Virginia Banking Nov/Dec 2015 by The Warren Group

November/December 2015

Fall at the VBA: Events Recap IN THIS ISSUE

8TH ANNUAL COMMITTEEPALOOZA | VBA LEADERSHIP CONFERENCE | TRID AND E-SIGNATURES

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November/December 2015

2015-2016 Officers and Directors of the Virginia Bankers Association T. Gaylon Layfield, III, Chairman, Xenith Bankshares, Inc. John G. Stallings, Chairman-Elect, SunTrust Bank John R. Milleson, Immediate Past Chairman, Bank of Clarke County G. William Beale, Union Bank & Trust Christopher W. Bergstrom, Cardinal Bank Michael W. Clarke, Access National Bank Barry C. Elswick, TruPoint Bank Scott C. Harvard, First Bank, Strasburg William H. Hayter, First Bank & Trust Company Charles Henderson, Bank of America, NA

Cover

Glen Kelley, Wells Fargo Bank, N.A. Brad E. Schwartz, Monarch Bank Joe A. Shearin, EVB Susan K. Still, HomeTown Bank Daniel G. Waetjen, BB&T Michael O. Walker, Benchmark Community Bank

Fall at the VBA

Robert Wojciechowicz, Capital One Financial Corporation AT-LARGE MEMBERS VBA Benefits Corporation Chair J. Peter Clements, The Bank of Southside Virginia Management Services Inc. Chair M. Andrew McLean, Middleburg Bank Government Relations Committee Chair Ronald D. Haley, River Community Bank, NA VBA Education Foundation Chair Charles H. Majors, American National Bank & Trust

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 Chandler Owdom Director, Communications & Strategy Virginia Bankers Association

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280 Summer Street, Boston, MA 02210 Phone: 617-428-5100 Fax: 617-428-5118 www.thewarrengroup.com

SUBSCRIPTIONS If you would like to subscribe to Virginia Banking, contact Chandler Owdom at cowdom@vabankers.org Virginia Banking is published bi-monthly. Copyright 2015. Statements of fact and opinion are made on the responsibility of the authors alone and do not imply an opinion or endorsement on the part of the officers or members of VBA.

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ÂŠ 2015 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: custompubs@thewarrengroup.com Call 800-356-8805.

features

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Eighth Annual CommitteePalooza Brings Together 185 Bankers Community Investment Survey Results Fourth Annual VBA Leadership Conference

in every issue 4 Calendar of Events 6 Insights 8 Legislative Update 9 Worth Noting 10 Legal Line 18 Washington Update 19 New Associate Members 20 Compliance Corner 22 Bankers on the Move Send us your thoughts or ideas on Virginia Banking! Please email Chandler Owdom at cowdom@vabankers.org. Has your information changed? Please email Kellee Edelin at kedelin@vabankers.org with your new contact information.

SAVE THE DATES FOR 2016 VBA CONFERENCES & EVENTS FINANCIAL FORECAST January 8, 2016 Greater Richmond Convention Center

HR, BENEFITS AND TRAINING CONFERENCE May 1-3, 2016 Omni Charlottesville

BANKER DAY January 14, 2016 Virginia State Capitol

FUNDAMENTALS OF CREDIT ANALYSIS & BUSINESS FINANCING May 10-11, 2016 VBA Training Center

BANK SECRECY ACT/ANTI-MONEY LAUNDERING 2-DAY SCHOOL February 23-24, 2016 VBA Training Center

OPERATIONS & TECHNOLOGY CONFERENCE May 17-18, 2016 Omni Charlottesville

BANK DIRECTORS SYMPOSIUM March 2016 Richmond & Blacksburg

ANNUAL CONVENTION June 19-22, 2016 The Greenbrier

SECURITY RISK WORKSHOP March 1-2, 2016 Omni Charlottesville

CFO CONFERENCE August 28-30, 2016 Omni Hotel Downtown Richmond

RETAIL BANKING & MARKETING CONFERENCE March 9-10, 2016 Omni Charlottesville

CREDIT MANAGEMENT CONFERENCE October 3-4, 2016 Omni Charlottesville

VBA/ABA GOVERNMENT RELATIONS SUMMIT March 14-16, 2016 Washington Marriott Marquis

LEADERSHIP CONFERENCE October 6-7, 2016 Richmond

SUPERVISOR BOOT CAMP April 6-7, 2016 VBA Training Center

ENTERPRISE RISK MANAGEMENT WORKSHOP October 27, 2016 VBA Training Center

COMPLIANCE SCHOOL & ADVANCED COMPLIANCE April 11-15, 2016 Omni Charlottesville

WOMEN IN BANKING SEMINAR November 17, 2016 Richmond

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Insights

Emerging Leaders: Banking’s Bright Future “The future belongs to those who see possibilities before they become obvious.” — John Sculley, former CEO, Pepsi Co. and Apple

H Bruce Whitehurst President and CEO, Virginia Bankers Association

ave you been to any meetings lately where the role and impact of Millennials is not discussed? This young generation – larger than us Baby Boomers and dwarfing the Gen Xers between us and them – is already making a huge impact on American society, culture and business. As a father of two Millennials and coworker to several, I am energized by all they bring to the table and really enjoy spending time with them. This fall, we asked members of the VBA Leadership Division – our emerging banking leaders group – to emcee most of our 12 regional state legislative meetings, thinking it would be good to put a younger face on banking. In every case, our emcees did a terrific job and represented their banks and Virginia banking extremely well. Shortly after our round of successful legislative meetings, I had the opportunity to attend the VBA Leadership Conference at Mountain Lake Lodge (remember the film “Dirty Dancing” that was filmed there?) with 50 of our emerging banking leaders. The conference was great, with timely topics and very good speakers; the energy among our emerging leaders was even better. During the conference, I observed a group of young bankers who were highly engaged in topics ranging from the economy to cyber security to social media (second nature to them …) to how banks must evolve and change in this dynamic environment in order to stay relevant to Millennials and future generations. They asked insightful questions and offered keen observations – based on their own experiences – on how banking will adapt and change in order to remain a central part of our economy. They talked about financial literacy and why it is so important for bankers to maintain our leadership role in making sure everyone has access to learning this essential life skill. They focused on the leadership attributes that will set them apart as they progress within their chosen career of banking. They identified the need to attract more bright young people to our industry.

