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September-October 2021
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IN THIS ISSUE: Annual Conference Highlights Making the Move to .BANK Maximize New PPP Loan Relationships
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September-October 2021 • Vol. 106 / No. 5 • illinois.bank
TABLE OF CONTENTS
35
10-19 DEPARTMENTS 5 Message from the President and CEO 8 Compliance Corner 35 Event Highlights 36 Preferred Vendors
20
26
FEATURES
10 Annual Conference Highlights 13 IBA Chair Michelle Gross' Inaugural Speech Excerpts
38 Ad Index 41 New Associate Members 41 Associate Members News 42 On the Move 44 Industry News 47 Events Calendar
16 Meet Your Illinois Bankers Board of Directors 18 Congratulations Award Winners 19 Marty L. Davis Named Banker of the Year
20 How to Maximize New PPP Loan Relationships 22 Three Risk Factors to Present to Your Board 26 Operating Efficiency Among Agriculture Borrowers 30 Making the Move to .BANK 32 Federal Bank's New Tool to Meet Accounting Change
Our Mission: Advocacy. Education. Industry Resource...for all Illinois bankers. Our Vision: Connecting Bankers. Advancing Banking.® Our Core Values: The Illinois Bankers Association will place our members’ interests first, be responsive to their needs, and provide them with the highest level of professionalism and service. The IBA staff is the Association’s greatest asset. We will conduct ourselves with integrity and respect. We will work together as a team, share information, build upon our strengths, embrace new ideas, and recognize and celebrate accomplishments.
OFFICERS AND EXECUTIVE COMMITTEE MEMBERS Michelle Gross Chair State Bank of Bement
William Gleason Chair-Elect The Leaders Bank, Oak Brook
Betsy Johnson Vice Chair Solutions Bank, Forreston
Thomas Chamberlain Treasurer Iroquois Federal Savings & Loan, Danville
BOARD OF DIRECTORS Jeff Fauver Catlin Bank
Amy Randolph First Busey Corporation, Champaign
Scott Bland First Neighbor Bank, Toledo
Frank Pettaway The Northern Trust Company, Chicago
Anthony G. Nestler Hickory Point Bank and Trust, Decatur
REGION 2
REGION 5
James Hannon First Security Trust and Savings Bank, Elmwood Park
Gary Collins Old Second National Bank, Aurora
T.J. Burge Community Partners Savings Bank, Salem
Quint Harmon Pioneer State Bank, Earlville
Pamela Sharar-Stoppel Wintrust Financial Corporation, Wheaton
Courtney Olson First Bank of Highland Park
Richard Knebel The Bradford National Bank of Greenville
James Huiskamp Blackhawk Bank and Trust, Milan
Matthew Smith First Mid Bank & Trust, Mattoon
REGION 3
AT LARGE
Lawrence Horvath Heartland Bank and Trust, Bloomington
Dane Cleven Community Savings Bank, Chicago
Richard Mahoney First Midwest Bank, Chicago
Bethany Shaw Peoples National Bank (Future Leaders Alliance Board Chair / non-voting member)
Steven Rosenbaum Hoyne Savings Bank, Chicago
Tyler Rouse First Federal Savings Bank of ChampaignUrbana
ILLINOIS BANKERS ASSOCIATION STAFF DIRECTORY Two Offices to Serve You! Springfield Office: 800-783-2265 • Chicago Office: 800-878-2265 To connect with our staff, use this email format: firstinitiallastname@illinois.banker Executive Administration Randy Hultgren, President and CEO Erich J. Bloxdorf, Executive Vice President & COO
Pam Macha, Springfield Office Coordinator Legal and Compliance Carolyn Settanni, Executive Vice President and General Counsel Carly Berard, Senior Counsel Michael Schasane, Staff Attorney Amy Giacomucci, Law Assistant
T.J. Burge Member-at-Large Community Partners Savings Bank, Salem
Rick Parks First National Bank of Waterloo
REGION 4
Joan HeggenMcMahon U.S. Bank, Chicago
Mary Curl, Executive Assistant & HR Manager
Anthony Nestler Member-at-Large Hickory Point Bank and Trust Co., Decatur
Megan Collins Bank of America, Chicago
REGION 1
Bank and Partner Relations Julie Winterbauer, Vice President Linda Koch, CAE, Member/Business Relations Manager
Communications/Marketing/ Associate Membership
Illinois Bankers Business Services, Inc.
Tammy Squires, Assistant Vice President
Brian Hoffman, President
Debbie Jemison, CAE, Director, Financial Literacy
Illinois Bankers Education Services, Inc.
Robin Lane, Director, Associate Membership
Callan Stapleton, CAE, President
Finance and Administration Mark Bennett, CPA, CFO and Executive Vice President
Bob Anderson, Manager, Education Relations & IT Support Cassie Mattson, Manager, Event Management and FLA
Marcia Stratton, CPA, Director
Denise Perez, Manager, Education & Training
Marie South, Financial Assistant
Amy Sale, Education Assistant
Government Relations
Illinois Bankers Group Insurance Trust
Ben Jackson, Executive Vice President Aimee Smith, Assistant Vice President
Erich J. Bloxdorf, Plan Administrator Mike Mahorney, Senior Trust Advisor Hillary Meyers, Trust Manager
Sarah Cowan, Membership Assistant
C. Brant Ahrens Immediate Past Chair CIBC, Chicago
Randy Hultgren Secretary President and CEO Illinois Bankers Association, Springfield
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• September-October 2021
Editorial Office 3201 West White Oaks Drive Ste. 400 Springfield, IL 62704 217-789-9340 www.illinois.bank With the exception of official announcements, the Illinois Bankers Association disclaims all responsibility for opinions expressed and statements made in articles published in Illinois Banker. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Illinois Banker (ISSN 0019-185X) is published bi-monthly and is available at a cost of $45 per year for members and $90 per year for nonmembers. Regular issue single copy price is $8.50. Postmaster, send address change to Illinois Bankers Association, 3201 W. White Oaks Drive, Ste. 400, Springfield, IL 62704. News items from members of the Illinois Bankers Association are invited and are due on the first of the month preceding publication. © Copyright 2021 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
Beginnings, Endings, and New Beginnings
Randy Hultgren
IBA President and CEO
Powerful training, inspirational messages, and insights into navigating regulation characterized a fantastic “It’s Your Show,” the IBA’s 2021 Annual Conference. The valuable content helped equip and motivate bankers from every size and region in Illinois. For me the most memorable presentations were the farewell address by Brant Ahrens and the kick-off address by our new Chair, Michelle Gross. Times of transition offer opportunities for reflection and recommitment. Brant Ahrens successfully led the IBA through one of the most challenging years in our history. He began his term with a virtual Annual Conference when we thought the impact of the pandemic would only last a few months. Even though the only two times I saw Brant in-person during his tenure as Chair were at his installation last year and his farewell address this year, he helped the IBA have one of our most successful years ever. Under his leadership we broke multiple attendance records for IBA events. He helped us end the year with our greatest revenue over expenses in our history, and we were able to put significant resources into protected reserves to ensure our strong financial standing for years to come. In addition, he led many virtual banker roundtables that allowed us to personally connect with over 80 of our members. Thank you, Brant, for all you have done and continue to do for the IBA and for our great banking industry! Michelle Gross is hitting the ground running in her leadership role as Chair of the IBA. Michelle has already met with dozens of leaders of other state banking associations and has been able to share
successes and challenges seen by banks in Illinois. She is committed to strengthening and growing the IBA and is already making plans to come and visit your bank. Michelle will play a vital role as we continue to connect bankers and advance banking and as we set the strategic plan for the next decade of the IBA. The most powerful moment of the Annual Conference was when Art Wilkinson, Michelle’s dad who was IBA Chair in 1996, installed his daughter as Chair and gave her the historic 126-year-old President’s pin. Michelle and Art mark the first time where two generations of the same family have led the IBA! Debbie Jemison has faithfully served the Illinois Bankers Association for over 22 years and will be retiring as Vice President of Communications and Marketing at the end of August. She is our go-to person whenever any of us has a struggle with words, which is often the case for me, and over the course of her long communications career, she’s overseen the editing of more than 400 industry magazines. Debbie started the second in the nation Women in Banking Conference, now in its twentieth year, and has built it into the gold standard event. She initiated our Women’s Leadership Symposium and this year guided the first ever collaboration with the ABA on this type of conference. The initial lofty goals were to have 200 bankers register, but by the day of event, there were over 900 attendees. And, way back in 2001, Debbie was the visionary for Illinois Bankers to work with schoolchildren in the state in collecting pennies to assist in the building of Abraham Lincoln Presidential Museum children’s area.
September-October 2021 •
•5•
I have had the great privilege of working with Debbie over the last year, but many of her IBA colleagues have known and worked with her for decades. I asked for their thoughts about Debbie, and I received amazing responses, but only had room to share several of them. Debbie has always been there for me. If I ever needed her to look at a document or even an email to make “minor tweaks,” she was always willing to do so, teaching me along the way on proper punctuation and use of words. I loved our morning chats before the day got started and I am truly going to miss that. – Mary I immediately think of Debbie’s help on our coronavirus newsletters that went out constantly last spring and summer — I see 84 listed in Informz. Bankers still remember that the IBA was a constant source of information on lobby closings, the CARES Act and other legislation, the Paycheck Protection Program rollout and its myriad changes, and all of the other regulatory responses to COVID. On a personal level, Debbie has always displayed her friendly and loving personality, going the extra mile to show she cares about my family and showering us with notes and gifts for milestones like new babies. – Carolyn I have long known Debbie as our children attended school together. The only “problem” I ever had with her is that she played volleyball and graduated from the University of Missouri – THE archrival of the University of Kansas. Despite her being a “Tiger,” this “Jayhawk” has always enjoyed her company. – Erich Debbie loves golf, volleyball and the Cubs. She is super competitive, but the most caring person you will ever meet. – Brian Debbie is truly one of the kindest and professional people I know. She has always been a resource for all the IBA staff and membership, but you know that you can go to Deb with an immediate need, and she will do everything she
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• September-October 2021
can to help. She embodies true customer service – both internally and externally. She is not afraid to take a leap and try something new – just look at the Women in Banking Conference! It was among the first of its kind and is now one of the longest running conferences for women banking professionals. She set the standard for all other state banking associations and in turn, created a legacy. – Julie My memories span more than 20 years with Debbie. We've not only been co-workers, but we’ve created a lifelong friendship that is so dear to me. Debbie’s love, friendship and support has been a constant. She is easy going and a great listener. The way she has led her life, personally and professionally, has been with dignity and heart. We all have benefited from having Debbie in our lives. I wish her many years of good health, relaxation, and chocolate martinis! I love you my friend, and I will miss you so much. – Tammy Debbie was always available whenever needed—morning or night—to respond, react, review, rewrite (and correct my poor grammar), and critique whatever situation we were facing. Her input always made things better! – Linda The entire IBA Team and our great members wish Debbie Jemison all the best in her retirement and express our deep gratitude for all she has done for us! I am excited to announce that Debbie is not leaving the IBA entirely but will be taking over as Director of Financial Literacy. In this role, she will help us train and inspire future banking leaders. Maybe one of the young people she will inspire will be one of your kids or grandkids to have another generation of IBA leaders.
Thank you Brant, Michelle and Debbie for all you have done and continue to do for the IBA!
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September-October 2021 •
•7•
COMPLIANCE CORNER The IBA Law Department
QUESTION
We are aware of the recent FinCEN administrative ruling denying the IBA’s request for relief from currency transaction report (CTR) filing requirements for cash shipments executed by Thillens. We use Brinks to transport our cash shipments to and from our Federal Reserve account, and Brinks does not withdraw cash from its own bank accounts to fulfill our cash orders. Is Brinks a money services business (MSB), and do we need to file CTRs in relation to our cash orders fulfilled by Brinks?
