Ohio Bankers League Winter 2010 Magazine

winter 2010 issue

The Official Magazine of the Ohio Bankers League

PARK NATIONAL’S

Bill McConnell An Ohio Pioneer

INSIDE THIS ISSUE

OBL ANNUAL MEETING

IN PICTURES

WHAT TECHNOLOGY TRENDS WILL BE TOP OF MIND FOR BANKS IN 2011 THE HIDDEN CRISIS IN BANKING

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winter 2010 issue

Contents A Comprehensive Resource for the Ohio Banking Industry

Other News

4 Chairman’s Corner 6 Random Thoughts 18 Steps of the

Features

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In Pictures

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Statehouse

30 Window on the Capitol

34 Banking Calendar 45 Around the Industry

OBL Annual Meeting Provides Direction to Crowd of 300 Park National’s Bill McConnell A Pioneer in Banking

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The Hidden Crisis in Banking

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How Might Dodd-Frank Affect your Directors & Officers Insurance?

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Intensive Week Translates into Wealth of Knowledge OBL Bank Management School 2010

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2010 Year in Review

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Historic Changes for Elections and Electioneering

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Gone with the Wind The forever-changed banking landscape and how to navigate it

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Opening the Spigot: Realizing new revenue streams through export finance

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What Technology Trends Will Be Top of Mind for Banks in 2011?

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chairman’s corner Tom Moore, President & CEO at First Federal Bank of Ohio in Galion

A Tumultuous Year Well, I picked an interesting year to be OBL chairman. It seems like only a month or two ago that I was looking forward to Christmas 2009. Now, Christmas 2010 is upon us and I find myself wondering where the past year has gone.

If I was to characterize 2010 with just one word it would be ‘tumultuous’. The OBL was faced with a great deal of adversity but still accomplished a lot in a short space of time, in the political arena, in educating Ohio’s bankers, and through its collective buying arm, OBL BankServices.

Government Government remains the most significant risk area for banks. With Dodd-Frank, this was underlined once again.

The multitude of new regulations created by this huge bill will usher in a new age for banking and drive up compliance costs for all Ohio institutions. The OBL fought long and hard to mitigate or remove the bill’s more harmful provisions – like abolishing the thrift charter – but there is a long road ahead during the implementation phase.

Ahead of the rulemaking process, the OBL has been working with the U.S. Treasury to give Ohio banks and thrifts the opportunity to give real input into the process and open lines for future communication.

We are actively engaged with the Comptroller of the Currency as it takes on the regulation of federally chartered savings & loans. Head regulators from the OTS and OCC recently visited the OBL offices to discuss the new regulatory structure with members.

We also have our Annual Washington D.C. fly-in on March 2, where we will visit the heads of all the federal banking agencies, along with top staffers.

Dodd-Frank would have been worse had it not been for the tireless work of the OBL government team and its grassroots network of bankers who took the time to

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explain complex issues to their congressmen, one-by-one. But the important debate on regulations is yet to come. We need you to be a part of it.

Investment The OBL has once again been at the forefront of educating our bankers. We held more than 50 classroom seminars, led the way on six banking schools and co-sponsored two others with adjoining states. The

Dodd-Frank would have been worse had it not been for the tireless work of the OBL government team and its grassroots network of bankers who took the time to explain complex issues to their congressmen, one-by-one. association also held another great convention, this time in French Lick, Indiana, attended by over 300 and hailed by many as ‘one of the best ever’. We had fun watching the Buckeyes beat Miami with old friends in French Lick, even if it did make us a little late for the evening reception.

Attending the convention, with its networking opportunities, outstanding programming and governmental insight, brought to mind the many advantages OBL membership brings. Your dues dollars work in a variety of tangible and intangible ways, many of them detailed in this edition of Ohio Record. I challenge you over the next year, to make those dollars work in ways that may never be read in these pages.

Enroll someone at your bank in the Bank Management School and see what a difference it makes. Nearly every OBL member that has enrolled a student in the school has found the experience so beneficial that it has sent at least one more. Look at the seminars the OBL holds every week, covering almost every conceiv-

able subject. Need one that isn’t listed?

Call the OBL and ask Julie or Susan to build a high quality course for you.

Explore the products and services that OBL BankServices provides – one of them could save your institution thousands of dollars or help provide a product or service you don’t offer today. Only this past year, the OBL’s collective buying arm embarked on an exciting new venture offering title agency services that could further enhance your bank’s arsenal of products and services.

Honor The year might have been tumultuous, but it has also been rewarding. It was very special to be part of the OBL leadership team in the same year that former OBL chairman Steve Wilson of LCNB National Bank was named chair of the American Banker Association. Having one of Ohio’s own sons in such a prestigious position is truly an honor.

It has been a wonderful experience for both Polly and I, and the year really has flown by. I would like to say thanks to Mike Van Buskirk and the OBL staff for all their support and cooperation. Paul Reed has a great team to work with during his tenure as chairman in 2011 and he has my full support moving forward. With Paul at the helm, the Ohio banking industry is in capable hands.

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.

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

OSU President Gordon Gee to Speak at 2011 CEO Symposium - May 10 & 11 OBL Taps Time Magazine’s Best College President as Keynote The Ohio State University President Gordon Gee is confirmed to keynote the 2011 OBL CEO Symposium, May 10 & 11 at the Hilton Columbus at Easton. Gee, recently called a “transformational leader who understands where we have been, where we are and where we still need to go,” by the OSU board of trustees, will offer inspirational leadership insights.

Gee has spoken about the importance of Ohio's higher education institutions as elements in forging Ohio’s long term economic revitalization – and will also address these issues at the program. Watch for complete agenda details, which will include the return of the popular Regulatory Panel Discussion. Suggestions for session topics and speakers are now being accepted; and a limited number of sponsorships are available.

NEW! The OBL will include a special guest rate for the program, allowing for your spouse to attend the opening and closing keynote luncheons. Please contact Susan Poling at 614-340-7611 or spoling@ohiobankersleague.com for more information.

Carol Halkias, Accounting chalkias@ohiobankersleague.com Wendy Hench, Administrator Ohio Bankers Benefits Trust whench@ohiobankersleague.com 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.

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 over 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.

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random thoughts Michael M. Van Buskirk President & CEO

Penny Wise – Pound Foolish In today’s economy can you or any banker support promising long term development when there’s a less expensive short term alternative? Often the answer must be no. What I’ve just described is a dilemma bank executives routinely face in their own institution. It’s also a dilemma they routinely face collectively as they work to build their bankers’ associations.

Health insurance, the subject of intensive public attention and national debate throughout this year, is a good example.

Skyrocketing medical costs have made affordable insurance for high quality health care a challenge for every business, particularly small businesses.

Health insurance cost was an area that the banker leadership of OBL decided to confront directly a number of years ago, founding a co-operative health insurance trust. Community banks, joining together, essentially own their own insurance company. Its form is non profit. It was designed to be effective, but operationally lean. The combination should add up to savings and it does, over time.

The OBL’s purpose, generically, is to be the platform on which the industry builds solutions to problems best addressed by banks working together. That could be lobbying the Ohio General Assembly or working out better rules with a bank regulator. It could be developing a school or webinar on a subject key to banking or researching and writing an industry newsletter or magazine. More recently it has been cooperatively bank owned businesses like our securities dealer-broker Infinex, our new title insurance operation, or the aforementioned Ohio Bankers Benefits Trust.

The trust has been successful since the OBL was formed from its two predecessor organizations. It has grown to represent 40 percent of Ohio’s banks. Its year to year premium changes have been less than half the Ohio medical cost inflation trend rate.

We’ve even had premium holidays when claims experience was particularly good.

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Since the trust’s only goal is to provide affordable, high quality health care and break even, its operating cost ratios are significantly below the major insurance companies. Nevertheless, while the trust has been growing steadily, it remains small compared to companies like Medical Mutual or Anthem. The giant health insurers don’t offer premium holidays, particularly if they have shareholders.

However, they rarely have bad claims years because their size evens out their claims experience. Scale isn’t everything but a large pool does smooth out bumps. 2010 brought the Ohio Bankers Benefits Trust a bump.

Last October, after several years of favorable experience, health insurance claims in the trust jumped and remained very high throughout the first half of the year. Part of the jump was caused by the recession and by concerns surrounding Congressional consideration of the national health insurance bill. Part was simply a much higher than average number of cancer claims. An average is an average, and claims fell to normal levels in the past quarter. However, the trust board (all community bank CEOs whose employees are insured by the trust) set renewal premiums at twice the rate of last year in order to restore the trust’s reserves.

In a tough economy every bank needs to save money wherever it can. But if an institution secures a lower bid as a marketing ploy from a larger company will the teaser rate be outweighed by larger premiums down the road? That has often been the case. Since our last price increase, some banks have left the plan, but others are poised to join. However, the consequence is that growth which benefits all bank participants could be slowed. One of the pleasant facts about the trust is that every time a new bank joins, statistically it makes the program better for every existing participant. As the trust grows, the “bumps” smooth out and the operating cost advantages pay off more consistently.

Cooperative action, the reason the OBL was created more than a century ago, requires banks to work for the common good. Long term everyone benefits.

Ultimately, community bankers best control their destiny by working together picking areas where scale can make a difference then working cooperatively to make sure these jointly owned operations are run effectively and efficiently. Success depends not just on jumping into the pool; it requires being a part of the collective oversight.

In good economic times, it’s easiest to look to the long term. But it is during bad economic times when the benefits of past investments in the common good really pay off. Cooperative success requires looking ahead.

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.

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A packed auditorium hears from former Southwest exec Jason Young

Park’s Bill McConnell (right) receives the Pioneer in Banking Award

Richland Bank’s Dave Gooch with the Barrister Title Group team of Saunie Tomecko, Vicki Webb and Bud Vetter

President of the Ohio Senate Bill Harris

Ohio Valley Bank’s Jeff Smith, Farmers Bank and Savings Company’s Paul Reed and keynote speaker Jason Young

FHLB Cincinnati’s Tom Ciresi and Miami Savings Bank’s Bob Lameier Portage Community Bank’s Rick Coe, Cincinnati Federal Savings and Loan’s Joe Bunke and Taylor Adviser’s Todd Taylor

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IN PICTURES

OBL Annual Meeting Provides Direction to Crowd of 300

By Susan H. Poling, OBL Communications Manager

Community Bancshares, Inc.’s Tom Will receives the Ohio BankPac Shining Star Award

“Last year, a 2,300 page banking bill was passed. This year, the rules for that banking bill will be written,” said incoming OBL board president Paul Reed, president & CEO, Farmers Bank and Savings Company, Pomeroy, at the OBL Annual Meeting & Professional Development Event on Nov. 3. He then noted, “If you want a better industry, it is more important than ever to get involved.”

