Palmetto Banker Fall 2011 by SCBA

The South Carolina Bankers Association

Fall Issue 2011-2

Palmetto Banker Mobile 101

Mobile Banking? Mobile Payments? Remote Payments? Proximity Payments? Mobile risks and rewards; a primer.

Inside: Small Business Lending EverFi Distressed Real Estate Assets

2009 Park Street, PO Box 1483 Columbia, SC 29202-1483 Phone: 803/779-0850 Fax: 803/779-0890 Fax: 803/256-8150 www.scbankers.org Chairman Sharon W. Bryant First Citizens Chairman-Elect F. Richard “Rick” Redden, III Wells Fargo First Vice Chairman R. Arthur “Art” Seaver Jr. Southern First Bank, N.A. Treasurer David M. Lominack TD Bank Immediate Past Chairman Teresa W. Knight The Palmetto Bank SCBA Staff

Contents

President & CEO

Sharon Bryant Leads With Humility and Grace

Lloyd I. Hendricks

page 8

Moving Mountains at 111th Annual Convention page 18

Executive Vice President/General Manager/ BankPAC Treasurer

Linda W. Parker Executive Vice President, Financial Planning

Golden Anniversary for SC Bankers School

Donna S. Taylor Executive Vice President, Employee Benefit Trust/ SC Bankers School

page 26

Teresa D. Taylor Senior Vice President, Member Services, Conventions/ Conferences

E. Anne Gillespie Senior Vice President, Government Relations, Economic Development and Counsel

Feature - S.C. SSBCI CAP

Legislative Update

Penny D. Cothran

Meet the Chairman

Vice President, SCBA Services, Inc.

Cover Article - Mobile 101

Feature - Ten Success Strategies

Legislative Feature

SC Bankers Annual Convention

Bankers School

People on the Move

Young Bankers

Compliance Corner

Index of Advertisers

Bank News

Welcome New Associate Members

Good Deeds

Calendar of Events

A. O’Neil Rashley, Jr. Vice President, Communications Director/Editor, Palmetto Banker

Carolyn E. Laffitte Director, Government Relations

Amber J. Setzler Director, Community Bankers Council M. Caroline Sheorn

The PALMETTO BANKER is a publication distributed by the South Carolina Bankers Association. We welcome your comments and suggestions concerning the magazine. The magazine exists to serve its members by communicating news of interest, education and SCBA activities. Items and articles from members are welcomed; however, the editor reserves the right to refuse copy considered unsuitable for publication or not appropriate to our purpose. With the exception of official announcements, the South Carolina Bankers Association disclaims responsibility for opinions expressed and statements made in articles published in PALMETTO BANKER. Designed and published by CC Publish, Inc. (704) 545-7399 © 2011

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Feature

S.C. JEDA Program to Spur More Than $180 Million in Lending US Treasury Approves JEDA as Administrator of State Small Business Lending Initiative

he South Carolina Jobs-Economic Development Authority (JEDA) will be leveraging $18 million in federal funds to spur more than $180 million in job-creating lending activity to small businesses. Joint Resolution 5824 officially designated JEDA as the state agency to implement the capital access program (SC SSBCI CAP), with Business Development Corporation of South Carolina (BDC) serving as adminHarry Huntley istrator. The BDC will take a lead role in reaching out to the state’s banking industry to participate. The funds are the Palmetto State’s share of the $1.5 billion State Small Business Credit Initiative (SSBCI), created nationwide by the U.S. Treasury Department as part of the U.S. Small Business Jobs Act signed into law last fall. State-run programs apply for the funds, which then are used to boost credit that private lenders can make available to qualifying credit-worthy small businesses. Edwin Lesley “The state had to show that it could expect this investment would return at least $10 in new private lending for every $1 in federal funding. We, too, expect this to happen. And perhaps more importantly, this access to funds will empower small businesses across our state to open, expand and do whatever it takes to ensure their own success and put more people to work,” said Lloyd Hendricks, President/CEO of the South Carolina Bankers Association (SCBA), a key supporter who lobbied to bring this program to South Carolina. Harry Huntley, Executive Director of JEDA, said the funds will help the state’s businesses and business lenders participate in a national economic recovery. “Access to capital is a struggle for many small businesses,” Huntley said. “These critical funds will provide a powerful reason for banks to lend to the job-creation machines we have in South Carolina that are just waiting for their spark.” Edwin Lesley, President/CEO of BDC, said his organization is eager to get started administering the $18 million capital access program for the benefit of enterprising business people across South Carolina. “Participation by our state’s banking industry is essential. This kind of incentive can really help jump-start a lot of businesses and our state’s economy in general,” Lesley said. “I want to join JEDA and SCBA in thanking our State Officials who took this opportunity to make this happen.” 4 Palmetto Banker

The South Carolina Senate introduced the resolution where it was passed under the leadership of the chief sponsors, John Land of Manning, Nikki Setzler of West Columbia, Hugh Leatherman of Florence and Darrell Jackson of Hopkins. The Joint Resolution was then passed overwhelmingly by the House, where the leadership of Rep. Steve Moss of Blacksburg was critical to its success. Gov. Nikki Haley then signed it into law. JEDA also credits Commerce Secretary Bobby Hitt and Attorney General Alan Wilson for their work on the resolution. For more information about the SSBCI program, contact BDC at www.businessdevelopment.org or call (803) 798-4064 or contact JEDA at www.scjeda.com or call (803) 737-0268.

(l to r) Otis Rawl, SC Chamber, Edwin Lesley, BDC, Harry Huntley, JEDA, Lloyd Hendricks, SCBA

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Legislative Update

SCBA Completes Successful State Legislative Session by Neil Rashley, SCBA

he first year of the South Carolina General Assembly’s 2011 – 2012 session adjourned on June 2nd with lawmakers returning on June 14th in extended session to deal with primarily redistricting, the state budget and Governor Haley’s vetoes. The second year of the session is set to begin on January 10, 2012. Just as last year, this year’s primary statewide issue was the state budget and the projected $700 million shortfall in revenue. However, unlike last year, there was no federal stimulus money available to fund the budget so the legislature had to tap into other funds such as the cigarette tax to fund the $6 billion budget. Redistricting was also a big issue as South Carolina gained a 7th congressional district. The lines for this new district should be finalized in late August. For banking there were numerous issues SCBA Governmental Affairs staff lobbied and worked on throughout the year. Here is a quick synopsis of the top issues.

Small Business Credit Initiative One of the most positive bills for banking was S824, a Joint Resolution designating JEDA as the state agency to administer South Carolina’s $18 million allocation from Congress to support the State Small Business Credit Initiative - a Capital Access Program. This CAP program would operate the same as – and in conjunction with - the present South Carolina CAP program administered by the Business Development Corporation. JEDA will contract with BDC to market and administer the program and the funds are expected to support up to $180 million in small business lending. SCBA strongly encourages all banks to use this program as another small business lending tool. For further information contact Neil Rashley at SCBA or Edwin Lesley at BDC.

Foreclosure Foreclosure continued as a nationwide problem last year and a number of bills were introduced dealing with various aspects of foreclosure. In particular, S702 – opposed by SCBA – was filed and would have mandated court-appointed mediation of all foreclosures (even defaults and abandonments) in South Carolina. In addition the bill sought to comprehensively regulate the business of all mortgage servicers (including banks), declaring that a servicer owes to the homeowner a duty of utmost care, honesty, and loyalty in all transactions, including the duty of full disclosure of all material facts; requiring prompt crediting of payments received; declaring that a servicer acts on behalf of and as the agent of the mortgage holder or investor; and, making the mortgage holder or investor liable for any action of the servicer that violates rules for servicers. Due to SCBA’s and other’s efforts, S702 did not move forward; however, later in the session South Carolina Supreme Court Chief Justice Jean Toal issued an Administrative Order, effective May 9, 2011, staying all owner-occupied residential foreclosures until the foreclosing party completes an intervention process with the borrower. The order requires the foreclosing party to file an affidavit with the trial court certifying that an intervention process was conducted before a foreclosure can continue. If intervention is unsuccessful, the foreclosure still moves forward. Further, a court has the option of ordering 6 Palmetto Banker

mediation in certain cases. The order has no definite deadline and it is anticipated that it will stay in effect for at least another year.

Taxation The Tax Realignment Commission submitted its final report just prior to the start of the session. Although TRAC’s primary purpose was to review and make recommendations on sales tax exemptions, its scope was expanded to include all forms of taxation. For banks and thrifts, TRAC recommended eliminating the 4 ½% bank franchise tax and the 6% thrift income tax; instead, TRAC recommended taxing both banks and thrifts as C Corps - presently a 5% rate. The report also recommended eliminating the banks’ and thrifts’ personal property tax exemption. TRAC did, though, specifically recommend to not tax banks’ services. In the upcoming year, we anticipate that taxation issues will continue to dominate and more bills will be filed dealing with all forms of taxation. In fact, a present bill, H4217, proposes eliminating most sales tax exemptions while there is also a Supreme Court case challenging South Carolina’s sales tax exemptions.

Unauthorized Practice of Law Last year the South Carolina Supreme Court and Court of Appeals issued two separate rulings that held that a mortgage is unenforceable if the closing was conducted in violation of the Supreme Court’s rulings regarding the unauthorized practice of law. In Matrix v. Frazer, the Supreme Court allowed a judgment creditor in a bankruptcy proceeding to claim priority over a refinancing mortgagee because the refinancing was conducted without an attorney. In Wachovia v. Coffey, the Court of Appeals not only voided the enforceability of a homeowner’s mortgage (because an attorney was not present at a HELOC closing) but even went one step further and voided the bank’s contractual rights on the note. SCBA’s immediate concern was that these rulings were overly broad and put banks in a difficult and almost impossible position of trying to predict what lending practice the court might next rule is the unauthorized practice of law – thus risking the enforceability of the mortgage and recovery on the note. In the fall of 2010, SCBA convened a special committee of private attorneys and bank attorneys to discuss not only the dramatic impact of these rulings but to also fashion potential legislative remedies. Part of that discussion led to the introduction of H3988, a bill proposed by Reps. Clemmons and Viers of the House Judiciary committee. The bill specifically addresses the enforceability issue and states that a mortgage is still enforceable in a foreclosure action notwithstanding that the closing may have involved the unauthorized practice of law. The bill does affirm the Supreme Court’s sole authority to define the practice of law in South Carolina. H3988 will still be pending next year and SCBA will continue to work with legislators on potential legislative remedies to this problem.

Other Lending Issues ■ Point of Sale – The Realtors Association, the Association of Counties and the Municipal Association reached a compromise

Legislative Update (H3713) on the issue of point of sale and assessable transfers of interest. The compromise affects only commercial properties, rental, second homes and other properties taxed at 6 percent of their assessed value. According to the compromise, eligible properties would receive a 25 percent discount from the sale price when calculating its value for tax purposes. However, to minimize the impact on local governments, that discount could not reduce the new tax value to less than the property’s current market value. For instance, a property assessed at a fair market value of $100,000 which sold for $125,000 would be taxed based on its $100,000 value. The compromise also allows local governments who choose not to raise their property tax rates to their annual maximum -- the rate of population growth plus inflation -- to tap the difference, if needed, up to three years later. ■ Private Transfer Fees – Private transfer fees are fees developers place into deeds in order to create a stream of income for every subsequent sale of the property. In order to address the title marketability and other problems these fees have caused in real estate closings, Rep. Clemmons introduced H3095, a bill that establishes that private transfer fees in deeds are contrary to South Carolina public policy and would limit their use to certain exceptions such as homeowners associations and 501(c)(3)s where the fee’s benefit directly goes to the land. SCBA supported H3095, not only for the concerns related to real estate closings (title marketability, alienation of property, and nondisclosure of fees), but also because FHFA issued a proposed rule to Fannie Mae, Freddie Mac and the Federal Home Loan Banks advising them that they should not purchase or invest in mortgages

that have these private transfer fees. The proposed rule also has exceptions identical to those in H3095. H3095 was passed by the House and now sits on the Senate calendar set for debate in January. ■ Mandatory ELT – Another bill still pending for next year is H3915; a bill that requires that all vehicle lien satisfactions to be electronically transmitted to DMV. The effect to banks is that all banks would have to participate in ELT in order to make a car loan. SCBA actively supports the ELT program; however SCBA has expressed concern with the mandatory nature of the bill as some banks have concerns that ELT is not cost-effective for them presently. As such, SCBA has encouraged the subcommittee to continue the voluntary approach that the present statute takes. ■ Appraisal Management Companies – One section of the DoddFrank bill required that each state, within three years of the release of Dodd-Frank regulations, adopt a state level registration and regulation program for appraisal management companies. These regulations are set to be finalized in July 2011. H3717, introduced by Rep. Sandifer, is the South Carolina bill that, pursuant to Dodd-Frank, comprehensively regulates appraisal management companies, sets requirements for registration and renewal, and bars attempts to improperly influence the outcome of an appraisal. Still with this bill, one of the biggest issues to be resolved is the Dodd-Frank requirement that appraisers and appraisal management companies are allowed to charge only “reasonable and customary fees.” After the federal regulations are issued this summer, SCBA will continue to work with appraisers and other interested parties to write a bill for South Carolina that complies with federal law.

