Ohio Bankers League Fall 2010 Magazine by Jeff Vanik

fall 2010 issue

The Official Magazine of the Ohio Bankers League

GETTING A HEAD START Banker Education & Training in 2011

INSIDE THIS ISSUE

OBL GOLF CLASSIC 2010 IN PICTURES

REGULATORY ENFORCEMENT ACTIONS: EARLY INTERVENTION

THE ROAD TO SUCCESS 2010 OBL ANNUAL MEETING & PROFESSIONAL DEVELOPMENT EVENT

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fall 2010 issue

Contents A Comprehensive Resource for the Ohio Banking Industry

Other News

4 Chairmanâ&#x20AC;&#x2122;s Corner 6 Random Thoughts 31 Steps of the Statehouse

35 Window on

Features

OBL Golf Classic 2010 Little Turtle Country Club in Pictures

2010 OBL/ILFI Joint Convention In Pictures

The Road to Success 2010 OBL Annual Meeting & Professional Development Event

the Capitol

45 Around the Industry

Regulatory Enforcement Actions Early Intervention

Bank Bashing How Integrated Marketing Can Help Get a Positive Message Out

Getting a Head Start Banker Education & Training in 2011

22 25

Get the OBL Compliance Advantage in 2011 Days are busy. Time is short E-learning is the Answer in 2011

Educating Professionals. Creating Leaders OBL & The Graduate School of Banking

S.A.F.E. At Last! Managing Compliance Risk

Healthcare Reform Update What you Need To Know Now

Beware of Fraudulent Wire Transfer Requests

Ohio Record fall 2010 issue fall 2010 Ohio Record

chairman’s corner May you Live in Interesting Times Like the Chinese proverb says, we live in interesting times. Since I wrote my last column, the Dodd-Frank Act has become a reality and most pundits agree that it will revolutionize the banking industry as we know it. As ever, the biggest threat to the future of banking in this great state and across the nation is Congress and its actions. We have seen it throughout the history of our industry. From Glass-Stegall after the Great Depression; to the Financial Institutions Reform, Recovery and Enforcement Act in the early 90s after the S&L crisis; to Sarbanes-Oxley after the corporate failures of Enron and Worldcom. Lawmakers are quick to point the finger and take action, but less quick to ensure that their efforts are targeted at the true culprits.

History Repeating With Dodd-Frank, history has repeated itself once again. While large conglomerates like AIG, mortgage brokers and Wall Street investment houses like Lehman Brothers sparked this latest crisis, it is banks that will carry the regulatory burden. The multitude of new regulations created by this huge bill will drive our compliance costs through the roof. The new Consumer Financial Protection Agency will have jurisdiction over anyone who offers a consumer financial product or service. OBL members who listened to Jeff Quayle’s series of free briefings on the Act will know that in effect, this new federal bureaucracy will be able to outlaw or regulate anything and everything it does not like. We will also be faced with higher capital requirements and diminished fee income thanks to provisions like the one increasing interchange fee regulation. But there is good news, and it comes from your trade association. First, the bill would have been worse had it not been for the tireless work of the OBL grass roots network of bankers who

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took the time to explain complex issues to the congressmen, one-by-one. Second, the OBL is here to help all of us navigate through the potential minefield of new regulations and statutes and provide some innovative ideas that could fill the gaps caused by missing fee income.

Compliance Burden Through an unbeatable platform of top-notch compliance training options and cost-effective in-bank compliance consulting for community banks, the OBL can help your institution balance regulatory mandates with what is practical through compliance consulting, up-to-the-minute education programs or round table discussions with our regulators. Be it the nationally recognized Community Bankers for Compliance Program, OBL Compliance Services, or free-to-members online training through Compliance Coach, Ohio bankers have a comprehensive compliance resource that is just a phone call away. On the fee income side, the OBL’s partnership with Infinex Financial Group has made it easier for Ohio financial institutions to offer brokerage and financial services directly through a financial advisor located in their bank. Infinex is a full service investment program designed specifically for community banks by community banks. It is owned by community banks and banking trade associations, including the OBL. Give Michelle Crume a call to find out how your bank can take advantage of the uptick in the markets. The new partnership with Mansfieldbased Barrister Title Agency could help your institution boost non-interest income through its own title agency. By investing around just $5,000 in start-up capital, your title agency -- possibly formed in partnership with other community banks around the state -- could reach profitability almost immediately. I speak from experience; Bob Smith from American Savings in

Tom Moore, President & CEO at First Federal Bank of Ohio in Galion

Portsmouth and I have been running one for years. Then there’s the multitude of business partners and affiliate members, all of which are there with one purpose in mind – to help OBL members boost their bottom lines.

Annual Meeting Polly and I just returned from another great OBL Convention – this time in French Lick, Indiana – the home of Larry “the Legend” Bird. While we didn’t see Larry, we did enjoy an event filled with learning, networking and social opportunities. Melea Wachtman and the OBL Convention Team brought together some of the industry’s brightest and best experts, along with great entertainment. It was truly a great convention. As soon as November rolls around we will have our Annual Meeting, another great opportunity for networking and learning. We have invited former Southwest Airlines exec Jason Young back after he excelled at our convention a few years ago, and the OCC’s Ann Jaedicke will also join us to offer an update on unfair and deceptive practices. I hope to see you in Columbus on Nov. 3!

SURVIVING & THRIVING This edition of Ohio Record contains an informative advertising insert entitled “Surviving & Thriving in the New World of Retail Banking.” The OBL had no editorial input into this insert and -- as with all advertising content -- any content, opinion, view or idea expressed in any article, review or story is the author’s own and does not reflect the views of the Ohio Bankers League, its board of directors, staff or affiliates.

Working for You By James Thurston, Editor 4249 Easton Way, Suite 150 Columbus, Ohio 43219-6170 Tel. (614) 340-7595 Fax (614) 340-7596 Toll Free 800-686-6755 James Thurston, Editor Susan Poling, Features Association Staff Michael Adelman Vice President of State Government Relations madelman@ohiobankersleague.com Brenda Arnold, Administrative Assistant OBL BankServices barnold@ohiobankersleague.com Mike Baker, VP & Executive Director, OBL BankServices mbaker@ohiobankersleague.com Dan Conklin, BankPac/Government Relations Specialist dconklin@ohiobankersleague.com Michelle Crume, Vice President & Regional Director OBL/Infinex Partnership mcrume@ohiobankersleague.com Pam Foster, Compliance Consultant pfoster@ohiobankersleague.com Carol Halkias, Accounting chalkias@ohiobankersleague.com Wendy Hench, Administrator Ohio Bankers Benefits Trust whench@ohiobankersleague.com

Working for You: Enhancing the Value of Membership In these difficult times, the OBL has been stretching your membership dollars even further. • More than 250 bankers signed up for OBL SVP Jeff Quayle’s informative series of four briefings on the Dodd-Frank Act – free to members. • More than 150 banks and thrifts have signed up for the OBL’s online compliance training through Compliance Coach – free to members. • More than 150 bankers signed up for the OBL’s District Meetings, which featured a free briefing from legal experts on the implications of healthcare reform for community banks.

Working for You: Using the Media to Put Spotlight on CU Tax Break “Credit unions get unfair advantage,” was one of the headlines for an OBL letter to the editor decrying CU efforts to deflect attention away from their unfair tax advantage appeared in media around the state. The OBL pointed out that, “Credit unions are trying to use the current economic situation to take the spotlight off their tax loophole, when they are not serving the parts of society that justified the exemption in the first place.”

Julie Kiplinger, Manager of Professional Seminars & In-Bank Training jkiplinger@ohiobankersleague.com Sue Leppert, Administrative Assistant sleppert@ohiobankersleague.com Lynn Moore, Accounting Coordinator, OBL BankServices Compliance Coordinator, OBL Compliance Services lmoore@ohiobankersleague.com Susan Poling, Communications Manager spoling@ohiobankersleague.com Jeff Quayle, SVP & General Counsel jquayle@ohiobankersleague.com Bill Showalter, OBL Compliance Services wshowalter@ohiobankersleague.com Gary Sutter, Employee Benefits Manager, OBL BankServices gsutter@ohiobankersleague.com James Thurston, Communications Manager jthurston@ohiobankersleague.com Sue Turner, Executive Assistant sturner@ohiobankersleague.com Mike Van Buskirk, President & CEO mvanbuskirk@ohiobankersleague.com Melea Wachtman, Senior Vice President of Administration mwachtman@ohiobankersleague.com The Ohio Record is published quarterly by OBL BankServices. Member subscriptions may be purchased for $25 per year; Non-member subscriptions may be purchased for $50 per year. POSTMASTER: Send address changes to Ohio Record at the address listed above.

The letter was in response to credit union efforts to take attention away from their tax advantage by claiming lawmakers should increase their commercial lending cap.

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random thoughts A Regulatory Hurricane Alert Not long ago Hurricane Earl was churning northward along the Atlantic coast. Constant news coverage alerted residents from North Carolina to Canada’s Prince Edward Island of the storm’s progress and its potential danger to life and property. Currently, there are a chain of hurricanes working there way through the Caribbean and information streams from the National Weather Service. The hope is that early warning will allow those in the path of the storm to protect themselves. Consider this a regulatory hurricane alert. We know well the history of bank regulation. In the 1930s, reacting to the devastation of the Great Depression, Congress created a new scheme of deposit protection and an intensified system of bank examination. Much worked well. Bank failures dropped dramatically. Public confidence increased. Unnoticed by policy makers was the relentless and insidious work of the marketplace inventing alternative delivery systems that circumvented regulatory costs. Mortgage brokers, private equity firms, and hedge funds are examples. Unregulated securitization of mortgages through Wall Street is another. Individual state interests often trumped fairness and the national interest – witness former Utah Senator Robert Bennett’s protection of industrial loan companies. ILCs clearly breached the historical American divide between commerce and finance yet, thanks to Bennett, they gained FDIC insurance. The savings & loan crisis in the 1980s led a confused Congress to allow commercial acquisition by commercial companies of a single savings & loan, then regulators did not put a check on the size of the “unitary” thrifts. Some grew huge. Congress appeared blind during the creation and rapid growth of captive finance companies by entities like General Motors and General Electric which could subsidize the cost of credit through the

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price of the good or service sold. Many of these companies morphed Frankensteinlike into diversified financial companies. When some ran into trouble, federal regulators had the FDIC guarantee their debt using your premium dollars and damaging your credibility, chanting systematic risk. When Congress enacted more legislation, it failed to do anything to modernize the financial regulatory structure. That paralysis set the table for the Wall Street implosion. Why didn’t Congress act? One explanation is that streamlining and modernizing the regulatory apparatus would mean that some Congressional committees would lose jurisdiction. Did you know that financial derivatives are under the jurisdiction of the House and Senate Agriculture Committees? Turf competition between the Agriculture and Commerce Committees explains why the Commodity Futures Trading Commission operates autonomously from the Security and Exchange Commission and why derivative trading was virtually unregulated. It also explains why the Federal Trade Commission, which theoretically had some jurisdiction over mortgage brokers and did nothing, retains financial consumer protection responsibility even though Congress has created a new Bureau of Financial Consumer Protection. The mixture of Congressional blindness and self protectionism set the table for our economic implosion. The public suffers great harm but so do innocent banks. What does Congress do to craft a cure and develop a vaccine against future economic epidemic? It passes a 2,300 page, poorly crafted bill much of which we believe will result in between 4,000 and 6,000 pages of new regulation and significant cost for traditional banks. The burden on banks in the bill is in part banking’s fault. As an industry we were simply too frequently fighting one another instead of uniting against those who would do traditional banking harm.

