INSIDE Dave Heeter, MutualBank, Muncie, is stoked to lead the IBA as 2014 chairman. Story on page 10. HOOSIER BANKER JANUARY 2014
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,QGLDQD %DQNHUV $VVRFLDWLRQ 2IÀFHUV 'LUHFWRUV 6WDII ,%$ 2IÀFHUV Chairman ............................................................... 'DYLG : +HHWHU MutualBank, Muncie FirstVice Chairman .................................... /DUU\ : 0\HUV, First Savings Bank, FSB, Clarksville SecondVice Chairman ...........................0LFKDHO + +HDG First Federal Savings Bank, Evansville Immediate Past Chairman ..................... -DPHV & 0DUFXFFLOOL STAR Financial Bank, Fort Wayne 3UHVLGHQW DQG &KLHI ([HFXWLYH 2IÀFHU .... 6 -RH 'H+DYHQ, Indiana Bankers Association, Indianapolis &RQVWLWXHQW 'LUHFWRUV ICBA State Director ........................................ 'DYLG 0 *HLV, Jackson County Bank, Seymour ABA Membership Council ....... 0LFKDHO . %DXHU, Community Bank Shares of Indiana, New Albany Future Leadership Division President ......... /XFDV :KLWH The Fountain Trust Company, Covington 1RUWKHDVW 5HJLRQ 'LUHFWRUV -DPHV * +LDWW, First State Bank of Middlebury 0LFKDHO ' &DKLOO,Tower Financial Corp., Fort Wayne *UHJRU\ 0D[ZHOO, Farmers State Bank, Mentone 1RUWKZHVW 5HJLRQ 'LUHFWRUV .DUHQ , 0LOOHU,The Farmers Bank, Frankfort $QQHWWH 0 5XVVHOO, Security Federal Savings Bank, Logansport 3DWULFN 'XIIH\, State Bank of Burnettsville 6RXWKHDVW 5HJLRQ 'LUHFWRUV 'HQQLV :D\PDQ, State Bank of Medora *HRUJH : )HUULHOO, Bath State Bank $UFKLH 0 %URZQ, MainSource Financial Group, Greensburg 6RXWKZHVW 5HJLRQ 'LUHFWRUV &OD\ : (ZLQJ German American, Jasper .XUW ' 5RVHQEHUJHU, Our Community Bank, Spencer 0DWWKHZ +RZUH\, North Salem State Bank ,%$ 6WDII 3UHVLGHQW &KLHI ([HFXWLYH 2IÀFHU ........................................................... 6 -RH 'H+DYHQ ExecutiveVice President .............................................................. 3DXO : )UHHPDQ &$( SeniorVice President–Government Relations ........................................ $PEHU 5 9DQ 7LO -' Vice President–Meetings & Events ............................................ &KULVWLQD 0 %HQQHWW &03 Vice President–Government Relations ........................................................... 'D[ 'HQWRQ Vice President–Products & Services ................................................................. 5RG /DVOH\ Vice President–Education & Training ........................................................... /DXULH $ 5HHV Vice President–Communications .................................................................. /DXUD :LOVRQ Events & Communications Assistant ............................................................... 6XVDQ &ODUN Education Meeting Coordinator ................................................................. 0DUOHQH :HOOV Education Meeting Coordinator ........................................................... 0LW]L 0 &KULVWLDQ Staff Accountant ....................................................................................... 7LPRWK\ )U\ IT and Facilities Manager ...................................................................... 7UDF\ :DLQVFRWW Administrative Assistant ........................................................................... 0LFKHOOH /RQJ *RYHUQPHQW 5HODWLRQV 2IÀFH 0DQDJHU ...................................................... -RVKXD $ 0\HUV (PDLO DGGUHVVHV )LUVW LQLWLDO RI WKH VWDII PHPEHU·V ÀUVW QDPH SOXV ODVW QDPH H[DPSOH MGRH#LQGLDQDEDQNHUV RUJ 3OHDVH VHQG QHZV UHOHDVHV WR ,%$FRPPXQLFDWLRQV#LQGLDQDEDQNHUV RUJ 0LVVLRQ To advocate for and sustain an environment in which banks can succeed. 9LVLRQ To provide exemplary service to members as the premier state bank trade association in the country. 9DOXHV ,Q IXOÀOOLQJ RXU PLVVLRQ we will: 0DLQWDLQ WKH KLJKHVW HWKLFV LQWHJULW\ DQG respect for others; 6HUYH ZLWK SURIHVVLRQDOLVP innovation and resourcefulness; ,QVWLOO SDVVLRQ SRVLWLYH attitude and enthusiasm; 5HPDLQ PLQGIXO WKDW the success of the IBA LV MXGJHG E\ WKH VXFFHVV of its members. View Hoosier Banker Digital at www.ourdigitalmags.com/ publication/?m=19522&l=1. 3XEOLFDWLRQ 'LVFODLPHU Hoosier Banker articles are published by the IBA Service Corp., a subsidiary of IBA Holding Company Inc., that is a wholly owned subsidiary of the Indiana Bankers Association. All material published in Hoosier Banker and/or on the IBA website is the property of the Indiana Bankers Association.