If the turn-out for this year’s program is any indication – Ohio bankers are ready for action. Informative breakout sessions – many with standing room only – industry awards and the OBL Board election attracted more than 300 Ohio banking industry executives.

Including a keynote address from Southwest executive Jason Young, president of LeadSmart, Inc., and comments from Ann Jaedicke, deputy comptroller for compliance policy at the OCC, the program brought bankers together at the end of another challenging year to provide a road map, directions, tools and strategies to succeed in 2011.

Young, who offered insight on the importance of building relationships and holding leaders accountable, provided tools and strategies among real-life experiences as he shared the cultural factors that drive the behavior of managers and those employees who serve the customers.

2011 Board of Directors Elected

The OCC’s Ann Jaedicke and Ohio BankPac Chairman Trent Troyer, First Federal Community Bank, Dover

Elected 2011 association leaders included: Chairman – Paul M. Reed, president & CEO, Farmers Bank and Savings Company, Pomeroy; First Vice Chairman – Chairman G. Courtney Haning, chairman/president/CEO, The Peoples National Bank, New Lexington; Second Vice Chairman –Trent B. Troyer, president & CEO, First Federal Community Bank, Dover; and Treasurer – Paul M. Limbert, president & CEO, WesBanco Bank Inc. Elected for two-year, directors-at-large positions, with terms expiring Dec. 31, 2012, were: Kurt Treu, EVP/market president, Cleveland, U.S. Bank National Association; Daniel W. Schutt, president & CEO, The Union Bank Company, Columbus Grove; and William Koehler, president, Great Lakes Region, KeyBank, NA, Cleveland.

Awards & Honors

OBL Chairman Tom Moore, First Federal S&L Assoc. of Centerburg’s Terry Bumpus and the OBL’s Mike Adelman

Park National Corporation's Bill McConnell was only the second banker in history to receive the Pioneer in Banking Award (read more on p. 10); while President of the Ohio Senate Bill Harris received the Paul E. Gillmor Lifetime Public Service Award. Upon receiving his award, Harris told attendees, “You need to communicate (to those in office) what your needs are in your industry.”

Community Bancshares, Inc., was awarded the 2010 Shining Star Award recognizing contributions to Ohio BankPac. The bank’s president & CEO Thomas D. Will accepted the award from OBL board chairman Thomas Moore, president & CEO, First Federal Bank of Ohio, Galion. Will said, “Bankers need to ensure our message and our concerns are heard,” as he encouraged all to support the effort in 2011.

The Mechanics Savings Bank in Mansfield received the annual GSB Banker Advisory Board Scholarship, awarded to an outstanding OBL member bank for its involvement in their community and the League. President Deborah Schenk accepted the award on her bank’s behalf and noted, “It will be a great encouragement to our entire team as we earn the right to remain independent every day. Being the only independent bank in our community is a privilege that carries with it great responsibility. To that end, we shall use the scholarship judiciously.” winter 2010 Ohio Record

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PARK NATIONAL’S

Bill McConnell McConnell at an OBL event.

Bill and late wife Jane

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A Pioneer in Banking James Thurston Editor

rk Chairman With current Pa DeLawder l ie & CEO Dan

After receiving his MBA in the late 1950s, a young Bill McConnell knew he wanted to get into banking. He also knew the kind of bank he wanted to work for.

In an interview at then small community bank Park National, the bank’s CEO asked him, “Do you aspire to be the bank president?” McConnell replied, “I’m not certain I have the ability, but I don’t want to go to work for a bank where that isn’t a possibility.”

More than 50 years after being hired as the bank’s first management associate, he still sits on the board of the Newark-based institution, and Park has gone from strength to strength under his leadership and that of his successors.

At the recent OBL Annual Meeting, McConnell was presented with the Ohio Bankers League Pioneer in Banking Award. The award recognizes an Ohio banker whose vision, innovation and leadership have had a material impact on our industry and Ohio communities. He became only the second individual to receive the award, after former Bank One CEO John G. McCoy accepted it in 2006.

OBL President & CEO Mike Van Buskirk commented, “Bill is credited by many around the country for developing and proving the concept of what has become known as the super community bank.”

Early on, McConnell believed in centralizing the parts of bank operations that were transparent to the bank’s customers. Centralizing accounting, investment portfolio management, audit and data processing were early candidates for consolidation. But decision making powers remained local.

Current Park Chairman & CEO Dan DeLawder pointed out, “Keeping decision making “in the field” was critical if we hoped to offer a higher quality of customer service than our competition. Bill was the first to make it clear that ‘…all wisdom does not reside in Newark, Ohio’ and that for Park to be successful, decision making input and collaboration would be preferred.”

McConnell was also very aware of hiring the brightest and best, and then investing in them.

“Growing Park into an Ohio banking leader, he understood the critical importance of the most basic building block – people,” observed Van Buskirk. “Recruiting and developing people with real ability were hallmarks of his leadership.”

McConnell is one of only a handful of bankers to have served as chairman of both the OBL and national banking trade group, the American Bankers Association.

Van Buskirk added, “He viewed bankers associations, both state and national, as critical tools to help his bank and the people he worked with serve their customers and shareholders better. Bill invested heavily in tools important to his bank and he invested himself in the Ohio Bankers League throughout his career.”

He also served two terms as director of the Federal Reserve Bank of Cleveland and is a current director of several local companies. He received a B.A. in Economics from Denison University, an M.B.A. from Northwestern University and is a graduate of several professional schools including the Stonier Graduate School of Banking.

His activities in the community include serving as a trustee of the Newark Campus Development Fund, Licking County Foundation and A Call To College, and board member of Kendal of Granville and Granville Studio of Visual Arts. He served as a trustee and chairman of the board of trustees of Licking Memorial Hospital, and subsequently chaired the hospital's holding company, Licking County Health Systems. winter 2010 Ohio Record

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“Bill followed in the footsteps of John Alford and Ev Reese (pictured, with McConnell, outside Park’s HQ in Newark) which was no easy task as both John and Ev were icons in Ohio banking circles, and Mr. Reese also led the American Bankers Association in the early 1950s.

Bill gained immeasurably from working with his two predecessors…learning along the way the value of integrity, hard work, and making sure the business of banking was fun for all involved. He combined high intellect with a keen understanding of knowing how to recruit folks to the bank, give them meaningful work to do, and stay out of their way while they got the job done.”

– PARK CHAIRMAN & CEO DAN DELAWDER “When Bill originally hired me I had been turned down 24 times.

He explained, ‘We hope everyone else was wrong.’

“Bill is a real Renaissance Man. He took up golf later in life, still takes ski lessons even though he’s skied for more than 30 years and runs every day. Conversations with him are always multi-dimensional. The subject can go from economics, to British literature, to child raising tips, all in the space of a few minutes.”

– PARK PRESIDENT DAVID TRAUTMAN “Bill McConnell proved early that he was a natural leader. The people that worked with and for him – and competing bankers – instinctively liked him. That attraction was a combination, I think, of intelligence and integrity.”

– OBL PRESIDENT & CEO MIKE VAN BUSKIRK “In his own kind way Bill forced me to learn and grow my career in ways I wouldn’t have done on my own. I’ve often shared with others how he would assign me a project…give instructions ending with “you know”. In most cases I “didn’t know” but I’d figure it out, completed the project and always made sure whatever I did reflected well on him. He recognized abilities and skills in me that I didn’t even realize I had and led me to improve as a banker and as an individual.”

– PARK ASSISTANT VICE PRESIDENT BRENDA KUTAN

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Bill with John Alford and Ev Reese, both former OBL chairmen and presidents of Park. Reese, like McConnell, also chaired the ABA

Outside the Newark Chamber of Commerce with retired Park SVP Jerry Nethers

Bill at the Ohio Bankers Association Convention, 1984. He chaired the organization in 1981

With Park AVP Bren da David Trautman. Tra Kutan and President utman are also former OBL and DeLawder chairmen

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The Hidden Crisis in Banking Alan J. Kaplan Founder & CEO Kaplan & Associates, Inc.

As we emerge from the financial downturn now known as The Great Recession, which pummeled the financial industry and spawned the now-despised program known as TARP, another crisis is looming. This crisis, however, is not one caused by faulty mortgage lending policies, credit default swaps or Wall Street. It is of our own doing, even aided and abetted at times by bank boards and CEOs. It is a crisis of leadership, exacerbated somewhat by reticence to plan for the long term viability of our own institutions.

In the new world order of our banking industry, I believe that the two most vital ingredients for banks small and large, are capital and talent. Everything else, from regulatory scrutiny to asset quality issues to investments gone sour, are tactical problems that can and will be mostly resolved over time, provided that the talent and capital are available to weather the storm. And, without these two, regulators are increasingly reticent to grant the time necessary for institutional recovery.

This is not meant to diminish asset quality and other problems which can be major headaches to fix, and may need help from a general economic recovery. We keep returning, however, to the twin necessities of talent and capital, as troubled institutions that are short on leadership will likely pay a premium for additional capital, if it is available to them at all.

A number of well managed community banks have become magnets for capital—in many cases with little or no dilution—precisely because of their strong leadership teams.

According to Robert Kafafian, President & CEO of bank consulting and advisory firm The Kafafian Group, “The quality of the executive management team is one of the very first things we explore when working on a strategic plan for a client. If a bank lacks strong players in critical positions, it makes executing the plan much more challenging, especially when approaching a transition in any of the bank’s senior leadership roles. While planning is important, having a team that can execute is critical.”

Having been in countless bank boardrooms and advised dozens of community banks around the issues of leadership succession, some patterns have emerged: •Most bank boards with a named successor have limited context with which to determine whether that individual is truly ready and capable of running the bank, or whether this person can create “followership” throughout the organization.

•Many incumbent CEOs are reticent to truly plan for their departure, because they are not sure when they will really want to retire; or they do not want to be “pushed” by someone waiting in the wings; or they simply refuse to accept that they will not live forever.

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•Boards often struggle with the issue of “the devil they know”. We have seen many boards select a less ready internal successor, who is a good team player and wonderful cultural icon, over a more qualified (and well fitting) outsider, simply because they were not willing to hire someone they did not know prior to launching their search.

If a board strongly desires a home grown successor, which is usually preferable, the process of developing the next leader must begin much sooner.