Michael M. Van Buskirk President & CEO

One national banking trade organization actually supported the bill, justifying the stance because of some partial carve outs for smaller banks we all fought hard to win. I suspect they now regret their support. The final bill hurts small banks most of all. No community banker I know who has read the bill sees anything but a mountain of increased burden. They also see that non bank competitors continue to enjoy significant, unfair advantage. Now we need to unify our industry, evaluating the many proposals for new rules as the regulators formulate them, and working to offer advice to make them as fair and efficient as possible. We are currently establishing a number of subject area expert banker review groups which will analyze key proposals and help us formulate the Ohio industry’s response. A good rule can make a bad law survivable. A bad rule can create disaster. We must be effectively engaged. The OBL has been working with the Treasury Department to try to give banks real input and open lines for future communication into the new Bureau of Financial Consumer Protection which will write the rules you must live by. We are actively engaged with the Comptroller of the Currency as it takes on the regulation of federally chartered savings & loans and waits for the President to name a new head. Anne Jaedicke, OCC’s Deputy Comptroller for Compliance, will come to Columbus for OBL’s Nov. 3 Annual Meeting to share what she can about the new Washington regulatory organization and what banks can expect in 2011. We are planning an Ohio banker fly-in to Washington, March 1 - 3. We will visit the heads of all the federal banking agencies, along with top staffers. It may be the most important trip to Washington we’ve ever made. Your insights “from back home” can make a material difference. Please plan to be with us. We also have tools that can help, par-

ticularly in the area of consumer compliance, where we expect an explosion of new rules. As a member you can get free on-line consumer compliance courses that would cost you about $5,000 a year if you bought them at the bank. You can investigate it at ohiobankersleague.com or give Julie Kiplinger a call at our offices to find out more. OBL offers an annual program called â&#x20AC;&#x153;Community Bankers for Complianceâ&#x20AC;?. Signing up gives you quarterly seminars, supplemented with a hot line and news letter, to teach your people all the new and changing regulations and how to most efficiently comply with them. We also offer compliance auditing and in-bank training. We can find problems before your regulator does and help you correct them. This is not the first time banking has faced difficult challenges. In fact similar challenges caused Ohio banks to form the OBL 120 years ago. Between the economy and the mountain of new regulation future challenges are formidable. We are here to help.

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OBL Chairman Tom Moore; Gardiner, Allen, DeRoberts’ Kris Sutter; and Perpetual Federal Savings Bank’s Mike Melvin

Great weather and perfect conditions met more than 75 golfers

OBL Staffer Jeff Quayle watches as Golf Classic Sponsor Tom Ciresi, FHLB Cincinnati, looks for the green

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Bankers prepare to tee off

The Home Loan Savings Bank’s Tom Conidi joins Home Savings Bank’s Howard Boyle and The Home Loan Savings Bank’s Bob and Kyle Hamilton

Golf Classic Sponsor Mike Hines, Floodplain Consultants, Inc. is joined by Antwerp Exchange Bank’s Ron Eschbach and American Savings Bank’s Bob Smith and Jack Stephenson

IN PICTURES

OBL Golf Classic 2010 By Gary Sutter, Ohio Bankers League

Ok, so it’s too hot to have the OBL annual golf classic in August. So what do you do - move it to mid September and then what happens? A 90 degree day! Welcome to Ohio weather…

OBL Chairman Tom Moore and Citizens Federal of Bellefontaine’s Chuck Earick

Warm gentle breezes blew across the Little Turtle Golf Course to the delight of 76 golfers on a course that was in great shape, particularly the greens. Both food and beverages were well above par too. From all indications, this “first time” course should be a repeat. The Golf provided some excitement as two teams tied for first in the Scramble format. The eventual winners of: Mike Davis, Bob Dixon, Jim Jardine and Brian Atwell, (Dixon, Davis, Bagent & Co.) were awarded top prize for the birdie they made on the 4th hole. Second place winners were: Rick Hatcher, John Hoffman, Justin Dinovo, and Chuck Earick (Citizens Federal S & L, Bellefontaine. In the Own Ball format low gross winner went to Doug Reidel - (Keefe, Bruyette & Woods), with a round of 83, Mike Zedaker – (Van Wert Federal) came in second with an 87. Low net winners - Dan Ramer - (Fifth Third Bank) shot a 75 to take first place, and Phil Bair – (Van Wert Federal) with 76 took second. Special skill prizes went to the following: Closet to the pin: Kyle Lawler (FHLB) and Steve MacDonald (Home Savings Bank, Kent) Long Drive: Justin Dinovo (Citizens Fed S & L Bellefontaine) Long Putt: Jim Crotty (Keefe, Bruyette & Woods) and Jack Green (WesBanco Bank) Long Drive Women: Joanne Hindel (Fifth Third Bank) Thanks to our Corporate Sponsors Floodplain Consultants, Inc TRAVELERS

First Federal Bank of Ohio’s Dave Beach gives the OBL’s Mike Adelman a few putting tips

And to our Hole Sponsors ATM Solutions, Inc Bank On Hold Clark Consulting Crowe Horwath, LLP FHLB Cincinnati Fiserv

Golfers size up the 8th green

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All the

Right Moves... 2010 OBL/ILFI Joint Convention Recent news that the recession ended last summer was no surprise to the bankers who attended the OBL/ILFI Joint Convention in French Lick this fall. Many had already put the recession behind them as they focused on strategies for future success. In fact, in a live text survey during one of the Convention general sessions, attendees agreed that an economic rebound is likely – it’s just a matter of how soon they believe it will happen. Nearly 80 percent of the attendees responding to the question posed futurist by Jim Carroll were cautiously optimistic saying recovery was on the horizon, although 39 percent believed it was more than two years off. Much of the program content at this year’s Convention, which attendees overwhelmingly rated among the best ever, centered on the new risk management paradigm for financial institutions. Top regulators, leading consultants and industry experts offered insights on how bankers could expect risk management to play out in a post recession economy. This year’s Convention drew more than 300 financial industry executives – the event’s largest attendance in four years. Mark your calendar now and plan to join us next fall at the Hyatt Regency Baltimore on the Inner Harbor, Sept. 8-11, 2011. Melea Wachtman Senior Vice President of Administration

Many thanks to our 2010 Convention Sponsors Sponsorship dollars help us manage costs and produce top-notch events providing great benefits for all participants. We are grateful to the following companies for their generous support.

Premier Sponsor

Gold Sponsors

Principal Financial Group

Crowe Horwath LLP Fiserv Keefe, Bruyette & Woods, Inc. PNC Financial Institutions Group, LLC

Platinum Sponsors Clark Consulting Federal Home Loan Bank of Chicago Federal Home Loan Bank of Cincinnati Vorys, Sater, Seymour & Pease, LLP

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Silver Sponsors The Baker Group Bank on Hold BKD, LLP Disnmore & Shohl, LLP Elan Financial Services Floodplain Consultants Kaplan & Associates Young & Associates

IN PICTURES

Full House - Bankers packed the meeting room during one of two general sessions featuring a top line-up of speakers

OBL Chairman Tom Moore (center) and ILFI Chairman Roger Budney (right) present OTS Deputy Director Tom Barnes with a special commendation

Front & Center – Always a centerpiece of the Convention … bankers preview the popular Pac Silent Auction items

OBL Chairman Tom Moore and his wife Polly pose with closing keynote speaker Steve Ford – son of former President Gerald Ford

Park National Bank President David Trautman takes a moment to follow up with speaker Dr. Ed Seifried

Bob & Elaine Bolin along with Bob & Regina Smith show their Buckeye spirit during the OSU versus University of Miami football game

Grammy award-winning Nashville songwriters Lari White and Marc Beeson won over the crowd during the Convention closing banquet

Bankers looking for a more quiet escape enjoyed the serene environment of the historic West Baden Springs Hotel – nestled in the trees of the Hoosier National Forest

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The signs are confusing. Real opportunities and risks are ahead. How do you find your best route? NOVEMBER 3, 2010 By Susan Poling, OBL Communications Manager Attend the day-long 2010 OBL Annual Meeting and you will drive away with the tools and processes your institution needs to implement the ideas and strategies that will help you determine your road to success. Registration includes morning and afternoon breakout learning sessions, the keynote luncheon program and Annual Meeting, the Financial Services Expo, networking a copy of Jason Young’s book, Culturetopia, and more. Join us!

Keynote Address Jason Young, former senior-level manager at Southwest Airlines Co. and current president of LeadSmart Inc., learned the value of a successful workplace culture. He joins the OBL to keynote the lunch program to show you how to create a profitable and productive culture as you build an ultimate high performance. Young has been called a rare breed when it comes to developing leaders and customer service initiatives. During his 10-years with the airline consistently rated No. 1 in customer service and employee satisfaction, he was a key driver in creating and developing the company’s innovative training programs for its successful leadership and customer service culture that have become renowned in the business world today. Jason will be joined by the OCC’s Ann Jaedicke, deputy comptroller for compliance policy. She will be one of the architects of a rapidly expanding consumer compliance world for banking. During her presentation on Unfair and Deceptive Practices & How to Avoid Them, she will help attendees understand the merger of OTS and OCC, as well as provide insight into the development of the new Bureau of Financial Consumer Protection.

Optional Breakout Sessions Due to overwhelming response from the 2009 program, both morning and afternoon education sessions will be offered to Executives, Human Resource Professionals, and additional bank managers, including those in the Sales & Marketing, Technology & Compliance areas.