ANSWER No, we do not believe Brinks would be considered an MSB based on the services you describe, and we do not believe you need to file CTRs in relation to your cash orders fulfilled to and from your bank’s Federal Reserve account by Brinks. Under FinCEN’s regulations, MSBs include money transmitters that transport currency, funds, or other value from one person to another location or person by any means. However, FinCEN’s regulations also provide that money transmitters do not include armored cars that physically transport currency from one person to an account belonging to the same person at a financial
institution, provided that the person engaged in the physical transportation (i.e. the armored car) has no more than a custodial interest in the currency at any point during the transportation. Since Brinks has no more than a custodial interest in the currency it transports between your bank and your Federal Reserve account, we believe it is not a money transmitter under FinCEN regulations. Additionally, we do not believe you are required to file CTRs in relation to your cash shipments fulfilled by Brinks. FinCEN’s regulations do not require CTR filings for transactions with exempt
persons, and the twelve Federal Reserve Banks are automatically exempt persons (in other words, your bank is not required to file Form 110 to establish a Federal Reserve Bank as an exempt person). Also, we note that your arrangement with Brinks is distinguishable from the Thillens services discussed in the IBA’s request for exemptive relief and FinCEN’s denial of the request, since Thillens is a registered MSB and its practices include fulfilling cash orders with funds from its own bank accounts or its correspondent bank’s accounts — not from a bank’s own account at a Federal Reserve Bank.
QUESTION
Are we required to retain undeliverable mail that has been returned by the post office? If so, what kind of mail should we be retaining and for how long? We have read that if we can reproduce the mailing (such as an account statement) on request, then we can shred it immediately.
ANSWER We are unaware of any recordkeeping requirements specifically for mail that has been sent to customers and returned as undeliverable. Various recordkeeping requirements may apply to the contents of returned mail, such as disclosure requirements for disclosures
•8•
sent under Regulation Z, adverse action letters sent under Regulation B, and privacy notices sent under Regulation P, among others. Due to those potential recordkeeping requirements, we recommend maintaining contemporaneous records of the dates and content of any returned mail. Retaining such documents
• September-October 2021
in electronic form should be sufficient to establish compliance with any applicable notice or other delivery requirements. We also recommend attempting to contact your customer to determine if they have a new mailing address if you have not done so already.
QUESTION
If we have no transfer limits set for our savings and money market accounts, would they now be considered transaction accounts under the new Regulation D changes? Would that raise the reserve requirements on these accounts in the event that reserve requirements are ever reinstated under Regulation D? Are there any other ramifications that could result from this change in categorization?
ANSWER We do not believe that your savings and money market accounts would automatically be considered transaction accounts if you suspend enforcement of the six-per-month transaction limitation. Although a recent interim final rule removed the transaction limitation from the definition of “savings deposit” under Regulation D, the interim final rule maintains separate definitions for savings deposits and transaction accounts. Additionally, the Federal Reserve’s Savings Deposits FAQs state that banks may continue reporting accounts as “savings deposits” on FR 2900 reports even if they suspend enforcement of the transaction limitation.
We cannot predict what effect the reinstatement of reserve requirements under Regulation D would have on savings deposits. While the Federal Reserve declined to answer whether the recent amendment to Regulation D would be temporary or permanent, it did state that it does not “have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on the Board’s interim final rule and, in the future, if conditions warrant.” We are not aware of other significant ramifications that could result from removing transaction limitations from your savings
accounts. The Federal Reserve addressed one possible ramification in its FAQs related to the treatment of savings deposits under Regulation CC. The Federal Reserve stated that the recent amendments to Regulation D did not result in such accounts “now being covered by Regulation CC” because “Regulation CC . . . excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits),” and “accounts described in 12 CFR 204.2(d)(2) from the Reg CC ‘account’ definition.” Thus, savings deposits are still excluded from Regulation CC even though they are now included in the definition of transaction accounts.
About the IBA Law Department Our IBA Law Department provides many resources to help our bank members meet their compliance challenges, including a toll-free Compliance Hotline (1-800-GO-TO-IBA) and a dedicated compliance website (www.GoToIBA. com). We also publish a free weekly e-newsletter highlighting the latest regulatory developments, select recent Q&As, and other useful information – let us know if you want to subscribe!
Note: This information does not constitute legal advice. You should consult bank counsel for legal advice, even if the facts are similar to those discussed above.
September-October 2021 •
•9•
IBA’s Virtual Annual Conference August 11-12
Resiliency 2.0
Who would have thought that WOH -have YREV CER 1yet 202 DNA PIHSREDAEL we would toOpivot TESDNIM GNINNIW EHT ? T S A F W O H D N A R A F S R E T T A M TI NEHW YTILIBATNUOCCA again and move our Annual odrabmoL htebazilE .rD .D.hPfrom ,lheuan K sin-person irhC dloppiL .S kriK rednammoC Conference event in Branson, Mo., to a virtual event in just three short weeks? But our sponsors, exhibitors, members, attendees, special guests and speakers all stepped up and worked together to help mocthe .rekIBA nabstaff li.wwinwany :SLIway ATEDthey LLUF could, and we’re happy to say that it was a huge success. From P P Aincoming SREKNAB SIONILLI EHT HGUORHT DEMAERTS TNEVE DIRBYH A our outgoing and Board. R Chair E T Nspeeches, E C N O I Tto N Especial V N O C N O S N A R B E H T TA I R U O S S I M , N O S N A R B N I N O S R E P - N I D N A award presentations, the alwaysinformative Regulators’ Panel, spot-on flash and concurrent sessions, and our closing speaker, this was one to remember. Of course, we’d rather see you all in person, so save the date for next year’s Annual Conference in Springfield on June 7-9.
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ECNEREFNOC LAUNNA
The Regulators’ Panel, moderated by the IBA’s Carolyn Settanni, included representatives from the Consumer Financial Protection Bureau, Federal Reserve Bank of Chicago, Federal Deposit Insurance Corporation, Federal Reserve Bank of St. Louis, Comptroller of the Currency and Illinois Department of Financial and Professional Regulation.
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• September-October 2021
Dr. Elizabeth Lombardo, Shaquille O’Neal’s “Head Coach for Happiness,” presented “The Winning Mindset.”
ANNUAL CONFERENCE
Thank You to Our Annual Conference Sponsors and Exhibitors! We couldn’t do it without you!
THE WINNING MINDSET Dr. Elizabeth Lombardo
LEADERSHIP AND ACCOUNTABILITY WHEN IT MATTERS Commander Kirk S. Lippold
ANNUAL CONFERENCE Annual Conference Chair Bill Gleason, The Leaders Bank,
• .BANK Registry • Allied Solutions, LLC 2021 RECOVERY - HOW • Aunalytics FAR AND • Backbase USA HOW inc. FAST? Chris Kuehl, Ph.D. • Bankers' Bank • Bankers Healthcare Group • BankTalentHQ • Barack Ferrazzano Kirschbaum &
AUGUST 11 – 14, 2021 • BKD, LLP Nagelberg LLP
FULL DETAILS:Institutions www.ilbanker.com • BOK Financial Group • CIBC • CLA A H YB R I D E V E N T ST R E A M E D T H R O U G H T HE I L L I N O I S B• AEPIC N KRetirement E R S AP PPlan Services • evolv IN -P E R S O N I N B R A NS O N, MI SS O U R I AT T HE B R AN S O N C O N VE N T I O N CE N T E R. • Federal Home Loan Bank of served as emcee for the event.
AND
Illinois Bankers Scholarship Committee Chair Dave Brandon, Hickory Point Bank and Trust, accepted a $10,000 scholarship fund donation from Petefish Skiles & Co., represented by Brock Thompson.
IBA President and CEO Randy Hultgren inducts Ottawa Savings Bank into the Centennial Club.
Chicago • Graduate School of Banking • Howard & Howard Attorneys PLLC • Investors Title Insurance Company • Liquid Capital • MetLife Group • Midwest Independent BankersBank • Northland Securities • NFP Executive Benefits • Plante Moran • PG Design + Build • Quad City Bank and Trust Company • RSM US LLP • SBS CyberSecurity • SEI • SPARK • The Consultants - Powered by Illinois Bankers Insurance Services • UFS, LLC • UMB Bank, n.a. • Welch Systems, Inc. • Wipfli LLP • Windsor Advantage, LLC.
September-October 2021 •
• 11 •
Meet Your New
Illinois Bankers Association Chair Michelle Lynn Gross, EVP/ COO/ISO, State Bank of WOH - YREVOCER 1202 Bement ?TSAF WOH DNA RAF .D.hP ,lheuK sirhC
1 2 0 2 , 4 1 – 1 1 T S U G UA
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Best Advice I Ever Received: Practice I would like to be remembered one makes permanent not perfect year from now for: I want to be a Chair that is a good representative of DNA PIHSREDAEL TESDNIM GNINNIW EHT the SR ETIllinois TAM Bankers TI NEHAssociation W YTILIBAand TNUOCCAWho I admire the most: My parents – odrexamples abmoL hof tehow bazito lE love. .rD they are great its Board of Directors. I also want to dloppiL .S kriK rednammoC be effective in promoting our industry One thing people don’t know about toward a promising future! me: I play the oboe and direct my church choir. What’s your very first IBA memory? Going with my Dad when I was in Favorite Vacation Spot: On a beach. I college to one of his IBA Executive love to travel to different beaches. Committee meetings in Chicago and watching the comradery among the Still on my bucket list: Zip lining!! group. I loved it.
ECNEREFNOC LAUNNA
P P A S R E K N A B S I O NBest I L LDecision: I E H T HLeaving G U O Rteaching H T D Eand M A E R T SMost T N Einteresting V E D I R Bthing Y H inA my office: . R E T N E C N O I T N E V N O C N O Sswitching N A R B careers E H T Tto A banking. IRUOSSIM ,NOSN A R B N I N O S Daily shoe calendarR E P - N I D N A
Birthplace: Fort Benning, Georgia Education: Bachelor of Science in Music Education with a double emphasis in vocal and instrumental, Western Illinois University If I Weren’t in Banking: I would be a professor of music in a small college, directing a wind ensemble and singing commercials on the side.
Greatest Challenge in the Industry: Cybersecurity, Meeting the Customer Expectation, Regulation Best Advice for Young Bankers: Lean in to more experienced colleagues, whether they be in your office or outside of your office. Be open to new experiences and new ideas and don’t be afraid to express your thoughts.
What are you most looking forward to as Chair: I can’t wait to see everyone in person at meetings again and meet with bankers across the state. I look forward to working together to better our industry and increase awareness of how the IBA can assist all financial institutions through their lobbying efforts, compliance, education, product offerings and more.
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• September-October 2021
Sports faves? Chicago Blackhawks, St. Louis Cardinals, Fighting Illini What do you do to de-stress? Play the piano, read, walk Family: Husband – Rich (27 years); Son – Connor (25); Daughter – Lauren (22)
ANNUAL CONFERENCE
IBA Chair Michelle Gross’ Inaugural Speech Excerpts
W
the communities in that area with two While I enjoyed teaching, I missed the ell, this isn’t exactly the way I branches. numbers and interaction with customers had hoped I would be giving this I thoroughly enjoy what I do and I had at the bank. A job opened up in speech nor do I think it’s the way many of have done in the bank! I have been able the bank after 3 years of teaching and I you hoped to hear it. That being said, life LEADERSHIP AND 2021 - HOW to help on the RECOVERY technology side with new took the leap. It was the best decision I happens and I think we have all learned THE WINNING MINDSET ACCOUNTABILITY WHEN IT MATTERS FAR AND HOW FAST? products and services. And, yes, the IBA ever made, and I can still say that after 25 that we have had to become fairly agile Dr. Elizabeth Lombardo Kirk S. of Lippold Chris Kuehl, has been instrumental withPh.D. connecting years!Commander My bank, State Bank Bement, this past year. A huge note of gratitude to our bank with some exceptional tech is a 107+ year-old community bank the IBA staff for all of their hard work in headquartered in a town of 1,700 people. partners. I then expanded into loans and turning a live conference to 100% virtual helping customers realize their dreams. I Our footprint extends from Decatur to in a matter of weeks. Another thank am nerdy in that I really enjoy the Champaign, and we are proud to serve you to Brant (Ahrens) for his leadership as chairman of the IBA in a certainly FULL DETAILS: www.ilbanker.com unconventional time this past year and to Randy (Hultren), who started his tenure with the IBA in a truly unique fashion but hit the ground running andRmade A H YB I D Egreat V E N T ST R E A M E D T H R O U G H T HE I L L I N O I S B A N K E R S AP P strides inA his N Dfirst INyear -P Ewith RS Othe N IBA. I N B R A NS O N, M I SS O U R I AT T HE B R AN S O N C O N VE N T I O N CE N T E R. As I have pondered my message today for many months, my goal in these minutes is to leave you with an idea of my background, love of banking and hopes for the future of the IBA. I am so very thankful my parents are here with me today, even in our virtual environment! I was fortunate enough to be there with my Dad in Kohler, Wis., when he became Chair of the IBA in 1996. Fun fact, my son, Connor, learned to walk in their suite! As a child, Mom and Dad always supported us - my sister, Tami, and my endeavors. They were also very involved - Dad would play catch outside, coach our softball teams, Mom took me to oboe lessons at U of I and was a 4H leader. We were always told to give 110%, which was what I always saw him do in his job at the bank and with the IBA. I had always enjoyed my part-time job at the bank during college breaks and summers but had decided to get my degree in music education. I taught for a few years, band and choir - even a couple in my hometown with my Mom.