6 Virginia Banking | November/December 2015

As adept as Millennials are in the use of our truly amazing communications technology, they clearly still value the same thing I did at their age: opportunities to meet and network with their peers and to learn from each other as they hone their banking and leadership skills. We are fortunate at the VBA to be in a position to offer numerous opportunities to bring young bankers together; it reminds me of my days in the former VBA Young Bankers Section, where we valued all the same opportunities. Perhaps some of the most important things haven’t changed as much as we sometimes believe, and maybe the awesome communications technology of today actually enhances our ability to stay connected between face to face meetings rather than replacing them. Our emerging leaders group is now over 400 strong, with members from virtually every VBA member bank. And yet – as with so many things – there is a smaller core group of young bankers who are very active and whom we see at any combination of our School of Bank Management, legislative meetings and events and our recent VBA Leadership Conference. When I was active in the VBA Young Bankers Section – which produced no small number of current bank CEOs and C-suite executives – we had a similar experience of more total members than active members. Our goal at the VBA is to grow what you might call the top line and the bottom line – total members and active members – in our emerging leaders group. I use this analogy because I believe the more active someone is, the more benefit is derived for both the banker and his/her bank. Whenever I spend time with our emerging leaders, I come away with a strong sense that the future of banking is in very good hands. Let’s work together to develop as many future leaders for banking as we can!

“… The Millennial Generation will entirely recast the image of youth from downbeat and alienated to upbeat and engaged – with potentially seismic consequences for America.” — Neil Howe and William Strauss in “Millennials Rising” Email Bruce Whitehurst at bwhitehurst@vabankers.org with any comments on this article or tweet him at @BruceTW. www.vabankers.org

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Legislative

Update

State Legislative Meeting Update

Matt Bruning Senior Vice President, Government & Member Relations, Virginia Bankers Association

hroughout the fall, the VBA held a dozen meetings across the commonwealth with bankers and members of the Virginia General Assembly. Nearly 270 bankers from 50 different banks were able to connect with 70 state legislators. These meetings offered an opportunity to discuss important industry concerns, build and strengthen relationships with our local elected officials and hear from those leaders on the upcoming policy issues. As Bruce notes in his column (see pg. 6), we highlighted members of the VBA Leadership Division, many of whom served as emcees for the meetings, as an additional means to make important connections. Thank you to all those who attended or had someone from their institutions participate. In the past, these meetings presented a forum to share potential legislation being pursued by the VBA on behalf of the banking industry in the next legislative session. As we have discussed over the years, Virginia benefits from a solid legal and regulatory framework at the state level. This is due in large part to the strong, bipartisan support from the General Assembly – in response to the ongoing engagement of bankers – in providing a pro-banking environment, especially relative to other states and the federal government. Each year, we seek to make improvements, remove barriers and modernize our laws to ensure Virginia remains the best state for banking and for overall business. While we will continue to identify proposals to build and strengthen that framework, there was no pressing state issue on the horizon three months out from the start of the 2016 General Assembly session at the time of this year’s meetings. Acknowledging that much of our efforts before the legislature deal with educating officials on the pitfalls and unintended consequences of even wellmeaning bills, we discussed potential efforts that might come before the General Assembly. These included encouraging members to resist efforts to mandate the use of static technology in the payments system as banks undertake innovative efforts to secure their

8 Virginia Banking | November/December 2015

customers’ financial information and assets. We also reminded legislators of the lack of a level playing field regarding credit union taxation and regulation, noting that while Congress must address the tax disparity, the VBA would oppose any efforts by credit unions to expand their powers even further through state legislation. With the absence of significant state policy issues – a position that could change at any moment – these meetings provided an opportunity to share with legislators some of the proactive, positive partnerships Virginia banks have with entities with state government ties. We were pleased to work with the Virginia Small Business Financing Authority, Virginia Housing Development Authority, Virginia Community Development Corporation and Virginia Community Capital to highlight these partnerships at various meetings. By emphasizing these collaborative connections, bankers and representatives of these industry partners were able to discuss what individual banks and our collective industry are doing daily in Virginia to assist in providing capital to small businesses that often leads to job creation; facilitating firsttime homebuyer financing; ensuring affordable housing opportunities and engaging in community development. Bankers in every meeting shared their stories of working with these partners, as well as through many other efforts, to make the financial dreams of their customers – the legislators’ constituents – a reality. We appreciate all those who took the time to speak on behalf of all Virginia bankers on the importance of the partnerships, programs and countless enterprises bankers are undertaking as critical catalysts in our overall economic recovery and growth. With the 2016 General Assembly set to tackle the two-year spending plan for the state, economic development will continue to be a top legislative issue. Educating state legislators on how bankers interact with many of our industry partners helps to demonstrate Continued on next page www.vabankers.org

Noting

Worth

NEAL TO RETIRE FROM UNION BANK & TRUST

John Neal will retire from his role as president of Union Bank & Trust on Dec. 31. Billy Beale, CEO of Union and its holding company, will assume the president title. Neal began working for Union in January 1990 in Fredericksburg after coming over from Dominion Bank. His roles at the bank over the years included vice president, chief credit John Neal officer, chief operating officer, chief banking officer and, beginning in 2004, president. Neal will stay on as a member of the bank’s board of directors and will assume an advisory role on a temporary basis with the company.