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Meet the Chairman

Sharon Bryant Leads with Humility and Grace

37-year banking veteran, Sharon Bryant has established herself as a proven leader in South Carolina’s financial services industry. It should serve as no surprise that she was tapped to be chairman at the SCBA for the 2011 term. Palmetto Banker recently had the pleasure of sitting down with the incoming chairman at her bank, First Citizens, to discuss her extensive professional background and share her thoughts regarding the challenges and opportunities currently facing the financial industry in South Carolina and across the country.

PB: Tell me about yourself and about what led you to choose a career in banking? SB: Being a native of Columbia, I’ve been involved in the community for a long time. I went to Heathwood Hall and later graduated from the University of the South in Sewanee, Tenn., where I majored in English. While I was an undergraduate there, NBC came to campus seeking to hire individuals for their production management department. At the time, it seemed like a great opportunity to pursue, because I admired well-respected newscasters like Jane Pauley and Barbara Walters. After interviewing with NBC, they offered me a very entry-level position at their studios in California. However, I decided to come back to Columbia because my father had been battling Parkinson’s disease.

Once back in South Carolina, I applied for and completed an internship at First National Bank under the guidance of Bill Bringer. This turned out to be a great opportunity, as South Carolina National Bank and First National Bank were actively recruiting local candidates who had degrees from liberal arts schools. First National Bank offered me a position in their training program. I was on First National Bank’s administrative team learning how to best work with customers and how to best address their banking needs. While this proved to be a great opportunity for me to grow as a banker, I wanted a sales position that would provide me more interaction with customers. I informed the head of the trust area at First National Bank that, truthfully, I needed to be out in front of people. He was very kind in addressing my concern, but said, “In due time, little girl.” In 1986, Southern Bank was acquired by First Union, and they were looking to hire a business development officer in their trust and investment management area. So, I immediately drove to Charlotte, N.C., in my bright red suit, not thinking that I would run into women who were all dressed in similar, dark-colored masculine attire. My initial thought was that I was doomed. However, I went through the panel interviews and was ultimately selected for the position. With that offer, I went to work for First Union in a sales role in the company’s investment management division. I later transitioned into the company’s employee benefits division. In this role, I witnessed dynamic change in the broker dealer and trust area. Later, First Union asked me to conduct associate training, so I did that for about three years before returning to run First Union’s private banking operations in Columbia. Later, I was named Area President of First Union and also as commercial sales manager for a coastal area from Charleston, S.C. to Wilmington, N.C.

PB: Explain how you began and how you’ve advanced at First Citizens. SB: The opportunity to join First Citizens stemmed from a conver-

Sharon Bryant and members of her First Citizens team.

8 Palmetto Banker

sation with First Citizens Chairman and CEO Jim Apple. We were already acquaintances, having previously worked together on several projects. He always stayed in touch with me and one day invited me to lunch. My instincts made me think he was going to offer me a position like head of retail, head of trust and investments or a similar role. During our meeting, he replied, “I want you to come to First Citizens and be our human resources director.” Jim believed that anyone who was going to run a general bank or find themselves in a leadership position at an organization had to understand the importance of the human resources function. He knew my ability to recruit bankers would be a strength, so I joined First Citizens in 1999 as Director of Human Resources. I served as director for more than two years and helped the bank hire some very attractive talent – many of whom are still First Citizens associates today. As time went on, the bank began to focus its efforts on commercial lending by creating a sales environment inside of a community bank. When I joined the bank, we were very reactive. However, I felt we needed to be more proactive as bankers. The desire to be more proactive allowed me to move into the retail division leadership role, and now I’m a regional executive. I also oversee the Wealth Advisory Group, and am president of the bank’s in-house broker dealer, First Citizens Securities.

While I am thrilled to be a part of the growth First Citizens has experienced, before I joined the bank, I had a simple request for Mr. Apple. I said, “Jim, I’ll come, but only if you allow me to be me.” For so long in the banking culture, women tried to suppress the very characteristics that make us unique. I am loud, and I love to laugh. At First Citizens, I credit Jim with allowing me to express myself openly and honestly.

PB: What is the role of a trade association like the SCBA? SB: The SCBA is the primary lobbying body in South Carolina. The organization also is the direct liaison to the American Bankers Association. The SCBA acts as the voice of many different-sized banks, which all have various complexities. It’s very important that trade associations like the SCBA understand their membership. What may be important to a large bank may not be as important to a small bank, and vice versa. Organizations like the SCBA have to balance their resources to make sure the organization and its members are engaged at the federal and state level. It also is important for organizations to actively communicate with members and keep them abreast of current industry trends. The SCBA does an excellent job of having open lines of communication with its members. PB: What are the biggest challenges facing our industry in South Carolina and in the nation? SB: Revenue and Credit quality. PB: That’s a little bit different than what I usually hear from bankers. Please elaborate. SB: Regardless of a bank’s size, sustainability to shareholders is a means to ensure profitability. It’s a very simple concept. How can banks expect to remain profitable if regulations are imposing capital requirements? Regulations are now affecting how much banks can charge for transactions without obtaining any type of validation that transactions cost a certain amount – which is a significant challenge for banks today. Of course, interest rates fluctuate, but that one factor seems particularly problematic. Not only are banks losing interest income, but the spread is not there. More banks now have to look at revenue sources they have never had to rely on in the past. A banker used to be expected to simply make loans, take deposits and care for their customers. While it’s a bit cliché, there are some great lessons to be learned from books like, Who Moved My Cheese? or Tipping Point. Either one of those books can accurately address issues our industry is currently facing. In today’s operating environment, bankers can’t continue to sustain the same level of revenue and income for their bank by operating like they have in the past. The real challenge lies in a bank’s ability to adjust and conform to a more efficient operating style. That’s why many in our industry are fearful right now. Bankers are forced to face unforeseen circumstances and make important decisions accordingly. Having a positive attitude and a willingness to adapt to changes in today’s operating environment will be beneficial to today’s bankers. It’s important to stay ahead and embrace technological trends as well. I believe a lot of banks are in denial about the role technology will play in the future of banking. You have to look at your customer base and determine how they like to be banked. There are many different types of customers, and banks need to examine the banking habits of their customers and determine how to best serve each segment.

For example, there are people like my husband and me. We’re both professionals. Since I work outside the home, I want someone to proactively reach out to me. A good banker must first understand what’s important to his or her client and then build a professional relationship with him or her based on a mutual understanding of those criteria. That’s how our Private Banking Group operates. Then, there are customers like my son. He rarely uses an ATM and never visits a branch. But there’s mobile banking, which affords him the same access to his account. In my opinion, community banks aren’t working as quickly to fulfill the needs of my son’s generation, which has an abundance of technology at their fingertips. Banks must examine their current operations and determine if they need to adjust policies and procedures for future generations. In my opinion, that’s why banks are failing. Some [banks] are frozen. I think that’s huge for helping our membership.

PB: How are you going to determine what the needs are in the community? And how are you going to address them? SB: Well, banks are doing a lot more listening than talking these days. We are trying to break down and segment our customer base by age. We are looking for ways to better utilize our branch facilities. The real elephant in the room is that retail banking is one area being pressured to perform well because there are alternate deliveries and tremendous competition. Virtually any bank can offer customers a checking account. Many financial institutions have facilitated the process by offering customers the ability to open accounts online. In some respects, it’s almost as though every bank is offering the same thing. It’s important for banks to identify ways to differentiate themselves or think of new ways to appeal to their customer base. Banks should partner with their communities and then leverage the physical space for additional products and services. Small banks don’t have the capital for it and the big banks can’t seem to make it profitable. But it’s a sweet spot in the middle tier of banks – the ones with assets of $8 billion to $20 billion. I think our industry needs banks to partner together and serve as good stewards within their communities. All banks can work together to further the mission of our communities. After all, we collectively work and live in the same area. Banks have to determine how to

Meet the Chairman continued on page 10 9 Palmetto Banker

Meet the Chairman Meet the Chairman continued from page 9 address generational gaps and encourage more people involved in civic efforts. At the end of the day, being a diverse bank that demonstrates humility and appreciation to its residents is an important quality needed to remain a valued corporate citizen in our communities.

PB: What’s your mantra around the office? What would an outsider say you do best? SB: Public Affairs Officer James Bennett said I was the social conscience of the bank. He said that I’m an advocate for the lines but [also] an advocate for the customer. A lot of people have told me that my ability to quickly read people and create followership is one of my virtues. I believe I can connect with people through open communication. I think you have to get to know people on a personal level to gain their trust. Once you have that, you begin to make “emotional deposits.” In my experience, trust has proven to be a critical component of client relationships, especially when tough decisions need to be made. Unfortunately, many people mess up because they skip all the steps needed to build professional relationships. You can create an environment for people to motivate themselves. I like to spend a lot of time in that type of environment. I like to have fun, and I think it’s important to get to know people on a personal level. PB: What advice would you give a young banker? SB: First of all, they need to be extremely nimble and flexible. For so many years, bankers enjoyed a very predictable career path. Those

days have long disappeared, as our industry is constantly changing and we are all adapting to stricter financial regulations. It’s important for today’s young banker to be extremely agile and accept different opportunities and challenges that come their way. We are subject to many different types of situations in our lives, and there are abundant opportunities to learn and grow through our various experiences. The number one thing I stress when talking to people is to think critically in these situations. When a young banker can quickly assess a situation and make an educated decision to solve a problem, they are demonstrating their ability to think critically. Young bankers need to understand that banking is not as scripted in today’s world. As bankers, they have to be critical thinkers to be successful.

PB: What book have you read lately that impacted your life or career? SB: The One Thing You Need to Know: ... About Great Managing, Great Leading, and Sustained Individual Success by Marcus Buckingham. It’s a great book about management and leadership. Buckingham spends a lot of time talking about how to manage versus lead. He stresses that you have to do both to be successful. The book states that one has to inspire, lead and create a following. Another takeaway is the idea that far too many people succumb to fear -- fear of failure, fear of lack of respect, etc. To me, books with this type of subject matter offer a refresher course on what it means to be a successful leader.

PB: What is your favorite place to travel and why? SB: I love to travel anywhere with historical significance, which is why I love to travel to Europe. I have so much fun planning my itinerary for locations that, as the saying goes, “are off the beaten path.” My favorite country to visit is Italy, because I am fascinated by the deep roots of the religious community there. However, I like to travel within the United States, too. I’ll go any place where there is a story.

PB: If you had a day off – a gift, with no obligations – how would you spend it? SB: Reading. But I’d probably be reading about traveling!

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Cover Article

Mobile 101 by Kathy Levin, AAP, Managing Director, Payments Information Circle

obile banking and mobile payments are becoming increasingly popular – not just in other parts of the world but here in the United States as well. As mobile popularity grows, so does the confusion around what mobile is and how it works. Many people use the terms “mobile banking” and “mobile payments” interchangeably, but the way it was they are actually different things. Mobile banking involves accessing the user’s account at his or her financial institution through a mobile device for informational and transactional services, such as viewing account balances and transaction history, transferring funds between accounts, either at the same financial institution or different ones, paying bills, receiving account alerts, or even depositing checks via mobile RDC (remote deposit capture). Mobile banking involves the same sorts of things that can be done on a financial institution’s online banking and can be done via SMS/ text messaging, via WAP (wireless application protocol) site by utilizing the mobile internet or by using a downloadable application. There are advantages and disadvantages to all three of these methods and many financial institutions end up using a combination of two or even all three of them for their mobile banking offering. Mobile payments, on the other hand, are the exchange of financial value between two parties using a mobile device. The mobile device is used for purchasing or some other payment related transaction either at the point of sale (proximity payment) or remotely (remote payment). Mobile payments can be consumer to consumer (e.g. P2P (peer to peer) payments), consumer to business (e.g. payments made at the point of sale or bill pay services), consumer to machine (e.g. small value transactions at devices such as parking meters or soda machines) or consumer to online (e.g. using the phone to pay for online purchases). Like mobile banking, mobile payments can be done using SMS/text, mobile Internet, or a downloadable application, but it can also be done via contactless or barcode technology. A remote payment is when the payor’s mobile device initiates payment to a payee wherever that payee may be located.