ANNUAL CONFERENCE
AUGUST 11 – 14, 2021
September-October 2021 •
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in Illinois, ECORA at the federal level, I look forward to getting out and doing number crunching and call report credit unions buying banks, and the long my part to visit with banks across our which I continue to do every quarter. I standing topic, Banking Cannabis, are state to listen to their needs and what am fortunate to have an awesome group just a few issues I know we will hear more the IBA has done and more it can do for of employees and realize that our bank is about in the near future. them. In turn, I ask you to be an advocate what it is because of each of them. Support of our Illinois Bankers Pac is for your association and tell others what I feel like I’ve been involved with so critical to allow our voice to be heard. the IBA has done for you. the IBA most of my life. I remember in 100% of your contribution goes to Advancing Banking – let’s talk about college, going with Dad to downtown worthy political candidates who support that for a minute. The IBA has done an Chicago to a meeting. After being the views and future of our industry. outstanding job of advocating for our introduced to his colleagues, I met up Thank you to those of you who currently industry and was another topic that with my sorority sisters and had fun while support the PAC and for those of you every former chair I talked to mentioned. he would go to his meetings. I thought it OHto-have YREmeetings VOCER in 12Chicago. 02 DNA IHSLobby REDADay EL in who don’t,TE please aN donation I still remember myPfirst was so W neat SDNconsider IM GNIN IW EHTin ?TSAF WOH DNA RAF S RETTAM TI NEHW YTILIBATNUOCCAthe near future. It really is important. Springfield and how in awe I was listening I also got to drive him to Springfield odrabmoL htebazilE .rD .D.hP ,lheuK sirhC dloppiL .S kriK rednammoC Let’s change course to the mission of to our lobbyists during our legislative when he gave a speech on insurance the IBA: Advocacy. Education. Industry meetings and then peers talking about powers and met with the late, longtime Resource...for all Illinois bankers. We have matters that were important to our legislator Penny Severns. Linda Koch was already touched on advocacy. Many of industry. Our GR team is the best around our lobbyist back then and I thought she you already use the IBA for their massive at stopping harmful bills from getting to was amazing. I still do! All of this started catalog of educational opportunities and the floor for a vote as well as fighting for my love for our association a little earlier mthan oc.remost knaand bli.wgave wwme :SLaIAglimpse TED LLinto UF conferences which provide additional us when they make it out of committee. educational content and networking what I might want to be involved with opportunities. some day. A Shistory. R E K NI spent A B S I O N I L L I E H T H G U O R H T D E M A E R T S TOur N E Veducation E D I R Breally Y H Ais second to The IBA has suchPaPrich some time . Rtalking E T N EtoC past N Ochairmen I T N E V NinOthe C N O S N A R B E H T T A I R U O S S I M , N O Snone. N A RIBencourage N I N O Smy R Estaff P - Nand I Dmy NA colleagues to attend, learn, grow and last few months, asking them questions bring information back to the bank to about their time as Chair and I heard help us better serve our customers, and I several resounding messages. Every hope you will, too. single one of them said they enjoyed Industry Resource – did you the networking with bankers across the remember that a group of bankers – the state. I think that’s been the hardest part Illinois Bankers Business Services Board of COVID. I was fortunate to attend a -- vet various products and services for conference in person a few weeks ago us each year? They work with IBA staff They worked tirelessly this past year, and I will never take for granted again, to help us help our customers. If you on our behalf, getting us information talking face to face with my peers. I haven’t recently, take another look at our on the PPP program, lobbying for us as had one former Chair who mentioned vendors. Many are offering flash sessions essential workers, getting the word out it was “so cool for him to see banks during our conference and are joining to our government officials that bankers with the 2nd/3rd generations.” My Dad us virtually in the marketplace and as were working hard in their communities mentioned it was very gratifying meeting sponsors. With the “blessing” of the IBA, to help businesses and consumers with bankers from all different asset sizes. part of your work has been done for you. through these tough times. While some Another former Chair stated something You can’t beat that. of those messages may have fallen on that really resonated with me, “As chair, Another resource, the IBA legal staff deaf ears in the legislature, they sure all are on the same mission – to help – here to assist with compliance matters, didn’t to me. We are fortunate to have bankers.” banking law and more. Access to the people working behind the scenes on I look forward to visiting many banks IBA’s Compliance Connection has been our behalf, and I don’t see that need across our great state with Randy and invaluable for our bank as I am sure it is slowing down any time soon. As a recent others – and continue to build those for others. headline read, “A former Senate Banking relationships between bankers and the Talent is something we hear a lot Committee staffer who has supported IBA. I am mindful that in order to have about these days. Retaining Talent. strong regulation, was named as the the IBA – we need banks and thrifts – our Attracting Talent. BankTalentHQ is an administration's choice for assistant members and that is the overall vision – IBA product that can help. Not only is it secretary of financial institutions.” CRA Connecting Bankers, Advancing Banking.
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We are all working to better our industry and the customers that we serve.
• 14 •
• September-October 2021
ANNUAL CONFERENCE we have the same mission for the IBA IBA is also very fortunate to have over a robust job board but it has a blog with and that is to focus on what they do 200 volunteers who serve on various great topics, coaching information, and best, which is Connecting Bankers and committees within the association to resume writing all in one space. It really is Advancing Banking. guide the staff in the direction of our the one-stop shop for both job seekers as I thoroughly enjoyed the visits I had members’ needs. Thank you to those of well as banks looking for quality talent. with several of our past chairs and thank you who serve on a committee or lead Lastly, the mission is for ALL Illinois each of them for their time. Every one of a committee. Our association is better bankers. That’s important. No matter them said they truly enjoyed their time because of each of you. For those of your gender, color of your skin, religion, as chair of this great association and you not on a committee, it is a great bank size or veteran status - we are all LEADERSHIP AND your 2021 RECOVERY - HOW encouraged me to take it all in and enjoy opportunity to learn more about working to better our industry and the THE WINNING MINDSET ACCOUNTABILITY WHEN IT MATTERS FAR AND HOW FAST? the year. I look forward to visiting with association, meet other bankers and be a customers that we serve. Dr. Elizabeth Lombardo Commander Kirk S. Lippold Chris Kuehl, Ph.D. many of you in the coming months and part of our industry’s future. Reach out if I was fortunate in that my parents thank you for allowing me to lead this you are interested!! instilled in me that I could be anything I association for the next year and consider I look forward to working closely wanted to be. They might have chuckled it a privilege. A privilege that is being with our executive committee, board of a bit when at one point I wanted to be allowed not only by my bank, State Bank directors and Randy, and the IBA staff, an Olympic Volleyball Player like Debbie of Bement and its Board of Directors, this coming year on an updated strategic Green but didn’t tell me no. FULL DETAILS: www.ilbanker.com Officers and Employees, but also by my plan which will help direct the IBA’s future I watched Linda Koch be a rock star amazing family who, without, I wouldn’t in assisting you, our members. We need with my Dad and I had others I looked be who I am. to think long-term, focus on what we up to, male and female who I aspired A Hwelcome YB R I D allE VtoE N T STdoRbest E A Mand E Densure T H Rthat O U the G HIBA T HE L L I N O I SThank B A Nyou K E to R SmyAP P and Dad — Mom is inIthe to emulate. We should usOall. group thatByou be a partAof amazing N our D IN -P E RSindustry. O N I NWe B R A NSforefront O N, Mfor I SS U This R I AT T HE R AN S OI’m N CsoOblessed N VE NtoT Ihave O N you CEtwo N T EforR.my parents — and to my hubby Rich, and elected, is not a bashful group. They ask get to help people realize their dreams, my two awesome kids, Connor and great questions and challenge the staff be an entrepreneur or small business Lauren, who mean more to me than they and rest of the board to ensure we are owner, buy the new car, buy their dream could ever know. doing what’s best for our association. house, work to get their credit back I am one lucky woman! While our backgrounds are all different, on track, teach them how to balance a checkbook, and so much more. Think back to why you went into banking and what you were passionate about. Share that with others. Like past chairman Micah Bartlett said, “Make banking great again” by inviting others along your path. Let’s provide those opportunities for young leaders, high schoolers, those just in banking and not sure which way they want to grow, for ALL. It starts at the top and those of you listening have the opportunity to affect change in this arena. I invite you to join me in this charge. The IBA even has a scholarship program that can offer assistance to those wanting to further their education in the finance field. All of these resources and programs are led by staff from the IBA that is second to none. Some are here with us today but many are back in the office, continuing to work hard for all of us. The
ANNUAL CONFERENCE
AUGUST 11 – 14, 2021
September-October 2021 •
• 15 •
Meet Your Illinois Bankers Association Board of Directors Region 1
Executive Committee WOH - YREVOCER 1202 ?TSAF WOH DNA RAF .D.hP ,lheuK sirhC
Chair Michelle Gross State Bank of Bement
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Chair-Elect William Gleason The Leaders Bank, Oak Brook
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moc.reknabli.www :SLIATED LLUF
Frank Pettaway The Northern Trust Company, Chicago
TESDNIM GNINNIW EHT odrabmoL htebazilE .rD Joan Heggen-McMahon U.S. Bank, Chicago
ECN E R2 E F N O C L A U N N A Region
PPA SREKNAB SIONILLI EHT HGUORHT DEMAERTS TNEVE DIRBYH A . R E T N E C N O I T N E V N O C N O S N A R B E H T TA I R U O S S I M , N O S N A R B N I N O S R E P - N I D N A Vice Chair Betsy Johnson Forreston State Bank
Member-at-Large Anthony Nestler Hickory Point Bank and Trust Co., Decatur
Treasurer Thomas Chamberlain Iroquois Federal Savings & Loan, Danville
Member-at-Large T.J. Burge Community Partners Savings Bank, Salem
Gary Collins Old Second National Bank, Aurora
Courtney Olson First Bank of Highland Park
Region 3
Lawrence Horvath Heartland Bank and Trust, Bloomington
Tyler Rouse First Federal Savings Bank of Champaign-Urbana
Region 4
Immediate Past Chair C. Brant Ahrens CIBC, Chicago
• 16 •
Secretary Randy Hultgren IBA President and CEO, Springfield
• September-October 2021
Scott Bland First Neighbor Bank, Toledo
Anthony Nestler Hickory Point Bank and Trust Co., Decatur
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Region 5
At Large
THE WINNING MINDSET Dr. Elizabeth Lombardo T.J. Burge Community Partners Savings Bank, Salem
