Virginia Banking July/August 2013

July/August 2013

VBA Welcomes

Gary Shook, VBA Chairman 2013-2014

IN THIS ISSUE

FINAL BASEL III CAPITAL RULES | CELEBRATING 120 YEARS

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July/August 2013

2013-2014 OFFICERS AND DIRECTORS OF THE VIRGINIA BANKERS ASSOCIATION Gary R. Shook, Chairman, Middleburg Bank John R. Milleson, Chairman-Elect, Bank of Clarke County Jeffrey M. Szyperski, Immediate Past Chairman, Chesapeake Bank Christopher W. Bergstrom, Cardinal Bank Katherine E. Busser, Capital One Financial Corporation Tim Butturini, Wells Fargo Bank, N.A. J. Peter Clements, The Bank of Southside Virginia Randy K. Ferrell, The Fauquier Bank Gary Gore, Bank of America, N.A. Scott Harvard, First Bank, Strasburg William H. Hayter, First Bank & Trust Company G. Lyn Hayth, III, Bank of Botetourt T. Gaylon Layfield, III, Xenith Bankshares, Inc. Monte L. Layman, Blue Ridge Bank Susan R. Ralston, Bank @Lantec John G. Stallings, SunTrust Bank H. Watts Steger, III, Bank of Botetourt Susan K. Still, HomeTown Bank David P. Summers, Virginia Heritage Bank Daniel G. Waetjen, BB&T Michael O. Walker, Benchmark Community Bank AT-LARGE MEMBERS Benefits Corporation Chair J. Peter Clements, The Bank of Southside Virginia Management Services Inc. Chair G. Lyn Hayth, III, Bank of Botetourt Government Relations Committee Chair Monte L. Layman, Blue Ridge Bank VBA Education Foundation Chair H. Watts Steger, III, Botetourt Bankshares, Inc.

EDITORIAL & EXECUTIVE OFFICES 4490 Cox Road Glen Allen, VA 23060 804-643-7469 Fax 804-643-6308 www.vabankers.org Bruce T. Whitehurst President and CEO Virginia Bankers Association Kathryn Roberts Coordinator, Education & Training/ Communications Virginia Bankers Association

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Cover

16

VBA Welcomes Gary Shook, VBA Chairman 2013-2014

features

10

Final Basel III Capital Rules

26

VBA Honors Statewide Scholarship Winner Holmes Laughon

28

The VBA Celebrates 120th Annual Convention

in every issue 4 Calendar of Events 5 Insights 6 Legislative Update 8 Legal Line 12 New Associate Members

14 22 24 30

Worth Noting Washington Update Compliance Corner Bankers on the Move

Send us your thoughts or ideas on Virginia Banking! Please email Kathryn Roberts at kroberts@vabankers.org. Has your information changed? Please email Kellee Edelin at kedelin@vabankers.org with your new contact information.

July/August 2013 | Virginia Banking 3

Calendar of

Events

Live Events

Webinars

INSTRUCTOR-LED SEMINARS

CFO CONFERENCE, CHARLOTTESVILLE AUGUST 26

ETHICS:YOUR LICENSE DEPENDS ON IT, CHARLOTTESVILLE AUGUST 28

CEO FORUM, HOT SPRINGS SEPTEMBER 12

CONSUMER LENDING 2013, GLEN ALLEN SEPTEMBER 19

CREDIT MANAGEMENT CONFERENCE, CHARLOTTESVILLE OCTOBER 7

COMMERCIAL LENDING SCHOOL, GLEN ALLEN OCTOBER 16

COMPLIANCE HOT TOPICS II, GLEN ALLEN OCTOBER 23

2013 LEADERSHIP CONFERENCE, LEESBURG NOVEMBER 14

WOMEN IN BANKING CONFERENCE, GLEN ALLEN NOVEMBER 19

ONLINE/INSTRUCTOR-LED SEMINARS

AIB PRINCIPLES OF BANKING

AUGUST 12

AIB BASIC ADMINISTRATIVE DUTIES OF A TRUSTEE

AUGUST 12

ABA ONLINE REVIEW COURSE FOR THE CRCM EXAMINATION

AUGUST 12

Online Seminars

WEBINARS

UNDERSTANDING LOAN DOCUMENTS AUGUST 8

STRATEGIC PLANNING TIPS FOR A NEW ENVIRONMENT SEPTEMBER 4

CONTINGENCY FUNDING PLANS – THE PAST AND FUTURE SEPTEMBER 10

CASH, CREDIT, AND COLLECTIONS MANAGEMENT: THE LIFE BLOOD OF THE BUSINESS SEPTEMBER 11

GETTING THE MOST OUT OF YOUR IT SYSTEMS SEPTEMBER 11

CAPITAL PLANNING IN THE CURRENT ENVIRONMENT SEPTEMBER 12

COMMUNITY BANK MERGERS AND ACQUISITIONS SIMPLIFIED SEPTEMBER 12

GETTING IN THE DOOR WITH PROSPECTS SEPTEMBER 16

PROBLEM LOAN IDENTIFICATION AND PREVENTION SEPTEMBER 17

HANDLING CONFLICT IN THE WORKPLACE SEPTEMBER 18

IRA BASICS SEPTEMBER 18

SECURITY AWARENESS AND SOCIAL ENGINEERING SEPTEMBER 18

CREATING COMPELLING ADVERTISING FOR COMMUNITY BANKS SEPTEMBER 19

MONEY SAVING, MONEY MAKING MARKETING IDEAS SEPTEMBER 19

IRA BENEFICIARY DISTRIBUTIONS SEPTEMBER 25

Information and online registration is available at the VBA website. Please either go to www.vabankers.org or use this form to check the box next to the program you want information about, then fax the form to the VBA office at 804-643-6308. The VBA will send you information about the program as soon as it is available, usually eight weeks before the program.

Name___________________________________________________ Bank/Firm______________________________________________ Address_____________________________________________________________________________________________________________________ City ________________________________________________________________ State/Zip ___________________________________ Phone ___________________________ Fax _________________________ Email __________________________________________________ For more information go to www.vabankers.org.

4 Virginia Banking | July/August 2013

www.vabankers.org

Insights Ode to CFOs

I Bruce Whitehurst President and CEO, Virginia Bankers Association

ncreasing complexity. If there are two words that best describe the changes in banking in my 20 years at the VBA, these would have to be the ones. That’s why this issue of Virginia Banking is dedicated to the role of the CFO in banking. Accounting has taken on more importance in banking and in business. As an example, we had one bookkeeper when I came to the VBA in 1993; today we benefit greatly in our office from a terrific accounting team led by VBA CFO Jeff Brugh and VBA Controller Stacy Puckett.

I wanted to capture the increasingly important role of financial professionals in banking today, but also to do so in an unexpected and fun way. So, here goes…

They used to be called Cashier in most banks, Whatever they did, we always said thanks!

As banking got so much more complicated, The Cashier position was re-evaluated.

Soon banks were hiring lots of CPAs,

Virginia banking is much the better for all the fine women and men who guide our banks’ financial management, and the VBA is for tunate to have an active and engaged CFO Committee that keeps us focused on how we can best suppor t this most impor tant function.