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Examples of remote payment would include using SMS/text to donate money to a charitable cause, or using the mobile internet to go to a mobile website and purchase goods, or using a downloadable application to purchase a movie ticket or pay for parking. Proximity payments are when the payor’s mobile device interfaces with payee’s POS (point of sale) equipment to initiate payment. An example of a proximity payment is using a mobile device with an NFC (near field communication) chip embedded in it to make a purchase at a merchant that has installed NFC equipped POS terminals. Another example of a proximity payment would be a mobile device displaying a 2D barcode on its screen and having it scanned at a merchant that supports the linked mobile gift card program. Some mobile services can fall into either category, such as bill pay or P2P payments as they can be done either through mobile banking or through third party mobile payments service providers. Like any other offering, financial institutions will need to consider the risks of mobile banking and mobile payments, including strategic risk, reputational risk, financial risk, operational risk, fraud risk, and, of course, legal and compliance risk. Risk assessments will need to be performed. As mobile banking is similar to online banking, the risk assessment performed for mobile banking is similar. And for mobile payments, the risk is usually similar to the underlying payment being made. But in all cases, financial institutions need to consider the new access points being utilized and the risks that come with the use of a mobile device. So, for example, if a financial institution were offering mobile RDC, the risks involved would primarily be the same as consumer and/or business RDC (depending on the customer base to which mobile RDC is currently offered). But it would have the additional risks involved with utilizing a mobile device. Mobile banking is becoming increasingly common in the United States. All large banks, most mid-regional and many community banks and credit unions now are offering mobile banking services. The primary reasons offered by many financial institutions for implementing mobile banking is the feeling that they are gaining a competitive advantage over other financial institutions by doing so and that they could potentially lose customers if they do not. Large banks generally offer all three types of mobile banking (SMS/text, mobile browser-based banking, and downloadable application). Smaller banks and credit unions often implement whatever options are included in their core processors’ or another vendor’s mobile package. Financial institutions usually start with basic information-based services like branch and ATM locators, transaction histories and balance inquiries, and then add payment type services as phase two of their mobile banking offering. If mobile RDC is added, it is often done as a separate application, with a plan to integrate it into the mobile banking application or site at a later date. Mobile payments are not as common in the United States yet, and there have been many reasons for this. There are lots of stakeholders involved in the mobile payments process. There are technology challenges with different devices and different operating systems. There are concerns around security and around the lack of clear guidance on regulatory expectations for mobile payments programs. And in these difficult economic times, there are also serious concerns around the implementation costs involved.

In addition to all of these issues, the United States payments landscape is different than the developing and developed countries where mobile payments have proven very successful. Many developing countries lack the banking and the physical infrastructure required to reach people located in remote regions. According the UK Department for International Development, more than 2.7 billion people in the developing world have no access to financial services. The same study points out that by 2012, 1.7 billion people will have access to mobile phones who also do not have access to bank accounts. So there are few payment alternatives available besides cash. In developed countries that are more technologically advanced (such as Japan, Singapore, South Korea), many mobile phones are equipped with contactless chips. These are also very cash intensive societies where mobile payments replaces cash. The mobile carriers partnered with banks, the government and transit authorities to begin mobile payments. Here in the United States, we already have lots of existing payment options, we rely less on mass transit, and there hasn’t really been tremendous customer demand for mobile payments. However, there are signs that mobile payments may finally be poised to take off here as well. Google has already released an NFC capable device and other device manufacturers are following suit. Research in Motion for example announced in May that the next Blackberry Bolds will be NFC enabled and they will be available sometime this summer. Smartphone use is continuing to grow and with that comes the

explosion of applications that their users crave. Mobile “giving” (for disasters is Haiti and Japan) showed that Americans have become comfortable using their phones for payments. The American Red Cross raised over $22 million for Haiti earthquake relief in donations via text message that appeared on customers’ wireless bills. In addition, there are many forces pushing toward use of EMV chip and PIN cards. If these cards become widely issued and used, the NFC readers that are needed for NFC-enabled phones would be in place. And finally, two mobile wallet pilots have recently been announced. Google announced a mobile wallet pilot that will begin in New York and San Francisco and will include a contactless Citi MasterCard and Google prepaid virtual card as well as a loyalty card. And VISA has announced a digital wallet service that will store VISA and nonVISA payment accounts, support NFC payments, and deliver mobile commerce and P2P transaction services. There are many financial institutions partnering with VISA on this digital wallet and it is expected to launch in both the U.S. and Canada in the fall of 2011. About Payments Information Circle Payments Information Circle is a membership-based organization for community banks and credit unions, which serves as a payments information resource through networking, education, and consulting. PIC is dedicated to offering members both the tools to handle practical day-to-day issues, and the knowledge to enable strategic decisions for the future. For additional information, please visit www.paymentsinformation.com.

The Correspondent Division of CenterState Bank is a full service unit with an extensive network of bank relationships throughout the Southeastern United States.

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120 Club Oaks Court, Suite 150 Winston-Salem, NC 27104 336.659.7100 y 877.604.8282

International Services

www.csbcorrespondent.com

Fed Funds Lines of Credit

13 Palmetto Banker

Feature

Ten Success Strategies Bankers Need To Embrace When Dealing With Distressed Real Estate Assets

oday, many lenders find themselves as property owners as they hold nonperforming loans or recaptured properties. What was once their loan departments are now their REO departments. Their staffs are undermanned and face the daunting task of reducing risk while at the same time preserving and enhancing the value of their loan portfolios. Unfortunately, this task is generally complicated by the lenders’ lack of experience in such matters and consequently, they typically lack comprehensive and cohesive plans. Fortunately, much of their risk can be eliminated and any remaining risk dramatically reduced if some very basic rules are followed. LandTech, a South Carolina real estate developer and asset manager, attributes its highly successful record to assiduously following a rule-based plan. This plan encompasses ten fundamental rules that LandTech has employed over decades of assisting lenders as managers of troubled assets. Taking these ten critical steps will minimize the risk and maximize the value of a lender’s asset.

1. Dig Deeper The first step may seem obvious, but it is critical to the decision-making process. Digging deeper requires a more thorough investigation than relying purely on an appraisal. A detailed physical inspection of the property is mandatory. A title search may be required along with a complete investigation of tax records to identify what the lender owns and what liabilities exist. If the asset includes homes, a home inspection report may be needed to identify a host of potential issues that could wreck your collateral, such as mold, insect damage, water damage and construction issues.

2. Don’t Let Entitlements Expire Is there a permit matrix that captures every entitlement for the asset? Who are the granting authorities? What are the expiration dates? Are the permits assignable? Are there bonds about to expire? What about zoning conditions and deadlines? Potential buyers for the assets (especially larger assets that are unfinished, stalled, or in disrepair) will require a thorough understanding of entitlements. A complete upfront entitlement matrix will shave significant time from due diligence periods.

3. Adhere to Government Regulations Since the Clean Water Act (1972), the Environmental Protection Agency (EPA) has been charged with protecting America’s waters including regulating the effects of stormwater runoff. Eighteen months ago (Dec. 2009), the EPA issued new discharge standards for construction sites. For years, contractors have shown little regard for erosion control, only doing the minimum to pass infrequent inspections. The EPA is now cracking down on local governments that have not demanded compliance. Local inspections have increased dramatically and work sites that fail to comply are subject to significant fines and delays. This new regulatory and compliance environment is a real cost and directly affects asset value.

14 Palmetto Banker

4. Consider a Receiver When a loan goes into default, the underlying collateral and its value can rapidly decline. This is particularly true for partially finished developments that have essentially stalled. Property values can spiral downward quickly due to neglect, abandonment and a host of environmental and financial factors. While simple attention to matters like property maintenance can often improve the physical appearance of an asset, the lender may want to pursue the legal option of a Receiver to manage more complex matters. A Receiver is an independent, impartial party appointed by a court to take custody, manage and preserve property involved in a foreclosure until a final settlement or transfer of title to the lender has occurred. In many cases, a borrower will have literally “thrown in the towel” with no money to fund the project needs, and the lender is uncomfortable funding additional expenses to a borrower who is already in default. A Receiver can manage every aspect of the development – construction, regulatory, sales, homeowner associations, legal, etc. – while preserving and enhancing value for the creditors.

5. Find the Market The key in today’s challenging real estate market is to find the market equilibrium in terms of price and product for the asset. There are hosts of data that figure into your search: absorption, comparables, demographics, lifestyle trends, permits, schools, jobs, interest rates, etc. In regards to pricing, the task is very complex especially when prices are generally declining, but letting buyers dictate prices is a very weak negotiating position. Knowledge is power in pricing. One must understand precisely the market (local, regional, national) the asset competes within, and price it according to valid comparables. The results may not be to one’s liking, but ultimately reaching this number, and knowing it upfront can shorten the marketing period for their asset. Regarding product, what worked in the go-go years (2003 to 2007) does not work in today’s market and repositioning the asset to match buyer’s preferences is the best strategy now that the world has changed.

6. Impose Strict Financial Controls Whatever stage of development in which the special asset is found, the lender must impose strict financial controls. For projects with ongoing operations such as golf courses, the first step will be to take control of the checkbook and ascertain the quality of financial systems in place. Change the locks. Quickly ascertain cash on hand, payables, and establish a manageable cash flow plan. Find out about existing contracts and leases. There are also payroll and the associated HR concerns. Develop an operating cash flow that will minimize expenses while maintaining the asset at an acceptable level. Concurrently, develop an overall discounted cash-flow analysis which looks at long-term values in today’s terms. With this business decision model, the costs associated with maintaining the asset can be analyzed, potentially lowered without harming the asset and a reasonable projection of the value of the asset can be made.

Ten Success Strategies continued on page 16

15 Palmetto Banker

Feature Ten Success Strategies continued from page 14

7. Understand the Property Covenants, Conditions and Regulations (CCR’s) and its Governing Body (the HOA)

Reports, Reports!” If the property is a larger asset and a more complex sale, there are many real estate companies with global marketing reach and referral capabilities that may be better suited for the task.

The lender must learn everything possible about the Homeowners Association (“HOA”) and make important determinations which impact asset value. Does the property have covenants and are all filings and required records current? Who holds the “Declarant Rights”? Is there a management company and an approved budget? Who serves on the Board? Have all meetings been held as required? What are the assessments and are there subsidies required? What is the delinquency rate? What is the financial health of the HOA? Control of the HOA can be vital to the value of an asset and these are but a few of the questions lenders need to have answered prior to putting an asset on the market.

10. What’s Your Plan?

8. Reports, Reports, Reports!

LandTech has been in the business of assisting lenders as managers of troubled assets for decades. While much of our time has been devoted to development of our own communities, there have been extensive periods where we have returned to our roots as managers for lenders on troubled assets. In addition to being successful developers, we also serve as third-party receivers and managers for several large master-planned communities in the Southeast and Northeast and have provided asset classification, evaluation and HOA-related services on several hundred assets across 10 states. The author, Bill Earle serves as Vice President of Marketing for LandTech and may be reached at (803) 217-3935 or bearle@landtechsc.com.

There is simply no substitute for timely reports that inform lenders what is happening within their market, to the asset and its disposition. Reports must equip a lender with facts so he or she can make decisions as to how to proceed with the asset. Additionally, reports must be actionable so they can flow up or down the chain of command electronically in order that others up the chain are informed and those down the line can be given direction. Quality reporting allows the lender to be focused at a strategic level, solving problems, managing issues, and looking for buyers!

