KENTUCKY BANKER August 2014
Key To Success Providing products designed specifically for community banks is key to becoming the best correspondent bank in the marketplace. Let The Bankers’ Bank of Kentucky offer your institution innovative solutions to meet the challenges of today’s complex banking environment.
• Daily Settlement & Cash Management • Federal Funds Lines of Credit • QNET correspondent connection • Loan Participations Buy/Sell • Holding Company Loans • Secondary Market Mortgage service • Safekeeping / Bond accounting • Asset liability management • ACH Origination • International Wire Transfer • Foreign Item Collection • Merchant Services • Visa Gift Card Program • IT Outsourcing* • And more!
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August 2014 | 2
for a personal appointment.
CONTACTS BOARD OF DIRECTORS Mr. William Alverson Traditional Bank Mr. James W. Beach Peoples Bank & Trust Company Owenton Mr. J. Wade Berry Farmer’s Bank & Trust Company Marion Mr.William F. Brashear, II Hyden Citizens Bank Mr. Neil S. Bryan The Farmers Bank of Milton Mr. G. Anthony Busseni Century Bank of Kentucky, Inc. Ms. Katherine Reese Capps First State Financial, Inc.
Mr. David P. Heintzman Stock Yards Bank & Trust Company
Mr. Stephen Miller Peoples Bank of Kentucky, Inc.
Ms. Lanie W. Gardner First National Bank of Muhlenberg county
Mr. Louis Prichard Kentucky Bank
Mr. Don Jennings First federal Savings Bank of Frankfort Ms. Elizabeth Griffin McCoy Planters Bank, Inc. Mr. Michael H. Mercer First security Bank of Kentucky Mr. Glenn Meyers Kentucky Federal Savings & Loan Association
Cover Photo taken by Thomas Cox “sunset over Cumberland Lake”
for the Scenes of Kentucky Photo Contest
Mr. Thomas J. Smith, III American Bank & Trust Company, Inc. Mr. H. Lytle Thomas Heritage Bank Mr. Frank B. Wilson Wilson & Muir Bank & Trust company Mr. Greg A. Wilson The First Commonwealth Bank
KBA STAFF Ballard W. Cassady Jr. bcassady@kybanks.com President & CEO Debra K. Stamper dstamper@kybanks.com EVP / General Counsel / Director of Compliance Paula B. Cravens Sturgeon pcravens@kybanks.com Director of Education Solutions
Chris Kelso ckelso@kybanks.com Manager, AIB, Education Solutions Michelle Madison mmadison@kybanks.com Information TEchnology Manager Lanie Minton lminton@kybanks.com Administrative Assistant
Selina O. Parrish sparrish@kybanks.com Director of Vendor Solutions
Tammy Nichols tnichols@kybanks.com Convention & Membership Services Coordinator
Matthew E. Vance mvance@kybanks.com Chief Financial Officer
Katie Rajchel krajchel@kybanks.com Staff Accountant
Miriam Cole mcole@kybanks.com Executive Assistant
Yvonne Savage ysavage@kybanks.com PAC Services Coordinator
Paula Cross pcross@kybanks.com Education Services Coordinator
Angie White awhite@kybanks.com Manager, Communications Solutions
Jamie Hampton jhampton@kybanks.com Education Services Coordinator Natalie Kaelin nkaelin@kybanks.com Assistant General Counsel
Steve Whitlow swhitlow@kybanks.com Systems Engineer
Consultant
John P. Cooper jcooper@kybanks.com Legislative Solutions Consultant
KBA Insurance Solutions
Chuck Maggard cmaggard@kybanks.com President & CEO Brandon Maggard bmaggard@kybanks.com Account Representative Audrey Whitaker awhitaker@kybanks.com Insurance Services Coordinator
Lane Hettich lhettich@kybanks.com Benefit Manager Donna McCartin dmccartin@kybanks.com Benefit Support Specialist
HOPE of Kentucky Billie Wade bwade@kybanks.com Executive Director
KBA Benefit Solutions
Lisa Mattingly lmattingly@kybanks.com Director of Sales & Service
CONTRIBUTING EDITORS Lane Hettich lhettich@kybanks.com
Angie White Awhite@Kybanks.com
CONTACT 600 West Main Street Suite 400 Louisville, KY 40202
Phone: 502-582-2453 Fax: 502-584-6390 www.kybanks.com
August 2014 | 3
CHAIRMAN’S CORNER bankers’ lives. I find our lenders increasingly frustrated with the new rules that cause us to decline loans we have historically granted.
Neil Bryan KBA Chairman
Politics, pragmatism, and practical solutions to complex issues are on my mind this month. The KBA is affiliated with the American Bankers Association. Pragmatically, we need a full time lobbying presence in Washington to keep our concerns front and center. Historically, I have not always agreed with all of the ABA positions. I will let you in on a little secret: I have not always agreed with all of the KBA positions either. However, our common interests and needs require practical answers to an increasingly varied set of legal and regulatory challenges. Politically we need to find common ground allowing us to present one united voice. ABA’s current theme is “Getting back to the business of banking.” I think that states our position quite well. We want to be allowed to concentrate on our core competences. Unfortunately, we are unable to do that effectively given the way the new regulations (such as Ability to Repay) complicate community August 2014 | 4
In my humble opinion, we need to aggressively move forward with our legislative agenda. Politics have seldom been more crucial to our long term viability as an industry. We need to press forward by telling how our customers are disadvantaged and disenfranchised by implementation of specific portions of Dodd Frank. Record the ways in which our customers are being penalized. Put a face on the problems we encounter every day. Politicians might not be very sympathetic to bankers, but when their voters are adversely affected it illustrates the problems in a very different way. Possibly the frustration and pain we share with our customers is the most potent message we can present to Congress. Let us endeavor to stay on the offensive. I think we own the high moral ground. It is my belief that we must pragmatically press forward with practical solutions that solve real problems faced every day by our customers. We are problem solvers by nature. We find innovative and practical solutions to financial challenges every day. If the current regulations remain in force the very viability of our communities is endangered. We need to push back effectively, but respectfully. We require the ability to serve our constituencies in
a safe and sound manner. That necessitates the ability to make case-by-case decisions that are not micromanaged by people who have never sat across a desk from a young couple buying their first house, or a person risking everything they own to keep their business afloat in the longest economic downturn since the Great Depression. Does that strategy carry risk? Of course it brings us personal and professional risk. My question is do you want to sit back, just play defense, and hope it will not get worse? I will leave you with this thought. In football, a prevent defense most often prevents the team that employs it from winning. We are risk managers, not risk avoiders. The biggest risk we might face is our own fear, preventing us from doing what deep down we know has to be done.
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What is a QR Code? In this issue you will notice QR codes featured throughout the magazine. QR is short for “Quick Response” meaning that the code can be read conveniently. QR codes are used to take a piece of information from transitory media and put it in your cell phone. You may have seen these codes on billboards, business cards, web pages, or even on someone’s t-shirt. The reason it is more useful than a standard barcode is because a QR code can store (and digitally present) more data, including url links, geo coordinates, and text. The other key feature of QR codes is that your cell phone can actually scan the image- and nearly everyone has a cell phone in today’s society. How can you use QR Codes? Your bank, no matter how small or large, can use this technology. You might generate a QR code next to every product on your web site. This code may contain all the product details, the number to call and the URL link to the page so the customer can show their friends on their cell phone. You can add QR codes to any print advertising, flyers, posters, or invites containing: •Product details •Contact details •Offer details •Event details •Coupons •Twitter & Facebook information
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STRAIGHT TALK Acronyms Or maybe something like this, “All depts. are required to submit PTO and MTD reports ASAP for the upcoming QTR by EOD Aug. 14th.”