•Banks too often begin to search for a successor with a short timeline for the incumbent CEO to retire. An earlier hunt for the future leader would allow for better successor development, a smoother cultural integration, and an easier transition in partnership with the retiring CEO. So, what is the solution to this conundrum? The answer is quite simple: invest the time early-on to develop the high potentials within your organization; set the expectations around timelines and roles; and be honest about what you have or do not have in your own talent pool. Banking today is a far more complex industry that it was in the mid-1980s when I first entered the industry. The demands on CEOs of even the smallest institutions require broader skill sets, new ways of managing a diverse and diffused workforce, and political and organizational savvy on a new level. Developing these qualities is not easy, but failing to do so actually creates more institutional risk, including the complexities involved in bringing in a new leader from the outside when internal development efforts fall short.

We have noticed a decline in attendance at industry conferences over the past few years, partially due to the cost climate and partially the “optics” of a board or bank leaders flying off to a resort on “bank business.” However, industry conferences and conventions—some of which clearly offer stronger education than others—can provide a vital connection to the latest trends and issues facing those with fiduciary responsibility for the institution. The OBL and other associations provide excellent training programs for both up-and-comers as well as well as

incumbent leaders. More banks should leverage these and other regional and national resources on behalf of the next generation.

Back home, few boards are focused on the two most vital elements of grooming and retaining high potential executives: 1. The personal involvement of their boss (or board) and 2. Providing developmental stretch assignments for up-and-comers.

This is where the objections often start, with comments like “I can’t afford to take my Chief Lender out of that role to broaden her background. I need her there”. We believe that if she is a true successor contender, you can’t afford NOT to round out her banking skills and knowledge in other key areas of the institution. We have seen too many solid citizens elevated into the president’s chair with less than ideal preparation, where the bank could have invested the time (more than money) to better round out their experiences. A little coaching around leadership competencies and managing former peers doesn’t hurt either, and is often a very worthwhile investment. Most underprepared successors will be the first to admit that they wish more had been done to prepare them for the Big Chair.

Showing your up-and-comers that there is a plan for their future, and that you as their current leader (or as a board member) are consciously aware of this, is also vital. High potentials want to “feel the love”, and this more than anything will keep them committed to the organization.

Few rising stars will leave an institution that they feel cares about them and is working to help them reach their potential. Developmental stretch assignments, special projects, and board exposure are all ways to make your best-and-brightest feel valued—while while testing their mettle.

Best of all, these activities do not cost the bank money to implement; they may actually save or make money for the institution.

Adds Kafafian, “Community banks can do more to prepare for leadership succession well in advance of planned retirements. Failing to groom the next generation can be one more reason why a bank might be forced to consider selling or merging.” In the future, when the current financial industry downturn is finally in the rear view mirror, there will likely still be between 7000 and 7500 banking institutions in this country. Yet it is unclear whether there will actually be enough qualified leaders to run these banks. Formal training programs like the one I was recruited into right out of college have largely gone by the wayside.

Today, what remains are mostly a handful of larger community banks with a few credit analysts being training on-thejob. While there is nothing wrong with this approach, it lacks the scale and depth of predecessor programs. Quality commercial loans may be hard to come by these days, but quality commercial lenders with strong banking skills and upside potential are even harder to find. Yet this is a major part of the talent pool from which future bank leaders will be drawn.

Our industry remains a vital part of the national economy in many ways, and community banks are often the lynchpin of their local business communities.

Ensuring the survival of the industry and community banking is critical all across the country. The best way to secure your bank’s future is by developing leaders within the bank who have the potential to manage and grow a strong, healthy institution for the long term. Failing to do so may result in your bank’s next crisis, and one which may be even more difficult to resolve.

Alan J. Kaplan is Founder & CEO of Kaplan & Associates, Inc., an OBL Member Executive Search and Talent Consulting firm specializing in the banking industry. You can reach him at 610-642-5644 or alan@kasearch.com.

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How might Dodd-Frank affect your Directors & Officers insurance?

Mike Read Marketing and Sales Manager ABA Insurance Services Inc.

Since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act earlier this year, much has been written about the possible effects the new legislation will have on banks, both large and small. As banking, legal and regulatory experts continue to debate the Act and its potential ramifications, one thing is clear: more rules and regulations are on the way. Anytime new laws are created, particularly those of the size and scope in Dodd-Frank, it is important to review your D&O contract for potential coverage shortcomings and exclusionary language.

Directors & Officers liability insurance is designed to protect against claims involving actual or alleged omissions, errors, misstatements and misleading statements. The potential to unintentionally violate one of the numerous significant new regulations or laws resulting from Dodd-Frank is very real. For example, the creation of the Consumer Financial Protection Bureau and the new laws intended to ensure fair and equitable access to credit create many potential lender liability coverage implications.

implications are enormous as some policies specifically exclude violations of lending laws. This not only precludes coverage for any judgment or settlement, it also means defense costs are not covered. While intentional violations of law are never covered, look for policies that expressly agree to pay defense costs for these matters.

Regulatory Exclusion coverage issues Another potential coverage issue to consider is the Regulatory Exclusion. Some D&O policies commonly purchased by community banks do not provide coverage for claims brought by regulatory or supervisory bodies, most often through a specific exclusion or the definition of Loss. This is already a significant coverage restriction; if we see more regulatory actions as a result of Dodd-Frank, the exclusion will become even more punitive. If your bank is in good financial condition and operating without an order, do not accept a regulatory exclusion. Contrary to what you may have heard, strong-performing community banks can still find policies that do not contain this exclusion.

There is no better time than today to review your D&O contract. New rules and regulations created by Dodd-Frank are on the way, and you don’t want to find yourself in a difficult position because of inadequate insurance coverage.

For questions regarding Directors & Officers coverage, please contact your agent or visit www.abais.com.

Most entity claims are due to general errors and omissions during the lending process

Additional Dodd-Frank Act resources available to you

A study of our claims data reveals that general errors and omissions during the lending process are the largest source of paid entity claims, and many of these allege violations of lending laws such as TILA or other Federal or State regulations.

We can expect to see violation of law allegations increase if the predictions of 5,000 new pages of banking regulations from Dodd-Frank hold true. The coverage

To help you understand more about the Dodd-Frank Act and its potential effects, there is a useful Dodd-Frank Tracker at regreformtracker.aba.com. This resource provides current information on the implementation of the Dodd-Frank Act and contains posts made to the site regarding Dodd-Frank. This is available to everyone–you do not need to be a member of the ABA to access the information.

The blog is organized for easy finding and tracking of information that you’re interested in. The banking-related areas of Dodd-Frank are organized into categories such as the Volker Rule, Prudential Supervision, Systemic Risk, Deposit Insurance, Interchange Fees, Preemption, Trust and Securities, and more. Features include news stories on Dodd-Frank Act proposals, comment letters and rules; a calendar of comment letter deadlines; and links to other resources. Special sections focus on key issues, such as interchange, deposit insurance and the Consumer Financial Protection Bureau. Visitors can sign up to receive updates—via e-mail or RSS—as new content is posted.

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.

Are you looking for that Spark?

Creative print is more than just ink on paper It’s about gaining Attention for your business It’s about stimulating Interest in your products It’s about creating Desire for your services That’s where Ohio Record comes in

To reach over 4,000 key banking decision-makers contact James Thurston at (614) 340-7621 or jthurston@ohiobankersleague.com.

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From the

Steps of the Statehouse

Michael J. Adelman Vice President of State Government Relations

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Election 2010: The Statewide Outlook The Republicans won conceivably every race in this year’s election. They took back the three statewide posts they lost in 2006 and hung onto the fourth. Thus, they secured the ultimate prize, the State Apportionment Board; thereby giving the GOP the authority to draw legislative boundaries.

In a sheer numbers sense all of the Ohio House seats, and then some, that Democrats picked off over the prior two elections flipped Republican. Success bred more success in the Ohio Senate where they regained a seat lost in 2006 and seized a long-coveted seat in the Dayton area. The Senate Republicans will have their largest majority in over 40 years. But, the GOP’s success didn’t stop there. They also netted five Congressional seats, retained a U.S. Senate seat, took back the Ohio Supreme Court’s Chief Justice gavel and kept two high court seats. Though we expect many of these public officials to be receptive to our industry’s positions, relationships matter and the credibility we need to succeed must be earned. Thus, our work is cut out to ensure the OBL continues its long tradition of being the go-to representative of the banks and thrifts at the Statehouse.

Transition Governor-elect Kasich is strategically assembling his cabinet as well as making other key appointments. The team’s singular goal is to facilitate an economic environment that will retain and create jobs. Kasich will make a mark on banking through key appointments such as the Department of Commerce director, superintendent of financial institutions and its deputies. With Kasich’s congressional success and financial industry experience he has been involved in many of the issues that bankers care about most.

We are confident in his ability to attract the right people to lead this critical industry through the State’s persistent economic malaise.

To turn the corner, an improved regulatory environment will be critical for all businesses including banks and thrifts.

The OBL is armed with recommendations for alleviating regulatory burdens on financial institutions. Selfishly the OBL believes our industry plays a vital role and Kasich likely understands where we fit with capital formation and economic development.

The OBL will work to build upon the success of the Office of Insurance and Financial Development within the Ohio Department of Development. This twoperson team was a response to the OBL’s persistent urging with the past couple governors that resources were needed to promote banking. Our industry’s strength and diversity should be used as an economic development drawing card.

Additionally, we employ a significant number of Ohioans and countless thousands more rely on a competitive banking environment to support their professions.

Further, we deserved an advocate within the executive branch. Yet, more work needs to be done to focus on the reality that banks and thrifts are critical to the fabric of every community and the State as a whole. Show me a job that is created or maintained that doesn’t have a banker’s fingerprints on it. Plus, encouraging banks and thrifts to keep their charters, headquarters and other significant operations in Ohio along with their good-paying, environmentally-friendly jobs should be among Kasich’s priorities.

Looking at the other new statewide

officeholders, they all have some relevance for the banking industry. Accordingly, the OBL has established dialogue with all of them to find opportunities for bankers to facilitate smooth transitions as well as provide useful feedback loops going forward.

The state treasurer has the most direct regular interaction. Many banks and thrifts in Ohio are registered to do business as state depositories. Most local government entities require this designation. Treasurerelect Josh Mandel makes the leap from state representative where he served the past two years as the ranking Republican on the Financial Institutions, Real Estate and Securities Committee. He was very visible during the campaign meeting with many bankers in communities across the state. He fully understands the economic significance of using Ohio institutions for state business.