To help the lender recover maximum value, every asset should have a concise written plan that covers it from start to finish. The lender should require their REO staff to have a thorough understanding of all elements of the plan. The plan should include a valuation of the asset, critical dates to preserve entitlements, a quality assessment of the HOA, a budget, a written disposition strategy, a recommended action plan and next steps. Plans should be digital and converge into an overall summary plan from which one can adeptly manage the special assets portfolio.

Elements of a Plan for the REO Asset 9. Hire the Right Professionals to Broker the Asset The maxim, “all real estate is local,” doesn’t apply when it concerns larger real estate assets. Buyers hail from all corners and the Internet has flattened the market. Depending on the size of the asset, seek out and retain the right broker to list and sell the asset. If the asset is an individual house or two, it may be best to find a real estate company within the local market. Seek out a broker who will perform many of the tasks defined in this brief article with an emphasis on “Reports,

16 Palmetto Banker

Description of the Asset

Asset Evaluation

The Location Story

Current Management Plan

Issues with the Property(s)

Critical Dates

Homeowners Association and Status

Budget Disposition Strategy

Entitlements

Recommended Action Plan

Description of the Market

Next Steps

Legislative Feature

SC Secretary of State Mark Hammond Announces UCC Online Now Available for Filing and Document Retrieval

new service called “UCC Online” offered by the South Carolina Secretary of State’s Office now allows banks and others to electronically file, search and retrieve all UCC documents. This web-based application, built through a partnership between the Secretary of State’s Office and South Carolina Interactive, allows users to file, assign, correct, amend, terminate, search and retrieve all UCC financing statements. The new system also allows you to print certified or non-certified documents directly from any computer. Electronically filing a UCC online allows a bank to ensure that a security interest is perfected immediately. Banks no longer have to wait for a paper filing to be processed, thus removing the risk of untimely perfection of filings.

UCC Online provides: ■ Convenient 24/7 access; ■ Screen wizards to ensure accurate and efficient filings; ■ Help links on every page; ■ Immediate filing confirmation;

“Our goal in the design of UCC Online was to create a convenient and reliable method for customers to file, search, and retrieve UCCs with around-the-clock access. This new service will greatly benefit those who need our services, as well as the citizens of South Carolina.” – South Carolina Secretary of State Mark Hammond SCBA strongly encourages all of its member banks to subscribe to this service. Customers submitting filings or requesting document retrieval may sign up for a subscriber account and be billed monthly or pay instantly using any VISA, MasterCard or Discover debit or credit card. Payments are processed through SC.GOV’s secure payment system. Please visit www.scsos.com for more information or log on to https://ucconline.sc.gov/UCCFiling/ to directly access the new system.

■ Viewable UCC filing records and recorded statutory liens; ■ Quicker UCC Search processing time; and ■ Immediate search results.

17 Palmetto Banker

Annual Convention

Moving Mountains at 111th Annual Convention

he beautiful and rustic West Virginia mountains were an exquisite backdrop for the 2011 South Carolina Bankers Associationâ&#x20AC;&#x2122;s Annual Convention held at The Greenbrier June 9-12, 2011. Chairman Teresa W. Knight, The Palmetto Bank, Laurens and her husband, Randy, were delighted to entertain a sell-out crowd of almost 330 conventioneers and exhibitors who came together for the business session, trade show and other activities on the historical property. Congratulations to the sponsors, exhibitors, associate members and bankers on a very productive and illuminating convention of the SC Bankers Association!

h Carolina Bankers and The majestic Greenbrier awaits Sout Associate Members

See You Next Year! Chairman Sharon W. Bryant wishes to invite you to the 2012 SCBA Convention at The Cloister, Sea Island, Georgia June 10-13, 2012.

man Teresa Sharp shooter Chair

Knight

ic Bank, and Scott Plyler, South Atlant rshall, visit Ma ker ban his son, future the exhibit hall

r of the Outstanding Young Banke Past Chairmen and past and nk, Ba pps, First Community Year recipients, Mike Cra ing dur up ch cat ., rn First Bank, N.A Justin Strickland, Southe ion ept nking Rec the Graduate Schools of Ba

Chairman Teresa Knight, The Palmetto Bank, and her husband, Randy, host the Sporting Clays Tournam ent

lenn ond sponsor, G ndor and Diam ade Ve tr d e re th er ef ng Pr ri SCBA e, exhibits du nc SCBA Chairman-El lia Al as ui ect Sharon Bryant, Blackwood, Eq ABA, reiterated Citiz First ens, and Chairman Governor Frank Keating, Teresa Knight, The rts effo show ots ssro gra of e anc ort Pa lm imp ett the o Bank

18 Palmetto Banker

New Officers Terms are from July 1, 2011 until June 30, 2012

Chairman

Chairman-Elect

First Vice Chairman

Treasurer

Sharon W. Bryant

F. Richard “Rick” Redden, III

R. Arthur “Art” Seaver Jr.

David M. Lominack

First Citizens Columbia

Wells Fargo Charleston

Southern First Bank Greenville

TD Bank Greenville

New Board of Directors Terms are from July 1, 2011 until June 30, 2012 President & CEO Lloyd I. Hendricks South Carolina Bankers Association Columbia Immediate Past Chairman Teresa W. Knight The Palmetto Bank Laurens 2nd Immediate Past Chairman Charles W. “Chuck” Garnett NBSC Columbia

Group I Director William G. “Gary” Horn CBC National Bank Beaufort

Group V Director J. Glenn Anderson Spratt S&L Chester

Group II Director Michael “Mike” R. Brenan BB&T Columbia

Group VI Director Curtis A. Tyner Heritage Community Bank Hartsville

Group III Director William J. “Billy” Cook Abbeville Savings & Loan, Abbeville

Young Bankers Division Chairman: Jeffrey A. “Jeff” Paolucci First Reliance Bank Florence

Group IV Director J. Thomas “Tommy” Johnson Citizens B&L Greer

Members at Large One Year Melissa Albergotti Bank of America, Columbia

Two Years Fleetwood S. Hassell The Bank of South Carolina, Charleston

Three Years Thomas “Tommy” Bouchette BNC Bank, Myrtle Beach

F. R. Rick Saunders, Jr. First Reliance Bank, Florence

R. Scott Plyler South Atlantic Bank, Myrtle Beach

J. Ted Nissen First Community Bank, Lexington

One-Year Terms Community Bankers Council William O. “Will” Buyck, Jr. The Bank of Clarendon, Manning

SCBA Bankers School Francis A. “Frank” Townsend, III Southern Bank & Trust, FSB, Aiken 19 Palmetto Banker

Annual Convention

and and his wife Sally, rn First Bank, N.A. wife his d an A. N. Art Seaver, Southe , nk th Southern First Ba Fred Gilmer, also wi President and CEO d Hendricks, SCBA oy Ll th wi it vis ie nn Jea

lls izens; Rick Redden, We Sharon Bryant, First Cit are . N.A nk, thern First Ba Fargo; and Art Seaver, Sou man-elect and First Vice air Ch n, ma air Ch installed as Chairman respectively

Building and Loan, Tommy Johnson, Citizens ritage Community He er, presents Curtis Tyn ard Bank with a 35-Year Aw

t Evatt, Oconee Federal, and Tommy Johnson celebrates with Rhet rd Awa receives the Half Century Club

n , N.A. and Maso Jim Brant, SCBT on t th Bank reflec Garrett, GrandSou s past ion nt ve memories of con

20 Palmetto Banker

Jim Justice, owner of The Greenbrier, entertains with his life stories

his family as he

Past Outstanding Young Banker rec ipients Leon Patterson, Th e Palmetto Bank, and Henry Laffitte, Palm etto State Bank

Dr. Bruce Yandle, Clemson University, shares the economic forecast

SCBA Chairman-Elect Sharon Bryant, First Citizens, presents Randy Knight with a gift of appreciation

Jim Chairman SCBA Past alls st in s, Citizen Apple, First rs the new office

Dave Sanderson, Oracle, gives his powerful story of survival on the Hudson

SCBA Preferred Vendors and Bron ze sponsor, Scott Bacue and Dan Thompson, Vantiv, (formerly Fifth Third Processing Solutions) network during the trade show

mingle y, Federal Reserve Bank Matt Martin and Paul Fre ion g recept during the Saturday evenin

BankPAC Cha irman-Elect C urtis Tyner, Heritage Com munity Bank gives the BankPAC repo rt

Banker recipient past Outstanding Young SCBA Past Chairman and Lin and SCBA e wif his h wit State Bank Sterling Laffitte, Palmetto her husband Randy The Palmetto Bank with Chairman Teresa Knight, dinner at the Board of Directors

Immediate Past Ch airman Chuck Ga rnett, NBSC, and past Outstanding Yo ung Manager recipi ent Sara Fisher, NBSC, congratulat e Tyler Hudson, NB SC as he receives the 2011 Outstandin g Young Banker Aw ard

21 Palmetto Banker

Annual Convention

35-Year Club The South Carolina Bankers Association Congratulates Those Who Have Served 35 Years! Lesley M. Barber, Mortgage Credit Analyst Underwriter, First Citizens, Columbia

Walter Davis, Bank Support Specialist, NBSC, Sumter

Jackquline W. Hodge, Teller Leader, First Citizens, Summerton

Lennette Meeks, Teller, Horry County State Bank, Tabor City, NC

Elizabeth C. Barrineau, AVP/Head Bookkeeper, The Bank of Clarendon, Manning

Leon B. de Brux, Senior Vice President, The Bank of South Carolina, Charleston

Lee O. Holloway, Vice President, The Citizens Bank, Sumter

Daniel B. Minnis, Senior Vice President, Credit Admin, Peoples Bancorporation, Easley

George Beckham, Senior Vice President, NBSC, Columbia

Alvenia Dinkins, Executive Assistant, NBSC, Columbia

Hilda C. Biggerstaff, Vice President, The Citizens Bank, Florence

William Dixon, Assistant Manager, Assistant Vice President, Bank of America, Georgetown

Diane H. Blewer, Regional Branch Operations Manager, Columbia Main, BB&T, Columbia

Mavis Horger, SVP/Loans Operations Department Head, SCBT, N.A., Orangeburg J. William (Bill) Hughes, Senior Vice President, Greer State Bank, Greer

Judy Edwards, Vice President, Greer State Bank, Greer

Patricia A. Jensen, Senior Vice President, Controller, Peoples Bancorporation, Easley

Harriett Brady, Personal Banker, NBSC, Spartanburg

Diana G. Elliott, Vice President, Horry County State Bank, Windy Hill Beach

Alice Johnson, VP/Loan Operations Officer, SCBT, N.A., Orangeburg

Jean P. Campbell, Assistant Vice President, The Palmetto Bank, Laurens

Hagood Ellison, Wealth Management Advisor, Managing Director Investments, Bank of America, Columbia

Yvonne H. Jordan, Assistant Vice President, Horry County State Bank, Loris

Jane H. Cannon, Head Teller, Horry County State Bank, Myrtle Beach

Gail M. Kennedy, Administrative Assistant III, Mortgage Lending, BB&T, Greenville

Pat Carter, Bank Support Manager, NBSC, Sumter

Ernest F. Fortner, Jr., Senior Vice President, Consumer Lending, Peoples Bancorporation, Easley

Marie M. Carver, Bookkeeper, Regent Bank, Greenville

Annie J. Gainey, Credit Analyst, First Citizens, Columbia

Susan Kilby, Senior Vice President, Branch Manager, Seneca National Bank, Seneca

Connie T. Coker, Head Proof Operator, The Citizens Bank, Turbeville

Alan George, Vice President/Commercial Banker, First Community Bank, Columbia

Carolyn M. Kirsch, Assistant Vice President/ Training, The Bank of South Carolina, Charleston

Orianna S. Gregorie, Vice President, The Bank of South Carolina, Charleston

William J. Long, ML Const. LN Admin. Manager, Mortgage Lending, BB&T, Greenville

Wanda Crook, Teller Leader, First Citizens, St. George Marydee Cullen-McLemore, Loan Review, Crescent Bank, Myrtle Beach Becky Davis, Bank Support Supervisor, NBSC, Sumter Suella C. Davis, Mortgage Loan Internal Originator, Mortgage Lending, BB&T, Greenville