Our industry throws around a lot of acronyms. I imagine young bankers entering the industry have a time keeping it all straight. We’ve got government entities to sort out like the CFPB (Consumer Financial Protection Bureau), the CFTC (Commodity Futures Trading Commission), FCC (Federal Communications Commission) and the FCSIC (Farm Credit System Insurance Corporation), FANNIE and FREDDIE (Fanny Mae and Freddie Mac). Think you have those under control? What about all the everyday terms like CAGR (compound annual growth rate), CDO (collateralized debt obligation), QM (qualified mortgage), KPI (key performance indicators), and OCF (operating cash flow). I imagine executive reports for your institution read similar to this one: “In the fourth QTR, our institution’s PL was down 1% but our ROA was up 2.3%. LCR remained consistent for the past 2 QTRs.”
Acronyms are meant to ease the effort in communicating a lengthy title-they operate as buzzwords to immediately clue the listener or reader to the topic. If you go on vacation for longer than 3 days a new financial agency acronym has popped up in our industry. When did our industry evolve into such a cumbersome, wordy mess? Straightforward terms like quick, approve, or decline have fallen out of favor (at least by regulator’s standards). Our clients used to have a loan within hours; now it takes days, even weeks. Using all these efficient terms complicates the matters at hand. In years past, a banker’s job was to sit with a client, discuss their situation, and clearly discuss the reason why or why not the bank would extend a loan to the client’s trucking company. The banker would give options for his situation, explain how he could build credit, and operate as an advisor for not just this loan, but any future financial decisions the client needed to make. Today, a banker must file extensive paper work, wait 2-3 days, and in the end, call to explain why the bank cannot extend a loan. The burden of Dodd Frank regulations, though some well intended, created more red tape, more paperwork, and
more headache for bankers and clients. If we look at the cold, hard facts, all this red tape has led to 11,255 community banks being consolidated or forced out of business over the last 30 years.1 Almost one out of every five U.S. counties has no other physical banking office except those operated by community banks. That’s a startling statistic to hear when we know that community banks are clearly struggling to comply with BASEL III, HOEPA, ATR/QM, the Volcker Rule, and maintain BAU (business as usual). Now that I have your head spinning with word play, how about the length of regulations? As noted by the Federal Register, “servicing rules” encompass 456 pages of single spaced 9 point font. “ATR/ QM” regulation is outlined in 408 pages, and “loan originator rules” remain concise and succinct at 225 pages. The King James version of the Bible has, on average, 1695 pages. The Dodd Frank regulations included 5,905 proposed rules, with an additional 7,708 pages of final rules. It’s incredible bank regulations overshadow the “rules to live by.” I think King James could have given Congress a lesson in concise writing! Any fire marshal would find the
Let me know what you think: bcassady@kybanks.com August 2014 | 6
STRAIGHT TALK
compliance office in your bank a real threat – that’s a problem. All these efficiencies, protections, and compliance rules impact profitability. Why on Earth would I launch a new product in my bank if the mortgage loan officers, compliance officer, and CFO are busy with CCAR (Comprehensive Capital Analysis and Review)? According to the American Bankers Association, “of community banks, 6% report having discontinued residential lending following DFA, with an additional 9% anticipating exiting the mortgage business.” We have to get a grip on this BS, ASAP. Tell your legislators to stop this excessive regulation. Speak up for the industry; speak up for your customers. Traditional community banks are going to have to get a break soon or our way of life in a lot of small communities is in jeopardy.
Another Successful Banking School in the Books..... Congratulations to the KBA General Banking School Participants. “Knowledge and friendship are just two of many qualities to bring home. The KBA staff is so caring, the instructors seasoned in the classes they are teaching, and the overall atmosphere is fun. The courses gave me ideas that I was able to bring and implement at my bank. And, all the friendships I have made and hope to keep as my career goes forward. I can’t thank the KBA enough. I considered it a privilege to attend KBA Banking School and look forward to other education the KBA offers.” -Clay Fedde “I had the most beneficial experience attending the KBA General Banking School Year 2 in June! Our presenters did an excellent job teaching us how the balance sheet and income statement directly affect each other with every decision made by management. It really helps to give us a better understanding of how community banking decisions are made. I have also made some lasting relationships with my classmates over the last two years. We keep in touch and also utilize each other’s banking knowledge and experiences in our own current positions. I’m so glad I was given the opportunity to attend KBA General Banking School and have already encouraged many of my co-team members to attend also!” -Cherith Griggs The “Year Two” Bankers pictured below took time for a fun dinner after a long week of intense study.
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MY TWO CENTS PLUS SOME Does Your Bank Have a Digital Presence? www.prosper.com www.kickstarter.com www.paypal.com www.mint.com 3. Online only banks www.usaa.com www.ally.com I have been visiting some of our member institutions’ websites and, to be blunt, some are not very user friendly or inviting. I know that everyone wants a digital presence. I have heard the cry. However, more important than a digital presence is the effectiveness of that presence. Potential customers will not give your website a second chance (current customers might, but it depends upon the depth of their loyalty). If your website does not close the deal, you should close your website. Sounds harsh, doesn’t it? I mean for it to sound that way. There was a time when just having a website, with any information, made your institution cutting edge. Now, you are competing with banks that are totally online, banks that give customers money management tools, banks that monitor a customer’s bill for irregularities, etc., to say nothing about the financial services that banks can get online from non-banks. Here are just a few examples of your competition: 1. Bank websites www.firstniagara.com www.salemfive.com www.lakecitybank.com www.flagstar.com 2. Non-bank financial services websites www.simple.com www.mangomoney.com www.lendingclub.com August 2014 | 8
www.gobank.com (not live yet, but interesting) www.bankofinternet.com 4. Searches www.mybanktracker.com (notice who is on top—Discover, State Farm, Nationwide) www.findabetterbank.com The development (or redevelopment) of your bank’s website should be accomplished with the intent that your website should function as a branch, rather than a bulletin board. You want to reach new customers, provide service to existing customers, and enhance your bank’s brand. The expectations for your website production should be as high, if not higher, than for any of your physical branches. The first thing you should do right now is visit your bank’s current website. Look at it as if you knew nothing about your bank, or ask someone who isn’t affiliated with the bank to do so for you. Looking through a critical eye, identify what you like and don’t like about the current website. Focus on and identify what information or access is not available through the website that you would need if you were unable to reach a physical branch. Look at whether anything on your home page draws your attention and leads you to look further into the website.
