or current customer is challenging for the lender and frustrating for the business owner. It can compound the emotional impact of an already difficult situation. How the bank and its lenders address these matters can make a significant difference as
• September-October 2020
to a customer’s perceptions and the bank’s reputational standing in their eyes. In those situations, augmenting alternative financing can play a pivotal role. Liquid Capital’s Bank Alliance Program was designed for strategic collaboration with its bank partners and their lenders to address a variety of situations. With the COVID 19 pandemic, it’s become more intense and stressful on the business owner. Being able to respond in a timely fashion is essential. The spectrum runs the gamut from being able to keeps the doors open to responding to sizable opportunities. In every case, the bank and its lenders have the opportunity to enhance their image and distinguish themselves in a critical time of need. Now, more than ever, being empathetic, responsive, and creative will serve banks and their lenders well as they address the needs of their bank customers as they: Offer More – Do More – Be More
EVENTS CALENDAR All programs delivered virtually unless otherwise noted. OnDemand recordings will be provided. Please check our Calendar of Events at www.ilbanker.com/Events/Calendar-of-Events and website at www.ilbanker.com for online training options and any updates. SEMINARS, CONFERENCES AND FORUMS OCT 2 Security Management Seminar OCT 5 Certified Banker Security Manager OCT 6 BankTech Conference OCT 6 HR Forum OCT 7 Train-the-Trainer Forum OCT 7 ACH Exception Handling – Virtual OCT 8 HSA Workshop OCT 15 Women in Banking Conference OCT 19 Certified Banker Vendor Manager OCT 20 Compliance Conference OCT 22-23 Business Development Workshop OCT 27-28 The Art of Commercial Lending Workshop – Springfield / Virtual OCT 28 IRA Essentials OCT 29 Advanced IRAs NOV 4 Basics of Banking NOV 5 Midwest Bank Leaders Conference NOV 6 Effective Relationship Management: Driving Loan Portfolio Growth NOV 18 Marketing Forum – Peru NOV 18 Small Bank CEO Forum – Bloomington NOV 19 Marketing Forum – Springfield NOV 20 Technology & Operations Forum – Bloomington NOV 30- Midwest Agricultural Banking School – DEC 3 West Lafayette, IN DEC 1 Safe Deposit Box Operations
DEC 4 DEC 4 DEC 4 DEC 8-9
Bank Counsel Conference CFO Forum – Schaumburg CFO Forum – Springfield Advanced BSA/AML Academy
WEBINARS OCT 1 Being Strategic with Base Compensation for Non-Executive Positions* OCT 2, Credit Risk Management in the Covid-19 9, 16 Recession OCT 5 Document Review Trends and Leading Industry Practices for Corporate Trustees• OCT 8 TRID for Construction Loans* OCT 15 Excel: Filtering and Slicing Data* OCT 16 Outsourced Third Party Risk Management Program* OCT 19 Advanced Tax Return Analysis* OCT 20 FLSA: Beyond the Basics* OCT 20 Manage Your Core Assets: Teams▪ OCT 20 Manage Your Core Assets: Relationships▪ OCT 21 Common Pitfalls of ARM Disclosures* OCT 21 Manage Your Core Assets: Brand▪ OCT 26 SEO Self-Assessment: Are Your Strategies Driving New, Qualified Customers?• OCT 29 Flood Insurance Compliance* NOV 4 Excel Explained: Charts* NOV 4 Planning Opportunities and Pitfalls with Power•
NOV 5 The 5 Keys to Coaching for Bank Managers* NOV 17 Industry Trends and Developments Impacting Corporate Trustees• DEC 2 Recent Developments in Estate and Trust Administration• DEC 3 Quarterly Compliance Briefing: Winter 2020* DEC 8 Excel 101: Introduction to Spreadsheets* * Total Training Solutions • American Bankers Association ▪ Graduate School of Banking
ABA ONLINE TRAINING COURSES OCT 12 OCT 19 OCT 26 NOV 2 NOV 9 NOV 30 DEC 7
Bank Lines of Business Commercial Lending Marketing Management Consumer Lending Managing Interest Rate Risk Money and Banking General Accounting Building Customer Relationships Analyzing Financial Statements
Please visit www.ilbanker.com/ Education-Events/Calendar-of-Events for the most current listing of events
UPCOMING EVENTS Fall Golf Outing, Pekin Country Club September 28
BankTech Conference - Virtual October 6
Midwest Bank Leaders Conference - Virtual November 5
Spring Golf Outing (Rescheduled), St. Clair Country Club, Belleville October 1
Women in Banking Conference - Virtual October 15
Bank Counsel Conference - Virtual December 4
Compliance Conference - Virtual October 20
REGISTER TODAY! www.ilbanker.com
September-October 2020 •
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NEWS & NOTES Bankers’ Bank is Live with its Funding Agent Solution on the RTP® Network, Announces Approval Payment Solutions Partnership
Bankers’ Bank is now live with its Funding Agent solution and is providing funding and liquidity management services for IncredibleBankSM on the RTP® network developed by The Clearing House. The new Funding Agent solution from Bankers’ Bank, allows community banks to more easily manage access to the RTP network by eliminating the challenges associated with managing RTP network funding. Bankers’ Bank also announced a new partnership with Approval Payment Solutions (APS) to provide customers digital and merchant services solutions. Approval Payment Solutions offers a complete menu of electronic payment solutions to businesses of every size and type. They are a full-service provider, offering an allinclusive solution for the payment processing needs of any business.
