Kentuckybankermagazine janfeb2018

GOVERNMENT RELATIONS

KENTUCKY BANKER JANUARY FEBRUARY 2018

COMPLIANCE & LEGAL

EDUCATION ALLIANCE

OPPORTUNITY! and uncertainty...

INSURANCE SOLUTIONS

PRODUCTS & SERVICES

HOPE OF KENTUCKY

KBPAC POLITICAL ACTION COMMITTEE

Kentucky Banker Magazine Official Publication of the KBA www.kybanks.com

f @kybankers

X Chairman’s Corner: 2018 To-Do List j Straight Talk: Personal Friendships x Bank Robbery Prevention v SEAY Management Checklist

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THE KBA IS a nonprofit trade as-

sociation that has been providing legislative, legal, compliance and educational services to its member institutions since 1891. KBA’s directors and staff work together with its members to make the financial services industry a more effective and successful place to work. The strength of the KBA is bankers unifying as an industry to speak as one voice.

The purpose of THE KBA IS to provide effective advocacy for the financial services industry both in Kentucky and on a national level and to serve as a reliable and responsive source of information and education about areas of interest to the industry.The KBA does this in four ways: government relations and industry advocacy, information interchange, education and products and services.

Your Association Our Commonwealth

KENTUCKY BANKER MAGAZINE Published bi-monthly by the Kentucky Bankers Association

YOUR ASSOCIATION OUR COMMONWEALTH

JAN/FEB 2018 IN THIS ISSUE

2017 KBA ESSENTIALS OF BANKING SCHOOL GRADUATES 2017-2018 OFFICERS Chairman Mr. Timothy E. Barnes President & CEO Hometown Bank

Vice Chairman Mr. David M. Bowling, CEO Citizens Union Bank of Shelbyville Treasurer Mr. Lloyd Hillard, Jr. President & CEO United Bank & Capital Trust Co. Past Chairman Mr. Michael H. Mercer President & CEO First State Bank

President & CEO Mr. Ballard W. Cassady, Jr. Kentucky Bankers Association

BOARD OF DIRECTORS Group Representatives

Representing Group 1 Mr. J. Brent Bugg President & CEO, Fredonia Valley Bank Representing Group 2 Ms. Lanie W. Gardner Community President First Southern National Bank Representing Group 3 Mr. John T. Taylor President & CEO, PBI Bank

Kentucky Bankers Association 600 West Main Street, Suite 400 Louisville, Kentucky 40202

Representing Group 4 Mr. Dan M. Harbison President & CEO The Farmers National Bank of Scottsville Representing Group 5 Mr. Gregory D. Goff, President & CEO First National Bank of Kentucky

Representing Group 6 Mr. Darin L. Young President & CEO, Century Bank of Kentucky

KBA To-Do List.................... 7 About Friendship.............8 Elizabeth McCoy...................10 South Central Bank..........12 Spring Conference...............13 The Peoples Bank........14 Limestone Bank..................16 Mirador...................20 BankTalentHQ.................21 Robbery Prevention.............24 HDMA and Company.....26 Seay HR Checklist.................28 Danny A. Garland........30 Regulators are Coming........32

Representing Group 7 Mr. Steve Tolliver, Market President The Monticello Banking Company

ON THE COVER

The new year brings with it the promise of opportunity and the challenge of uncertainty.

The KBA is here to help every member navigate these interesting times.

Representing Group 8 Mr. Anthony Kinder President & CEO Peoples Bank of Kentucky

Representing Group 9 Mr. Jed Weinberg Chairman, Bank of Hindman

Representing Thrifts Ms. Shanda L. Smith, President & CEO Blue Grass Federal Savings & Loan

Representing Thrifts Kari R. Gough President & CEO, Winchester Federal Bank

Representing Bank Size

Assets of $1B or more Mr. James A. Hillebrand, President Stock Yards Bank & Trust Company

Assets at least $200M; less than $1B Mr. Dale Sights President, Field & Main Bank

KBA Benefits Trust Mr. W. Fred Brashear, II President & CEO, Hyden Citizens Bank

Kentucky Banker Magazine (KBM) is the official bi-monthly periodical of the Kentucky Bankers Association (KBA). No part of KBM may be reproduced without written permission from the KBA. The KBA is not responsible for opinions expressed by outside contributors published in KBM. The KBA reserves the right to publish submissions at the discretion of the KBM editorial team. Subscriptions: $30/year for KBA members; $60/year for KBA non-members; single copies $5 each.

SUBMIT

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KENTUCKY BANKERS ASSOCIATION STAFF 23 EMPLOYEES WITH 300+ YEARS OF COMBINED EXPERIENCE SERVING THE COMMONWEALTH

Ballard W. Cassady Jr. President & CEO bcassady@kybanks.com

Jamie Hampton Education Services Coordinator jhampton@kybanks.com

Debra K. Stamper EVP & General Counsel dstamper@kybanks.com

Michelle Madison IT Manager mmadison@kybanks.com

Matthew E. Vance Chief Financial Officer mvance@kybanks.com

Tammy Nichols Convention Coordinator Finance Officer, HOPE of KY tnichols@kybanks.com

Selina O. Parrish Director of Membership sparrish@kybanks.com Natalie Kaelin, Esq. Director of Education nkaelin@kybanks.com Josh Fischer Director of Communications jfischer@kybanks.com Billie Wade Executive Director, HOPE of KY bwade@kybanks.com Miriam Cole Executive Assistant mcole@kybanks.com John P. Cooper Legislative Solutions jcooper@kybanks.com Paula Cross Education Services Coordinator pcross@kybanks.com Casey Guernsey Enrollment and Billing Specialist cguernsey@kybanks.com KBA Facebook @kybankers

Katie Rajchel Staff Accountant krajchel@kybanks.com Steve Whitlow Systems Engineer swhitlow@kybanks.com Chuck Maggard President & CEO, KenBanc cmaggard@kybanks.com Lisa Mattingly Director of Sales & Service KBA Benefits Solutions lmattingly@kybanks.com Brandon Maggard Account Representative KenBanc Insurance Services bmaggard@kybanks.com Donna McCartin Benefit Support Specialist dmccartin@kybanks.com Audrey Whitaker Insurance Services Coordinator awhitaker@kybanks.com Angie White Business Development awhite@kybanks.com

STRONG BANKS NEED STRONG FOUNDATIONS Historically, columns have always symbolized architectural stability and strength. Columns are the foundation of buildings that, after thousands of years, still stand. Your customers depend on the same stability and strength.

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WE KNOW BANKS kenbanc.com Chuck Maggard cmaggard@kybanks.com cell 606-682-1950

Lisa Mattingly lmattingly@kybanks.com cell 502-377-4048

Brandon Maggard bmaggard@kybanks.com cell 606-682-2769

SINCE 1891

New Year’s Resolutions

CHAIRMAN’S CORNER Tim Barnes 2017-2018 KBA Chairman

Are you still fighting the good fight?

As I write this in Mid-January, only 8% of folks are still in compliance with their New Year’s Resolutions. Did you make a New Year’s Resolution?

If so, are you still fighting the good fight?

New Year’s Resolutions are thought to have begun with the Babylonians making promises to their gods to pay their debts, and return items that they had borrowed.

I did not have any extra money left over at year’s end so I know I paid my debts, but I blame my neighbor for causing me to fail the second part of the equation. IF (and this is a big IF); IF I borrowed tools from my neighbor, I was only storing the tools at my house until he needed to use them. In other words, I am resolved to keep my neighbor’s tools at my house safe and sound.

Most resolutions revolve around health, and I guess that is a good thing. According to a quick Google search, increased exercise tops the list of resolutions at 38%, followed by lose weight (33%), eat healthy (32%), take more active approach to health (15%), learn new skills (15%) and work on personal wellbeing (12%).

Each January I clean my office, rid my office of clutter, and restock office supplies including my “Things –To-Do-Personal-Planner” pad of paper.

The “Things–To-Do-Personal-Planner” is sort of my “New Day Resolution.” I try to finish each day by marking items off of my Things-To-Do list.

Please allow me to share my “KBA To-Do List” with you (at right). It is my hope that you will complete your “KBA To-Do List” as well.

By the way – Happy New Year!

JAN/FEB 2018

KBA TO-DO LIST ~ 2018 ~

q Mail KBPAC Check q Sign up for Spring Conference April 16-18 Lexington q Write letter to McConnell & Paul in Support of S2155 q Call Chuck about Bond Ins renewal q Register for Washington DC trip May 20-23 q Review KBA HOPE loan package for approval q Attend KBA Group meetings q Read Fraud-Net press release q Talk with Ballard to see how I can help in Frankfort q Attend Bankers Roundtable on March 19 q Discuss sending someone to KBA General Banking School q Call Selina about Vendor contact info q Proof Chairman’s Corner article q Thank KBA staff for a wonderful job q Call Mercer to rub in fact this year is going so well q Send get well wishes to Debra Compliments of 1510 S. Main St. - Corbin, KY Ph: 606-528-1745 Fax: 606-528-9994 www.hinkleprinting.com

PAGE 7 | KENTUCKY BANKER

UNITED IN SERVICE

STRAIGHT TALK Ballard W. Cassady, Jr. President & CEO bcassady@kybanks.com

With a Little Help From Our Friend So we can get back to serving OUR customers and OUR communities!