Think about whether your website furthers your bank’s mission and whether it is reflective of the bank’s image and position in the community. Identify problems with locating information that you need through common search words or simpleto-follow menus. Look at ways to humanize or create interest in your website. Banking does not need to be dull and dry in order to convey stability and trust. Most importantly, look at the information and see if it is being maintained and kept current. In addition, these action items/key points hold true when evaluating your social media presence. Of course, the primary difference is that your social media presence is not secure and should not be used as a business deal closing tool, but as a customer lead developer and relationship tool. Social media should be viewed as the journal of your bank’s life. It should reflect the history and the activities that give your bank heart and soul. That can include community activities and upcoming events, general financial tips, stories about staff, etc. And, in order to make this “life journal” effective, you need to have a purpose and a plan in mind from start-to-finish. This purpose can and should be monitored and modified over time to ensure its value and applicability to your target customer base. When reviewing any internet presence, think about how you are engaging your customers and potential customers. Come up
with new ideas. One financial institution in Kentucky has put a page up on their website which allows anyone to vote on the charities that the institution will support this year. There are several potential charities listed for each region covered by the institution in Kentucky. Think how this can push your brand: • Select charities with well known, trusted causes and substantial followings. • Tell the charities how it works and that they are in the running (consider a small contribution to all of the considered charities in order to spread the goodwill). • Provide a link that is not password protected in order that the charities and their followers can spread the word about the “VOTE” on their websites and social media pages. My final thought…provide information that customers want. Don’t give them information that they don’t want. Debra Stamper dstamper@kybanks.com
Compliance Corner Question: What are we required to provide under the Kentucky Fair Housing law? Answer: As most of you are aware, 104 KAR 1:010 requires lenders to provide borrowers with a copy of the February 1993 version of the pamphlet, "What Kentucky's Fair Housing Law Means." The problem is that the pamphlet has not been updated since 1993 and the 1993 version is no longer produced and may not even be accurate. The Commission on Human Rights has several brochures available on its website for download, but none are expressly identified as being the replacement brochure for the 1993 required pamphlet. That leaves you between a rock and hard place--complying with a law that is clearly outdated vs. not complying with a clear mandate. Unfortunately, nothing has really been resolved with this issue so I suggest that you provide your borrowers with a copy of the "Fair Housing Brochure" and refer them to the website for the "Fair Housing Handbook," if further information is needed. http://kchr.ky.gov/reports/brochures.htm -- The Fair Housing Brochure and Fair Housing Handbook can be found on this website. Banks should print off the most current version online and provide it. Information courtesy Natalie Kaelin, KBA Assistant General Counsel. If you have a nagging compliance issue that fellow bankers may face, send Natalie an email: nkaelin@kybanks.com August 2014 | 9
Legislative Spotlight
Representative Jeff Greer (D) House District 27 serves – Bullitt (part), Hardin (part) and Meade counties Interviewer Lane Hettich As part of the KBA’s diligence to governmental affairs we wanted to introduce a new feature column. Kentucky legislators who agree to an interview will be featured regularly. We hope you enjoy this recurring feature. Q: What is the most rewarding aspect of serving as a Kentucky Legislator? A: To me, it’s being able to truly help those I serve. That may be improving our roads, getting funding for a new school, or making sure our region has what it needs due to changes at Fort Knox. At the state level, it has been an honor to play a role in guiding the state forward on such issues as raising the high school dropout age and improving banking and insurance laws. Q:What is the least favorite part of your service? A: The pace of turning an idea into law can be frustrating at times. My drop-out legislation, for example, took several years before the concept became law last year. The country’s economic recession, meanwhile, has forced legislators to do more with less for quite some time. I’m proud of the way we have navigated the state over the last six years, but I hope we’ll soon see faster growth economically. Q: Can you describe the difference between how you thought your job as a Representative would be before you were elected and how it actually played out? A: Fortunately, the reality has not been too different from what I had expected. I knew there would be a lot of long hours – both at home in the district and in the Capitol, especially during legislative sessions – but I have had a lot of support from my colleagues and staff. I do have a greater appreciation of the give-and-take that is inherent in the legislative process. Most issues are not resolved in a vacuum; they have to be viewed as part of a bigger picture. Q: Is it important to hear from bankers in your district? Why? A: It is crucial for all legislators to hear from the bankers in their districts, because bankers play such an integral role in shaping our communities and the commonwealth. They have their hand on the pulse of what’s working, what’s not, and what’s possible for the future. As chair of the House Banking and Insurance Committee, I understandably spend more time than most legislators speaking with the banking community, but it’s something I would do even if I were not chairman. Q: What is the best way for a banker to reach you about a concern? A: The easiest way to leave a message or schedule a meeting is through my legislative email, which is Jeff.Greer@lrc.ky.gov. Bankers can also call my secretary through the Legislative Research Commission’s switchboard at 502.564.8100 and asking for Reni Krey. The days I’m in Frankfort for legislative meetings are the best times to set up an appointment. Keep in mind that legislative sessions, which run from January through March or August 2014 | 10
April (depending on the year), can be especially busy. Q: Describe a stalled legislative issue that you would like to see progress on and explain why it is important to you? A: This year, I sponsored legislation that, had it passed the Senate, would have included basic CPR training as part of the health requirements for graduating high school. Many schools already do this, but it’s not uniform across Kentucky. I believe we should join the handful of states that have already taken this step; according to the American Heart Association, our country would add a million newly trained rescuers every few years if that occurred. I filed this legislation after we had several people in my community survive because they were rescued by someone knowing CPR. The course I’m recommending is easy to teach, and I am convinced it would save lives. As I did with the high school dropout bill, I’m going to keep pushing this proposal until it becomes law. Q: Tell us something about you that the banking community may not know? A: My first job out of college was working for a bank. During my three years there, I spent time as a teller and worked in bookkeeping and collections. While I later chose a career in insurance, that early experience gave me a great understanding of banking, and it has proven to be invaluable during my work as a committee chairman today. Anyone lucky enough to spend time at a bank like I did would quickly learn about most other businesses as well and how the flow of money works. It makes for a great foundation, no matter what job a person may pursue later in life. A special thanks to Rep. Jeff Greer, Reni Krey, and Angie Cain for their assistance. We appreciate your commitment to our industry.
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Barr and McHenry Town Hall Meeting Mr. Barr cited a few updates from the House Finance Committee, a very prestigious committee for a freshman Congressman to sit on: 1) The “Help Rural Communities Act” aims to amend the Dodd-Frank Wall Street Reform and Consumer Protection Act. It would provide an application process for interested parties to apply for a county to be designated as a rural area. Bath County is currently in the process of reclassifying as “rural,” thereby becoming eligible for additional consideration. Left to right, Congressman Andy Barr, Mr. Ballard Cassady, and Congressman Patrick McHenry.
A recent meet and greet with Congressman Andy Barr, held at Central Bank in Lexington, KY, allowed KBA bankers and community members to connect with the Congressman in an informal town hall style discussion. Mr. Ballard Cassady introduced Congressman Barr (KY) and Congressman McHenry (NC) to the crowd and invited each to discuss a few topics related to banking and commerce. Congressman Barr emphasized that although advocacy is an essential part of his job, listening to his community members is by far the most important part. Mr. Barr discussed the vibrancy of the small communities in Kentucky, citing his own hometown of
Lexington. Without a thriving local bank in those communities, the economic growth stops for those who live and work in the area. Providing access to affordable credit for consumers and entrepreneurs is key.