As the “Top Cop” the attorney general defends state entities as well as consumers and businesses. Yet, unchecked activism can bring harmful risk so it is critical to have lines of communication in place to avoid surprises. Foreclosures have been in the spotlight as of late for AGs across the

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country and we share their goal of rooting out bad actors while ensuring responsible parties are not hit with costly, overlapping new requirements to do business. Attorney General-elect Mike DeWine has surrounded himself with knowledgeable hardworking staff throughout his days in the state legislature, as Lt. Governor and in the U.S. Senate so we are confident he will continue his trend.

The secretary of state’s office is the portal of business filings that bankers use daily. Secretary of State-elect Jon Husted has paid close attention to the banking industry throughout his career in the General Assembly, most notably during his tenure as House Speaker. There may be new opportunities to streamline and update the business side of the office.

The state auditor intersects the

banking industry especially with regard to public funds collateralization. Auditorelect David Yost has deep roots with his bankers thanks to years of public service at the county level.

Lastly, the Ohio Supreme Court will see a new chief justice with the election of Maureen O’Connor. Her elevation from a justice’s seat to the top slot may create new opportunities for Ohio’s banks and thrifts as we ensure we are given a fair shake in the legal system.

General Assembly After two years of Democrat control, Republicans wrestled back the Ohio House of Representatives. It will swing from a 53-46 Democrat majority to a 59-40 GOP edge. Rep. Bill Batchelder (R-Medina) has been tabbed to lead them.

Legislative Priorities Though I didn’t quite predict the degree of change resulting from the election, my prediction of a very quiet lame duck is playing out like an indefinite hockey intermission. Looking back over the two years that comprised this session the OBL’s biggest success was none of the bills we fought the hardest against became law. You’ll recall our victory late last year in pushing for a corrective solution to unreasonable county record forms requirements. Overall, though, our zone defense helped keep the opposing forwards in the corners and out of the passing and shooting lanes by planting sufficient seeds of doubt that all the bills the OBL opposed would cause more harm than good. Though we’d usually rather advocate for something, when those opportunities aren’t available its great to know a Patrick Roy or Martin Brodeur is between the pipes keeping pucks out of the net. The OBL’s involvement prevented considerable harm from impacting banks and thrifts at the state level. The numerous foreclosure bills dominated my time the past twenty four months. Once those were largely iced an attempt was made to give credit unions authority to accept public deposits. Though it was never voted out of committee, it wasn’t due to a lack of effort on the part of the credit unions and advocates confusing the issue with anti-bank rancor. We also successfully defended three attempts to high stick depositories with unreasonable anti-free market requirements and eligibility standards on IOLTAs. Also peppered in there were nasty credit card related bills and others that sought to clamp down on products on which your customers have come to rely.

Thanks for honoring me to wear the captain’s “C” on my OBL sweater at the Statehouse. Our accomplishments the past two years, however, were “ours.”

Supporters of ours in the legislature welcomed our advice and took note of our warnings. I say it a lot, but I can’t do it without you. You have worked hard to develop credibility in your communities. You generously put forth the effort and time to meet with your elected officials, participate in the OBL’s annual Day at the Capitol, hold legislative district meetings in your bank, send emails, write letters, testify in committees, respond to my requests for first-hand experience to educate me on complex issues, and give to Ohio BankPac. Because of such effort amongst the myriad tasks that go into being a successful banker back in your community, your elected officials recognize this commitment to the districts that they represent and it makes you politically relevant. Thanks for lacing up your skates with me!

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Batchelder first served in the House from the late 1960s until term limits took effect in the late 1990s, then returned in 2006.

One-third of the 99 House members will be freshmen; yet, seven come with prior legislative experience that will help them hit the ground running in January.

Nonetheless, the magnitude of turnover compounds the change that will occur in the lower chamber. Committee membership will significantly reshuffle and with party change they will all get new chairmen. Thankfully, Batchelder announced the number of standing committees will be streamlined from twenty-seven to seventeen. This will enable interested parties to keep better tabs on the process.

The Ohio Senate not only remains in GOP hands, but becomes an even stronger 23-10 majority. They will be led by Senator Tom Niehaus (R-New Richmond) who heads into his final two years before term limits turn him away. Interestingly, term limits, two incumbent losses, elections to higher offices and cabinet appointments will result in a one-third turnover in the upper chamber as well. Yet, of the new senators to be sworn in, at least seven have prior experience from the House.

Their knowledge of the process and the players involved will enable them to make immediate impacts.

A Look Ahead Unlike last session’s split control of state government, Kasich’s upset of incumbent Governor Strickland will likely generate considerable deference from legislative leaders paving the way for his priorities. He will need that degree of cooperation to bring the State’s budget into balance by July 1. Out of whack by an estimated $8 billion, Kasich has called for tough decision making on programmatic spending priorities going forward and the need for government streamlining. The OBL is sharing its suggestions on some old and new initiatives intended on refocusing the State’s priorities while maintaining and creating employment in Ohio. This includes employment of bankers as well as leveraging your willingness to lend to credit-worthy borrowers.

Be safe in your holiday travels and rest up since 2011 could shape up to be a really exciting match.

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Intensive Week Translates into Wealth of Knowledge OBL 2010 Bank Management School Susan Poling OBL Communications Manager

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“Four score and six short quarters ago, three bankers and a regulator took over American Community Bank. Our fore managers bestowed upon us a declining ROA, ROE and a decreasing spread, so we knew we had our work cut out for us. Net income was down four quarters in a row, and net interest margin was at an all time low.” So began the bank president’s message at an American Community Bank shareholder meeting on Oct. 1, 2010.

In reality, the bank “president” was Jessica Gribben, banking center manager at Richland Bank – A Division of PNB, who was presenting her final report at the 2010 OBL Bank Management School. A comprehensive and intensive one-week school, providing an institution’s rising or experienced bankers to a wealth of ideas and banking concepts.

The week had full days of learning about subjects such as Strategic Planning, Asset Liability, Risk Management, UPBR Report and Risk Management, and also included opportunities for students to hear from current Ohio banking industry presidents and retired regulators for candid discussion about regulatory agencies and 21st Century Community Banking.

Upon the closing of the School, Bill Campbell, lead faculty member who runs the bank executive simulation program, noted, “This school provides a sincere and intense learning process. Each student learned the most from their mistakes – and returns to their bank with a new understanding of the difficulty in running a bank and a new appreciation for the roles of senior management on a daily basis.”

OBL CEO & President Mike Van Buskirk provided high remarks to the 24 graduates in front of their CEOs and managers at the graduation ceremony. “This was an impressive class of student bankers. A highly skilled group of individuals who worked hard learning and integrating … who will now better understand the strengths and weaknesses of those around you. There were talented individuals at the School, but it was the teams that translated into the performance.”

He also stated that this is the start of lifelong learning. “The investment the bank made in you represents their belief that you are a part of the future of their organization,” he concluded.

The week is full of intensive learning, while also includes many networking and team-building opportunities. A fun approach to the final shareholder presentations wraps up the week.

Enjoy the school in pictures.

REGISTRATION IS NOW OPEN FOR THE …

2011 OBL Bank Management School Sept. 11 – 16, 2011 OBL Training Center, Columbus, Ohio With overnight accommodations at Courtyard by Marriott Columbus Easton School Registration - $1,195 Double Occupancy - $395 Single Occupancy $795 The program will begin the afternoon of Sunday, Sept. 11 and will conclude with a graduation ceremony and brunch on Friday, Sept. 16. Classes will begin each day at 8 a.m. and will conclude by 8 p.m. Upon registration, a pre-work assignment will be given; with an additional project to be completed prior to the School. To receive a copy of the brochure or for more details, please contact Susan Poling at 614-340-7611. Student names are also being accepted for the current class roster.

“American Community Bank” team members Jessica Gribben, Teresa Deitering, Eric Bloomfield and Joel Althauser were ready to meet the “American Dream” as they strived to provide an ROE of 18 percent, a return on assets of at least 1 percent, and provide products and services their customers need and want as they grew the size of the institution. In Joel’s words, he found the school to offer a good balance of theory and practice.

A panel of CEOs provided an opportunity for students to hear from those currently leading community banks as Jennifer Griffin, Commerce National Bank; Tom Westfall, The Arlington Bank; Paul Thompson, First Federal Savings and Loan Association; and Coleman Clougherty, The Farmers Citizens Bank, offered their insights and vision for the coming years.

Scott Sprouse, also known as Alex Trevek, led his bankers in a mock game of Jeopardy to creatively share their bank’s Stockholder Presentation.

George Padias (third from left) and Bill Campbell (second from right) spend time with a group during a Bank Executive Simulation Decision session.

Teams made six decisions throughout the week. winter 2010 Ohio Record

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Rick Hatcher (left), a 2008 Bank Management School graduate, and the CEO of Citizens Federal S&L Assoc. of Bellefontaine, congratulates Justin Dinovo, assistant secretary, who received the Ora (Andy) Anderson GSB Scholarship Award for classroom excellence and project work during the School. Dinovo noted that he liked everything about the school. “Bill and George were excellent teachers. The relationship you build with your peers is great tool for the future.”

The 2010 O Bank Management Sc BL hool Graduates Joel Althauser, The Home Sa

First Champion Bank’s Edna Weber prepares to take on “The Economy” – boxer and fellow team member Angela Gillis during the shareholder presentation

Jeff Quayle, OBL senior vice president & general counsel, led a regulatory panel discussion to help students identify the key issues in today’s regulatory environment, and understand the importance of the banker/ regulator relationship and the role of bank management in compliance.

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vings and Loan Company of Kenton, Ohio Eric Bloomfield, American Savings Bank, FSB Elizabeth Brunori, Federa l Reserve Bank of Clevelan d Maura Clougherty, The Far mers Citizens Bank Brooke Crouse, Security National Bank – A Divisio n of PNB Jayne Davis, Farmers Bank and Savings Company Frank Davison, The Ohio Valley Bank Company Teresa Deitering, Ohio Div ision of Financial Institution s Rob Delisio, The Farmers Citizens Bank Justin Dinovo, Citizens Fed eral S&L Assoc. of Bellefon taine Angela Gillis, The Fahey Banking Company Lynn Greenstein, Nationwid e Bank Jessica Gribben, Richland Bank – A Division of PNB Ryan Hanawalt, The Mecha nics Savings Bank Felicia Hough, The Midd lefield Banking Company Jodie McCalla, The Ohio Valley Bank Company Lori Michael, The First Be xley Bank Cindy Moore, Fairfield Na tional Bank – A Division of PNB Brad Sander, The Genoa Banking Company Amy Searfoss, The First Na tional Bank of Pandora Rocco Serafini, The Bank of Magnolia Company Scott Sprouse, The Nation al Bank of Oak Harbor Cathy Swain, The Hocking Valley Bank Edna Weber, Farmers Ba nk and Savings Compan y

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2010 YEAR IN REVIEW

By James Thurston, Editor

January In an op-ed article published in The Columbus Dispatch, OBL President and CEO Mike Van Buskirk says Ohio banks are lending and open for business. While “lending levels across the country have fallen,” Van Buskirk writes, “Ohio banks have bucked that trend so far.”