9:15 - 10 a.m. Serve Smart - Making a Mark with Everyday Extraordinary Customer Service Jason Young, President, LeadSmart, Inc. Remaining Independent in the Face of an Aging Shareholder Base Thomas L. Dooley, Senior Vice President, Boenning & Scattergood Increasing Customer Profitability and Tenure with Customer Engagement and Retention Strategies James Hanson, Senior Account Manager, Affinion Group

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10:30 - 11:15 a.m.

Financial Services Expo

Effective Resolution of Non-Performing Loans: From Creditors’ Rights Strategies to Loan Workouts and Complex Foreclosure Actions Karl C. Kerschner, Managing Partner, Meyer & Kerschner, Ltd. CDARS: Intelligent Funding Solutions in an Unprecedented Banking Environment Erich Buckenmaier, Regional Director, Promontory Interfinancial Network, LLC Your Bank’s Image is an Investment: Regulate Your Online Reputation Bryan Huber, Chief Interactive Officer, Paul Werth Associates and Kim Ratcliff, Vice President, Paul Werth Associates

Always a featured portion of the event, The Financial Services Expo, presented by OBL BankServices, will highlight the latest in financial industry product and service providers with many of the industry’s leading vendors. Beginning at 8:30 a.m. and running during and after programs until noon, the Expo affords you an opportunity to find collaborative answers to your most pressing bank service needs.

3 - 3:45 p.m. The Future of Relationship Banking (Is Here Today) Ray Oswald - Vice President, Bank Solutions Consulting, Fiserv, Inc. New Compliance Paradigm: How to Structure Yourself for Success (or Survival) Bill Elliott, Senior Consultant & Manager of Compliance, Young & Associates, Inc. HR Advisory Group Ohio Bankers League Educators

Registration Check out the great value! Nearly three hours of classroom education, a copy of Jason Young’s book Culturetopia, lunch, keynote messages from two nationally known speakers, luncheon meeting and invaluable networking at a cost affordable for your institution. Members

$150 for the first individual from an OBL member institution or company $125 for each additional registrant from the same institution or company Bank Leadership Institute Alumni

$99 per person Non-members

$225 per person *Register online at www.ohiobankersleague.com. Space is limited and will be accepted on a first-come first-served basis. Contact Susan Poling at 614-340-7611 with any questions.

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Regulatory Enforcement Actions: Early Intervention Jeffery E. Smith Attorney Bricker & Eckler, LLP

It can, but rarely does, happen without warning or at least what are evident as clear warnings with the benefit of 20-20 hindsight. Regulatory enforcement actions more typically follow a series of carefully calculated steps by which the agencies have provided some form of notice ranging from comments to MRA’s/MRBA’s in examination reports that they are becoming increasingly concerned about a certain issue, or issues, that the institution and its board and management are expected to address. When those issues continue to exist, or become even more exacerbated by interim action or inaction, the agencies feel that they have no recourse but to “turn up the heat” with increasingly severe actions eventually culminating in public enforcement actions which all institutions strive to avoid. Granted it’s not always crystal clear in the presentation, but boards and management need to be on the lookout for telltale signs of impending problems cited through agency reviews as well as through their own internal and external auditors and management. Early, immediate, proactive and preemptive action on the part of the institution to demonstrate that (1) they “hear” the concern, (2) they too are concerned, and (3) they are taking immediate action to address the concern helps immensely in mitigating (and perhaps avoiding altogether) any agency sense that their issues are being ignored and that therefore they must use a “bigger hammer” to get attention and to mitigate the plethora of shareholder, business, and liability issues that can accompany a public enforcement action. Even seemingly minor and insignificant things like the exit meeting with regulators where concerns are identified and actions threatened, followed by a response that the board and management will simply wait to receive the final report (or action) to respond or that based on pending vacation schedules the agencies are requested to delay, simply serve to (1) reinforce the notion in the minds of the regulators that the institution is not taking their concerns seriously or with any sense of urgency or priority, and (2) reinforces the sense that a more severe action may be the only way to accomplish that goal. In the current environment, time is not on the side of the bank in responding to identified or potential concerns. A prompt, credible, and serious followup response by the board and management may make the difference between a public and a non-public action and can conceivably serve to avoid the action altogether. Those viewed as failing to promptly recognize and address problem issues will quickly find themselves in an increasingly hostile and challenging environment with the agencies which can often be avoided by simply listening and responding quickly.

Shareholder Issues The board is on “notice” of regulatory concerns through the examination and enforcement process and conversations with agency personnel, and those concerns may directly reflect potential weaknesses in the boards’ fiduciary obligations to its constituencies (particularly in the hands of plaintiff’s counsel with the benefit of 20-20 hindsight. Clearly the best defense is a strong and immediate offense through development and implementation of a proactive and preemptive strategic approach to resolving the issues as soon as possible. To do otherwise is to simply set the stage for enhanced regulatory actions and potentially enhanced shareholder issues. Proper management of the regulatory process is a key part of the role and responsibility of each director and each member of senior management. Prompt early recognition of existing or potential problems and development of processes to resolve the problems early on can save untold headaches (not to mention liability) in the long run. And it is a critical part of the enterprise risk management system of the institution as well.

Regulator Communication Perhaps one of the most important early actions that the institution can take is to identify an appropriate group of directors and executive management to initiate a direct dialogue,

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communicate, and meet in person directly with appropriate agency personnel to let them know that (1) they “hear” and understand their concerns, (2) they are immediately looking into those concerns, (3) they would appreciate further input and detail by the agencies with regard to the issues and how the agencies view their potential resolution, including success stories regarding similar situations with other institutions and (4) they will proceed with all due speed to address and resolve the issues. Boards and management perceived as being “hostile” to the agency or which continue in a “denial” phase and are not likely to seriously address agency concerns do so at significant peril. It is rare that the agencies are really far “off” in their assessment of the situation (recall that they see many institutions) and that perception can lead to the sense that additional and more aggressive enforcement tools are required to get the job done. Immediate followup is critical, and keeping the lines of communication open with the agencies to discuss progress and actions taken can again mean the difference between a formal action and an informal action, and even perhaps a revisiting of a proposed CAMELS component or overall rating. Keeping in mind that the “M” in CAMELS can be a very subjective component and can reflect a number of subjective qualities, it is important to keep that number as low as possible and the perception of acknowledgement of problems as they occur and are identified is a key part of that credibility.

Internal Communication Boards and executive management should immediately establish an overall tone of non-confrontation and cooperation with agency personnel throughout the organization. If there are viable and credible disagreements with the agency (which can and does occur) those should be vetted, and handled only at very senior levels and involve board members so that the agency does not form a belief that the board is either uninformed, uninvolved or just not interested. Discussions should be mutually respectful and non-confrontational. A confrontational and dismissive tone is never productive, however, and

again can serve to enhance the sense of the agencies that a more severe action is necessary. Understanding and managing the relationship with the agencies is critical, and can make a very significant difference in how the concerns are handled. That tone should be set at the top and enforced internally throughout the organization. Whether real or not, and whether deserved or not, a regulatory sense of lack of recognition of problems, cooperation by management or the board, or worse yet “hiding the ball”, can be fatal.

Problems Especially with the benefit of 20-20 hindsight, many problems are obvious in the rear view mirror or, sadly, after the wreck has already occurred. The key is to pay attention to what agencies are saying, what auditors are saying, what employees are saying, and what the market is saying about the credibility of your stock. “An ounce of prevention is worth a pound of cure”, and early, prompt, and preemptive action in response to identified issues and potential problems can make all the difference in the actual impact of those issues and problems on the institution and its board and management. Retaining advisors who have been through these kinds of issues and who have strong regulatory credibility and governance experience to provide objective assistance can significantly shortcut the process and provide needed support and insights while helping to minimize risk and management distraction. Stay in touch with the regulators, and once a problem is identified redouble your efforts to demonstrate sincere concern. Communicate your recognition of the problem as well as active and preemptive steps already in process to resolve the problem as quickly and effectively as possible, with ongoing controls in place to ascertain that it is not likely to reoccur once the immediate issues are resolved. Those actions can make a significant difference in the outcome of the issue at hand, as well as the overall relations with agency personnel at a critical time in the economy and in bank regulation. Bricker & Eckler, LLP 100 S. Third St. Columbus, Ohio 43215 614.227.2352 jsmith@bricker.com fall 2010 Ohio Record

Being a PR consultant for the banking industry has often felt like being a lineman in recent times. The hits have kept comin’. Bank Bashing has almost become a competitive sport, as an over-eager media lumps Main Street Bank, Ohio in with Lehman Brothers, AIG and the rest to fit its ready-to-wear explanation of the financial crisis. When the press paints our whole industry with the same brush, it is critical that Ohio banks and thrifts fight back with their own message. For most OBL members, telling a different, positive story should not be difficult. We are living it every day in our communities. But how to get the word out? Advertising is the communications tool most banks reach for first. While expensive, well targeted advertising can be very effective. The most successful advertising campaigns I’ve seen come from the institutions that walk the walk as well as talk the talk. It’s no good just putting an ad campaign out there for the sake of it – it has to align with your overall vision, your mission statement and your business plan. If it doesn’t, it can hurt your brand and confuse your audience. A lot of community bank CEOs balk at sky high prices when it comes to advertising. It’s true, dwindling circulations have meant news outlets have bumped up space rates to bolster other traditional revenue streams. But these days, an advertising campaign can get value for money never before seen. How? I hear you ask. Well it all comes back to that “walking the walk” thing, as well as using all the modern marketing tools a community bank has at its disposal. If your brand is true to your company’s ethos and permeates everything you do, your advertising should automatically reflect your goals and your mission statement. And guess what? There are a lot more avenues to express your brand than there used to be. The best thing is most of them won’t cost you a penny.

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As well as a traditional media like print, radio and TV, your message can be integrated into your Web site, social media outlets like facebook and twitter or e-mail marketing programs. Liberty National Bank in Ada used these 21st century marketing channels to their full advantage with new media spots featuring then CEO Bill Carr. The banks released a series of print and radio ads that said, “Don’t lose sleep over us. We are doing fine.” Then Carr rolled up his shirt sleeves in a series of podcasts to reinforce the message. Instead of burying the fiveminute interviews in its online press room, the bank put them front and center on its homepage. Needless to say, the spots quickly went viral, popping up on facebook and twitter, and the bank quickly passed its annual lending and deposit taking goals with several months to spare. But getting the message out is just half of the story when it comes to using these new channels. It has also become a lot easier to answer the marketing professional’s “holy grail” question? How do you evaluate success? Social media monitoring tools like your basic Tweetdeck or Buzzlogic or more complex options like Alterian or radian6 make it easy to accurately measure the progress

James Thurston Editor

of your social media efforts. The metrics are endless - with tweets, hits, or target phrases all infinitely measurable. This makes it very easy to make course corrections and re-align what you’re doing with your original objectives. Interactive social media like Facebook, Twitter or Digg give you the power to effectively have a conversation with your customer. Be it comments on a blog, Facebook messages, or return tweets, the feedback your bank receives should constantly be filtered back to shape and mold your marketing efforts - and ultimately your brand. This will help create brand loyalty and create brand advocates, with the real world benefit of increasing customer retention rates and decreasing acquisition costs. The most effective way to repair the industry’s image is to do it one bank at a time. And when the number of marketing channels at our fingertips is greater than ever at less cost, the time to take action is now.

fall 2010 Ohio Record

GET AHEAD. STAY AHEAD. INVEST IN EDUCATION.