Friendship is so woven into the fabric of our lives that we The list is incredibly long: seldom stop to think about it – what defines it, what sustains it. Perhaps we think most about friendship when we • Original cosponsor of H.R. 1116, the TAILOR Act, lose it. introduced on February 16, 2017. Rep. Barr introduced this legislation with Rep. Tipton (R-CO), to require federal I’m blessed to have thousands of acquaintances but far few- prudential regulators to regularly report to Congress about er friendships, and I cherish each and every one of them. I their new regulations, whether these rules are duplicative came close to losing one of those friendships recently, out of or unnecessary, what alternatives were considered, and why pure neglect more than anything else. I had taken my friend one regulator proposed a rule while another may not have for granted, and I neglected the maintenance – the time and found it necessary. This Congress: The Tailor Act passed out effort and appreciation – that every friendship needs. This of Committee 39-21 on 10/12/17. friendship deserved those things, and it taught me a lesson.

• Introduced the Portfolio Lending and Mortgage AcDo such lessons apply to our industry’s friendships? Speak- cess Act (H.R. 2226). This legislation establishes a legal ing as one who has to count on those friendships in order to safe harbor satisfying the Qualified Mortgage (“QM”) rule’s achieve our goals, I believe so. ability-to-repay requirements for loans held on a bank or credit union’s portfolio. This reform will align the interests Every Kentucky banker knows that our industry has few of borrowers and lenders, while protecting taxpayers and friends that have shown us as much understanding, cour- the financial system from a recurrence of the factors that tesy and constancy as Congressman Andy Barr. In my 45 contributed to the 2008 financial crisis. years of banking, from the mailroom at First National Bank Pikeville to the KBA, I have never seen a legislator give • Introduced the Preserving Access to Manufactured more time and attention to banking issues, nor understand Housing Act (H.R. 1699). This legislation amends the defithose issues more fully, nor advocate for us with more te- nition of “high-cost” loans so that manufactured homes no nacity than has Andy Barr. He has never turned his back on longer fall under this designation that is harming access to us, even when it cost him support from other quarters, be- affordable manufactured housing. Currently sales are down cause he truly understands that our strength is Kentucky’s about 14 percent according to HMDA data. Passed House strength.

12/1/2017 (256-163, with 27 Democrats in support).

Andy Barr stands for re-election in 2018. To finish the work he’s begun, he will need his friends to act like friends – to support him even when it costs us support from other quarters, to support him regardless of our own political affiliation. To do anything else would be to take for granted what he has done to help us and our communities prosper.

PAGE 8 | KENTUCKY BANKER

• Introduced the Taking Account of Bureaucrats’ Spending (TABS) Act (H.R. 2553). This legislation would move the CFPB into the annual appropriations process, giving Congress oversight of its spending. Currently the CFPB draws its funding directly from the Federal Reserve, making it unaccountable to Congress and the American people.

JAN/FEB 2018

SINCE 1891

• Introduced the Expanding Proven Financing for American Employers Act (H.R. 3772). This bipartisan legislation prevents the disruption by new government regulations of the market for collateralized loan obligations, a sound, secure form of corporate financing that American companies use to expand and hire – including companies across Kentucky.

• Introduced the Monetary Policy Transparency and Accountability Act (H.R. 4270).

This legislation increases transparency at the Federal Reserve giving businesses and households greater clarity about future monetary policy changes.

• Sponsored H.R. 1259, the HELP (Helping Expand Lending Practices in) Rural Communities Act on March 4, 2015. This bipartisan legislation fixes the problem of the CFPB incorrectly designating rural counties around the country, including Bath County, as “non-rural,” which limits lending in rural communities. Passed the House by 401-1 on 5/6/15. Became law 12/4/15 as part of H.R. 22, the FAST Act.

The KBA reaches out to every member of Kentucky’s delegation in Washington, whether Democrat or Republican, with your stories and with solid data, in support of the changes we need. We do our best to work with every one of them, but that isn’t always reciprocated.

Unfortunately, Congressman Yarmuth (D. Louisville) is the most consistent example of that. We meet with him on every visit to Washington, but he has NEVER supported banking These are just examples of what Andy Barr has done for on any issue with any vote. We don’t need more “friends” OUR industry, so we could get back to serving OUR cus- like that! tomers and OUR communities. He has been on the front line of our grueling battle to recover from Dodd-Frank’s ex- All this makes a friend like Andy Barr too important for us cesses and overreach, the legacy of an era of when he wasn’t to take for granted, as an industry or as individual Kentucky there to help us. bankers. Whatever he achieves for our industry is a personal win for every banker and every bank customer.

As a result, we are poised to pass S.2155 in 2018, a landmark bi-partisan regulatory relief bill for our industry that Andy That’s what makes this industry friendship a personal Barr played a pivotal role in through his relentless push for friendship that I hope every Kentucky banker can find ways portfolio lending and more. to affirm in the months ahead.

The KBA reaches out to every member of Kentucky’s delegation in Washington, whether Democrat or Republican, with your stories and with solid data, in support of the changes we need. Ballard W. Cassady, Jr. JAN/FEB 2018

PAGE 9 | KENTUCKY BANKER

McCoy Named to Reserve Board The Federal Reserve Bank of St. Louis has appointed Elizabeth G. McCoy, president and CEO of Planters Bank in Hopkinsville, to the role of chair of its Community Depository Institutions Advisory Council (CDIAC). She will serve a three-year term as chair, ending in 2019. She has served on the council since 2015.

Members of the 12-person advisory council, established by the St. Louis Fed in 2011, are executives of smaller financial institutions across the Fed’s Eighth District. Hopkinsville is in the Louisville Zone of the Eighth District.

the Hopkinsville Industrial Foundation, the Hopkinsville/Christian County Economic Development Council, and U.K.’s Gatton College Business Partnership Foundation.

Council members advise St. Louis Fed President James Bullard on the credit, banking and economic conditions facing their institutions and local communities. Additionally, the chair of the CDIAC has the responsibility of reporting twice yearly to the Federal Reserve Board of Governors in Washington, D.C.

Ms. McCoy is a graduate of the University of Kentucky, holding both a bachelor’s degree in accounting and a master’s degree in business administration; she is a Certified Public Accountant.

Ms. McCoy and her husband Hal have one son and reside in Christian County.

Ms. McCoy was also named to the University of Kentucky’s Board of Trustees. Appointed by Governor Matt Bevin she also serves on the boards of the following organizations: the Kentucky Center for the Performing Arts, the Kentucky Chamber,

She told Kentucky.gov: “The education that I received at U.K. has opened many doors and provided me with immeasurable opportunities. It is an honor to be able to give back to the University that has given so much to me.”

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SINCE 1891

Reality Needs to Intrude on Valuation of Cryptocurrencies

by Bert Ely, opinion contributor to The Hill The cryptocurrency phenomenon rolls on, despite the fact that the most valuable cryptocurrency, bitcoin, has yet to recover from a huge plunge when its price dropped 41 percent from a peak of $20,089 on Dec. 17 to a low of $11,833 five days later.

It has since had a jagged recovery, to $15,069 at 4 p.m., Eastern Time, Thursday, according to www.CoinMarketCap.com. It is still 25-percent below its peak price.

Many other cryptocurrencies have performed similarly in recent weeks — a swoon in late December and then a bumpy price recovery since then, none more so than Ripple XRP. XRP clearly is the new darling of the cryptocurrency speculators, in part because it is so cheap — just $3.31 per XRP at 4 p.m., Eastern Time Thursday. XRP is now the second-most valuable cryptocurrency, with a current market valuation of $128 billion, compared to bitcoin’s $253 billion valuation and a total valuation of all cryptocurrencies of approximately $745 billion.

Clearly, cryptocurrencies exist in a world of their own, with at best a tenuous link to the real economy and the investor-owned companies that produce the goods and services consumed by real people.

Even Ripple’s XRP has no ownership link to Ripple’s real-world attempt “to send cross-border payments more quickly, transparently and cheaply,” according to an article in the American Banker. Instead, Ripple periodically issues XRP to fund its development activities and for other purposes, such as charitable contributions.

Like bitcoin and most other cryptocurrencies, XRP has no claim on any real assets or business activity. As I said in an earlier Hill op-ed, there is no “there” there for any cryptocurrency and possibly for some of the initial coin offerings (ICOs) that fund the start-up of real businesses.

I also noted in subsequent op-eds that cryptocurrencies essentially are Ponzi schemes. It is only a matter of time until they collapse, leaving the so-called investors in these schemes with hundreds of billions of dollars of losses. It is no surprise, then, that Merrill Lynch has blocked clients and financial advisors who trade on their behalf from buying bitcoin-related investments

because of concerns over the cryptocurrency’s investment suitability. Other brokerage firms have adopted similar policies.

Thursday, the SEC reinforced the Merrill Lynch policy by urging investors to “exercise caution” with cryptocurrencies like bitcoin, warning that while the SEC and state regulators are pursuing violations of the securities laws, “there is a substantial risk that our efforts will not result in a recovery of your investment.”

