Illinois Bankers | September - October 2019

The Official Publication of the Illinois Bankers Association

September - October 2019 ilbanker.com

IBA’s 2019-2020 Executive Committee

Also in this issue:

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September-October 2019 • Vol. 104 / No. 5 • ilbanker.com

TABLE OF CONTENTS

34

16 DEPARTMENTS 5 Message from the President and CEO 6 Compliance Corner

10 Washington Update: Reframing the Credit Union Debate

18

36

32 Scholarship Fund Update

FEATURES

34 IBA Roadtrip

12 Diversity of Membership

38 Preferred Vendor

16 It's Prime Time for IRA Deposits - Here's Why

44 On the Move

18 Annual Conference Highlights 36 Bank Succession Planning 42 Shattered Myths of Banking

46 Industry News 48 New Member Banks 48 New Associate Members 49 Events Calendar 50 The Last Page

September-October 2019 •

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OFFICERS AND EXECUTIVE COMMITTEE MEMBERS

BOARD OF DIRECTORS REGION 1

REGION 4

Clark Delanois The Northern Trust Company, Chicago

Tom Gihl Illinois National Bank, Springfield

Martin J. Noll Oak Park

Anthony G. Nestler Hickory Point Bank and Trust, Decatur

REGION 2

Kevin L. Olson Chairman Grundy Bank, Morris

Rick M. Francois American Community Bank & Trust, Woodstock Betsy Johnson Forreston State Bank REGION 3

C. Brant Ahrens Chairman-Elect CIBC, Chicago

Michelle L. Gross Vice Chairman State Bank of Bement

Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville Tyler Rouse First Federal Savings Bank of ChampaignUrbana

REGION 5 T.J. Burge Community Partners Savings Bank, Salem Richard Knebel The Bradford National Bank, Greenville AT-LARGE CATEGORY Christopher P. Barton State Bank of Geneva Dane Cleven Community Savings Bank, Chicago

Erich J. Bloxdorf, Executive Vice President & COO Mary Curl, Executive Assistant & HR Manager Pam Macha, Springfield Office Coordinator Legal and Compliance Bruce Jay Baker, Executive Vice President & General Counsel Carolyn Settanni, Vice President and Assistant General Counsel Carly Berard, Assistant Counsel Amy Giacomucci, Law Assistant Bank and Partner Relations Julie Clark, Vice President

Thomas J. Chamberlain Member-at-Large Iroquois Federal Savings & Loan, Danville

Megan Collins Bank of America, Chicago

Steven F. Rosenbaum Hoyne Savings Bank, Chicago

William Fanter, U.S. Bank N.A., Chicago

Pamela A. ShararStoppel Wheaton Bank and Trust Company

Jeffery L. Fauver Catlin Bank James R. Hannon First Security Trust and Savings Bank, Elmwood Park Daniel J. Hollowed Cornerstone National Bank & Trust Company, Palatine

Simon P. Yohanan First Bank of Highland Park, Northbrook FLA Chairman Matt Wyatt TheBANK of Edwardsville

James H. Huiskamp Blackhawk Bank and Trust, Milan

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 Linda Koch, CAE, President & CEO

Betsy Johnson Member-at-Large Forreston State Bank

Richard J. Mahoney First Midwest Bank, Chicago

ILLINOIS BANKERS ASSOCIATION STAFF DIRECTORY

Executive Administration

William P. Gleason Treasurer The Leaders Bank, Oak Brook

Gary S. Collins Old Second National Bank, Aurora

Jeff Bowden, Senior Banking Advisor (jeff.bowden47@ comcast.net) David Barbeau, Senior Banking Advisor (dbarbeau@htc.net) Sarah Cowan, Membership and Government Relations Assistant

Communications/Marketing/ Associate Membership Debbie Jemison, CAE, Vice President Tammy Squires, Assistant Vice President Robin Lane, Director, Associate Membership Finance and Administration Mark Bennett, CPA, CFO and Vice President

Illinois Bankers Business Services, Inc. Brian Hoffman, President Phil Talley, Vice President, Insurance Services Casey Widholm, Marketing Manager Illinois Bankers Education Services, Inc. Callan Stapleton, Vice President

Marcia Stratton, CPA, Director

Kevin Klug, Assistant Vice President

Marie Ann South, Financial Assistant

Bob Anderson, Manager of Education and Training

Government Relations

Cassie Mattson, Manager, Event Management and FLA

Ben Jackson, Vice President Aimee Winebaugh, Director Kirsten Davis-Franklin, Manager, Grassroots and PAC Sarah Cowan, Membership and Government Relations Assistant

Denise Perez, Education Coordinator / Chicago Office Coordinator Amy Sale, Education Assistant Illinois Bankers Group Insurance Trust Erich Bloxdorf, Plan Administrator Robert Penwell, Relationship Manager Hillary Meyers, Trust Manager

Daniel P. Daly Immediate Past Chairman SENB Bank, Moline

Linda Koch Secretary IBA President and CEO, Springfield

Editorial Offices 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. Š Copyright 2019 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

Serving You

Linda Koch

IBA President and CEO

We hope you enjoy this edition of Illinois Banker and all its highlights, especially those featuring our Annual Conference in Austin! For a millisecond, we relished in the feedback from our member bankers, associates and exhibitors for hosting what has been deemed an “outstanding” conference! Our unique keynoters, timely educational sessions, marketplace, and all-important networking and PAC events were instrumental in the success of this flagship event. Special thanks go to our hundreds of bankers, associates, exhibitors and guests for joining us, and to our sponsors—a big THANK YOU! Our 2019 Board of Directors, including IBA’s newly elected Chairman Kevin Olson, took the oath of office during the Conference’s Salute to Leadership and, together with our more than 220 volunteer bankers and associates, are immersed in the Association’s strategic plan initiatives and the future of our industry.

At the same time, we saluted those dedicated bankers whose board and committee terms were coming to an end, including a special tribute to immediate past Chairman Dan Daly for his dedication in uniting our industry, fighting for our industry, and for meeting with bankers from across Illinois. We will be forever grateful to these industry leaders for volunteering their valuable time, for helping the Association be the best in our business, and for ensuring that our industry remains relevant and strong.

Meanwhile, we are over the halfway mark with lots to do before we finish out the year. We just launched a new college scholarship program (page 33) and announced two new preferred vendors—IBA’s 401K plan powered by ABG Retirement Services (page 38) and Strategic Resource Management, which you’ll read about in the next issue.

Be watching for more specialty conferences, several advocacy programs, our Chicago Area Chapter meeting, and dozens more education programs. In addition, our staff and officers continue to hit the road meeting with bankers throughout the state, and we hope you noticed our new campaign on credit union parity! Finally, we will be moving into a new Springfield office on October 1 -– we hope you’ll visit us sometime soon and take in a seminar in our state-of-the-art “Center for Banking Excellence.”

Rest assured, we already are gearing up for next year with the development of more new products and services and outstanding events, including our Annual Conference in Springfield on June 15-18, where “Illinois Bankers Standing Tall” is more than just a conference theme!

It goes without saying, our focus is to give you the highest quality education, the very best products and services, and the most meaningful opportunities to connect with colleagues, business associates and lawmakers.

On behalf of our entire IBA staff, thank you for affording us the opportunity to do what we love to do—serve you!

September-October 2019 •

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COMPLIANCE CORNER By the IBA Law Department

QUESTION Shortly after receiving his account statement, our customer notified us that some counterfeit checks had cleared his account. We sent the checks back through the Fed as fraudulent. We have received one of the checks back as a “late return” from the depository bank. Who is liable for these checks under the UCC, and does our bank have any recourse for these checks?

ANSWER

We believe your bank likely is liable for these checks since they were returned after the midnight deadline. Whether your bank has any recourse for the checks depends on whether the depository bank breached a presentment warranty to your bank, or your customer’s negligence substantially contributed to the making of the fraudulent checks.

Under the Fed’s rules, a paying bank “may send to us a returned check that a Reserve Bank did not handle for forward collection only if it sends the returned check within the deadline of Regulation CC and the Uniform Commercial Code” — i.e., the midnight deadline. The midnight deadline provided in the Uniform Commercial Code (UCC) requires banks to return checks, including forged checks, by midnight of the next banking day after receiving the check (with certain limited extensions permitted under Regulation CC). According to its Operating Circular 3, the Fed does not provide an adjustment process

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for banks that return checks after the midnight deadline even if the checks have been altered or bear a forged endorsement.

However, your bank may have a claim against the depository bank if it breached one of the UCC’s presentment warranties. When the depository bank presented the check to your bank, it made three presentment warranties under the UCC: (1) there are no unauthorized or missing endorsements on the check, (2) the check has not been altered, and (3) the depository bank did not know that the drawer’s signature was forged. It may be unlikely that the depository bank breached any of these warranties unless you can prove that it knew the checks were forged when it transferred them to your bank.

Also, under the UCC, your bank is not required to reimburse a customer for forged checks if the customer’s own negligence substantially contributed to the making of the forgeries (provided that your bank exercised ordinary care and acted in good faith in paying the checks). For example,

• September-October 2019

an employer that keeps blank checks and a rubber signature stamp in an unlocked desk drawer likely would be treated as substantially contributing to check forgeries. In less extreme cases, it may be more difficult for your bank to prove that your customer’s negligence substantially contributed to the forgeries. Consequently, we recommend reviewing the circumstances surrounding the making of the fraudulent checks and consulting with your bank counsel before deciding whether or not to reimburse your customer or whether to pursue a claim against the depository bank.

Finally, we note that your bank should assess whether a suspicious activity report (SAR) should be filed in relation to the fraudulent checks. The FDIC regulations provide that a SAR should be filed if the loss aggregates more than $5,000 and there is an identified suspect involved in the suspicious activity, or if the total loss aggregates to $25,000 or more, regardless of potential suspects.

QUESTION We discovered that one of our customers is employed by a marijuana grower from whom the customer receives regular ACH payroll deposits. What is our responsibility with respect to this customer?

ANSWER

In our view, it would be prudent for your bank to treat a customer employed by a marijuana-related business (MRB) as it would treat an “indirect MRB," since the customer provides services to the MRB (in the form of labor) and receives monies from the MRB that are derived from its federallyprohibited activities.

The FinCEN Guidance does not specifically define MRBs but indicates that such businesses generally are directly involved in growing, distributing or dispensing marijuana. The guidance also does not specifically define indirect MRBs but recognizes that many banks provide financial services to customers who themselves provide goods or services to MRBs, and those generally speaking are indirect MRBs (for example, “a commercial landlord that leases property to a marijuana-related business”). According to the FinCEN Guidance, whether a bank wishes to accept deposits from and provide other financial services to indirect MRBs is a risk-based decision. If a bank knowingly does so, it generally should look to the rules for filing standard SARs, as opposed to the three types of marijuana-specific SARs required by the guidance for direct MRBs. As part of your risk assessment for this customer, your bank may wish to conduct a limited due diligence to ensure that your customer’s employer is operating its business pursuant to a license issued by the state. The FinCEN Guidance provides that conducting due diligence

on a direct MRB customer should include, among other things, verifying whether the MRB is duly licensed under state law, and this currently can be accomplished on these State of Illinois websites: www.idfpr.com/profs/ medcan.asp for dispensaries and www2.illinois.gov/sites/ agr/Plants/MCPP/Pages/ default.aspx for cultivation centers.

If your bank chooses to continue its relationship with this customer, the most cautious approach would be to file a standard SAR for all payroll deposits that aggregate at least $5,000, with ongoing monitoring and continuous SAR filings made for each 90-day reporting period thereafter, for as long as your customer receives deposits from the MRB. However, we are not suggesting that this is necessary.