HAZEL FARMER AWARDED WILLIAM H. KNULL JR. AWARD Bank of Lancaster’s Hazel Farmer was honored as the fourth annual winner of the William H. Knull Jr. Community Service Award by the Boys & Girls Club of the Northern Neck (BGCNN) on Nov. 4. The award is presented each year by the BGCNN to Northern Neck residents who have distinguished themselves by unselfish service to God, country and community, while providing services for the betterment of youth. Farmer has taken an active role in the community over the past four decades and has served on numerous civic and charitable organizations. At the Bank of Lancaster, where she has worked for 46 years, Farmer currently serves as chief relationships officer and consumer education director. Working with local educators and other community partners, Hazel heads up a team that teaches youth throughout the Northern Neck about financial literacy. These programs include both Teach Children to Save Day and Get Smart About Credit Day, as well as the VBA Bank Day Scholarship Program. Farmer was a key part of the team that created the infrastructure for the first school bank for schoolchildren in the Northern Neck, helping students to understand the importance of learning how to save and handle credit responsibly. This school bank, known

as the “Bright Futures Bank,” was established at Lancaster Middle School and was the first of its kind in the area. Kudos to Hazel on this outstanding recognition!

HOMETOWN BANK’S SUSAN STILL NOMINATED TO FEDERAL RESERVE BANK OF RICHMOND BOARD OF DIRECTORS Susan Still, president and CEO of Hometown Bank in Roanoke, Virginia and VBA board member, has been nominated to serve on the Federal Reserve Bank of Richmond Board of Directors. Each Federal Reserve Bank has a nine-member board of directors and each director is elected to serve a three-year term. Still has been nominated to join the Class A Board of Directors, a group representing the stockholder member banks. Kudos to Susan on her nomination.

BLUE GRASS VALLEY BANK MARKS 100 YEARS Blue Grass Valley Bank celebrates its 100th anniversary this year. O.P. Chew helped start Crabbottom Valley Bank in 1915, along with fellow directors I.W. Nicholas, J.F. Stover, J.S. Jack, G.E. Swecker, H.L. Simmons and J.W. Newman. All were Crabbottom residents and big farmers. In 1945, Crabbottom Valley Bank was renamed Blue Grass Valley Bank. Congrats to Blue Grass Valley Bank on this milestone anniversary!

SHUFORD NAMED PRESIDENT & CEO; MORRIS TO RETIRE Old Point National Bank’s board of directors announced that the bank has appointed a new president and chief executive officer. Robert F. Shuford Jr., who most recently worked as the bank’s senior executive vice president and chief operating officer, was appointed Robert F. Shuford Jr. president and chief executive officer of the bank effective Sept. 8, succeeding Louis G. Morris, who will retire at the end of 2015.

State Legislative Meeting Update continued from previous page

our meaningful role in support of economic growth and development. As we advocate for policy positions before the General Assembly, legislators will better understand the connections between bankers, our industry partners and the legislative decisions being made in Richmond. Legislators repeatedly urged bankers in attendance to serve as a resource for them as they consider issues. Bankers

are not only recognized as financial subject matter experts, but also as local leaders who are engaged in their communities. Whether or not you were able to participate in these meetings, it is important to engage with your elected officials going forward, as they want to hear from you. A great way to do so is by joining us on Thursday, Jan. 14, 2016, in Richmond for our annual VBA Banker Day. We hope to see you there!

Email Matt Bruning at mbruning@vabankers.org with any comments on this article. November/December 2015 | Virginia Banking 9

Line

Legal

TRID May Entice More Banks to Use e-Signatures

T Mel Tull General Counsel, Virginia Bankers Association

he new TILA/RESPA integrated disclosure rules (TRID) require lenders to deliver specific residential mortgage loan disclosures to borrowers within strict time limits and make lenders responsible for documenting the borrower’s receipt of those disclosures. Delivering disclosures electronically and collecting electronic signatures acknowledging receipt can greatly reduce the time required to comply with TRID and make the process for documenting compliance more efficient. All of which is leading many banks to express a renewed interest in the regulations governing electronic disclosures and electronic signatures. THE BENEFITS OF ELECTRONIC DISCLOSURES Under TRID, the loan estimate (which discloses estimated loan closing costs) must be delivered or mailed to the borrower no later than three business days after receipt of a loan application and at least seven business days before consummation of a residential mortgage loan. The closing disclosure (which discloses final closing costs) must be received by the borrower at least three business days prior to consummation. If certain information changes after receipt of the closing disclosure, TRID requires closing to be delayed until three business days after the borrower receives a revised closing disclosure. The TRID rules deem these disclosures to be received by the borrower three business days after the disclosures are placed in the mail. Alternatively, these disclosures are deemed to be received by the borrower electronically when the borrower affirmatively acknowledges receipt. Thus, electronically delivering these disclosures to a borrower and having the borrower acknowledge receipt with an electronic signature can eliminate or greatly reduce the threeday mailing period and reduce the timeline for residential mortgage closings. TRID puts the burden on lenders to prove that the loan estimate and closing disclosure