August 2014 | 12
2) The “Restoring Proven Financing for American Employers Act” amends aspects of the Volker Rule with respect to certain prohibitions on proprietary trading by banking entities and certain relationships with hedge funds and private equity funds. 3) The “Portfolio Lending and Mortgage Access Act” aims to amend the “Truth in Lending Act” and provides that residential mortgage loans held on portfolio qualify as qualified mortgages. This act has passed out of the House and
would give banks more flexibility and incentivize them to retain the risk in house. Mr. Barr also discussed an Exam Reform bill that has not been voted on yet, but essentially standardizes regulatory exams and gives banks the right to appeal negative responses to exams. Following his comedic discussion of North Caroli-
na and Kentucky basketball, Mr. McHenry segued into more pertinent matters about the CFPB. Congressman McHenry discussed holding regulators accountable and stressed the importance of keeping regulatory departments, such as the CFPB, in check. Newly appointed as the Chief Deputy Majority Whip, Congressman McHenry explained, for those unfamiliar, how the CFPB operates. Funded by profits of the Federal Reserve, the bureau is unaccountable and that follows from a flawed operational structure. McHenry explained the flawed policies and egregious actions need the light of day shined on them, which is what he and Mr. Barr aim to do every time they visit Washington.
Lastly, Mr. Barr and Mr. McHenry discussed that if the American people lose confidence in a government that is overextended and operates hypocritically, which occurs at the CFPB, then further problems will follow. They shed light on the issues that do not make them popular in Washington, but make them champions for our industry.
A special thanks to the campaign managers with Mr. Andy Barr for their assistance and courtesy.
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Questions: Call Chris Kelso at 502-736-1200 or email ckelso@kybanks.com. August 2014 | 13
August 2014 | 14
Kentucky Supreme Court Rules In Favor Of Bank On Major Check Fraud Case On June 19, 2014, the Kentucky Supreme Court rendered its unanimous opinion in favor of Commonwealth Bank & Trust Co. in Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co. M&P’s John McGarvey, Eric Jensen and Brad Salyer represented Commonwealth Bank. In considering an issue of first impression, the Kentucky Supreme Court held that the Uniform Commercial Code is intended to occupy the field to the exclusion of common law claims in the areas in which it provides comprehensive rights and remedies, such as the check fraud loss provisions of Articles 3 and 4. Mark D. Dean, P.S.C. is a sole practitioner law firm. Dean and his bookkeeper were authorized signatories on the firm’s escrow account at Commonwealth, each having signed a signature card. Beginning in 2003, the bookkeeper began embezzling funds. In all, she embezzled more than $800,000. Each month, Commonwealth sent the firm a detailed account statement. Dean claimed he first learned of the embezzlement in 2008. In 2009, the firm sued the bank, asserting claims for violations of Articles 3 and 4 of the UCC, aiding and abetting fraud and breach of duty of ordinary care, common law negligence, and breach of contract and duty of good faith and fair dealing. The firm also sought punitive damages. The trial court granted the bank summary judgment on the basis that the UCC claim was barred by the statute of limitations and that the plaintiff had failed to identify facts to support its common law claims. The Court of Appeals affirmed, but held the bookkeeper’s signatures on the checks were “unauthorized” within the meaning of 4-406 of the UCC. The Court of Appeals concluded that the one year bar to timely examine bank statements and bring unauthorized signatures to the bank’s attention barred all of the firm’s claims.
The Supreme Court of Kentucky affirmed the summary judgment, though also on different grounds. The Court determined that 4-406 was not applicable as the bookkeeper was authorized to sign checks by virtue of the signature card. The Court pointed out that Kentucky banks cannot be required to police an authorized signatory when writing valid checks on an existing account. Instead, the Supreme Court determined – as argued by M&P – that the UCC claim was barred by the three year statute of limitations, which began running when the monthly bank statements were provided to the account holder. Reasonable diligence by the account holder would have revealed the losses. That the bookkeeper diverted the statements did not relieve him of this duty. Significantly, the Supreme Court also determined that the common law causes of action were barred, as they were displaced by the comprehensive UCC provisions governing check fraud loss in Articles 3 and 4. The Court held that determining whether the UCC has displaced other principles of law and equity must be decided on a case-by-case basis, and that the “proper balance tends to favor application of the UCC and displacement of other law.” M&P is a leading banking and finance law firm representing financial institutions, businesses and individual clients throughout Kentucky and Indiana. If you have questions about this case, please contact John McGarvey at (502) 589-2780.
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t LEXINGTON
THIS IS AN ADVERTISEMENT.
LOUISVILLE
NEW ALBANY NASHVILLE
SAFE DEPOSIT BOXES
PROFIT CENTER OR LOSS LEADER?
The challenge, to draw this nonuser market group into the safe deposit fold, can be met in several ways. Educate these potential box renters, by making safe deposit box rental relevant to their particular needs. Offer rates and fees that appeal to a lower income clientele. Train your staff to recognize this group and offer box services that are realistic and affordable, but not given away. Train Staff:
David P. McGuinn President of Safe Deposit Specialists For many profit-conscious financial institutions, their safe deposit box operation is perceived as a millstone or a lowyield “necessary evil” that must be tolerated to remain competitive and serve consumers. However, with careful analysis, planning and the revamping of some pricing and procedures, these same boxes can become a thriving profit center within 24 to 36 months. As a nationally recognized safe deposit box specialist, I am often asked what techniques could be put in place to transform this “loss leader” into a lucrative endeavor. My answer is always simple and concise: know your market, evaluate and train your department staff, and review your box rental rates, fees, programs and policies. Analyze Market: Identify the consumers who will most likely rent boxes and appeal to them. Surveys reveal these facts: • Most box renters are 50 years old or older. (age = wealth) • The income level among box renters is 14% greater than the national average, and 42% are college-degreed professionals. • This market group is 16% more likely to avail itself of additional financial services offered by an institution • Nonusers are typically younger blue-collar workers with less education and lower income than their affluent counterparts. August 2014 | 16
A well versed, well trained department staff must be very sensitive to the special type of traffic that flows through their department, those who match the typical box renter profile, your affluent patrons. Within this market group there are rich opportunities to cross-sell additional financial services. These consumers will most likely express interest in investments, CD’s, annuities and mutual funds and are excellent candidates for a VIP relationship for which they will be willing to pay by maintaining high account balances. Sophisticated box renters expect to interact with a well trained staff capable of answering their questions and discussing and meeting their financial needs and aspirations. The typical temporary worker or a part time staff lacks the motivation or knowledge to tap into this cross-selling opportunity. Profit or Loss: Box rental rates, fees, and policies must be carefully reviewed annually. After surveying the local competition, your current rental rates and fees should be compared and adjusted periodically, the same way other products and pricing are handled. Box rental rates should be calculated using a “vault area occupied” pricing method which can be easily calculated and explained to box renters. Complete a profit and loss analysis of the entire safe deposit box operation, develop additional ways to increase box rentals and implement at least fifteen additional fees that could be charged. Formulate an acceptable method of announcing future rate and fee increases and if available, revisit successful box rental programs and employee incentives that proved beneficial in the past. Finally, examine all “free box” rental agreements and justify the reasons why rental charges were waived. Other Resources: After completing all of the steps mentioned above there are also several very effective marketing forms, brochures and booklets available. These safe deposit box resources will help you rent more boxes and maintain your current box renters. One publication, titled, “Safe Deposit – The Ultimate Protection” was written to help consumers understand the benefits, complexities and security requirements of renting a safe deposit box.