To oversee increasingly complex accounting ways.

We started to hear a lot about FASB, The CFO’s response: “hey, just ask me!

“I’ll tell you about pooling, purchase and mark to market, Come into my office, just sit down and park it!”

Things got so complex in FASB land, Their board went from 5 to 7; ain’t that grand?

Then there’s always this thing they call SOX, Attestations, compliance, reporting … better hope your CFO rocks!

Even if you aren’t SEC reporting like most, There’s still much to do, or else we’ll be toast!

There are audits, reports, your shareholder meeting, Which always goes better if great food you are eating!

The unsung heroes, we sometimes call them, Because without them, we know there’d be mayhem!

So thanks CFOs, for all that you do, With all this complexity, we really need you!

Keep guiding us through audits, FASB and SOX, We value your prowess at checking off all those blocks!

Virginia banking is much the better for all the fine women and men who guide our banks’ financial management and the VBA is fortunate to have an active and engaged CFO Committee that keeps us focused on how we can best support this most important function. I don’t believe “decreasing complexity” will prevail in the future, so we are sure glad to have these great financial professionals among us!

Bruce Whitehurst can be reached by email at bwhitehurst@vabankers.org. www.vabankers.org

July/August 2013 | Virginia Banking 5

Legislative

Update

Being Strategic About Grassroots

A Matt Bruning Vice President, Government Relations, Virginia Bankers Association

t the recent VBA Annual Convention, VBA President and CEO Bruce Whitehurst outlined two overarching priorities for the VBA – one focused internally and the other externally, but are intrinsically linked – as part of your association’s forward-looking three-year strategic plan. Stemming from the valuable input and feedback from our members, they serve as the framework on which to build off our strong existing foundation. The first is to deepen our engagement with our members in all aspects of what the VBA does and offers. Externally, we hope to elevate the industry voice to many different outlets. These priorities and the requisite goals and actions necessary to attainment, which will be a dynamic endeavor going forward, are firmly rooted in our guiding principles of industry unity and strong, proactive advocacy.

These same themes, and examples on how to incorporate them into your bank, were reiterated by participants in a panel on the “Leading our Industry Forward.” Immediate past ABA Chairman and Oklahoma bank CEO Kell Kelly spoke passionately about the critical need to be engaged, especially at the federal level, on behalf of your institution and the industry in order to make a difference. Union First Market Bank CEO and former VBA Chairman Billy Beale noted the benefit of involving his teammates in the VBA/ABA Government Relations Summit in Washington. Chesapeake Bank CEO and immediate past VBA Chairman Jeff Szyperski encouraged attendees to involve all levels of bank employees in grassroots efforts, including BankPAC. There are myriad ways to engage in grassroots advocacy. We want to ensure that you connect in the ways that make sense for you, your teammates and your bank. Whether it is attending Banker Day in Richmond in January, sending an email to your congressman about a federal issue, contributing to BankPAC or inviting a legislator to visit your bank, we want to make these opportunities readily available and convenient. Your active individual participation bolsters our overall industry-wide actions both through the cumulative impact as well as the specific localized interactions.

Seeking to further strengthen and enhance the engagement of bankers in grassroots advocacy and

intensify the collective voice of Virginia banking is only possible with the commitment and partnership of our members. As I’ve said in this space before, the overall success of our efforts with legislators and regulators is predicated on the actions of thousands of devoted bankers.

As a partner with the VBA, we hope you will make the commitment to further engage with us on advocacy. Later this fall, we will be scheduling our annual legislative visits across the commonwealth.

These meetings bring elected officials from both the federal and state levels together in your area and offer the opportunity to discuss the issues important to banking. Likewise, it provides the forum to talk about what you do at the bank and why it is important to your customers and communities. At the heart, advocacy is education and we must be diligent on educating decision makers about the importance of our business and the concerns, roadblocks and challenges we face.

Please be on the lookout for a meeting in your region and we encourage you to not only attend, but bring someone else from your bank.

Virginia bankers have and continue to be leaders in grassroots advocacy. Many of you understand the impact engagement in the legislative and regulatory processes can have on policy outcomes that directly affect your daily jobs. The challenge now is how to take the next steps of involvement.

The VBA is partnering with the ABA on a new program – Amplify – to assist in how every bank and every banker can take action. You will be hearing more about how to engage in Amplify over the next several weeks and the simple tools available to integrate advocacy into your efforts.

Jeff Szyperski, in his Chairman’s Report at the convention, aptly compared the VBA to “the plastic thingy” that connects packs of soda bottles.

Serving as a collective binder for the industry, we will continue to strive to reinforce and support our individual members. Strengthening that bond is our priority. We hope that you will incorporate a commitment to deeper engagement – in advocacy and other VBA efforts – into your personal and business strategic plan. For without the individual bottles – you – the plastic thingy loses its value.

Matt Bruning can be reached by email at mbruning@vabankers.org.

6 Virginia Banking | July/August 2013

www.vabankers.org

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Line

Legal

Current Issues In Flood Insurance

W

hen a bank makes a loan secured by real estate located in a Special Flood Hazard Area (SFHA), federal law mandates that the lender require the borrower to maintain flood insurance on the property. Understanding how to resolve flood zone discrepancies and the recent changes to the National Flood Insurance Program (NFIP), will help banks provide better customer service to their clients.

Mel Tull General Counsel, Virginia Bankers Association

PROCEDURES FOR RESOLVING FLOOD ZONE DISCREPANCIES A critical step in the closing process for any real estate secured loan, or loan amendment, is for the lender to order a flood zone determination on the collateral property, which determination will reveal whether the property is in a SFHA and flood insurance is required. Flood zone determinations are provided by third-party companies that report flood zone information to lenders based on the current Flood Insurance Rate Map (FIRM). But what happens when a discrepancy arises between the flood zone indicated on the flood insurance policy declarations page and the findings of the flood zone determination company?

According to the Federal Emergency Management Agency (FEMA), flood zone discrepancies may occur when insurance companies do not underwrite policies using flood zone determinations provided by lenders. Often these insurance companies provide their own flood zone determinations or require their agents to determine the flood zone. As a result, lenders frequently find the flood zone indicated on a flood insurance policy declarations page is different from the lender’s flood zone determination.

This incongruity can put lenders in a tricky spot, both in terms of federally-mandated flood insurance requirements and from a customerservice perspective (for instance, if the borrower is required to maintain flood insurance on a property it believes is not located in a SFHA). Despite a

2008 directive from FEMA that requires lenders and insurers to use the more hazardous flood zone rating when there are conflicting determinations, confusion persists.

The FEMA guidance suggests several appeal avenues if a property is believed to have been wrongfully found to fall in a SFHA. First, the lender can direct its flood zone determination company to review its findings, especially if the borrower or insurance company have persuasive information showing the property is indeed not in a SFHA (such as a survey or elevation certificate that help better identify the location of a building on a FIRM). If the bank’s flood zone determination company revises its findings, no flood insurance will be required. If the original findings are affirmed, the lender and borrower will have to appeal directly to FEMA to change the flood zone determination.