The folly of cryptocurrency valuations is immediately evident when those valuations are compared with the stock-market valuations of real companies that produce goods and services and employ human beings.

Those companies own real assets, such as buildings, computers and production machinery, as well as financial assets, including loans and investment securities that represent claims on real assets. Most importantly, these companies generate cash profits, something no cryptocurrency can claim; any increase in a cryptocurrency’s market valuation most certainly does not reflect any underlying profitability.

A few examples will illustrate this contrast. Since cryptocurrencies can reasonably be classified by their investors as a financial asset — they certainly do not represent or have a claim on tangible assets, such as buildings or machinery — it is appropriate to contrast cryptocurrency valuations with real-world financial firms.

JPMorgan Chase provides an excellent contrast. As an aside, its CEO, Jamie Dimon, has been very critical of cryptocurrencies, stating at a conference that bitcoin is a “fraud” that “won’t end well.”

JPMorgan Chase had a stock-market valuation of $378 billion, only slightly less than the combined valuation of bitcoin and XRP — $381 billion. JPMorgan Chase has total assets of $2.6 trillion, including loans of $900 billion, and over 240,000 employees. Does anyone really believe that bitcoin and XRP are the equivalent of that megabank? If so, I have a planet or two I would like to sell to them.

For those who are not enamored with financial firms, a few non-financial comparisons are worth noting. The market value of the 1,385 cryptocurrencies tracked by CoinMarketCap was $745 billion at 4 p.m. Thursday, falling between the current CONTINUED ON PAGE 21

JAN/FEB 2018

PAGE 11 | KENTUCKY BANKER

UNITED IN SERVICE

South Central Bank Holds Grand Re-Opening Ribbon Cutting

#kbabankshots

BANK SHOTS!

KATHY McHANEY Kathy McHaney has joined the team of The Paducah Bank and Trust Company as Assistant Director of Marketing. McHaney earned a bachelor of science degree from Drury University and has more than 30 years of experience in marketing, public relations, graphic design and photography in the fields of higher education and non-profit organizations.

A native of southwest Missouri, McHaney is married with two children, is on the board of directors for Paducah Cooperative Ministry, and volunteers with other community activities.

South Central Bank (Elizabethtown) held an open house to celebrate their Grand re-opening ribbon cutting event. Pictured above (left to right) Anita Reynolds, Ruthie Bale, Brandon Fogle.

“I am excited to welcome Kathy to our team,” said Marketing Director Susan Guess. “As our company has grown, so has our need to grow and enhance our marketing strategies. Kathy brings a great deal of experience, talent, and creativity to Paducah Bank. We are proud of our brand and believe that Kathy’s contributions will only strengthen our ability to tell the story of our commitment to our customers.”

KBA BANK SHOTS! highlight your achievements; this is where we publish your successes & acknowledge your milestones. email jfischer@kybanks.com @kybankers #kbabankshots

PAGE 12 | KENTUCKY BANKER

JAN/FEB 2018

SINCE 1891

#kbabankshots

BANK SHOTS! Register: www.kybanks.com/KBA/SpringConference

Questions: Natalie Kaelin nkaelin@kybanks.com

2018 Spring Conference Agenda *Subject to Change CHRISSY RUDD Chrissy Rudd was named Assistant Vice President, BSA/Fraud Control Officer at Paducah Bank. Rudd has been with Paducah Bank for 12 years and has 15 years of experience in the financial services industry. She has a business degree from Murray State University, and is ICBA Certified in BSA/AML. She actively participates in many community service and charitable activities including the Toddlers Sunday School.

Monday, April 16, 2018 11:00 AM - Golf Scramble Shotgun Start 5:30 PM - Welcome Reception Tuesday, April 17, 2018 9:00 AM - Economic Update 10:00 AM - The Next Generation of Customers Chris Soule, Director of Business Development, nCino 11:15 AM - HMDA Update Martin (Marty) T. Mitchell, CRCM, is a Managing Director at ProBank 1:15 PM - Implementing the New Customer Due Diligence Rule Robert Flowers, Partner, Hunton & Williams 2:30 PM - Keynote Speaker Mind Blowing Motivation: The Incredible Gift of Struggle Meridith Elliott Powell

AMY ROBERTS Central Bank announced that Amy Roberts has joined Central Bank as Vice President, Retail Banking Officer in Northern Kentucky. She brings more than 18 years of banking experience to her new role at Central Bank. Her prior experience includes work in treasury management, risk management, audit and retail banking.

A graduate of Northern Kentucky University, Amy earned her BS in accountancy, with a minor in business administration. She was also recognized as an Emerging Leader by the Kentucky Bankers Association for 2017-2018.

JAN/FEB 2018

They are the essence of the most successful among us. Traits gained when you commit to do whatever it takes. Imagine having the power to push through obstacles. The insight to turn excuses into solutions. And the courage to “go for it” and fly with “no-net.” It all starts when you embrace the gift of struggle. Struggle is the best teacher. Better than any leader, coach or mentor. But only when you embrace it.

5:30 PM - Reception with the Exhibitors Wednesday, April 18, 2018 8:30 AM - The Art of Branch Transformation Jeff Winter, Senior Vice President of Business Development, NewGround 9:30 AM - State of Banking in Kentucky Commissioner Charles Vice, Department of Financial Institutions (DFI) 10:30 AM - A Look at Leases Nancy Mullen, Senior Manager, KraftCPAs Assurance Services Department

PAGE 13 | KENTUCKY BANKER

SINCE 1891

The Peoples Bank Breaks Ground On New Office Bank Shows Continued Growth

Local officials and members of the Glasgow-Barren County community joined Chairman, President and CEO of The Peoples Bank, Terry L. Bunnell, the bank’s Board of Directors, and the staff of the Glasgow office to celebrate the ground breaking of the new Glasgow location on September 12, 2017.

Mr. Bunnell stated, “We are excited to host the ground breaking of our new location in Glasgow. Growth in the Barren County market has been outstanding and our customer base continues to grow. The ground breaking of the new Glasgow facility is a reality of our plans for the bank and a response to customer needs. The bank’s customer base in our Marion-Crittenden County market and our successes with new banking relationships in our Glasgow-Barren County region are the catalyst for our expansion.”

The new location of The Peoples Bank at 1300 West Main Street, Glasgow will be a two-story 6,700 square foot facility with a three lane drive-thru and drive-up ATM.

ROD BROTHERTON

Rod Brotherton, Kentucky Bank, Lexington, Kentucky has achieved National Social Security Advisors certification from the National Social Security Association in Cincinnati.

SAM POLLOM Sam Pollom has been promoted to VP, Director of Operations and Compliance of WealthSouth, a division of Farmers National Bank of Danville.

The Peoples Bank was organized in 1946 in Marion, KY. The bank was acquired

by Terry L. Bunnell and other investors in 2007. In 2008, Mr. Bunnell opened the Glasgow location as a loan production office at 605C Happy Valley Road. In 2010, the Glasgow location was converted into a full service community bank branch, offering all the products and services of a larger financial institution.

Further, Bunnell commented, “The Peoples Bank has continued to grow to become an asset to our community as customers continue to search for the one-onone customer service and flexibility of a locally owned community bank.”

ELLEN SHARP Central Bank announced the promotion of Ellen Sharp to Senior VP, Special Assets. She began her career at Central Bank in 2011 & is a graduate of Rollins College and the University of Kentucky.

JASON SMITH Central Bank announced the promotion of Jason Smith to Senior VP, Credit Administration. Mr. Smith has over 21 years of banking experience and has been with Central Bank since 2011.

PAGE 14 | KENTUCKY BANKER

JAN/FEB 2018

CFSB Receives Volunteer Honor from White House Partners with Junior Achievement to Educate Local Students

For the second year in a row, Community Financial Services Bank (CFSB) has received The President’s Volunteer Service Award from the White House in Washington, D.C. CFSB team members, in partnership with Junior Achievement (JA) educates young people about business in local schools.

Since its founding in 1919, JA is a not-for-profit organization whose purpose is to inspire young people to succeed in a global economy. The Corporation for National and Community Service recognizes and appreciates CFSB’s commitment to strengthen our nation and communities.

Pictured (L-R): Dan Douglas, President of Junior Achievement West Kentucky presents the “Excellence in Volunteer Service” award plaque to CFSB Vice President/Director of Marketing Jeremy Rose.

Pictured L to R: Tom Coffey, Mindy Sunderland, Morgan McGarvey and Thurman Senn

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PBI Bank Changing Name to Limestone Bank 110-Year Old Bank Reinvigorate Its Roots

Over the last 110 years, PBI Bank has served clients across the Commonwealth to meet their personal, business, agriculture, and equine banking needs. In the first weeks of 2018, leadership at PBI Bank decided it was time to adapt the bank’s name and visual identity to set the tone for the years to come.

“Our focus on building strong relationships is central to who we are and who we strive to be every day.”

The new name, Limestone Bank, is derived from the rock found across much of Kentucky. Not only is limestone used in construction materials, but it’s also used in horse feed by many of the bank’s equine clients as a strong source of supplemental calcium.

“We know that this change might raise a few questions, but we’re still the same bank,” Taylor says. “We’re simply changing our name and logo to reinvigorate our promise to help our clients build firm financial futures.”