22 Palmetto Banker

Rebecca M. Groce, Business Services Assistant, II, Dalton Area Commercial Loans, BB&T, Calhoun, GA Carolyn F. Hall, Switchboard Operator/ Receptionist, Lexington Main, BB&T, Lexington Donella S. Hardee, Mortgage Specialist, Crescent Bank, Myrtle Beach

Janet Mason, Senior Teller, Bank of America, Spartanburg Celestine B. McCants, Loss Prevention Specialist, First Citizens, Columbia Aileen S. Meetze, Senior Vice President, The Bank of South Carolina, Mt. Pleasant

Susan Mullis, Banking Center Manager II, Assistant Vice President, Bank of America, North Augusta Aleeta D. Oâ&#x20AC;&#x2122;Shields, Relationship Manager, First Citizens, Spartanburg Cleopatra Owens, Lead Operations Representative, Bank of America, Columbia Ron L. Paige, Regional/EVP, Horry County State Bank, Myrtle Beach Charlotte Palmer, Assistant Branch Manager, NBSC, Irmo Vernice Pearson, Bank Support Manager, NBSC, Sumter Mary Polasky, Accounting Manager, Home Federal Savings & Loan, Bamberg Lynn Powell, Consumer Lender, NBSC, Loris Maureen Reese, Group Operations Manager, Senior Vice President, Bank of America, Columbia Elizabeth Reeves, Banking Center Manager II, Vice President, Bank of America, Mount Pleasant Joseph C. Reynolds, Senior Vice President, Ameris Bank, Columbia W.D. (Bill) Rhoad, III, Director, Home Federal Savings & Loan, Bamberg

35-Year Club Frances Rogers, Branch Manager, NBSC, North Myrtle Beach

Ellen P. Stroble, Retail Sales Manager, First Citizens, St. George

Gena B. Scully, Cash Management Sales Officer, First Citizens, Greenville

Sallie Strong, Teller, Bank of America, Orangeburg

Patricia A. Shoemake, Payroll Administrator, First Citizens, Columbia Joyce F. Steen, Teller, First Citizens, Sumter

Dennis J. Stuber, Consolidated Market Executive, First Citizens, Camden Peggy Tatum, Personal Banker, First Citizens, Toccoa, GA

William C. Thomas, Agency Manager, IV, Insurance Hilton Head, BB&T, Hilton Head Island

Wanda J. Wells, SVP-Chief Administrative Officer, Provident Community Bank, Union

Diane H. Todd, Assistant Vice President, Horry County State Bank, Conway

James White, BankCard Manager, First Citizens, Columbia

Curtis A. Tyner, President, Heritage Community Bank, Hartsville

Winifred G. Wood, Client Service Agent III, Insurance Services, BB&T, Greenville

Robert M. Vance, President, Mutual Savings Bank, Hartsville

Half-Century Club The South Carolina Bankers Association Congratulates Those Who Have Served 50 Years! Patricia S. Bochette, Senior Vice President Operations/Data Processing, Farmers & Merchants Bank of South Carolina, Holly Hill

Frances R. Buyck, Board of Directors, The Bank of Clarendon, Manning T. Rhett Evatt, President & CEO, Oconee Federal, Seneca

John L. Hutto, President & CEO, Farmers & Merchants Bank of South Carolina, Holly Hill

Willette M. Parker, Vice President, The Bank of South Carolina, Charleston Cynthia J. Reaber, Assistant Vice President, Bank of Anderson, Anderson

In Memoriam The Annual Convention Affords Bankers Time To Remember Those Who Are No Longer With Us. June 2010

September 2010

December 2010

March 2011

Lawrence O. Way, Jr., Director, Farmers & Merchants Bank of SC, Holly Hill

William L. “Billy” Boyd, III, Director Emeritus, First Community Bank, Lexington

Rachel B. Broadhurst, Director, Horry County State Bank, Loris

Gerald Dix, Retiree, NBSC, Columbia

Dr. Henry Lucius Laffitte, Director, Palmetto State Bank, Allendale

January 2011

Sandra W. Bolin, Mortgage Loan Originator, First Citizens, Charleston

August 2010 Betty Irene Butler, Retiree, NBSC, Sumter

October 2010

Andrena Owens, Retiree, NBSC, Sumter

Lena Hill, Retiree, NBSC, Sumter

Henry Rickenbaker, Director, NBSC, Sumter

Quay W. McMaster, Director, Provident Community Bank, Winnsboro

Linda Blandin, Client Service Agent I, BB&T, Easley February 2011 Frank Jirowetz, Lendmark Branch Manager III, BB&T, Columbia

Bruce Fipps, Retiree, NBSC, Loris

April 2011 Fred Barnes, Retiree, NBSC, Columbia

How Can I Honor My Colleagues? Each spring, prior to the annual convention, the SCBA reminds bankers to issue their company’s necrology report so that our colleagues may be honored at the business session and in this account.

23 Palmetto Banker

Annual Convention

2011 Annual Convention Exhibitors Much Appreciation to the Following Exhibitors for Making our Trade Show Such a Success! Bankers Dashboard, LLC BlueCross/BlueShield of SC BranchServ Broadridge Financial Solutions Colite International, LTD Community Bankers’ Bank Consultants and Builders, Inc.

Dell SecureWorks Equias Alliance, LLC Fifth Third Processing Solutions Flex-Pay Payroll Services ICS Compliance InfoTech Alliance Bank Services

Jack Henry & Associates Lendio Pentegra Retirement Services Rogers Realty & Auction Co. SCBA Services, Inc. Shred With Us, LLC SWBC Insurance Services

Spectrum Financial Systems, Inc. Works24 Zions Bank Correspondent Banking Zurich

2011 Annual Convention Tournament Winners Congratulations to the Following Teams and Individuals for Winning the Annual Golf, Tennis, and Sporting Clays Tournaments

GOLF WINNERS: FIRST PLACE Wayne Pearson, Southcoast Community Bank, Mt. Pleasant Tricia Pearson, Mt. Pleasant Harry Huntley, SC JEDA, Columbia Ben Seabrook, Southcoast Community Bank, Mt. Pleasant

CLOSEST TO PIN John Windley, SCBT, NA, Columbia LONGEST DRIVE Wade Conner, Pentegra Retirement Services, Charlotte, NC TENNIS WINNER: Sally Seaver, Greenville SPORTING CLAYS WINNER: Randy Knight, Laurens

SECOND PLACE Art Seaver, Southern First Bank, Greenville Sam Seaver, Greenville Jack Bell, Sandler O’Neill, Atlanta, Ga. Dale Hall, First Federal, Charleston

se view at The

Lovely golf cour

golf Sculpture in front of the pro shop

24 Palmetto Banker

yne A, Ben Seabrook and Wa Harry Huntley, SC JED t firs the are nk, Ba ty mmuni Pearson, Southcoast Co ners. place golf tournament win

Greenbrier

The Greenbrier Classic was a stop on the 2011 PGA Tour.

Much Appreciation

25 Palmetto Banker

Bankers School

Golden Anniversary for SC Bankers School

he 50th Session of the South Carolina Bankers School was held at Lander University in Greenwood, SC. The School was held July 10 -15, 2011 under the leadership of Gray Henderson, Palmetto State Bank. Bankers School is a three-year progressive course of instruction with a one-week residence for each of the three consecutive years. Students are challenged to learn more about their responsibilities while preparing for future advancement. On Sunday afternoon, the first year students were inspired by Robert W. “Bobby” Jonte, Bank of Greeleyville. By Monday, after the first full day of classes, the students were ready to unwind at a casino night hosted by the School. Back by popular demand, all students and CEOs attended an expert panel of CEOs for an informative discussion of the industry. On Thursday evening, 33 students received their diplomas. A reception and dinner were held at the American Legion Post #20. Many of the graduates’ CEOs and supervisors were in attendance to congratulate those who had achieved this three-year accomplishment. Finally, on Friday, the third-year students competed in the BankExec competition. The superlative projects were judged, and the winners are:

Winning Team Bank: “Jack in the Box” 1. Jack Trnavsky, The Palmetto Bank (CEO) 2. Erica Page, SCBT, N.A. 3. Terryn Patterson, First Palmetto Savings Bank 4. Molly Maguire, Horry County State Bank 5. Monica Cain, Carolina Alliance Bank Our Lillie Magalis Winner this year is Colin Griffin with First Federal. Colin’s cumulative average for the 3rd year is 98.00 and he will receive a scholarship for the first year to the Graduate School of Banking at LSU. Congratulations, Colin! We know you worked very hard. The Chairman for the 2012 Bankers School is Francis A. “Frank” Townsend with Southern Bank & Trust in Aiken. Chairman Townsend and the Bankers School Board are excited to return to Lander University. He looks forward to seeing your students in Greenwood next year July 8 – 13, 2012. For more information on Bankers School, please contact Teresa Taylor at 803-779-0850.

SC Bankers School Board of Directors 2011-2012 Mr. Francis A.”Frank” Townsend, Chairman Southern Bank and Trust Mr. Laurence Bolchoz, Chairman-Elect, First Federal

Mrs. Gray L. Henderson, Immediate Past Chairman Palmetto State Bank Mr. David E. Anderson Anderson Brothers Bank Mr. Willis Fortson The Palmetto Bank

Mr. John Griggs NBSC

Mr. Kevin Lindler First Citizens

Mr. Jerry Jenerette TD Bank

Mr. David Keller Southern First Bank, N.A.

Mrs. Tracy Kellahan Bank of Greeleyville

Mr. W. Gerald “Jerry” Stevens Capitalbank

SC Bankers School Course Coordinators Mr. James B. Brant SCBT, N.A.

Mr. James R. “Jimmy” Clarkson Horry County State Bank

Mr. Edwin W. Fisher SCBT, N.A.

Casino night is a big “hit” during the SC Bankers School as evidenced in these photos.

26 Palmetto Banker

Mr. R. Scott Plyler South Atlantic Bank

, Matt Babb and Reggie Will Randall, Kurt Seguer ir last year at Bankers Gainey reconnect for the School

moderates the Dr. Ernest Swift sion us CEO panel disc

T, N.A. Jack Goettee and John Windley, SCB show their support of their students

Tommy Bouchette, BNC Bank; Mike Crapps, First Community Bank; Hugh Lane, The Ban k of South Carolina; Rick Redden, Wells Fargo and John Win dley, SCBT shared their knowledge of the current banking climate in SC

E ri n M cC a Citizens ru sk il l, F ir st ns for and wins first-year class presi dent. Congratula tions!

al touches BankExec team adds the fin to their presentation

Students frantically

Class Vice President, Rusty Richardson, Anderson Brothers Bank and Class President, Patrick Knie, SCBT announce the student fundraiser results

Team “The Rock” prepares for the BankExec competition

e nk of Greeleyvill Bobby Jonte, Ba nday Su ss cla r yea st addressed the fir e lessons afternoon giving lif

and SCBA Jennifer Murray, SCBT Strickland, Past Chairman Justin reacquaint . Southern First, N.A ion ept rec during the CEO

cram for the exam

Sharon Bryant , First Citizens , and SCBA Chairman, cong ratulates Conw ay Moncure, Federal Reserve as he receives hi s diploma

Winning Bank Exec team “Jac k in the Box” discusses str ategies

27 Palmetto Banker

Bankers School

ng Students diligently studyi

d, Cha irm an-E lect Fra nk Tow nsen ents pres st, Tru & k Ban n Sou ther etto Chairman Gray Henderson, Palm ion eciat appr of State Bank, with a token p ershi lead and work hard for all of her year the ut ugho thro

Students enjoy the

CEO reception

SCBS Chairman Gray Henderson presents Colin Griffin, First Federal with the Lillie Magalis award for having the highest cumulative average

Immediate SCBA past Chairman Teresa Knight, The Palmetto Bank, Amber Setzler, SCBA, SCBS Chairman Gray Henderson and Teresa Taylor, SCBA First Vice Chairman Art Seaver, Southe rn First Bank, N.A., Sam SCBA, catch up during the Faculty Board Dinner Erwin, The Palmetto Bank and SCBA Presid ent and CEO Lloyd Hendricks show their sup port of SCBS

Students enjoy the graduation festivities

ron Bryant, SCBA Chairman Sha congratulates y udl pro ns, First Citize st Citizens, Jesse Smith, also with Fir ent on his accomplishm

Midis & Bill Tucker, Tucker Capital s che Associates, LLC tea second to ing ink Th Planning/Strategic ts year studen

Bank Directors’ and Managers’ College Announced Daniel-Mickel Center for Executive Education, Darla Moore School of Business, University of South Carolina, Columbia For the past nine years, this program has helped directors gain a better understanding of their overall duties and increasing challenges. It’s designed to provide new insight into bank operations, create valuable dialogue with regulators and enhance even the veteran director’s education. Help your directors and managers fulfill their fiduciary obligations in providing a higher 28 Palmetto Banker

level of service to their respective communities. Registration materials will be mailed in late July. The fee is $790.00, which includes books, study materials, a parking pass for USC, two lunches, breaks, two receptions and dinners. Room rates at The Inn at USC are $115.00 per night plus tax and fees.