LEADERSHIP AND ACCOUNTABILITY WHEN IT MATTERS Commander Kirk S. Lippold
Richard Knebel The Bradford National Bank of Greenville
Dane Cleven Community Savings Bank, Chicago
2021 RECOVERY - HOW FAR AND HOW FAST? Chris Kuehl, Ph.D.
Megan Collins Bank of America, Chicago
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Jeff Fauver Catlin Bank
AUGUST 11 – 14, 2021
At Large
FULL DETAILS: www.ilbanker.com
A H YB R I D E V E N T ST R E A M E D T H R O U G H T HE I L L I N O I S B A N K E R S AP P A N D IN -P E R S O N I N B R A NS O N, MI SS O U R I AT T HE B R AN S O N C O N VE N T I O N CE N T E R. James Hannon First Security Trust and Savings Bank, Elmwood Park
Earlville
James Huiskamp Blackhawk Bank and Trust, Milan
Richard Mahoney First Midwest Bank, Chicago
Rick Parks First National Bank of Waterloo
Steven Rosenbaum Hoyne Savings Bank, Chicago
Pamela Sharar-Stoppel Wintrust Financial Corporation, Wheaton
Matthew Smith First Mid Bank & Trust, Mattoon
Bethany Shaw Peoples National Bank (Future Leaders Alliance Board Chair / non-voting member)
Quint Harmon Pioneer State Bank,
At Large
Amy Randolph First Busey Corporation, Champaign
Thank you to our Outgoing IBA Board Members Immediate Past Chairman Kevin Olson, Grundy Bank, Morris
Rick Francois American Community Bank & Trust, Woodstock
Tom Gihl, INB, N.A., Springfield
Simon Yohanan, First Bank Chicago, Northbrook
September-October 2021 •
Andrew Butts, Bank of Belleville
• 17 •
Congratulations to all of the exceptional banks and bankers who were honored during the IBA’s Annual Conference! Banker of the Year Marty L. Davis, Murphy-Wall State Bank WOH - YREVOCER 1202 and Trust Company
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Bank of Farmington Beardstown Savings s.b. The Bradford National Bank of Greenville
Graduate School of Banking at the University of Wisconsin
HR School Scholarship • Sharon Richardson, Pioneer State Bank TESDNIM GNINNIW EHT
DNA PIHSREDAEL SRIBA ETTAssociation AM TI NEH W YTILIBATNUOCCA Scholarships odrabmoL htebazilE .rD d l o p p i L . S k r iK reBank dnam&mTrust oC Banker Advisory Board Scholarship • Kacie Rankin, Peoples • Cody Simmerman, SouthernTrust Bank
1Murphy-Wall 2 0 2 ,4 1State – Bank 1 1 TandSUTrust G UA
Illinois Bankers PAC Bank of the Year
mCompany oc.reknabli.www :SLIATED LLUF Honorary Lifetime Membership Kevin L. Olson, Grundy Bank
• Pioneer State Bank with Mark Govednik attending
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PPA SREKNAB SIONILLI EHT HGUORHT DEMAERTS TNEVE DIRBYH A N O I T N E V N O C N O S N A R B E H T TA I R U O S S I M , N O S N A R B N I N O S R E P - N I D N A
Centennial . R Award ETNEC Ottawa Savings Bank
Illinois Bankers Scholarship Fund Linda J. Koch Scholarship Winners • Jacob Britt, Fairfield High School, sponsored by Megan Berg, Peoples National Bank N.A. • Brittany Lear, Western Illinois University, sponsored by Michael Steelman, Farmers and Merchants State Bank of Bushnell • Jack Anthony Nick II, Trinity International University, sponsored by Jack Nick, First Midwest Bank Illinois Bankers Scholarship Winners • Anna Cieplucha SEEP-LUCCA, Saint Xavier University, sponsored by Martha Rodriguez, Byline Bank • Doruntina Hamza, Oakton Cummunity College, sponsored by Candice Bonfiglio, Republic Bank of Chicago Nicholas J. Lovitsch, University of Illinois at Urbana-Champaign, sponsored by Brien J. Leahy, First Bank of Highland Park • Sophia Reyes RAY-EZ, University of Iowa, sponsored by Nora Reyes, Republic Bank of Chicago A special thank you to Petefish Skiles and Co., Virginia, Ill., for their generous donation of $10,000 to the Illinois Bankers Scholarship fund in honor of their 150th bank anniversary!
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• September-October 2021
ANNUAL CONFERENCE
Marty L. Davis Named 2021 Banker of the Year Additionally, he has served on Marty L. Davis, President and CEO a number of IBA committees, of Murphy-Wall State Bank and including Ag, Annual Trust Company in Pinckneyville, LEADERSHIP AND 2021 RECOVERY - HOW THE WINNING Conference, Government is the Illinois Bankers MINDSET Association’s ACCOUNTABILITY WHEN IT MATTERS FAR AND HOW FAST? Elizabeth Relations, StrategicKirk Planning, 2021 Dr. Banker of the Lombardo Year. This is the Commander S. Lippold Chris Kuehl, Ph.D. Nominating, Illinois Bankers 19th year for the award, which is the Business Services Board, highest honor the IBA can bestow on Illinois Bankers Education one of its members. It is given annually Services Board, and the Illinois to an individual whose dedication Bankers PAC Board. to excellence has most profoundly enhanced the banking industry. The FULL DETAILS: www.ilbanker.com Davis is heavily involved in the 2020 PAC award, which was given award was presented by last year’s lobbying Congress and the Illinois out at this year’s Annual Conference. Banker of the Year Thomas Broeckling, General Assembly on banking issues, 2021 Banker of the Year Marty Davis First National Bank of Steeleville, A H YB R I D E V E N T ST R E A M E D T H R O U G H T HE I L L I N O I S B A Nbusiness K E R S has AP Pa responsibility to making several visits each year to believes during the IBA’s virtual Annual A N D IN -P E RS O N I N B R A NS O N, M I SS O U R I AT T HE B R AN S O N C O N VE N T I O CEmake N T EaR.positive Washington, D.C., and Springfield to look beyond profit N and Conference on August 12. promote positive bank and financial impact on society. He is or has served industry legislation and further lobby as a member of the Board of Governors Davis’ banking career spans more against bills that would be detrimental of the Southern Illinois Real Estate than 35 years. He has a long history to community banking. Title Company, John A Logan College of community involvement and Foundation Board, and Elverado School achievement and have been extremely Davis and his bank are long-time PAC District, and he is a charter member of active with the IBA. He began his supporters, and Murphy-Wall has won the Perry County CEO program that tenure on the IBA Board of Directors the Illinois Bankers PAC Bank of the assists students in attaining additional nearly two decades ago and served as Year award multiple times, including life skills. He works with numerous IBA Chair in 2012. other local not-for-profits, charities and food banks assisting them in their endeavors.
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AUGUST 11 – 14, 2021
He has served as President and CEO of Murphy-Wall since 2000, during which time the bank has grown from $63 million in assets to $150 million and has expanded from one facility to five facilities, growing it to a regional bank. Congratulations to 2021 Illinois Banker of the Year Marty Davis!
September-October 2021 •
• 19 •
How to
Maximize New PPP Loan Relationships
By Samantha Vance
Over the course of the past year, community banks took the spotlight for dedicating countless hours to ensure the survival of communities across the nation. You seamlessly adjusted operations to best serve your communities in safe and healthy ways. You maintained and excelled at constant communication with your account holders. The Onovative team applauds you and your teams for all the tremendous efforts over this tumultuous time. Through news outlets and personal stories, the world got a preview of what we have known for years serving this industry — community financial institutions are the backbone for many towns and neighborhoods across the United States.
Small Business Impact When mega banks failed them in their time of need, many small businesses recognized the value in the commitment and service from community financial institutions. Your teams leaped to secure funding for small businesses from the Personal Paycheck Protection (PPP) loan program. According to the Federal Reserve, 91% of small businesses applied for some type of emergency funding, and almost half of those requests were handled by small banks.
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• September-October 2021
An overwhelming 40% of loan dollars and 32% of loans approved for PPP round 2 so far were generated from community banks. Not only did you deliver, but you also provided a superior customer experience to both your new and existing relationships. A recent Federal Reserve report cites that 79% of independent businesses that used community banks to process their PPP loan report they were satisfied with their overall experience, compared with 67% for large banks and just 49% for online lenders. The Federal Reserve also reported that 95% of borrowers who went to a large bank for their PPP loan were existing customers of the institution, while nearly 20% of small banks’ PPP borrowers were net new to their institutions. The high level of customer service provided by community banks during the pandemic led to referrals for PPP loans and new account openings. Through all the uncertainty of COVID-19, PPP loans allowed community banks to prove to both new and existing small business customers that you can be relied on.
Community financial institutions are the backbone for many towns and neighborhoods across the United States. Small Business Growth As PPP loan round 2 availability dwindles, or in many cases is exhausted, what’s next? Small business growth is trending optimistically with 41% of small business owners expecting to grow their revenue in 2021 and 37% considering expanding products and services. Community banks have a timely opportunity to build strong, long-lasting relationships with small businesses in the communities you serve. The time is now to position yourself as their financial institution for all their business needs beyond PPP.
Engage Business Account Holders Community banks have a unique opportunity to increase your engagement with your PPP loan account holders to further expand your relationships. Here are six key strategies to boost your communication touchpoints: 1. Onboarding – Communicate with account holders within 3 days of opening a new account. According to J.D. Power research, doing so has a significant impact on satisfaction. Onboarding your business relationships is just as important as any new consumer relationships. Any new business relationships gained through your PPP loan efforts should receive the full welcome experience into your bank. A simple phone call, email or letter can leave a lasting impression. 2. Personalization – Leverage the information attained through the PPP loan process. Make offers specific to those that were existing account holders versus those that are brand new account holders. Use language specifically tailored to businesses with a professional tone rather than re-using general account holder language. 3. Nurture the Relationship – Schedule phone calls for relationship bankers to follow up and personally connect with your PPP loan account holders.
4. Multi-Channel Integration – Utilize email, postcards, letters, surveys, and phone calls to stay engaged and top of mind with your small business account holders. Don’t be afraid to “over-communicate” - small businesses owners have limited time but want to stay in the know and appreciate the information. Ensure your messages are received by communicating several times using multiple mediums. 5. Business Financial Needs Assessment – Take into account the specific needs of the business you are engaging: Did they receive all the funds requested? More loan funds might be needed. Consider surveying your PPP relationships for what’s needed next. 6. Expand the Relationship – Incentivize your business accounts to expand the products and services they have with your bank. Cross-selling to your current business relationships is shown to produce positive ROI. With our Core iQ software, we have seen customers implement our automated cross-sell framework that has proven effective in expanding relationships. As you begin to cross-sell to your new PPP loan relationships, promoting business checking accounts with a 90-day tracking window is recommended to allow business accounts time to convert. To help you get started, we’ve provided a letter template for you to use to engage your PPP relationships with a cross-sell offer for a business checking account. Access this free Template by scanning the QR code. 8.
About the author: Samantha Vance is VP of Marketing for Onovative. She can be reached at svance@onovative.com. IBA Associate Member
September-October 2021 •
• 21 •
Three Risk Factors
To Present to Your Board By Michael D. Cohn, CPA, CISA, CGEIT, WolfPAC Solutions Group
T
he COVID-19 pandemic drastically altered how we work, how we shop, and how we interact with people in all facets of our daily lives. We won’t return to the world as we remember it in December 2019, and new models for banking, healthcare and education remain a work in progress. In its wake, this global pandemic brought a wave of unprecedented fiscal and operational risks to many financial organizations. Recognizing the radical change in threats seen during the pandemic, risk managers and the Chief Risk Officer (CRO) should now analyze, alter and enhance their risk presentation and evaluation strategies to continue to effectively communicate to the executive team
• 22 •
• September-October 2021
and Board. To evolve with these trying times, there are three foundational elements that risk managers should be reporting right now—risk appetite statements, enterprise risk assessments (ERA), and key risk indicators (KRI).
Risk Appetite Statement
In a strategic, top-down enterprise risk management (ERM) program, a risk appetite statement is a translator. It lets organizations take the enterprise-level strategy and turn it into a business unit playbook—clearly defining the risks they’re willing and unwilling to take. The organization can use this catalogue of potential threats to develop metrics that inform current performance verses expectations.
There are normally two generations of risk appetite statement maturity: Generation 1 In Generation 1, the organization takes the enterprise strategy and develops qualitative statements around it. This provides the ‘risk takers’ the business-level direction so they know what risks can be taken and which would be worth taking. Generation 2 A Generation 2 risk appetite statement provides Boards insight on exactly how much risk the organization is taking. For example, when we talk about metrics, we often think of limits by default. We have unexpected loss due to fraud or error, and the limit shouldn’t go over a certain amount. Although this information doesn’t provide boundaries, it provides a frame of reference for the magnitude of impact. But having a limit doesn't necessarily give us beneficial insight. This is where we can start to perform a session to identify not just the standard limit, but also the high end of our limit, as well as the low and moderate risk thresholds. And these metrics should be trended to show where we have been and where the future metric may be. This will allow the Board to quickly understand where (and if) things are operating as they should. It also quickly highlights where an organization needs to pay more attention in their ERM program. How You Can Upgrade to Generation 2 Organizations already have many of the risk metrics and monitoring activities required of a Generation 2 risk appetite statement. So chances are, looking at the important packages and various subcommittee packages will offer those metrics. Organizations can then evaluate whether those are the key indicators they want to use as the qualitative metrics. Organizations also need to advance from key performance indicators (KPI) to key risk indicators (KRI). It’s difficult to link emerging risks with forwardindicating risk indicators, but through committing to try and adjusting over time, organizations can begin to learn what works and what doesn’t.