There are three paths under which FEMA can reverse the SFHA determination: • Letter of Determination Review (LODR), a process where FEMA verifies whether the building’s location was correctly identified on the applicable FIRM; • Letter of Map Amendment (LOMA), an independent evaluation by FEMA of an elevation certificate if the property is within a SFHA but the building falls on naturally high ground; and • Letter of Map Revision-Fill (LOMR-F), a review

by FEMA of evidence that a community has utilized fill to raise the elevation of the ground beneath a building.

A successful LODR, LOMA or LOMR-F finding affirmatively releases the lender from requiring flood insurance on the property. However, if FEMA affirms the original SFHA finding, then the lender must notify the borrower that flood insurance must be obtained within 45 days or the lender will force place flood insurance, which may be more expensive than insurance procured by the borrower.

Mel Tull can be reached by email at mtull@vabankers.org 8 Virginia Banking | July/August 2013

www.vabankers.org

RECENT CHANGES TO THE NATIONAL FLOOD INSURANCE PROGRAM Lenders should also be sensitive to recent changes in the law that may affect their customers’ flood insurance requirements. In order to make the NFIP more financially stable, Congress passed the Flood Insurance Reform Act of 2012, also known as the Biggert-Waters Act. Among other things, the act eliminates subsidies for property owners whose premiums do not reflect the actuarial risk of flooding.

As a result, businesses and homeowners who have long been able to take advantage of subsidized flood insurance may not be able to do so after the Act is fully implemented.

As of Jan. 1, 2013, subsidized rates for non-primary residences in SFHAs, and subsidized rates for structures built prior to the community joining the NFIP – known as “pre-FIRM properties” – are being phased out. These properties will see a 25 percent rate increase per year until the premium reflects the actuarial risk.

Beginning Oct. 1, 2013, subsidies will be phased out for business properties, severe repetitive loss properties consisting of one to four residences, and any property that has incurred flood-related damage in which the cumulative amounts of claims payments exceeded the fair market value. Policyholders for these properties will likewise see rate increases of 25 percent per year until the premium reflects the actuarial flood risk. In addition, homeowners whose primary residence is in a SFHA will lose their subsidized rates if they purchase a new policy, sell their home, or allow an existing policy to lapse.

Rate adjustments may also apply to those who live in a community that has adopted an updated FIRM. Historically, when a new FIRM was adopted, those affected were able to grandfather their premiums under the prior FIRM. But beginning in 2014, grandfathering will be phased out, and new premiums will be incrementally increased over a five-year period.

Although only about 20 percent of NFIP policies receive subsidies, and will therefore be affected by the foregoing changes, it’s important for lenders to be mindful of upcoming changes in law so as to better serve their customers with respect to flood insurance issues. www.vabankers.org

July/August 2013 | Virginia Banking 9

Capital Rules

Final Basel III

A Summary of Key Provisions and Important Planning Considerations

By Jacob A. Lutz, III Troutman Sanders LLP

T

he Federal Reserve, FDIC and OCC have adopted the final rules for implementation of the Basel III capital requirements,1 following more than a year of extensive comment by banks and state and federal bank associations including the VBA. The final rules retain many of the provisions in the proposed rules issued in 2012, but do include several key changes, some of which are of special

significance to community banks.2 Importantly, most provisions of the final rules become effective on Jan. 1, 2015, including the revised definitions of regulatory capital and the new minimum capital ratios; however, the capital conservation buffer and countercyclical capital buffer will become effective on Jan. 1, 2016.3 KEY CHANGES FROM THE PROPOSED RULES All three regulatory agencies have emphasized

their approach to balancing the importance of higher quality capital and more capital for all banking organizations against real market impacts of availability of credit and the access of community banks to capital, as well as the complexity of the proposed rules and the burden of compliance on the part of all institutions, particularly community banks. Some key departures of the final rules from the proposed rules are as follows: AOCI filter. All institutions (except advanced approaches banking organizations) are permitted to make a one-time election to opt out of including most components of accumulated other comprehensive income (AOCI) in regulatory capital (the AOCI filter). In effect, an institution that opts out of the AOCI filter will retain the AOCI treatment under currently effective capital rules.

Risk weighting on residential mortgage loans. Residential mortgage loans retain the existing risk-based capital treatment, including the 50 percent risk weighting for prudently underwritten, performing loans secured by a first lien on one-to-four family properties and the 100 percent risk weighting for all other one-to-four family residential mortgage loans, including those secured by a second mortgage. The proposed rules would have applied risk weightings ranging from 35 percent to 150 percent based on certain factors including loan-to-value ratio and seniority of lien.

Trust preferred securities grandfathered.

For holding companies with total consolidated assets of less than $15 billion as of Dec. 31, 2009, under the final rule trust preferred securities and certain other non-qualifying capital instruments that were issued prior to May 19, 2010, and are presently included in Tier 1 capital are permanently grandfathered into Tier 1 capital, subject to a limit of 25 percent of Tier 1 capital.

However, the final rule retains the “imminent risk penalty� of the proposed rule which causes the

Jake Lutz is a partner and head of the Troutman Sanders financial institutions section. He may be reached at jake.lutz@troutmansanders.com or (804) 697-1490.

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loss of grandfathered status by crossing the $15 billion assets threshold through acquisition, either as buyer or seller, but not through organic growth, in which case non-qualifying capital instruments must be fully phased out of Tier 1 capital

by Jan. 1, 2016.

OTHER KEY PROVISIONS OF THE FINAL RULE The final rule contains a number of key provisions included in the proposed rule, with minor modifications, including the following: Capital requirements. The final rules require a leverage ratio of at least 4 percent, which exceeds the Basel III requirement of 3 percent, and which is likely to change for the largest banks as a result of a proposal to impose a higher leverage ratio by all three federal banking agencies on July 9, 2013. Institutions are also required to have total risk-based capital of at least 8 percent, Tier 1 riskbased capital of at least 6 percent, and Common Equity Tier 1 risk-based capital of at least 4.5 percent.

Risk weights. The final rules contain some very important changes to the calculation of an institution’s riskweighted assets by revising the risk weights given to certain asset types. Risk weightings for high volatility commercial real estate (HVCRE) loans and portions of past due exposures will increase to 150 percent, and much higher risk weightings will apply to certain equity investments.

Risk weightings for exposures to foreign banks and foreign governments and their central banks will be calculated based on a sovereign risk classification.

Capital conservation buffer. The final rule adopts the proposed capital conservation buffer for all institutions equal to 2.5 percent of the total riskweighted assets. The capital conservation buffer will be phased in from 2016 to 2019 but will not be a minimum capital requirement. Instead, an institution that fails to maintain the capital conservation buffer will be subject to certain new restrictions on capital distributions www.vabankers.org

(including dividends) and executive bonus payments.

Prompt corrective action. The final rules adopted changes to PCA regulations to ensure consistency with new regulatory capital requirements, including an increase in certain of the trigger thresholds for prompt corrective action. Banking organizations are required to have additional capital under the revised PCA framework and must have a minimum Common Equity Tier 1 capital ratio of 6.5 percent to be wellcapitalized.