In light of Illinois’ recent legalization of marijuana for personal use by adults, the burden of filing SARs on all of your indirect MRB customers — which could include landlords, seed and equipment suppliers, attorneys, accountants, security firms, transportation companies, utility companies, and a host of other legitimate businesses — as well as on all individual customers who are employed by MRBs in Illinois, most likely would be untenable from an operational standpoint.

Consequently, your bank may wish to consider adopting a policy that differentiates between circumstances under which it will or will not choose to file a SAR for a transaction involving an indirect MRB or an MRB employee. For example, your bank may choose

to file SARs for transactions involving indirect MRB customers only when they derive a large percentage of their revenues from direct MRBs, and it may decide to not file SARs on employees of duly licensed MRBs. Additionally, we note that while former U.S. Attorney General Jeff Sessions rescinded the “Cole Memorandum” (which generally provided that state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activities), the FinCEN Guidance that was based on the Cole Memorandum remains in effect. Further, current U.S. Attorney General William Barr indicated during his confirmation proceedings that he does “not intend to go after parties who have complied with state law in reliance on the Cole Memorandum.”

Irrespective of whether your bank chooses to file SARs on indirect MRB customers or employees of MRBs, we strongly advise maintaining thorough records that document your bank’s decision-making process for each situation.

Finally, we reached out to FinCEN to inquire whether they agree with the above analysis; regrettably, we received a perfunctory response that simply referred us back to the FinCEN Guidance. We stand by our analysis, which is informed by the guidance while accounting for the realities of providing financial services to residents of an entire state in which indirect MRBs and MRB employees will soon become ubiquitous.

September-October 2019 •

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COMPLIANCE CORNER CONTINUED QUESTION We are a state-chartered savings bank that hired a teller who began working for us before we received their background check. The background check revealed a felony charge for manufacturing and distributing a controlled substance. The employee has a court date next week.

Are we required to terminate the employee?

ANSWER

No, a state-chartered savings bank in Illinois is not required to terminate an employee who has been charged with but not convicted of a felony offense for manufacturing and delivering a controlled substance. However, we recommend closely monitoring the employee’s case so that you become aware of the outcome as soon as the verdict is entered.

The Federal Deposit Insurance Act (FDI Act) prohibits any person who has been convicted of a criminal offense involving dishonesty, a breach of trust, or money laundering from “participat[ing] in the conduct of the affairs of an insured depository institution” without the prior written consent of the FDIC. The FDIC has issued a Statement of Policy confirming that this prohibition does “not cover arrests, pending cases not brought to trial, acquittals, or any conviction that has been reversed on appeal.”

However, this Statement of Policy also extends the FDI Act’s employment prohibitions by providing that “[a]ll convictions . . . for offenses concerning the illegal manufacture, sale, distribution of, or trafficking in controlled substances shall require an application unless they

fall within the provisions for de minimis offenses.” An offense is considered “de minimis” if: (1) there is only one conviction of record for a covered offense, (2) the offense was punishable by imprisonment for a term of one year or less and/or a fine of $2,500 or less, (3) the conviction was entered at least five years prior to the date an application would otherwise be required, and (4) the offense did not involve an insured depository institution or insured credit union.

If your employee is convicted of this felony drug offense, we do not believe it would meet the FDIC’s de minimis criteria, since a felony conviction typically is punishable by imprisonment for a term of more than one year, and a recent conviction would not be at least five years old. As a result, we believe your bank would need to obtain approval from the FDIC if you wish to continue employing this individual after they are convicted of a felony offense for manufacturing and delivering an illegal controlled substance – although this would not be feasible for a person who is currently serving a felony sentence.

As to Illinois law, the Savings Bank Act provides that “no person who has been convicted of any criminal offense involving

dishonesty or a breach of trust may . . . participate directly or indirectly in any manner in the affairs of a savings bank” without the prior written consent of the Illinois Department of Financial and Professional Regulation (IDFPR). Further, it is a Class 3 felony for anyone to knowingly permit a person convicted of such an offense to participate in the affairs of a savings bank.

However, unlike the FDIC’s policy, this prohibition in the Savings Bank Act does not extend to convictions involving illegal controlled substances. Moreover, an IDFPR representative has confirmed that a conviction for the offense of manufacturing and distributing a controlled substance would not be considered a crime involving dishonesty or a breach of trust.

Accordingly, we do not believe that a pending case involving charges of manufacturing and distributing an illegal controlled substance requires regulatory approval for the continued employment of this individual, but if the person ultimately is convicted, you will need to obtain the FDIC’s prior written consent to continue employing the person.

About the IBA Law Department Our IBA Law Department provides many resources to help our bank members meet their compliance challenges, including a dedicated compliance website (www.GoToIBA.com) and a form to submit your compliance questions. 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.

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• September-October 2019

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WASHINGTON UPDATE

By Rob Nichols, President and CEO, American Bankers Association

Reframing the Credit Union Debate For too long, banks with legitimate concerns about unbridled credit union growth have been portrayed as Goliath picking on David. The truth is that in many states, a credit union is one of the largest local financial institutions, outranking most of the state’s community banks in size.

But rather than trying to convince policymakers or the public that central casting got it all wrong—that it’s big credit unions that are harming small banks—ABA, with guidance from our long-standing banker Credit Union Task Force, has made a deliberate effort in the past two years to raise the level of awareness about credit union policy issues and excesses among third parties and the media.

We believe this strategy is effectively reframing the debate from banks vs. credit unions to credit unions vs. taxpayers, a crucial step toward drawing more oversight of the industry.

More people now are questioning whether credit unions, which enjoy a generous federal tax exemption, are earning this benefit.

Even major media outlets like The Wall Street Journal, The New York Times and National Public Radio have turned a critical eye to credit union practices—running stories on the lax enforcement of meaningful membership restrictions and an expose of the industry’s taxi medallion loans, which imposed predatory terms on thousands of taxi drivers and drove some credit unions out of business.

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The most recent criticism comes from a respected independent research firm—Federal Financial Analytics, run by veteran banking policy analyst Karen Shaw Petrou who has a strong interest in matters of economic inclusion. ABA commissioned the study but had no editorial control over Federal Financial Analytics’ research and conclusions.

Petrou’s study assessed not only the extent to which credit unions meet their mission, but also how their federal regulator judges and enforces it. The paper found, among other things, that credit union members are disproportionately from middleand upper-income households, that the National Credit Union Administration maintains no data on credit unions’ effectiveness at providing financial services to people of “small means,” and that its definition of “lowincome” is far more expansive than that used by other federal agencies.

This lack of credit union mission compliance is the rub for Petrou. “Sometimes the question of credit-union mission compliance is seen as an us-versus-them battle between bankers and credit unions,” she said. “This study readily acknowledges the vital role credit unions can and should play in household financial services—its goal is not to question credit unions, but to remind policy-makers of their vital mission to ensure that taxpayer-benefits received are credit-union benefits earned.”

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ABA does not disagree. We have long maintained that there is a role for credit unions in our financial services ecosystem. But that role has become blurred as some credit unions increasingly look and act like banks, even purchasing them.

It’s past time for policymakers to take a truly critical look at today’s $1.5 trillion credit union industry to ensure the American taxpayer is not being cheated. We have called for just such scrutiny, urging NCUA in particular to conduct a “top-to-bottom assessment” of whether the industry is meeting its targeted, statutory mission to serve households of “small means.” We have also asked the NCUA Inspector General to review the regulator’s role in allowing credit unions to lose sight of their mission.

In the meantime, ABA is continuing to challenge NCUA in the courts. Our lawsuit against NCUA over its expansive field of membership rule is still active; we won two of four counts, are appealing the other two, and a decision could come any day.

But we are excited to move our case to the court of public opinion—and even more encouraged that the response isn’t a knee-jerk dismissal of our grievances as competitive sour grapes. Others are now seeing the serious implications of credit unions’ mission failures and lax oversight, and such awareness is crucial to achieving a level playing field.

E-mail Rob Nichols at nichols@aba.com

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The IBA: Well-Positioned to Serve Our Diverse Membership for Many Years to Come The IBA has been Empowering Illinois Bankers Through Information, Collaboration and Innovation® for nearly 130 years!

We are proud of our diverse membership and relish the opportunity to serve Illinois banks of all sizes!

The Illinois Bankers Association – one of the largest and strongest banking trade associations in the country – is governed by a 29-member Board of Directors that reflects our diverse membership and represents all charters, asset sizes and areas of the state. Under the leadership of IBA president and CEO Linda Koch, together with her highly qualified team, the IBA has increased in scope and strength, greatly expanded its valuable member services, programs and products, and is well positioned to continue effectively serving the Illinois banking industry and its 105,000+ bank employees for many years to come.

We are excited about our future. We look forward to serving our members with new opportunities and programs, and we intend to continue our mission of connecting bankers and advancing banking with the integrity and passion our members have come to expect from this great organization for the past 128 years.

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PUBLICATIONS

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2019-08-06 3:58 PM

Our Industry’s 2019 Credit Union Campaign is Underway!

IBA Op-Ed Calls on Lawmakers to Revisit CU Tax Exemption IBA’s Vice President of Government Relations, Ben Jackson, recently submitted an editorial illustrating the injustice of the credit union tax exemption.

Jackson’s letter draws attention to the alarming phenomenon of credit unions purchasing banks and its detrimental effect on communities. The letter ends with a call to action to tell state and congressional lawmakers it’s time to reexamine the credit union tax exemption.

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A copy of our report filed with the State Board of Elections is (or will be) available on the Board’s official website (www.elections.il.gov) or for purchase from the State Board of Elections, Springfield, Illinois. All contributions to Illinois Bankers PAC are voluntary. You may refuse to contribute without reprisal. Contributions to Illinois Bankers PAC are not tax deductible.

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• September-October 2019

State Journal-Regis

ter

July 15, 2019

Imagine that you ow n a family-run restaurant in your ne ighborhood. You’re a local business rooted in the community, and you pay your tax es and contribute to community events.

Now picture a larger franchise building a restaurant across the street from your place, offering simila r food. That chain restaurant has marke ting resources you can’t match, their sca le lowers their costs ... and let ’s say they ha ve one more advanta ge: The franchise restau rant doesn’t pay income taxes on their profits, even though they offer very simila r food, market to the same clientele, and pro vide the same level of service that your res taurant does.

While this scenario ma y be the stuff of fiction in the restauran t world (as far as I know, it is), surprisin gly, it occurs every da y in the banking world . Community banks in many markets throu ghout Illinois — most of them locally owne d, small-scale family businesses — are co mpeting with just ov er a dozen large, aggressi ve credit unions.

IBA , STATE AS SO CIATIO NS CA LL FO R IN CR EA SE D CR ED IT UN IO N OV ERSIG HT The IBA along with 50 other state bankers associations sent a lett er to congressional leaders calling for a sta tutory review of the credit union industry’s mission of serving people of “small mean s.” The groups also called for a thorough exa mination of the National Credit Union Administration and its oversight of the cre dit union industry.

The letter cites the rec ent Federal Financial Analytics report commi ssioned by the American Bankers Ass ociation detailing how credit unions are contributing to the economic inequality thr ough their efforts to primarily provide servic es to high-income customers, make high risk loans, and purchase taxpaying ba nks.

Credit unions enjoy an exemption from income taxes, along with some sales tax breaks because of the ir historic mission to serve small, interc onnected groups of individuals, along with underserved communities.

But today’s large, corpo rate credit unions are not the mom-and-p op institutions of decades past. They now enjoy few restrictions on who the y serve while growing at alarming rates. They have abandoned their core mission by focusing on lending to business es and serving highe rincome clientele. The biggest credit unions aren’t credit unions an y longer — they are multi-billion-dollar ba nking corporations that don’t pay taxes.