Enterprise Risk Assessment
The risk appetite statement told an organization where they’re willing and unwilling to take risks. The ERA takes a different approach and reports the risks that an organization is actually taking. An ERA is one of the key reports that should be presented to a Board outlining inherent risk based on the risk assessment process. There is a need for Residual Risk reporting but that leads us to internal control strength, not emerging threats. Theoretically, the ERA results should align with the Risk Appetite statement. But if they differ (and the first time we try to align them they will), it reveals that an organization must take another look at their program and make sure there are no errors. Whether errors are found by a risk appetite statement or an ERA (or no errors are found), all areas related to the deviation should be investigated, because this indicates that an organization is either taking too much risk in a particular area, more risk than they’re comfortable with, or not enough risk (exposing potential opportunities).
Creating an ERA
The development of an ERA is a first line of defense activity. The foundation for this assessment is also the foundation for what comes next—developing a second line of defense risk monitoring program. Once the high risk threats are revealed, monitoring programs can be developed. When organizations overlay monitoring activities with KPIs from the ERA results, they’re able to witness opportunities for improvement, what they’re focusing too much on, and what they’re not focusing on enough. It also helps shine a light on potential errors in the analysis. Just as you compare the risk appetite statement to the ERA, you can compare an ERA to monitoring activities and Risk Appetite. Consider the relationship as three points of a triangle, with each analysis congruent with the other two. continued on following page
September-October 2021 •
• 23 •
What Factors Should Be Communicated to the C-Suite and the Board?
The risk assessment results provide a lot of good data on the current risk profile of the organization, but there's additional valuable information within the assessment that the Board is also interested in seeing. While completing the assessments, an organization is identifying and evaluating the control environments against various threats. Giving these to a Board will showcase the top hazards to the organization and their potential impacts. The top threats identified here are likely the threats that can put a halt to your operations. Strong controls are expected in these areas with a resulting Residual Risk of Moderate or lower. A high residual risk requires discussion and potentially control adjustment because making no changes is a kin to self-insuring.
Key Risk Indicators
Many people ask how many KPI and KRI metrics should typically be presented to the Board. Generally, less is more when taking a look at metrics. Organizations should boil down hard KPIs and KRIs to provide an early warning and communication system. Indicators often overlap. If one is triggered, chances are three or four of them are also going to be triggered. But you don't need all three or four in your presentation. Instead of having all indicators presented, you only need to display the one that’s
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• 24 •
• September-October 2021
always going to trip in that situation to alert you to look deeper into these risks. Financial and operational risk metrics provide the greatest level of insight for your organization. It's not just financial concerns that are going to steer the direction of your enterprise and determine your success. Being able to analyze operational, strategic, and reputational metrics is also imperative to an organization.
Conclusion
Just as the risks and challenges faced by organizations evolved amid the pandemic, the way organizations report risk must also evolve. Foundational ERM program elements must mature quickly, or new economic trends and emerging risks will initially be missed. To stay on top of the progressing threats introduced by COVID-19—and adequately prepare for the future—risk managers need to present risk appetite statements, ERAs, KPIs and KRIs to their Boards. Focusing on these three analyses will help your organization link your ERM framework to your overall business strategy, goals and capital. About the author: Mike Cohn is a Principal and the Director of the WolfPAC Solutions Group, where he's responsible for leading the strategic direction of the group. With over 25 years in the banking and technology industries, he has extensive knowledge in strategic planning, technology strategy and management issues, ERM programs, and corporate governance design. He can be reached at mcohn@wolfandco.com. IBA Associate Member
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September-October 2021 •
• 25 •
Operating Efficiency Among Agriculture Borrowers a comparison of four farms
By Tim Ohlde, Country Banker
Agriculture is a cyclical industry and, recently, this has been evident across all the commodities. Monitoring Financial Efficiency ratios is key to understanding the health of operations particularly in times of transition between cycles. Although there are several efficiency ratios to choose from, the Operating Expense Efficiency (OEE) ratio is one of the best to start with. Tracking the proportion of expenses to revenue gives keen insight on asset utilization, management aptitude and discipline. In this case, less is more; a lower ratio (percentage) is the goal so that expenses are lower per dollar of revenue. The formula for the Operating Expense Efficiency ratio is: Total Operating Expenses (Excluding Depreciation and Interest) divided by Gross Revenue
• 26 •
• September-October 2021
In essence, tracking how many cents of operating expense it takes to produce a dollar of Gross Revenue. To illustrate the value of the OEE ratio, data was gathered for four farms to display changes in efficiency as they moved toward, through and beyond the most recent super cycle. The four farms all include a cow calf operation and approximately the same percentage of acres in a mix of dryland and irrigated row crops. They could each be dubbed a typical midwestern farm. It is important to note that all four borrowers are using accrual adjusted Income Statements. Their data quality is high and reflects true profitability. If you have not moved to accrual adjusted Income Statements, it is a foundational piece to enhanced quality analysis. The chart below displays three-year averages of the OEE ratio for each of the four farms.
When compared side by side it is evident that Farm One emerged from the super cycle, even more efficient. While the other three lost significant efficiencies. Which begs the obvious question, “What strategic decisions allowed Farm One to emerge from the super cycle with increased efficiency?” Based on knowledge of the operations three key strategies were used:
• Consistently marketing crops and livestock two years ahead,
• Reconfiguring capital to deploy it the most
effective way, while resisting the urge to completely upgrade machinery and facilities with the enhanced revenue, and
• Close management of expenses by conducting a line-by-line review each year.
After developing and reviewing this case study, several things were evident. First, financial information doesn’t lie, there are tactics available to improve the efficiency ratio even in a super cycle. Second, you can’t take your eye off the ball during good times, for even one year. Farms two, three and four all saw dramatic impact on the average of the efficiency ratio post super cycle. Exerting influence on that negative move were inconsistent and/or no marketing and decreasing focus on controlling expenses. Just one year of skyrocketing expenses leaves a large impression. And third, times of high prices can disguise inefficiencies. Out of the norm government payments such as the ad hoc ones the last few years can skew the revenue picture as well. General ag lending statistics show that in 2020, many borrowers covered their debt service exclusively with government payments. Without further study of the numbers, one might assume that the operation was doing very well. Can you review the trend and determine what specific activity caused the impact? Of course not, but it does alert you to a possible trouble so you can start digging in to find out what happened. Because driving down the expense side of this equation is challenging. And, because borrowers sometimes believe their commodity prices are out of their control, how do you convince borrowers to work toward improving the Operating Expense Efficiency ratio?
• Engage a marketing plan on 100% of sales, • Conduct an annual line-by-line expense review and evaluation, zero-based budgeting for agriculture, and
• Reconfigure capital allocation for maximum profitability.
If your bank is new to ratio analysis or is not used to discussing ratios with borrowers, the OEE ratio is a great place to start. It is easy to calculate and understand and is also meaningful to borrowers. You can use this ratio to strengthen your borrower relationships by offering added value through the insights that come from this ratio. Consider the following positive ways to launch those discussions • Borrowers can use this ratio to challenge themselves. The ratio is an indicator of how management and resource base are working together to make maximum impact (MxR) squared. • The range in which the ratio falls does not change; regardless of change in expenses and/or revenue, look for stability in the range or a decreasing ratio. Begin by reviewing the range and setting goals to achieve. • Create a benchmark with this ratio against which you match up expenses and revenue on Pro Forma Cash Flows. There are benchmark suggestions below. • If borrowers are eager to improve efficiency, help them see that it will take:
• Significant management adjustments, • Changes in resource composition, and • Adoption of new practices; for instance, moving toward no-till and away from maximum tillage.
• Put the level of revenue and expense in context. Help borrowers see that the cost structure of today’s operations is substantially higher. Even small swings in expense can have a dramatic impact on margins. Your bank may also be using ratios to rank borrowers within your portfolio or as part of loan pricing and scoring. If that is the case, the following benchmarks may be useful. They are widely accepted and provide September-October 2021 •
• 27 •
a good starting point for a dialogue about how these ratios could be part of your scoring or pricing and what your bank’s lending policy will be. Please note, there is a recognized difference in benchmarks for operations that have mostly owned versus mostly rented or leased land.
As agriculture lending continues to evolve and becomes more analysis focused, great lenders will work in partnership with their borrowers to encourage:
• Deep, quality analysis, including accrual adjusted Income Statements,
• Knowledge and implementation of risk management/commodity marketing,
Alt
• A focus on education – both parties need to keep learning,
• A keen understanding of each business enterprise, and
• Striving toward above average business IQ Efficiency is never more important than in times of tight margins, but don’t overlook how it can also help borrowers truly capitalize on the upside of super cycles and other circumstances that provide openings for extraordinary financial success. Ratio analysis is the tool to uncover those opportunities and to position borrowers to act. About the author: Tim Ohlde is CEO of Country Banker Systems. He can be reached at timo@countrybanker.com. Country Banker is a loan analysis software program designed by bankers for bankers to use in an intuitive and efficient way. Ohlde is also CEO of Elk State Bank. Both companies are based in Clyde, Kansas. IBA Associate Member
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New Branch Specialists
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• September-October 2021
September-October 2021 •
• 29 •
The IBA is Making the Move to .BANK
and think you should, too!
We’re excited to announce that the Illinois Bankers Association has enhanced our cybersecurity and will be moving our website and email addresses from ILBanker.com to Illinois.BANK in September 2021.
There simply has never been a better time to enhance cybersecurity for your bank, online banking, and email communications by moving to the verifiable, gated and more secure .BANK domain.
After the move, if you visit or email us at ILBanker. com, you will be automatically redirected to Illinois. BANK (take a moment at your convenience to update your bookmark and address book). We believe ‘The bank of the future’ is in .BANK, so to further encourage you to enhance your cybersecurity along with us, we want to announce a new member benefit, a 20% discount on new 1-year registrations of .BANK domains for all members of the Illinois Bankers Association.
1. Complete the Verification Application with fTLD, the operator of the .BANK domain:
Now is the time to move to .BANK! Today, most of our customers find themselves banking and communicating with us online, and they will likely continue to do so for the foreseeable future. In fact, more than a quarter of surveyed customers indicated they’ll continue to bank online even once it’s safe to return to branches. Further, many customers find themselves more acutely concerned with their personal and/or business finances as the COVID pandemic continues. This move to online banking and communications has caused a dramatic increase in phishing attacks in the financial sector (400%-600% according to the FBI), and the concern around personal/business finances has made customers far more likely to engage with phishing emails, leading to identity theft and financial fraud. Similarly, this increase of phishing and BEC-style attacks on banks increases the probability of breaches and ransomware attacks. • 30 •
• September-October 2021
The process is very easy:
www.register.bank/get-started 2. Once you are verified (typically within 1 business day) you will receive a Registration Token from fTLD. Share this token, and the Discount Code below, with one of the participating registrars listed below to complete the registration process and purchase your .BANK domain.
Discount Code: SBAAPR2021 Participating Registrars • EnCirca • Lexsynergy • 101Domain • DomainRegistry.de If you have any questions about .BANK, from registering a domain to making the move easily, affordably and seamlessly for your customers, Drew Schiff, from fTLD Registry Services, the .BANK operator, has offered to be a direct resource to our members. He can be reached at drew@fTLD.com or 202.339.7000.
MYTH VS. REALITY MYTH #1: It’s expensive REALITY: Most .BANK’ers report implementing our Security Requirements for around $1,000.
MYTH #2: It’s hard to implement REALITY: We have new tools and partnerships that make migration easier than ever. On average, our Security Requirements take 2-3 hours of engineering time and banks complete the entire move over the course of 2 weeks. However we’ve had banks complete their moves in just a couple of days.
MYTH #3: It’s about marketing, not security REALITY: .BANK, through verification and Security Requirements, provides security that cannot be replicated in gTLDs like “.com”. Our .BANK’ers have prioritized migration because they found it to be the most cost effective, efficient way to protect their bank, employees and customers from phishing and spoofing attacks that lead to breaches, BEC, malware, ransomware, identity theft and financial fraud.