5 HOOSIER BANKER TABLE OF CONTENTS VOLUME 98 NO. 1 6925 Parkdale Place Indianapolis IN 46254-4673 Phone: 317-387-9380 Fax: 317-387-9374 ZZZ LQGLDQDEDQNHUV RUJ IBAcommunications #LQGLDQDEDQNHUV RUJ 3XEOLVKHU 6 -RH 'H+DYHQ (GLWRULDO DQG $GYHUWLVLQJ Laura Wilson Hoosier Banker (ISSN 0018-473X) is published monthly by the IBA Service Corp., a subsidiary of IBA Holding Company Inc., that is a wholly owned subsidiary of the Indiana Bankers Association. The magazine invites news from IBA ǯȱ ¢ȱDZȱęȱȱ the month preceding publication. $GYHUWLVLQJ 5DWHV DYDLODEOH upon request or online at ZZZ LQGLDQDEDQNHUV RUJ. Advertisers should provide HOHFWURQLF 3')V E\ WKH ÀIWK RI WKH PRQWK SUHFHGLQJ SXEOLFDWLRQ Hoosier Banker DGYHUWLVLQJ LV available to members and associate members of the Indiana Bankers Association only. 6XEVFULSWLRQV Hoosier Banker subscriptions are provided free of FKDUJH H[FOXVLYHO\ WR PHPEHUV DQG associate members of the Indiana Bankers Association. Public access to Hoosier Banker Digital is available DW ZZZ LQGLDQDEDQNHUV RUJ $662&,$7,21 83'$7( 6 PRESIDENT’S PONDERINGS S. Joe DeHaven, IBA 8 BOARD REVIEW Gregory Maxwell, Farmers State Bank, Mentone 9 IBA CALENDAR OF EVENTS &29(5 6725< 10 DAVE HEETER: LIFELONG BANKER )($785(6 17 IBA PRESENTS 2014 BOARD OF DIRECTORS 26 WHATYOU DO,AMPLIFIED Ashley Bray, $%$ %DQNLQJ -RXUQDO 28 OUR GLOBAL MESSAGE William A. Loving, Independent Community Bankers of America 31 ADVOCACY FORYOU AND BYYOU Frank Keating,American Bankers Association *5 6327/,*+7 21 INDIANA POLITICS: 2014 Amber R.Van Til, IBA 363 6+2:&$6( 22 ANNOUNCING TWO NEW PREFERRED SERVICE PROVIDERS Rod Lasley, IBA ',5(&7256 6(1,25 0$1$*(0(17 24 INTEREST-RATE RISK:A PRIORITY FOR 2014 Jeffrey F. Caughron,The Baker Group LP ('8&$7,21 5281'83 30 FIFTY ATTEND MIDWEST AGRICULTURAL BANKING SCHOOL '(3$570(176 13 ASSOCIATE MEMBERS' CORNER 13 HONORS 14 COMPLIANCE CONNECTION Larry C.Tomlin, Krieg DeVault LLP 14 IN MEMORY OF 25 FROM THE BOARD ROOM 32 BANKERS ON THE MOVE 34 BANKING ON COMMUNITY 34 ADVERTISERS INDEX 5 HOOSIER BANKER JANUARY 2014 David W. Heeter is CEO and director of MutualBank, Muncie, and CEO, president and director of 0XWXDO)LUVW Financial Inc.