IMPORTANT PLANNING CONSIDERATIONS There are some important planning considerations arising from the final rules. These include: Increase capital planning to respond to Basel III. The difficulty in responding to the Basel III capital ratios is driven not by the increase in the ratios themselves, but the corresponding changes in both the numerator of the calculations (qualifying capital less required deductions) and the denominator (risk weighted assets) that will make capital planning more complex. While the shifts on both sides of the equation should result in achieving two of the primary objectives of Basel III, increasing the quantity and quality of capital, they also will have a number of indirect impacts that require preparation.

Take advantage of opportunities to enhance capital. The final rules, in effect, make maintaining robust levels of Common Equity Tier 1 capital an imperative for each institution, particularly in light of reduced sources of new non-common equity Tier 1 capital under the final rules.4 As a result, institutions must be proactive in deciding when to obtain. additional equity capital, and take advantage of opportunities to issue common equity. Institutions must weigh the costs and potentially dilutive effect of raising equity at a time when new capital might not be fully deployable against the potentially prohibitive costs

incurred if an institution waits too long to raise equity.

Plan for impacts of HVCRE and pastdue loans risk weightings. Although the banking agencies’ decision to not modify risk weightings on residential mortgage loans will greatly reduce the net impact of the new Basel III risk weights, institutions that focus on HVCRE lending or are still struggling with asset quality issues should carefully review the new HVCRE and past-due risk weightings. Moving from a 100 percent risk weight to a 150 percent risk weight on these assets could cause an institution to fall below regulatory capital thresholds or force management to preemptively raise capital in challenging equity markets. These changes to risk weightings reflect the regulators’ view that certain loans and assets carry much greater risk than others.

CONCLUSION The final capital regulations implementing Basel III are complex and impose significant challenges for institutions of all sizes. These changes to virtually every aspect of the capital ratios require a thorough understanding of the interplay between the various changes and the direct and indirect consequences of each. While the proposed phase in periods would seem to provide some breathing room, pressure from regulators and market perception of an institution lagging behind will likely drive a more aggressive adoption schedule. Institutions that plan and coordinate now will be stronger players in a consolidating industry.

1. The final rules were adopted by the Federal Reserve Board on July 2, 2013 and by the FDIC and OCC on July 9, 2013.

On July 9, 2013, all three agencies also proposed a rule to increase the leverage ratio requirements for the larger US banks.

2. The final rules as published are 971 pages in length (not including the proposed leverage ratio rule for larger banks) and cannot be fully summarized in this article.

3. For advanced approaches banking organizations (those with more than $250 billion in assets or $10 billion in foreign exposures) the new rules are effective Jan. 1, 2014, for most provisions.

4. Concurrently with the Basel III initiative, certain staff of the Federal Reserve have started to more strictly apply requirements for a capital instrument to receive Tier 1 capital treatment (e.g., preferred stock), further restricting sources of non-common equity Tier 1 capital.

July/August 2013 | Virginia Banking 11

Welcome

New Associate Members

CHECK PRINTING/RELATED SERVICES, IT CONSULTING & SERVICES

IMAGEX, INC.

1985 Isaac Newton Sq. West Reston, VA 20190 Phone: (703) 467-1588 Website: www.imagexinc.com CONTACT: DAVID BERRY, ACCOUNT EXECUTIVE Email: dberry@imagexinc.com Imagex, Inc. is an information management solutions provider with 25 years of proven success. From check scanners to archival software, our commitment is to provide clients with painless information capture solutions and promote the secure management of proprietary documents through digital preservation.

FUNDING & CAPITAL SOURCES, INSURANCE

M-CAM, INC.

210 Ridge McIntire Road, Suite 300 Charlottesville, VA 22903 Phone: (434) 979-7240 Fax: (434) 979-7528 Website: www.m-cam.com CONTACT: ADAM TEPPER,VP OF CAPITAL MARKETS Email: alt@m-cam.com M-CAM offers the banking industry innovative capital solutions including intangible asset-backed collateral insurance and enhancements.

INSURANCE

THE TRAVELERS COMPANIES COMPLIANCE SERVICES, PAYMENT SYSTEMS

NATIONAL ADJUSTMENT SERVICES, INC. 168 E. Belt Blvd.

Richmond, VA 23224 Phone: (804) 231-9268 Fax: (804) 230-9377 Website: www.nationaladjustment.com CONTACT: BURT OREFICE, PRESIDENT AND OWNER Email: jane@nationaladjustment.com

14200 Park Meadow Drive Chantilly, VA 20151 Phone: (571) 287-6278 CONTACT: BRIDGET JENNISON, ACCOUNT EXECUTIVE OFFICER Email: bjenniso@travelers.com For more than a century,Travelers has supported community banks by offering an extensive selection of customized insurance solutions for community banks.

National Adjustment Services, Inc. is a recovery company certified compliant according to CFPB regulations. It covers the entire state of Virginia and has been in business for over 50 years!

EMPLOYEE BENEFITS, INSURANCE

MEYER-CHATFIELD, CORP.

261 Old York Road Jenkintown, PA 19046 Phone: (814) 467-0022 Website: www.meyerchatfield.com CONTACT: MARK L. SOLLENBERGER, MANAGING DIRECTOR Email: m.sollenberger@meyerchatfield.com Meyer-Chatfield is a comprehensive solutions company.The company serves as a highly respected BOLI specialist, a trusted bank compensation advisor, and provides the highest quality in BOLI and compensation administrative services.

SAVE THE

Date:

2013 VBA Leadership Conference November 14-15, 2013 | National Conference Center | Leesburg, VA Contact Anna Clay at aclay@vabankers.org for more information.

12 Virginia Banking | July/August 2013

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VIRGINIA IS FOR (small business)

LOVERS

How do we love small business? Lenders, let us count the ways Virginia State Small Business Credit Initiative 1. Cash Collateral Program 2. Loan Purchase Participation Program 3. Economic Development Loan Fund 4. Virginia Capital Access Program Credit Enhancement Solutions designed for Small Business Lenders!

www.vabankers.org

804-371-8254

May/June 2013 | Virginia Banking 21

Noting

Worth

CBB FINANCIAL ANNOUNCES NEW CHAIRMAN AND CEO RETIREMENT CBB Financial, the holding company for Community Bankers’ Bank, announced the election of director Ellie Gutshall as chairman for 2013-2014 and the retirement of President and CEO Bill McFaddin at the end of March 2014. In addition to his role of director and chairman at CBB Financial and Community Bankers, Ellie is also the president and CEO of Valley Bank in Roanoke, Va. Congratulations to Bill on his upcoming retirement and Ellie on his new position.

VIRGINIA BANKERS GRADUATE FROM THE GRADUATE SCHOOL OF BANKING AT LSU On June 6, six bankers from Virginia received their diplomas from the Graduate School of Banking at Louisiana State University. During their three years at the Graduate School of Banking, students received extensive bank study assignments and attended 180 hours of classroom instruction.

Receiving diplomas from Virginia were: Joy Fridley, Highlands Community Bank; Susan Harman, Old Point National Bank; Bobbi Mason, Old Point National Bank; Donald Morris Jr., Southern Bank and Trust; Jason Null, The Bank of Marion; and Jonah Pence, Farmers & Merchants Bank. A total of 155 bankers from 19 states and Mexico graduated. Kudos to all graduates on this honor!