GETTING A HEAD START Banker Education & Training in 2011

Susan Poling OBL Communications Manager

The OBL offers many learning options for the professional development of you and your bankers each year. To give bankers a head start with 2011 budgeting and planning we have put together this summary of opportunities to help calculate your training investment with the OBL. CLASSROOM SEMINARS

Provide a day-long, one-time focused look at a topic with a subject matter expert. $255 per person per session SPECIALIZED CONFERENCES

Annual opportunities to learn about timely topics in such areas as human resources, marketing and Bank Services Act. Also provides valuable networking opportunities. $425 per person ADVISORY GROUPS

Committee of OBL member bankers who participate in quarterly phone conferences to assist education team in ensuring that our offerings meet your training needs. No cost to participate. ESSENTIALS & ADVANCED SCHOOLS

Multi-day programs offered at beginning and advanced levels, with multiple tactics and applications. Case studies provide a look at real-life scenarios. Many provide certification and provide an opportunity to stay updated in your field. 2011

Ohio Record fall 2010

school include Commercial Lending, Bank Management, Essentials Lending and Compliance. Average $795 – $995 per person OBL Bank Management School is $1,895 per person WORKSHOPS & SERIES

Over the course of two-days – or several days over the calendar year, OBL workshops and series allow bankers to stay updated on topics that matter most, such as Bank Security, Directors Training, Branch Management and/or Teller Certification, Evening Training for Frontline Personnel. The Community Bankers for Compliance Program also returns. See page 22 for more details. Frontline Training - $99 per person per session Two-day Workshops - $450 per person CBC Program - $1,250 – 1,500 per bank for 1 or 2 representatives MEMBER EVENTS

Opportunities for bankers to join together for learning, networking and lobbying.

Range as low as nothing to participate in the annual OBL Day at the Capital to $150 per person for the Annual Meeting. IN-BANK TRAINING

Specialized training sessions in your bank or at a nearby location enable you to meet your individual bank’s training needs. A range of topics is available, including Relationship Banking, Ethics & Attitude & Problem Solving, and can be built for a few hours to a day or more. Train a few employees or train them all. Fees begin at $1,000. E-LEARNING

Whether it is an online Webinar, telephone seminar, or recorded On Demand programming, “E-learning” saves bankers time without delaying learning benefits; minimizes travel costs and time away from work; and meets the needs of geographically dispersed employees. One payment allows multiple staff to hear consistent message. $199 - $345 per connection

DO THE MATH Whether your bank budgets a single amount of training dollars each year to cover all employee needs, or budgets a specified amount for each employee’s development during a calendar year, these examples are to get you started and to see just how far even ten or twenty thousand dollars may stretch with the OBL. WHAT CAN $10,000 OF TRAINING BUY FOR YOUR BANK?

Annual Meeting Attendance (1)........................................$150 Community Bankers for Compliance Membership for 2 $1,500 OBL Bank Management participant ..............................$1,895 CEO Symposium ................................................................$425 Five Webinars – for multiple employees ............................$995 Essentials School ................................................................$795 Evening Training for Frontline Personnel (5) ....................$495 Specialized Conferences (3) ............................................$1,275 Ten Seminars throughout the year ..................................$2,550 Compliance Coach (35 online courses for all employees)............................No Cost TOTAL ..................................................................$10,080

Education manager Julie Kiplinger is available to help you plan your 2011 spending to ensure your training needs are met. Julie can even assist your bank with the creation of a Career Development Plan for a specific employee who may need to reach a specific level of employment in short order. Contact her at 614-340-7612 for more details.

WHAT CAN $20,000 OF TRAINING BUY FOR YOUR BANK?

Annual Meeting Attendance (4)........................................$525 Community Bankers for Compliance Members for 1......$1,200 OBL Bank Management participants (2) ........................$3,790 CEO Symposium ................................................................$425 Economic Summit for you and 3 clients ............................$180 12 Webinars – for multiple employees ............................$2,388 Essentials School for 2 ....................................................$1,790 Specialized Conferences (3) ............................................$1,275 20 Seminars throughout the year ....................................$5,100 2 Multi-day workshops........................................................$900 In-Bank Training Session Topic & Number TBD by you ........................................$2,350 Compliance Coach (35 online courses for all employees)............................No Cost TOTAL ..................................................................$19,925

fall 2010 Ohio Record

GET AHEAD. STAY AHEAD. INVEST IN EDUCATION.

FALL

Please see the OBL Web site for a complete listing of currently scheduled classroom seminars and workshops, schools and conferences, and special meetings and events. NOV. 17 – 19

NOV. 30

DEC. 1

DEC. 2

OBL TRAINING CENTER

FINDLAY

NEWARK

BLUE ASH

School of Commercial Lending Essentials & Lending Panel Discussion* Now more than ever, it is critical to your bank’s growth and health. Commercial credit personnel need state-of-the-art skills and good judgment to make prudent, profitable loans. This School delivers a solid background to new credit analyst and others, as well as provides a fundamental review and updated skills to experienced bankers. In addition, a Lunch & Learn Lending Panel Discussion will close the school as representatives from the State Treasurer’s Office, Small Business Administration and the Ohio Department of Development will identify and explain resources so that bankers, in turn, can recommend them to customers - helping to serve them better. *The panel discussion may also be attended as a stand-alone session for just $99.

Bank Robbery Training In this emotionally traumatic age, any number of factors could lead a person to attempt bank robbery. These regional evening seminars for frontline personnel will help new account representatives, personal bankers, tellers, head tellers and bank management understand best security practices, know what to expect, and teach students how to respond during and after a robbery. The manual also includes sections on bomb threats, evacuation, identity theft, scams, victim assistance, elder abuse, and counterfeit money and checks. Held from 6 – 9 p.m., and including a pre-session dinner, the program is just $99 per person.

NOV. 29 - DEC. 2

FEB. 15

PURDUE UNIVERSITY

RENAISSANCE, COLUMBUS

Midwest Agricultural Banking School Designed to help further the education of bankers and others involved in the field of agricultural finance, class work features the practical aspects of agricultural credit and finance. In addition to classroom instruction, the School, presented in partnership with the Indiana Bankers Association, includes participation in the Indiana Bankers Agricultural Clinic.

2011 Economic Summit

RETURNING

Held at a new location, the 2011 Economic Summit will once again provide Ohio bankers with an opportunity to reach out to those at the heart of their communities and to introduce these successful small business owners to members of the Ohio General Assembly. Farmers Bank and Savings Company President & CEO Paul Reed noted the 2010 Economic Summit as a plus for building relationships. “While they (small business customers) felt honored to be invited – more important – they felt privileged to be there.” Meanwhile, Meigs County development director Perry Varnadoe commented, “It was especially good to be able to hear non-political, non-biased research-based data. Information without spin – just the facts.” Watch the Web site for more details.

Ohio Record fall 2010

fall 2010 Ohio Record

GET AHEAD. STAY AHEAD. INVEST IN EDUCATION.

GET THE OBL COMPLIANCE ADVANTAGE IN 2011 By Julie Kiplinger, OBL Manager of Professional Seminars & In-bank Training

Through an unbeatable platform of top-notch compliance training options and cost-effective in-bank compliance consulting for community banks, the Ohio Bankers League can help you navigate the often complicated requirements of the consumer compliance frontier in 2011. OBL programs are designed to strengthen your bank’s ability to manage the effort, as we focus specifically on balancing regulatory mandates with what is practical for your bank through compliance education, round table discussions and compliance consulting.

Compliance Education 2011 Community Bankers for Compliance Program This nationally-known comprehensive program, presented in 2010 through a partnership with Young & Associates, Inc., attracted 40 banks and more than 70 bankers to its quarterly seminars focusing on the most recent industry and regulatory developments. The program, which has gained regulatory approval, is returning to the OBL in 2011 and will continue to also feature a monthly Compliance Update e-newsletter, compliance hotline and member-only Web site. Next year’s program prices have been lowered. At $1,200 for a single participant from your bank or $1,500 for two participants – the value for face-to-face regulatory training cannot be beat, as the investment averages just over $185 per session. Non OBL members will be able to join the CBC Program for $1,500 or $1,800 respectively. New for 2011. Bankers can attend individual sessions. OBL member banks that are not members of the CBC can now choose to attend an individual session for $345 for the first person; and $145 for each additional representative for the same session. Banks that are not members of the OBL or the CBC can now attend an individual session for $425 per person. You pick the training date. In 2011, each quarterly seminar will be offered on two different dates. This will allow the OBL to expand the program to additional members while keeping a good presenter – attendee ratio, yet will still provide ample networking opportunities for our bankers. Check page 24 for 2011 CBC Program dates.

Complimentary Online Compliance Training The OBL has purchased access to leading online compliance training provider Compliance Coach, to offer OBL member institutions Web-based compliance training at no cost. This exciting partnership began in 2009 and continues to provide access to 35

Ohio Record fall 2010

Compliance Coach programs, covering the areas where Ohio institutions face the greatest compliance risk, including Truth in Lending Act - Closed End for Mortgage Bankers, Equal Credit Opportunity Act for Mortgage Lenders and RESPA for Mortgage Lenders.

Face to Face Compliance Roundtables Regulatory roundtables and panel discussions put bankers in the same room as their principle regulator and compliance examiners for an interactive discussion on the latest policy updates and exam procedures. Held in August, the 2010 OBL Regulator Roundtable attracted more than 70 compliance and bank officers to hear the latest news from the OCC, FDIC, OTS and the Federal Reserve Bank of Cleveland. The next opportunity to hear from and meet with principle regulators will be at the 2011 CEO Symposium, May 10 & 11, at the Hilton Columbus at Easton.