About the Author:
This booklet includes: • What items should be protected in a safe deposit box? • Description of the very reasonable box rental rates. • Helpful hints to increase safe deposit box security. • What 70 items need safe deposit box protection? • Why should everyone have a safe deposit box? • Description of all available box sizes. Other marketing resources include a very popular “Question and Answer Brochure” that is now used by thousands of nationwide financial institutions. This safe deposit box brochure addresses and answers consumer’s “Most Frequently Asked Questions” and helps them evaluate the importance of having a safe deposit box to safeguard their valuables. All of these printed publications can be used as marketing tools for new accounts, trust departments, officer call programs, investment meetings, senior citizen clubs, civic groups, school tours and employee box rental contests and promotions.
David P. McGuinn, President of Safe Deposit Specialists, is a former banker and is often referred to nationwide as the safe deposit GURU. In all 50 states he has trained over 250,000 safe deposit personnel since 1969 and has served as President of the American Institute of Banking and the American, Texas and Houston Safe Deposit Associations. He has created numerous safe deposit compliance manuals, training videos and marketing and profitability resources. During the past 45 years, McGuinn’s safe deposit products and services have been recognized as the national standard for the financial industry. Visit www.sdspec.com for information and assistance.
experience responsiveness
BKD National Financial Services Group
300 PROFESSIONALS We do what we say we will do. It’s a simple concept. The 300 professionals of BKD National Financial Services Group have developed a reputation for being dependable, timely and attentive. We call it Responsive Reliability, and it’s one of our five standards of unmatched client service. Learn more about The BKD Experience at bkd.com. Doug Keller // Partner Ben Howard // Director 502.581.0435 // bkd.com
August 2014 | 17
NetGain Technologies is celebrating their 30th year in business this month. The region-leading managed IT services company was founded in 1984 in Lexington, Ky. Since then, they have grown to include seven branches across six states including Kentucky, Ohio, Tennessee, Missouri, Arkansas and Alabama.
August 2014 | 18
Helping you achieve your branch transformation goals to satisfy the custom in every customer.
The in-branch demands of your customers are various. Some demand simple transaction speed. ® Others require extensive personal attention. Diebold Opteva Branch Performance SeriesTM terminals were designed to provide the flexibility to respond along the entire spectrum of these needs. In the process, you can achieve your branch transformation goals. Your customers are satisfied. Your tellers are freed up to create higher-value sales. It’s another example of how Diebold is satisfying the personal tastes of both customers and the branches that serve them.
For the entire story, visit www.diebold.com/newinnovation.
requests@diebold.com www.diebold.com
August 2014 | 19
Mid-Year Thoughts on
Interest Rates and the Bond Market A Jeffrey F. Caughron — Associate Partner, The Baker Group LP
t the end of last year, conventional wisdom called for a steady increase in interest rates and bond yields as we moved through 2014. After all, the economy had shown clear signs of improvement, job creation seemed to be proceeding apace, and the Fed had begun the process of winding down its “Quantitative Ease” stimulus program. In the midst of this year-end landscape, the 10-year Treasury yield was sitting slightly above 3% and seemed poised to drift higher. It’s still possible that higher yields will be a reality by the end of 2014, but for now there’s a good deal of head scratching about why we saw the 10-year yield drop sharply in the first half of the year.
declined 60% through the first six months of the year. Moreover, the dearth of supply is not limited to the U.S. It’s estimated that the worldwide supply of bonds may fall short of demand by as much as half a trillion. This imbalance has led to a ratcheting downward of rates and bond yields around the world.
Supply and Demand
Fed Policy: The Expectations Game
Much of the explanation for the strong bond market can be found simply in the laws of supply and demand. After all, bonds are not unlike commodities in the sense that there is a finite supply available at any point in time, and a given level of demand at the same time. Yes, the Fed’s QE program was an important source of demand, and it’s been steadily “tapered” away. But there is much more that is figuring into the supply/demand equation for bonds. Even with the Fed on course to end its QE bond purchases by October, there has also been a notable slowdown in net issuance of Treasuries as the budget deficit has improved sharply. Indeed, the annual budget deficit as a percent of GDP is 30% narrower than one year ago, and is now below the 30-year average. The upside of this for bonds is that net issuance of Treasury debt had August 2014 | 20
On the demand side, cash has been plowed into Treasuries for a variety of reasons. Among these is the safe-haven trade. When geopolitical flashpoints like Ukraine and Iraq pop up, money flows to the safest and most liquid markets. And despite all of the problems and challenges for the U.S., its Treasury debt remains the best place for scared money to take cover.
In addition to favorable supply/demand dynamics, bond yields have been held lower by expectations that when the Fed finally begins to raise the Fed Funds rate, it will be a kinder, gentler tightening cycle. Specifically, the futures market is projecting a very gradual upward trajectory for the funds rate that will terminate at a relatively low level when all is said and done. In fact, futures pricing points toward a funds rate that is not much higher than 2%, even three years from now. This is the market’s reflection of Janet Yellen’s assessment that the Fed’s commitment to a “highly accommodative” monetary policy will still be necessary for some time yet to come. So given these market conditions, what should bank portfolio managers be doing? The first rule is to avoid com-
placency and stay on task with prudent deployment of excess liquidity. If we always maintain a disciplined strategy to put idle funds to work at prevailing yields, we’ll hit the peaks and the valleys and everything in-between. This will result in a smooth moving average of portfolio yield and performance. Secondly, to the extent that the relatively strong bond market is a pleasant surprise, take advantage of it to restructure the portfolio for lower price risk, optimal cash flow, or better relative value. Finally, remember to manage the bond portfolio within the context of the overall asset/liability posture of the bank. This is the cornerstone of good investment management throughout all interest rate cycles. Since 1979, we’ve helped our clients improve decision-making, manage interest rate risk, and maximize investment portfolio performance. Our proven approach of total resource integration utilizing software and products developed by Baker’s Software Solutions* — combined with our solid investment experience and advice — makes us the investment firm of choice for many community financial institutions. For more information, contact Jeff Caughron at The Baker Group: 800-937-2257, www.GoBaker. com, or email: jcaughron@GoBaker.com. *The Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc. Jeffrey F. Caughron Associate Partner The Baker Group LP
Interest Rate Risk and Investment Strategies Seminar As the economic environment transitions into a new phase, bank managers must gear up to meet new challenges and opportunities. Achieving high performance in a fast-changing environment requires powerful tools, techniques, and processes to find the optimal balance between risk and reward. It also requires a partnership with proven winners. The Kentucky Bankers Association’s Interest Rate Risk and Investment
October 8, 2014 Location KBA Office 600 West Main Street First Floor Training Room Louisville, KY Agenda 9:00 a.m. — 4:00 p.m. Breakfast Seminar Lunch Speakers — The Baker Group Jeffrey F. Caughron Ryan W. Hayhurst
October
Strategies Seminar, presented by The Baker Group, is developed specifically for managers of financial institutions. Designed for high performance, it is an in-depth examination of current topics including:
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• Balance Sheet Trends, Economic Conditions, and Fed Policy • Regulatory Expectations for Interest Rate Risk and Investments • Reporting Tools for Optimal Management • Hot Topics for Interest Rate Risk: Non-Maturity Deposits and Modeling Assumptions • Security Selection and Relative Value Analysis • Strategies for High Performance Investment Management • Cash Flow, Liquidity, and the Bond Portfolio
Who Should Attend Financial institutions’ CEOs, CFOs, investment officers, board members, and those who are directly or indirectly responsible for financial management functions will benefit from this seminar. CPE credits will be earned for your attendance.