10 Virginia Banking | November/December 2015

were received by borrowers in a timely fashion. Electronic mail logs and electronically signed customer receipt acknowledgements can be stored conveniently and efficiently in electronic loan files to document timely compliance. THE BASICS OF E-DISCLOSURES AND E-SIGNATURES The federal Electronic Signatures in Global and National Commerce Act (the ESIGN Act) has been around for many years. The ESIGN Act permits the use of electronic records to satisfy any statute, regulation or rule of law requiring information to be provided in writing. It further provides that a document or signature cannot be denied legal effect or enforceability solely because it is in electronic format, provided that the parties involved consented to conduct business electronically. For TRID compliance, it is important to understand that the ESIGN Act has special rules for consumer transactions. The consumer must consent electronically in a manner that reasonably demonstrates the consumer’s ability to access information in electronic form. This requirement is designed to ensure that the customer not only consents, but also has the required hardware and software needed to access the electronic document. Prior to obtaining a consumer’s consent, the bank must provide the consumer with a clear statement informing the consumer of: • Any right or option to have the record provided in non-electronic format, and the right of the consumer to withdraw his or her consent and any conditions, consequences or fees in the event of such withdrawal. • Whether the consent applies only to a specific transaction or to specific categories of records that may be provided or made available during the course of the parties’ relationship. • The procedures the consumer must use to withdraw consent and to update the conwww.vabankers.org

sumer’s contact information electronically. • How to obtain a paper copy of an electronic record and whether any fee will be charged for such copy. The consumer must also be provided with a statement of the hardware and software requirements needed for access to and retention of electronic records. If the hardware and software requirements change, the bank must provide the consumer with a statement of the revised requirements and inform the consumer of his or her right to withdraw consent without being charged a fee and without the imposition of any condition that was not disclosed in the original notice. The ESIGN Act does not apply to transactions governed by the laws for the creation and execution of wills, codicils or testamentary trusts and many commercial transactions under the Uniform Commercial Code. Additionally, under the ESIGN Act, any notice of default, acceleration, repos-

session, foreclosure or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual, cannot be delivered electronically. ADVANTAGES AND DISADVANTAGES Generally, electronic disclosures and electronic signatures can save time, reduce errors, provide better record management methods, and reduce the amount of paper consumed. This may be especially true when complying with TRID. On the other hand, the ESIGN Act’s consumer requirements are cumbersome and electronic disclosures and signatures raise cybersecurity risks, present technical challenges and increase software implementation costs. Ultimately, each bank will need to assess the costs and benefits of electronic interactions with consumers, and TRID compliance should now be part of that assessment.

For more information, contact Mel Tull, VBA general counsel, at mtull@vabankers.org or (804) 819-4710. This article has been prepared for informational purposes only and is not legal advice and does not create an attorney-client relationship.

NCCB 16 ABA National Conference for Community Bankers

BREAKING BOUNDARIES February 14–17, 2016 JW Marriott Desert Springs Resort and Spa Palm Desert, California To serve today’s customers and communities, banks must reach further than ever before. Join ABA and bankers from across America as we explore what it takes to grow beyond our boundaries and into the new definition of community.

November/December 2015 | Virginia Banking 11

Events Recap

Fall at the VBA STATE LEGISLATIVE MEETINGS The Virginia Bankers Association held a dozen meetings across the commonwealth with bankers and their legislators in Abingdon, Roanoke, Lynchburg, Danville, Charlottesville, Staunton, Richmond, Fredericksburg, McLean, Leesburg, Williamsburg and Virginia Beach. Nearly 270 bankers from 50 different banks were able to connect with 70 state legislators. To read more about these meetings, see Matt Bruningâ&#x20AC;&#x2122;s column on page 8.

Browning Herbert emceed the meetings in Vienna at Capital One Digital Labs (pictured) and in Leesburg.

Matt Bruning facilitated the roundtable discussion in Leesburg.

Bankers and legislators at the meeting in Abingdon.

Jennifer Theimer with Delegate Terry Austin in Roanoke.

Tracie Gallahan updated Lynchburg area legislators and bankers on the efforts of the VBA Leadership Division.

Josh Hale, Jonah Pence and Sen. Mark Obenshain in Staunton (from left).

12 Virginia Banking | November/December 2015

Senator Emmett Hanger, Dek Bowen and Robert Wood in Charlottesville (from left). www.vabankers.org

VBA LEADERSHIP CONFERENCE

Fifty-five emerging banking leaders convened at Mountain Lake Lodge in Pembroke, Virginia. To read more about the conference, turn to page 16. Pictured here are Will Clements, John Snead, Elizabeth Sharples, Chris Miller and Misty Pack. MEETING WITH REP. HURT

Bankers met in Charlottesville on Oct. 14 for lunch with Rep. Robert Hurt. This meeting provided a great opportunity for the Congressman to interact with bankers and learn about their issues and for him to provide an update on what is happening in Congress. JUMP$TART SUMMIT Courtney Fleming and Chandler Owdom exhibited on behalf of the VBA E d u c a t i o n Foundation and Virginia banks at the Jump$tart Teacher Summit on Columbus Day. This special summit is designed to offer Virginia’s school systems ongoing resources and teaching models for integrating the economics and financial literacy education requirement in the classroom. The Foundation was one of the many participants that provided tools and information on programs, which teachers can then take back to their classrooms. The Foundation was also the tote bag sponsor of the event and donated a school supplies basket and gift card to the lucky teacher pictured here. www.vabankers.org