Compliance Consulting OBL Compliance Services Compliance consulting services – tailored to meet your bank’s specific needs – are available on a fee basis at a significant discount for OBL members. These customized services can be provided under an ongoing retainer relationship or as stand-alone projects and are managed by a team of OBL consumer compliance veterans, Bill Showalter and Pam Foster.

fall 2010 Ohio Record

GET AHEAD. STAY AHEAD. INVEST IN EDUCATION.

2011 DATES TO SAVE... 23/24

February 15

Economic Summit, The Renaissance Hotel

March 1–3 3–4 15/16 24 – 25 29 – 30

OBL Washington, D.C. Fly-In OBL Marketing Conference Community Bankers for Compliance Seminar OBL Human Resource Conference BSA/AML Conference

April 3–8 5 26 27 28

GSB Bank Technology Management School OBL Day at the Capitol Regional Directors Workshop Regional Directors Workshop Regional Directors Workshop

May 10 – 11

CEO Symposium, Hilton Columbus at Easton

June 8/9

Community Bankers for Compliance Seminar

August 5 7 – 12 7 – 19 14 – 17 17 – 19

Ohio Record fall 2010

Regulator Roundtable GSB Human Resources Management School GSB Graduate School of Banking GSB Seminar Management Seminar Mortgage Lending School

Community Bankers for Compliance Seminar 31 – Sept. 1 Advanced Agricultural Workshop

September 8 – 12

11 – 16 14 & 15 22

OBL Joint Convention, Hyatt Regency Baltimore on the Inner Harbor Baltimore OBL Bank Management School Bank Security Workshop OBL Golf Classic, Little Turtle Golf Club

October 5 9 – 14

ALM Seminar GSB Financial Managers School

November 2

OBL Annual Meeting & Professional Development Event 9/10 Community Bankers for Compliance Seminar 28 – Dec. 1 Midwest Agricultural Banking School

NO COST ONLINE COMPLIANCE TRAINING STILL AVAILABLE IN 2011 Individually, a bank might spend up to $5,000 for a Compliance Coach membership - but with the collective power of the OBL - this nationally-known online compliance training continues to be available at no cost to member banks. The more than 100 OBL member banks that are also Compliance Coach clients have access to 35 FREE interactive online compliance courses 24/7 in high risk areas - 11 of which are approved for CRCM credits, including: RESPA: HUD-1/1A; Currency Transaction Reporting; and HMDA: Reporting and Disclosure. “We were very satisfied with the Compliance Coach training programs we utilized last year and we will continue to use the product in the future,” said Lisa Eadler, operations officer, Greenville National Bank. “We found the program a valuable tool, as we were able to customize annual training specific to employee jobs and responsibilities and document results to follow up with any additional training that was needed.” The OBL introduced this program to its members as a benefit in January 2009 and is pleased to continue this no-fee program in 2011. If your bank is not already registered, visit the OBL Web site for more details or contact Julie Kiplinger at 614-340-7612.

DAYS ARE BUSY. TIME IS SHORT. E-LEARNING IS THE ANSWER IN 2011 In today’s fast-paced economy, companies across the world understand the value of E-learning. Webinars and On Demand programs save on travel costs, limit out of office time – and enable multiple employees to receive the same message for one connection fee. It is a win-win situation all the way around. The OBL extends that “win” and adds further value to E-learning by offering additional price savings to OBL member banks and your employees in 2011.

$199 OBL Webinar Offer Continues Due to positive response and the never-ending list of required training – the OBL Education Team extends its $199 per connection online learning option through the end of the calendar year. Multiple employees and bank directors can receive training via these live programs, including Preparing for Your Next On-site BSA/AML/OFAC Examination; BSA/AML Compliance for Lenders; and Understanding the New, Interim & Proposed Regulation Z Rules.

On Demand Learning Can’t attend the Webinar or missed the OBL’s latest classroom seminar on the training topic you or your banker needed? Check out the library of OBL On Demand Programs – also available for just $199 per program. Access remains for six months, so over time, training can average just dollars per employees. Pay special attention to the:

Top 10 On Demand Programs Sold in 2010 … 1. Required Changes to Regulation CC Holds & Disclosures 2. Regulation E Revisions: Handling Overdrafts Created by EFTs 3. RESPA – Preparing the GFE & HUD-1 4. Call Report Preparation 5. Implementing Regulation Z & RESPA Escrow Rules 6. ACH Risk Assessment 7. Motivating & Managing the Teller Line 8. Accounting for OREO & ALLL 9. Higher Priced Mortgage Loans Review & Update 10. Advanced Loan Documentation Whether a bank participates in a LIVE session or purchases one of more than 350 On Demand programs, for every five programs purchased by a bank during 2010, an additional program will be offered free of charge, courtesy of the OBL. Check out the training library at the OBL Web E-Learning Web site, or contact education@ohiobankersleague.com for assistance in locating On Demand or LIVE programs to meet your immediate needs - or to find out how many OBL Webinars your bank has purchased to date. fall 2010 Ohio Record

GET AHEAD. STAY AHEAD. INVEST IN EDUCATION.

EDUCATING PROFESSIONALS. CREATING LEADERS. OBL & THE GRADUATE SCHOOL OF BANKING The Ohio Bankers League and the Graduate School of Banking, Madison have partnered since 1945 to bring higher-level learning opportunities to Ohio bankers. Whether it is via a multi-day residential school in Madison, Wisconsin; participation in more than 180 annual online seminars; or collaboration on a GSB speaker in the OBL Training Center, more than 100 bankers experience the partnership this year.

2010 GSB Graduates In August, eight Ohio bankers joined the ranks of GSB alumni. The OBL congratulates the following for their commitment to higher learning. Aaron M. Barnhart, Valley Savings Bank; Mark P. DePue, First National Bank of Pandora; Christopher R. Hiner, Park National Bank; Brian D. Matthews, Huntington Bank; Andrea L. Moore, Federal Reserve Bank of Cleveland; Connie M. Moskal, Liberty Savings Bank, FSB; John P. Miller, The Union Bank Company; Terry D. Townsend, Advantage Bank.

GSB Scholarships To assist Ohio bankers in furthering their education, the OBL annually awards GSB partial scholarships and a partial Human Resources Management School scholarship in conjunction with state association programs. In 2011, the OBL will once again offer GSB scholarships through the OBL Bank Management School, as well as select a recipient from the general OBL membership based on an application process. Another recipient will be awarded a seat at the 2011 Human Resources Management School. The applications for the 2011 scholarships will be available in the first quarter and will consider a personâ&#x20AC;&#x2122;s demonstration of outstanding leadership and a commitment to his or her community and to the banking industry. Budget now to send your bank leaders to one of the following GSB Annual Schools: GSB Bank Technology Management School, April 3 â&#x20AC;&#x201C; 8 Graduate School of Banking, Aug. 7 - 19 Human Resources Management School, Aug. 7 - 12 Financial Managers School, Oct. 9 - 14 Senior Management Seminar, Aug. 14 - 17

Ohio Record fall 2010

Lower Prices Announced for GSB Online Seminars The Graduate School of Banking also announces a reduced fee for online programs this fall, including courses on ALCO Evolution, Commercial Business Development and Money-Saving, MoneyMaking Marketing Ideas. Running throughout the 4th quarter of 2010, prices have dropped: 1-part programs that were previously priced at $345 are now just $245; 2-part programs are now $395 instead of $450; 3-part series are $525, down from $575; and 4-part programs remain at $695, which is less than $175 per session. In addition, 2010 GSB Residential School students will receive a 25% discount off the lower prices on programs through Dec. 31, by registering with a promotional code that was provided at session. Check the GSB Web site at www.gsb.org for complete details and to view the current line-up of programs.

2010 GRADUATES, GRADUATE SCHOOL OF BANKING

Aaron M. Barnhart

Mark P. DePue

Christopher R. Hiner

Brian D. Matthews

Andrea L. Moore

Connie M. Moskal

John P. Miller

Terry D. Townsend

Contact Susan Poling at 614-340-7611 for more information as it becomes available.

fall 2010 Ohio Record

Ohio Record fall 2010

TRAIN ONE OR ALL VIA OBL IN-BANK TRAINING By Julie Kiplinger, OBL Manager of Professional Seminars & In-bank Training

Since its implementation more than two years ago, the OBL In-Bank Training program has benefited Ohio banks across the state, reaching more than 400 Ohio bankers. Employees have received personalized training on topics such as customer service, relationship banking, sales training, and ethics and attitude. And while one session at First Federal Community Bank was for as few as eight employees – another series of sessions at Ohio Valley Bank reached nearly every single full and parttime employee – more than 100 in total.

Attendees receive personalized training

Whether your bank needs training for a department, working group, one-on-one or the entire staff, the OBL’s in-bank trainers can offer solutions that are tailored to your bank’s policies and procedures, as well as your institution’s mission statement, values and corporate culture. In addition to being cost-effective, convenient and easy to coordinate – OBL In-Bank Training programs are making a real difference to those who are trained. “There have been many advantages to the OBL In-Bank Training program. Most notably, we were able to have almost every employee participate in the customized, three part “All Aboard the Train to Professional Growth” seminar on the topics of change, attitude and building better customer relationships. Bringing Julie to our main office allowed more face-to-face quality training time and less travel time for the employees, as well as interaction with fellow employees from across the company.” – Gretchen Schmidt, President & CEO, The Franklin Savings and Loan Company

Trainers Angie Holbrook and Julie Kiplinger have a combined 50 years in banker education

“Our bank has used OBL In-Bank Training during the last year and is very satisfied. Julie was easy to work with and gives a thorough and professional presentation. Our participants were very positive about their training experience, feeling more knowledgeable and motivated about working for our bank. OBL’s training services cover our bank’s needs and help enhance our new hire’s knowledge and skills, as well as support our current employees. Ongoing training is important and OBL offers a variety of services to help. I look forward to using In-Bank training again.” – Stephanie Wilson, Vice President, Human Resources, First Federal Community Bank For more information about in-bank training programs or to schedule a consultation, please visit the OBL Web site or contact Julie Kiplinger at 614-340-7612. fall 2010 Ohio Record

Ohio Record fall 2010

From the

Steps of the Statehouse Michael J. Adelman Vice President of State Government Relations

FALL LEGISLATIVE PREVIEW A Completion, Interception or Dropped Pass? No screaming fans or spirited marching bands, please. Chirping crickets amongst the post-game remnants in the stadium is a preferable image for the Statehouse during the socalled “Lame Duck” session, which is the legislative period following a general election. In my twenty years at the Statehouse, I’ve lived through nine Lame Duck sessions. Some were quite memorable. Those few weeks can reflect the Woody Hayes quote, “There are three things that can happen when you throw a pass, and two of them are bad.” Lame Duck session involves a time crunch with a potential flurry of activity. This combination can lead to a fumblerooski or other wild plays. The Lame Duck session weeks are on the heel of one election and the furthest point from the next. Leadership carefully weighs the prospects of accomplishing its remaining priorities in the current session or punting to the next.