• Managing Investment Risk: Strategy and Tactics • Sector-Specific Risk Management: MBS Prepays and Municipal Bond Credit Analysis The Baker Group will again this year will provide each bank in attendance a customized “bank sheet” reflecting numbers unique to their bank. Please contact Jamie Hampton at 502.582.2453 or jhampton@ kybanks.com. For a complete listing of KBA programs, or to register online, please visit www.kybanks.com. Dress is business casual.
Winning the Performance Challenge Presented by
Kentucky Bankers Association | 600 West Main Street, Suite 400 | Louisville, KY 40202 | f 502.584.6390 | 502.582.2453
August 2014 | 21
Compliance Hotline
Rethink How Your Bank Tackles Compliance By Scott Daugherty, President and General Counsel, Compliance Alliance, Inc.
You cannot pick up a financial magazine or newsletter or listen to news sources without being led to believe that the community banks are in imminent danger of becoming extinct. We have all seen the reports and heard the so-called experts tell us we are going to see a wave of mergers that will eliminate 25 percent or more of the community banks in the country. As I read these publications and listen to different speakers, I tend to reflect on the strength of community banks and the communities they serve. Community banks have historically found ways to survive all of the obstacles thrown at them. Whether those obstacles are economic or regulatory, those challenges have always been faced head-on by community bankers. And after the clouds have cleared, the bank stands firm and strong. The pressures put on community banks by DoddFrank have led to the most current rush to judgment, causing all the rumors of sell, merge or liquidate to survive. The Federal Reserve Bank of Minneapolis attempted to quantify the costs of implementing the Dodd-Frank requirements by modeling the effect that hiring new compliance personnel has on banks’ profitability. Naturally, they found that “the impact on profitability is most significant for the smallest banks.” Their analysis suggests that a large part of the labor cost of complying with regulations is the time that bank officers and managers devote to compliance activities, especially to complying with new regulations or major revisions of regulations. The study also revealed that compliance issues might also affect the customers of small banks. Small banks, looking for ways to recoup the increases in fixed costs, may, depending on the competitive landscape, pass these costs on to customers in the form of limited product offerings and higher prices for basic products and services. Regulatory burdens, therefore, can harm small bank customers. These are the types of reports that have led the media, regulators and, unfortunately, bankers to accept that community banks can’t keep up with the August 2014 | 22
new regulations. I strongly disagree with this premise, as I know that the community banks can and will not only survive, but also thrive. The answer is not sale, merge or liquidate. I hate to imagine what our communities would be like without community banks. Community banks have always been able to adapt and thrive, and this environment is no different. But we must rethink how we tackle compliance. The old ways of doing things are not sufficient or efficient. There is a new way to do things that will allow community banks to thrive in this environment and continue to serve their customers and their communities as they have for more than 100 years. Think back to Jan. 10. The Ability-to-Repay/Qualified Mortgage rule became effective. Now imagine what your compliance officer and the compliance officer at every community bank in the country did leading up to the effective date. Imagine being tasked with the following: • Reading and understanding the 800-plus pages of the rule. • Developing a plan to deal with the rule. • Writing a policy. • Writing procedures for the bank to follow. • Developing training for bank staff and conduct the training. • Developing ways to track and monitor compliance with the new rule. Where do compliance officers find the time to do this in addition to the many tasks they are responsible for every day, not to mention the many other new rules and regulations that are coming out every month. It makes no sense in this new regulatory environment for every community bank to have staff that is doing
the exact same thing as their counterparts. Imagine if, for just the QM/Ability-to-Repay rule, your compliance officer had the following at his fingertips: • Ability-to-Repay and Qualified Mortgage rule summary • QM balloon payment exception policy • QM small creditor exception policy • QM temporary small lender exception policy • Mortgage small servicer policy • Consumer real estate policy • Mortgage servicing policy – small lender • Mortgage loan officer compensation guidelines policy • QM & HOEPA points and fees cheat sheet • ATR QM comparison chart • Small creditor QM flowchart • Characteristics of a loan request matrix • Small creditor qualified mortgage checklist • TILA closed-end disclosure checklist • Balloon QM checklist rural and underserved creditor
Helping You Reach Compliance Success , Inc. Excel in federal and regulatory compliance with Compliance Alliance! • 800+ quality documents • Personalized hotline responses • Clear-cut compliance reviews • Unlimited access! Want to learn more? Contact us today!
888-353-3933 www.compliancealliance.com info@compliancealliance.com
• Balloon QM checklist small creditor • Ability-toRepay checklist • Ability-to-Repay calculator • General QM checklist • Compliance Alliance QM and Appendix Q webinar • QM and appendix Q webinar audio recording • Mortgage tsunami webinar • Qualified Mortgage board training Imagine if for every new rule or regulation your compliance officer had these kinds of tools at his or her disposal. Imagine if your compliance officer had a team of bank attorneys, former regulators and compliance experts at his disposal. Imagine if your compliance officer had policies, procedures, checklists, worksheets, cheat sheets, flow charts, training tools, risk assessments, reviews, a compliance hotline and many other tools at her fingertips. At a time when our banks may be having a difficult time attracting qualified personnel (at an affordable rate), regulatory changes are forcing all banks to hire more compliance personnel. We are keenly aware of the difficulty our banks are having in this area and we strongly believe that our communities cannot survive without the financial and credit needs of its citizens, businesses and governing bodies being met. We were so concerned that we created a company to assist our bankers meet the requirements of the governing regulations. The consequences of compliance costs are real. Costs are rising, access to capital is limited and revenue sources are limited. The last thing that our banks need is to try and recruit and retain extra personnel. We have the answer for you: Compliance Alliance, a KBA Company. For more information, visit www.kybanks.com or contact KBA’s Selina Parrish at sparrish@kybanks. com or 502-736-1282.
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Jim McKenzie
Correspondent Banking
Count on us. In today’s environment, Correspondent relationships are more important than ever and Stock Yards Bank & Trust is committed to working with the community banks in Kentucky. As one of the largest and strongest Kentucky based community banks, we understand the complex issues your bank is facing today. When your bank has needs around capital, liquidity, acquisition financing, stock buy backs, retirement plans or trust services we want to be your bank’s trusted Correspondent partner. Chances are we know you, your bank and your community. Give James or Jim a call and put our experienced team to work for your bank.
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James Brown
Correspondent Banking
The Correspondent Banking Team Jim McKenzie has over 40 years of banking experience, 36 years of those years as a correspondent banker.
James Brown has over 20 years of banking experience in Retail, Small Business, Corporate and Correspondent Banking.