GET SMART ABOUT CREDIT DAY Banks across Virginia team up with the Virginia Bankers Association Education Foundation and the American Bankers Association every year to provide credit education to Virginian teens through the Get Smart About Credit program. The program, now in its 13th year, is a Carolyn Kiser, HomeTown Bank, teaches 5th national campaign of and 6th graders at Community School in volunteer bankers who help Roanoke on Get Smart About Credit Day. young people develop responsible credit habits. The program’s awareness day – Get Smart About Credit Day – was held Thursday, Oct. 15, but banks visit schools any time that works for their schedules. Bankers make presentations on important financial obstacles facing teens, including paying for college, building good credit habits, managing their money and protecting their identity. This year, approximately 100 bankers made 187 presentations to 5,660 students. Final numbers will be reported at yearend. Thank you to the following 14 banks for participating this year: Bank of Botetourt, Bank of Lancaster, The Bank of Southside Virginia, Cardinal Bank, Chesapeake Bank, City National Bank, Farmers Bank of Appomattox, Fulton Bank, HomeTown Bank, Pioneer Bank, Sonabank, TowneBank, Union Bank & Trust and Wells Fargo. VBA EDUCATION FOUNDATION DELIVERS $21,000 GRANT TO SUPPORT ECONOMIC EDUCATION A three-year grant from the Virginia Bankers Association Education Foundation to the University of Virginia’s College at Wise will allow the college’s Center for Economic Education to promote financial and economic literacy in the region’s public schools. The grant, totaling $21,000, was announced on Sept. 8, and the presentation was followed by a reception for attendees. The three-year commitment of $7,000 per year will support the center’s efforts to help area public schools comply with Virginia’s requirement that each high school student complete a personal finance and economics course before graduating. Pictured at the grant presentation were, from left: Leton Harding, Powell Valley National Bank; Delegate Terry Kilgore, Virginia House of Delegates; Bruce Whitehurst, Virginia Bankers Association; Chancellor Donna P. Henry, UVA-Wise; Gary Stratton, UVA-Wise professor and director of the Center for Economic Education; and Daniel Mortensen, Virginia Council on Economic Education. November/December 2015 | Virginia Banking 13

Learning

United

Eighth Annual CommitteePalooza Brings Together 185 Bankers

Most of our committee chairmen were able to make it to Richmond for the day. Fifteen out of the 17 VBA committees and 185 bankers convened at the Troutman Sanders building in downtown Richmond for the VBA’s annual CommitteePalooza event. This year, the event took place on Sept. 17, with half of the committees meeting in the morning and half meeting in the afternoon, with a joint general session in between. The chairmen and committee members met as committees to discuss how each might provide value to Virginia bankers, and to begin to plan annual events and conferences. During the joint session, Elizabeth Coit from the American Bankers Association gave a presentation on the Financial Education and Advocacy Initiative (FEAI). Seth Winter, Mark Jones and Henry Burt from Troutman Sanders also updated participants on hot topics that they see facing their bank clients. To close, Matt Bruning from the VBA led a discussion on VBA’s Strategic Priorities for 2016-2018. This event continues to be a great opportunity to kick off the VBA’s committee year and for members of all the committees to network with each other as they help the VBA plan for the year ahead. Thanks to all the bankers who made time in their busy schedules for this important event!

Some of our committees also have vice chairmen, pictured here.

Fun at the Retail Executives Committee meeting.

THE FOLLOWING COMMITTEES MET AT COMMITTEEPALOOZA: • CFO • Compliance • Enterprise Risk Management • Government Relations • Human Resources • Leadership Division Steering Committee • Legal Affairs

• Lending Executives • Marketing • Mortgage Executives • Operations & Technology • Retail Executives • Security • Training • Trust & Wealth Management

14 Virginia Banking | November/December 2015

The 185 attendees filled the room during the joint session at the Troutman Sanders building. www.vabankers.org

COMMUNITY INVESTMENT SURVEY RESULTS COMMUNITY INVESTMENT SURVEY RESULTS

TheBankers Virginia Bankers Association recently conducted a Community Investment Survey of the banks ginia Association recently conducted a Community Investment Survey of Commonwealth’s the Commonwealth’s to determine ways in which they support growth and civic development in their local communities. Responses were mine waysfrom in 44 which support growth civicmake development theirinlocal communities. Responses compiled banksthey throughout Virginia, eachand of which a significantinimpact their respective communities. d from 44 banks throughout Virginia, each of which make a significant impact in their respective communiti The following is just a glimpse of how these banks contribute to their communities (all information is from 2014):

owing is just a glimpse of how these banks contribute to their communities (all information is from 2014): Virginia banks employed 70,842 people in 2014.

Mortgage loans in Virginia totaled $69,634,356,000.

48,744 Virginia bankers donated more than 499,359 hours of community service.

Small business loans from 97 lenders were made in Virginia for a total of $9,726,153,000.

Virginia banks employed 70,842 people in 2014.

48,744 Virginia bankers donated more than 499,359 hours of community service. Virginia banks donated a total of $53,857,988.99 to local charities and nonprofits.

Virginia banks donated a total of $53,857,988.99 to local charities and PARTICIPATING BANKS nonprofits.

Mortgage loans in Virginia totaled $69,634,356,000.

Small business loans from 97 lenders were made in Virginia for a total of $9,726,153,000.

Banks donated $544,175 in college scholarships last year.