Large, corporate credit unions are helping put many traditional community banks out of business. More troubling, we are witnessing an alarming trend of large, out-of-state credit un ions actually buying community banks. Th ere have been two of these acquisitions already this year in

Read the letter on our IBA Credit Union Resource page - www.i lbanker.com/ Advocacy/Credit-Unio ns

Illinois, in Woodstock and Chicago. It’s impossible for large, corporate credit union s to say they are not ba nks — and that they shouldn’t pay taxes — if they are buying an d absorbing their tax-pa ying competitors.

This corporate acquis ition trend harms all Illinoisans. It mean s lower corporate income tax and sales tax revenue for much-needed state an d local services. And it means the loss of the cornerstone of many communities — an independent, local financial institution.

We have asked our sta te and congressional leaders to reexamine the unfair tax benefits provided to large, co rporate credit unions.

We encourage all Illino isans to ask their state lawmakers and members of Congres s to support local comm unity banking by providing tax parity in the financial services industry.

Ben Jackson is vice pre sident of Government Relation s for the Illinois Bankers Association

AD DIT IO NA L CR ED IT

UN IO N RESO UR CES

The IBA is dedicated to raising awareness of the credit union tax exemption to state and federal lawmakers.

We have heard an unprecedented lev el of buzz from our efforts with lawmaker s this year, and we ask you to help us con The IBA also worked wit tinue the momentum h a tax fairness and join our efforts by group, the Council for Sound Tax Policy contacting your local lawmaker. For resource (CSTP), in publishing a letter to the editor in s, check out the IBA’s Credit Union Resou the Kankakee Daily Jou rnal calling for an end rce page at www. ilbanker.com/Advocac to the credit union tax y/Credit-Unions that exemption. The letter includes a new study we compares the $12,000 in federal and state commissioned this year, as well as tal income taxes that an ave king points and a rage Illinois family customizable letter to pays to the $0 in incom send to lawmakers. e taxes that a credit union pays and points to the sports stadium If you have questions an naming rights and exc d/or receive lusive sponsorship legislator feedback, ple deals that credit union ase contact our s purchase instead of Government Relations paying income taxes. htt team via email – Ben ps://bit.ly/2Z3nOcI Jackson bjackson@ilba nker.com or Aimee Winebaugh awinebaug h@ilbanker.com or call 217-789-9340.

CO UN CIL FO R SO UN D TA X PO LIC Y: CR ED IT UN IO NS SH OU LD SH AR E TA X BU RD EN

September-October 2019 •

• 15 •

It’s Prime Time for IRA Deposits – Here’s Why

By Steve Christenson, Ascensus LLC

I have seen a number of trends with community banks during my 30+ years of working with IRAs. As a bank service representative in the mid 1980s, I saw CDs paying 18 percent over 10 years.

Customers were placing their IRA contributions and rollovers into deposit accounts as part of their investment plan. When the stock market and interest rates both fell dramatically in 2008— the Great Recession—customers were sent reeling in an attempt to secure their retirement dollars.

The stock market has recovered over the past decade, but interest rates have only begun to do so.

I am hearing with greater frequency today that community banks are seeking more deposits. One key strategy to gain deposits is IRAs. But many banks have not focused beyond minimum maintenance with IRA for some time.

CUSTOMERS NEED ASSISTANCE Over the past 10 years as interest rates remained low, banks were more able to borrow low cost funds and deposits were not a primary focus. IRAs became something that banks were required to service and there was little worry when IRAs were closed.

Additionally, banks experienced a significant loss of knowledge over the past decade, often requiring other staff to absorb the IRA duties into their routines.

But with rates slowly beginning to rise and with recent volatile activity in the stock market, customers again are more actively considering where to place their retirement dollars.

• 16 •

• September-October 2019

GENERATIONAL CHARACTERISTICS FOR SAVING Baby Boomers – Baby boomers are actively retiring every day, thus slowly becoming a smaller part of the workforce. Some are leaving their primary career to work part-time to supplement their retirement.

They are seeking modest growth and preservation of capital.

Baby boomers are also rolling over significant employer-sponsored retirement plan savings (new dollars) into IRAs, and are taking direct control of how they are invested and used. They remember when CDs offered a valued and safe choice for longterm dollars. And while they are comfortable using the Internet for financial services, boomers are also very willing to visit a branch if the service provides value. This group also is spending time planning on how best to provide for their beneficiaries.

Generation X – Generation Xers (a more quiet generation) are now entering their 50s. Many are sending their children to college or vocational school, and others have completed that phase in their life. This group is becoming more focused on accelerating their retirement plan savings and making up for lost time. A recent study by Allianz Life®, Chasing Retirement Study, found that approximately 50 percent of those approaching retirement are

“chasers,” meaning that they may have retirement savings, but are behind on their retirement savings plans. This group is looking for ways to get back on track.

One thing that is seldom referenced in retirement planning advice and online tools today is Traditional and Roth IRA catch-up contributions for individuals age 50 and older—this now comes into play for generation Xers, who are ages 39-53. An IRA owner can add to the maximum regular IRA contribution ($5,500 for 2018 and $6,000 for 2019) an additional $1,000 contribution annually to help them catch up on their savings.

Generation Xers also are willing to conduct online transactions, but because they have been busy raising their families and advancing their careers, many are not aware of this. Providing information and advice to generation Xers can be an important element, especially if it is done proactively.

Lastly, generation Xers likely are dealing with the loss of a parent or grandparent. They will look to their banks to provide assistance with beneficiary claims and all the complexities that come with those transactions. It provides bank employees with direct contact to these individuals along with an opportunity to provide information on IRAs as retirement savings tools.

Millennials – Millennials are good savers. They are tech-smart and communicate primarily through messaging. And while not heavily focused on retirement at this age (generally ages 22-37), they have started the saving process through their employer retirement plans. Ascensus® data for year-end 2017 shows millennials with an average retirement balance just over $11,000 in their 401(k) accounts.

This also is the group with the higher number of employment changes. While they appreciate and use the technology solutions offered by the larger financial services firms, millennials prefer the community presence and focus of local firms. They will not visit a branch often, but want to know that one is nearby. Banks can become trusted resources for this demographic group by providing straight forward and valued advice on items such as retirement plan rollovers to IRAs (new dollars coming in), and can build a long-term bond with this group.

NEXT STEPS Finding the right way to reach all of these groups effectively is a key challenge. Making sure you have the expertise available is equally critical.

Marketing – There is no single promotion that will reach each of these generations equally. But banks today have the ability to mine their own data and present more targeted marketing to each age group.

They also have the ability to deliver a much focused message through email or text, and can invite the reader to review specific website content.

Each generation is seeking a trusted source for financial information. Your website can present content or brief video snippets that review key concepts. Your educational content can also easily include a call to action. The goal is for the user to take that next step.

Expertise – When the recession hit in 2008, many banks lost key expertise due to staff reductions and normal retirements (baby boomers). Many organizations relied on that one individual who took care of their IRAs for years. This is something that many banks had not planned for, and many didn’t fully understand the effect on their IRA business.

As important as education is for your customers, it is as important for your employees. IRAs can be a valuable asset to your organization, but they can also cause negative events if handled incorrectly. To be successful, you’ll need a commitment to spend money to educate your team and be willing to seek outside support from IRA experts.

IRAs are long-term investments for every consumer group. As deposit products become more competitive for every age group, banks have the opportunity to provide a valuable service and gain long-term customers and deposits.

About the author: Steve Christenson is Executive Vice President for Ascensus LLC. Ascensus supports over 73,000 retirement plans, more than 4.3 million 529 education savings accounts, and a growing number of ABLE savings accounts. It also administers more than 1.6 million IRAs and health savings accounts. For more information about Ascensus, visit ascensus.com. IBA Preferred Vendor

September-October 2019 •

• 17 •

ANNUAL CONFERENCE HIGHLIGHTS JUNE 23-25

AUSTIN, TX

Dr. Rick Rigsby inspires the crowd.

Annual Conference Committee Chairman Brant Ahrens, CIBC, welcomes the crowd to Austin.

Dan Daly, SENB Bank, gives his outgoing chairman speech.

Opening speaker Connie Podesta interviews Marty Davis, Murphy-Wall State Bank and Trust.

The Regulators’ Panel included representatives from the FDIC, IDFPR, FRB Chicago, OCC and CFPB, and it was moderated by IBA EVP and General Counsel Bruce Jay Baker.

Gary Hemmer, First National Bank of Waterloo, leads an impromptu artwork auction that raised more than $19,000 for Illinois Bankers PAC.

• 18 •

• September-October 2019

Linda Koch presents a Community Service Award to Ashley Basso and Jennifer Nagle with Peoples Bank and Trust in Pana.

Prior winner Marty Davis, MurphyWall State Bank and Trust, presents the Illinois Bankers PAC Bank of the Year Award to Kevin Olson, Grundy Bank.

New IBA Chairman Kevin Olson presents his inauguration speech.

The Illinois Bankers PAC Silent Auction was a hit with attendees

AWARD WINNERS CONGRATULATIONS TO ALL OF THE EXCEPTIONAL BANKS AND BANKERS WHO WERE RECENTLY HONORED AT THE IBA’S ANNUAL CONFERENCE! BANKER OF THE YEAR Thomas W. Hough, Carrollton Bank

COMMUNITY SERVICE AWARDS Alliance Community Bank, Athens The Leaders Bank, Oak Brook Peoples Bank & Trust, Pana The IBA Executive Committee: Chairman-Elect Brant Ahrens, CIBC; Chairman Kevin Olson, Grundy Bank; Treasurer William Gleason, The Leaders Bank; Immediate Past Chairman Dan Daly, SENB Bank; and Vice Chairman Michelle Gross, State Bank of Bement.

ILLINOIS BANKERS PAC BANK OF THE YEAR Grundy Bank

ILLINOIS BANKERS PAC LEGACY AWARDS Delaware Place Bank TheBANK of Edwardsville

HONORARY LIFETIME MEMBERSHIP Daniel G. Watts, Forest Park National Bank Stanley D. Jenks, Security Savings Bank IBA President and CEO Linda Koch acknowledges the outgoing IBA board members: Stan Jenks, Security Savings Bank; Michelle Toll, The State Bank Group; and Dale Blachford, formerly with Liberty Bank.

Dane Cleven, Community Savings Bank, recognizes Stan Jenks, Security Savings Bank, prior to Jenks’ induction as an honorary lifetime member of the IBA.

UNIVERSITY OF WISCONSIN GRADUATE SCHOOL OF BANKING SCHOLARSHIPS TreMayne Joyner, Hickory Point Bank & Trust, Champaign Thomas Schlink, Farmers & Mechanics Bank, Peoria

UNIVERSITY OF WISCONSIN GRADUATE SCHOOL OF BANKING ADVISORY BOARD SCHOLARSHIPS Blackhawk Bank & Trust, Milan (Evan Johnson) Rochester State Bank, Rochester (Christopher Walcher)

Dan Watts, Forest Park National Bank & Trust, receives well-deserved recognition as the 2017-18 IBA Chairman.

Outgoing Chairman Dan Daly places the President’s Pin on incoming Chairman Kevin Olson.

September-October 2019 •

• 19 •

ANNUAL CONFERENCE HIGHLIGHTS • 20 •

• September-October 2019

September-October 2019 •

• 21 •

ANNUAL CONFERENCE HIGHLIGHTS

Thomas W. Hough Named Banker of the Year

• 22 •

Thomas W. Hough, CEO of Carrollton Bank, Carrollton, Ill., was honored as the 2019 Banker of the Year by the Illinois Bankers Association. The award ceremony was held on June 24 during the IBA’s Annual Conference in Austin, Texas, and it was presented by last year’s winner Jeffrey D. Snyder, President and CEO of Forreston State Bank, Forreston, Ill. This is the 17th year for the Banker of the Year award, which is the highest honor the IBA can bestow on one of its members. It is presented annually to an individual whose dedication to excellence has profoundly enhanced the banking industry.