Having attended the ABA Trust School, I feel more confident in providing advice-based solutions to clients. This immersion program gave me an in-depth exploration of account administration, fiduciary law, tax and estate planning. Importantly, I read and better understand trust documents, and am more focused on reducing our organization’s risk exposure.

ABA National and Graduate Trust Schools September 22 – 27, 2013 | Emory University Conference Center | Atlanta, GA

Apply today.

Visit aba.com/TS or call 1-800-BANKERS

14 Virginia Banking | July/August 2013

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20 125+ 150+

Da ve N iles

Walter is the Partner-in-Charge of the Financial Institution Services Group and has been serving banks throughout the Southern U.S. for 22 years.

Dave is the Partner-in-Charge of Risk Advisory Services for Community Banks and an Audit Partner, and he has more than 18 years of experience serving banks.

919.875.4993 walter.mcnairy@dhgllp.com

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16 Virginia Banking | July/August 2013

www.vabankers.org

Q A

Neighbors You Can Bank On.

VBA Welcomes

Gary Shook, VBA Chairman 2013-2014

Gary Shook, president and CEO of Middleburg Bank, was elected chairman of the Virginia Bankers Association on June 18, 2013. He is an alumnus of the University of Virginia and has been with Middleburg Bank since 2005. Gary will serve a one-year term succeeding Jeffrey Szyperski, president and CEO of Chesapeake Bank. We invite you to get to know your new chairman: How did you become a banker?

Purely by accident! About a year following graduation from the University of Virginia, my friend Andy Callahan, who works down in Tidewater, introduced me to Townsend Oast, CEO of the then $78 million Peoples Bank of Chesapeake (and former chairman of the Virginia Bankers Association), who hired me as a management trainee.

Prior to that point, I had worked as a runner for the Chesapeake law firm of Cassell Basnight. In those days you had to run the real estate packages to the various banks for funding. Through that job I came to know many bankers in Tidewater and gained a real interest in helping folks reach their financial aspirations through the banking and financial services industry.

What are some of the most significant changes in the banking industry you have witnessed since you embarked on your career?

Changes, let me count the ways!

My first job was hand-sorting the NSF www.vabankers.org

checks that came in every night. From there I learned how to operate the new “computerized” proof machine featuring 12 pockets. When I was placed on the teller line I used a regular adding

How long have you been involved with the VBA, and what impact has this involvement had on your bank and on your career as a banker?

Townsend Oast sent me to my first VBA conference in 1983. It was on IRAs. They were just coming out at that point and as the new kid on the block, I was designated to become the “expert.” Additionally, for young bankers in those days, the requisite keg parties were certainly at the top of the list as a networking must-do for a twentysomething aspiring bank leader. Over the years, I have chaired the Trust Committee twice, and also served as the chairman of

I have personally benefited from the many opportunities that a banking career has provided to me. We should all understand that not all days are perfect and we need to continually focus on the calmer waters off on the horizon. machine, which in my opinion seemed to work pretty well! Since then, it’s been a whirlwind of changes, most for the better, but some are still head scratchers.

For me, the most revolutionary change deals with the leveling of the playing field that technology has brought to all banks. From online banking and bill pay services to mobile banking, we can all compete in the same space with virtually the same technology. The best part is the affordability that has come as part of this evolution.

the Community Bankers Council. From there, I followed Jeff Szyperski as chairman of the Management Services Board, where I developed a great understanding of our “for-profit” businesses and the value that our association brings to each of our banks through those channels. My predecessor at Middleburg Bank, Joe Boling, has been a great support in my new leadership role at the VBA, as he is a past chairman himself. His example of leadership has Continued on page 18 July/August 2013 | Virginia Banking 17

Q

A

VBA Welcomes Gary Shook,VBA Chairman 2013-2014 Continued from page 17

Matthew Santmyer, Patrick Heijmen and Gary Shook representing Middleburg at the 2012 Leadership Conference. encouraged me, as well as the members of our management team, to be sure to give back to our industry.

What do you hope to bring to the association during your time as chairman? What are your goals for 2013-2014?

We must reach out and show our communities, legislators and regulators that we are indeed the good guys. We can be used as resources in growing our communities and are not to be relegated to the world of the greedy and untrustworthy. Additionally, we as bankers need to find ways to reach out and make the case to the next generation of banking leaders and help them get involved in their industry. The Virginia Bankers Association Leadership Division is the perfect conduit to channel greater involvement.

What do you see as the banking industry’s biggest challenges this year?

We need to keep our focus on the myriad of new rules coming out of the CFPB and the other regulators. We all need to speak up when the ABA, VBA 18 Virginia Banking | July/August 2013

or regulatory agencies make a request for comments. We have seen that they do in fact read all comment letters and use those thoughts in the final rulemaking.

We cannot allow those opportunities to pass us by. From the financial side, margin compression continues to be the lead story due to federal policy. While we are seeing signals of a change in their policy, no one knows for sure as to when those changes will be implemented.

What lessons can we learn from the previous year, 2012-2013?

Jeff Szyperski has been a great leader for the association and I have learned from his steady approach to leadership, along with his wonderful dose of levity.

The Congressional and presidential elections of this past year should have affirmed for everyone that DoddFrank and what I call the “Dodd-Frank mentality” in Washington are here to stay, for now, and we must work with our elected leaders and regulators to bring common sense business practices back to many of the areas where these legislative and regulatory changes defy logic. We need to show these leaders that banks and bankers deserve a seat at the table in

bringing common sense regulation back to our industry.

What is one piece of advice you would give to someone entering the banking industry today?

My biggest worry is that we will not get the opportunity to provide advice to young people wanting to enter our industry, as they are being frightened away by the many negative portrayals presented of financial services providers. The reality is that bankers and banking are key to the economic vibrancy of the communities in which they operate. We provide good jobs, great financial services, and hopefully an appropriate profit to our shareholders.

We also have the opportunity to give back to our towns and cities through the numerous civic and philanthropic vehicles that await our involvement – both with our hands and with our dollars! I have personally benefited from the many opportunities that a banking career has provided to me. We should all understand that not all days are perfect and we need to continually focus on the calmer waters off on the horizon.

Continued on page 20 www.vabankers.org

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Q

A

VBA Welcomes Gary Shook,VBA Chairman 2013-2014 Continued from page 18

Gary Shook stops at the Cumberland Gap to document the start of his tour of Virginia as VBA chairman.

How do you encourage and develop promising leaders at your bank?

I recommend staying current and seeking ways to connect with peers, the Leadership Division, and the like.

Thomas Jefferson always saw education as a lifelong pursuit, and Middleburg Bank encourages all of our associates to seek educational opportunities. Last year, we sent a large group of our up-andcomers to the Leadership Conference.

We plan to send a larger group to this year’s Leadership Conference to be held in November at the National Conference Center near Leesburg. We make full use of the VBA Bank School at the University of Virginia, sending at least two of our folks each year for a total of six or seven participants. It has to be the best value for a bank educational program out there, and we have seen great results. Also, the Executive Leadership Institute that is held by the VBA bi-annually is a great program for emerging leaders that are ready to move to the next level in the company.

Who has had the greatest impact on your career and why?