Thank you to the 44 banks that participated this year. Contact Chandler Owdom at cowdom@vabankers.org to participate

in 2016. TICIPATING BANKS

The Bank of Marion First Bank & Trust Company Access National Bank The Bank of Southside Virginia First Capital Bank American National Bank and Trust Co. Farmers Bank of Appomattox First Century Bank Owdom at The of America ou to the 44Bank banks that participated this year. Contact Chandler cowdom@vabankers.org to parti The Fauquier Bank First State Bank Bank of Botetourt TowneBank Freedom Bank of Virginia Bank of Clarke County TruPoint Bank Highlands Union Bank Bank of Floyd SunTrust First BankBank Access National Village Bank Bank HomeTown Bank of Bank Georgetown The Bank First Bank & Trust Company can National Bank and Trust Xenith Bank of Marion John Marshall Bank Bank of McKenney MainStreet Bank Benchmark The Bank of Southside First Capital Bank Company Community Bank Burke & Herbert Bank Virginia FirstMiddleburg Century Bank Bank Bank of America Monarch Bank C&F Bank The Farmers Bank of Appomat First State Bank Bank of Botetourt Oak View National Bank Capital One The Fauquier Bank Freedom Bank of Virginia Bank of Clarke County Old Point National Bank Cardinal Bank TowneBank Highlands Union Bank Bank of Floyd Peoples Community Bank Carter Bank & Trust TruPoint Bank HomeTown Bank of Georgetown River CommunityBank Bank, N.A. Chesapeake Bank Select Bank EVB Village Bank John Marshall Bank Bank of McKenney Southern Bank and Bank Trust Company Farmers Bank Xenith Bank MainStreet nchmark Community Bank SunTrust Bank FirstBank Bank Middleburg Bank Burke & Herbert

Monarch Bank C&F Bank Oak View National Bank Capital One MORE Old Point National Bank Cardinal INFORMATION Bank Peoples Community Bank Carter Bank & Trust River Community Bank, N.A. Chesapeake To view the fullBank Community Investment Brochure, which includes all the survey results, visit www.vabankers.org. To see more about www.facebook.com/virginiabankersassociation. Questions? Contact Bank EVBbanks’ community service efforts, visitSelect Chandler Owdom at cowdom@vabankers.org. Southern Bank and Trust Company Farmers Bank

RE INFORMATION

Leadership

Development

Fourth Annual VBA Leadership Conference

Marcus Wade and Anna Pickeral at the Thursday night reception, sponsored by Harland Clarke, at the Lake Cottage hospitality cabin.

The conference this year took place at the iconic Mountain Lake Lodge, where parts of the 1987 movie “Dirty Dancing” were filmed.

Brandon Atkins (left), chairman of the Division this year, facilitated the CEO panel with (from left) Jeff Haley, Allan Funk and Scott Steele.

Anabelle Rodriguez-Milligan, Anna Pickeral, Sherri Clowser, Stephanie Oliver, Nicole Martin and Tom Rasey during the roundtable discussions. 16 Virginia Banking | November/December 2015

Delegate Greg Habeeb gave an overview of what is going on in the Virginia General Assembly and discussed reasons why it is important for bankers to be involved in the political process.

The fourth annual Virginia Bankers Association (VBA) Leadership Conference took place Oct. 15 and 16 at Mountain Lake Lodge in Pembroke, Virginia. Emerging banking leaders from across Virginia gathered at the lodge for two days of education sessions, panel discussions and roundtables covering topics like the economy, the future of the banking industry, leadership, government relations, financial literacy and cybersecurity. Speakers included Ryan Swift, EverFi; Kartik Athreya, Federal Reserve Bank of Richmond; a CEO Panel featuring Jeff Haley, American National Bank & Trust, Allan Funk, Grayson National Bank and Scott Steele, Bank of Fincastle; Delegate Greg Habeeb, Virginia House of Delegates; Donna Highfill, author of “Real People, Real Change”; Sharon Cook, FHLBank Atlanta; and Ron Galloway, Method Content LLC. Dorothy Welch, Blue Ridge Bank, also provided a discussion of ways to get involved with government relations, and Chandler Owdom with the VBA talked about the VBA Leadership Division’s financial literacy efforts and provided tips for making financial literacy presentations, as well as a lesson plan to use in classrooms for Get Smart About Credit Day. The VBA Leadership Division has done a tremendous amount of work towards the goals of promoting grassroots involvement among emerging bank leaders in Virginia, as well as promoting financial literacy among the youth across Virginia. To that end, every year at the Leadership Conference, the VBA www.vabankers.org

recognizes two members for their contributions to the Division. Congratulations to Will Clements, The Bank of Southside Virginia, this year’s Outstanding Leadership Division Member in Government Relations. Congrats also to Jonathan Comer, Blue Ridge Bank, our recipient for Outstanding Leadership Division Member in Financial Literacy. A third is provided to one of our six regional directors, responsible for planning educational and networking events for the Division. This year’s Outstanding VBA Leadership Division Regional Director honor went to Immediate Past Chairman Browning Herbert, Middleburg Bank. Thanks to all who attended this great event. For more information on the VBA Leadership Division, visit www.vabankers.org or contact Chandler Owdom at cowdom@vabankers.org.

Tony Farland, Ashley Robins, Jeff Gignac, Travis Hull, David Owen and Philip Walker were some of the Division members in attendance.

Dorothy Welch, vice chairman of the Leadership Division and the group’s representative on the VBA Government Relations Committee.

Fifty-five people attended the event this year.