Held in two sessions with Housing provided by The Inn at USC Module One: October 19-20, 2011 Module Two: November 29-30, 2011 Call Anne Gillespie at 803-779-0850 for more information.

People On The Move Bank of America Merrill Lynch

Congaree State Bank

Mark Bennett has been promoted to Business Banking market executive for the state of South Carolina within its Global Commercial Banking division.

Jack Redd was named AVP/deposit BSA compliance/bank security officer, Jason Richardson was named AVP/commercial loan administrator/loan operation manager. Eric Bell was named banking officer/compliance/accounting administrator.

Bank of Travelers Rest Kimberly Colegrove was promoted to assistant vice president. Jason Graydon was promoted to vice president credit mortgage loan manager at the main office. Robert (Bob) Wood was promoted to vice president credit/loan review officer. Cindy Weber Starnes was promoted to assistant vice president operations manager.

First Citizens Will Brown joined First Citizens as executive vice president and chief credit officer. Michael Delaney was named senior vice president and commercial area executive for the bank’s Orangeburg market.

First Federal BNC Bank Danny Broach joined BNC Bank as vice president, special assets portfolio manager. Kristen Curtis was promoted to assistant vice president. Lisa Fineran joined BNC Bank’s mortgage division as vice president, mortgage loan officer. Justin M. Lee joined as vice president, special assets portfolio manager. Wendy Marrero was promoted to assistant vice president from branch manager at the Surfside Beach branch. David Neff joined BNC Bank’s mortgage division as vice president, mortgage loan officer. Liz Nykiel was promoted to assistant vice president from branch manager at the North Myrtle Beach office.

CapitalBank Chrystal Scott was promoted to banking officer. She is the bank’s CB/IRA coordinator and works in branch administration in Greenwood.

Community FirstBank Patricia Ramage was added as a credit analyst. Danielle Ross joined as teller at the bank’s Charleston office.

Mike Davies joined First Federal as senior vice president/director of mortgage and retail lending.

Coleman A. Kirven was promoted to executive vice president and commercial banking executive. William J. Marcus, Jr. was promoted to assisColeman A. Kirven tant branch manager and loan officer, Woodruff Road. Terry D. Nation joined as vice president and small business banker for Anderson, Oconee and Pickens Counties. Claire B. Pratt was promoted to compliance officer. Kenneth B. Stoddard was promoted to assistant vice president, appraisal manager. Mark A. Terry was hired as the chief information officer. Wendy G. Workman was promoted to senior auditor.

Horry County State Bank

Mark A. Terry

Gretchen Floyd was promoted to assistant vice president/branch operations manager of the Windy Hill branch. Shannon Stevens, Susan Ellis, Haley Ammons, Cynthia White, and Meagan Buffkin are celebrating three years of service with the bank. Cynthia Kirtley celebrated five years of service in the second quarter of 2011.

Sandhills Bank

NBSC, a division of Synovus Bank

SCBT, N.A.

NBSC announced the addition of Sara B. Fisher, Daniel P. Shaaf and Joe E. Taylor, Jr. to its board of directors. Catherine S. Cantey was promoted to treasury management director on the expanded Synovus Treasury Management Group. Brian J. Cummings joined Synovus Securities as a financial consultant. G. Neal Kyber was selected as executive vice president and regional executive for the Upstate region. Claude “Trey” Moore, III was promoted to city executive for the Rock Hill market.

Cynthia A. Hartley (Cindy) joined the SCBT Financial Corporation Board of Directors.

Don C. Hamilton joined as vice president and relationship development manager in North Myrtle Beach. Amanda Horton joined as flex teller in Bethune and McBee. Ann-Marie C. Howard joined as loan administrator at the North Myrtle Beach branch.

South Atlantic Bank Cari Henderson was promoted to customer service representative at the Murrells Inlet office. April N. Jacobs joined as a teller at the bank’s main office in Myrtle Beach. Shirley Kulcsar was promoted to management trainee at the bank’s main office in Myrtle Beach. Shannon Sutley was promoted to teller supervisor at the Murrells Inlet office.

The Palmetto Bank Sheila B. Bryson was promoted to loan processing manager. 29 Palmetto Banker

Young Bankers

EverFi’s Public-Private Model Launches Financial Literacy in Schools Throughout South Carolina “What EverFi has done is come up with a great product that will allow kids to learn life skills that will take them long past any textbook and really teach them how to be productive citizens.” – Governor Nikki Haley, April 27, 2011

rom budget cuts to dwindling staff and course eliminations, schools across the country are being asked to do more with less. Lost in the shuffle of this increasing pressure are the skills students need to succeed in life, college and careers. When we founded EverFi in 2008, our goal was to reach students through effective, innovative, web-based pedagogy designed to complement classroom instruction while engaging the private sector through meaningful sponsorship. More importantly, we EverFi CEO Tom Davidson and wanted it to be in a language Governor Nikki Haley at a press that they really understood. conference at Airport High School - Social gaming, messaging April 2011 tools, 3-D environments, iPhone applications – this is the language of today’s students. Our products are free to K-12 schools and underwritten by banks that buy licenses for the use of our software and are able to whitelabel and customize the portal. This unique model gives banks the opportunity to engage in new media, demonstrate community reinvestment, meet their social responsibilities, and connect with today’s students who will be tomorrow’s workers and community leaders. After spending three years on planes, trains and state highways, meeting with superintendents, curriculum directors, teachers and students across the country, we now operate in over 3,000 schools in all 50 states, including over 60 in South Carolina. Our growing network of partners includes Capital One Bank, Regions Financial, US Bank, Synovus, community banks, 15 state bankers associations, and the Financial Services Roundtable. We are truly honored to partner with the South Carolina Bankers Association as well as BB&T and NBSC, our first bank sponsors in SC. The EverFi curriculum teaches, assesses and certifies high school students in over 600 core financial topics. It offers an interactive, stimulating experience for students, and features the latest technology and instructional design including rich media, high-definition video, simulations and social networking, while facing real-life scenarios. EverFi’s products are the first to assess students and track behavioral change. The platform puts our partners at the forefront of technology and financial education as they link with young adults in the 30 Palmetto Banker

communities they care about. Further, given the nature and flexibility of the course, banks can be as involved or hands-off as desired. I have always been passionate about improving the learning experience by giving students access to cutting-edge resources and enhancing the classroom dynamic. While serving three terms in the Maine Legislature in my early twenties, I worked with Governor Angus King to provide laptops to every Maine seventh-grader and create a major expansion of the wiring of schools and libraries across the state. Coming from this background, I was inspired to bring the political sector into our network in a really interesting way. Some of our closest political advocates are former mayors Adrian Fenty (D.C.) and Johnny Ford (Tuskegee); and the former Executive Directors of the Republican and Democratic Governors Associations, Nick Ayers and Nathan Daschle, respectively. These relationships go a long way in supporting the programs our bank sponsors create and have been invaluable as far as bringing awareness, importance and excitement to this financial literacy initiative.

Students at Hermitage High School in Virginia pose with Lieutenant Governor Bill Bolling as they finish the EverFi Platform November 2010

Students face a real-world, simulated environment in the EverFi Life game where they customize an avatar, set a budget, explore a community and are awarded points for good decision-making.

In South Carolina, we are thrilled that Governor Haley has endorsed our program and is encouraging banks and schools throughout the state to participate. She has fully embraced EverFi’s mission and recognizes the value of the public-private partnership. The governor sent a letter to every superintendent in the state urging them to adopt the program in their schools. I had the pleasure of attending a recent event at Airport High School in West Columbia along with Gov. Haley. She and her team are discussing how to make EverFi a permanent part of the curriculum for all schools in the state. We look forward to bringing the program to every student in South Carolina with the support of the Governor, the Education Department, state officials and the many banks we hope to partner with in the coming months. Gov. Haley said it best: “When you can teach a child a life skill in a way that’s fun for them- you can’t put a price on that.” The most rewarding moments of the job are when we hear from students and teachers who have gone out of their way to let us know how much they’re enjoying the program. Sherri Strickland, CTE teacher at Springfield High School in North Carolina wrote us: “We are loving this program. We are on module five and the students are going home and talking it up with their parents. I have had some parents say they need to take my class! Keep up the good work! Students and teachers are loving EverFi!” Aaron Ingrim, a senior at Henry A. Wise High School in Maryland told us, “I recommend this course to teenagers, even adults, because it will help them plan and prepare for the future and life.” The modern classroom requires a blend of both innovative technology and private-sector resources that, together, create an environment that will engage, excite and prepare. We look forward to continuing these wonderful public-private partnerships

in South Carolina and seeing thousands of students earn their certification in Financial Literacy—a distinction that will gain value as they move forward with their educations and careers. Warm Regards,

Tom Davidson Tom Davidson Founder & CEO To learn more about this opportunity and how you can work with schools this year, contact Emily Finkelstein, EverFi Program Director: emily@everfi.com - 202.455.8731.

About EverFi, Inc. EverFi is the leading education technology platform to teach, assess, and certify students in critical skills that states are mandating and employers are demanding, including Financial Literacy, Student Loan Management, Digital Literacy and Responsibility, Substance Abuse Prevention, and additional platform areas to be announced in 2011. The company is powering a national movement in 50 states and over 3,000 schools and colleges. EverFi teams with major corporations and foundations to provide the programs at no cost to schools. In September 2010, EverFi raised $11 million from New Enterprise Associates, Allen and Company, Tomorrow Ventures, the investment vehicle for Google Chairman Eric Schmidt, and leading CEOs such as Michael Chasen of Blackboard. Learn more at www.everfi.com

31 Palmetto Banker

Young Bankers

Tyler Hudson Named Outstanding Young Banker for 2011

yler B. Hudson of NBSC, a division of Synovus Bank, was named Outstanding Young Banker for 2011 at the South Carolina Bankers Association’s (SCBA) annual convention held June 10-13, 2011. Hudson is a senior vice president and commercial real estate Last year’s recipient, Gray Henderson, credit manager for South presented the award to the 2011 recipient, Carolina at the bank’s Tyler Hudson. Columbia office, where he has worked since 2007. Prior to that, this 1996 Presbyterian College alumnus made a name for himself as the executive officer of NBSC’s Florence office for six years where he grew the market by 50% while opening a second branch. Hudson came to NBSC in 1997 as a management associate before being named assistant branch manager of the Cayce office, and later, manager of the Irmo office. He became a private banker in 2000. Additionally, Hudson is a champion salesperson, having been awarded NBSC’s highest sales recognition for multiple years. This Danville, KY native graduated

32 Palmetto Banker

from the prestigious South Carolina Bankers School and the Graduate School of Banking at Louisiana State University. Also, Hudson attended Synovus’ Leadership Institute and Leadership Columbia. He is a past chairman of the SCBA’s Young Bankers Division, having previously served as the Division’s PEP (Personal Economics Program) chairman. “Tyler has done an extraordinary job during his years at NBSC,” says nominator Sara Fisher, NBSC chief operating officer. “He consistently exceeds expectations and is well thought of by his peers and by those in his community. He can always be counted on when given any goal and he takes great pride in a job well done.” The Outstanding Young Banker Award is the highest honor presented in South Carolina’s banking industry. Sponsored by the SCBA Past Chairmen’s Club, it has been given each year since 1970. Along with serving the banking industry via the Young Bankers Division in various roles, Tyler Hudson is active in his community. He was president of the Boys & Girls Clubs of the Pee Dee area and was a director of the United Way of Florence and of United Way South Carolina. He served on the board of the Florence Chamber of Commerce, and was a member of the Florence Kiwanis Club and of several committees at Central United Methodist Church. Currently, he is an active member of Columbia Rotary Club, of Junior Achievement’s board, and of Eastminster Presbyterian Church, where he serves as a deacon. He is married to Eliza Mood and has three sons, Banks, William and Hugh.