Aside from these two connections, John Taylor, President & CEO of PBI Bank, suggests yet another. “Many of our team members know first-hand the financial needs of businesses, farmers, and horse owners and breeders, and we’ve been able to build sturdy relationships with our clients because of that knowledge,” Taylor said.

Even though the name and logo will change, PBI Bank hasn’t been purchased, and current clients will keep their account numbers and information.

PBI Bank customers will receive communications with further details about the name change in the coming weeks.

Community members will also be invited to a special event occurring at their local branches on February 20, 2018, which is the date the name change will be effective.

SINCE 1891

Promontory Committed to Serving Banks Fintech is Reinventing Itself in Ways the Proponents of Disruption Once Considered Inconceivable

by David Still, Regional Director Promontory Interfinancial Network

The year was 2002, well before the financial crisis that gave rise to the recent growth in the fintech movement. Former executives of the Office of Comptroller of the Currency, Financial technology, or fintech as it is more commonly the Federal Reserve System, and the Federal Deposit Inknown, at its most basic means using technology to deliver surance Corporation founded a company with a strength better financial products and services. In many ways, the in innovation that is reflected in the 20 issued patents that fintech revolution has already taken place. Bank customers it holds to date. But from the beginning, working closely with banks was key, and the company understood its fucan use their smartphones to check their account status, ture was contingent on the success of its partner banks. pay bills, and deposit funds - individuals almost never need to visit their bank branch for routine transactions.

From its inception, Promontory Interfinancial Network has Fintech also refers to the hundreds of companies that emerged in recent years, from marketplace lenders to pure technology plays. Fintech’s burst on the scene in the wake of the financial crisis as an alternative to traditional banking—raising expectations that they, rather than conventional banks, would drive the industry’s future.

been steadfastly committed to serving banks, not competing with them, and to a meticulous attention to detail that belies the disruptor stereotype, even when doing so leads to higher costs for itself. The company works closely with the industry’s two major national trade associations and has marketing alliances with nearly 40 national and state banking trade associations. From just 10 clients at launch, the company has developed a network that has been chosen by more than 3,000 banks nationwide over the past fifteen years, and now encompasses 46 percent of all community banks in the United States.

Now some of the same companies that just a few years ago were celebrated as the future of banking are struggling to withstand credit, business, and economic cycles and to secure the funding they need to grow. And a few Fintech is reinventing itself in ways the proponents of diseven face more serious problems. ruption once considered inconceivable. Banking is now a partner, not a barrier, to fulfilling fintech’s promise. A comAs a result, many fintech leaders are rethinking their strat- pany founded with little fanfare during the early stages of egies. Some forward-thinking fintechs are now partnering the fintech movement, and now at the center of banking’s with banks, instead of competing with them, or turning to ongoing evolution, was among the first to show the way. time-honored banking tools like deposit-based funding of And from the beginning, it has been a stable, collaborative loans. Still others are pursuing a once-unthinkable strate- friend to banks, not a competing influence. gy—acquiring bank charters through ILC applications—in other words, becoming banks themselves.

In hindsight, these developments would seem predictable.

Did any fintechs recognize from the start that working closely with banks—not seeking to replace them—would be key to their success? In fact, a model of true collaboration with banks evolved more than 15 years ago, not in a hotbed of innovation, but among veterans of the federal government in Washington DC, who built an innovative financial technology company across the Potomac in Arlington, Virginia.

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CONTACT Dave Still, Regional Director Promontory Interfinancial Network, LLC 866.776.6426, ext. 3439 / 703.292.3439 www.promnetwork.com

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First Kentucky Bank Reaches Students Through Online Financial Education Over 3,489 Students Reached Since 2011

is for high school-aged students and covers 6 hours of programming on a variety of financial topics including credit In the 2017-2018 academic year, high schools and elemen- scores, insurance, credit cards, student loans, mortgages, tary schools throughout Carlisle, Graves, Livingston, Mar- taxes, stocks, savings, 401k’s and other critical concepts shall, Muhlenberg, and Ohio counties once again adopt- that map to national financial literacy standards. Both ed the EverFi Financial Literacy and Vault Understanding platforms uniquely track the progress and performance of Money programs, which are both sponsored by First Ken- every user. tucky Bank.

“First Kentucky Bank is very proud to have reached so First Kentucky has partnered with leading education tech- many students with critical financial education. It’s a testanology company EverFi, Inc., to bring these interactive, ment to our deep commitment to the community,” Laura web-based financial management programs to over 3,489 Stinson, Director of Marketing said, “It is critical that stustudents and 16 local schools since the program’s incep- dents understand important aspects of personal finance tion in 2011. This past school year, the First Kentucky Fi- like what a credit score means and how to save for college, nancial Scholars program reached 837 students within 13 and these programs are empowering them with the skills local elementary and high schools across its six-county that will put them on a path to financial success.” wide footprint.

Both the EverFi and Vault programs use the latest in new media technology to bring complex financial concepts to life for today’s digital generation. Vault is geared towards young learners to introduce financial literacy skills early in a child’s development. The 2.5‐hour curriculum aligns with both state and national standards and includes topics such as saving, budgeting, responsibility and decision-making, credit and debt, careers, income, charity, and more. EverFi

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“EverFi strives to help today’s generation prepare for a lifetime of challenging financial decisions,” said EverFi CEO, Tom Davidson. “We are grateful for our partnership with First Kentucky Bank which provides students with the critical skills they need to be savvy, responsible consumers.”

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First Security Bank Opens New Banking Center EMERSON BALLARD

Town & Country Bank and Trust Company promoted Emerson Ballard to VP and Chief Lending Officer. He began with the bank 12 years ago and has played an integral role in exploring new commercial loan opportunities and further cultivating current banking relationships. Emerson has been crucial to the growth and success of the bank and is consistently one of the top lenders within the organization.

“Emerson has been a key part of our success, and his promotion is well deserved,” said Raffo Wimsett, President and CEO of Town & Country Bank and Trust Co. “We are confident that Emerson’s leadership will be an important asset to help our organization reach its goals.”

Emerson is a graduate of Bellarmine University and holds a Bachelor’s degree in Business Administration. He recently participated in the KBA’s Emerging Leaders Program.

Open for business! First Security Bank is now open for business at its newest banking center in Evansville, Indiana.

Located at 10 N Fulton Avenue, the banking center brings a new banking experience to First Security Bank customers including more accessible tellers, collaborative workspace and a technology bar to support customer’s online banking needs while in the banking center. It is also the first banking center in the First Security footprint to launch with the bank’s new brand, illustrating its fresh new approach to community banking. “The Fulton Avenue banking

center brings a new First Security Bank experience, and will make our commitment to Evansville concrete and focused on our customers. As the bank that’s got your back, we believe this new location and an excited First Security team will help us grow with the Evansville community we love,” said President and CEO, Michael F. Beckwith. “Walking into the banking center you can feel the energy and the collaborative spirit with our team and space. Adding this opening to the celebration of our 20th anniversary has been ideal for our Evansville customers, both current and future.”

TONY PARRISH Peoples Exchange Bank announced the promotion of Anthony (Tony) Parrish, COO, to CEO. During his time at Peoples Exchange Bank, the bank has grown to over $370 million in assets.

Parrish earned his Bachelor of Business Administration in 1988 from Morehead State University and is a 1994 graduate of the LSU Graduate School of Banking.

“Working alongside Claude Bentley, Chairman Beach and our Board of Directors for the past 20 years has thoroughly prepared me for this very important role in directing the future of our company,” Parrish said. “I am honored to be afforded the opportunity to serve Peoples Exchange Bank and our customers in this capacity.”

“Tony is a strong and capable leader and has been key to numerous operational improvements over many years,” Bentley said. “He is committed to our values and we are excited about the future of our bank under his guidance.”

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Mirador Brings Advanced Lending Technology to KBA Members The Kentucky Bankers Association has endorsed Mirador, which offers a white label small business lending platform that helps financial institutions make smarter, faster lending decisions. This advanced technology platform will enable banks in Kentucky to originate more small business loans, quickly and efficiently.

“Our goal is to provide the solutions our member banks require to effectively meet the needs of their communities, which includes serving the small businesses that are the backbone of local economies,” said Ballard W. Cassady, Jr., President and CEO of KBA. “Mirador’s platform gives banks an important technological edge, allowing them to be more efficient when originating small business loans and providing a foundation from which they can increase their small business lending in a cost-effective manner.”

“Small business lending can be a challenge. Businesses are quirky – each one has unique risks and data can be sparse. It often takes lenders days, if not weeks, to gather the necessary information and make a determination about each company’s loan application,” said Trevor Dryer, Mirador CEO and co-founder. “In an evolving marketplace, where online lenders are seeking to take market share and customers away from banks, we provide the tools that enable banks to compete; make faster, more profitable loans; build stronger customer relationships and attract new qualified borrowers.”

The Mirador solution allows banks to deepen the personal relationships they have with their small business customers by facilitating a better loan application and underwriting experience, making it possible for banks to originate more small business loans.

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The secure, cloudbased platform gives banks the power to expedite the processes of qualifying, originating and monitoring loans by eliminating many manual processes.

The platform is easily integrated into existing bank operations, and automates loan application, data collection and decision-making processes.