6 HќќѠіђџȱ юћјђџ юћѢюџѦ 2014 in 2003. There will be four more years with this successful return, assuming that all of our transactions can continue their current levels of success. IBA has the ability to communicate and convene, and 2013 proved fruitful. Communications come in many forms, with our two most prevalent being Hoosier Banker magazine published each month since 1916, and the weekly IBA E-News. In the area of convening, many bank- ȱęȱȱȱȱȱȱȱȱ ȱǯȱ Bringing bankers together to discuss issues is of paramount importance. IBA brings members together through ȱ ȱ ǰȱ ȱ ęȱȱ - tion, Mega Conference, IBA Annual Washington Trip, and other conferences, seminars and discussion groups. IBA also is your voice with the media. We reach out to the media, conducting several editorial board meetings each year and responding to dozens of media requests for interviews. We consistently portray the banking industry as the business that supports all others. You are the backbone of the economy, and we are proud to sing your praises. In 2014, we will not be able to repeat such dramatic legislative success, at least not at the Statehouse. Maybe ȱȱęȱȱȱ ǰȱ ǯȱ ȱ ȱȱ ȱȱ¢ȱȱěǰȱȱȱ save money or generate more income from product and ȱěǰȱȱ¢ȱȱȱǯȱ We will continue to communicate as best we can and advocate for you with the media. While we do not know what this baby called 2014 will look like or accomplish, or what roadblocks or disasters will come along, rest assured that we will be there with you every step of the way. Thank you for your steadfast support of IBA! Every year-end, we see the cartoons depicting a bearded old man and a new baby. The old man, of course, represents the year coming to an end, and the baby represents the new year that is full of anticipation. Often the old-timer provides advice ȱȱ¢ȱȱȱĴȱȱȱȱ young one away from the calamities the old-timer faced. While we all know what happened in the year that is ending, no one really knows what will happen in the new year. The classic cartoon is a stark reminder of the unknown that lies ahead. 2013 was a good year for the Indiana Bankers Association and for most of the banks operating in our state. The year began well, with the most successful legislative session for banking concerns I have witnessed in my nearly quarter of a century representing banks at the Statehouse. ȱȱȱ ȱŗŖŗŞȱ ȱȱęȱȱ tax by 2 percent over four years; initiated repayment of the ǞśŖȱȱ ȱ¢ȱȱȱȱȱ ȱ ȱ ȱ ȱǻ ǼȱȱŘŖŖřDzȱȱȱȱȱ ȱȱȱ ȱ¢ǰȱȱȱȱĚ ȱ ȱȱȱȱȱȱȱȱęęDzȱ and established stricter safeguards against future legisla- ȱĴȱȱȱȱ ǯ IBA also was successful in defeating or obtaining amendments to many bills to which we were opposed. It was a landmark session, made possible by our strong government relations team, zealous banker grassroots ¢ȱȱȱȱȱȱĴȱǻ Ǽǯȱ Through it all, we maintained IBA’s historical focus on banking and economic issues. Educationally, in 2013 we provided training to more bankers than ever in our history. While it is unfortunate that much of this training is necessary due to excessive compliance burden, IBA is proud to provide the training ȱȱǯȱ ȱȱěȱȱȱ ȱ¢ȱ ago, and the demand has been so great that we continue to expand the areas that they cover. Whether through forums, webinars, series like Community Bankers for Compliance, schools, conferences — including the unique Mega Confer- ȱȯȱȱǰȱ ȱȱȱěȱȱ- tional programming. Again, without your support, this programming would not be possible. IBA continues to increase and improve our product and ȱěǯȱ ¢ȱȱȱȱȱȱȱ of associate members; companies created jointly by IBA and member banks, such as our title insurance company; or companies that IBA owns, such as our New Markets ¡ȱ ȱ ¢ȱ ȱ ¢ȱǻ Ǽǯȱ ȱ ȱȱȱ¢ȱěȱȱŘŖŗřȱȱȱęȱȱ ȱ completed, successfully culminating a journey that began ASSOCIATION UPDATE PRESIDENT’S PONDERINGS 6 -RH 'H+DYHQ 3UHVLGHQW &KLHI ([HFXWLYH 2IÀFHU ,QGLDQD %DQNHUV $VVRFLDWLRQ ȱ ȱ ǯȱ ǰȱȱȱȱ ȱ ȱȱ - cial Institutions, has announced ȱȱǰȱěȱ ǯȱřŗǯȱ He was appointed director in ŘŖŖşȱ¢ȱȱ ǯȱ ȱ - iels and reappointed last year by Gov. Mike Pence. A member of the Indiana Bankers Association Forty Year Club, Mills previously served for 37 years with National City Bank Indiana. '), 'LUHFWRU 0LOOV 5HWLUHV Gov. Mike Pence (left) congratulates Dave Mills on his successful career and retirement from the Indiana Department of Financial Institutions.