Compliance Corner

Troubling Times Ahead For Credit Bureau Data Furnishers b y Jennifer Maisano

ver the past few years, Credit Score Disclosure notices have prompted consumer mortgage seekers to increase scrutiny of their credit bureaus. Today, however, thanks to the new FACTA 311 Risk Based Pricing notice requirements, the connection between higher, or less favorable, loan rates and credit bureau information has been brought to the attention of a much greater percentage of the nation’s banking customers and credit union members. Beginning in January 2011, requirements are in place for lenders to provide Risk Based Pricing notices to many consumers applying for new credit, as well as consumers that have been negatively impacted by changes in terms on their existing loans (such as increases in APR). Due to the complexity of both the Credit Score Proxy and Tiered Pricing methods for determining which consumers must receive the new notices, many lenders have opted to send the Risk Based Pricing notices to all consumers that apply for loans rather than trying to calculate which individual consumers have technically received “materially less favorable” terms as noted in Section 311 of FACTA. As if the barrage of “FreeCreditScore.com” and other score monitoring commercials wasn’t enough to bump up disputes volumes, lenders can expect the new notices to direct more and more consumers to obtaining and carefully examining their credit reports. Additionally, with almost 10% of the U.S. in job search mode, and thanks to the now widespread practice of employment screening credit bureau pulls, it is expected that dispute numbers will increase even more.

Impact of Recent FCRA and FACTA Court Decisions Although the FTC has not recently penalized any single data furnisher with a significant FCRA or FACT Act related fine, FCRA experts within the FTC warn that “lenders should be more concerned with the consumer’s right to private legal action with regards to FCRA and FACTA violations than regulatory fines.” Specifically, legal actions related to technical violations of the regulations such as inaccurate reporting of consumer account information to the credit bureaus. What makes litigation a bigger risk now than in the past? In a recent decision in Bateman v. American Multi-Cinema, Inc., the Ninth Circuit Court opened the door for more class actions seeking exorbitant amounts in statutory damages for technical violations of the FCRA and FACTA with its decision that an FCRA or FACTA class action could not be denied based on the enormity or disproportion between actual and statutory damages, and there was no evidence that lawmakers held the intent to preclude class actions under either of these regulations. This means that the Ninth Circuit Court decided: ■ That there was no intent by Congress to block civil litigation and class actions against data furnishers for violations of FCRA and FACTA, and ■ Bateman was allowed to move forward (“certified”) as a class action suit, and ■ Bateman was allowed to move forward regardless of the enormous disproportion between the amount of actual damages sought (quantifiable damages) and statutory damages sought (not so easily quantifiable “harm”) which, in this case was $29 million to $290 million. While the issue in this case was AMC’s violation of Section 113 of FACTA by printing full account numbers on receipts, the Ninth

Circuit’s decision was not specific to violations of only that one section of FCRA/FACTA. The Bateman decision, coupled with another decision in 2010 by the Seventh Circuit Court stating that the statutory damages provision of FCRA is “unconstitutionally vague and excessive,” opens the floodgates for potentially enormous class action suits against data furnishers for all types of violations of FCRA and FACTA.

Common Credit Reporting Mistakes Most Data Furnishers Are Making Today Both the Ninth and Seventh Circuits’ recent decisions significantly increase risks for institutions that have not taken a hard look at all their FACTA requirements, but most significantly those intentionally or unintentionally overlooking Section 312’s mandate for accuracy and integrity of credit reporting. Many issues with credit reporting stem from the old adage “junk in… junk out.” Incorrect set-up of account definitions, designations and codes during the implementation phase of a new core system or portfolio merger/acquisition related conversion accounts for an astonishingly large percentage of credit bureau reporting errors. And the biggest issue is that most data furnishers are unaware that their definitions are inaccurate. For example, the most common error found during client audits is the assignment “Installment Loan” designation to accounts that are in actuality consumer “Mortgages.” This may seem like an innocuous substitution, however, there are potentially substantial scoring consequences. A human manually reviewing a credit report may be able to compensate for such errors however, many scoring systems cannot as is depicted in the following case study derived from actual 2010 audits of four financial institutions: Case Study - How Small Reporting Errors Can Impact Scoring In 4 recent audits, Banks North, West, East and South all had the same data processor. Their core system did not allow for designations of accounts as “mortgages,” but instead coded these loans as “installment loans.” As the length of mortgages should be reported in years rather than in months as required by installment accounts, in an attempt to compensate the core system also reported the lengths of these loans as “30” for 30 years. Issue: Most scoring systems take data at face value with little or no interpretation. If you track the erroneous “Installment Loan” designation downstream, the credit scoring systems would see the following: ■ An installment loan for an extremely large sum (e.g. $200,000). ■ Duration of payments for these loans was reported as 30, however, the number reported for an installment loan is seen by Metro 2® as 30 months, whereas, the number reported for a mortgage is seen by Metro 2® as 30 years. Result: Most credit scores would be calculated based on the facts reported – “Installment” loan of $200,000 with what looks like payment term of 30 months. In effect, a 30-month payback period would

Troubling Times Ahead continued on page 34 33 Palmetto Banker

Compliance Corner Troubling Times Ahead continued from page 33 require each payment be approximately $6600, whereas a 30-year pay back period would yield a monthly payment in the vicinity of $1000. The perceived debt of $6600 per month could potentially negatively impact multiple factors of consumer lending such as approval scores, debt ratios, bankruptcy scores, pre-screen scores, etc. And those types of errors are just the tip of the credit reporting iceberg. From a potential litigation standpoint, data furnishers that do not invest the time and resources required to evaluate the accuracy and integrity of their credit reporting on an ongoing basis are making a potential titanic mistake.

Taking Steps to Substantially Decrease Data Furnisher Risk Data furnishers who believe they are reporting correctly because they receive few disputes are deluding themselves. In most cases minimal dispute volumes only mean that your consumers aren’t yet educated enough to identify your errors. But consumer attorneys are quickly learning the technical ins and outs of the reporting process forcing data furnishers to overhaul their reporting strategies and reign in their entire data reporting programs. “Reasonable procedures” not only include an extremely detailed field-by-field audit of the Metro 2® reporting file, but also include many other compliance procedures that are just as important. To stay protected, your FACTA 312 compliance program should, at a minimum, incorporate all of the following “reasonable procedures”: 1. Annual Bureau Audits – Getting each bureau to provide you with an annual data audit. This process allows the bureau to give you a type of ‘state of the union’ evaluation of your data, telling you what they think may be wrong. However, bureaus will not identify root causes of errors or tell you how to fix them. 2. Annual Reporting Strategy Review – Evaluate your ongoing strategy to confirm core system definitions are accurate based on how each of the different account types and statuses should be reported. 3. Quarterly Internal Data Audit – Complete internal quarterly data audits to compare your core system account data to the values placed on the reporting file. The objective is to confirm that your account data is correctly coded when converting from your core system to the

Metro 2® file. If errors are found, regulations mandate you find and fix root causes rather than manually correcting each error so that your institution does not continue to re-pollute consumer bureaus. 4. Quarterly Audit of Posted Data – Once you confirm your data is being placed on the reporting file in the correct form and format, you must also confirm that the information is displaying correctly on the consumer’s bureaus. You will be surprised at how many times things are not displaying as you expect. Note: Specific tools must be used to enable this process to be completed without posting hard inquiries to bureaus. 5. Monthly Pre-Reporting Reality Checks – A quick “reality check” of your data should be completed before it goes out the door each month. Generally, this step encompasses reviewing key field volumes and codes to confirm data remains fairly consistent from month to month. While not a full audit, this quick check can alert you when something is seriously off. 6. Monthly File Delivery Confirmation – put a confirmation process in place to confirm that your data was received by each bureau. This is especially important if you have not yet implemented electronic data delivery and are still mailing hard media. 7. Daily Queue Review – check your e-Oscar queues daily to make sure you are staying within the FCRA mandated 30-day response date for disputes. Consumer attorneys are just waiting to take a nice juicy bite out of your institution. Implementing and maintaining a full-fledged FACTA 312 compliance program will actually help keep you ahead of the litigation trend. But expertise doesn’t grow overnight. If you need help, get it before you regret it! © 2011 Credit Bureau Strategy Consulting, LLC Jennifer Maisano is the President and CEO of Credit Bureau Strategy Consulting, LLC. CBSC provides superior and comprehensive consulting services focusing on assisting data furnishers in developing and implementing FACTA 312 compliance programs. CBSC’s specialty is providing expert data audits. CBSC also offers do-it-yourself FACTA 312 compliance products and training. For more information contact Jen at 410-208-6797, Jen@CBStrategyConsult.com or visit www.CBStrategyConsult.com

Index of Advertisers BDC

Dixon Hughes Goodman

KeenanSuggs

CenterState Bank

Elliott Davis

LandTech

Community Bankers Bank

Flex-Pay

Smith Moore Leatherwood

Credit Risk Management

Howe Construction

Vantiv

34 Palmetto Banker

Bank News BNC Bank

First Citizens

BNC Bank has formed a Mortgage Division, which will provide a full array of lending products. The Mortgage Division will offer additional opportunities and products for our customers, combined with exceptional service levels. Kathy Kida has joined the division as Vice President, Area Manager for South Carolina. With over 25 years of experience in the mortgage banking industry, Kida will be leading the Mortgage team for the Myrtle Beach and Hilton Head markets.

First Citizens was recently honored with two first place awards given at the Business Development Corporation of South Carolina’s annual meeting. The organization recognized the bank as a lead referral source of qualified Small Business Administration (SBA) 7(a) loans. Business Development Corporation’s sister organization, the Certified Development Corporation of South Carolina, recognized the bank as a lead referral source of qualified SBA 504 loans. First Citizens recently introduced a new mortgage product – called Primary Residence – that gives potential home buyers the ability to place as little as three percent down on the purchase price of a new home. The Primary Residence mortgage has rates available for terms up to 30 years. As a result of a lower down payment requirement, qualified homebuyers can allocate more funds for closing costs and other expenses associated with purchasing a home.

Congaree State Bank Congaree Bancshares, Inc., the holding company for Congaree State Bank, received notification from the Bank’s primary regulators that the Consent Order has been lifted. The Bank’s board of directors entered into the formal agreement with the FDIC and the South Carolina State Board of Financial Institutions on May 14, 2010. “While we still have certain financial and regulatory hurdles to achieve, this announcement provides a clear indication of the progress that Congaree State Bank has made,” states Charlie Kirby, President and Chief Executive Officer of Congaree State Bank. “Since last May, we have worked very hard and very expediently to meet the requirements of the Consent Order. I am extremely pleased that the Bank has achieved this accomplishment in such a short period of time. It typically takes two years to reach this goal and we have accomplished this in ten months.”

First Federal Select financial centers are now open on Saturdays from 9 a.m. – 2 p.m. market wide. The following First Federal locations are now open on Saturdays in the Charleston metro area: 1309 Sam Rittenberg Blvd. in West Ashley, 4962 Centre Pointe Dr. at Tanger Outlets in North Charleston, 1315 North Main Street in Summerville, 1185 Folly Rd. and 632 Long Point Rd. in Belle Hall Shopping Center in Mount Pleasant.

TD Bank Crescent Bank Crescent Bank held its 10th annual Myrtle Beach Customer Appreciation Day on Friday, July 1, at its Myrtle Beach branch. The event is held to thank customers for their patronage since the bank opened in July 2001. Crescent Bank served complimentary hamburgers, hotdogs, beverages, Ben and Jerry’s Ice Cream and other summer grilling favorites as an expression of thanks to customers for their loyalty.

For the fourth consecutive year, TD Bank, America attained the position of top U.S. Small Business Administration (SBA) Lender in South Carolina. For the SBA’s first two quarters ending March 30, 2011, TD Bank led a long list of South Carolina SBA lenders, making 12 loans averaging $1.8 million per loan. Since the beginning of the government’s fiscal year, October 1, 2010, TD Bank’s SBA loans in South Carolina to small business owners have totaled $21.8 million.