“Mirador’s platform gives banks an important technological edge, allowing them to be more efficient when originating small business loans and providing a foundation from which they can increase their small business lending in a cost-effective manner.”

By minimizing these Ballard W. Cassady labor-intensive tasks, KBA President and CEO banks are able to improve the profitably of small business lending by reducing origination costs and making the most educated decisions using a wide variety of data, while maintaining their internal credit standards and criteria. The platform also helps banks reduce losses by offering an on-going loan monitoring service that tracks key data sources to identify any potentially problematic loans before they go into default.

For more information visit www.miradortech.com Or contact Robert Green (503) 832-7943 rgreen@miradortech.com

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BankTalentHQ – One Year Later!

Finding and keeping top talent is high on the list of the many challenges Kentucky banks face. With that in mind, the Kentucky Bankers Association rolled out BankTalentHQ, and the platform has taken off.

BankTalentHQ is the premier talent management resource exclusively for exploring and building financial industry careers and connecting financial industry companies with top talent.

It is brought to you by the Kentucky Bankers Association in partnership with 11 other state banking associations across the country: Arizona, New Mexico, Colorado, Idaho, Kansas, Illinois, Indiana, South Carolina, Maryland, New Hampshire and Maine, with even more in the pipeline.

The main focus for the website, located at banktalenthq.com, is the job board, which allows you to post job openings for your institutions, with the ability to purchase a single 30-day post or a discounted posting package to fill multiple vacancies. It also allows internships to be posted at a discounted rate. Ancillary services include industry news and articles, resume writing, a career learning center and coaching. To make the site even more robust and tailored for your institution, additional services like career paths, job summaries, executive recruitment and outplacement are in development.

“

The types of jobs posted in the past year ranged from tellers and operations staff to CFOs, Chief Lenders, and even CEOs from Arizona to Maine. With over 700 jobs posted and 1,400 registered job seekers, there were over 700 total applications sent for those positions. And that is just in the first year! The site continues to grow as more banks, like yours, participate and more states sign on.

In addition to the job board, we recently added two career coaches to the website. Donna Flynn serves as our Management and Career Coach and Joe Micallef as our Sales Coach.

Both have contributed to the success of the website by offering timely articles and advice. Be sure to check out their “Ask the Coach” blog on BankTalentHQ.com to answer your burning questions on how you can be a better employee, manager or sales person.

Try us out in 2018! We know you’ll like what you see. And, be sure to let us know of your hiring success stories, your comments and other feedback on how we can make the site better by emailing us at info@banktalenthq.com. www.banktalenthq.com

Testimonial

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BankTalentHQ was easy to use. I’m excited to have it as a means for posting jobs.

Ms. Sallylyn Williams AVP/HR Manager, Bank of the Bluegrass and Trust Company

Bert Ely continued: Valuation of Cryptocurrency stock-market value of Apple ($880 billion) and Microsoft ($672 billion). Does anyone really believe that the sum of the market value of all cryptocurrencies even begins to approach the economic value of either of those technology companies and their contribution to the global economy?

At some point in time — and the sooner the better — reality needs to intrude on the valuation of the cryptocurrencies. Those valuations must reflect the real-world value they create, or rather destroy, through the consumption of enormous amounts of electricity, computer chips and human effort.

Once real-world valuations are applied to cryptocurrencies, these Ponzi schemes will collapse, wiping out hundreds of billions of dollars of fictional value “investors” in them thought they had.

Smart investors, though, will bail out before that inevitable collapse, and be thankful that they did.

Bert Ely is the principal of Ely & Company, Inc., where he monitors conditions in the banking industry, monetary policy, the payments system and the growing federalization of credit risk.

This assessment of cryptocurrencies is not a negative reflection on blockchain technology, per se, but rather a recognition that this technology is not suitable for storing monetary value.

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Heritage Bank Supports FOP Heritage Bank recently presented the Fraternal Order of Police (FOP) with a check for $750 to help support their Shop with a Cop program. The Shop with a Cop program was started in 2000 to foster positive relationships between youth and police officers. Young children from kindergarten through 6th grade are selected each year to shop at one of the local area stores to pur-

chase Christmas gifts for members of their immediate family. The officers escort them around the store and assist with selecting gifts for each family member. “We are truly grateful to the Fraternal Order of Police for sponsoring this program for our youth here in Christian County,” said Annette Hargis with Heritage Bank.

BRANDON GRIFFIN

First Southern National Bank added Brandon Griffin to its Lending Team. His office is located at the bank’s Vincent Drive branch in Stanford, KY. Griffin has been with the bank since 2011

LISA CLARK Lisa Clark has been named Loan & Business Development at First Southern National Bank in Garrard County. Clark has been with the bank since 2003.

Farmers Bank of Milton Gives Farmers Bank of Milton is pleased to lend its support to the Madison Consolidated High School athletic department for the purchase of bleacher end covers for their gymnasium. Farmers Bank of Milton currently serves the communities of Milton, Carrollton, La Grange and Crestwood in

Kentucky and Madison, Indiana. Pictured left to right: Ralph M. Pratt, III, Board Chairman, Farmers Bank of Milton; David Hertz, Executive Vice President, Farmers Bank of Milton; Ryan Mahoney, VP of Farmers Bank of Milton and Joe Bronkella, Athletic Director of Madison Consolidated High School.

LISA DRIVER Community Financial Services Bank (CFSB) promoted Indirect Lending Team Leader Lisa Driver to Assistant VP. She began her banking career in 1983, while coming to CFSB in July of 2012.

WESLEY McGREGOR Community Financial Services Bank (CFSB) promoted Wesley McGregor to Assistant VP. He began his career at CFSB in May of 2015 in the Commercial Lending Department.

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The Murray Bank Gives Back

Bob Hargrove, President and CEO of The Murray Bank (below at right), made a contribution to the Main Street Youth Center. The donation was presented to David Hudspeth (left), who serves as the director for Main Street Youth Center.

SUZANNE IBERG

Community Financial Services Bank (CFSB) promoted Risk Management Administrative Assistant Suzanne Iberg to Corporate Secretary. She began her banking career in 1978 in Illinois

NATHAN ROWTON Community Financial Services Bank recently promoted Commercial Lender Nathan Rowton to Assistant VP. Nathan has 28 years of business practice.

RAFFO WIMSETT III Town & Country Bank and Trust Co. announced Raffo Wimsett, III, as Business Development Officer. He brings with him over 5 years of experience working for Commonwealth Credit Union.

The Paducah Bank Gives Back The Paducah Bank Board of Directors presented a check for $2,500 to the Paducah Independent Schools Transitional Student Services Program on Thursday.

The donation represents the Board’s wish to make a charitable contribution rather than to receive Christmas gifts for themselves from the Bank. Members who had perfect attendance at all Board meetings during the year were

given the honor of selecting a local charity to receive the donation. Once again, the Directors felt that a donation for the wellbeing of children was most appropriate during the Christmas season. The Transitional Student Services Program works to meet the fundamental needs of the 200 homeless or “transitional” students identified in the Paducah Independent School System.

SANDY PAYNE COMBS Central Bank announced that Sandy Payne Combs has joined the bank as Assistant VP, Trust Operations Manager. Sandy brings nearly 40 years of banking experience to Central Bank.

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Bank Robbery Prevention... ...money can be replaced, but lives cannot.

by Craig Collins, President One Beacon Financial Services

The Front Door

• Publicize (signs on the main entrance) the usage of There has been a significant increase in robberies of comCash Recyclers, 15 Minute Delayed Time Locks and munity banks in certain geographic locations. Some comcameras. The more sophisticated robber will case a lomunity banks are resorting to utilizing “controlled access” cation first, see the notifications and move elsewhere. for customer entry into the bank. This article offers some suggestions on enhancing existing robbery policies and Your Employees procedures. While you may not always be able to prevent a robbery, you can take steps to help make your bank less of • Until someone is faced with a robbery scenario, it’s a target and protect employees in the process, particularly hard to know how they will react. The best way to keep when robbers are looking to use more aggressive tactics. calm during the situation is to review and rehearse robbery procedures. The more you prepare your emEnhancement Suggestions: ployees, the higher the probability of a safe result for them and your customers.

The Vault • Consider adding marked bills as bait money.

• Use safe deposit boxes to spread excess vault cash into smaller increments.

• Place a 15-inute delay time lock if possible.

Money can be replaced, but lives cannot.

The Teller Line • Cash recycler machines (CRM) can help to reduce OneBeacon Financial Services offers property and casualty the amount of cash exposed to a robbery. Many CRMs coverages for commercial banks, savings banks and savhave a built-in “robbery mode” feature. If the teller ac- ings and loan institutions. tivates the feature, the CRM will dispense a predetermined amount of cash and automatically shut down for approximately 20 minutes.

The Building • “All Clear/Morning Glory Procedures” should be implemented at all locations. Everyone should be aware of procedures related to opening and closing the bank.

They should be reviewed and changed regularly so potential robbers have a more difficult time following your routine.

• Camera positions should allow clear view of people’s faces entering and exiting the bank. In addition, a camera should also be placed in a position to give a clear view of the parking lot.