Best Hometown Bank Merges into First National Bank of Waterloo
Best Hometown Bank has officially merged into First National Bank of Waterloo. The bank’s two Madison County locations in Collinsville and Maryville will now be First National Bank of Waterloo locations, which expands First National Bank of Waterloo’s reach to 10 cities in five counties with 13 banking centers.
Illinois Banks Receive More than $115,000 in Distributions from American Bankers Mutual Insurance, Ltd.
American Bankers Mutual Insurance, Ltd., the reinsurer for the directors and officers (D&O), bond and cyber insurance program endorsed by American Bankers Association (ABA) and a Preferred Vendor of the Illinois Bankers Association (IBA), declared a $2.5 million distribution to be shared by qualified ABA member banks insured through ABA Insurance Services, a member of Great American Insurance Group.
This is the 30th consecutive year that the industry’s leading professional liability and bond insurance provider has declared distributions to eligible ABA member banks, bringing the total to $88.8 million since the program’s inception. Nearly $4 million of that has been shared with Illinois banks. Banks that purchase their D&O, bond, cyber and related insurance from this program and are current ABA members are eligible to receive a distribution.
Grant Franklin Earns Housing Credit Certified Professional Educational Designation
Grant Franklin of Town and Country Bank has earned the designation of Housing Credit Certified Professional™ (HCCP) from the National Association of Home Builders (NAHB) and NAHB Multifamily. Franklin is one of a select group of industry professionals nationwide who have attained the HCCP certification. The HCCP is a professional certification program that sets competency standards for housing
Congratulations to Trudy Hart, who retired
from The Clay City Banking Company after 38 years. Through the years, she served as Vice President, loan officer, Board Secretary and Clay City Branch Manager. We wish you all the best, Trudy!
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• September-October 2020
KEUSAL LEARNING credit professionals involved in developing, investing in, allocating and managing housing credit properties. The designation provides a benchmark for industry professionalism, experience and a commitment to quality. Franklin has nearly 40 years of experience in the banking industry and currently serves as the Executive Vice President and Director of Sales and Commercial Banking for Town and Country Bank.
FHLB Chicago Announces Transition of President and Chief Executive Officer
The Federal Home Loan Bank of Chicago announced Matthew R. Feldman, President and Chief Executive Officer, has submitted his intention to retire effective December 31, 2020. Feldman has held his current position since May 2008 and has been with the Bank since September 2003. The Board of Directors of FHLB Chicago has accepted his plans for retirement and has appointed Michael A. Ericson, Chief Operating Officer, to be Feldman’s successor effective January 1, 2021. During his tenure, Feldman transformed the Bank to be mission driven, focusing on the needs of members in Illinois and Wisconsin and championing member directed community investment and economic development activities in the communities in which our members serve. Ericson was named Chief Operating Officer of the bank in January 2020, and has been with FHLB Chicago since January 2005 having previously served as Executive Vice President, Group Head, Members and Markets, as well as Executive Vice President, Chief Risk Officer. Ericson is a Fellow of The Daniel Burnham Fellowship of Leadership Greater Chicago.
IBA Announces Breaking into Banking Partnership with Keusal Learning The Illinois Bankers Association is excited to announce a new partnership to deliver short training modules for commercial bankers. Breaking into Banking, produced by Keusal Learning delivers. Credit Officers and Commercial Training Managers — Here’s How to Build Skillful and Productive Commercial Bankers from Day 1… GUARANTEED. Focusing on the reality of the banking world over textbook portrayals of the business, this course will equip you with key concepts and banking terminology and will show you how it all fits together. • Get Breaking into Banking 101 – Ten 30-Minute Lessons - 5 Hours Total • Get Breaking into Banking 201 – Nine 20-Minute Lessons - 3 Hours Total • Breaking into Banking for Interns – 6 Lessons in 65 Minutes Keusal Learning was established in 2015 by Andy Keusal after having spent 18 years in commercial banking. Andy began his banking career as a Credit Analyst and spent most of his years interviewing, hiring, and training people for commercial banking positions. By far, the most challenging period of his career was the first year, because he entered the industry so unprepared to perform the job he was hired to do. For more information, visit breakingintobanking.com.