Two-Minute Warning As I’ve stated in my columns since the start of the current 128th General Assembly, the Statehouse tension has been palpable. There has been disagreement between the House and Senate over legislative priorities. This has resulted in fewer bills going to the Governor for signature. Yet, for an industry that has felt targeted, limited bills crossing the goal line has been a good thing. Were there proactive items we would like to have accomplished? You bet. However, the risks were often too high and our defensive unit had to be on the field much of the game. As an election year, the General Assembly recessed in early June so legislators could campaign back home. Though my days have not been consumed by attending legislative committee hearings, it hasn’t quite been a festive half-time show. Just like a coach diagrams Xs and Os and scripts plays to create or react to different matchups, the recess has given me a chance to assess what has happened thus far and strategize on what might lie ahead. My commitment to the OBL membership is to continue to execute the game plan working with a knowledgeable grassroots team of bankers, which is the key to our continued “three yards and a cloud of dust” success. Proper preparation will minimize the risk of a Hail Mary catching us flat on our heels.

Game Reset There are a number of harmful bills the OBL has worked diligently on over the past year and a half. Though the main foreclosure bill may have made it to midfield by being passed out of the House, most of the others have failed to move the chains. The OBL has vigorously opposed the main foreclosure bill (HB 3) and companion mediation bills (HB 306 and SB 197) since introduction. The risk of unintended consequences translates into more harm than good. Rather than erecting barriers to the foreclosure process, dragging it out even longer, and risking tougher access to credit the OBL advocates speeding up the process. Yet, the ultimate solution is job creation. Ohioans with paychecks can best afford their mortgage payments and avoid foreclosure in the first place. fall 2010 Ohio Record

HB 323 represents a dramatic policy shift in that it would deem an owner abandons a property right if they do not act quickly enough in filing a writ of execution. The goal is to move along the process so homes go to auction rather than indefinitely falling in limbo. Other provisions intent on accelerating the process include (1) allowing a default judgment where the lender documents and can prove the property is both vacant and neglected by terminating statutory and equitable redemption rights; (2) permitting a deed in lieu of sale if the homeowner doesn’t respond to the complaint; (3) setting explicit timelines for county officials to execute their duties; and (4) streamlining the auction process if a property fails to gain bids on the first or second sale. The bill would also expressly authorize a lender to enter and secure the property when it is vacant and neglected and to do so before the foreclosure action is commenced if this is not inconsistent with the mortgage documents. Further, HB 323 would criminalize vandalism of one’s own property after service of a summons. The tenant notification companion bills (HB 9 and SB 13) would require landlord notice to tenants facing foreclosure and provide tenancy following sale. Though federal law took effect last year requiring ninety days notice to terminate the lease following sale the bills would fill a gap in tenant protection. A law firm representing condo associations continues to drive grassroots support for so-called “super” lien authority (HB 408). They think their interest in a property should take priority over the lender. Their goal is for the legislature to mandate an association’s ability to collect up to sixmonth’s worth of delinquent dues and other fees when a property sells. A recent bulletin from a federal bank regulator should clothesline any interest in this bill. Last but not least, the credit unions continue to push for authority to become public depositories. This is a clear cut issue for bankers and it appears to be an issue more legislators are questioning the appropriateness of as well. This should help run out the game clock on this bad idea. My chinstrap is buckled and I’m ready to take the field. I’ll be prepared if a slobberknocker breaks out, but would welcome the General Assembly taking a knee as time expires.

Ohio Record fall 2010

November Elections are a High Stakes Game It’s cliché to label each election as “the most important to date.” All are high stakes. This is clearly the case in 2010! The grand prize this November is what we refer to around the Statehouse as “control of the pen,” the State Apportionment Board. This body draws the legislative boundaries that will stand for the next ten years. Historically the party that controlled the redistricting process reaped significant gains in the legislature in the ensuing election cycles. This little-known, but extremely influential body has been controlled by the Republicans the past two times (1991 and 2001) while the Democrats controlled it the prior two (1971 and 1981). It is comprised of three statewide offices: Governor, Secretary of State and Auditor. The Senate and House appoint a majority member and a minority member. All 99 representatives are up for election and control hinges on a mere 4-seat swing. 2006 and 2008 were big years for the Democrats. Two years ago, the House Democrats emerged from 14 years in the minority. They hold a 53-46 seat advantage. Interestingly, the Democrats have more term-limited members opening up seats that might not otherwise be noteworthy contests. They also have members swept into office in 2008 with the strong presidential turnout. While being in the majority translates into a fundraising edge, the past two elections have proven it is not insurmountable if voter mood and turnout is against your party. The Senate has a solid 21-12 Republican majority. Control is not in jeopardy. Conventional Statehouse wisdom is that only three or four of the 17 contested seats are truly competitive. Some think the GOP could actually pick up as many as two more seats. Democrat Governor Ted Strickland seeks a four-year extension in the top statewide post. He is being challenged by former Congressman and FOX News personality John Kasich. Attorney General Rich Cordray, the Democrat incumbent, was voted into the position in a special election two years ago following the resignation of Marc Dann. Former US Senator Mike DeWine is his Republican challenger. Auditor is also open because Republican Mary Taylor joined John Kasich as his running mate. This race pits Democrat David Pepper, a Hamilton County Commissioner, against Republican David Yost, Delaware County Prosecutor. Secretary of State opened up when Jennifer Bruner threw her hat in the US Senate primary race, which she lost to Lieutenant Governor Lee Fisher. Republican Jon Husted, currently a state senator and former Ohio House Speaker is running against Democrat Maryellen O’Shaunessey, who serves as Franklin County Clerk of Court of Common Pleas. Treasurer Kevin Boyce, a Democrat appointed nearly two years ago to finish out the balance of Rich Cordray’s term, is being challenged by Josh Mandel, a State Representative from suburban Cleveland. There are also two Ohio Supreme Court races. Republican Justice Maureen O’Connor is taking on Democrat Chief Justice Eric Brown, who was appointed to the post by the Governor following the death of Chief Justice Tom Moyer earlier this year. Republican Justice Judith Lanzinger is challenged by Democrat Mary Jane Trapp, an 11th District Court of Appeals Judge. So why should bankers care about these races? A lot really is at stake. Depending on whose polls you believe, strong voter sentiment against incumbents and the President could spell trouble for the Democrats who are looking to remain in their statewide posts or in control of the Ohio House. Changes would create new opportunities for our industry, which has been inappropriately targeted in recent years. Regardless of who wins, the OBL will continue to forge stronger relationships and educate our elected officials so that they better understand the vital role banks and thrifts play in every community across the state. As I’ve said before, my role with the OBL membership is to assist in managing legislative and regulatory risk. Individual banker involvement is critical to our industry’s success. Invite the candidates into your institution for a meeting. Plus, don’t forget to vote. A lot is at stake and Ohio’s banking industry is counting on you!

fall 2010 Ohio Record

Ohio Record fall 2010

WINDOW ON THE CAPITOL Senator Steve Buehrer State Senator Steve Buehrer represents the 1st Senate district, which includes Defiance, Fulton, Hancock, Hardin, Henry, Paulding, Putnam, Van Wert, Williams and parts of Auglaize County. Before coming to the Senate in 2007, he served four terms as the state representative for the 82nd Ohio

In this regular feature, Ohio Record introduces our elected state and federal legislators. In this edition, the spotlight is on State Senators Steve Buehrer (R-Defiance) and Tom Sawyer (D-Akron).

House District. Buehrer serves as chairman of the Insurance, Commerce and Labor Committee, which debates key issues that impact Ohio’s economy, including business regulations, consumer protection and workers’ compensation law. He also has an influential voice in shaping state transportation policy as vice chair of the Highways and Transportation Committee. In addition, Buehrer sits on the Energy and Public Utilities Committee, the Health, Human Services and Aging Committee and the Judiciary-Civil Justice Committee. He has been recognized as a Watchdog of the Treasury three times by the United Conservatives of Ohio for his fiscally-conservative voting record. He was also named Legislator of the Year by the League of Ohio Sportsmen in 2008 and recently was honored as a Guardian of Small Business by the National Federation of Independent Business in 2007. Ohio Record: Tell us a little bit about your background and how you became involved in politics? Sen. Buehrer: I started as an LSC intern in 1990 in the Ohio House of Representatives serving as an aide to Representative Jo Ann Davidson. I then continued my involvement in Ohio government by working at the Ohio Bureau of Employment Services, the Ohio Department of Human Services, the Ohio Department of Administrative Services and the Ohio Bureau of Workers’ Compensation under Governor Voinovich. During these years of governmental service, I knew I wanted to go back home and serve in the General Assembly. I always felt very blessed with the opportunities and upbringing I had enjoyed, and therefore, wanted to give something back to the community. So my wife and I packed up and moved back to my hometown of Delta where I ran for State Representative and won in 1998. Ohio Record: What is your stance on the foreclosure bill, HB 3? Why? Buehrer: During this economic crisis, I understand the desire for a bill such as this one; however, I believe it is vitally important not to add additional burdens to the lending institutions for very little real gain for people struggling to make their housing payments. I believe the legislature needs to do everything we can to assist both the lenders and our constituents who find themselves facing foreclosure. Unfortunately, I do not believe House Bill 3 accomplishes this goal. I believe Senator Jones’ Senate Bill 197, which focuses on mediation, takes a step toward this middle ground, with a shorter moratorium (three months) but still needs discussion and compromises before it is brought up for a vote. However, the most vital step to ending our foreclosure crisis is strengthening the economy and getting people back to work so they can begin to make their mortgage payments again. I believe that this should be the primary focus of the legislature. fall 2010 Ohio Record

Ohio Record: What accomplishments are you most proud of this session and what are your legislative priorities yet this year? Buehrer: The accomplishment I am most proud of is holding the line on additional burdens to businesses and families. I believe we need to do everything within our power to encourage businesses of all sizes to locate in Ohio. Holding back additional regulatory burdens is just one step in the process. I have had the privilege of working to reduce the burden for some businesses through my work on Senate Bills 162 and 204 which would reduce regulatory burdens in the telecommunications field and for the automobile dealers respectively. Ohio Record: Why should a banker care about public policy? Buehrer: A banker should be concerned about public policy because there are many bills that the legislature handles that will have an affect on them. In fact there are things in the Ohio Revised Code that may come as a surprise, for instance, the ORC mandates that banks are to be closed on holidays. The ORC also addresses big picture subjects, such as, which institutions can be considered public depositories. With such a wide sweeping spectrum of issues handled by the Ohio legislature I believe it is important to be watchful of things that will affect you personally, whether in business or your personal life and be sure to share your opinions with your elected officials. Ohio Record: How can bankers be helpful to you and the other members of the General Assembly? Buehrer: This question ties into the previous question because by caring about public policy and staying informed it gives bankers the opportunity to meet with their legislators and express their views on particular issues. In the end, the elected official works for you and the more opinions received from voters, the easier it is for he/she to make the decision to vote for or against a specific bill on behalf of their constituents.