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8 HќќѠіђџȱ юћјђџ юћѢюџѦ 2014 Board Review *UHJRU\ 0D[ZHOO 3UHVLGHQW DQG &KLHI ([HFXWLYH 2IÀFHU )DUPHUV 6WDWH %DQN 0HQWRQH Northeast Region Director, IBA Board of Directors M¢ȱȂȱ¢ǰȱęȱȱǰȱ starts with family. I am a father, a grandfather and a husband to Julie. ȱȱȱȱ ȱ Ȃȱǰȱȱę- dler and a proud community banker at Farmers State Bank, Mentone. ȱ ȱ ȱȱȱ ǰȱ ȱ I worked on farms and became familiar with farm life. My father was a longtime district sales manager for an animal feed company, and my mother worked at a bank for years. Thus two constants were embedded into my work life: agriculture and banking. ȱ ¢ȱȱȱȱȱŗşŝřȱȱȱ ȱ ¢ȱ National Bank. I lucked upon my entrance into banking when an acquaintance called to inform me that the bank was looking for a general banking trainee. I had already gained prior experience as a student at Ball State University, service in the U.S. Army and a few short stints in the work force, and was eager to start building a solid career. From the start, I enjoyed banking and its close ties with people. Most of my career has revolved around lending, and there is a great deal of satisfaction in helping people reach their goals. ȱ ȱŗşŞŖȱ ȱȱȱ ěȱȱ ȱȱȱ ȱ ȱ ¢ǯȱ ȱȱȱȱęȱ¢ǰȱȱȱ to community banking at The Old First National Bank, ěǰȱȱȱȱȱȱǯ I became bank president in 1994 and continued in that role until 1999, when the bank — which was a part of Fort Wayne National Corp. — was sold to National City. ȱ ȱ ¢ǰȱ¢ȱȱ ȱęȱȱȱ executive. It was a fun and exciting position, with lots of travel, but after a time I began to seek a more traditional community banking role. That opportunity came when Farmers State ȱěȱȱȱȱȱȱȱȱ¡ȱ Ĝǯȱ ȱȱ¢ȱ ȱȱȱ ǯȱŗǰȱŘŖŖŝǯ Today my responsibility is to manage all of our banking ǰȱ ȱȱȱȱȱȱěǯȱ ȱ most community banks, about 80 percent of our assets are in loans, so my primary focus is on the loan portfolio and the credit process. My career developed on the lending side of banking. I began by making car loans, then grew into making house loans, giving me the satisfaction of helping people through a major step in their lives. Later I became a business and ag lender, helping business owners start or save businesses, and helping farmers protect their assets. This consultative role is what we all strive for as community bankers. This role extends outside of our institutions to the wider community, as well. Like my banking peers, I am community-connected. I am particularly active as chairman the ȱ ȱ ȱ ǯǰȱȱȱ development company. As bankers, we understand how important it is to protect our economy. I am fortunate to work in Kosciusko County, known as the “orthopedic capital of the world.” In fact 50 percent of orthopedic products worldwide are made in Warsaw, Ind. It all began, incidentally, with a pharmacist who formed a company that made slings for injuries. His company ȱȱȱȱǰȱȱęȱȱȱ knees. Eventually a cluster of corporate headquarters had formed in the area, creating a strong economic base. I believe in protecting the economy, and I believe in protecting the Indiana banking community. For this reason, I am glad to serve on the Indiana Bankers Association board of directors, because I value IBA’s role in safeguarding our industry. Certainly the educational component of IBA is important, especially to smaller institutions like ours. The smaller the bank, the more dependent we are on consultants and outsourcing of every type. At Farmers State Bank, we have the highest trust in