My career is certainly a mosaic of those with whom I have worked over the years.

You learn good lessons from the good examples, as well as greater lessons from the lesser examples of leadership. I have read the various books written by banking leaders of the past and have found some 20 Virginia Banking | July/August 2013

good lessons for leadership from those sources as well.

What is the greatest benefit you see from membership in the Virginia Bankers Association?

Without the legislative and regulatory advocacy that the VBA provides, we would all find ourselves behind the proverbial eight ball. We have been extremely fortunate over the past several years to have the VBA team in our court. On the services side, whether it be employee benefits, title insurance, commercial insurance, D&O, as well as many other endorsed products, the Middleburg leadership team knows that we can count on the VBA for the best pricing and the extra level of due diligence that comes from their expertise in products and services review.

What was your first job, and what did you gain from that early work experience?

I worked as a janitor in a small office building beginning at the tender age of 15. Believe it or not, I enjoyed it more than my paper route. I did gain a real disdain for dust on chair railings and on backs of doors, never mind the ever-present mud being tracked into our offices. Blocking and tackling and focusing on the details are certainly the stories of being successful in a banking career! Metaphorically speaking, that job taught me early on that

if you pay attention to the little things, the big things will take care of themselves!

As a leader, I need to show the team that I have no problem changing a burned out light bulb and vacuuming that still everpresent mud that gets tracked into our offices! By working together, the job gets done with greater efficiency.

Tell us something about yourself that would surprise your fellow bankers.

Living in the Middleburg area, many folks assume that I am a horseback rider.

In fact, out of the seven presidents of Middleburg Bank, over its nearly 90 years of existence, four have been “Masters of the Hunt.” But, alas, my riding career ended when I was about 11 years old, and I am now relegated to the world of “hilltoppers” and spectators in what is still a very important part of the culture of the northern piedmont of Virginia.

Is there anything else you would like to add?

We are so very fortunate to have the VBA staff that we do, led by Bruce Whitehurst.

The Virginia Bankers Association is at the very top tier of state associations. Bruce has made that happen by building upon the great platform put in place by his predecessor, Walter Ayers, and the bankers that have come before us. It is each of our jobs to make a point of finding a means by which to add to that legacy! www.vabankers.org

Update

Washington

Cybersecurity Vigilance

A Frank Keating President and CEO, American Bankers Association

s banking becomes an increasingly mobile and electronic-based activity for your customers, the possibility of cybersecurity threats from criminals and “hacktivists” continues to grow.

This means we each have to be vigilant – ready to respond to protect our bank and our customers.

We know that no bank is immune from experiencing something like a distributed denial of service attack. Banks are increasingly the target of such attacks, which seek to disrupt a bank’s processes by overwhelming computer and/or telecommunications networks with massive amounts of server and data requests. And sometimes these attacks can mask an attempted compromise of a bank’s systems.

These attacks can interfere with customers’ ability to access their online banking accounts, and they can also morph into data loss or destruction. While the latter instances are rare, we must be mindful that they can occur.

ABA is actively engaged in industry-led responses to these threats, working with government and law enforcement officials to provide you the resources necessary to address these threats. Our cybersecurity webpage on aba.com – aba.com/cybersecurity – is continually updated with information on the latest threats and resources to minimize their impact.

Through our Corporation for American Banking, we are evaluating our cybersecurity endorsements to ensure we are offering the appropriate suite of products and services. And we continue to work with the administration and Congress to improve our nation’s overall cybersecurity and enhance our capacity to share vital threat information.

These are defensive actions, but we also are on offense, working to shut down cybersecurity threats.

On June 5, with the assistance of the ABA, two other industry trade groups and the Federal Bureau of Investigation, Microsoft’s Digital Crimes Unit received court approval to take down a major network of infected computers, or “botnets,” known as Citadel.

Botnets, which are controlled by hacker-operat-

ed servers, are used to commit financial crimes and cyberattacks, and can remain active for years if not intercepted. The Citadel botnets had infected as many as 5 million computers and had been used to compromise additional computers of financial institutions’ customers worldwide. The operation’s success will reduce future losses incurred by banks and their customers. As these computers move off the botnet grid, they will be cleansed of malicious software, a process that is already under way.

“Creating successful public-private relationships – in which tools, knowledge, and intelligence are shared – is the ultimate key to success in addressing cyber threats and is among the highest priorities of the FBI,” FBI Executive Assistant Director Richard McFeely said of the botnets’ takedown.

Our perspective is similar. We can only effectively secure our cyber environment when banks and our partners in other industries, such as telecommunications and energy, work collaboratively with each other and government to share threat information. And we can only be effective if each and every one of us takes this threat seriously.

At ABA I can assure you that we take cybersecurity seriously and I hope you do, too. As with other issues crucial to our industry and our nation, bank CEOs and senior executives need to set the tone from the top on cybersecurity so everyone understands the need to remain vigilant.

Gov. Frank Keating can be reached by email at keating@aba.com.

22 Virginia Banking | July/August 2013

www.vabankers.org

Virginia Bankers Association

Thank You! Chairmen s

Committee

s

ber m e M d r a o B

Thank you to all of our board members, committee members, chairmen, and the hundreds of bankers that attend our education and training events, support our legislative initiatives, and participate in our many programs. We appreciate your service and dedication to the industry!

Compliance

Corner

Is Your Auditor Participating in Writing of Policies and Procedures?

If So,They May Not be Independent

By Darlia Fogarty Director of Compliance, Compliance Alliance, Inc.

T

here are two important aspects to independence that must be distinguished from one another: independence in fact (real independence) and independence in appearance (perceived independence).

Both aspects are essential to achieve the goals of independence. Real independence refers to the actual independence of the auditor, also known as independence of mind. More specifically, real independence concerns the state of mind of an auditor and

how the auditor, reacts and deals with a specific situation. An auditor who is in fact independent, has the ability to make independent decisions even if there is a perceived lack of independence present or if the auditor is placed in a compromising position by company directors. Many difficulties lie in determining whether an auditor is truly independent, since it is impossible to observe and measure a person’s mental attitude and personal integrity. Similarly, an auditor’s objectivity must be beyond question, but how can this be guaranteed and measured? This is why perceived independence is of great importance.

It is essential that the auditor not only acts independently, but also appears independent as well. If an auditor is in fact independent, but one or more factors suggest otherwise, this could potentially lead to the conclusion that the audit report does not represent a true and fair view. Independence in appearances also reduces the opportunity for an auditor to act otherwise than independently, which subse-

quently adds credibility to the audit report.

There are a wide range of opinions regarding the difference between auditing and consulting. The majority agree that compliance review and risk assessment objectives are strongly associated with auditing, while implementing policies and procedures are strongly associated with consulting.

However, a significant majority believe that the identification of critical issues and recommendations to solve problems were a mix of auditing and consulting combined. In an effort to make certain there is no confusion between these two very different functions, you might consider these “best practice” activities for the two fields: CONSULTING ACTIVITIES 1. Focus on daily activities and future events (procedures for daily functions and policies for future).