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For a FREE evaluation of your current insurance coverage contact Chuck Maggard, President & CEO of KenBanc Insurance Services.

Phone: 502-736-2671 Free: 800-392-4045 Email: cmaggard@kybanks.com WE KNOW BANKS

KenBanc Insurance Services provides a full line of insurance products targeted specifically to meet the wide-ranging needs of financial institutions. Our team is fully trained in analyzing your bank and its specific needs; we look closely for both gaps and overlaps in your various policies, and utilize peer analysis and benchmarking to make coverage recommendations.

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Chili & Grilled Cheese Win Heritage Bank shows support of Military Affairs Commission, wins Grilled Cheese Competition

The Christian County Chamber recently hosted the Salute “We are thrilled to be able to give back to the communities Saturday Chili Cook-off in October 2017 to raise money we serve, and are especially happy to give back to those and awareness for the Military Affairs Committee. who serve our country, “said Betsy Shelton, Market President. “It is great to see the community come together in Heritage Bank participated in the event’s Chili Cook-off as such a fun way to celebrate and recognize these service well as the 1st Annual Grilled Cheese Competition, where members,” she added. they took first place in both Grilled Cheese Challenge categories, and were named “Overall Champion” of the Grilled Heritage Bank’s team served up food and fun; the team Cheese Competition. All three awards were based on judg- gave away toy soldiers and took selfies for families with es’ decisions. The panel of judges was comprised of grilled their Heritage Bank Polaroid prop. The event proved to be a big hit in the community. cheese sandwich experts, otherwise known as children.

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2018: HMDA and Company

Highlights for the Upcoming Year

by Sarah Sauceda, Associate General Counsel Compliance Alliance (KBA Partner)

will constitute covered loans if they are home purchase loans, home improvement loans, or refinancings.

This past year has shaped up to be quite a ride but buck- One other slightly understated change has to do with le up—2018 is fast approaching. preapprovals. Under the new rule, covered institutions will be required to collect, record, and report informaHighlights for 2018 include: (1) Home Mortgage Disclo- tion for approved but not accepted preapproval resure Act (HMDA) changes; (2) amendments to the Equal quests for home purchase loans.

Credit Opportunity Act (ECOA); (3) an increased Truthin-Lending (TIL) threshold; (4) Community Reinvestment In contrast, preapproval requests for open-end lines of Act (CRA) amendments; and (5) “sunset” provisions. credit, home purchase loans to be secured by multifamily dwellings, and reverse mortgages will not be covered The time has come for the long-awaited changes affect- under HMDA. ing HMDA to hit the banking world with a bang. HMDA – version 2018 – includes changes relating to institutional Lastly and as most of you know, reportable data under and transactional coverage and data collection, record- HMDA has received a bit of a makeover. HMDA 2018 ing, reporting, and disclosure. adds a few extra data points.

As for institutional coverage, HMDA 2018 adopts a uni- These new data points include: form loan-volume threshold for all institutions. This (a) applicant/borrower age means that starting January 1, 2018, an institution will (b) credit score be subject to HMDA if it originated 25 or more covered (c) automated underwriting system information closed-end mortgage loans in each of the preceding (d) unique loan identifier calendar years, or if it originated 100 or more covered (e) property value open-end lines of credit in each of the past two years. (f) application channel (g) borrower-paid origination charges Of course, the institutions making these loans also need to meet other applicable coverage requirements to be (h) points and fees subject to HMDA. (i) lender credits (j) discount points As for the amendments to transactional coverage, (k) loan term HMDA 2018 modifies the types of transactions that are (l) prepayment penalty covered. Basically, the new version of HMDA adopts a (m) non-amortizing loan features dwelling-secured standard. As of January 1, 2018, cov(n) interest rate ered loans will include both closed-end mortgage loans (o) loan originator identifier & other data points and open-end lines of credit secured by a dwelling.

Another major change to this portion of HMDA concerns Again, the effective date for these changes is January 1, business-purpose loans. Starting January 1, 2018, dwell- 2018. Be sure to remember that, although the HMDA ing-secured, business-purpose loans and lines of credit 2018 is upon us, you will still need to submit data colPAGE 26 | KENTUCKY BANKER

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lected in 2017 under the current rule with the slight ment of Housing and Urban Development (HUD) SCRA change of submitting the 2017 data to the CFPB instead notice; the National Flood Insurance Program (NFIP); of the Federal Reserve Board. and the Federal Home Loan Mortgage Corporation loan limit of $424,100. These provisions are all set to expire Because the regulators know that changing one major at the very end of 2017, with the exception of the NFIP. regulation isn’t enough fun, they have also changed NFIP authorization was set to expire on December 8, ECOA. ECOA’s current ethnicity and race information 2017, but received a two-week extension by Congress collection are updated in the 2018 version of the regu- (currently set to expire on December 22, 2017). As of lation. Additionally, the amendments add certain model now, none of the provisions have been extended past forms and remove others.

2017. So, be sure to keep an eye on these regulations towards the end of the year.

Thankfully the changes to HMDA and ECOA go handin-hand, as the purpose of the amendments to ECOA is In conclusion, there are a great many changes in store to facilitate compliance with HMDA version 2018. Note for 2018, but if you are prepared, you should be able to that all these changes to ECOA come into effect on Jan- handle them with ease and confidence. uary 1, 2018 with the exception of the amendment that removes the Uniform Residential Loan Application. This particular amendment becomes effective on 1-1-2022.

It didn’t happen for 2016…It didn’t happen 2017…but the time you have anxiously been awaiting…has finally arrived! The TIL exemption threshold has been adjusted. For any questions or concerns, feel free to give us a call The exemption threshold will increase from $54,600 to at (888) 353-3933, chat with us on the website (https:// $55,800, effective January 1, 2018. www.compliancealliance.com), or email us at hotline@ compliancealliance.com The regulators are at it again and are making more changes—this time to the CRA. Once again, these changes are aimed at helping banks transition to the new version of HMDA. The new rule updates the definitions of “home mortgage loan” and “consumer loan,” and the public ABOUT THE AUTHOR file content requirements to conform HMDA 2018. The Sarah Sauceda serves as Associate General Counsel for amendments also cleanup the CRA by removing now Compliance Alliance. She is an Honors Program graduobsolete references to the Neighborhood Stabilization ate who graduated summa cum laude from Lamar UniProgram. The comments closed on October 20, 2017, versity in Beaumont, Texas. and the final rule becomes effective on January 1, 2018.

Finally: When I think of sunsets, I picture beaches, long walks, and OF COURSE regulations that are up for renewal. (This is normal, right?) This last topic concerns the regulations that are set to expire in the near future.

These are often referred to as “sunset” provisions because the regulatory sun is quickly setting on them.

Some of the major sunset provisions include: sections 531 (maximum rent) and 533 (foreclosure) of the Servicemembers Civil Relief Act (SCRA); the U.S. DepartJAN/FEB 2018

“

Testimonial

I had used Compliance Alliance previously and could not wait to share the benefits that this service provides with my new employers. After seeing the various tools and resources provided by Compliance Alliance, in addition to their toll free hotline, they were impressed with the support that Compliance Alliance is providing to KBA members. They will be an excellent enhancement that our Compliance Department will use every day!

Mrs. Beverly Oxford Compliance Officer The First Commonwealth Bank, Prestonsburg

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Seay Management HR Checklist The Seay Management Human Resources Management Checklist ensures that you implement “best practices” in terms of policies, procedures, manuals and documents to hire and retain good employees and motivate them to superior performance.

1. EMPLOYEE HANDBOOK This is your fundamental employment document because it describes how you will handle work issues that arise with your employees. To meet that goal, it should be comprehensive and detailed. Some of the policies you need include: • EEO policy – This policy should include all protected categories under federal, state and local employment regulations. The policy should be reviewed annually to ensure all categories are listed.

• Emergency Closing – inclement weather and natural disasters can have an impact on regular business operations. Employers should have a stated plan of action to communicate with employees during these occurrences.

• Cell Phone Use – talking or texting at work, even if set on vibrate, taking pictures and safety issues involved while driving on employer business.

• Email/Internet Use at Work – We should train employees on how to compose emails and what Internet sites should be avoided and inform them that the email system is the property of the employer and that all emails are subject to being retrieved.

• Discussing Wages – Employers should not have policies prohibiting employees from discussing wages, benefits and working conditions.

2. SOCIAL NETWORKING Employers should develop a policy on the use of social networking at work, taking into consideration sites like Facebook, Twitter and Instagram, etc.

• Employers should prohibit or restrict access to social networking sites during working time and employers should be aware that some material that employees post may be considered a protected concerted activity, even if it is critical of management.

• Supervisors and managers should be required to stay off the personal social media pages or sites of their employees.

We strongly recommend management not “friend” employees on social media and to “unfriend” them if it has already occurred.

• On the basis of NLRB regulations, employers should refrain from instructing employees about what they can and cannot post on Facebook or other social networking sites.

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3. SEXUAL HARASSMENT Conduct Sexual Harassment Awareness Training annually for all managers and employees, to build a wall of protection around your company. We recommend that every employer should have a policy, published in the employee handbook that prohibits sexual harassment at work and outlines a procedure for reporting allegations of sexual harassment.