the quality of the education and training that IBA provides. Trust is critical in the banking profession, and I’ve been fortunate to work with many trustworthy people who have helped me develop my career. I especially want to ȱ ȱȱȯȱ ȱ ěǰȱ ȱȱȱȱȱ of directors of Old First National Bank, and Jim Johnston, who was president of the Fort Wayne National Corp. These gentlemen believed in me and helped guide me into leadership. I certainly want to thank my family, too. Just as my ȱȱȱ¢ȱȱȱęǰȱȱȱ¢ȱǯȱ Julie and I are fortunate that all of our four children and 10 grandchildren are doing well, and all live within a three-hour drive of us. You may know one of our sons, Sam Maxwell. He is a ȱȱ ȱ ȱ ȱȱ ǰȱȱ IBA-member institution. I am proud that, for the last sev- ȱ¢ǰȱ ȱȱȱȱȱȱȱŗŖȱȱ ȱ corporate bankers nationwide. Julie and I are very happy to be in Kosciusko County. ȱ ȱȱȱȱȱ ȱȱŘŖŖŜǰȱ ȱ ȱȱ that Kosciusko County is “God’s country.” After only a short time, I have come to agree. ASSOCIATION UPDATE
ASSOCIATION UPDATE CALENDAR OF EVENTS Register online at www.indianabankers.org/calendar.cfm 9 HќќѠіђџȱ юћјђџ юћѢюџѦ 2014 Alternative Delivery Channels … $YDLODEOH DW \RXU FRQYHQLHQFH YLD :HELQDU &' 520 RU 2Q 'HPDQG Appraisals: Ordering and Reviewing Feb. 4 u ,%$ &HQWHU Community Bankers for Compliance Series - Session 1:The Loan Estimate and Closing Disclosures Feb. 10 u &RXUW\DUG E\ 0DUULRWW )RUW :D\QH Feb. 11 u ,%$ &HQWHU Feb. 12 u ,%$ &HQWHU Analyzing Personal Financial Statements and Tax Returns Feb. 13 u ,%$ &HQWHU Analyzing Business Financial Statements and Tax Returns Feb. 14 u ,%$ &HQWHU Indiana Deposit Documentation Feb. 18 u )RUW :D\QH +RWHO Feb. 19 u ,%$ &HQWHU CFO Forum: Feb. 18 u ,%$ &HQWHU *URXS Feb. 21 u ,%$ &HQWHU *URXS Senior Lender Forum: Feb. 19 u ,%$ &HQWHU *URXS Feb. 20 u ,%$ &HQWHU *URXS Basic Banking School: Session 1 – Analyzing the Bank and the Banking System Feb. 25 u ,%$ &HQWHU IRA Basics Feb. 25 u ,%$ &HQWHU IRA Intermediate Feb. 26 u ,%$ &HQWHU Commercial Real Estate Construction Lending Feb. 26 u ,%$ &HQWHU Managing the Asset Quality of a Community Bank’s Loan Portfolio Feb. 27 u ,%$ &HQWHU ,7 DQG 2SHUDWLRQV 2IÀFHUV )RUXP Feb. 27 u ,%$ &HQWHU *URXS Feb. 28 u ,%$ &HQWHU *URXS &HUWLÀHG 7HOOHU (YHQLQJ 3URJUDP Vital Check and Deposit Issues for the Frontline March 3 u )DLUÀHOG ,QQ and 6XLWHV -HIIHUVRQYLOOH March 4 u +XQWLQJEXUJ (YHQW &HQWHU March 5 u &KDSPDQ·V %ORRPLQJWRQ March 10 u )RUW :D\QH +RWHO March 11 u %HVW :HVWHUQ ([HFXWLYH 3OD]D Lafayette March 12 u 6KHUPDQ +RXVH %DWHVYLOOH 2014 Deposit Regulation Update and Review March 6 u ,%$ &HQWHU The 2014 IBA Leadership Development Program: Session 1 - “It’s Simple, But It Isn’t Easy” 0DUFK u :RRGHG *OHQ ([HFXWLYH 5HWUHDW DQG &RQIHUHQFH &HQWHU +HQU\YLOOH 12 Steps to Effective Expense Control and Bank Effeciencies March 11 u ,%$ &HQWHU Training the Credit Analyst 0DUFK u ,%$ &HQWHU Handling Deceased Deposit Customer Issues: PODs, Estates,Trusts and IRAs March 13 u ,%$ &HQWHU 2014 Call Report Preparation 0DUFK u ,%$ &HQWHU Annual Security and Risk Management Conference 0DUFK u Indianapolis Marriott North Uniform Commercial Code Under Revised Article 9 March 20 u ,%$ &HQWHU Calculating and Maintaining the Allowance for Loan and Lease Losses March 21 u ,%$ &HQWHU Seven Habits of Effective Credit Administration in Commercial Banks March 24 u ,%$ &HQWHU A First Look at the Integrated Disclosure Requirements March 24 u ,%$ &HQWHU 2014 Human Resource Forum March 25 u ,%$ &HQWHU Auditing Mortgages