The OBL and member bankers meet with U.S. Sen. Sherrod Brown and Congressman Steve Driehaus to discuss key bills pending in Congress.

The OBL announces a new training partnership with national compliance outfit Young & Associates, Inc. to bring enhanced compliance, lending and management training to members. The relationship begins with the kick off of the 2010 Community Bankers for Compliance Program which attracts more than 110 bankers and 50 banks to the training center throughout the year.

harmful to the state’s economy and to Ohio consumers. The OBL’s Mike Adelman tells legislators that a mandatory mediation bill and the broad-sweeping foreclosure bill, HB 3 would have many unintended consequences.

Despite up to a foot of new snow and ice covering much of the state, Ohio banks and thrifts and the OBL offices remain open for business. John Malanowski, president & COO of First Federal Savings and Loan Assoc. of Lorain reports, “We have had around six inches of snow in Lorain but we are open for business and intend to remain open for the rest of the day to serve our customers.”

The OBL makes last ditch efforts to limit potential damage caused by Rep. Dennis Murray’s (D-Sandusky) toxic title bill at the Statehouse.

The OBL testifies against two bills in the Ohio Senate Finance and Financial Institutions Committee that could be

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SERVICE

OBL Loan Participation Service, the new online loan participation marketplace for Ohio banks, receives its first loan posting.

March kicks off the OBL In-Bank Training season as lead trainer Julie Kiplinger presents 9 customized sessions at four banks across Ohio.

April Decreased action on the most pressing bills allow OBL staff to focus attention on a bill to update the state probate law that proposed an expansion benefiting credit unions. The joint bill sponsors and probate judges agree to remove a provision that the OBL rejected.

March

More than 40 execs head to Washington D.C. for the OBL D.C. Fly-in, meeting with Sen. Sherrod Brown, federal regulators and the Ohio delegation.

February Congressman Charlie Wilson asks the OBL to prepare background information and banker testimony addressing trends in Ohio small business lending for a joint hearing by the House Financial Services Committee and Small Business Committee.

L PARTICIPATION

OBL OAN

130 bankers attend regional directors workshops including nearly 80 at the OBL Training Center.

OBL members Howard Boyle and Randy Herron testify at the Statehouse against a bill that would permit Ohio credit unions to hold public deposits.

OBL President and CEO Mike Van Buskirk and General Counsel Jeff Quayle travel to Washington D.C. with 12 Ohio bankers working to mitigate potential harm caused by a new regulatory reform bill.

The OBL holds a town hall meeting with U.S. House Minority Leader (and future Speaker) John Boehner to brief him on the real impact the regulatory reform bill will have on the U.S. economy.

May The OBL publishes its new enhanced Ohio Financial Institutions Directory, the most comprehensive data source for the Ohio banking industry and features up-todate information on the rapidly changing world of financial institutions in Ohio.

A record-breaking 120 plus banking and industry leaders attend the 2010 CEO Symposium at the Hilton Columbus at Easton.

Ohio Superintendent of Financial Institutions John Reardon resigns, citing family reasons.

The OBL Day at the Capitol attracts more than 100 Ohio banking industry executives who hear from President of the Ohio Senate Bill Harris and talk foreclosures, credit unions and IOLTAs with legislators.

June OBL district meetings attract more than 130 Ohio banking leaders, who hear about the latest in health care reform updates.

August The OBL’s annual Regulator Roundtable attracts 70 plus bankers.

OBL Employee Benefits Manager Gary Sutter reports that Liberty National Bank of Ada becomes the 75th member of the Ohio Bankers Benefits Trust.

More than 80 banks participate in the annual Bank Compensation & Benefits Survey.

Results are provided on a searchable CD-ROM and participant feedback continues to praise this collective industry initiative.

September Rep. Dennis Murray’s ‘toxic title’ bill is approved by the Ohio House by an 87-11 vote. Thanks to OBL amendments, data collection and nuisance abatement requirements are removed from the final bill and Rep. Murray reiterates his pledge to continue working with the OBL to further improve the bill.

After extensive behind the scenes lobbying from the OBL and others, the sword of Damocles hanging over the future of the thrift charter is removed, when plans to axe it are stripped from the federal banking bill.

July Former OBL member Carolyn Bradford is appointed new Ohio superintendent of financial institutions, replacing previous chief John Reardon.

President Obama signs the Dodd-Frank Act into law, ushering in the most sweeping changes to bank regulation in generations.

The OBL immediately schedules a free series of tele-briefings on the bill to bring members up to speed on its provisions.

Twenty-four students complete indepth course work and intensive Bank Simulation program at the OBL Bank Management School.

More than 300 banking industry executives arrive in French Lick for the OBL's 2010 Joint Convention. Bankers hear from well-known speakers such as Dr. Ed Seifried, Steve Ford and Jim Carroll.

Little Turtle Country Club is the venue for more than 70 golfers at the 2011 OBL Golf Classic. winter 2010 Ohio Record

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2010 YEAR IN REVIEW October The OBL’s new title agency partnership with Mansfield-based Barrister Lawyers Title takes off as the first Ohio community banks reap the benefits of lender-owned title agencies following a low-cost, highmargin model developed by Barrister.

A $230 million Ohio credit union failure in northern Ohio causes a $170 million hit to the National Credit Union Share Insurance Fund.

Top executives from the OCC and the OTS brief bankers on the future of thrift regulators.

November A sold-out Financial Services Expo and keynote speakers including former Southwest Airlines exec Jason Young are highlights of the 2010 OBL

Annual Meeting Development Event.

&

Professional

Republicans pick up over 60 U.S. House seats and more than six U.S. Senate seats in November elections, while John Kasich wins the hotly contested governor’s race in Ohio.

An evening training series for frontline personnel focuses on Bank Robbery in Findlay, Columbus and Blue Ash. The Twilight Series began in August with sessions on BSA Training and will continue in 2011 with a variety of customer service related topics.

December

Famers & Merchants Bank of Pomeroy is the latest community bank to sign up with the OBL’s broker-dealer partnership with Infinex Financial Group.

During the year, the OBL staff and bankers testify more than ten times at the Statehouse and on Capitol Hill on issues ranging from lawyers trust accounts and credit unions to foreclosures and small business lending.

The 2011 OBL Education Programs by Topic is released via the OBL Web site to assist Ohio bankers with professional development and training opportunities.

OBL continues to deliver timely member news and information through enhanced regular electronic communications vehicles and expanded Website utility.

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HISTORIC CHANGES FOR ELECTIONS AND ELECTIONEERING Jeff Quayle OBL Senior Vice President & General Counsel

We just lived through an historic election. Over 60 seats shifted from one party to the other, so there are now 242 Republican members of the House of Representatives; more than anytime since 1947. In our own Ohio delegation, we are left with only five Democrats, fewer than anytime in my memory, and all shoe-horned into the northern tier of our state.

We also have five freshmen with very diverse backgrounds who will be going to Washington D.C. for the first time. Similar results were seen across the country, as state legislatures and governorships also changed hands, turning out well known political legends and all within 24 months of the dramatic 2008 election of the first African American President.

Questions The most important questions for bankers are: What did we learn from these dramatic results; and how will this change impact our business?

First, we learned that the electorate is extraordinarily impatient. This recent election represents the third change of control in the last 16 years. Prior to this period of more rapid change there were only two brief interruptions to Democrat control of the House in the 64 years between 1931 and 1995 (1947-48 and 1953-54). The electorate senses that our country needs good leadership and workable answers to vexing issues, and if the current team isn’t giving it to them the voters will quickly start looking for someone new.

Technology Second, we have seen the incredible impact of new technology on elections. For example, multiple news organizations have the luxury of focusing on a narrower band of issues than ever before, helping keep wide swaths of voters interested and engaged in the political process. (Heck, it doesn’t take a news organization anymore. One person with a digital camera and an internet link can change the course of political debate: Just ask ACORN.) Internet advertising can be incredibly focused, and fundraising has been democratized.

Who needs a PAC when a good mailing list and a well targeted email can raise millions in $25 increments? The electorate is watching and the elected officials know it.

So, what do these changes mean for bankers? We have to work harder to make sure our message is heard among so many voices, but you remain in a good position to influence the process positively—and many important issues will still be front and center in 2011.

You are in a good position because you are well respected in your own community, and looked at as an opinion leader. Most, although not all elected officials understand the connection between credit, capital formation and job growth. Countless times over the last session of Congress, our industry had important input when a congressman picked up the phone and called his trusted banker to ask: “How will this bill impact our district?”

Fortunately, the new members of our delegation already have those strong relationships with both bankers and members of your trade association staff. It is up to us to build on those good relationships and provide accurate reliable data to our elected officials as they need it. And here, technology can work for you as well: As most issues are coming up for votes, you can access position papers or sample letters through the OBL Web site or our grassroots system.

The campaign for 2012 has already started. Earlier in December the first salvo was fired when during the lame duck session the House of Representatives voted to extend the “Bush tax cuts” but only on income less than $250,000. Even though there was no chance the Senate would follow this lead, it does permit all supporters to go back home for the next campaign as a Representative that voted for tax cuts. The race is on! winter 2010 Ohio Record

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WINDOW ON THE CAPITOL Representative Steve Stivers

In this regular feature, Ohio Record introduces our elected state and federal legislators. In this edition, the spotlight is on newly elected Ohio Congressman Steve Stivers (R-15) and State Representative John Carney (D-22).

Rep. Stivers, recently elected this past November, will serve communities in Central Ohio, on the west side of Columbus. Stivers previously served as a state senator from January 2003 until December 2008. Throughout his career in the Ohio General Assembly, he was an advocate for programs and initiatives that promoted economic development and encouraged job creation. While at the Statehouse, he worked to help disabled Ohioans obtain medical coverage, on the passage of a fiscally conservative state budget, on providing the largest property tax cut in Ohio history and on freezing tuition costs for Ohio’s college students.