Hough is the fifth generation of his family to lead the bank, which was founded by his great-great grandfather in Carrollton in 1877, and his banking career spans 50 years.

He has served on the IBA’s Annual Conference Committee, Government Relations Committee, Education Services Committee and Business Services Committee. Not only is he a past IBA Board member, but he also served as Chairman of the IBA Board in 2009, immediately following the financial crisis, and was known for “being a positive voice for Illinois banks” during those turbulent times.

• September-October 2019

Hough is a board member of the Regional Business Council, the Foundation for Barnes-Jewish Hospital, the Jefferson National Parks Association, the University of Illinois College of Business Dean's Business Council, and the Lewis & Clark Community College Foundation.

He has been instrumental in leading the 100% organic growth of his bank from one location and $7 million in assets in 1973 to 10 locations and nearly $1.7 billion in assets today.

Meet Your New Illinois Bankers Association Chairman If I weren’t in banking: I’d be teaching. I enjoy working with our people and helping them understand the why to things.

What are you most looking forward to as Chairman?

Traveling the state and meeting our member and non-member bankers in their banks.

I would like to be remembered one year from now for: Enhancing the engagement of the IBA membership in the IBA’s activities and Bankpac and helping the industry speak with a unified voice.

Kevin L. Olson

Grundy Bank President, Chief Executive Officer, Board Chair Hometown: Leland, Illinois

Education: BS Agriculture, University of Illinois Graduate School of Banking, Madison, Wisconsin

What’s your very first IBA memory? When I first started banking, the IBA had local federations that comprised several counties. I became active in our local federation, became an officer and met one of the IBA’s lobbyists—Linda Koch. It’s been a fun ride ever since.

Best decision? Hard to name just one. Some of the best would be: Asking my wife to marry me; applying for my job at Grundy Bank; and becoming active in the IBA. Most recent accomplishment?

Completing an expansion of our main banking location and opening a new branch location all within a couple weeks of each other. Both are an accomplishment of our whole team—they would not have happened without a tremendous team effort.

Greatest challenge in the industry? Keeping our organizations relevant and successful in the competitive environment we face from our fellow bank and non-bank competitors.

Best advice I ever received?

My Dad told me as I was leaving for college, “Remember, you’ll have to look yourself eye-to-eye in the mirror every day.” I didn’t fully appreciate it at the time, but I’ve appreciated the wisdom as it’s helped me utilize some guiding principles when there are tough decisions to make.

Who I admire the most? My parents. They provided me with strong values, a good work ethic and gave me the tools to make decisions.

One thing people don’t know about me? I did some batting practice at U.S. Cellular Field. The pitcher got a quite a laugh out of it, but it was a memorable experience.

Favorite vacation spot? One of our best vacations was traveling the Oregon Coast and into its wine country.

Still on my bucket list? To see the White Sox in the World Series. I was out of town for their home games in 2005 and had tickets for game 6, but the Sox won in a sweep.

Most interesting thing in my office? I have a model of the tractor mounted corn picker my Dad used to use on the farm. It reminds me of my days growing up on the farm.

Sports faves? The Fighting Illini and Chicago White Sox. They are in a quite a drought right now, but there’s hope on the horizon!

What do you do to de-stress? I like to work out on the elliptical or go for long walks.

Family? Wife: Mary.

Best advice for young bankers?

Find someone who will mentor you; refine your leadership skills; and take on responsibility whenever the opportunity presents itself.

September-October 2019 •

• 23 •

IBA Chairman Kevin L. Olson’s Inaugural Speech Excerpts

ANNUAL CONFERENCE HIGHLIGHTS

It is truly humbling and an incredible honor to stand here as the new Chairman of this tremendous organization that serves Illinois banks and thrifts of all business models. I would like to thank you for your support and thank all of the former IBA Chairs that I have served under and from whom I’ve learned so much over these last several years on the board. And, let’s take a moment to thank Dan Daly for his wonderful leadership of the IBA this past year.

I would also like to thank the Board of Directors, Officers and employees of Grundy Bank for allowing me to be active in the IBA the past several years and especially in the coming year.

Without their support and encouragement, I would not have had this opportunity to serve our wonderful industry.

And, last, but certainly not least, a huge thank you to my wife, Mary. Thank you for being here today, and on the many banking associations’ trips we’ve taken.

It’s been a fun ride with you by my side.

Who is this guy standing here? I’m President, CEO and Board Chair of Grundy Bank, Morris, Illinois. Our bank is an almost 155 year old institution located about 65 miles southwest of Chicago. I have been fortunate to be with Grundy Bank for over 30 years and to watch our clients, community and Bank prosper by forming the relationships that moves us all forward.

My formal banking career began with a college internship that my college professor, Tom Frey put together with the Monahan family at the First National Bank of Arcola. To use a term former IBA Chairman Micah Bartlett uses to describe banking, it was a “fun” summer. I’d never really had a job other than helping out on our family’s and neighbors’ farms in Leland, Illinois, so it was a new experience. In that community bank, I was exposed to many things—lending, collections, opening accounts and being a teller, or I should say trying to be a teller. It was a disaster; I never did balance. I’m still amazed when our tellers can go weeks and months with never being out of balance. Even with this traumatic duty, my internship was a wonderful experience and it showed me the career path I wanted to follow. As we continue

• 24 •

to visit with bankers in the state, one common theme we hear is that there is a shortage of talent—especially in the rural areas. The IBA is working to remedy this in several ways.

One is by forging relationships with colleges and universities to assist in developing our next generation of bankers. An example is our work that began late last year with Harper College in Palatine, to help develop an apprenticeship program for banking and finance students. Another example is our work in formulating a banking curriculum with Marquette University in Milwaukee. Two classes have now graduated from this program and another class is forming for the upcoming school year.

A second innovation is BankTalent HQ. The IBA launched BankTalentHQ two years ago. It began as a job board specific to the banking industry, and it has evolved into a premier talent management site with a footprint in more than 30 states across the country. It is the only nationwide site that is dedicated to working with colleges and universities to help financial institutions attract and retain quality employees. The site’s growing list of features include leadership and sales coaching services, an “ask the coach blog,” a bi-weekly podcast, and other career resources.

Helping students financially is a third way the IBA is seeking to attract talent.

As Dan Daly mentioned in his remarks, the IBA is launching a new college scholarship program for students seeking a career in the financial services industry. The goal is to reach $50,000 by year-end. Beginning with the 2020 school year, several $1,000 scholarships will be awarded to IBA member-sponsored high school graduates or college undergraduates pursuing financial industry degrees.

As we look ahead, the next 12 months will be a time of transition for the IBA. One of the transitions will be the move to a new Springfield office. Beginning October 1st, we will be located on the Southwest side of Springfield in the Park Place One Building on West White Oaks Drive. This new location will provide us with higher quality space for our employees and members, easier access for our visiting bankers, and access

• September-October 2019

to a broader choice of nearby lodging, restaurants and shopping for those who may be attending multi-day events.

The second will be to select Linda Koch’s successor. Linda has been with the IBA for over 30 years and will have served as our CEO for over 19 years when she retires in June, 2020. Her enthusiasm for banking in our state and across our country has allowed the IBA to grow and prosper. And, it’s made her one of the most respected state banking association leaders in the country.

Linda is a consummate professional and this was again on display when she made her announcement in December of last year. This will give the IBA Board of Directors plenty of time to search for our new CEO and have a smooth transition. A committee, diverse of gender, geography and bank models has been formed to lead the search. The committee’s role is to appraise and review candidates and make a recommendation to the Board of Directors so that our new CEO will be in place by late First Quarter, 2020.

We are very fortunate as we enter this period of CEO transition. We have an incredibly talented IBA staff that will continue to carry out the Board and membership’s strategic objective to promote, unite and advance our industry. And, let’s not forget, the IBA is a Member Driven Organization. Over 200 bankers volunteer each year to serve on our various boards and committees. It is these bankers who are instrumental in setting the tone and direction for the Association.

In addition to having committed volunteers and a strong staff, our membership is strong and continues to grow—even in the face of industry wide consolidation. This is happening because Illinois banks and thrifts see the value of IBA membership created by the constant work of our members and staff who advocate on our behalf.

And, please, continue your efforts.

Share your IBA experience with a non-member bank and let them know the value you place on it. And, let’s be sure to let all our employees know the many valuable member opportunities

Thank You to Our Outgoing Board Members! that exist--like the conversations with lawmakers through the IBA’s many advocacy events; highly rated training programs; access to a first class legal team to discuss particular matters of compliance, banking law and the like; and, of course the many board and committee volunteer opportunities. This will not only help deepen the IBA relationship with our members; it will, more importantly, provide our employees with incredible experiences that will benefit their professional and personal well-being.

The next year provides us many opportunities on the political and regulatory fronts. Among other issues, we’ll be continuing our efforts in Washington to promote BSA and CRA reform; we’ll be talking with Members of Congress and the regulators on the need for a roadmap to bring the state’s legalized cannabis industry into the banking system; and our efforts to level the playing field with large bank-like credit unions; the Farm Credit System and the fintech industry will not waiver.

These are issues faced by all banks—regardless of their size or geography. Our position on these and all issues are vetted by our Government Relations Committee and our Board. It is then blended with the expertise of our lobbying staff to deliver a message that’s sole purpose is to advance our entire industry.

Once our policies are formulated, we often look for coalition partners to deliver a more unified and louder voice. Organizations like the Chamber of Commerce and other business groups, agricultural interests, and financial service organizations are all ones we have and will continue to partner with when possible.

Just imagine the powerful impact we could have if the lay members of these organizations would stand together with one another when presenting these arguments.

To help position our industry, the IBA is working with the University of Illinois’ Regional Economic Applications Laboratory Institute of Government and Public Affairs to produce various studies illustrating the important role our industry plays in Illinois’ economy and communities. You’ve no doubt seen our first study and the message it carries— that the banking industry’s ripple effect

Being an industry leader takes a great deal of commitment, time and effort. We are privileged to have more than 220 Illinois bankers and Associate members serving on an IBA committee or board. To our outgoing officers and directors, as well as to all of our current and past committee members, thank you for volunteering your time and for helping our association and our industry remain at the forefront in Illinois.

OUTGOING BOARD MEMBERS Immediate Past Chairman Daniel G. Watts, Forest Park National Bank & Trust Dale Blachford, Formerly with Liberty Bank, Alton Joseph Dively, First Mid Bank & Trust, Mattoon Andy Hartman, JPMorgan Chase Bank, N.A., Springfield Stanley Jenks, Security Savings Bank, Monmouth Ronnie Shambaugh, Best Hometown Bank, Collinsville Michelle Toll, The State Bank Group, Wonder Lake

on our state’s overall economy cannot be overstated. Banks are at the core of our economy – helping families, creating jobs, growing small businesses, and standing ready to help their communities thrive. In total, more than 400,000 jobs are directly or indirectly dependent on our industry, generating $22.6 billion of labor income. We’ve got to be sure that lawmakers, candidates and other public policy makers know of the significant contributions that banks and thrifts make toward the economic success of our clients and our communities. We encourage you to spread the word about the important economic role of our institutions, and to support and elect policy makers who understand this!

Another way to support our political efforts and help advance our industry is to support the IBA’s PAC. Right now, only a small portion of our member banks give to our Illinois Bankers PAC. I ask you all, to please, if permitted by law, have your bank support the Illinois Bankers PAC. Please ask your employees and directors to participate in the PAC. It easy to do—

in addition to personal donations, hold a jean’s day or some other fun event that will elicit a gift from your employees. And, please, offer the candidate of your choice some of your time, talent and treasure. Believe me, they will not forget it.