Employees who utilize the complaint procedure outlined in the policy should not be retaliated against or have their employment adversely affected by making such a complaint. We also recommend a policy prohibiting management from engaging in a social, dating or romantic relationship with non-management employees.

4. BULLYING IN THE WORKPLACE Bullying can be physical, emotional and/or relational and often occurs online and through social media. To prevent, eliminate or reduce bullying at work, we recommend that you develop a strong anti-bullying policy and make absolutely sure you have a way for employees to report abuses, in a confidential and anonymous way.

5. IMPLEMENT A DRUG FREE WORKPLACE PROGRAM To help resolve potential drug issues at work and lower your Workers’ Compensation premium. Employers have the right to prohibit employees from coming to work under the influence of drugs or alcohol and from bringing illegal drugs into the workplace.

Even if marijuana is “legal” in your state, the employee still is not allowed to report to work under its influence.

6. DISC PROFILE To make sure you hire the best employees, that are the best “fit” for the job and the work culture, consider administering the DISC profile, which is a measure of working style: • Hard Driving Type A • People Oriented • Multi-tasker • Detail oriented The DISC lets you “look behind the curtain” to see if you really have the Wizard of Oz or if you have a pretender. We offer this service online.

7. AFFIRMATIVE ACTION PLAN Complete the annual update of your Affirmative Action Plan according to the regulations, if you are a covered employer. To be covered, you must have 50 employees and federal government contracts of $50,000 or more.

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8. EEO-1 AND VETS 4212 REPORTS The deadline for filing EEO-1 Reports for 2017 is March 31, 2018. The Trump Administration has informed the Equal Opportunity Commission (EEOC) that there is currently a hold and review on the requirement to include pay data. Employers are instructed to continue to utilize the previous format to submit the EEO-1 report.

the application form, disciplinary notices, commendations, performance appraisals, et. al.) but none of the documents that are problematic (drug test records, private/personal documents).

Some employee documents are necessary for recordkeeping and reporting and are perfectly proper, but are of a personal, private or medical nature or have an EEO component.

In compliance with the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) all VETS 4212 reports (you must do this if you have 100 employees or if you have 50 employees and an Affirmative Action Plan) are due on September 30th of each year.

For these documents, have a confidential employee file, separate from the regular employee file.

9. NEW HIRE REPORTS Regularly submit your New Hire Reports to the state employment agency database.

10. JOB DESCRIPTIONS Ensure that you have detailed job descriptions for every job, in compliance with ADA, EEOC and Generally Accepted Principles of Human Resources Management.

In addition to helping us manage, job descriptions are often a first line of defense, in the event of an EEOC or DOL investigation. Employers who are covered by the Affirmative Action regulations are required to have job descriptions.

11. MANAGEMENT TRAINING Consider conducting several Management Training sessions on important subjects like: • How to Counsel and Dismiss Employees • How to Conduct Performance Appraisal • How to Handle Difficult Employees • Sexual Harassment Training 12. EMPLOYMENT LABOR POSTERS Check that you have all current required employment posters, placed in prominent locations. Federal regulations require 6 posters; the various states require about 5 more.

13. I-9 FORM Review your I-9 forms for completion and keep on file for all employees. Verification requires employers to: • Examine and record documents under Columns A, B, C. • Make copies of the verification documents and attach them to the I-9 Form.

• File the I-9 Forms in a separate location, not the regular employee file.

Employers should be utilizing the I-9 form which expires 8/31/2019 for new hires. All previous versions are to be discontinued.

14. EMPLOYEE FILES Make sure your employee files are complete and that they include all the documents you need (such as

JAN/FEB 2018

15. COMMUNICATIONS WITH EMPLOYEES Employers should have clear and frequent employee communications programs such as: • Open Door policy • Employee Complaint Procedure • Bulletin boards • Employee newsletter - printed or electronic newsletter 16. DOCUMENTATION Make sure all of your Human Resources decisions and actions are fully and comprehensively documented, that you have developed and implemented a system of Progressive Discipline and that all of your supervisors and managers have been fully trained.

17. UNEMPLOYMENT In an effort to reduce claims and benefits due to employees, keep the following in mind: • If you dismiss an employee within the 90 day probationary period, whatever benefits may be awarded should not be charged to your account.

• Former employees should not be eligible for benefits if they are dismissed for misconduct or if they leave with “no good cause attributable to the employer.”

• Employees who are dismissed for performance reasons will almost always be awarded benefits.

18. NATIONAL LABOR RELATIONS BOARD This agency covers both union and non-union employees and enforces the “Unfair Labor Practices” requirements. Under the provision of “protected concerted activity” two or more employees may discuss their wages, benefits or working conditions. As employers, we cannot counsel, discipline or dismiss them for engaging in this activity.

19. TIME RECORDS The Wage and Hour Division of the Department of Labor is targeting the question of “working time,” which regulations define laboriously as whenever an employee is “suffered or permitted to work.”

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PAGE 29 | KENTUCKY BANKER

Resolution First Federal Savings Bank of Kentucky in Honor of

Danny A. Garland WHEREAS, Danny A. Garland faithfully served on the Board of Directors of First Federal Savings Bank for 36 years; WHEREAS, Mr. Garland also served as President and CEO of the bank during his 32 years of employment; and WHEREAS, Mr. Garland shared his talents with innumerable communitybased activities, including educational, governmental, philanthropic, and spiritual undertaking; and WHEREAS, Mr. Garland was a mainstay in the community and represented First Federal honorably and dutifully; and WHEREAS, the Board of Directors, officers, and employees of First Federal appreciate Mr. Garland’s service to First Federal and our community; WHEREAS, Mr. Garland passed away on October 17, 2017; NOW, THEREFORE, BE IT RESOLVED that First Federal Savings Bank, through its Board of Directors, does hereby acknowledge our gratitude, honor, and respect for Mr. Garland and his long service to our bank, our community, and our industry.

BE IT FURTHER RESOLVED that as a tribute to Mr. Garland, this resolution be made a part of the permanent and official minutes of the Bank; that a copy be furnished to Mrs. Marcia Garland, Danny’s beloved wife, and that a copy be furnished to the Kentucky Bankers Association magazine for publication.

Adopted this 14th day of November, 2017 at the regular Board Meeting of First Federal Savings Bank of Kentucky.

SINCE 1891

continued: Seay Management HR Checklist If an employee is working, the employer is responsible for paying for this time, even if you didn’t authorize it, and even if you didn’t know about it. This could include travel time, meal periods, time before and after regular work hours, homework and other time.

Employers should have a clear policy on the use of smart phones and other devices at home and during other non-scheduled work hours to conduct company related business. Make sure all employees are recording all of their work time accurately and that you know when employees are working.

20. EXEMPT CLASSIFICATION Verify all of your exempt employees are properly classified. Remember that one of the requirements for exemption is that employees must receive a guaranteed salary, not subject to deduction, in any week in which they perform any work at all.

The current exempt salary level of $455 is fairly low so we expect that it will increase at some point. We project in the future to see an exempt salary level in the $600-$700 range.

21. ONLINE APPLICATION AND JOB POSTINGS Consider having employees complete the application form online, through your website, rather than in person. This can be a more efficient and less expensive process and may more quickly identify those applicants who might be good candidates for the positions you have open. You might also want to list your open positions on your website.

22. HR MANAGEMENT COMPLIANCE AUDIT REVIEW This will help you reduce or eliminate any potential liability or exposure, provide you with the comfort and assurance that you are in compliance with all of the employment regulations that cover you and check to see that you have the “best practices” you need to hire and retain good employees.

We trust that this HR Management Checklist will be helpful to you as you establish and refine your employment goals and objectives. Please contact Seay Management Consultants with any questions you may have. Contact Kylie Luff, Senior VP, Seay Management Consultants: kylie@seay.us or 407-722-7670.

SINCE 1891

The Regulators are Coming, The Regulators are Coming...

Signs that Should Alert you to Ineffective Reporting

by Darlia Fogarty, Director of Compliance and COO Compliance Alliance (KBA Partner) The board believes the compliance officer has been given adequate policies, training and staff to ensure the bank will not encounter any issues when the regulators arrive for the compliance exam. So the exam should be a non-event right?

Monthly reports should focus on the execution of the board’s policies by delivering performance data and metrics. These reports should cover frontline activity and clearly demonstrate whether the day-to-day work of compliance is being done on time and accurately.

Monthly reporting should expose where weaknesses may exist, and state the corrective actions being taken to remedy the deficiencies.

Let’s talk about the process of an onsite visit. For the staff involved, the onsite regulatory visit can be painful to endure, but it is necessary to ensure the safety and soundness of the bank. An overlooked mistake could be minor in the overall scheme of things; however, in the worst-case scenario, it could cause major penalties up to and including personal liability for the board.

Quarterly reports should focus on trends and analytics that demonstrate whether risk exposures are increasing or decreasing. The quarterly report gives insight into how the compliance program is functioning over time.