2. Address the implementation of activities.

3. Initiated by departmental needs.

4. Primary client is department manager.

5. Involves staff throughout the organization.

6. Yields a product (policies, procedures, tools) rather than an audit report.

AUDITS ACTIVITIES 1. Focused on past or historical events (specific point in time; i.e. “as of date” for audit or exam).

2. Address compliance issues and business risks.

3. Initiated by audit committee or board of directors.

4. Primary client is audit committee/senior manager.

5. Conducted exclusively by members of third-party audit firm or internal audit department.

6. Yields an audit report with findings and recommendation used by senior managers to address how well the organization is adhering to policies and legal requirements, as well as to begin the development of a product (i.e., a policy, procedure, tool) to guide the organization with compliance for requirements of the policy or procedure.

To learn more about Compliance Alliance, contact Darlia Fogarty at (888) 353-3933.

24 Virginia Banking | July/August 2013

www.vabankers.org

In regulatory opinion, as stated in several exam findings, allowing the audit personnel to perform traditional consulting activities (policy or procedure development) gives the bank a false sense of security. That is, although the auditors’ experience may give them insight into how to correct an issue or the ability to produce a product to assist the bank in implementing a specific finding, allowing the auditor to produce the policy or procedure would remove the independence, because in essence the auditor would then be auditing their own work.

Given the importance of independence and objectivity to the internal audit function, it is of the utmost importance to consider this opinion.

The credibility and effectiveness of the entire audit function is at stake if, by engaging in certain activities, auditors are risking their independence. Based upon the Standards for the Professional Practice of Internal Auditing (SPPIA), the requirement for independence and objectivity can be summarized as follows: “Internal auditors should be independent of the activities they audit. Such independence permits internal auditors to perform their work freely and objectively.

Without independence, the desired results of internal auditing cannot be realized. …

(Independence) is achieved through organizational status and objectivity…”

Objectivity is an independent mental attitude that internal auditors should maintain in performing audits. Internal auditors are not to subordinate their judgment on audit matters to that of others. It is important to note that external auditors are governed by guidelines as strict as those of internal auditors.

Designing, installing and operating systems are not audit functions. Also, the drafting of procedures for systems is not an audit function. Performing such activities is presumed to impair audit objectivity.

The greatest risk of violating the independence principle comes from mixing consulting with auditing.

The gray area between auditing and consulting offers opportunities for observers (more specifically, regulators) to www.vabankers.org

conclude that auditors have violated the independence principle when they write policies and procedures to be implemented in the banks in which they perform audit functions.

For the most part, auditors and regulatory agencies believe that performing consulting services carries a relatively high risk of jeopardizing independence.

Senior management needs to establish criteria to differentiate auditing and consulting work. The bank should appreciate and expect the auditors to protect the independence and objectivity of the audit function and not expect or allow the auditor (internal or external) to participate in any activity that would jeopardize the independence.

Considering the strict standards required of the audit function and the regulatory view of independence, the board should ensure the audit function is clearly separate from the management function of policy making and the writing of procedures. Remember, auditors

make recommendations for best practices to include in a policy, but should in no way be involved in the actual writing or implementation of the policy.

Many banks are falling into the trap of using auditors to write critical documents as a result of a lack of resources, such as time to find the documents elsewhere or the cost of purchasing each policy.

If your internal auditor is creating your policies, don’t take the chance that your audits will not be considered independent.

Compliance Alliance, owned by the Virginia Bankers Association and 15 other state banking associations, was developed to assist banks in navigating the expansion of compliance rules and regulations. Compliance Alliance provides more than 700 products, including cheat sheets, check lists, cliff notes, risk assessments, polices, procedures and much more, in addition to a hotline available by phone, email and live chat as well as completing reviews of advertising, new products, policies, procedures and disclosures.

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July/August 2013 | Virginia Banking 25

Bank Day

Scholarships

VBA Honors Statewide Scholarship Winner Holmes Laughon

T

he Virginia Bankers Association, together with the VBA Education Foundation and the VBA Leadership Division, congratulate Holmes Laughon for winning the statewide VBA Bank Day scholarship. Holmes shadowed First National Bank in Altavista on Bank Day and shared his experiences at the bank in his winning essay. He recently graduated from E.C. Glass High School and will attend Virginia Military Institute in the fall. Tracie Gallahan of First National Bank, Altavista, presented the $6,000 scholarship to Holmes during his high school’s award ceremony.

Congratulations, Holmes!

The VBA Bank Day Scholarship Program began in 1991 when the third Tuesday in March was declared Bank Day in Virginia

Tracie Gallahan of First National Bank presents Holmes Laughon with his scholarship award. by the Virginia General Assembly. On this day, Virginia high school seniors spend a day in banks across the commonwealth shadowing a banker in their daily duties. The purpose of this experience is for the students to learn about banking, financial services, and the vital role banks play in their communities.

From their experience, the students are required to write an essay on the topic, “How Banking Benefits My Community,” and seven scholarships (six regional and one statewide) are awarded on the basis of the essays. The VBA Bank Day Scholarship Program will take place again next year on March 18. Please contact Chandler Dewey at cdewey@vabankers.org to learn how to get involved.

Your Data.

Your Future.

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Getting to Know Our Regional Scholarship Winners EMILY CASSELL School: Northwood High School Bank shadow: The Bank of Marion College attending in the fall: James Madison University Potential major: Mathematics High school activities: Volleyball, basketball, played trumpet in the Panther Pride marching band, senior class president.

Favorite thing about Bank Day: My favorite part of going to the Bank of Marion for Bank Day was getting to go in the vault and learn about how the money is stored and protected.

One thing I learned on bank day that I did not know before: Before participating in Bank Day, I had no idea that my local bank had a kids’ program or that they scheduled bus trips for older citizens of the community.

One fun fact about yourself: I absolutely love horses. I have a Haflinger named Starry Night and we go on trail rides regularly.

NATHANIEL CLEMENS School: Broad Run High School Bank shadow: Middleburg Bank College attending in the fall: The College of William & Mary Potential major: Hispanic studies with plans to get a master’s in secondary education High school activities: Choir, theatre Favorite thing about Bank Day: Meeting all the people who work at the banks. They were very friendly, helpful, informative and care about each other as well as the community and their customers.

One thing you learned on Bank Day that you didn’t know before: I didn’t know about the various departments in a bank.

I figured everyone handled transactions in one way or another, but the banking system is really divided up into specific jobs and duties so that every department focuses on one aspect of banking and is therefore more efficient.

One fun fact about yourself: Aside from Spanish, I love learning about history and anthropology and researching past and present events, achievements, and conflicts in the United States and around the world.

www.vabankers.org

HOLMES LAUGHON School: E.C. Glass High School Bank shadow: First National Bank, Altavista College attending in the fall: VMI Potential major: Economics and business High school activities: Lacrosse, Mercy Care Council, and volunteering at the Jubilee Family Development Center Favorite thing about Bank Day: Getting to go inside the vault!

One thing you learned on Bank Day that you didn’t know before: The depth of the symbiotic relationship between a local bank and the community in which it resides.

One fun fact about yourself: I asked for a cash register for Christmas when I was three years old.

AUSTIN PAINTER School: Riverheads High School Bank shadow: StellarOne Bank College attending in the fall: Liberty University Potential major: Business and marketing High school activities: Football and track Favorite thing about Bank Day: Learning about mortgage loans.