In closing, I’d like to say that I look forward to visiting many of you in your banks this coming year. A year ago, Dan Daly said that he and I would try to exceed Chairman Dan Watts’ mark of visiting over 60 banks. Well, we fell a bit short with about 50 visits. I think, Dan Daly, that tells me I better hit the road tomorrow and, better yet, get some more help if we’re going to top Dan Watts’ record in the coming year.

My friends, the IBA is alive and well. It has incredible banker volunteers who set its plan and who, along with first class employees, invest in and work the plan.

Thank you for allowing me to be a part of the journey!

September-October 2019 •

• 25 •

Meet Your Illinois Bankers Association Board of Directors EXECUTIVE COMMITTEE

ANNUAL CONFERENCE HIGHLIGHTS

Chairman Kevin L. Olson Grundy Bank, Morris

Chairman-Elect C. Brant Ahrens CIBC, Chicago

Vice Chairman Michelle L. Gross State Bank of Bement

Treasurer William Gleason The Leaders Bank Oak Brook

Member-at-Large Betsy Johnson Forreston State Bank

BOARD MEMBERS REGION 1

Member-at-Large Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville

• 26 •

Immediate Past Chairman Daniel P. Daly SENB Bank, Moline

Secretary Linda Koch IBA President and CEO Springfield Clark Delanois The Northern Trust Company, Chicago

REGION 2

Rick M. Francois American Community Bank & Trust, Woodstock

Betsy Johnson Forreston State Bank

• September-October 2019

Martin J. Noll Oak Park

REGION 3

Thomas J. Chamberlain Iroquois Federal Savings & Loan, Danville

Tyler Rouse First Federal Savings Bank of Champaign-Urbana

REGION 4

Tom Gill Illinois National Bank, Springfield

REGION 5

Anthony G. Nestler Hickory Point Bank and Trust, Decatur

T.J. Burge Community Partners Savings Bank, Salem

Richard Knebel The Bradford National Bank, Greenville

AT LARGE

Christopher P. Barton State Bank of Geneva

Dane Cleven Community Savings Bank, Chicago

Gary S. Collins Old Second National Bank, Aurora

Megan Collins Bank of America, Chicago

William Fanter U.S. Bank N.A., Chicago

Jeffery L. Fauver Catlin Bank

James R. Hannon First Security Trust and Savings Bank, Elmwood Park

Daniel J. Hollowed Cornerstone National Bank & Trust Company, Palatine

James H. Huiskamp Blackhawk Bank and Trust, Milan

Richard J. Mahoney First Midwest Bank, Chicago

Steven F. Rosenbaum Hoyne Savings Bank, Chicago

Pamela A. Sharar-Stoppel Wheaton Bank and Trust Company

Simon P. Yohanan First Bank of Highland Park

Matt Wyatt TheBANK of Edwardsville

FLA CHAIRMAN

September-October 2019 •

• 27 •

Parting Address of Outgoing IBA Chairman Daniel P. Daly Good afternoon and thank you exhibitors, sponsors and especially fellow bankers for attending this year’s annual conference.

It has been an honor to represent the Illinois banking industry during this past year, working with Linda Koch, her talented team and my colleagues on the IBA board.

My Chairmanship has been a fun investment of time, and I walk away with a great sense of fulfillment.

ANNUAL CONFERENCE HIGHLIGHTS

Before going into my remarks, I’d like to recognize my wife, Sherry, Mother to our four children, Maggie, Bridget, Maureen and Patrick and Grandmother to our five grandchildren, Elizabeth, Catherine, Bobby, Chloe, and Eddie. But most importantly, for nearly 39 years, Sherry and I have been a great team!

For those of you who do not know me, I am President and CEO of $315 million SENB Bank headquartered in the Quad Cities, operating offices in Illinois, Iowa and Wisconsin. Since starting my career with KPMG and moving into the banking industry, I have been working either as an advisor to banks or as a banker for over 40 years!

During the past year, we continued the tradition, initiated

by Immediate Past Chairman, Dan Watts, of personally visiting with as many Illinois bankers as possible throughout the state.

• Chairman-Elect, Kevin Olson and I have visited nearly 50 banks and thrifts and hundreds of bankers across the state. At these meetings, we shared common interests and common challenges, as well as our admiration and respect for what the Illinois Bankers Association does for our industry. Banker feedback has been shared with our Board of Directors, and this feedback has helped us to make better decisions with maximum benefit for all bankers.

As an aside, I must tell you that Illinois has some of the smartest, most successful bankers in the country. Many bankers have found creative ways to improve their organizations and their profitability in this challenging Illinois environment. I compliment all of you for your creativity and your persistence.

As a member of the IBA Executive Committee and Board, I have worked with very dedicated chairmen, outstanding board members, and hundreds of committee volunteers.

All these bankers have made contributions which have advanced our industry. These women and men are real industry improvers.

I want to extend a special thanks to the current members of the executive committee and board of directors. Your thoughtful efforts have been vital to the important strategic advances made by the IBA this year.

• 28 •

• September-October 2019

The IBA works well by crafting thoughtful strategies which are developed by the exceptional IBA staff in collaboration with the board. But the key to success is in the implementation of these strategies, and the IBA team has done an excellent job in execution. Let me cite a few examples of the Association’s work: One of our strategic objectives is to publicly promote the positive impact that our industry has on the Illinois economy. The economic impact studies and other key data generated by the IBA’s partnership with the University of Illinois has been effectively used by the IBA to educate lawmakers and other stakeholders about the important role of our industry.

• Speaking of lawmakers, thanks to our government relations and legal team, committee members and engaged bankers, the IBA’s advocacy work is effective. If not for the efforts of the IBA, our organizations would be facing even more tremendous challenges.

• The Association is building industry leaders and attracting and retaining new talent to our industry—another major IBA objective.

• In just two years, BankTalentHQ, the IBA’s talent management site has become the industry’s “go to” resource for talent.

• The IBA’s Future Leaders Alliance Program, now with nearly 200 alumni—is the best leadership development program for aspiring banking leaders.

I am excited today to announce the newest IBA effort to attract quality bank talent to the industry. Today, we are launching the Illinois Bankers Scholarship Fund to support students seeking a banking-industry related degree. We are truly excited about the possibilities this new scholarship program will mean for the industry! The IBA has already generated nearly $10,000 in individual donations to our new College Scholarship Fund. The $10,000 is made up of donations from IBA staff and a few past IBA chairmen. I do want to recognize Mike and Laura Steelman who generously donated $5,000 to help this initiative get off to a roaring start! Thank you, Mike and Laura!

Last year, I laid out five objectives to help advance our industry and improve our operating environment. We have made great progress in achieving these objectives.

Unity—I am proud of the Association’s work to help bring the industry together in a collaborative way. We are certainly stronger when we work together. Years spent building a strong relationship between the IBA and the Illinois League of Financial Institutions resulted in the

IBA retaining several new experienced staff members and assuming sponsorship of the League’s Group Insurance Trust, affording hundreds more community banks and thrifts with greater access to quality, cost-effective healthcare options; helping this financially strong Plan to grow even stronger.

Collaboration A second priority: building a collaborative relationship with the Community Bankers Association of Illinois, the CBAI, showed some progress. The CBAI’s thoughtful Chairman, Tony Sisto, Chairman of STC Bank in St. Charles accepted a meeting with me where we agreed as Volunteer Leaders of our organizations to look for ways to work together. Incoming Chair, Kevin Olson, intends to continue to work with CBAI volunteer leadership to further our collaborative efforts.

Together, collaboratively, we can make a difference!

Regulatory Relief—After years of determined work, the IBA and the Industry were able to attain passage of Senate Bill 2155—the regulatory relief bill. We continue to make progress with Congress and regulators to modernize CRA and Bank Secrecy Laws, to provide a safe harbor for those banks that serve the burgeoning marijuana industry, and lastly to provide parity with the credit union industry and the farm credit system. BUT, the IBA can only be successful with your strong support! We need all bankers engaged in grassroots efforts at all levels of government—and we need your support of the Illinois Bankers PAC! State of Illinois- The under-told story of bankers as community economic drivers must be well publicized and understood throughout the state. The IBA /U of I partnership is one way that we are documenting banking’s economic impact. The Education Approach with legislators and improving understanding of challenges faced by legislators is having an impact. As bankers, we work in a consultative approach with our customers, and I strongly believe that the full adoption of a similar consultative approach with legislators will pay long-term dividends.

Parity with Credit Unions and the Farm Credit System.

Congress needs to act and to recognize that unfair credit union and farm system advantages are detrimental to the unique community banking system in the United States and the many towns and cities, big and small that depend on their bankers to be economic drivers.

Technology—Last year, the IBA created a new FinTech Committee and inaugurated our first BankTech Conference which I attended last October. This year’s BankTech Conference is scheduled for October 3rd. You will find this conference informative and invigorating. You should attend!

I expect one day I will reflect on my banking career, and my time with the IBA and the many bankers it serves as

one of the most rewarding times of my career. It has been a pleasure to serve as your chairman.

You can continue to expect great things from the Association.

It has and will continue to be the champion of our industry.

The association’s incoming leadership is dedicated and will build upon the groundwork that has been laid to ensure the IBA remains the industry’s most trusted resource for many years to come.

Kevin, it will be an honor to transfer the Chairman’s Pin to you, and I wish you much success.

I would like to offer a special thank you to my family, and especially my wife Sherry, who supported me during this very busy past year. I’d also like to thank the SENB Bank board members and SENB team members for supporting my Chairmanship during this year.

Finally, I would be terribly remiss in not recognizing the excellent leadership of Linda Koch over the past 30+ Years.

Linda announced her retirement plans in December, and she will end her successful tenure in June 2020 at next years’ annual meeting in Springfield. Linda has presided over the IBA with passion, professionalism and a sincere commitment to the IBA and the industry. Linda, the IBA is a much better place for your leadership.

I mentioned in my remarks last year that my personal email signature includes the following quotation from Franklin Roosevelt, “Happiness lies in the joy of achievement and the thrill of creative effort.”

We together have accomplished much during the past year. I know that together, you will work to overcome our challenges and achieve even greater success. Thank you again for supporting my chairmanship and please accept my best wishes to all for happy, healthy and prosperous years ahead.

Thank you.

Bank visits made by 2018-19 IBA Chairman Dan Daly, SENB Bank September-October 2019 •

• 29 •

CONFERENCE EXHIBITORS

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Thank you to our Annual Conference Sponsors and Exhibitors!

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Investors Title Insurance Company Ironcore Inc. Jack Henry Banking Midwest Independent Bank NewGround Northland Securities Office of the Comptroller of the Currency Plante Moran PrismPremier Profit Resources, Inc. Promontory Interfinancial Network, LLC PULSE, a Discover Company Risk Management Association SBS CyberSecurity S&P Global Market Intelligence TEAM Risk Management Strategies UMS Banking United Bankers’ Bank Vanguard Vantage Point Solutions Vining Sparks Visible Equity

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• September-October 2019

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September-October 2019 •

• 31 •

SCHOLARSHIP FUND UPDATE Thank you to the Illinois Bankers Scholarship Committee for all of their work in establishing the Illinois Bankers Scholarship Fund!