(502) 625-0878 jim.mckenzie@syb.com
(502) 625-9330 james.brown@syb.com
Lending Services Holding Company Shareholder Groups Bank Credit Needs And More! Deposit Services Fed Fund Sweeps Wire Transfer Automated Clearing House And More! International Services Foreign Exchange (CHECKS & WIRES) Letters of Credit And more!
www.syb.com
Stock Yards Trust Company Services Retirement Plans Investment Management Insurance Trust Partnering And More! NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
Top 6 Advantages of Outsourced Core Processing By Shellie Marrs, CSI Solutions Consultant As recently as five years ago, the in-house model of core system data centers was the option of choice for many community financial institutions. However, accelerating technological advances in the financial services industry, along with increasing regulatory pressures, are changing the way banks view their current business models and ongoing needs. And for many, outsourced core processing is making a lot of sense. The differences between in-house core processing and an outsourced model are steadily fading. Financial institutions once held to the belief that maintaining in-house processing was the only way to retain control over information and operations. But while it’s true that in-house processing can offer institutions a sense of power in regard to their infrastructure—as well as flexibility in terms of selecting hardware and software—outsourced data centers have evolved for changing demands and now offer financial institutions an equal amount of control, while also providing increased security and reducing costs for maintenance and upgrades.
2. Reduced Costs/Greater Efficiencies: Back-office functions are complicated in nature, and many banks find difficulty in performing those functions at a consistent and reasonable cost. Small banks are hit hardest by this problem, since back office employees don’t generate revenue, yet costs are often the same as they are for larger banks. Plus, institutions using an outsourced delivery mode tend to see fewer surprise expenditures popping up. 3. Disaster Recovery/Regulatory Compliance: You have a bank to run, so make this your core processor’s problem. Outsourced core deployment provides the support you need to streamline disaster recovery, regulatory compliance processes and business continuity planning, and does so without additional in-house expenditures. 4. Staffing Flexibility: Outsourcing allows institutions that have seasonal or cyclical demands to bring in extra resources only when needed. In addition, as competition for experienced IT professionals grows ever fierce, your reliance on full-time IT employees decreases.
Further, as digital channels multiply, it’s become increasingly expensive—yet critical—to maintain constant, uninterrupted service from these various touch points. Outsourced processing deployment, however, is ideally suited to handle this challenge while keeping costs to a minimum.
5. On-demand Scalability: An outsourced core environment grows along with your bank, eliminating concerns of capacity limitations, infrastructure adjustments, and additional IT staff and system hardware. Because of this, implementing new products and services is easily accomplished.
In point of fact, according to a Bank Systems and Technology report, about 80 percent of new core system contracts in 2010 featured outsourced deployment. As you evaluate your choices for managing back-office operations, consider these advantages of outsourced data centers:
6. Competitive Advantages: Armed with increased scalability, your bank can be first to market with new solutions. Further, the right vendor can help your bank deploy and maximize the effectiveness of these solutions, relieving your staff from owning all the burden.
1. Ability to Focus On Profitable Activities: The race to keep up with today’s technology, as well as rising regulatory burdens, consume increasing resources— both human and financial. This comes at the expense of the primary activities that have made your bank successful, like making loans, providing individualized customer service, and analyzing profitable customer relationships. Outsourced processing allows you to refocus on those customer-centric business activities that are most important for growth, without sacrificing quality or service in the back office. August 2014 | 26
You hear it time and again: bankers just want to be bankers. And as outsourced core deployment continues to meet IT challenges head-on, more financial institutions will view it as a significant way to accomplish that goal. About the Author Shellie Marrs, Solutions Consultant Shellie Marrs, CSI solutions consultant, conducts technology demonstrations and other training events for financial institutions, providing practical insight into the ways various platforms operate and interface.
Shellie previously served more than 15 years as a CSI account manager, a role in which she worked directly with financial institutions on the most effective ways to leverage technology. Prior to joining CSI, she held several leadership and training roles with banks in
Texas and Indiana. Through her experience, she brings hands-on experience with multiple systems, processes and best practices.
For Republic Bank, the Commercial Rebate Program was a very smart financial decision. Steve Trager, Chairman & CEO Republic Bank
Republic Bank knows a thing or two about making smart investments for the future. After making energy-efficient upgrades, they earned more than $14,000 in rebates through LG&E and KU’s Commercial Rebate Program. Cash rebates and long-term savings—now that’s something of substantial interest. To see how your business can apply for up to $50,000 in rebates per facility, visit lge-ku.com/rebate. 74079_LGEku_Banks_7_5x5c.indd 1
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UPCOMING EDUCATION EVENTS & SEMINARS COMMERCIAL LENDING SCHOOL September 15-19 Louisville Certified Teller Seminar July – August 11 Various Locations Internal Audit Seminar August 12 & 13 Bowling Green August 14 & 15 Lexington
Cash Flow Seminar November 12 Bowling Green November 13 Lexington
Asset Liability Management Seminar October 8 Louisville Safe Deposit Seminar December 3 Bowling Green FDIC Community Bankers College December 4 Lexington October 21 Bowling Green October 22 Lexington
When it comes to the banking industry, KraftCPAs has the bases covered. Services • Merger/acquisition assistance • Valuation services • Internal & external audit • Information systems assurance & consulting • External & internal penetration testing • Social engineering • Compliance reviews • Loan reviews & grading systems
Wynne E. Baker - (615) 782-4230 Member-in-Charge Banking Industry Team
Gina Pruitt - (615) 782-4207
Member-in-Charge Information Systems Assurance & Consulting
• Enterprise risk management • Forensic accounting • SOX documentation & testing • Tax planning & compliance
www.kraftcpas.com/Banking.htm • Serving the banking industry since 1958
ERICA PARKS EARNS THE AIB COMMERCIAL LENDING DIPLOMA Erica Parks, Commercial Lending Assistant at Central Bank, in the Winchester Market, earned and received the American Bankers Association American Institute of Banking Commercial Lending Diploma. Erica dedicated many hours toward earning this well-deserved recognition to gain additional knowledge of the commercial lending line of business, which will greatly assist her in her continued professional development and career pathing. Erica was recognized and presented the diploma in front of her fellow co-workers on Wednesday, June 11, 2014. Chris Kelso, Manager of AIB Education Solutions with the Kentucky Bankers Association, drove from Cincinnati, Ohio, to make this special presentation to Erica. Ms. Kelso stated, “Erica has achieved one of the most challenging course curricula in our financial services industry, through her dedicated time allocation, knowledge and management perspective”. Sheila Plymale, Vice President and Director of Training, stated, “I am so proud of Erica and how diligently she has worked to achieve this diploma”. August 2014 | 28
Bank Marketing Workshop 2014 CFO Prog Set your bank apart with out of the box marketing and for Commu ensure advertising compliance (UDAAP) September 25, 2014 9:00 a.m. – 4 p.m. Holiday Inn East 1325 Hurstbourne Parkway Louisville, KY 40222
REGISTRATION FEE $295 per person
All times are local times. For directions, please visit www.kybanks.com. 8-9 Registration, Continental Breakfast and Networking 9-12 Terri Langhans, Blah Blah Blah Etc., Inc. Simple Ways to Stand Out and Get Better Results from Marketing Terri Langhans will show you how to set your bank apart, attract new customers and increase the depth of the relationships with existing customers—regardless of how big or small your budget is. She will provide creative ideas, simple strategies, and tangible tools you can use right away to build your brand, improve your marketing and service in ways that influence choice and trigger the decisions you want your customers to make. Learning objectives include: • Identify the critical questions to be answered to generate Word of Mouth Marketing • Use the four cornerstones of effective marketing message to ensure your marketing materials stand out and motivate action • Use the five elements of graphic design to create marketing materials that attract more interest • Create compelling copy or conversations that clear the path for action 1-4 Carl Pry, CRCM, CRP, Treliant Risk Advisors Advertising and Marketing Compliance 1. Preparing and Managing UDAAP Risk CFPB has been given almost unlimited mandate under Dodd-Frank to “take any action…to prevent a covered person or service provider from committing or engaging in an unfair, deceptive, or abusive act or practice under Federal law in connection with any transaction with a consumer financial product or service.” • How does it compare with “UDAP”(just one A) • What does this new standard mean for compliance and risk managers • Scope of UDAAP, Products, Services, Delivery Channels • UDAAP examples: What should your focus be?