These reports should contain information about regulatory trends and upcoming or changing rules in addition to considering the environmental and operating conditions that could affect the bank’s progress and perforSo how do you know whether your bank is ready for an mance. exam? How do you determine whether you’re conducting the proper periodic maintenance and routines to These reports should also summarize the results of comkeep your compliance programs as effective as possible? pliance monitoring activities that occurred during the quarter and which activities are planned in the quarter The answer is simple by examiners standards: by exer- ahead. This data allows directors to conclude what, if cising proper oversight of these programs at the board any, internal events or changes will influence the bank. level. If only there was a definite way to determine what In general, these reports show the up-to-the-minute the regulators deem “proper” oversight. Oversight is state of preparedness for exams and audits. carried out by reviewing the right reports with the right content at the right times.

Finally, annual activities such as audits or third party reviews generate reports on the compliance program’s efThe board must ensure that they are being given solid, fectiveness. This annual look-back reflects how well the accurate information to carry out their fiduciary duties bank kept its risk exposures to acceptable levels. These as well as to make informed decisions. One way to do types of reports often detail the overall effectiveness of this is to demand quality reports at specified intervals. the senior management team and compliance manageReports that are inaccurate, incomplete or delivered too ment in carrying out their responsibilities. These reports infrequently may conceal weaknesses that should be take an independent look at the program to gauge its addressed. Reports should occur at three basic inter- effectiveness, efficiency and performance over a historvals: monthly, quarterly and annually. ical period.

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JAN/FEB 2018

SINCE 1891

continued: The Regulators are Coming...

That being said, remember that, if the reports are not accurate or are considered to be inadequate, the reports will be of no benefit.

WILL HAYDEN

First Kentucky Bank promoted Will Hayden to Senior VP. Hayden is also a commercial lending officer and has been with First Kentucky since 2016.

When reviewing your bank’s reports, keep in mind the following signs that should alert you to ineffective reporting: • Reports that are too long or too detailed. Key points cannot be extracted when the volume of information presented buries the real meaning.

• Reports that state only facts but provide no analytical statements or ratings. The board needs to understand whether the data being presented is positive or negative.

• Reports that fail to identify the root causes of weaknesses. Failure to identify the root cause delays the implementation of corrections.

STACY ALRIDGE

First Kentucky Bank promoted Stacy Aldridge to Senior VP. Aldridge, a 23-year employee, previously held the title of Senior Operations Officer.

STACY OVERBY First Kentucky Bank promoted Stacy Overby to Senior VP. Overby, a commercial lending officer, joined the First Kentucky team in 2002 and has 27-years banking experience.

KYLE HITTNER Field & Main’s Kyle Hittner was promoted to Director of Brand Experience, Vice President. In this new hybrid role, Kyle will oversee creative branding strategies and community engagement.

JAN/FEB 2018

• Reports that identify the root causes of deficiencies, but do not suggest appropriate corrective action. Solutions should be offered in reports.

• Reports that only emphasize weaknesses and ignore strengths. Focusing only on the negatives may inappropriately exaggerate the scope or materiality of an identified problem.

• Reports that do not reflect the materiality or severity of an issue. Treating every issue uniformly is a sign that perspective may be lacking. The report should clearly identify whether or not the issue is systemic or isolated.

Oversight of a compliance program that can withstand not only regulatory scrutiny, but the changing economic environment and regulatory conditions is a tough assignment. Proper reporting ensures proper maintenance of the compliance program, and a well-maintained program that can be clearly communicated to examiners is the key to passing the exam.

Compliance Alliance is committed to providing resources for our bankers to assist with compliance; from keeping up with the changes, all the way through the reporting. Contact me directly at (888) 353-3933.

PAGE 33 | KENTUCKY BANKER

UNITED IN SERVICE

Best Practices to Grow Your HELOC Portfolio

by David Carlson, Senior VP Haberfeld Holdings dcarlson@haberfeld.com

KEITH MOODY

Home equity lines of credit (HELOCs) are again becoming a relevant strategic instrument to accelerate loan growth. While consumer interest in HELOCs has revived and will likely continue growing, many financial institutions are struggling to capitalize on these opportunities.

2017 began with several key housing and economic indicators pointing favorably to a continued resurgence in HELOCs. However, despite these decidedly HELOC-friendly indicators, HELOC growth is proving to be an uphill climb. In the first quarter of 2017, the dollar volume of HELOC originations was at a three-year low. The pace quickened in Q2 but origination growth still lags behind 2016 performance. It’s not that community financial institutions aren’t trying. Many are devoting considerable resources to gain traction with HELOCs, only to have their efforts rewarded with lackluster results.

If you ask an officer at one of these under-performing institutions to explain their financial institution’s subpar HELOC results, they might point you to a long list of legitimate frustrations. Often, these are valid concerns; however, a select number of community financial institutions are successfully identifying and attracting new borrowers through the use of innovative strategies. The results – significant growth through increased loan volume and enhanced income.

What’s the differentiator? Why are some financial institutions succeeding while others flounder? Research shows successful execution of a HELOC strategy requires attention to three key areas: (1) Process, (2) Product and (3) Promotion. While many financial institutions may believe they have these elements in place, most do not have a formal foundation to drive actual results.

Process Without a defined process, a successful HELOC strategy cannot be effectively implemented. Developing a consistent organizational process includes: (1) internal education for all team members and (2) a dedicated internal process.

Bank of the Bluegrass & Trust Co., announces Keith Moody, VP & CIO, Retired Lexmark International, Inc., has joined their Advisory Board.

LEANNE ADREON Leanne Adreon was to Assistant Vice President, Consumer Relationship Manager at Paducah Bank. She has been with Paducah Bank for 8 years.

DOUG LAWSON Planters Bank hired Doug Lawson as Senior Vice President for Ag and Commercial Lending. He has 25 years of extensive business and banking experience.

Internal Education Internal education should focus on recognizing HELOC opportunities – specifically, what is a HELOC and how consumers can actually use a HELOC. In addition, employees need to know who the dedicated product owner is and how to make a successful referral to the HELOC specialist.

Internal Process The HELOC growth strategy must have dedicated owners who are HELOC experts. Each product owner must have access to an online application process, which is well defined, intuitive and easy to navigate. In addition, financial institutions must have clear processes around loan closings. Specifically, what is the internal documentation process and where will they be closed (e.g., in branch, online, in a lender’s office, etc.)?

RICK DAVIS Planters Bank promoted Rick Davis to Executive Vice President and Chief Financial Officer. Mr. Davis joined Planters in July 2008.

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JAN/FEB 2018

SINCE 1891

continued: Grow Your HELOC Portfolio

GARY CLARK

Community Financial Services Bank held a retirement reception for Executive Vice President Gary Clark in December to celebrate his 30 years of service with CFSB.

Product With the process defined, it is time to focus on the product. Although it isn’t always obvious with a product such as HELOCs, there are significant ways a financial institution can differentiate itself. For example, will your financial institution focus on a fixed-rate offer or an introductory rate offer? Consumers will want to compare rates, so it is important to understand how compelling your rate offering will be to prospects. Other items for consideration include decisions regarding closing costs and credit quality – essentially, will you charge closing costs and what will your risk tolerance be as it relates to consumer credit scores. Like our other products, HELOCs are most successful when financial institutions pair a compelling product offering with targeted marketing and differentiating service.

Promotion Once you have the right process and products in place, the final step is promotion. A random survey of many websites shows most financial institutions don’t even promote their HELOC offerings. The first step in effectively promoting HELOCs is to include them on your organization’s website. The next and most important part is to utilize data to make strategic decisions.

DARLENE MILLER Community Financial Services Bank held a retirement reception for Corporate Secretary Darlene Miller to celebrate her 35 years of service with CFSB.

Imbedded in your financial institution’s data is a wealth of information regarding targeting opportunities, specifically, who are your best customer or member HELOC targets? When this information is paired with non-customer or member targeting information based on external data sources, a financial institution can then successfully implement a targeted omni-channel marketing approach to increase HELOC acquisition.

HELOC promotion utilizing an omni-channel marketing approach includes a variety of sequenced and targeted methodologies. For example:

DAVID PUCKETT Community Financial Services Bank held a retirement reception for Board Member David Puckett in December to celebrate his 22 years of service with CFSB.

• Emails to targeted customers or members directing them to a HELOC microsite • Digital integration with social media through strategically placed digital marketing • Promotional visibility at your branches • Targeted mailings to high probability prospects • Digital display ads to targets across multiple electronic devices When executed properly, the impact of targeted marketing drives actual results. A case study highlighting one financial institution’s success with an omni-channel marketing approach shows an 11-branch institution that implemented its first HELOC growth strategy in Q1 of 2017. Even with the dollar volume of HELOC originations at a three-year low nationally, the following results were achieved: • Averaged 15 additional funded HELOC loans per month • Recouped marketing investment early in Q3 • Doubled new HELOC production

KATHY WOODS Kathy Woods joins Field & Main Bank as Lexington Market President. Woods brings 28 of years of commercial lending and banking experience to the Field & Main team.

JAN/FEB 2018

The time for a proven HELOC strategy is now: (1) The resurgence in HELOCs represents a significant opportunity for community financial institutions to boost loan volume, (2) The current underlying economic fundamentals are conducive to HELOC growth, and (3) Consumer interest exists. In order to capitalize on this opportunity, financial institutions must now decide if they are willing to design and deploy a HELOC strategy consumers will embrace.

PAGE 35 | KENTUCKY BANKER

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