MYTH #4: It’s not being used by banks yet REALITY: Initially there was a lull due to perceptions of high cost and complexity, but with our new tools, best practices, customer marketing and education templates, partnerships and outreach there has been a surge interest and migration. There are currently over 670 .BANKs live and many more are working with us to make the move now.
MYTH #5: The big banks don’t see the value in .BANK REALITY: Big banks believe in the security afforded by gated TLDs, like .BANK, but most have invested hundreds of thousands of dollars to secure their own gated and branded TLDs (.AMEX, .BARCLAYS, .BBVA, .BOFA, .BNPPARIBAS, .CHASE, .CITI, .HSBC, etc.). When the big banks move to gated domains they’ll use their own.
Get a Domain @ www.register.BANK Calla Us: 202.589.2528 Launch Domain @ www.register.BANK/LAUNCH
Call Us: 202.589.2528
September-October 2021 •
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The Federal Reserve Offers Community Banks a New Tool to Meet Accounting Change By Carl White, Federal Reserve Bank of St. Louis
T
he Federal Reserve recently unveiled a tool to help small community banks— those with less than $1 billion in assets—comply with a new accounting standard they are required to implement by 2023. The standard is the current expected credit loss (CECL) methodology for setting banks’ loan loss allowances, and the tool is called SCALE—the Scaled CECL Allowance for Losses Estimator.
➢
Why CECL?
Put simply, under CECL, banks will be required to set aside funds to cover losses expected over the life of an asset when it is booked, rather than when it becomes probable that a loss will occur. The financial crisis of 2007-2008 spurred this change in loss recognition because bank balance sheets did not adequately reflect the risks inherent in loan portfolios. Under CECL, banks will rely on historical experience, current conditions and “reasonable and supportable forecasts” in setting aside loan loss reserves, formally called the allowance for credit losses (ACL).
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• September-October 2021
Just how they do that depends on a number of factors, including size and complexity. The nation’s largest publicly traded banks began complying with CECL in 2020. The nation’s community banks, thrifts and credit unions are required to comply by January 2023, and regulators have been working with them to ease the transition process.
Helping Community Banks Make the Transition
➢
The St. Louis Fed has been at the forefront of these efforts, and in December 2019, we launched the CECL Resource Center at www. supervisionoutreach.org/cecl. Designed as a “one-stop” resource for community bankers, the website features CECL news and updates, supervisory guidance, research and analysis, and links to webinars and other tools. SCALE, which was developed by a team of experts from across the Federal Reserve System at the direction of Federal Reserve Governor Michelle Bowman, is the latest addition to the site and has its own page that contains links to a webinar on the SCALE methodology, the SCALE spreadsheet template and instructions, and frequently asked questions. In a nutshell, the SCALE method simplifies the process of computing the ACL by using peer data derived from the publicly available regulatory reports
(call reports) of larger community banks as a starting point.1 Banks can then make adjustments to reflect their own circumstances without the need to work with costly third parties. Community banks are not required to use the SCALE methodology, and its use should not be considered a “safe harbor,” as examiners will still evaluate the adequacy of a bank’s overall ACL process.
➢
Stay Tuned
The SCALE page on the CECL Resource Center website, like the parent site, is a work in progress. Still to come is a data spreadsheet featuring the call report data banks that wish to use SCALE need to estimate their CECL-compliant ACL. An Ask the Fed webinar on the SCALE tool, featuring accounting experts
from the Federal Reserve, the Financial Accounting Standards Board (FASB) and the Conference of State Bank Supervisors (CSBS), also provides valuable information for banks. Other resources will continue to be added to the site. Illinois community banks headquartered in the Federal Reserve’s Eighth District with CECL-related questions, or questions about the SCALE tool, should contact Supervision Vice President Allen North at Allen.North@stls.frb.org. Community banks in Illinois that are headquartered outside the Federal Reserve’s Eighth District should contact their local Reserve Bank. About the author: Carl White is Senior Vice President, Supervision, for the Federal Reserve Bank of St. Louis. IBA Associate Member
September-October 2021 •
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UPCOMING EVENTS October 4 Fall Golf Outing Pekin Country Club Pekin
October 25-26 Washington Leadership Visit Washington, D.C.
October 7 BankTech Conference Chicago Marriott Southwest Burr Ridge
October 28-29 Women in Banking Conference Crowne Plaza Springfield
November 4 Midwest Bank Leaders Conference Gleacher Center Chicago December 2 Chicago Area Chapter Holiday Breakfast Sheraton Lisle Naperville Hotel
December 3 Bank Counsel Conference Renaissance Chicago Downtown Hotel Chicago
TOP TIER SPONSORS
Become a TOP TIER SPONSOR by connecting with the IBA at 217-789-9340. • 34 •
• September-October 2021
EVENT HIGHLIGHTS Women’s Leadership Symposium Draws More than 900 Registrants More than 900 people registered for this year’s virtual Women’s Leadership Symposium. The IBA partnered with the American Bankers Association for the event, which attracted attendees from nearly every state. Speakers included Raven Solomon on “Inclusive Leadership” and Deb Munster on “Relationship Capital.” Top-name speakers, along with the chance to network with other attendees in smaller breakout rooms, drew high marks from the crowd. Thank you to our friends from Solutions Bank for sharing a picture from their Women’s Leadership Symposium 'watch party.' The group “came away from the event inspired, engaged, and feeling cohesive and powerful."
Raven Solomon discussed the importance of traits, competencies and experiences in her opening session.
September-October 2021 •
• 35 •
PREFERRED VENDOR By Brian Hoffman, President, Illinois Bankers Business Services, Inc.
American Community Bank and Trust Forms Strategic Partnership with Liquid Capital Corporation American Community Bank and Trust, in Woodstock, Ill., has formed a strategic partnership with Liquid Capital Corporation as a participant in Liquid Capital’s Bank Alliance Program. Through this program, the bank and their commercial lenders will have alternative financing options available to prospective and current bank customers. In a highly competitive market, having a broader array of financing options to address the diverse needs of businesses helps to differentiate the bank and its lenders.
Trust is an $850 million dollar privately owned commercial bank with locations in Woodstock, Crystal Lake, McHenry, Huntley and Elk Grove, Ill. ACBT is focused on relationship banking with privately owned businesses, investors, and families. About Liquid Capital Corporation With administrative offices in Toronto, Canada and Austin, Texas, as well 35 sales offices spanning North America, Liquid Capital
In the words of Rick Francois, the bank’s president, “American Community Bank and Trust strives to deliver creative solutions for our client base. We believe that working with Liquid Capital will help us deliver additional options for our clients to meet their financing needs.” Commenting on the partnership between the bank and Liquid Capital, Tom Stamborski, program manager for the Bank Alliance Program, said, “We at Liquid Capital are delighted to be a partner with American Community Bank and Trust and gratified that they have chosen us to provide strategic financing solutions for their customers. We look forward to complementing the bank’s reputation as a customer-centered and innovative institution.” About American Community Bank & Trust American Community Bank &
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• September-October 2021
provides an array of alternative financing programs for B2B companies across most industries. The company has provided over 3 billion dollars of financing facilities to its clients. Contact Liquid Capital to learn how your bank can customize a program, including "White Labeling," and create an additional revenue stream! Contact Tom Stamborski at 847-8423300 to find out what Liquid Capital can do for your bank!
NEW LOOK, NEW NAME, SAME TRUSTED SERVICE Approval Payment Solutions (APS) Has Rebranded Approval Payment Solutions (APS) is excited to announce the rebrand to evolv in 2021. While providing payment processing solutions to bank partners and merchants across the country for over 23 years, evolv has been dedicated to growing with the companies it serves. Consistent with the company itself, the name “evolv” illustrates everchanging growth in a specific direction. That direction for evolv has always been clear: to help its partners, sales channel and merchants increase sales, reduce costs, and mitigate risk. Commitment to this motto compelled enhancements to their product portfolio, including investing in a digital marketing agency and partnering with multiple payment processors to offer a more robust line of business solutions and cutting-edge payment technology.
Customized Solutions for Businesses evolv provides business owners across the country customized solutions for their business, including, but not limited to, cash discounting, point-of-sale, contactless payment terminals, virtual payment options, and ecommerce solutions. Accepting credit cards is often a large overhead expense for many businesses as the cost continues to rise to cover the expense of reward points, airline miles and other customer card incentives. Because federal regulations have changed, business owners have options when it comes to payment acceptance. evolv works closely with merchants to define solutions best for their business.
YOUR LEADING BANK DESERVES LEADING INDUSTRY EXPERTISE The Consultants ONLY work with banks. We uniquely know, understand and care about your insurance needs. Find everything you need including Financial Institution coverages, Property & Liability insurance, Workers Compensation, and a menu of Employee Benefits. Looking for the best products and services available anywhere, bundled to build a coverage and benefits package unique to your situation?
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we craft coverage and benefits packages unique to your situation - not the bank down the street.
GET IN TOUCH:
Brian Hoffman | bhoffman@illinois.bank
continued on next page
September-October 2021 •
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PREFERRED VENDOR • Cash Discounting A legal, compliant, and hasslefree solution, evolv’s Cash Discounting Program has helped hundreds of business owners save up to eighty percent of their credit card processing fees. • Point-of-Sale Become more efficient with a reliable, easy-to-use point-of-sale solution that accepts all payment types, tracks time and employee attendance, manages inventory, gives real-time insights into trends and data, and so much more. • Contactless Payment Terminals Keep customers safe by offering a touch-free payment option like Apple Pay or Google Wallet. evolv offers the latest in contactless smart terminals and mobile solutions.
• Virtual Payment Options From payment buttons to ACH and recurring billing, evolv offers a strong line of virtual terminals making accepting payments both safe and easy. • Ecommerce Your online store is just a few clicks away with evolv’s ecommerce solutions. Set up your online store to easily sell across social media, Amazon, and instore, with easy-to-use marketing tools to help grow your business. Building Partnerships Through Excellence in Customer Service evolv is home to hundreds of relationship managers, independent agents, and sales offices across the country with representation in 20 states. Through excellence in customer service, evolv strives to provide the best solutions for their
partners and merchants, treating everyone as part of the evolv family. Aligned with its mission, evolv concentrates on evaluating and updating current business practices to ultimately reduce merchant and partner overhead, while taking necessary steps to secure merchants and partners, mitigating their payment processing and digital marketing risks. To learn more about evolv, visit poweredbyevolv.com or reach out Danielle Lausch, Director of Strategic Partnerships at 717-892-8988. For more information about any of our Preferred Vendors, connect with Brian Hoffman, bhoffman@ illinois.bank, 217-789-9340.