$50K

Chairman Dave Brandon Hickory Point Bank & Trust Decatur Andrew Butts Bank of Belleville Belleville Thomas Chamberlain Iroquois Federal Savings & Loan Association Danville Trent Cox Farmers & Mechanics Bank Galesburg Michael Cripps The First Bank and Trust Company of Murphysboro Murphysboro

Lenore Erickson First Bank of Highland Park Highland Park Jeffery Fauver Catlin Bank Catlin Joshua Huseman First National Bank DeKalb Rachael Maurer United Community Bank Springfield Matthew Wyatt TheBANK of Edwardsville Collinsville

$21,094

ABA BA NK ERS C ONF E RENCE

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Power of Partnership As an ag banker, serving your customer means more than providing a lending channel. It’s about being in touch with the intricacies of the farm as a business to help guide your customers to growth. Join us in Dallas to learn the power of partnership, network with colleagues

Visit www.ilbanker.com/scholarship for more information, including scholarship award criteria.

• 32 •

• September-October 2019

and experts, and gain unique perspectives.

aba.com/AgConference3

Scholarship Fund

PLEDGE TODAY

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.

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IBA ROADTRIP

The IBA is on a road trip, and you’re invited!

Take a peek at some of our recent stops.

Follow us on Facebook, Instagram, Twitter and LinkedIn for more road trip photos.

FOLLOW US on Social Media!

• INFO ON EDUCATION EVENTS • BREAKING NEWS • INDUSTRY MILESTONES • BEHIND THE SCENES WITH US

#illinoisbankersassociation @illinoisbankers

We appreciate the time and commitment of all of the outgoing members of our Board of Directors! Most were honored at our Annual Conference; however, Ron Shambaugh, Best Hometown Bank, was not able to attend, so the IBA's Julie Clark met up with him in Collinsville to present an appreciation plaque.

IBA Chairman Kevin Olson visits with Jack Kramer, president of the First Bank of Manhattan.

• 34 •

• September-October 2019

Linda Koch visited Dave Brandon, Hickory Point Bank in Decatur, to film a video about our new Illinois Bankers Scholarship Fund.

Learn more at www.ilbanker.com/scholarship.

The IBA's Callan Stapleton dropped in on the folks at Rochester State Bank to present them with the University of Wisconsin Graduate School of Banking Advisory Board Scholarship. Pictured is Callan, GSB Advisory Board Member Don Swartzbaugh with Farmers and Merchants State Bank of Bushnell, Chris Walcher, Rochester State Bank (who will be using the scholarship), and Kim Kleinschmidt, Rochester State Bank CEO.

An extra perk of visiting with Dan Cortelyou and Mike Steelman of Farmers & Merchants State Bank of Bushnell is getting some puppy love from Shakespeare!t

Linda Koch describes the difference between banks and credit unions at BankWork$, an 8-week free training program put on by the Association House of Chicago to train young adults from low income and minority communities for lasting financial industry careers.

IBA Chairman Kevin Olson, Grundy Bank, taking in nutrients before a busy day of bank visits with IBA president and CEO Linda Koch -- first stop is Bank of Montgomery!

A big congratulations to Larry H. Clark who has retired from Community Partners Savings Bank after 42 years of service! He remains on the bank’s Board of Directors and will serve as its chairman. T. J. Burge will serve as the bank's new Chief Executive Officer. Pictured are T.J., Larry and the IBA's Julie Clark.

September-October 2019 •

• 35 •

Bank Succession Planning

By: Patrick Marget, J.D., CPA, CFP®, CLU® and R. David Fritz, Jr., CLU®, Executive Benefits Network

The purpose of long-term succession planning is to create an ideal plan for the future that takes into account all the things that are important to the bank, such as culture, philosophy and goals. Some questions to consider while planning: Is it better to “promote from within” or bring in outside talent? What key executives will turnover in the next 3-5 years? Is it better to higher younger talent or someone more experienced? Who will mentor the team of future leaders?

As the Senior Leadership teams in the

banking industry approach retirement,

creating and developing the bank’s succession plan is critical. Along with creating a succession plan, it is important for key executives to plan for retirement.

When retirement planning is ignored and not clearly communicated, even the most thorough succession plans will fall apart. The ultimate goal is to have a smooth and successful transition.

Business leaders must consider their own retirement planning first and then integrate it into the bank’s succession plan. The leaders must know their future so proper steps can be taken forward with short-term and long-term succession planning for the bank.

Along with long-term and short-term succession planning, the bank needs to ensure their management, shareholder and board succession planning is well aligned. The bank needs to consider who they need to retain, and how to reward them to ensure they will remain at the bank for the years to come, to fill leadership roles as individuals retire.

Short-term succession planning refers to being prepared for when the unexpected happens. The bank must have a solution for when immediate actions need to be dealt with, this is often called the “lifeboat drill.” It is never too early to develop your employees with depth, skills and training so individuals are prepared. When planning for the shortterm, consider these questions: What if an executive suddenly leaves the organization or is not able to work? Who would assume the executive’s position in the near term while keeping in mind the long-term goals? Is Key Person Insurance necessary to provide working capital?

• 36 •

• September-October 2019

The succession plan that is developed should be formalized and written down. When a plan is in writing and is presented to the Board during the year, the bank is more likely to stay on track with that plan. When a plan is not formally communicated, it becomes a mental note in the middle of the night that does not get the attention it needs. Once written down, the plan can be in place for years going forward and can help determine how to develop specific individuals, and what parts may be missing.

Once the bank has determined who will be in the pipeline for leadership roles, it is important to determine a retention strategy. Most companies have found that promoting from within outperforms those that recruit from the outside. Banks these days have Baby Boomers, Gen Xers, and Millennials all in the same bank, and they have different ideas of what is important from a compensation and retention standpoint. What worked for one group may not work for the next generation. Be sure to take the time and listen to the employee’s desires.

The areas of retirement and succession planning are often overlooked. Too many banks are forced to sell because of the lack of preparation. When preparing for the bank’s future, focus on the end result. Take action to develop a plan sooner rather than later and communicate that plan with other leaders and the board.

About the authors: R. David Fritz, Jr., CLU® , is Managing Partner for Executive Benefits Network. He is the Co-Founder of EBN and a 32-year veteran of the financial services industry. Patrick Marget, J.D., CPA, CFP®, CLU® is Managing Director for EBN. He is a 17-year veteran of the financial services industry. IBA Associate Member

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• 37 •

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This program provides IBA member banks a new opportunity to participate in a Group Trust with the goal of achieving administrative and investment management fee savings for participating plans while offering full customization and the highest level of fiduciary protection available.

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September-October 2019 •

• 41 •

Shattered Myths of Banking

By Achim Griesel, Haberfeld

Banking has more customer data than about any other industry. We know financial and personal information and how customers spend money.

With data, we can understand behavior patterns for millions of people.

To attract younger customers, you need a balanced acquisition strategy and good solutions in-branch and online. It’s true for delivery as well as marketing channels.

As bankers, we go to conferences and look for the next silver bullet, but ignore what happens in our own customer base. We love buzz words, and talk about Big Data, machine learning, and AI, but base our conclusions on personal opinions or small surveys while we have access to data, actual transactions, and behavior patterns for millions.

To disregard this verifiable data in favor of notions we think we understand eventually allows myths, like the five below, a place in decision-making.

That can be detrimental to a community financial institution. How do you spot these myths and what should you do? Read on.

MYTH #1: For Millennials and Gen Z, digital is the only thing that matters A Celent study recently posted to The Financial Brand showed that Millennials and Generation Z adopted online and mobile banking at a higher rate than older customers, but had a clear preference for visiting branches for some transactions – just as much as the older segment.

That seems to explain in part a recent analysis showing that, in the last five years, Google searches for physical bank locations doubled.

To all generations, it seems, the branch is still essential.

• 42 •

• September-October 2019

Data from more than 2,500 branches of community-based financial institutions shows a multi-channel approach could attract about 10% more of the younger market segment than represented in a footprint.

Our belief is you can attract younger segments, and win their loyalty, with an omni-channel approach, a core relationship and low-cost deposit acquisition strategy and a simple desire to grow.

Value-added accounts that offer services for a fee may be a good solution for the 10-20% of customers willing to pay. If you push customers into this type of product, attrition increases and long-term fee revenue suffers. Attrition with these products can be as much as 3 times the average.

You can offer services with associated fees, but it provides limited growth. For sustained growth, a better option is to expand your customer base.

MYTH #2: The Branch is Dead The branch isn’t dead nor have digital channels failed to meet customer’s expectations; customers simply want choices. According to the Celent study, customers prefer the branch for more complex relationship-based activities, but handle simple, more transaction based activities online.

Overall, fewer than 10% of customers prefer only digital.

This is right in line with what we’ve discovered at Haberfeld. For 73% of customers, the first product is the checking account. Over the last few years we have tracked online and in-branch opening stats at more than 300 community FI branches. In this sample of more than 500,000 core relationships, at institutions allowing account openings online, 95% of new relationships were started in branch.

Channels as well as choices are important!

MYTH #3: To gain core deposits, you need to

offer a higher rate

Higher rates get more deposits, but is that the best way to grow? Attracting rate-sensitive customers is a risky approach in today’s risingrate environment. Data from community based financial institutions representing more than 2,500 branches in the U.S. shows you can grow core deposits even without a rate. Few of these 2,500 branches offered an above market rate, yet grew core deposits at twice the industry pace.

The key to sustainable core deposit growth, for core relationships as well as time deposit money, is a balanced strategy that includes a good sales process.

MYTH #4: Increasing fees does increase fee income There are several ways to increase your noninterest income, but raising or implementing fees is the least sustainable. It leads to higher attrition, fewer customers and less fee income.

MYTH #5: We can focus on the Business Segment only

There are quite a few mid- to large-size banks focusing only on business customers. The reason: a business relationship is four times more profitable than a consumer. But, when we analyzed about 500,000 business relationships, we found some interesting correlations: • For 55% of businesses, the checking account is the product initiating the relationship • For 31% of business customers, the consumer account was the first relationship with the FI. That means one third of all business accounts come from a consumer relationship. So, if a community FI only chases business customers, it’s limiting profitability. This may work for large FIs, with thousands of customers per branch, but not community FIs with branch capacity to spare.

Today, customer experience and convenience is defined differently. As an industry, we need more to earn trust and build relationships. The branch is one channel, but we need to serve customers well in all channels. An omni-channel approach in delivery as well as our marketing is key to our long-term growth and success.

About the author: Achim Griesel is president at Haberfeld, a data-driven consulting firm specializing in core relationships, customer, and profitability growth for community-based financial institutions. Griesel can be reached at agriesel@haberfeld.com or 402-323-3793. IBA Associate Member

September-October 2019 •

• 43 •

ON THE MOVE Ashland

Chicago

Jaci Workman has been named chief financial officer, and Emily Leonhard has been promoted to chief loan operations officer

Matthew Robertson has joined the bank’s Commercial Real Estate group as senor vice president, team lead, and Sarah Hunter has joined the bank as vice president, Commercial Real Estate.

WEST CENTRAL BANK

Gallagher

Gayton

Bloomington, MN UNITED BANKERS’ BANK

Dwight R. Larson became the new CEO and president of United Bankers’ Bank and its hoding company, United Bankers’ Bancorporation on August 26.

BYLINE BANK

FIRST MIDWEST BANK

Glenn M. Mazade has joined the bank as senior vice president of business banking.

Decatur BUSEY BANK

Hernandez

Larson

Bloomington-Normal

BLOOMINGTON-NORMAL COMMUNITY BANK, A DIVISION OF MORTON COMMUNITY BANK

Tina Marlett has joined the bank as a senior retail community banker specializing in mortgage lending.

Champaign

FIRST FINANCIAL BANK Marlett

Martin

Katrina White has joined First Financial Bank as a mortgage originator.

Charleston

FIRST MID BANK & TRUST

O'Brien

Snavely

First Mid Bank & Trust is pleased to announce Daniel Moffett’s promotion to branch manager II for the Charleston banking centers, located at 701 6th Street and 500 W Lincoln Avenue.