Ohio Record fall 2010

Senator Tom Sawyer Senator Sawyer began his career as a public servant when he was elected to the Ohio House of Representatives in 1976. Drawing on his past profession as an educator, he served as chair of Ohio’s House Education Committee. After his tenure in the Ohio House of Representatives, Sawyer was elected mayor of Akron in 1983. While mayor, he set a new course for the city’s economic growth by restructuring the City’s fiscal reporting systems. He also improved the delivery of municipal services, strengthened police, fire and paramedic forces and balanced the City’s budget --all without raising taxes. Through these reforms, Sawyer restored the City’s broken and financially troubled Recycle Energy System and reorganized its $43 million debt, restored service and saved taxpayers over $80 million in long-term debt. He was then elected to the U.S. Congress in 1986 and served for 16 years. Drawing once again on his education background, Sawyer was deeply involved in the Education Committee, where he was active in every education measure taken in the House of Representatives and authored the National Literacy Act and the Eisenhower Mathematics and Science Improvement Act. Ohio Record: What is your stance on the foreclosure bill, HB 3? Why? Sen. Sawyer: It is too early in the process to take a position on HB 3 since the Senate Finance Committee has only heard sponsor testimony on HB 3. Additionally, we are unsure what form this legislation will take as there is a possibility that certain provisions of HB 3, HB 9 and SB 197 will be combined. Ohio Record: What accomplishments are you most proud of this session and what are your legislative priorities yet this year? Sawyer: I am extremely proud that we were able to balance the state budget while sustaining stability in the public schools and maintaining the strength of Ohio’s higher education system. I look forward to the remainder of the session as we prepare and position the state for the next biennial budget.

Ohio Record: Why should a banker care about public policy? Sawyer: A banker should care about public policy because it affects the venue in which you work daily. Ohio Record: How can bankers be helpful to you and the other members of the General Assembly? Sawyer: After an extended period of time dealing with one of the most difficult economic periods in recent memory, it has played itself out in no small part on how bankers relate to constituents having difficulty with their mortgages. Bankers have been enormously helpful in addressing the needs of our constituents on the mortgage issue, and profoundly unhelpful in some cases. We all need to do our best to help each other.

fall 2010 Ohio Record

S.A.F.E. At Last! “Are we there yet?” Parents everywhere hear this one nearly every time they take the kids more than a few miles in the car. We at OBL have been getting this kind of question repeatedly over the past year or more regarding rules to implement the S.A.F.E. Act. These queries revealed much confusion over what the requirements are and when they would take effect for banks and thrifts. We heard questions like, “I got an email saying that the SAFE act statute requires loan originators to be registered, but that the regulation has not been created and no compliance date has been set. Then, I got an educational notice from an online vendor that says loan originators must be registered by December 31, 2009. Can you clarify things?” “What is the date for this to happen? Is a date set yet?”

A little background Congress enacted the Secure and Fair Enforcement for Mortgage Licensing Act in July 2008 to require states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators, and provide for the establishment of a nationwide mortgage licensing system and registry for the residential mortgage industry. The Act requires all states to provide for a licensing and registration regime for mortgage loan originators who are not employed by federal agency-regulated institutions within one year of enactment (or two years for states whose legislatures meet biennially).

Ohio Record fall 2010

By William J. Showalter, CRCM, CRP OBL Compliance Services Senior Consultant

In addition, the S.A.F.E. Act requires the federal banking agencies, through the Federal Financial Institutions Examination Council, and the Farm Credit Administration to develop and maintain a system for registering mortgage loan originators employed by agency-regulated institutions.

Licensing vs. registration Most of the confusion seemed to center on the issue of licensing versus registration of mortgage loan originators. The issue is really deceptively simple. MLOs that work for federally supervised banks, thrifts, and credit unions (as well as FCA lenders) must register with the national registry. MLOs employed by other mortgage lenders must navigate the licensing and registry system, a much more time consuming, expensive, and burdensome process which also carries a continuing education requirement.

Coverage A “mortgage loan originator” is an individual who both takes residential mortgage loan applications, and offers or negotiates terms of a residential mortgage loan for compensation or gain. The term “mortgage loan originator” does not include individuals that perform purely “administrative or clerical tasks” (the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry) and communication with a consumer to obtain information necessary for

the processing or underwriting of a residential mortgage loan). Also excluded are individuals that perform only real estate brokerage activities and are duly licensed, individuals or entities solely involved in extensions of credit related to timeshare plans, employees engaged in loan modifications or assumptions, and employees engaged in mortgage loan servicing. “Compensation or gain” includes salaries, commissions, or other incentives, or any combination of these types of payments.

MLO registration An MLO must be federally-registered if the individual is an employee of a depository institution, an employee of any subsidiary owned and controlled by a depository institution and regulated by a federal banking agency, or an employee of an institution regulated by the FCA. The joint final rule, as required by the S.A.F.E. Act, prohibits an individual who is an employee of an agency-regulated institution from engaging in the business of a loan originator without registering as a loan originator with the national registry, maintaining annually such registration, and obtaining a unique identifier through the registry. Employer financial institutions must require adherence to this rule by their employee MLOs. The national registry is not yet ready to accept MLO registrations. It is expected to be ready by early in 2011, at which time the federal agencies will announce a date when registrations may begin. Bank and thrift MLOs will then have 180 days to complete their initial registrations.

MLOs may submit their registration information individually or their employer institution may do it for them. The decision of which approach to take should be made by management to assure consistency within the institution, especially since there is prescribed institution information that also must be submitted to the registry. MLOs and their employers need to remember that registrations will have to be renewed annually for as long as an individual operates as an MLO.

Other requirements Bank and thrift managers also should be aware that there are specific requirements in these new rules regarding the use of a unique identifier by MLOs, as well as

Contact William J. Showalter of OBL Compliance Services for all your compliance needs at (614) 340-7623 or wshowalter@ohiobankersleague.com.

for the institution to have policies and procedures to implement S.A.F.E. Act requirements. While the date for registrations to begin has not yet been set, the date by which financial institutions must have their S.A.F.E. Act policies and procedures in place has â&#x20AC;&#x201C; by the effective date of the rules, October 1, 2010.

So, the â&#x20AC;&#x153;are we there yetâ&#x20AC;? question has been answered. We are. Now, we must work to meet the challenge of implementing the new MLO registration requirements.

fall 2010 Ohio Record

HEALTHCARE REFORM UPDATE

What you Need To Know Now Wendy M. Hench OBL OBBT Administrator

Ohio Record fall 2010

Health care reform will be phased in over the next several years. While refinements are still pending, there are certain issues and processes that will need to be addressed before the first plan year following Sept. 23, 2010 or in other wordsâ&#x20AC;ŚNOW. These include deciding on grandfathered status; small-business tax credit; and W-2 reporting. The first question to address is whether or not your plan will be considered a grandfathered plan, or one that was in existence on March 23, 2010. As one of the themes for healthcare reform was to offer the same coverage that was available when the bill was signed, only certain changes are allowed to a grandfathered plan. These changes include smaller adjustments to deductible; out of pocket limits and co-pays; decreases in employer contributions by more than 5 percent; and change in carriers for self funded plans. Fully insured plans must renew with their current carrier to remain grandfathered. Reasons for deciding on maintaining grandfathered status include delayed effective dates on some of the mandates such as allowing certain external appeal rights; first dollar preventive services; removal of preauthorization for OB/GYN care; emergency services; and extending dependent coverage to age 26. Grandfathered plans would be allowed to make routine changes to their plans to account for medical inflation and adopt new consumer protections in order to comply with legal requirements. Premium changes are not taken into account when determining whether or not a plan is grandfathered. To maintain grandfathered status, plans will be required to meet certain administrative requirements such as plan communication materials to verify grandfathered status, maintaining documentations of plans including contribution structures in existence on March 23, 2010, and required calculations of the impact of certain benefit changes. All plan materials provided to a participant or beneficiary must include appropriate disclosure language. If a plan offers separate benefit options such as varying deductible, the grandfathered status of each plan is analyzed separately. On the other hand, there are pros for opting out of grandfathered plans. A majority of current plan designs already cover the patient protections detailed in the legislation such as no recession of coverage due to illness. In addition, most plans do not currently require referrals or designation of doctors and allow for access to emergency care without priorauthorization. First dollar benefits for preventive services are also currently included in most plans; however, co-pays and annual limitations will need to be removed for the upcoming plan year on in-network services. Abiding by grandfathered plan rules creates a hefty administrative burden and eliminates sufficient flexibility with plan designs. It should be noted that the mandated benefit changes could have an impact anywhere from 1 to 9 percent on premiums for the next plan year. The flexibility to make plan changes could help offset such premium increases. The government estimates that a large percentage of employer sponsored plans (50 to 80 percent) will lose their grandfathered status by 2013. This is mostly due to the extensive requirements of maintaining grandfathered status and restrictions both on the employer and plan levels. By decreasing premium contributions on a grandfathered plan by greater than 5 percent, employers could be faced with penalties of up to $100 a day per covered

life for each day of non-compliance. The Ohio Bankers Benefits Trust Trustees have unanimously voted to offer only non-grandfathered plans for the 2011 plan year. This will allow greater flexibility to plan designs as well as relieve the compliance burden from its members. The Trustees agreed that remaining active and vibrant in an industry that is constantly changing means having some elasticity to respond to rising healthcare costs and legislative reform. Employers should review the grandfathered issues with their current health insurance carrier and the effects it will have on their plan in 2011. Another consideration as a result of healthcare reform is the small-business tax credit. Beginning in 2010, a small-business tax credit will be available to help employers

purchase health coverage. The credit is targeted to help small businesses with fewer than 25 full time equivalent employees with an average annual wage less than $50,000. The credit is largest for employers with 10 or fewer FTE with annual wages less than $25,000. Employers should review the tax credit with a tax advisor before filing. Beginning with the 2011 calendar year (i.e., W-2s filed January 2012), employers must begin to report the value of employer provided health coverage on an employeeâ&#x20AC;&#x2122;s W-2. The reported value should be equal to the COBRA cost less the 2 percent administrative fee of both the employer and employee contributions. Although the new rule applies for employeesâ&#x20AC;&#x2122; tax years beginning after Dec. 31, 2010, payroll sys-

tems need to be updated for this change by January of 2011. Plans for which coverage costs must be reported under the new requirement include medical, prescription, and Medicare supplemental policies. Coverage under dental and vision plans is also included, unless they are â&#x20AC;&#x153;stand-aloneâ&#x20AC;? plans. HSAs and FSAs are excluded from the reporting requirement. Employers should begin working with their payroll departments immediately to ensure compliance with these new requirements. For more information on healthcare reform, visit www.dol.gov/ebsa/healthreform/, www.irs.gov, and www.insurance.ohio.gov. For a free quote on your health insurance needs, contact the OBLâ&#x20AC;&#x2122;s Gary Sutter at (614) 340-7615.