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LKCS
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Back Cover
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PG Design + Build
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• September-October 2021
46
PREFERRED VENDOR UNIQUE AND MARKET-LEADING INSURANCE SOLUTION FOR FINANCIAL INSTITUTIONS, RECOGNIZED FOR THEIR UNDERWRITING AND CLAIMS EXPERTISE RICHARD FLENNER | RFLENNER@ABAIS.COM REDUCE YOUR ENERGY COSTS THROUGH APPI’S DATA-DRIVEN PROCUREMENT AND CONSULTING SERVICES JAMIE POLEND | JPOLEND@APPIENERGY.COM FASTER AND SIMPLER IRA ADMINISTRATION PROGRAM THAT CATCHES ERRORS AND VERIFIES THE ACCURACY OF TAX REPORTING FORMS MICHAEL BUSH | MICHAEL.BUSH@ASCENSUS.COM BANKERS HEALTHCARE GROUP OFFERS LOAN SOLUTIONS TO TOP-QUALITY BORROWERS, WHICH COMMUNITY AND MIDSIZE BANKS CAN ACCESS VIA THE BHG LOAN HUB. NELLIE ANDRIYANOVA | NELLIE@BHG-INC.COM YOUR JOB IS POSTED ON A COMBINATION OF 7,500 EMPLOYMENT OFFICES, COMMUNITY BASED ORGANIZATIONS, AND OTHER SPECIFIC DIVERSITY HIRING SITES, AS WELL AS 100S OF OTHERS BRIAN HOFFMAN | BHOFFMAN@BANKTALENTHQ.COM ACCELERATE GROWTH, BOOST ROI, AND IMPROVE OPERATIONS WITH TOOLS AND TECHNOLOGY DESIGNED FOR FINANCIAL INSTITUTIONS OF ALL SIZES BOB REID | BOB.REID@DELUXE.COM REDUCE THE RISK AND CERTIFY YOUR LOAN PORTFOLIO AGAINST FLOOD ZONE RISKS CRAIG CALLAHAN | CCALLAHAN@FLOODPLAIN.COM IDENTIFY AND ADDRESS YOUR BANK’S UNFUNDED RISKS IN A TAX ADVANTAGED WAY TRAVIS HOLDMAN | THOLDMAN@KEY-STATE.COM SAVE 20% - 30% BASED ON YOUR CURRENT OFFICE PRODUCT SPEND KIMBERLY GILBERT | KIMBERLY.GILBERT@OFFICEDEPOT.COM
CAN ADD MILLIONS TO YOUR BOTTOM LINE BY NEGOTIATING AND REVIEWING YOUR KEY CONTRACTS UMA ZIELINSKI | UZIELINSKI@SRMCORP.COM PROVIDES BANKS WITH A COMPREHENSIVE OURSOURCED SBA 7(A) AND USDA LENDING PLATFORM CONNOR MULVEY | CMULVEY@WINDSORADVANTAGE.COM
QUICKLY AND EFFICIENTLY MANAGE PPP LOAN FORGIVENESS; SAVING TIME AND MONEY RENE MORALES | RENE.MORALES@ABRIGO.COM APPROVAL PAYMENT SOLUTIONS ENABLES MERCHANTS TO ACCEPT CREDIT AND DEBIT CARDS, EBT, GIFT CARDS, FUEL CARDS AND CHECKS SAFELY AND EFFICIENTLY DANIELLE LAUSCH | DLAUSCH@APSOLUTIONS.NET ARM YOUR MANAGEMENT TEAM AND STAFF WITH THE DAILY FINANCIAL INFORMATION THEY NEED TO MAKE CRITICAL DECISIONS THAT IMPROVE PERFORMANCE AND PROFITS BOB REID | BOB.REID@DELUXE.COM TAKE CONTROL OF THE MARKETING PRODUCTION PROCESS – ALL FOR A FRACTION OF YOUR CURRENT MARKETING COSTS NEAL REYNOLDS | NREYNOLDS@BANKMARKETINGCENTER.COM DEEPEN YOUR POOL OF POTENTIAL DIRECTORS AND MEET THE NEEDS OF YOUR COMPANY JIM ZUEHLKE | JIMZ@CARDINALBOARDSERVICES.COM CHARLIE ROER | CHARLIER@CARDINALBOARDSERVICES.COM FULL FIDUCIARY PROTECTION, SCALE, AND PURCHASING POWER, WHICH REDUCES THE COST OF ADMINISTRATIVE SERVICES AND INVESTMENTS PATRICK BEARSS | PAT.BEARSS@ABGRPIS.COM PROVIDES STABLE AND PROFITABLE INCOME OPPORTUNITY FOR AFFILIATED AGENCY OWNERS DANA LYONS | DLYONS@INVTITLE.COM ATTRACT AND RETAIN CUSTOMERS WITH DIVERSE FINANCING SOLUTIONS FOR AN ADDITIONAL REVENUE STREAM TOM STAMBORSKI | TSTAMBORSKI@LIQUIDCAPITALCORP.COM ALLEVIATE STRESS AND MITIGATE RISK TO ENSURE THE SAFETY AND SECURITY OF YOUR INSTITUTION DAVID EDWARDS | DAVID.EDWARDS@SBSCYBER.COM FLEXIBLE IT SERVICE PROVIDER THAT ALLOWS THE BANK THE FREEDOM TO DEPLOY TECHNOLOGY BASED ON THEIR UNIQUE STRATEGY TOM SZEWS | TOMS@UFSTECH.COM MARKET LEADER PROVIDING OUT-OF-THEBOX INTELLIGENT VIRTUAL ASSISTANT (IVA) TO HELP CUSTOMERS 24/7. JOHN GAREY | JOHN.GAREY@ALLIEDSOLUTIONS.NET
September-October 2021 •
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PREFERRED VENDOR
Windsor Advantage’s Q&A Corner By Connor Mulvey, Windsor Advantage 1. We have a number of borrowers in our SBA Portfolio that have not done well over the last 18 months and the CARES Act payments have expired. I understand daycares, spas & salons, fullservice restaurants, breweries and bars are all industries that collectively have struggled. What are some proactive steps we can take to minimize any losses we may incur? I would suggest now is the time to make sure your SBA loan files are compliant and up-to-date. Review your portfolio and identify the accounts where these types of industries are or will have issues in the coming months. If you have not completed a loan/ file review, now is the time. Windsor provides external file review and there are several very competent firms that will review the file for eligibility, underwriting and identify any missing key documents. Now is the time to get key compliant documents into the file before your borrower becomes less cooperative. This should be part of your process as an external file review can not only identify exceptions that may result in a repair or denial, it can also identify systemic process flaws within your SBA processing, underwriting, closing and servicing functions. 2. We have a growing watch list of potential problems. When is a site visit required by the SBA? The only time that the SOP 50 57 2 specifically requires a site visit is
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when a loan is put into liquidation. Other times when it is prudent to do a site visit include: • Prudent Servicing Standards – whatever your institution’s site visit policy is. • During consideration of a workout plan • If there is a change in environmental risk • During a payment deferment 3. What should we do to prepare for a site visit? • Review the loan file, specifically collateral documents. • Complete new lien searches. • Determine the status of taxes – property, payroll, income. • Appraisal review – Does a new appraisal need to be ordered? 4. What needs to be addressed in the site visit? • Determine whether the property is occupied or vacant. • Assess if there is environmental risk. • Gather information for the preparation of a liquidation plan. • Evaluate the possibility of a workout with the borrower. • Repossess personal collateral if appropriate. • Develop a plan for the Care and
Preservation of the collateral including securing the property and making sure that you have insurance coverage on the collateral. • Evaluate if any repairs or cleanup are necessary on the property. As prudent lenders, we must work with our borrowers to the extent we can, but in the cases where we may have no choice but go through liquidation, it is critical our process, documentation and staff all know what to do to ensure we are successful, should we need to ask for a Guaranty Purchase. Windsor Advantage is the nation’s largest SBA Lender Service Provider and assists lenders nationwide in processing, closing, servicing and liquidations. For more information, please contact Connor Mulvey, Vice President– Business Development Windsor Advantage, LLC, 444 N Wells St., Suite 201, Chicago, IL 60654 P: 312-585-6596 C: 708.408.1820
SBA Notes of Interest Windsor Advantage, LLC is the nation’s largest Government Guaranteed SBA and USDA Lender Service provider, based in Chicago with offices in Indianapolis IN, and Charleston, SC. Windsor manages over $1.8 billion in SBA and USDA servicing assets. IBA Preferred Vendor
• September-October 2021
WELCOME
NEW ASSOCIATE MEMBERS (as of 9-1-21) Aunalytics South Bend, IN aunalytics.com Aunalytics provides advanced analytics and valuable business insights to midsized and community banks to improve customer relationships, strategically deliver new products and services through data-driven campaigns, and drive competitive advantage with its side-by-side digital transformation model. Aunalytics' Daybreak for Financial Services is a cloud-native data platform with advanced analytics that empowers users to focus on critical business outcomes. BalancedComp, Wichita, KS balancedcomp.com We partner exclusively with banks and credit unions to provide compensation and performance management consulting services. BigIron Auctions Saint Edward, NE bigiron.com As pioneers in the industry, we are among the first to provide a safe, secure way for owners to receive fair market value for their assets via an online auction. Over the years, we’ve expanded our operations, and now conduct weekly equipment, land, and livestock auctions from coast-to-coast. Despite our growth, one thing remains unchanged – our commitment to providing an honest, trustworthy auction. Eltropy, Inc, Milpitas, CA eltropy.com Serving over 200 FIs and built specifically for FIs, Eltropy's enterprise text messaging platform enables unique capabilities that enables FI's to offer a better client experience while streamlining operations - Lending, Collections, Marketing, Reputation Management, HR, Contact Center, and more. FirsTech Inc., Saint Louis, MO firstechpayments.com FirsTech Inc. has been a multi-faceted payment solutions and technology firm since 1984. FirsTech’s Financial Institution Technology
Solutions include Electronic Payments, Mobile Solutions, Telephone Payments, In-Person Payments, Remittance Processing, Merchant Services, and many more. FirsTech is a leading technology partner that assists clients in achieving their business objectives. Foresight Research Rochester Hills, MI foresightresearch.com Foresight Research interviews nearly 1,000 Illinois residents annually about their banking needs, satisfaction, products and services consumed, branch and digital banking well as demographics and media and messages that influence banking decisions. Illinois surveys are included with 15,000 annual national surveys for local, regional and national reporting. Foresight Research is a leader in cost effective syndicated research and has been published the Financial Brand Insights magazine. Luse Gorman, PC Washington, DC luselaw.com Luse Gorman, PC is a Washington, D.C.–based law firm specializing in securities, regulatory, benefits and tax matters for financial institutions. With 18 experienced partners focused solely on financial institutions, we have one
of the largest financial institutions law practices in the country. Our clients range from large international banks to small mutual thrifts. National Notary Association Chatsworth, CA nationalnotary.org Our company provides bank employees with the training, supplies, and surety bonds needed to become a Notary Public in all 50 states. SEI , Oaks, PA seic.com/solutions/it-servicestodays-modern-businesses SEI is a financial institution providing technology operations and investment processing solutions to other financial institutions. The business has approximately 4,000 employees and $1B revenue. Publicly traded, Nasdaq: SEIC We’ve built cybersecurity and network operations solutions to support this business, and are offering them as managed services to community banks. Weltman, Weinberg & Reis Co., LPA, Chicago, IL weltman.com Since 1930, we've provided our clients with the kind of leadership that stands out in our industry. And we have the pioneers to prove it.
ASSOCIATE MEMBER NEWS Manatt, Phelps & Phillips, LLP Manatt, Phelps & Phillips, LLP, a multidisciplinary, integrated professional services firm, announced that Bryan A. Schneider has joined Manatt Financial Services in its consumer financial services practice. Joining as a partner in Chicago, Schneider has deep regulatory roots and comes to Manatt from the Consumer Financial Protection Bureau (CFPB), where he led the Supervision, Enforcement and Fair Lending division as Associate Director. Before that, he was the top official at the Illinois Department of Financial and Professional Regulation, where he served as Secretary and was a member of the Governor’s Cabinet. Schneider’s practice focuses on advising clients through the gamut of consumer financial services regulatory and enforcement matters, particularly as it relates to supervision, enforcement and fair lending. He also brings a unique perspective for clients as a former member of key interagency governing organizations at the CFPB, including the Task Force of Supervision of the Federal Financial Institutions Examination Council.
September-October 2021 •
• 41 •
ON THE MOVE Belleville
Reay
Severson
BANK OF BELLEVILLE Tom Reay has joined Bank of Belleville as a mortgage consultant. Reay has over 20 years of experience in lending and will handle loans throughout Bank of Belleville’s Metro East region which includes Bank of Belleville and divisional banks in Madison, Clinton and Monroe Counties.
Bloomington Shepherd
Wynn
HEARTLAND BANK AND TRUST COMPANY Heartland Bank and Trust Company announces Deanne Conterio has been named Senior Vice President Retail Banking Director.
Bloomington, MN
Garner
Pitchford
UNITED BANKERS’ BANK Dwight Larsen, President and CEO of United Bankers’ Bank (UBB), announces the appointment of Jennifer Severson as Executive Vice President and Chief Financial Officer. Severson has over 19 years of experience in community banking.
Galesburg
DiMarzio
Seifert
F&M BANK Mike Holloway, Knox County President of F&M Bank, is pleased to announce that Brittney Shepherd has been hired as Small Business Banker.
Mattoon
Moffett
• 42 •
FIRST MID WEALTH MANAGEMENT First Mid Wealth Management is pleased to announce the addition of a new financial advisor team in Decatur with the addition of David C. Swartz, a Raymond James financial advisor, and Anita Reed, an administrative assistant. Swartz brings
• September-October 2021
37 years of experience, being licensed in Illinois as well as holding nonresident licenses in 14 other states.