Dennis Warner has been promoted to senior vice president.

Effingham

MIDLAND STATES BANK

Pat Martin has joined the bank as market president for the Bourbonnais area; Mike O’Brien has joined the bank as commercial relationship manager; and Scott Snavely will continue serving the Kankakee, Herscher, Dwight, Grant Park, Beecher and Momence areas as market president.

Itasca

ITASCA BANK & TRUST CO.

Soledad Gaytan was recently appointed operations officer/ customer service manager at Itasca Bank & Trust Co.

Marion

SOUTH PORTE BANK

Tracey Clark has been appointed interim CFO.

Tinsman

• 44 •

White

Zisook

• September-October 2019

Mattoon

FIRST MID BANK & TRUST First Mid Bank & Trust has hired Andrea Hernandez as senior vice president, director of Treasury Management.

Moline

QUAD CITY BANK & TRUST Quad City Bank & Trust welcomed W. Scott Tinsman, Jr. to its board of directors. Tinsman is COO of Twin State, Inc. He also recently stepped into the position of CEO of Sivyer Steel Castings, LLC.

Northbrook

FIRST BANK CHICAGO, A DIVISION OF FIRST BANK OF HIGHLAND PARK

Erin Reardon Cohn to EVP/ director of treasury management; Emma Montagu to SVP/treasury management advisor; David Smith to EVP/commercial real estate; Nathan Bowker to VP/commercial real estate; and Marc Zisook to VP/commercial real estate

FIRST BANK OF HIGHLAND PARK

Farhan Khan to assistant vice president/senior information security officer, and Stacy Raven to marketing/event manager.

QCR HOLDINGS QCR Holdings, Inc. announced that Reba Winter has assumed the role of chief information officer.

Monmouth

SECURITY SAVINGS BANK Security Bancorp MHC and Security Savings Bank are pleased to announce that Brad Ray has been named as the next president. Ray has been in banking for 28 years and worked for Roseville State Bank, Monmouth Trust and Savings Bank, Midwest Bank of Western Illinois and most recently Rabo Bank. He will succeed Stan Jenks as president. Jenks will continue to serve as chief executive officer of both organizations until his retirement later this year.

Pana

FIRST NATIONAL BANK OF PANA

Matt Beavers, president and CEO of First National Bank of Pana, announced the appointment of Andrew P. Chiligiris as a bank director. An attorney and local business owner, Chiligiris will join the board of the First National Bank of Pana, the parent company of the First National Bank of Decatur, the First National Bank on Spresser in Taylorville and the Bank of Blue Mound. Chiligiris is the owner of Macon County Title Company and several other businesses in the Decatur area.

Rockford

ILLINOIS BANK & TRUST Illinois Bank & Trust recently promoted Dennis Roop to executive vice president.

Salem

COMMUNITY PARTNERS SAVINGS BANK

Effective June 28, Larry H. Clark retired from Community Partners Savings Bank after 42 years of service.

Clark began his career in 1977 and served as a teller, a loan officer and in other positions before being named Chief Executive Officer which title he carried for the last 29 years of his career. During his career he served on numerous boards and was involved in many community efforts. The bank is pleased to announce the appointment of T. J. Burge as its new chief executive officer. Burge has been employed with the Bank for over 14 years and has served as BSA officer, comptroller, chief financial officer and most recently as executive vice president/chief operating officer.

Terre Haute, IN FIRST FINANCIAL BANK

Joey L. Gallagher has joined First Financial Bank as vice president and commercial loan officer.

Paxton

FARMERS-MERCHANTS BANK OF ILLINOIS Dylan Reetz. Reetz has joined the Farmers-Merchants Bank team as an agriculture loan assistant.

September-October 2019 •

• 45 •

INDSTURY NEWS Illinois Banker Appointed Chairman of ABA’s American Bankers Council The American Bankers Association has appointed Michael L. Scudder as chairman of the ABA’s American Bankers Council for the 2019-2020 membership year.

Scudder is the chairman and chief executive officer of First Midwest Bancorp, Inc., where he has spent 33 years in several leadership roles. He began his professional career at KPMG before joining First Midwest Bank in 1986.

State Bank followed by 16 years of service as the Vice President of the First National Bank and Trust Co. in Rochelle until his retirement in 1993. During this time John taught banking courses at Eastern Illinois University, Bradley University and Illinois State University through the Illinois Bankers Association. He was past president of the Ogle County Banker's Association as well as a member and previous president of the Rochelle Kiwanis Club.

The IBA extends its condolences to the family and friends of Mary Ann Hass and John Wendling.

Reedy Appointed to ARM Board

Financial Group, Inc. the parent company of HomeStar Bank and Financial Services. As a result of the transaction, HomeStar Bank is now a subsidiary of Midland.

The transaction will increase the Midland branch network to 70 locations across Illinois and in the St. Louis market.

Illinois Financial Professionals Receive Prestigious Banking Diploma photo The Graduate School of Banking at Colorado (GSBC) is proud to honor two Illinois financial professionals for their graduation from its 25-month program.

First Mid Insurance Group is pleased to announce that Seth Reedy, Head of Life and Health Division, has been appointed to the Associated Risk Managers (ARM) International Board of Directors The Council provides feedback and direction to the ABA on key regulatory and legislative issues critical to midsize banks. In addition, members of the Council participate in regular meetings with their peers to exchange information and share best practices on issues affecting their banks.

In Memory Of Mary Ann Hass passed away June 28, 2019. She was the former president and chairman of North Federal Savings Bank in Chicago and Wilmette for many years.

Additionally, she was a past chairman of the Chicagoland Association of Savings Institutions.

John A. Wendling passed away on June 8, 2019. During his first 7 years in banking, he served as the Vice President of the Rochelle • 46 •

The graduates pictured (L to R) include: Courtney C. Grob, Federal Deposit Insurance Corporation, Downers Grove, and Gary Binicewicz, Blackhawk Bank, Rockford.

Reedy’s appointment will be for a 3-year term to expire on May 1, 2022. He also serves as a board member of Mid-Illinois Big Brothers Big Sisters.

Midland States Bancorp, Inc. Completes the Acquisition of HomeStar Midland States Bancorp, Inc. announced it has completed its acquisition of HomeStar

• September-October 2019

Graduates receive a diploma upon successfully completing six weeks of classroom training–two weeks for three consecutive years–which focus on general management and technology, leadership and human resource management, financial management and lending. The students also completed intersession projects and ended their curriculum at GSBC with an extensive bank management simulation course. GSBC awarded 156 total graduates from across the nation with its prestigious diploma in banking during a ceremony at the University of Colorado in Boulder, Colo.

Always your partner, never your competitor.™

Give back to your community with community rewards cards.

The consumer credit card program at Bankers’ Bank is tailored to make community banks shine. This referral card program lets you offer three great consumer card options: • up to 3% cash-back rewards when customers shop at participating community-based businesses • up to 3X rewards for travel, merchandise and gift card rewards when customers shop at participating community-based businesses • a no-frills card with an especially low rate While your customers appreciate your community support, you’ll appreciate the turn-key program offering reliable fee income.

Contact us to get started.

Your Correspondent Bankers

Andy Carlson 815.441.2656 Northern IL

Amanda James 312.965.9500

www.BankersBank.com

Northern IL

Your Commercial Bankers

Jeff Rabenort 618.306.3656 Southern IL

Linda Lease 317.504.2007 Southern IL

Tom Thompson 224.775.5456 Northern IL

Madison, WI • Chicago, IL • Des Moines, IA • Indianapolis, IN

Asset Liability Mgmt • Bank Cards • Cash Letter • Commercial • International • Investments • Leasing • Mortgages • SBA 7(a) • Wealth Mgmt

September-October 2019 •

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WELCOME NEW MEMBER BANKS Brickyard Bank When your bank’s a member, you’re a member!

ASSOCIATE MEMBER NEWS Howard & Howard Royal Oak-based law firm Howard & Howard is pleased to announce that Joseph E. Silvia has joined the Firm. He will practice out of the Chicago office.

SomerCor SomerCor has announced the hiring of Elisabeth (Lis) Williams as Vice President of SBA 504 Lending. Williams is an experienced SBA lender with a distinguished track record in business development and operations.

NEW ASSOCIATE MEMBERS Alkami Plano, TX 75024-6666 www.alkami.com Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for U.S. financial institutions.

The Alkami Platform enables clients to grow confidently at 2X the market rate with modern, frictionless UX and a secure proven single-code base delivering continuous innovation.

AuctionTime/FleetEvaluator Lincoln, NE www.auctiontime.com AuctionTime.com brings together buyers and sellers to move equipment at auction values. Fleet Evaluator is a powerful asset valuation tool backed by the most expansive and accurate data in the industries it serves.

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Country Banker Systems, LLC Clyde, KS www.countrybanker.com Country Banker is a financial analysis software system emphasizing a doublecolumn balance sheet and offers accrual adjusted or cash basis options.

Customizable cash flow templates and loan presentations pair with balance sheet spreads; sensitivity testing; ratio and trend analysis; credit quality risk rating; and income statement analysis.

Dama Financial, Inc. Kansas City, MO www.DamaFinancial.com Dama Financial, through its U.S.-based Bank partners, provides cannabisrelated businesses with access to secure, transparent banking services, helping reduce safety risk for cash-intensive businesses, and improve operational efficiency. Dama's robust risk and compliance system meets the strict regulatory requirements of working with CRBs. Iron Comps by Tractor Zoom Waukee, IA www.tractorzoom.com Iron Comps uses auction results for a more transparent and accurate way to value equipment; make better decisions, reduce risk and increase profitability.

How do we get such great data? Tractor Zoom is a farmer first company set out to make it easier than ever to find farm equipment at auction while giving the auctioneer another lead source.

Janney Montgomery Scott LLC Chicago, IL www.janney.com Founded in 2003, the Janney team is united by a common a bond: We’re dedicated to the success of community banks and their investors. We exist to be the trusted advisor for community banks and their investors. Janney provides investment banking, research, sales and trading and capital raising services to community banks of all sizes.

Pentegra Retirement Services www.pentegra.com Shelton, CT Pentegra is a leading provider of retirement plan, fiduciary outsourcing and institutional investment solutions.

• September-October 2019

Founded in 1943, today with more than $13 billion in assets under management, we serve over 4,000 clients nationwide.

Pentegra offers more than 75 years of expertise and insights in developing retirement plan solutions.

Ritchie Brothers Auctioneers Morris, IL www.rbauction.com Auction company helping to provide equipment solutions as your trusted adviser. We have many solutions at your fingertips and we are open to the public!

We conduct onsite auctions, online auctions, and on the farms auctions. So if you or anyone you know is interested in selling their assets please reach out for a free no-obligation quote today!

Shield Compliance Seattle, WA www.shieldbanking.com With its purpose-built AML/BSA compliance management platform, Shield Compliance is transforming the way financial institutions automate processes, manage risk, comply with regulators, satisfy operational demands, and unlock new revenue associated with serving the legal cannabis industry.

Strategic Resource Management Memphis, TN www.srmcorp.com Strategic Resource Management advises in areas such as payments, digital banking, core processing and operational efficiencies. We have unlocked billions of dollars in value and improved the competitive advantage of our clients with our reputation for industry-leading subject matter expertise, proprietary benchmark database, and proven negotiating.

UFS, LLC. Grafton, WI www.ufstech.com UFS is purpose driven, delivering over 100 reliable, accurate and state of the art technology solutions, providing managed IT, cybersecurity, core account processing, payments and digital banking to a growing family of Midwest community banks, helping them compete with the largest financial services organizations and thrive together.