Stivers is also a lieutenant colonel in the National Guard and served overseas for nearly a year as a battalion commander in a combat zone during Operation Iraqi Freedom in Kuwait, Iraq, Qatar and Djibouti.

Ohio Record: Was there anything different that distinguished this campaign, compared to your prior campaigns?

Rep. Stivers: In this campaign we had even more support than ever. I am grateful for the active support of over 2,000 volunteers and the strong level of grassroots support from every part of the district.

Ohio Record: I know you have been to Washington D.C. to begin preparations for the new Congress. What are your first impressions and how does it compare to your years of service in the Ohio General Assembly?

Stivers: In the aftermath of the 2010 election, it is clear that the American people expect us to work for a smaller and more efficient government and to hold us to our principles and values in the process. After talking to Congressional leaders on both sides of the aisle during my most recent trip to Washington D.C., I remain hopeful that we will make progress in seeking some common ground on the many challenges facing our nation during these difficult economic times. I also am hopeful that my experiences in serving at the state level will be helpful in contributing to the debate and moving effective policies forward.

Ohio Record: What will your top priorities be after you are sworn in?

Stivers: Like my service in the Ohio General Assembly, I will remain an advocate for policies which encourage job creation, promote economic development and make government smaller and more accountable.

Ohio Record: What are the main challenges facing your constituents?

Stivers: As I continue my visits across Ohio's 15th Congressional District, I understand the economic challenges facing so many of our families and small businesses, including the need to create more quality jobs and the frustration of those who want an end to big government. I am committed to working to address these concerns through my committee assignments and overall representation of the people of Ohio’s 15th Congressional District.

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Ohio Record: It's no secret that there are provisions in the recently adopted Dodd-Frank Bill that dramatically increase the cost of delivering financial services. Will the next session of Congress tackle any of these problems? Is it realistic to hope that the diverse parties can come together to make the Dodd-Frank Act more workable for both Ohio banks and Ohio consumers?

Stivers: One of the most important jobs for the 112th Congress is to ensure that small businesses have access to the credit they need so they can create jobs.

Community banks will continue to serve as leaders in lending to the job creators in

Ohio, and my job in Congress is to review and scrutinize any regulation that may discourage responsible lending.

I believe it is imperative to review existing laws to ensure they are necessary, effective and efficient. This belief extends to the newly-enacted Dodd Frank Act, which contains dozens of unresolved issues and regulations which could potentially hamper our economic recovery. Among those that will require the most intense scrutiny in the coming months will be the rulemaking and other regulatory actions coming from the Dodd Frank Act, including the new Consumer Financial Protection Bureau.

Representative John Carney State Rep. John Carney (D-22) serves the communities of Dublin, Clintonville, and northwest Columbus and is in his second term in the Ohio House of Representatives.

Rep. Carney is the eleventh of 12 children, and his family helped shape his beliefs in the importance of education, health care and economic opportunity. He earned both his bachelor’s and law degree from The Ohio State University. While on campus, Carney was twice elected student government president. His legacy includes an agreement with the Central Ohio Transit Authority to start a citywide busing program for all OSU students.

He now works as an attorney in the Columbus office of Porter, Wright, Morris and Arthur LLP, where he counsels clients on health care issues.

Away from the office, Rep. Carney organized the Computer Outreach Program at the Columbus City Schools. This free, year-round basic computer literacy course is open to all community members and has been offered at over a dozen Columbus schools.

Ohio Record: What are you most looking forward to once you roll up your sleeves and begin to tackle the workload of the 112th Congress?

Stivers: I am humbled by this opportunity to serve the constituents and work on behalf of the people of central Ohio.

We face many challenges as a state and country. That is why I am looking forward to taking the initiative to create policies that will promote job creation and smaller government, and that will also have a real impact on the lives of Ohio families.

Ohio Record: Tell us a little bit about your background and how you became involved in politics?

Rep. Carney: I am the eleventh of twelve children and am married to my wife Jenny. We are blessed with two lovely young daughters. I paid my own way through Ohio State University where I was twice elected President of the undergraduate student body and then went on to law school at Ohio State. Since I graduated from law school in 2001, I have been a healthcare attorney at the law firm of Porter Wright where I counsel individual physicians and physician group practices with respect to their business issues.

I ran for office because I believe that our elected leaders need to be focused on creating jobs, providing excellent educational opportunities, and improving access to high quality health care. While solutions to these problems will require the combined efforts of many stakeholders, I felt that my business and healthcare experience provided me with unique expertise to craft creative and practical solutions to get Ohio started in the right direction.

Ohio Record: What accomplishments are you most proud of this session and what are your legislative priorities yet this year?

Carney: I am proud to say that, as a first-term legislator, each of the bills I introduced received strong bipartisan support. winter 2010 Ohio Record

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A couple of key accomplishments include the Healthy Choices for Healthy Children Act, which improves all the nutritional standards and beverage standards in k-12 schools while encouraging additional exercise, and HB 67, a bill that reduced the minimum age for donating blood, which passed both the Ohio House and Senate with unanimous votes and is responsible for enabling the Red Cross to collect more than 15,000 additional pints of blood this past year.

Ohio Record: What are the priorities for the next legislative session?

Carney: Clearly, the top priority for the next session will be creating jobs and solving the state's budget crisis. The state faces serious fiscal challenges, and we must

face these challenges responsibly, in a way that serves the long-term interests of Ohio's citizens. I look forward to working across the aisle to address these challenges so that we put Ohio on the track to long term economic prosperity.

Ohio Record: Why should a banker care about public policy?

Carney: A vibrant, active banking sector in Ohio will be crucial as we bring ourselves out of the recession. Bankers understand better than anyone the challenges that Ohio’s families and businesses are facing. In the next legislative session, Bankers can play a crucial role in helping legislators understand those challenges, and in crafting solutions that will help improve Ohio’s economy. In particular, it

will be important for bankers to educate legislators with respect to what can be done to make capital more available to businesses so that investments can be made to grow businesses in Ohio. Too often elected officials focus on blaming a particular industry for the current problems we face, instead of focusing on how we can collaborate and provide mutually beneficial solutions to the issues that confront us. I encourage the bankers in Ohio to take a day out of their busy schedules and visit with their State Representative and Senator to provide concrete ideas of how we can work collectively to plan a better for future for Ohio.

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A Long History of Commitment to the Midwest 32

Ohio Record winter 2010

Stifel, Nicolaus & Company, Incorporated and Thomas Weisel Partners LLC are affiliated broker-dealer subsidiaries of Stifel Financial Corp. which are collectively referred to herein under the marketing name Stifel Nicolaus Weisel.

All transaction announcements appear as a matter of record only.

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JAN. 24 - 25

JAN. 27

OBL TRAINING CENTER

OBL TRAINING CENTER

2011 Lending Curriculum Begins Led by nationally-known presenters Jeff Judy and John Barrickman, 10 core courses throughout 2011 will teach both new and experienced lenders basic and advanced lending techniques. Beginning with programs on Analyzing Personal Financial Statements & Tax Returns (Jan. 24) and Financial Accounting for Bankers (Jan. 25), the courses will each be offered and priced as a one-day seminar. Future seminars include: - Analyzing Financial Statements - April 6; and Enhanced Ratio Analysis - April 7 - Cash Flow Analysis - June 2; and Asset Quality Ratings - June 3 - Qualitative Analysis - Sept. 20; and Loan Structure - Sept. 21 - Problem Loans - Oct. 26; and Best Practices in Portfolio Management - Oct. 27

Jeff Judy encourages all to attend, as he said, “These programs will help bankers at both ends of the spectrum, as we teach young people how to do things right; and provide more experienced bankers an opportunity to focus on areas where there is less confidence and familiarity.”

Stress Testing for Community Banks Federal bank regulators have announced mandatory stress testing for the largest 17 banks and have suggested they could also encourage it in smaller banks. This seminar will give community banks a useful tool for their own planning and to offer a head start with the regulators. Meeting Challenges of the Economic & Regulatory Environment will be led by Graduate School of Banking at Colorado President Tim Koch.

FEB. 10

FEB. 15

OBL TRAINING CENTER

THE RENAISSANCE HOTEL

Segmenting the Small Business Market Gain an understanding of why it is important to segment the small business market and how to do it using a “Life Stages of Business Approach” in conjunction with other key factors during this one-day seminar led by Lance Kessler. Designed to benefit lenders, marketers and those responsible for small business and relationship management, the program will help attendees identify opportunities across all lines of business for deepening and broadening relationships with existing and new customers.

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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. Bankers interested in a complete picture of what next year might have in store for the Ohio economy should attend the event where they will get an inside track from Mark Schweitzer, senior vice president and director of research, Federal Reserve Bank of Cleveland. Check the OBL Web site for registration details.

FEB. 24 & 25

2011

OBL TRAINING CENTER

OBL TRAINING CENTER

Certification Series Return for Professional Head Tellers/Supervisors Feb. 23, April 13 & May 25 AND

NEW! Bank Sales Manager Certification Series March 23, May 17, Aug. 30 & Oct. 4 Annual OBL Spring Conferences Get the most up-to-date, topical information at OBL annual conferences. The spring conference season will kick off Feb. 24 & 25 with the Human Resources Conference. Featuring a morning session on Employment Law & Updates with Patty Wise of Neihaus & Associates, Ltd, the agenda also includes sessions on Becoming a Strategic Partner at Your Bank; Developing a Culture of Character; Talent Management and more. Additional conferences will be held as follows: Bank Marketing Conference, March 3 & 4; BSA/AML Conference (with Young & Associates, Inc.), March 29 & 30; and the return of the OBL Technology Conference, which includes a one-day workshop with nationally-known presenter and expert Jack Vonder Heide, April 14 & 15.

Register online or watch for forms in the mail.

These popular series, led by nationally-known presenters Roger Morin and Phillip Borzilleri, provide top-notch training for frontline staff and bank and branch sales managers. Head Teller content focuses on key principles of quality supervision, quality service, and efficient bank operations; while the Sales Manager series provides the skills, attitudes, and practical methods for greater sales success. Participants may attend individual sessions or register for a series.

MARCH 9 & 10

MARCH 15 & 16

OBL TRAINING CENTER

OBL TRAINING CENTER

IRA Essentials & IRA Advanced Issues

2011 Community Bankers for Compliance Program

“Do you know how the Small Business Jobs Act of 2010 changed the IRS reporting penalties for banks? Do you know the new Roth IRA conversion rules for 2011? Do you know what you need to do about the amended IRS IRA documents? Get the answers you need as you explore the opportunities and challenges these changes will bring during these two one-day programs that may be attended individually or as a pair.