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November/December 2015 | Virginia Banking 17

Update

Washington

Mapping Banks’ Community Commitment

T Frank Keating President and CEO, American Bankers Association

o a typical retail customer, banks are a place where you make deposits or take out a loan. While that may be the fundamental definition of a bank, you and I know banks do so much more. You are custodians of your communities, leaders that help identify needs and develop solutions to help your towns and cities thrive. That commitment to community reveals itself in many ways, from creative financing that helps an affordable housing project get off the ground to extraordinary levels of volunteerism. The ABA Foundation celebrates this spirit of banking every year with our Community Commitment Awards. And now we are proclaiming it through our website. Visit aba.com/CommunityEngagement and you’ll find an interactive map of the United States linking you to numerous examples of banks’ community engagement. The examples, drawn from the entries we have received since 2012 for our awards, showcase bank innovations in the areas of affordable housing, community and eco-

You – and bankers across the country – can be the first line of defense against what is becoming an epidemic of fraud against our aging population.

nomic development, financial education, serving nontraditional borrowers and the underbanked, protecting older Americans and volunteerism. The map can be searched by state, program type, bank size and keyword. This is just a sampling, of course. The content will expand each year as we log more entries to our awards. (If you’d like to see your bank’s efforts listed on the map, be sure to submit an entry next spring.) It’s fitting that the ABA Foundation unveiled this new resource at a White House Conference

on Aging this summer. The White House had invited Scott Dueser, president and CEO of First Financial Bank Texas and a member of both the ABA and ABA Foundation boards, to that conference to discuss the approach his bank has taken to protect senior citizens from fraud. With elder financial fraud growing as Baby Boomers age, the White House was looking to spotlight solutions that work. Scott’s “Fraud Busters” program – a partnership between the bank, local police and Adult Protective Services – is such a solution. It has saved senior customers nearly $1 million in fraud in the past year, and its presence on our community engagement map helps alert fellow banks to ways they can similarly protect their vulnerable, aging customers. “We hope that by sharing the details of our program and what’s made us successful in protecting our customers, other banks will be encouraged to adopt similar initiatives,” Scott said at the map’s unveiling. The ABA Foundation is not stopping there when it comes to providing bankers with solutions for serving older Americans. In September, we announced a new financial education program called “Safe Banking for Seniors.” As with the foundation’s popular Teach Children to Save program, Safe Banking for Seniors will provide bankers with resources – like lesson plans, event materials, best practices and media outreach tools – to help them educate seniors and caregivers about elder financial abuse. (Learn more or sign up at aba.com/seniors). I strongly encourage your participation in this program. You – and bankers across the country – can be the first line of defense against what is becoming an epidemic of fraud against our aging population. Educate your customers about common scams targeting seniors. Train your staff on spotting signs of abuse. Partner with other organizations to expand your reach. Ensuring our seniors can bank securely is yet another way banks can demonstrate their commitment to their communities – and change the definition of banking.

Email Frank Keating at keating@aba.com with any comments on this article. 18 Virginia Banking | November/December 2015

www.vabankers.org

Welcome

New Associate Members

FINANCIAL INSTITUTIONS

Ameriserv Financial Bank Address: 2322 Blue Stone Hills Drive, Suite 160 Harrisonburg,VA 22801-5403 CONTACT NAME: GREG FREDERICK Phone: (434) 770-6684 Fax: (540) 433-1490 Email: gfrederick@ameriserv.com AmeriServ Financial Bank is a community bank, headquartered in Johnstown, Pennsylvania, and is publicly traded on NASDAQ under the symbol ASRV. The company has total assets of $1.1 billion and currently operates 17 community banking offices encompassing five Pennsylvania counties and four loan production offices spanning Pennsylvania, Maryland and Virginia.

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Address: 111 Center St., Suite 2400 Little Rock, AR 72201 CONTACT NAME: MATTHEW SWITZER Phone: (804) 296-0275 Fax: (501) 377-2470 Email: matthew.switzer@stephens.com Stephens is a privately held financial services firm focused on building long-term relationships with its clients. The firm is a full-service investment bank and provides M&A advisory and capital raising services to banks across the country.

VBA ASSOCIATE MEMBERSHIP VBA member banks consider VBA associate members primary candidates when searching for vendors to perform services for the banks. In addition to increasing your exposure and helping you form partnerships with member banks, associate membership with the VBA provides extra opportunities for your organization. Becoming an associate member of the VBA allows you to take advantage of the following benefits: • A free subscription to and opportunity to advertise in Virginia Banking magazine. • Your organization may be eligible to participate in a number of the VBA’s employee benefit programs. • Receive all conference and seminar notices and first notice of exhibitor and sponsorship opportunities plus an invitation to attend our Annual Convention. • Networking opportunities at many major VBA workshops and symposiums. • Your company description and contact information will appear in the VBA Online Directory. PLEASE EMAIL AMY BINNS AT ABINNS@VABANKERS.ORG IF YOU WOULD LIKE MORE INFORMATION OR TO APPLY FOR MEMBERSHIP.

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November/December 2015 | Virginia Banking 19

Compliance

Corner

Kickbacks, Marketing Services Agreements and the CFPB

By Dimitris Rousseas, Deputy General Counsel, Compliance Alliance

KICKB

ACKS

he CFPB is at it again – this time with a new interpretation of a rule that’s been on the books for four decades. In October, the CFPB issued a bulletin putting the industry on notice of its stance on Marketing Service Agreements (MSAs) and RESPA Section 8 violations. Their position is clear: “The Bureau intends to continue actively scrutinizing the use of such agreements and related arrangements in the course of its enforcement and supervision work.” The CFPB guidance comes after a wave of Section 8 consent orders issued to service providers in 2014 and 2015. Does this mark the end of marketing service agreements? Hard to say, but it appears that a few bad players are poisoning the well and the CFPB has stopped just short of outright banning MSAs. Many settlement providers are now refusing to enter any future marketing agreements, while others are even taking an extra precautionary step by terminating current agreements. Some service providers see too great of a risk to chance it. Steep penalties wait for service providers and their employees who violate the anti-kickback rule. In April 2015, the CFPB went after Genuine Title LLC and a group of loan officers who were in a kickback scheme. In the order, the CFPB claimed that Genuine Title paid for and distributed marketing material on behalf of the loan 20 Virginia Banking | November/December 2015