REGISTER EARLY! Space is limited.
2. Social Media Advertising Best Practices 3. Outsourced Marketing and Advertising Best Practices 4. Tracking Marketing and Advertising to Prepare for Bank Exam and Audits Who Should Attend Bank Marketing, Bank Operations, Retail Branch Personnel, Compliance Managers, Risk Managers, Auditors, Product Development, Senior Management, Directors Speakers Terri Langhans, Certified Speaking Professional (CSP), is the founder and former CEO of a national ad agency and marketing firm that she grew from scratch and sold to a Fortune 100 company. Now she runs Blah Blah Blah Etc., Inc. her speaking and training company, for people who want their message to be less ordinary and more effective. Terri is the author of The 7 Marketing Mistakes Every Business Makes and How to Fix Them, and Help Them
Hire You: How to Set Your Firm Apart, Win More Work and Still Be Yourself in Client Interviews.
Carl Pry, Certified Regulatory Compliance Manager (CRCM) and Certified Risk Professional (CRP), is a Managing Director for Treliant Risk Advisors in Washington, D.C. He was formerly Senior Vice President, Compliance at KeyBank. Through his experience as a consultant, banking attorney and compliance officer, he has provided a variety of regulatory compliance services to banks throughout the country. He is a frequent contributor to and currently serves on the Editorial Advisory Board for the ABA Bank Compliance Magazine. He is a popular compliance speaker and has conducted numerous training sessions across the country.
If you have questions or wish to register, contact Chris Kelso at ckelso@kybanks.com or (502) 7361300. Please visit www.kybanks.com for a list of all KBA programs, or to register online, August 2014 | 29
ON THE MOVE Mark A. Gooch, President and CEO of Community Trust Bank, is pleased to announce that Berry L. Popp has been promoted to Market Assistant Vice President. Berry Popp is responsible for consumer, residential, and commercial lending to new and existing client relationships by providing financial solutions to individuals and businesses in central Kentucky. Planters Bank announces the promotion of Jessica Shaw to Commercial Banking Officer. She is originally from Fayetteville, North Carolina, and received a B.S. in Banking and Finance from Fayetteville State University. Shaw relocated to the Clarksville area in 2011 with her husband, Eric, who is soon to be retired, Army Special Forces.
Farmers National Bank recently promoted Kasey Wilson to Assistant Vice President. Wilson is the Records Manager and joined Farmers National Bank in 2004. She is a Danville native, a graduate of Georgetown College, and a graduate of Kentucky Bankers Association’s General Banking School.
American Bank & Trust is pleased to announce the recent promotion of David H. Eubank to Chief Credit Officer. Eubank joined American in 2010 as the bank’s Loan Review Officer and was previously a financial institution examiner with the Kentucky Department of Financial Institutions. He is a graduate of Western Kentucky University with a degree in finance.
Farmers National Bank recently promoted Michelle Culbertson to Assistant Vice President. Culbertson is the Trust Operations Manager for WealthSouth, the Trust and Investment area of Farmers National Bank. She joined Farmers National Bank in 2013 and has over 15 years of experience in the trust and financial services industry.
Mark A. Gooch, President and CEO of Community Trust Bank, is pleased to announce that William “Dave” Compton has been promoted to Market Assistant Vice President. Dave’s responsibilities include providing consumer, residential, and commercial lending options to new and existing client relationships by providing financial solutions to individuals and businesses in Eastern Kentucky.
Planters Bank announces the promotion of Amanda Vinson to Vice President. Vinson joined Planters Bank in January 2005 as a customer service representative and was later promoted to credit analyst, senior credit analyst, and assistant vice president. Vinson graduated from Houston County High School and received a B.B.A with a concentration in Finance from Austin Peay State University in 2002.
Mark A. Gooch, President and CEO of Community Trust Bank, is pleased to announce that Barry Van Caudill has been promoted to Market Vice President. Barry’s responsibilities include providing consumer, residential, and commercial lending options to new and existing client relationships by providing financial solutions to individuals and businesses in Eastern Kentucky. He has more than 29 years of banking experience.
Our industry works hard to serve the communities, we want to recognize bankers who excel in their positions. There are plenty of ways to be “On The Move” in your Kentucky bank. A recent promotion, a new employee, even a new grandbaby! Let us share your good news with our readers. Send On The Move announcements to: Lane Hettich, lhettich@kybanks.com. August 2014 | 30
ON THE MOVE Rose Mary Stamler Dow, President and Secretary of Signal Investments, was named to the Lexington Board of Directors for Kentucky Bank. Signal Investments manages diverse portfolios of publically-held equities and fixed income securities. Additionally, the company has provided angel financing for the local startups.
George A. Hoskins, managing director of Wimbledon Farm, was named to the Lexington Board of Directors for Kentucky Bank. Hoskins has been a thoroughbred owner and breeder for 35 years.
Greg Ladd, founder and owner of Cross Gate Gallery, was named to the Lexington Board of Directors for Kentucky Bank. Cross Gate Gallery is one of the premiere ‘Sporting Art’ galleries in the world; they primarily handle Equine related ‘Sporting Art’.
Wes Omohundro, a CPA with Blue & Co., LLC, was named to the Lexington Board of Directors for Kentucky Bank. Mr. Omohundro’s audit engagements oversee governmental agencies, manufacturing entities, higher education institutions, and not-for-profit organizations.
Also named to the Lexington Board of Directors for Kentucky Bank (not pictured) is William Miles Arvin, Jr., Attorney, Law Offices of William Miles Arvin. Mr. Arvin is the founder and co-owner of two real estate rental companies with properties in Jessamine and Fayette Counties and throughout the Commonwealth. Mr. Arvin is also the founder and co-owner of Southern Tax Services, LLC.
Photo below: Jessica Bailey, Accounting Office at Traditional Bank in Mt. Sterling receiving the ABA Financial Management Diploma. She is being congratulated by her manager Mike Hendrix CFO and Chris Kelso of KBA.
Farmers Bank & Capital Trust Co. is pleased to announce that James E. Clouse was appointed to the Board of Directors. Mr. Clouse is a managing partner of the Charles T. Mitchell Company, a Frankfort CPA firm. A Certified Public Accountant since 1986, Mr. Clouse is a 1983 graduate of the University of Kentucky. He is a member of the American Institute of Certified Public Accountants, as well as the Kentucky Society of Certified Public Accountants. A current member of the Frankfort Area Chamber of Commerce Board of Directors, Mr. Clouse resides in Frankfort with his wife, Julie and children, Logan and Emma.
Photo above: Congratulations to Brittanie Dannelly (formerly Winkle) of Citizens Guaranty Bank. Brittanie was married on May 24th, 2014. She is currently the bank’s Deposit Operations Clerk. August 2014 | 31
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