WINTER

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.

The first quarter seminars in March will begin the 2011 Community Bankers for Compliance membership, though additional benefits begin in January. Members receive four inter-related compliance services for one annual fee of $1,200, including: Quarterly seminars covering the latest regulatory compliance and industry developments; subscription to the monthly Compliance Update newsletter; access to the toll-free Compliance Hotline for questions that arise on a daily basis; and access to the CBC members only Web page, which includes timely information and compliance tools. Register online or request a brochure today.

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The nature of the bank-customer relationship has permanently changed. In a new environment of increased regulation and government scrutiny, bankers’ energies are pulled in many directions at once. This article demonstrates how to direct research activity to drive fast and reliable growth within tight resource constraints, with special advice for community banks.

Gone with the Wind The forever-changed banking landscape and how to navigate it Leopoldo C. Toralballa Managing Director Dorsey & Company Strategic Consultants

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The residents of Tara, the fictional homestead in the romanticized Georgia of Margaret Mitchell’s Gone with the Wind wake up to a whole new world in the Civil War’s aftermath.

Past customs are swept away, and they are forced to face an uncertain future. The old ways are...gone with the wind.

The 21st century banking and financial services industries are waking up to a similar reality. Trillions of dollars in lost savings, record-high home foreclosures, a massive loss of consumer and small business credit availability and an unprecedented number of bankruptcies have contributed to the deepest decline in economic performance and consumer confidence since the Great Depression. This has been exacerbated by press reports of outrageous executive bonus payouts and other perceived bank excesses.

The dim economic outlook, along with tightened industry regulation and a growing array of communication and delivery channels to market constitute the new normal -- leaving banks a jumbled mess from which to rebuild.

New tools and new market understanding are necessary for banks to go forward efficiently, certain that revenue and profit growth will follow.

Banks are tempted to utilize old methods to return to revenue and account growth, but they have lost the old underlying consumer trust given the role of banking in the economic collapse and perceived diminished customer service. Nontraditional competitors, now more numerous due to deregulation and loopholes in local laws, are similarly weakened but do provide consumers with more choices. Simultaneously, some of the old competitors have been largely swept aside. Adding to the mix is the steady growth of new media, which give consumers endless sources of information on banks, including the experiences of current and former customers.

The problem for banks and financial service providers is that few are equipped to succeed in this new marketplace now that dimensions have changed.

Market research, paradigms and rules-of-thumb from more than a year ago are marks on a roadmap to a marketplace destination that no longer exists. A new map is required to navigate new territory safely. However, bankers have a lot on their plates. Increased regulation will bring increased work just to maintain business as usual. There’s no time to search randomly for answers.

The first question for any bank must be what it wants to stand for in this new and changed world. This is called defining one’s image, and large banks pay millions of dollars to do it. At first blush, it would seem that a community bank would lack the resources to play in this rarefied arena.

We hold exactly the opposite. Here are two key reasons why.

1. Community banks, by their nature, have not been affected by the financial crisis to the same extent as the big banks.

2. Their images can be tracked and manipulated more easily - and inexpensively – than those of large banks. Local and direct tactics will work where big banks need network television.

Wise bank marketers will prepare now by carefully mapping the return to sustainable market growth. The first step will always be to determine where you are: what you stand for and mean to your customers and your community. Here again, the community bank has an advantage. Its customers and environment are concentrated, and access to them is easy and (relatively) inexpensive. A quick, but thorough and brutally honest, analysis of your current collateral and marketing materials plus some research with customers will yield answers which are quite revealing.

After that, determine what you stand for. This is something you can do with your team. Here are a few ways to do this.

An assessment of your targets or customers and the environments in

which they operate is needed. In other words, meet your customers in their own neighborhoods. Where are they now versus five years ago? What do they value?

What do their attitudes and behaviors tell you about them?

Next step is to go back to your current message. How does what you’re saying differ from what you want to be? Again, this is something you can initiate with your team although some simple market research can help fill in the blind spots we all have.

The last part is a bit more technical.

You’ll need to take a look at all the ways your message reaches people, your customers and others in the community.

You’ll ask questions like: •How do people hear about you?

•What do they learn and when? From what sources?

•How do your neighbors become your customers?

them without increased spending; and •Apply behavioral understanding and channel-screening methods to efficiently capture the desired market segments by intersecting existing customer behavior.

Marketing budgets notwithstanding, community banks do have the tools at hand to identify targets and find the proper channels to reach them. This toolbox can be easily (and inexpensively) revealed by a short examination conducted with the aid of external marketing counsel.

Armed with a new road map, community and national banks today are indeed prepared to navigate a permanently changed marketplace.

Toralballa has had a 40 year long career as a marketing strategy leader and general manager for some of the most respected and imitated companies in the world, including American Express, TIMELIFE Books, Key Bank, Fortis Insurance and Publishers Clearing House. Contact Leopoldo at (216) 812-8408.

This is called Channel Mapping and, despite the fancy title, it needn’t be expensive.

These steps are the beginnings of a sound marketing plan. And though it may sound like a tool for big banks, it needn’t be. On the contrary, market research can: •Illuminate the new attitudinal environment within which you MUST operate; •Reveal the most attractive and available target market segments; •Build a dynamic picture of the new and old channels used by each segment and point out how to utilize

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The Tradition Continues ...

Mark your calendar and plan to join us in Baltimore next fall.

O B L / I L F I J o i n t C o nve n t i o n Sept ember 8-11, 2011 H ya t t Re g e n c y B a l t i m o r e o n t h e I n n e r H a r b o r 38

Ohio Record winter 2010

OPENING THE SPIGOT: Realizing New Revenue Streams through Export Finance M. Patton Perrin, CPA Global Finance Manager Global Markets Division Ohio Department of Development

“Tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports.”

President Barack Obama State of the Union Address January 27, 2010

Thus began one of our President’s most ambitious policy initiatives, one that brought spotlight attention on one of the greatest opportunities of our time: the opportunity to grow businesses by exporting American-made products to billions of consumers living outside the United States.

What are the relevant statistics regarding exporting?

•95 percent of the world’s customers are outside the United States.

•97 percent of all exporters are small- and medium-sized enterprises with less than 500 employees.

•58 percent of small- and medium-sized enterprises export to one country only, meaning that many markets are virtually untapped.

It is clear that exporting is a growth industry in the United States: Companies currently exporting to one country are gearing up to increase their exports by selling in at least one additional country (often referred to as picking the low-hanging fruit); and companies that are not exporting are considering it to grow their businesses, especially with the U.S. marketplace in the midst of difficult economic times.

Many of these firms will be looking for working capital and other financial resources to make this expansion possible. Traditionally, the Small Business Administration (SBA) has been very supportive thanks to its SBA Export Express line of credit and Export Working Capital Program, which are available through many banks.

The economic reality is that at many banks, balance sheets have been battered by exposure to the 2009 and 2010 housing crisis. Therefore, many banks are curtailing new loans, especially for exports. In addition, new reserve requirements placed on banks are negatively impacting the availability of funds that might otherwise be used to finance exports.

One solution, according to the SBA, is to increase the universe of banks offering export assistance through the Small Business Administration. “Many community banks had far less exposure than the large banks in the real estate crisis and are in a real position to lend to exporters,” says Mr. Patrick E. Tunison, Chief International Lending Officer of the SBA in Washington, D.C. “But they are not SBA-approved lenders. Others are SBA-approved lenders but have yet to explore making export-related loans.”

Why wait? New business is available! Consider the following two success stories: winter 2010 Ohio Record

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Rad-Con Inc., a small engineering firm located in Lakewood, Ohio, was able to make a multi-million dollar international sale with the support of the U.S. Small Business Administration’s (SBA) Export Working Capital Program.

Rad-Con Inc. has 29 employees and specializes in the design of industrial furnaces for sale to the steel industry. The company has a rich tradition and is a world-renown industry leader. Rad-Con pursued international business opportunities in order to grow its business by working closely with the trade specialists at the Cleveland U.S. Export Assistance Center.

Rad-Con was successful and won a multi-million export order that necessitated increased working capital. PNC Bank was able to finance its export working capital needs by utilizing the SBA’s Export Working Capital Program.

Aquatic BioControl is a privately held corporation, located in Westlake, Ohio, which is owned and directed by Richelle Bell and John Wong. The 10-person company develops, manufactures, and markets live bacterial products for purifying water in lakes, ponds, aquariums, and commercial fish farming. From its inception in 1996 through 2007, Aquatic BioControl focused primarily on retail products and sold through pet stores, garden centers, and hardware stores in the United States.

With significant technological advances, the product line expanded in late 2007, and a new target market, intensive fish farming, was identified. In intensive fish farming, relatively small, man-made ponds are used to grow fish to the highest possible population density. Fish release ammonia as they grow, and since ammonia is toxic to fish, the density of fish that can be successfully grown and harvested is limited.

Aquatic BioControl’s StartSmart is a completely safe, natural, non-toxic bacterial product with a unique ability to remove ammonia in fish-farm ponds through natural biological activity that converts ammonia into non-toxic by-products. John Wong states that StartSmart is a game-changer for intensive aquaculture, as it eliminates the toxic ammonia as fast as it is produced. This allows the fish to grow to a considerably higher density than without the use of StartSmart. In studies performed to-date in New Zealand and China, the increased crop value was three times the cost of StartSmart, making it extremely profitable for the fish farmers that use the product.

Aquatic BioControl began to work with the Ohio Department of Development’s Global Markets Division in June 2010. Department personnel, including Sean Corson and myself, made Richelle Bell and John Wong aware of export assistance provided by the Department to Ohio companies. The Ohio Department of Development conducted two market studies for Aquatic BioControl, identifying potential distributors for retail products in Great Britain and for intensive fish farming in Guangdong Province, China.

To assist with the costs required to support these export sales, the Ohio Department of Development also worked with Aquatic BioControl to secure a line of credit through the SBA Export Express program at Lorain National Bank. Without Export Express, Aquatic BioControl would have been unable to properly support the essential activities such as literature translation, overseas travel, increased manufacturing capacity, and staffing requirements demanded by export programs.

Aquatic BioControl is moving ahead full-steam with exports to the United Kingdom and China, and it’s projected sales will double over the next 18 months and grow exponentially. This would not be possible without the Export Express resource.

Growth Opportunity Do not miss out on this growth opportunity! Small business exports will continue to increase. Banks, both large and small, will be able to realize new revenue streams by joining the SBA and prudently meeting the export finance needs of these home-grown small businesses through the guaranty offered by one of SBA’s export loan programs.