April 1 u ,%$ &HQWHU New Rules for Lenders: RESPA and Reg. Z April 2 u ,%$ &HQWHU Mastering HMDA April 8 u ,%$ &HQWHU Principals of Loan Documentation April 9 u ,%$ &HQWHU Advanced Loan Documentation April 10 u ,%$ &HQWHU 2014 Consumer Lending School $SULO u ,%$ &HQWHU Branch Management Series: Session 2 - Growing the Retail Bank April 22 u ,%$ &HQWHU Basic Banking School: Session 2 – Banking Business Operations and Management April 23 u ,%$ &HQWHU IBA Mega Conference $SULO u ,QGLDQD &RQYHQWLRQ &HQWHU Indianapolis The 2014 IBA Leadership Development Program: Session 2 - “Do Something That Scares You” 0D\ u :RRGHG *OHQ ([HFXWLYH 5HWUHDW DQG &RQIHUHQFH &HQWHU +HQU\YLOOH Community Bankers for Compliance Series – Session 2 May 12 u &RXUW\DUG E\ 0DUULRWW )RUW :D\QH May 13 u ,%$ &HQWHU May 14 u ,%$ &HQWHU Senior Retail Lenders Forum May 14 u ,%$ &HQWHU Risk Management Forum May 22 u ,%$ &HQWHU Compliance for Mortgage Lenders: Completing the New Truth-in-Lending and RESPA Documents May 28 u ,%$ &HQWHU Feb. 3 u Bank Call Report Preparation for Beginners, Part 1 Feb. 3 u Dos and Don’ts on Power of Attorney’s in Indiana Feb. 4 u ACH Professional Series:Tax Refunds:ACH Postings, Exceptions and Bank Liability Feb. 6 u Construction to Permanent Lending Under the New CFPB Mortgage Rules Feb. 6 u Health Savings Accounts Feb. 10 u Bank Call Report for Beginners, Part 2 Feb. 11 u Imaged Documents:What to Keep,What to Destroy, What Holds Up in Court Feb. 12 u Escrow Account Compliance: Rules, Best Practices and Examiner Hot Buttons Feb. 13 u Opening Accounts for Minors: Compliance, Ownership and Access Issues Feb. 13 u Roth IRAs and Conversion Feb. 18 u BSA/AML OFAC Compliance:What Was Old Is New Again Feb. 19 u Risk Management Series: Expanding Your Required IT Risk Assessment Program Feb. 20 u The ALLL in Troubled Debt and Foreclosed Asset Restructuring Feb. 20 u Dos and Don’ts on Working With Caregiver and Fiduciaries Feb. 20 u New Business Account Interview: CIP, CDD and Legal Issues Feb. 21 u Dissecting the New CFPB Mortgage Rule Exam Procedures for TILA and RESPA Feb. 24 u Assessment and Examiner Expectations Feb. 24 u Bank Call Report Preparation for Beginners, Part 3 Feb. 25 u Trust Compliance in Opening Accounts and Lending Feb. 26 u Email Archiving and Encryption: New Rules and Best Practices to Minimize Risks Feb. 27 u Dealing With Casual Days, Dress Codes and Work Appearance Feb. 27 u What Is That Personal Tax Return Telling Me? Part 2: Schedules E and F March 3 u Bank Call Report Preparation for Beginners, Part 4 March 4 u Essential HR Recordkeeping From Hiring to Firing March 4 u Notary Public March 5 u RDC March 6 u Creating a Social Media Policy and Strategy That Everyone Can “Like” March 7 u Interagency Guidance for Reporting Elder Financial Explotitation March 10 u Bank Call Report Preparation for Beginners, Part 5 March 11 u Fiduciary Responsibilities for New Directors March 13 u Emerging Leaders Education: Understanding Asset/Liability Management Concepts March 18 u Flood Insurance Compliance Update: Including New Biggert-Waters Rules Effective July 6 and FEMA Mapping Changes March 19 u Regulatory Compliance for Lenders, Including BSA March 20 u Sub Chapter S Conversion in Community Banks: Issues and Answers March 25 u Loan Origination in the Current Regulatory Environment: Improving Compliance, Costs and Turnaround Times April 3 u ACH Professional Series:ACH Rules Update 2014 April 7 u Indiana Opening Business Accounts: Resolutions, Signature Cards and Changing Signers April 9 u Managing Loan Risk Using FICO Score Monitoring and Credit Mitigation Models April 10 u Basic Commercial Loan Underwriting:Analysis, Qualifying Applicants and Decision-Making April 15 u 5HVSRQGLQJ WR 2IÀFLDO 'HPDQGV IRU &XVWRPHU Funds: Subpoenas, Garnishments, Summonses, Levies