One thing you learned on Bank Day that you didn’t know before: There is a program in place for low-income families to get approved for loans to buy houses.

MEGAN E. PRETI School: Frank W. Cox High School Bank shadow: Old Point National Bank College attending in the fall: University of Virginia Potential major: Biology or political science High school activities: Soccer, cross country, track, Key Club, National Honor Society, National Math Honor Society, National English Honor Society and National Spanish Honor Society Favorite thing about Bank Day: Actually seeing first-hand how a bank operates on a daily basis. It was fascinating to learn about all the different activities that the bank performs on a daily basis and how it impacts all of us.

One thing you learned on Bank Day that you didn’t know before: The three Cs of banking – Character, Capacity and Collateral.

One fun fact about yourself: I like to paint.

NADIA RUTTER School: Powhatan High School Bank shadow: Village Bank College attending in the fall: Western Carolina University Potential major: Special and general elementary education High school activities: Show choir Favorite thing about Bank Day: Meeting all the people and eating lunch with Mr. Winfree.

One thing you learned on Bank Day that you didn’t know before: That the local bank participates in more than 100 charitable events.

One fun fact about yourself: I was adopted from Russia.

July/August 2013 | Virginia Banking 27

VBA

Events

The VBA Celebrates 120th Annual Convention

V Jeff Szyperski, Bruce Whitehurst, Kell Kelly and Billy Beale spoke on a panel about leading the industry forward.

The Right On Band provided entertainment at the Closing Banquet.

Congressman Robert Hurt addressed the audience at the Monday Business Session.

28 Virginia Banking | July/August 2013

irginia bankers gathered in Hot Springs, Va. at the beautiful Homestead resort to celebrate the 120th VBA Annual Convention on June 16-19.

Attendees heard from a variety of speakers, participated in outdoor activities, and capped off the event with a black-tie banquet to announce the new chairman and dance to the tunes of the Right On Band.

Upon arriving at The Homestead on Sunday afternoon, attendees perused the silent auction items up for bidding at the VBA BankPAC Silent Auction sponsored by Investors Title Insurance Company. We raised over $21,500 for our BankPAC campaign thanks to all contributors.

The Monday Business Session kicked off bright and early with speakers Rep. Robert Hurt, Herb Meyer and Adriana Trigiani. Each guest speaker introduced a new perspective to the audience and entertained with a variety of topics, including banking in the state of Virginia, global trends and developments, and insights from the book Tales from Southwest Virginia. Robert Hurt represents Virginia’s 5th District in the U.S. House of Representatives, Herb Meyer is the founder and chairman of Real-World Intelligence Inc., which designs and installs business intelligence systems for corporations and other private sector groups, and Adriana Trigiani is an accomplished novelist, television writer, producer and film director. We were thrilled for each of them to join us.

On Tuesday morning, Anirban Basu from Sage Policy Group Inc. presented the audience with an economic update, and Kell Kelly from SpiritBank spoke on a panel with Jeff Szyperski, Billy Beale and Bruce Whitehurst about how to lead the industry forward. Tuesday evening brought the Chairman’s Reception and Closing Banquet, where the new VBA chairman, Gary Shook, president and CEO of Middleburg Bank, was installed and welcomed by the crowd. The VBA also installed Johnny Milleson, president and CEO of the Bank of Clarke County as the chairman-elect. Attendees celebrated their installation with dancing and musical entertainment.

The VBA looks forward to hosting this event every year for our members and their guests. Thank you to everyone who attended our 120th Annual Convention. We hope to see you next year on June 15-18 at The Sanctuary at Kiawah Island, SC! www.vabankers.org

Jeff Haley, American National Bank & Trust Co.; Jeff Everly, Yount, Hyde & Barbour PC; Johnny Milleson, Bank of Clarke County; and Marshall Fleming, Bankers Insurance, LLC. enjoyed a round of golf at the annual golf tournament.

Gary Shook thanked attendees after he was installed as the new chairman.

Jeff Szyperski introduced Chairman-Elect Johnny Milleson and his wife, Bette, to the crowd.

2013-2014 Chairman Gary Shook and family at the 120th Annual Convention.

On the Web! Virginia banking magazine is available as a digital edition!

Go to www.vabankers.org and click on “Virginia Banking” under the Communications tab.

Check it out on your computer or iPad today!

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American National Bank and Trust Company

Bank of Hampton Roads

Hilary J. Blackburn, Senior Vice President, Marketing Product Manager Janice A. Cross, Executive Vice President Jennifer L. Deacon, Executive Vice President Joseph M. DiStefano, Senior Vice President Sopa Keo, Assistant Vice President Jason R. McDonough, Vice President Jonathan Reimer, Assistant Vice President Lilah Yosufy, Senior Vice President Sheila Yosufy, Senior Vice President

John Maloney, Vice President and Customer Relationship Manager

Carter Bank & Trust

Kimberly Fox, Relationship Manager H. Gregg Strader, Executive Vice President

Bank of Botetourt F. Lindsey Stinnett, Retiring from Board of Directors

Bank of Lancaster Ryan A. Blake, Information Technology Officer Edward P. Currin, Assistant Vice President Pamela J. Fawver, Retail Delivery Administrator Rebecca Coggin Hubert, Vice President, Regional Retail Manager Douglas F. Jenkins Jr., Vice President of Bay Banks of Virginia, Inc. Ivana L. Nichols, Assistant Vice President Ricky B.Varnier, Senior Vice President, Chief Technology Officer

Blue Ridge Bank R. Steven Landes, Vice President of Market Development

Cardinal Bank Alexandra L. Bettius, Vice President

30 Virginia Banking | July/August 2013

M. Wesley “Wes� Furrow Jr., Assistant Vice President Jennifer A. Gordon, Branch Manager

City Holding Company Guy Johnston, Senior Vice President & Retail Sales Manager

Farmers & Merchants Bank Carrie Comer, Senior Vice President and CFO Josh Hale, Senior Vice President and Business Development Leader Neil Hayslett, Executive Vice President and Chief Administrative Officer Stephanie Shillingburg, Executive Vice President

Sonabank, NA John Colantoni, Senior Vice President, Director of Internal Audit

TowneBank Anne Conner, President of Public Finance and Community Investment David Patterson, EVP, Accounting & Principal Accounting Officer Brian Skinner, President TowneBank Peninsula/ Williamsburg

Wells Fargo Chris R. Hairston-White, Vice President, Senior Business Banking Relationship Manager

Valley Bank Jerry Bradley, Senior Vice President/Finance Shannan Crosswhite, Branch Manager Bonnie Ferguson, Real Estate Finance Assistant Brad Harris, Senior Vice President, Business Banking Officer Brent Jenkins, Assistant Vice President/ Downtown Branch Manager Ashley E. McGhee, Assistant Vice President/ Controller Alan Miller, Assistant Vice President, Business Banking Officer Linda Saunders, Small Business Banking Assistant Connie Smith, Retail Administration Specialist Martin B. Williams, Assistant Vice President/ Commercial Credit Underwriter Mary Williams, Assistant Vice President, Mortgage Office Manager/ Closing Coordinator

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