Moline
SENB BANK Matthew L. Wynn has been appointed to the bank’s Board of Directors. Wynn brings 22 years of SENB Bank service in retail and lending leadership. Currently, he is the Senior Vice President and Senior Loan Officer.
Palatine
CORNERSTONE NATIONAL BANK & TRUST COMPANY Cornerstone National Bank & Trust Company is pleased to announce the addition of Ed Garner as a Senior Vice President based out of their Naperville location. Garner joins the team with 30 years of banking and finance experience.
Quincy
PEOPLES PROSPERITY BANK Peoples Prosperity Bank, a division of Town and Country Bank, announced that Haylee Pitchford has been promoted to Branch Manager in Quincy.
Springfield
TOWN AND COUNTRY FINANCIAL CORPORATION Town and Country Bank welcomes Mark DiMarzio and Carla Seifert as Vice President, Commercial Banking Officers, operating out of the bank’s MacArthur Boulevard location in Springfield. In addition, the bank welcomes Dan Moffett as VP, Commercial Banking Officer in its Bloomington location.
On the Move at Quad City Bank and Trust Quad City Bank & Trust (QCBT) announces the retirement of Michael Bauer from his service on the bank’s board of directors. Bauer helped to co-found QCR Holdings, Inc. (QCRH) in 1993 and create the company’s first charter, Quad City Bank & Trust, in 1994. He retired as President and CEO of QCRH in 2007. A Davenport, Iowa, native, Bauer began his banking career at Davenport Bank & Trust, serving in a variety of leadership roles until the company was acquired by Norwest Bank in 1991. It was at this time that he partnered with Doug Hultquist to form a community-focused holding company – QCRH. Over the past 27 years, QCRH has grown to over $5.68 billion in total assets with banking charters in the Quad Cities, Cedar Rapids, Waterloo/Cedar Valley, Des Moines/Ankeny and Springfield, MO as well as an equipment leasing division in Milwaukee, WI. Jim Field, who also serves as Vice Chair on the board of directors for QCBT’s parent company, QCRH, has replaced Bauer on the QCBT board of directors effective May 20, 2021. Now retired from an impressive career at John Deere, he served as President of the Agricultural Division, the Worldwide Construction & Forestry and Power Systems Division and as the Chief
Financial Officer of Deere as well as in a number of other positions in Operations, Finance and Business Development since joining Deere in 1994. QCBT President, Laura “Divot” Ekizian, was unanimously elected as a new member of the bank’s board of directors. A Chicago area native and St. Ambrose University graduate, she began her banking career with QCBT 21 years ago as a Private Banking Officer. In addition to her leadership duties as President, Ekizian oversees the consumer and residential lending, retail and marketing departments.
Lockwood began his banking career 38 years ago as a small business banker at a family-owned bank in Denver, Colorado, where he was eventually promoted to a credit analyst position and manager over the retail banking division. In addition, QCBT is proud to welcome Mike Weipert to the role of Vice President, Commercial Banking Officer. With 25 years of experience in the financial industry, Weipert specializes in working with commercial and industrial clients, commercial real estate companies and non-profit organizations.
The bank also announces the retirement of Jeff Lockwood, Executive Vice President & Chief Lending Officer. Lockwood started with the bank 15 years ago as the Senior Vice President of Commercial Banking, overseeing commercial, correspondent, credit cards, real estate & retail. Effective July 4, 2021, his current responsibilities and management of the commercial banking group, correspondent banking department, and treasury management team transitioned to John Nagle, Senior Vice President, Chief Lending Officer.
September-October 2021 •
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NEWS & NOTES
In Memory Of
Courtney Olson Named BankBeat Rising Star
IBA Past Chair Gavin “Guy” Weir Gavin “Guy” Weir, age 90, of Frankfort, passed away July 17, 2021, at Lightways Hospice House in Joliet. Guy was a United States Army Veteran and will be remembered for his commitment to his family, leadership in the banking industry, giving back, and his strong work ethic, and longtime personal and business friendships. Guy’s career in banking started with Pullman Bank & Trust, where he worked his way through various departments which led him to Standard Bank and advancing to President at County Bank. In 1970, Guy transferred to Chicago City Bank and Trust (CCB), where he became President and Chairman of the Board. In 1999, Guy sold CCB and continued as a Board Member of FBOP Corp, assisting in the transition to the new owners.
Congratulations to Courtney Olson, Senior Vice President, Managing Director of Business Banking with the First Bank of Highland Park, for being named a BankBeat Rising Star. Olson is a 2008 Illinois Bankers Association Future Leaders Alliance (FLA) graduate, is a former FLA Board Chair, and she was recently named to serve on the IBA Board of Directors. The article, which appeared in the July BankBeat magazine, stated, “When PPP loans became available, not only was Olson on the front line within her bank, working 17-hour days to secure loans for her customers, but she also partnered with local chambers and led webinars to help business owners understand the ‘ins and outs’ of PPP loans.” View the full article at https://bankbeat.biz/rising-stars2021-illinois-banker-serves-community-and-customers-alike
CONGRATULATIONS, COURTNEY! We are grateful for your leadership, expertise and commitment to First Bank as we deliver banking solutions throughout the Chicagoland area. Congratulations for being recognized as a Rising Star in Banking.
He served as President of the Illinois Bankers Association in 1979-1980, along with holding a position on the Leadership Council of the American Bankers Association.
Courtney Olson Senior Vice President / Managing Director of Business Banking
HIGHLAND PARK • NORTHBROOK • FIRSTBANKHP.COM Member FDIC | Equal Housing Lender | NMLS #421795
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• May-June 2021
Lyle Ince Joins 50 Year Club
and Oakridge Financial advised B&E Investments, Inc. on the transaction. Upon closing of the transaction, State Bank of Arcadia will merge into First National Bank and Trust Company resulting in approximately $400 million in total assets across five locations.
Stapleton Elected to Illinois Society of Association Executives Board
ABA Washington Visit Remains Virtual
Community State Bank (Galva) President Tim Nimrick, recently presented the Illinois Bankers Association 50-year Club pin and certificate to CSB Executive Vice President, Lyle Ince, at a CSB Board meeting. Illinois bankers who have been in the banking industry for 50 years or more receive recognition in the prestigious IBA 50 Year Club. Congratulations, Lyle!
First National Bank and Trust Company to Acquire State Bank of Arcadia
In partnership with state bankers associations, the ABA plans to host a virtual Washington Visit via Zoom on September 27-29 with leaders from the CFPB, FDIC, FinCEN, OCC, and Federal Reserve Board of Governors, as well as ABA policy experts. This program provides an opportunity for participants to speak directly with regulators about the need for common-sense policies and reform to help America’s banks better serve their communities and grow the economy. Learn more at www. aba.com.
Congratulations to the IBA's Callan Stapleton on his election to the Illinois Society of Association Executives (ISAE) Board of Directors. Callan is President of Illinois Bankers Education Services, and he recently earned his Certified Association Executive (CAE) designation. He joins the IBA's Debbie Jemison who serves on the ISAE Board as an Ex Officio member.
First National Bank and Trust Company has entered into an agreement with B&E Investments, Inc., to acquire State Bank of Arcadia in Arcadia, Wis., with banking assets of $210 million. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions, including the receipt of the requisite regulatory and shareholder approvals. Reinhart Boerner Van Deuren S.C.
September-October 2021 •
• 45 •
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• 46 •
• September-October 2021
EVENTS CALENDAR SEMINARS, CONFERENCES & FORUMS
SEPTEMBER 29- 10/1
Beyond the Basics - Consumer, Small Business and Small Investment Real Estate Lending
OCTOBER
5 ACH Exception Handling – Springfield 6 ACH Exception Handling – Oak Brook 13 HR Forum 14 Bank Investments and Strategies 14 Commercial Real Estate (CRE) Lending in Today's Economy – Springfield 15 Commercial Real Estate (CRE) Lending in Today's Economy – Oak Brook 18-22 Commercial Lending School – Springfield* 19 LaserPro® Commercial Doc Preparation for Beginners Workshop – Springfield 20 LaserPro® Consumer Real Estate for Beginners Workshop – Springfield 20 IRA Essentials – Oak Brook 21 Advanced IRAs – Oak Brook 21 LaserPro® Tips, Shortcuts and Best Practices Workshop – Springfield 24-25 SBS Security Manager Bootcamp – Springfield 27 Security Officer Workshop – Springfield* 28-29 Women in Banking Conference – Springfield
NOVEMBER 3-4 4
BSA/AML Wrap Up Midwest Bank Leaders Conference – Chicago 9 Fundamentals of Ag Financing – Springfield* 16 Problem Loan Workout in Today's Market 17 Marketing Forum 18 Small Bank CEO Peer Group Forum – Bloomington 19 Technology & Operations Forum – Springfield* *Hybrid (In-Person or Virtual)
ONCOURSE LEARNING WEBINARS
OCTOBER 1 4 4 6
TRID: All About Construction Loans Signature Card Danger Zones Audit Report Writing Legal Essentials for Lenders
All programs delivered virtually unless otherwise noted. Visit my.illinois.bank/Education-Events/Upcoming-Programs
7
Federal Benefit Payments Garnishment Requirements 13 Marketing & Advertising Compliance, Part 1 19 All About Flood Insurance Compliance Requirements 20 Ability to Repay/Qualified Mortgages Review and Update 21 Legal Liabilities when Check Fraud Occurs 26 Opening Complex New Accounts, Part I: Business Accounts 27 Excel Explained: Budget Spreadsheets 28 Opening Complex New Accounts, P art II: Trust and Fiduciary 28 Using an Effective Selling System to “Score” Your Prospects 29 Marketing & Advertising Compliance, Part 2
NOVEMBER 4 17 18 19
Excel Explained: Charts Regulation O - Lending to Insiders Most Common TRID Issues Employment Records and How to Keep Them
GSB ONLINE SEMINARS
OCTOBER
4
Engaging Prospects: How to Leverage Your Resources 5 Accounting Basics/Refresher 5 Overview of Appraisal Rules/ Guidelines and the Review Process 5 Focus on Sole Proprietorships, Rental Property and Farms 5 A Beginners Guide to Asset/Liability Management 7 Characteristics of Strong Risk Assessments and Tools to Monitor and Report Results 7 Managing TDRs Start to Finish: Initial Identification to Rewriting to Non- TDR Status 12 Cap Rates and Factors Beyond Debt Coverage and Loan-to Value 12 Appraisal Approaches to Value De-mystified 12 Focus on Pass-Through Entities and Schedule K-1s 12-13 Fundamentals of Interest Rate Swaps and Caps 13 Liquidity Strategies for Illiquid Community Bank Stocks 13 Loan Portfolio Stress Testing in a Pandemic World
14 15 15
Best Practices in Annual Loan Review Managing Generations in the Workplace Every Employee is Responsible for Customer Growth 15 Five Ways to Reuse IT Risk Assessment Frameworks 18 Preparing for First Meetings: How to Stand Out 18 Customer Experience Management: Lead It or Lose It 19 Issues with Property Types & Lease Structures 19 Key Appraisal Components Beyond the Approaches to Value 25 Coaching Prospecting: Practical Strategies for Sales Leaders 26 Developing a Global Analysis of Property Holdings 26 Overview of Evaluations and Other Valuation Options 28 How to Move from Effective Advertising to Strategic Marketing 28 Pricing Loans in Uncertain Times 28 Building a Culture That Develops Future Leaders
NOVEMBER
3 5 5 8
Everything Roth Cyber Incident Response Best Practices Interviewing Skills for Better Hires Strategic Planning for Financial Institutions: It's All About Your Strategy 10 Maintaining Community Bank Independence in a Consolidating Environment 15 Three Key Risk Assessments In Your ERM Program: ERM, IT and Internal Controls 23 Components of Business Financial Statements & Tax Returns 30 Cash vs. Accrual Accounting Refresher 30 Best Practices for Lines of Credit, Term Loans and Other Credit Facilities
ABA ONLINE TRAINING COURSES
OCTOBER 11 25
Bank Lines of Business Marketing Management
NOVEMBER 1 1 1 8 29
Consumer Lending Managing Interest Rate Risk Money and Banking General Accounting Building Customer Relationships
September-October 2021 •
• 47 •
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