10 HќќѠіђџȱ юћјђџ юћѢюџѦȱ2014 COVER STORY When he became chief executive Ĝȱȱȱȱ ǰȱ ǰȱ ȱ ǯȱ ȱ ȱȱ¢ȱ ȱ ǰȱȱ predecessor, “You can’t get 10 years’ worth of experience in less than ŗŖȱ¢ǯȄȱ ȱDZȱȃ Ȃȱ going to make a lot of mistakes. Learn from them.” Ten years have since passed, and now Heeter, 52, has been elected chairman of the board of directors of the Indiana Bankers Association, ěȱ ǯȱŗǯȱ ȱȱȱȬ¢ȱ stint at another Indiana bank, Heeter has spent his full 36 years in banking with MutualBank, Muncie. Heeter also serves as CEO, president and director of MutualFirst Financial Inc. and as vice president of the MutualBank Charitable Foundation Inc. Additionally he is a member of the IU Health Ball Memorial Physicians Board, the Community Foundation of Muncie ȱȱ ȱ ¢ȱęȱ advisory board. A former member of ȱ ȱ ȱ ȱȱ ȱ ¢ȱ ¢ȱ ȱ Advisory Council, Heeter has served with the Ball State University College of Business alumni board, Muncie ȱ ¢ȱ ȱȱ Commerce, United Way and Muncie Family YMCA. He is a graduate of Ball State University and of the Graduate School of Banking at the University of Wisconsin. Hoosier Banker ȱ ȱ Heeter about his banking insights and goals as IBA chairman. What are your responsibilities as CEO of MutualBank and as president and CEO of MutualFirst Financial Inc.? “My primary responsibilities are strategic planning, shareholder and investor relations, mergers and acquisitions, and board governance. Technically M&A is part of ¢ǰȱȱȱȱĜȱ standpoint, I manage the holding company. ȱȱȱȱȃ ȱȱǰȱ ȱ Ĵȱ is our president and chief ȱĜǯȱ ȱȱ of responsibilities is set up so that I run the company, and Pat runs the asset of the company, which is the bank. “Because we are a public company, compliance with SEC requirements is important. We have an obligation to disclose relevant information in a timely manner. I spend a great deal of time on governance-related issues — board meetings, board education, board communication and reporting. “We have two boards, one for the bank and one for the holding company, with the same people serving on both. We make sure that our board has a clear understanding of traditional bank-related requirements, such as the Bank Secrecy Act, anti-money laundering, security, audit and so forth. Strategic ȱȱȱȱęȱ activity.” How do you time-manage such vast responsibilities? ȱ ȃ ¢ȱȱ ȱ ȱ ǰȱ ȱ ȱȱȱ ȱ of both the holding company and the bank; I became CEO on Nov. 1, 2003. Our board foresaw that the functions of president and CEO are such big jobs, that to have one person do both ȱȱȱȱěȱȱȱ that job apart. That’s why we organized to separate the running of the holding company from running the bank.” What is your history with MutualBank? “I joined MutualBank on Sept. 7, 1978, while I was in high school. I was drawn to the bank, because it was highly respected and a good environment. “It was my senior year, and I was playing football. I’d leave school about 11:30, come into the bank and work until 2:30, then go to football practice. When the football season Dave Heeter: Lifelong Banker Dave and Deb Heeter pose with a copy of the MutualBank vision and values — based on character, compassion, class and competition.