officers, and in return the loan officers would refer their borrowers to Genuine Title. The CFPB went on to allege that the loan officers had set up a shell company to receive cash kickbacks from Genuine Title. The penalties imposed on the individual loan officers ranged from $37,000 to $400,000 and a ban from the mortgage industry for several years. While it may not be as surprising that setting up company to receive kickbacks is a Section 8 violation, it is unsettling that regulators are focusing on providers who engage in joint marketing. It shouldn’t come as a shock to most people that you will refer business to those who you have a trusted relationship with. If a borrower asks a loan officer which title company they should look into, the loan officer would naturally provide the name of a person with whom they have a trusted relationship. If the loan officer advertised their services on a flyer with the title company, is that now a Section 8 violation? If each party pays their fair share of the ad costs, it shouldn’t be, but the CFPB is taking a fine tooth comb to that agreement. The guidance brings into question the legality of many joint marketing programs, including any relationship with a real estate agent, title company and even as a “preferred lender” for a developer. How much is too much money to perform certain www.vabankers.org

services? What is a thing of value? The CFPB has made clear that “independently established market-rate compensation for marketing service, alone, does not suffice to ensure the legality of an MSA.” The new MSA guidance and the slew of new consent orders are at the very least sending a chilling effect on MSAs, and likely will change the way the mortgage industry markets. The CFPB is even targeting “unwritten” MSAs – so even if you don’t formally engage in an agreement, the CFPB or any other regulator can assume one based on your practice. Even referrals to trusted service providers are under attack and can be scrutinized by regulators. Take for example a loan officer that has established a trusted relationship with a real estate agent they know can take good care of their clients. Because of the agent’s good reputation, the loan officer offers her name to potential clients who

ask for a referral. If the agent then refers their clients to the loan officer because of the quality work the loan officer does, is this now a Section 8 violation? Did the loan officer receive something of value, the loan referral, in exchange for giving the agent a referral, and thus a Section 8 violation? Hopefully the path doesn’t lead us to that conclusion, but how far the bureau will go is uncertain. This is not to say you shouldn’t refer customers to other businesses within the mortgage industry. The loan process wouldn’t work if loan officers couldn’t give a name of a service provider for which the borrower can contact. What the guidance does mean is that you have to take a good look at your current marketing agreements and your current marketing practices with respect to third parties. Make sure the bank is paying their fair share and nothing more. Careful self-scrutiny, proper pro-

cedures and good policy will keep the penalties at bay. Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933, visit compliancealliance.com, or email info@compliancealliance.com. Dimitris Rousseas has spent his entire career working with deposit and lending departments of financial institutions on both the production and compliance side. He is a graduate of the University of Illinois Law School and has been with Compliance Alliance since September 2012. Dimitris has fielded questions on a wide range of legal and compliance issues faced by community banks. Dimitris has written numerous articles for banking publications and presented on a variety of banking topics.

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November/December 2015 | Virginia Banking 21

Move

Bankers on the

Are your bankers on the move? Email submissions to cowdom@vabankers.org.

Anderson

Hobson

Jenkins

Pittman

Creedle

Emert

Minix

Chauhan

Lierde

Tobin

Nobles

Ricciardi

Irby

Hawkins

American National Bank & Trust Co. Gwen L. Smith, Financial Center Manager Bank of Georgetown Mary Anderson, Vice President, Business Development Officer, Nonprofit Banking Group Ron Hobson, Senior Vice President, Government Contract Lending Bank of Lancaster Douglas F. Jenkins Jr., Executive Vice President, Chief Banking Officer Susan S. Pittman, Senior Vice President, Chief Lending Officer Benchmark Community Bank Steve Creedle, Vice President/Senior Business Banker Leanne Emert, Senior Vice President/Retail Banking Lee Minix, Vice President/Senior Credit Officer Jay A. Stafford, Executive Vice President Blue Ridge Bank Dorothy M. Welch, Vice President of Engagement Cardinal Bank Anamika Chauhan, Vice President and Branch Manager Aurelia M. Dinoso, Vice President Carmen James, Vice President and Branch Manager Tom Van Lierde, Senior Vice President, Real Estate Lending Joann Tobin, Senior Vice President, Market Executive Majshda Mahmoodi, Assistant Vice President and Branch Manager

22 Virginia Banking | November/December 2015

Stafford

First Virginia Community Bank Lance D. Nobles, Senior Vice President, Regional Lending Executive Sharon Ricciardi, Vice President, Business Development Officer/ Relationship Manager Freedom Bank Darren Tully, Vice President, Relationship Management Officer Hampton Roads Bankshares Donna Richards, President and Chief Operating Officer Heritage Bank Melonie Boone Whitehead, Senior Vice President, Chief Banking Officer John Marshall Bank Greg Jay, Senior Vice President/Commercial Lending Middleburg Bank James B. Herbert, Senior Vice President, Commercial Relationship Manager Matthew W. Santmyer, Vice President, Commercial Relationship Manager National Bank Jeff Irby, Vice President and City Executive Old Point National Bank Don Buckless, Senior Vice President and Chief Lending Officer Powell Valley National Bank Ross E. Hawkins, Vice President

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