It’s simple! Just e-mail your press releases and photos to:

How Can I Get My Bank News Published?

pennycothran@scbankers.org Deadlines are available at www.scbankers.org Click on About Us, then News and Publications.

e h t e v Sa Date

2011 Young Bankers Division Annual Scholarship Golf Tournament MONDAY, October 3, 2011 Columbia Country Club, Blythewood, SC

We hope you will join us for a day filled with networking, fun and fellowship for a cause you are close to!

“FORE” THE FUTURE OF BANKING! sponsorship opportunities available

35 Palmetto Banker

Welcome, New Associate Members 3500 Fairlane Farms Road, Suite 11 West Palm Beach, FL 33414

To help banks mitigate risk, Land Tech also offers third party, due-diligence review of new development loan requests. Our loan evaluations address over 400 important criteria and are performed prior to presentation in a bank’s loan review committee.

Contact: Glen Blackwood, Managing Consultant Phone: 561-798-5620 Fax: 561-798-3511 Email: gblackwood@equiasalliance.com Website: www.equiasalliance.com

MountainSeed Advisors, LLC

Equias Alliance

Equias Alliance is a coalition of the most experienced former consultants of Clark Consulting. Our objective is to assist banks in the design, implementation and administration of non-qualified deferred compensation and supplemental executive retirement plans (SERP’s) as well as the purchase, documentation and service of bank owned life insurance (BOLI). The principals of Equias Alliance include Glenn Blackwood, who has worked with over thirty South Carolina banks on these programs.

Land Tech Asset Management, LLC 2000 Center Point Road, Suite 2100 Columbia, SC 29210 Contact: Chuck Munn, President of Asset Management Division Kevin Steelman, President of Development Division Phone: 803-540-3444 Fax: 803-540-3460 Email: cmunn@landtechsc.com ; ksteelman@landtechsc.com Website: www.landtechsc.com Today, many banks find themselves as property owners as they hold nonperforming loans or recaptured properties. Undermanned REO departments face the daunting task of resolving risks and liabilities while preserving and enhancing the value of their portfolios. LandTech Asset Management LLC’s (“LTAM”) experienced team of real estate professionals work with banks of all sizes – from local, community and regional banks to the largest financial institutions – to identify, preserve and recover value in their underperforming assets. We leverage our expertise across a full spectrum of real estate services to provide banks everything they may require during the ownership cycle including development, asset management and evaluation, receiverships, disposition and brokerage. Our company routinely provides the following services to banks: marketing research, regulatory and due diligence services, construction management, sales and marketing, financial controls and reporting, golf and amenity oversight, in-house legal counsel and homeowner association management. Additionally, we provide exceptional reporting systems which are suitable for all levels of bank management.

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4200 Northside Parkway, NW – Building 12 Atlanta, GA 30327 Contact: Wes Wells, Vice President Phone: 404-812-5366 Fax: 404-812-5299 Email: wes@mountainseed.com Website: www.mountainseed.com MountainSeed Advisors is a bank advisory and consulting firm based in Atlanta, GA that performs 3rd party services for its clients including, but not limited to, loan reviews, portfolio valuations, portfolio stress testing, ALLL analysis, appraisal reviews, level 3 asset pricing for real estate, troubled asset business plans, etc. MountainSeed works with their bank clients to implement various portfolio maintenance strategies in an effort to strengthen the balance sheet. MountainSeed also has the ability to raise passive equity capital for troubled institutions, if necessary. Some of the firm’s recent public deals include the $275 MM recapitalization of Bank of Hampton Roads and the $325 MM recapitalization of Central Pacific Financial with Carlyle Group and Anchorage Advisors. More information on these case studies as well as MountainSeed’s business lines can be found at www.mountainseed.com. For more information, please contact Wes Weells at wes@mountainseed.com.

Strategic Risk Associates, LLC 1 Tuckahoe Boulevard Richmond, VA 23226 Contact: Rob Mitchell, Partner Phone: 804-366-1584 Email: rmitchell@srabank.com Website: www.srabank.com SRA consists of a very seasoned staff of former bankers and regulators who help community banks with written agreements, enforcement actions and responses to bank exams. We also help with stress tests, M&A due diligence, internal audits, loan reviews, training for boards of directors, loss share agreements, policies and procedures and other risk management services. Enforcement actions are overwhelming and distracting. We help banks comply and serve as the bank’s and board’s security blanket in meeting regulatory expectations. Stress tests are a great way to test capital adequacy especially when combined with loan reviews. Many banks have used SRA and will attest to our work.

Welcome, New Associate Members AloStar Bank of Commerce 3680 Grandview Parkway, Suite 200 Birmingham, Alabama 35243 Contact: Shaw Lokey, Senior Vice President/Correspondent Services Phone: 205-298-6391 Fax: 205-298-6560 Email: slokey@alostarbank.com Website: www.alostarbank.com

banking platform; and businesses with $5 million to $150 million in revenue who need a variety of commercial lending products. Our correspondent banking services include fixed income investment services, brokered CD’s, asset/liability modeling, bond accounting, safekeeping, cash management programs – including traditional and image clearing – and handling Federal Funds as agent.

AloStar Bank of Commerce is focused on serving three client bases that are each critical to our nation’s economy: leading community banks who benefit from a suite of correspondent services; a core of depositors who interact with the bank largely through its online

2011 PEP RALLY Cheering on a Brighter ! n e r d il h C r u o r fo e r u t u F Wednesday, November 30, 2011 Saluda Shoals Park, River Center, Carolina First Room 2:30 p.m. - 5 p.m. This event is intended for all bankers participating in any financial literacy efforts in South Carolina to discuss our banks’ playbooks while sharing ideas, learning what has and hasn’t worked in the past, spotlighting resources and developing new strategies. Sponsorship opportunities available. Saluda Shoals’ Holiday Lights on the River display begins at 6p.m. If you would like to drive through the Midlands’ largest light display, plan accordingly. $10/vehicle.

Hors d’oeuvres and Beverages Will be Served Throughout the Event. Register for this FREE event on our Web site, www.scbankers.org, by Wednesday, November 16, 2011, if you would like to attend.

37 Palmetto Banker

Good Deeds Bank of America

The Palmetto Bank Coleman Kirven, Sherry Brock and Ronicka Patrick, Anderson County, participated in the ABAEF’s Teach Children to Save Day last April. The Palmetto Bank hosted the seventh annual Law Enforcement Appreciation Luncheon at its headquarters in Greenville on May 9, 2011. U.S. Congressman Trey Gowdy was the keynote speaker.

More than 30 volunteers from Bank of America volunteered to paint the Carolina Children’s Home’s recently refurbished gymnasium in Columbia. In addition, The Bank of America Charitable Foundation presented a $10,000 check to Carolina Children’s Home to support the day-to-day operation costs of the organization. In May, United Way honored Bank of America with two Summit awards to recognize the company and its employees’ exceptional commitment to improving the financial stability of working individuals, families and communities. Bank of America has invested more than $450 million with United Way since 1999, taking a leadership role as the largest financial institution supporter for more than 10 years. The bank was the first financial institution to nationally support United Way’s Financial Stability Partnership through $4.5 million in grants in addition to hundreds of employee volunteers, providing free tax preparation and filing assistance as well as helping lower-income working families claim the Earned Income Tax Credit (EITC) and other credits, resulting in 1.5 million free tax returns prepared and $2 billion in total tax refunds. The bank is also the national founding partner of United Way’s one-stop centers which bring a range of social services under one roof to increase people’s economic self-sufficiency. Services include workforce development/career training and financial and savings coaching. This is a portion of the $200 million that the Bank of America Charitable Foundation invests annually to strengthen the economic and social health of the communities it serves.

SCBT, N.A. The South Carolina Bank and Trust Columbiana Drive office’s and St. George office’s employees, customers and friends showed what teamwork really means by working together and raising money to support the Souper Bowl of Caring project. The SCBT Columbiana Drive office raised a total of $299.37, which it has chosen to donate to Sharing God’s Love, a non-profit organization established in 1984 as a local cooperative ministry that works with community families facing emergencies related to their basic living needs. The SCBT St. George office raised a total of $524.93, which it has chosen to donate to Angel Food Ministries, a non-profit, non-denominational organization dedicated to providing food relief and financial support to communities throughout the United States. SCBT was a pioneer in partnering with the Souper Bowl of Caring to raise awareness and funds through collections at each of the branches and internal departments.

South Atlantic Bank

Carolina Alliance Bank Carolina Alliance Bank (CAB) participated in Teach Children to Save Day, which occurred on April 12th. On this day, bankers across the nation go into schools to teach lessons on financial literacy and the importance of saving. CAB had nine representatives who helped make this day a success, including: Carolyn MacIntosh, Cyndi Waters, E.A. Vandever, Janice Addington, John Poole, Jonathan Walker, Mary Foster, Nichole Buchanan, and Cal Wicker. Park Hills Elementary School and Pine Street Elementary School were the two schools participating in this day. 38 Palmetto Banker

South Atlantic Bank demonstrated a smart way to utilize its property as a community resource. The St. James High School Sharks Booster Club, with the help of South Atlantic Bank, raised more than $3,100 through its parking fundraiser during the 2011 HarleyDavidson Motorcycle Rally. The bank provided the parking lot at its Murrell Inlet office to the club which then charged a per vehicle fee to raise money for athletic programs. South Atlantic Bank’s Murrells Inlet office is positioned near a popular rally location.

Calendar

Calendar of Events September 2011 1 7 8

15 19 22

26 27

Writing Loan Narratives Webinar BSA Staff Training Webinar Community Bankers Council Fall Peer Group Session, Litchfield Beach & Golf Resort, Pawleys Island 2011 SCBA Consumer Lending Compliance Conference, Clarion Town House Hotel, Columbia Commercial Real Estate Loan Documentation Webinar Introduction to Consumer Lending Webinar—Part 1 Call Report Seminar, Clarion Town House Hotel, Columbia Introduction to Consumer Lending Webinar—Part II 2011 SCBA Bank Security Conference, Clarion Town House Hotel, Columbia Appraisal Regulations Webinar — Appraisal Regulations Appraisal Regulations Webinar — In-House Review

October 2011 3

Young Bankers Division 22nd Annual Scholarship Golf Tournament, Columbia Country Club, Blythewood, SC

Frequent Mistakes in Lending Compliance Webinar 5-7 Performance Trust University, Charleston Place Hotel, Charleston 14 Fighting Payments Fraud Webinar 18 Lending to Municipalities Webinar 19-20 SCBA Bank Directors’ and Managers’ College, Module 1, University of South Carolina, Columbia 20 ABAEF Get Smart About Credit Day 25 Professional Credit Analyst Webinar 25 SCBA Community Bankers Forum, Seawell’s, Columbia 27 Professional Credit Analyst Webinar

November 2011 8

Top 10 Loan Documentation Mistakes Webinar 9 Breaking Through to Sales Success, TBA, Columbia 14 Introduction to Commercial Lending Webinar—Part I 15 2011 SCBA Safety and Soundness Conference, Clarion Town House Hotel, Columbia 21 Introduction to Commercial Lending Webinar—Part II 29-30 SCBA Bank Directors’ and Managers’ College, Module 2, University of South Carolina, Columbia

Young Bankers PEP Rally, The River Center, Saluda Shoals Park, Columbia

January 2012 10

SCBA Legislative Reception, Columbia Museum of Art, Columbia 24-25 The 2012 SCBA BSA/ALM Conference, Clarion Town House Hotel, Columbia

February 2012 1

Banking Careers 101, Seawell’s, Columbia

March 2012 6

Community Bankers Spring Peer Group, TBA Columbia 9-11 Young Bankers Division Annual Conference, The Grove Park Inn Resort & Spa, Asheville, NC

April 2012 24

Teach Children to Save Day

June 2012 The 2012 SCBA Annual Convention and Trade Show, The Cloister, Sea Island, GA

REMINDER

If your company is a member of our association, SO ARE YOU! Let’s stay in touch! Go to www.scbankers.org. Sign in using your company e-mail address, select your company name and headquarters, then review all member benefits. Please take a moment to make sure ALL personal information is updated in our MEMBERS ONLY section.

Questions?

Contact Caroline Sheorn: CSheorn@scbankers.org 39 Palmetto Banker

South Carolina Bankers Association (2009 Park Street) Post Office Box 1483 Columbia, South Carolina 29202-1483

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