The SBA conducts a quarterly Lender Webinar and is also available to provide in-house lender training on its export loan programs. Ohio banks that would like to learn more should contact SBA’s Regional Export Finance Manager Patrick Hayes at (216) 522-4731 or Patrick.Hayes@sba.gov.

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What Technology Trends Will Be Top of Mind for Banks in 2011...

According to the 2010 ICBA Community Bank Technology Survey, regulatory compliance, safeguarding customer data, controlling technology costs, and mobile banking deployment.

Raj Patel Plante & Moran

Every two years, the Independent Community Bankers of America (ICBA) partners with Plante & Moran to conduct its biennial Community Bank Technology Survey. The goals are simple: (1) provide a benchmarking tool for tracking community bank technology trends and strategies over time, (2) develop a peer comparison tool to assist community banks in measuring current technological commitment and in reaffirming strategic direction, and (3) enhance ICBA advocacy staff’s knowledge of community bank technological capabilities and goals.

This year, the survey was sent to 7,583 community banks and received a total of 895 community bank responses or 12 percent. Although regulatory compliance ranked number one among technology concerns, safeguarding customer data, controlling technology costs and deploying mobile banking were close behind. Here’s a deeper look at the findings.

Regulatory compliance is the chief technology concern for community banks Eighty-two percent of community banks regard regulatory compliance as a leading technology concern. Regulatory compliance is a greater concern among banks with assets less than $250 million (85 percent) than those with assets greater than $250 million (76 percent). Additionally, 60 percent of respondents plan to increase compliance spending over the next two years and another 39 percent plan to neither increase nor decrease compliance-related spending, with little difference among the asset-size groups.

Safeguarding customer data remains a major objective for community banks Protecting customer information remains a key long-term objective for community banks. Sixty-three percent regard identity theft as a top-5 data security concern, with many community banks expecting to increase security spending (50 percent) and risk management (49 percent) expenditures. The top data security concerns are consumer identity theft at 72 percent, followed by virus attacks at 57 percent, phishing/pharming schemes at 53 percent, business identity theft at 46 percent, hacker attacks at 45 percent, and business-account password compromise at 40 percent. Forty-eight percent of actual respondents reported a monetary loss due to a data security breach, with consumer ID theft (30 percent),third-party data compromise (16 percent), and business ID theft (8 percent) being the most likely breaches.

Controlling technology costs is a long-term challenge for community banks Bankers continue to grapple with technology expense containment, with 76 percent labeling it one of their long-term technology decisions in the next two years (a 16 percentage point increase from 2008!). Thirty-three percent of the respondents noted their overall technology is less than desired, compared to just 24 percent two years earlier. Community

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banks are increasing their investment in compliance (60 percent), security (50 percent), network infrastructure (49 percent), risk management (49 percent), and mobile banking (47 percent).

Conversely the main areas where community banks are cutting their budgets are outside consultants (12 percent), core processing (9 percent), and communications expenditures (8 percent).

Community banks are ramping up for mobile banking deployment While only 15 percent of community banks offer mobile banking today, 47 percent plan to do so in the next 24 months. Of those that currently offer the service, 82 percent offer mobile Web, 42 percent offer SMS/test messaging, and 13 percent offer a downloadable application. The top functions offered through mobile banking are: account transfers (87 percent), bill payment (53 percent), and branch/ATM locator (48 percent).

Consumer adoption initiatives provide the next frontier for online banking growth Ninety-four percent of community bank respondents offer online banking (up 5 percentage points from 2008). However, only 6 percent of respondents have more than half of their customers enrolled in the service. Community banks are having success in their efforts to encourage consumer adoption, with 56 percent of respondents noting that more than 20 percent of customers enrolled—an increase of 16 percentage points from 2008.

The core processing platform is the virtual cornerstone of a community bank Eighty percent of community banks have been on their core processing platform for more than five years. However, core vendors shouldn’t rest on their laurels, with 26 percent of respondents reporting that evaluating their core processing relationship was one of their top technology decisions over the next 24 months. Only 8 percent of respondents reported changing

their platform within the past 2 years.

Banks with more than $500 million in assets are less likely to leave their core processing platform, with 91 percent staying on their core platform for more than 5 years, compared to 73 percent of banks with less than $100 million in assets. While the percentage of banks that use in-house and outsourced core processing systems is equally split (50 percent), larger community banks (with assets greater than $500 million) are more likely (60 percent) to use in-house processing.

You may view the survey results in their entirety at 2010techsurvey.plantemoran.com.

If you have any questions regarding the results feel free to contact me.

Raj coordinates Plante & Moran’s Technology Consulting & Solutions Group. He has 18 years of information technology and financial audit experience and he closely follows emerging technologies.

Raj’s experience includes IT risk assessments, network security projects, business continuity planning, IT audit, GLBA compliance, SOX assistance, and web application security. He is a certified information systems auditor and a certified information systems manager. Raj can be reached at (248) 223-3428 or raj.patel@plantmoran.com

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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

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ANDOVER

UPPER ARLINGTON

MILLERSBURG

The Andover Bank recently announced the hiring of Joseph Varhol as branch manager of the bank’s new Madison Banking Center.

The Arlington Bank announced the third and fourth quarter recipients of their employee of the quarter recognition program, the “Extra Mile Award.” The third quarter recipient was Betsy Cooper, branch manager of the Grandview branch.

Cooper was chosen as the recipient because she is truly committed to providing outstanding customer service to the bank’s customers. The recipient of the fourth quarter award was Karma Wion.

CSB Bancorp, Inc., recently announced the appointment of W. Robert Manning, Jr. to the senior management team of CSB. Manning was appointed senior vice president, chief operations and chief information officer of CSB and its whollyowned subsidiary, The Commercial & Savings Bank.

Joseph Varhol

CINCINNATI Cheviot Savings Bank announced that it will fund the nationally acclaimed Senior Crimestoppers Program at Hillebrand Nursing Home and Mercy Franciscan Terrace Nursing Home, both located on the west side of Cincinnati. The Senior Crimestoppers Program works much like a neighborhood watch where senior facilities with a strong commitment to crime prevention implement increased awareness and a zero tolerance policy.

Karma Wion

MADISON, WI The Graduate School of Banking at the University of Wisconsin-Madison is to introduce a special Bank Technology Management School, held April 3-8, at the Fluno Center for Executive Education, Madison.

MANSFIELD COLUMBUS Huntington National Bank announced the following promotions/appointments: Jeff Dennes, a nationally recognized leader in the online, mobile, and payments industry, to senior vice president, director of Online and Mobile Services.

Dan Goss

The Federal Deposit Insurance Corporation announced the appointment of Mark Pearce as director of the newlyestablished Division of Depositor and Consumer Protection.

WOOSTER Westfield Bank celebrated the grand re-opening of its expanded Wooster office with a ribbon cutting ceremony, co-hosted by the Wooster Area Chamber of Commerce.

OBL business partner Barrister Title Group has hired Vicki Webb as new director of joint venture development. To find out more about how your institutions could start its own profitable joint title agency, call Webb at (614) 206-3777.

WORTHINGTON

KENT Home Savings Bank recently announced the promotion of Colin Boyle to assistant vice president. Boyle is a life long Kent resident and graduate of the Stillman Colin Boyle School of Business at Seton Hall University.

OBL affiliate member PWCampbell announced the hiring of Dan Goss, regional vice president, as the newest addition to the PWCampbell team.

WASHINGTON D.C. Betsy Cooper

(l to r) Rachel Wirth, administrator, Mercy Franciscan Terrace; SHCPF VP George Clinard; Tom Linneman, president & CEO, Cheviot Savings Bank; Annie Iverson, marketing director, Cheviot Savings Bank

PITTSBURGH, PA

The Barrister Title Group team of Saunie Tomecko, Vicki Webb and Bud Vetter

Great Lakes Bankers Bank announced that Peter Kubacki has joined the board of the bank. Kubacki will also serve on the boards of Bankers Bancshares, Inc. and F & M Credit Services, Inc. He will fill the term of Ed McKeon, who recently left the board.

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Focus On…Home Savings, Youngstown Hope House Visitation Center, an Ohio nonprofit agency, monitored children’s drop-off and pickup site for exchanges was recently presented with a check for $4,000 from the between parties, as well as parenting classes, teen support Home Savings Charitable Foundation. groups and children of divorcing parents classes,” she said.

According to Carole Bopp, executive “We are so very grateful to the director, the Hope House Visitation Home Savings Charitable Foundation for Center, located in Youngstown provides this generous contribution, which will a child-friendly environment for superhelp us continue with our mission vised visitation, custodial/non-custodial and programs.” exchanges, education and mediation Since 1998, the Home Savings purposes relevant to the development of Charitable Foundation has provided healthy parent-child relationships. “We nearly $10 million of support to all provide a neutral setting that increases communities served by Home Savings, the family’s level of comfort and/or secuan OBL member, with offices throughout rity and provides non-custodial parents Amy Williams, board president, Hope northern Ohio and western Pennsylvania. contact with their children,” she said. House Visitation Center; Carole Bopp, “The consequences of domestic violence Visitation is supervised in a nonthreaten- executive director, Hope House can be devastating to everyone in a ing environment and our extended hours Visitation Center; and Michael Gahagan, family, so we are very pleased to support allow for visits without interrupting work AVP, Consumer Asset & Risk Analyst, Hope House in its endeavor to build Home Savings, and board presidentor school schedules.” healthy parent-child relationships,” said Bopp added that the homelike elect, Hope House Visitation Center Darlene Pavlock, executive director, environment of Hope House also allows Home Savings Charitable Foundation. parents to spend quality time with their children, find For more information on the Hope House Visitation necessary comfort and support and build healthy relationships Center, please visit www.hopehousevisitation.org. while improving family and parenting skills. “We also offer a

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.

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Ohio Record winter 2010

Our Schools’ Graduates are Leading the Way Apply today to participate in a 2011 program from the Graduate School of Banking at the University of Wisconsin - Madison. Our graduates are top performers who understand the keys to bank profitability and have the skills to implement them. GSB offers exceptional residential and online educational offerings: Graduate School of Banking | August 7-19 Bank Technology Management School | April 3-8 Senior Management Seminar | August 14-17 Human Resource Management School | August 7-12 Financial Managers School | October 9-14 Online Seminar Series | Ongoing

Please visit gsb.org to request a catalog or for information on curriculum, student profiles, scholarships and more.

Take the lead — Apply now to attend GSB!

Educating Professionals, Creating Leaders

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

Working for Banks and Bankers