EVENTS CALENDAR SEMINARS, CONFERENCES AND FORUMS OCT 1-3 OCT 3 OCT 8 OCT 8 OCT 9 OCT 9 OCT 15 OCT 16 OCT 22 OCT 23 OCT 24-25 OCT 25 OCT 29 OCT 30 OCT 31 NOV 5 NOV 6 NOV 6 NOV 7 NOV 13 NOV 14 NOV 14 NOV 15 NOV 19 NOV 20

Operations School – Springfield BankTech Conference – Lisle Getting Noticed in an Over-Crowded Market – Oak Brook Government Payments & ACH – Springfield Government Payments & ACH – Oak Brook Branch Strategy Rethink – Oak Brook HR Forum – Springfield HR Forum – River Forest Getting Noticed in an Over-Crowded Market – Springfield Branch Strategy Rethink – Springfield Business Development Workshop – Oak Brook Commercial Real Estate Lending Workshop – Oak Brook Fall Compliance Conference – Collinsville IRA Essentials – Oak Brook Advanced IRAs – Oak Brook LaserPro® Commercial Document Preparation for Beginners Workshop – Springfield Midwest Bank Leaders Conference – Lisle LaserPro® Consumer Real Estate for Beginners Workshop – Springfield LaserPro® Tips, Shortcuts and Best Practices Workshop – Springfield Marketing Forum – Peru Marketing Forum – Springfield Small Bank CEO Forum – Bloomington Tech & Ops Forum – Bloomington 2019 Security Management Seminar – Springfield 2019 Security Management Seminar – Oak Brook

WEBINARS OCT 1 OCT 1 OCT 1 OCT 1

OCT 2 OCT 2 OCT 2 OCT 2 OCT 3 OCT 3 OCT 7 OCT 8 OCT 8 OCT 8 OCT 8 OCT 8 OCT 9

OCT 9 OCT 10

Communicating with Executives* IRAs: Distributions and Beneficiaries* LinkedIn Value Strategies Loan Structure, Documentation and Compliance Training: A Comprehensive Approach Business Models Involving Convertible Virtual Currencies* Excel: Filtering and Slicing Data* IRA Distributions Do You Know Who Your Competitors Really Are? Is Your Financial Institution Competing with Fintech?  20 Tasks of the New Account Interview* Uniform Acts Impacting Trusts and Estates Agricultural Loan Documentation & Administration* Becoming an Employer of Choice FFIEC Cyber Compliance Update* Getting in the Door with Prospects - Tips on Leveraging Your Network Key Ratio Analysis: Calculating and Interpreting the Numbers Correctly Violence in Your Workplace: Prevention & Response* Right of Rescission: Review and Update*

OCT 10 OCT 15 OCT 15

Top 10 IRA Issues Quarterbacking Retail Deposits: Overview for Front-Line Bankers Understanding Regulation CC and the New Amendments* Opening Business Accounts* Successfully Negotiating the Minefield of Powers of Attorney - What Bankers Need to Know

OCT 15, 22, 29, NOV 5 Commercial Real Estate Appraisals: Reviewing and Interpreting OCT 15, 22, 29, NOV 5 Commercial Real Estate Cash Flow: Analyzing IncomeProducing or Rental Real Estate, Plus Global Cash Flow Issues OCT 15, 22, 29, NOV 5 Developing Personal and Global Cash Flow from Tax Returns OCT 16 Mortgage Servicing Compliance* OCT 16 Required Minimum Distributions OCT 17 Annual BSA Training for the Frontline* OCT 17 Demystifying Cryptocurrency OCT 17 Loan Underwriting Mistakes* OCT 17 Quarterbacking Retail Deposits: Overview of Advanced Managerial Approaches OCT 18 Excel Explained: Utilizing Dashboards* OCT 18 Five Ways to Reuse IT Risk Assessment Frameworks OCT 21 Creating the Right Enterprise Risk Management (ERM) Program for YOUR Community Bank OCT 21 Credit Analysis Basics* OCT 22 Basic Personal & Business Tax Return Analysis OCT 22 E-Sign for Lending and Critical E-Sign Implementation Issues* OCT 22, 24 Fundamentals of Interest Rate Swaps and Caps OCT 23 BSA/AML & OFAC Compliance, Part 1* OCT 23 IRA Transfers and Rollovers OCT 23 Strategic Planning for Financial Institutions: It's All About Your Strategy OCT 24 Basic Bankruptcy for Bankers* OCT 24 Building a Recognition Program for Success OCT 24 Loan Denials & Other Adverse Action Notices* OCT 24 Quarterbacking Retail Deposits: Uber-izing Design of Bank Deposit Vehicles OCT 28 Commercial & Business Lending Basics for Support Personnel* OCT 29 Countdown to Nonresident Alien Changes! * OCT 29 How to Craft an Effective Commercial Loan Write-Up OCT 29 Poor Box Drilling Creates Lawsuits* OCT 30 10 Check Legal Issues to Save You Thousands* OCT 30 Everything Roth OCT 30 Strategies for Family Banks OCT 31 IRAs: Auditing and Compliance* OCT 31 Loan Structuring Basics* NOV 1 Performance Appraisals That Work* NOV 1 Reward and Recognition Strategies NOV 4 Preparing for the First Call on a Prospect

NOV 5 NOV 5 NOV 5 NOV 5 NOV 5 NOV 6 NOV 5 NOV 7 NOV 7 NOV 7 NOV 8 NOV 12 NOV 12 NOV 12 NOV 12 NOV 13, 20 NOV 14 NOV 15 NOV 19 NOV 20 NOV 21 NOV 22 NOV 26 NOV 26 NOV 26 DEC 5 DEC 10 DEC 12 DEC 13 DEC 16

Ready. Set. CECL, Part 1 Developing an Enterprise-Wide Risk Assessment Introduction to Consumer Lending* Loan Committee Presentation Skill Training Top Strategies for Community Banks in 2020 Rollovers Between Retirement Plans and IRAs Ready. Set. CECL, Part 2 How to Build an Employee Referral Program That Works Recipe for an Effective Sales Environment Planning with FLPs and LLCs: Alive and Well Vendor Management Process Improvements Assisting Managers with Conflict Resolution Basic Estate Planning and Estate Settlement Community Bank Mergers and Acquisitions Simplified 2019 Industry Update for Corporate Trustees IRA Beneficiary Distributions Quarterbacking Retail Deposits: Withdrawal-Only Deposit Accounts Interviewing Skills for Better Hires Advanced Financial Statement Analysis Performing Your ACH Risk Assessment Quarterbacking Retail Deposits: General Overview Safe Deposit Marketing and Profitability* Advanced Cash Flow Analysis Advanced Tax Return Analysis Predicting Future Job Performance through Behavioral Based Interviews Recent Developments in Estate and Trust Administration Quarterly Compliance Briefing: Winter 2019* Top Fifty (50) "Most Important" Safe Deposit Procedures* Using Principles of Critical Thinking* Basic Personal & Business Tax Return Analysis*

 IBA * Total Training Solutions  Graduate School of Banking  American Bankers Association

ABA ONLINE TRAINING COURSES OCT 7 OCT 21 OCT 28 NOV 4

NOV 11

Bank Lines of Business** Commercial Lending CTFA Exam Online Prep Basic Administrative Duties of a Trustee Consumer Lending Managing Interest Rate Risk Marketing in Banking Money and Banking Building Customer Relationships CRCM Exam Online Prep General Accounting

** Banking Fundamentals Curriculum (formerly Principles of Banking)

UPCOMING EVENTS September 24-25 Women in Banking Conference Crowne Plaza Springfield

October 29 Fall Compliance Conference DoubleTree by Hilton Collinsville

October 3 BankTech Conference Hyatt Regency Lisle Lisle

November 6 Midwest Bank Leaders Conference Hyatt Regency Lisle Lisle

December 5 Chicago Area Chapter Holiday Breakfast Sheraton Lisle Naperville Lisle December 6 Bank Counsel Conference Renaissance Chicago Downtown Hotel Chicago

March 5-6, 2020 The ONE Embassy Suites East Peoria June 16-18, 2020 Annual Conference Crowne Plaza Springfield Springfield

REGISTER TODAY AT ILBANKER.COM! September-October 2019 •

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THE LAST PAGE

Pictured are the IBA’s Linda Koch and Julie Clark with the latest class of BankWork$ students. Linda and Julie were featured presenters during one of their class sessions in August.

BankWork$© Opens the Door to Lasting Careers in the Financial Services Industry The Illinois Bankers Association has teamed up with the Association House of Chicago and BankWork$© to train young adults from low income and minority communities for lasting careers in the financial services industry. This 8-week free training program already has propelled well over 2,000 graduates in the U.S. into rewarding careers with exceptional results, and we invite you to join other area banks as a financial industry partner in this innovative program that expanded to the Chicago area about two years ago.

What’s in It for Your Bank?

• Provides job-ready Teller, Customer Service Representative, Relationship Banker and Personal Banker candidates • Facilitates employee loyalty • Invests in the local community to extend reach into underserved communities • Retention rates exceed what banks generally achieve • Provides financial industry partners the opportunity to earn CRA credits by facilitating workshops and mentoring participants

For more information, contact the IBA’s Callan Stapleton at cstapleton@ilbanker.com or 217-789-9340.

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• September-October 2019

Illinois Bankers Group Insurance Program With the recent transfer of sponsorship of the Illinois League’s long-time Group Health Insurance Trust to the Illinois Bankers Association, now is the perfect time to take a look at all the Trust has to offer!

The Illinois Bankers Group Insurance Trust provides IBA members with a reliable source of competitively-priced, quality group insurance products. All plans comply with the Affordable Care Act THIS MEANS ■ Lower overhead expenses ■ Plan flexibility ■ Individual attention ■ Quality and timely processing of claims ■ COBRA and HIPPA administration ■ Coverage for employees, directors and retirees

COVERAGES INCLUDE ■ Major Medical with prescription coverage ■ High Deductible Health Insurance Plans ■ Dental/Vision care ■ Short/Long term disability ■ Access to Health Savings Accounts ■ Access to Flexible Spending Plans

STRATEGIC PARTNERS

CONNECT WITH US ilbanker.com | 217-789-9340 Erich Bloxdorf Plan Administrator ebloxdorf@ilbanker.com

Jim McNichols Vice President jmcnichols@ilbanker.com

Hillary Meyers Trust Manager hmeyers@ilbanker.com

Bob Penwell Relationship Manager bpenwell@ilbanker.com

Does it feel like the road never ends?

Let us help you face today’s banking challenges.

800-347-4MIB mibanc.com

Ron Hobson VP/Relationship Manager

Joe Kollmeyer SVP/Senior Loan Officer Tom Maassen VP/Loan Officer

Matt Sinnett President/CEO

OPERATIONAL SERVICES

LENDING SERVICES

• • • • • • • • • •

• Bank Stock Loans — Acquisition, Capital Injection, and Shareholder Buy Back/ Treasury Stock Purchase • Officer/Director/Shareholder Loans ( Reg-O) • Participation Loans Purchased/Sold — Commercial, Commercial Real Estate, Agricultural, and Special Purpose Loans • Leases

Midwest Image Exchange – MIE.net™ Electronic Check Clearing Products Information Reporting – CONTROL Electronic Funds – Wire Transfers/ACH Risk/Fraud/Anomaly Detection Tools Cash Management and Settlement Federal Funds and EBA Certificate of Deposit International Services/Foreign Exchange Safekeeping

PERSONAL BANKER SERVICES

INVESTMENT SERVICES* AUDIT SERVICES**

• Money Market Accounts • Certificates of Deposit • Officer/Director/Shareholder Loans (Reg O) MEMBER FDIC

* Investment Services offered thru First Bankers’ Banc Securities, Inc. ** Audit Services provided by MIB Banc Services. LLC, a subsidiary of our holding company