September-October 2020 •
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WELCOME
NEW MEMBER BANKS > Blackhawk Bank When your bank’s a member, you’re a member!
NEW ASSOCIATE MEMBERS (as of 8-25-20) acxell East Brunswick, NJ • acxellrms.com acxell delivers the highest quality in internal audit and risk management services. Our experienced Subject Matter Experts work with a personalized, client-oriented focus supported by technologically advanced tools and resources. Bend Financial Boston, MA • bendhsa.com Bend Financial has a market-leading HSA offering unique to financial institutions. We created an innovative solution to allow banks to get flexible with their deposits, investments, along with help retain and grow their HSA business through a joint, consultative sales approach. We leverage an Artificial Intelligence-enabled platform that learns individual behaviors and situations, predicts outcomes and delivers actionable advice that helps customers manage their health savings.
ASSOCIATE MEMBER NEWS Cinnaire
ADVERTISING INDEX
Cinnaire has announced the appointment of Katey Forth to Executive Vice President, Community Development for the organization. Forth brings more than 20 years of finance and lending experience to the new role, serving most recently as Cinnaire Lending President. She has played a key role leading the strategic direction of Cinnaire Lending, developing capacity building and fundraising initiatives and providing strategic
Main Street, Inc.
Main Street, Inc. announced the acquisition of Onovative, an automated marketing technology software provider based in Louisville, Ky. The Onovative marketing technology platform strengthens existing marketing solutions built on data, simplicity, and affordability for community banks and credit unions.
Bankers’ Bank (Wisconsin)
800-388-5550
www.bankersbank.com
BOK Financial Institutional Group
866-440-6515
www.bokfinancial.com/institutions
11
Howard & Howard
312-372-4000
www.howardandhoward.com
9
LKCS
815-223-0391
www.lk-cs.com
MIB-Midwest Independent Bank
800-347-4642
www.mibanc.com
Wipfli
800-486-3454 www.wipfli.com
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direction on operations and lending product lines.
• September-October 2020
35
Back Cover 2 16
ON THE MOVE
Belleville
Butts, Abert, Warren
Bank of Belleville Bank of Belleville is making plans to open a new banking center in Edwardsville. Paul Abert, an Edwardsville native, has been hired to serve as the Market President for Madison County. Abert will be joining Jennifer Warren, Chief Operations Officer, and Andrew Butts, Assistant Vice President of Bank Operations. Butts also serves as Vice Chair for the IBA’s Future Leaders Alliance (FLA) Board.
Peck
Photo top left (L to R) of Bank of Belleville team members Andrew Butts, Paul Abert and Jennifer Warren.
Frein
Phalen
FIRST STATE BANK First State Bank welcomes John Theisinger as Vice President, Commercial/Ag Lending.
Northbrook
FIRST BANK OF HIGHLAND PARK Claudia Phalen has been promoted to Vice President/ Business Banking Credit Officer, and Courtney Olson has been promoted to Senior Vice President, Managing Director of Business Banking.
Philo
Itasca
Moffett
Mendota
ITASCA BANK & TRUST CO. Michael-Anne Peck, JD, CTFA was recently appointed Vice President and Trust Officer at Itasca Bank & Trust Co.
PHILO EXCHANGE BANK Philo Exchange Bank welcomes Les Hoveln who joined the bank as EVP/Senior Lender.
Mattoon
Olson
FIRST MID BANK & TRUST First Mid is pleased to welcome Chris Frein as Regional Community Bank President. Additionally, Daniel Moffett has been named Commercial Loan Officer, working out of the Marshall banking center.
September-October 2020 •
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THE LAST PAGE
We Enjoy Socially Distancing with You!
H
ere’s a fun Facebook post from our friends at Philo Exchange Bank following a visit to the bank from IBA
President and CEO Randy Hultgren. Randy was in town to present the bank’s 2020 Illinois Bank Community Service Award.
We Miss You! Schedule a Visit with Us Today! We value our visits where we can personally talk about issues and needs important to you and your bank. As a way to connect with you and your staff, we have been scheduling virtual meetings through our preferred platform, Zoom. Of course, conference calls and in-person meetings are welcomed, too.
Connect with Julie Winterbauer at jwinterbauer@ilbanker.com if you have questions or would like to schedule a visit!
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• September-October 2020
Payment solutions to help you now and into the future Payments and Cash Management in the banking world is quickly evolving, Bankers’ Bank helps you stay on top of technology changes and remain competitive. Let us help you save time, create efficiencies, manage risks and offer payment options your customers demand. Solutions offered: • Cash Management Services • File Information Report Exchange (FIRE) • International Money Services • Cash Letter Clearing • Faster Payments Your Correspondent Bankers Amanda James 312.965.9500 Northern IL Jeff Rabenort 618.306.3656 Southern IL
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