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BEWARE of Fraudulent Wire Transfer Requests

Mike Read Marketing and Sales Manager ABA Insurance Services Inc.

Ohio Record fall 2010

Despite increased vigilance by banks in recent years, fraudulent wire transfers continue to be an on-going problem in the banking industry. Even when procedures are followed carefully, banks and their customers can still suffer a loss, such as in this following real example: A community bank and several of its customers were targeted in a relatively straightforward scam. A caller purporting to be a legitimate bank customer contacted the bank, asking that the customer’s home and business phone numbers be changed. The imposter apparently provided satisfactory security information to the bank’s customer service representative, who thereby completed the request. Several days later, a person posing as the customer called to request a transfer of funds between accounts and a corresponding international wire transfer of over $350,000. The bank representative, following the bank’s standard wire transfer verification procedures, instructed the caller to fax a signed wire transfer request to the bank, which the imposter did immediately. Before the wire was sent, the bank placed a verification phone call to what they believed was the valid phone number of the account holder. They received confirmation and sent the wire. Days later, a second victim was targeted. Earlier, the victim’s phone and fax numbers were changed as they had been in the first case. A caller claiming to be the valid account holder requested a wire transfer. The bank, again following procedure, faxed a wire transfer request form to the caller. The person called back the next day stating he had not received the form. He provided an alternate fax number and ultimately received the form. It was completed and faxed back to the bank. However, because the request form was apparently faxed to an alternate number, the bank took the additional step of comparing the signature on the form with the signature card used to open the account originally. Noticing the signatures did not match, the bank called the customer using the phone number on the signature card—NOT the number in the bank’s computer system (which had been changed)—and the fraud began to unravel. A similar attempt on a third victim was subsequently thwarted. It can be difficult to detect fraudulent activity. Sometimes even the most benign event can be the start of a serious problem. Here, the bank followed their verification procedures and still suffered a loss. While it is impossible to prevent all criminal activity, a bank’s best defense is to educate frontline employees to be on the alert for suspicious or unusual activity and immediately bring it to their supervisor’s attention. For instance, does the transaction follow the pattern of typical account behavior? The victim in this case was a longtime customer of the bank

Find Us on the Web Go to www.ohiobankersleague.com to catch up with the latest news as it happens in the Ohio banking community. View our calendar of events; get involved in online political grassroots campaigns; find a product or service; browse our banking news section; or enroll in the latest in banker education programs. It’s all there. and had never wired money at all during their relationship, let alone internationally. The old adage “know your customer” continues to be relevant, even in today’s electronic age. Encourage your staff to ask questions and explain the recent scams that are being reported in the industry.

Mike Read is the Marketing and Sales Manager at ABA Insurance Services Inc., which provides D&O, bond and related coverages to financial institutions in all 50 states from an A+ rated insurance carrier. To learn more about this OBL-endorsed program, please contact Mike at 1-800-274-5222 or mread@abais.com.

fall 2010 Ohio Record

Helping You Navigate the Compliance Frontier Few disciplines in banking are more challenging than the ever-changing landscape of regulatory compliance. The Ohio Bankers League can help you navigate the often complicated compliance frontier through OBL Compliance Services. Utilizing the experience of a highly-regarded 25-year industry veteran, the OBL now offers a wide variety of direct compliance consulting services covering a broad spectrum of federal consumer protection laws and regulations. To learn more about OBL Compliance Services contact the Ohio Bankers League at 800-686-6755.

OBL Compliance Services A SERVICE OF THE OHIO BANKERS LEAGUE

Ohio Record fall 2010

CANFIELD Farmers National Bank announced that John Gulas has been named president and

CEO of both the company and its whollyowned subsidiary, Farmers National Bank of Canfield. Gulas succeeds Frank Paden, who remains as executive chairman of both boards.

CANTON Randall

Smith

recently joined Westfield Bank as senior commercial banking advisor for the bank’s new Stark County office.

CLEVELAND

Randall Smith

OBL affiliate member Buckley King, a leading business and commercial law firm, has welcomed Lisa Lowe as a partner in its Business and Financial Services Group. Lisa Lowe KeyCorp announced that Mark Williams will join the company as director, strategy. OBL affiliate member Paragon Capital Group, LLC announced that Charles Crowley and Michael Voinovich have joined the firm as managing directors in investment banking and as principals of the firm. Also joining Paragon are Christopher Chapman, Istvan Nadas and Laura Davis.

COLUMBUS Huntington Bank has named Josh Eichenhorn senior credit approval officer

LAKEWOOD

PORTSMOUTH

First Federal of Lakewood signed a definitive agreement to acquire Century Bank, headquartered in Parma. Under the terms of the agreement Century Bank will be merged into First Federal of Lakewood.

American Savings Bank, FSB, announced that Gregory Flowers was named loan operations supervisor and Norma Wampler was named head teller of the South Shore, Kentucky branch.

MOUNT VERNON First-Knox National Bank announced the appointment of Nicholas Blanchard to manager of the Blackjack Road Office and Paul Mayville as assistant manager at Nicholas the Bellville Office. The Blanchard bank also announced that Wendi Fowler, trust officer at First-Knox National Bank, was recently awarded the Certified Trust and Financial Advisor designation from the Institute of Certified Bankers Paul Mayville (ICB).

PITTSBURGH, PA OBL affiliate member PWCampbell recently announced the following promotions/appointments: Allyson Gaherty to vice president of retail integration and strategy; Derek Nichols, to senior project manager for branding and merchandising; John Latsko was promoted to vice president and director of preconstruction; Frank Stumpo, to project manager; and David Welsh to vice president and director of sales.

responsible for bankwide commercial credit approval and credit administration and Scott Brewer, formerly of Stifel, Nicolaus & Company, Inc. in Cleveland, new corporate development director.

DEFIANCE

Allyson Gaherty

John Latsko

Rurban Financial Corp. has elected

Gregory Flowers

Norma Wampler

YOUNGSTOWN The Home Savings and Loan Company, a subsidiary of United Community Financial Corp., announced Patricia Young was named assistant vice president and branch manager of its Glenmoor Office while Greg Yurco was named vice president/commercial loan officer in commercial lending.

WESTFIELD CENTER Matthew Berthold was promoted to chief financial officer of Westfield Bank, replacing Joseph Kohmann who moved to Westfield Insurance as assistant group finance leader.

Tell Us About It Have an interesting story to tell, recent promotions, innovative program or other bank announcements? If it’s news you think we need to know… tell us about it. We’re interested in keeping up to date on the activities of our members. Please put the OBL Communications Department on your media mail or e-mail lists. Send your news to: James Thurston Editor, Ohio Record, jthurston@ohiobankersleague.com, 4249 Easton Way, Suite 150, Columbus, OH 43219-6170.

Timothy Stolly to serve as a director on the

board of Rurban and The State Bank and Trust Company.

Derek Nichols

David Welsh fall 2010 Ohio Record

Focus On…The First Citizens National Bank of Upper Sandusky Here Today. Here Tomorrow. That’s the motto at The First Citizens National Bank of Upper Sandusky, and it’s well earned. Dating to 1860, The First Citizens National Bank is wrapping up a 15-week celebration of its 150 years of service to its customers and to its community. The 150th anniversary celebration, which culminated in an Oct. 8 reception open to the public, has involved main office displays of both antiques and banking ephemera as well as weekly displays focusing on each decade in the bank’s history. The history of First Citizens National begins with the Exchange Bank which was founded in Wyandot County in 1860. In 1863, its assets and liabilities were purchased by a group of men, among them Thomas Valentine Reber, who established The First National Bank. Reber was the first president of First National. In 1946, First National consolidated with Citizens Savings Bank, forming The First Citizens National Bank, and

the yellow brick building which had housed Citizens became home to The First Citizens National Bank. Over the years the bank has expanded to encompass five of the downtown storefronts in Upper Sandusky. The Reber family, which has been a driving force throughout the bank’s history, continues to be actively involved – Nancy (Reber) Johnson is the current Chairman of the Board, which includes president/CEO Mark Johnson, EVP/COO Robert McClure, William Clark, Mark Kimmel, Joseph Kraus, Bruce Kuenzli, David Mason,

James Needs, James Reile, Jerry Taylor, and Kenneth Young. Directors Emeritus include S. S. Ruttmann, Donald B. Schilling, Jack Wilson, James McClain, and Dr. D.P. Smith. The First Citizens National Bank is a member FDIC and has been rated a Five-Star bank for safety and soundness by the Bauer Financial group for more than 20 consecutive years. More information regarding the bank’s anniversary celebration is available from Kate Orians, (419) 294-2351 or korians@firstcitizensnational.com.

MEMBERSHIP has its Benefits With new free online compliance training and access to the best in consumer compliance consulting, OBL membership has its benefits. To learn more contact James Thurston at (614) 340-7621.

Ohio Record fall 2010

Looking for Non Interest Revenue? We can point you in the right direction.

Please contact Michelle Crume at mcrume@ohiobankersleague.com or (614) 340-7622 for further information. fall 2010 FINRA/SIPC Ohio Record Securities offered through INFINEX INVESTMENTS, INC. Member

It’s all about choice. We’re flexible – You decide. In today’s competitive marketplace, benefits have become as important as compensation when hiring or retaining the best and brightest employees. That’s why we believe it’s important for you to have as much input as possible when it comes to designing your bank’s employee benefits program. With the Ohio Bankers Benefits Trust, you can pick and choose one, all, or a combination of plans you want to offer your employees and determine how you want to allocate premium contributions. Plan options mean greater cost control. For more information about the OBL health plan options contact: Gary Sutter at 614-340-7615 or gsutter@ohiobankersleague.com

OHIO BANKERS BENEFITS TRUST

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