11 HќќѠіђџȱ юћјђџ юћѢюџѦ 2014 was over, I‘d work throughout the afternoon. I continued to work here while studying at Ball State, which is ȱ ȱȱ¢ȱ ȱ ǯ “After graduating from college, ȱȱ ȱǰȱȱ ȱȱ MutualBank full-time. I had the opportunity to work at one of the Ȃȱ ȱ ¢ȱĜȱȱ Warsaw, which is near Syracuse, ǰȱ ȱ ȱ ȱǯ “It was a good situation, working ȱȱȱĜǰȱȱ ȱ ȱ ȱ¢ȱ ȱȱȱȱĜǯȱ ȱ ȱȱȱěȱȱ ȱ ¢ȱ Bank, which is headquartered in Warsaw. “I worked there for exactly one year, from April 1, 1985, to April 1, 1986. Then I had the chance to come back here to MutualBank, and the rest is history. I’ve been here just about my whole life.” Your banking background includes disparate areas, such as human resources, marketing and administration. How has your background helped your career? “My path is more unique than traditional. I started as an accounting clerk and worked in the accounting ȱȱęȱ¢ǯȱ ȱ ȱȱ ȱȱ ȱȱȱȱȱĴȱȱȱ everything — clean the vault, make bank deposits, run to the airport to pick up equipment, shovel snow. “Looking back, it helped me realize that there are a lot of things that simply have to be done in a business ȱȱ¢ȬȬ¢ȱǯȱ ȱȱęȱ level, my willingness to do whatever needed to be done helped me build credibility. ȱ ȃ ȱ ȱȱ ȱȱȱ - saw, I worked at a branch, again doing a bit of everything. I made loans, opened new accounts, ran a teller ǯȱ ȱȱȱęȱ ȱ in Kosciusko County while I was there, and I watched all weekend while it was being installed. It was fascinating. “When I rejoined MutualBank in 1986, I came into the role of human resources, leading the administrative division. Next I took on marketing and became executive vice president for one year prior becoming CEO. “I value all of that experi- ǯȱ ȱěȱȱ ȱȱ ¢ȱěȱ- ments and functions work is critical to being able to understand how it all goes together. “It’s harder to do that now, because banking has become much more specialized. In my case, I credit the organization, as well as ȱ ǰȱȱȱȱ ȱȱěȱȱ of the bank. That’s invaluable.” As 2014 chairman of the Indiana Bankers Association, what are your goals? “We’re in a good place as an organization, but overall I have three goals to address this year: continued government ȱǻ ǼȱǰȱȬȱ credible education, and expanding opportunities for future leaders. “First, in government relations, we’ve got to get more people engaged and contributing to funding ȱ ȱ¢ǰȱ¢ȱȱȱ federal side. We need to make sure that our members understand the im- ȱȱ ȱȱȱȱȱ funding it. “Second, we need to be constantly providing our members relevant and timely educational opportunities. This year we’re going to see a lot of regulatory change, and it will be important to react ¢ȱȱě¢ǯ “Third, we need to do something demonstra- ȱȱęȱȱ engage young people in the IBA. The challenge begins within our organizations. “Banks need to be identifying associates who are young, technologically savvy and serving in positions that could sit in a boardroom and contribute to overall strategy. The opportunity of engaging younger bankers is really important.” What are the main challenges ahead for the Indiana banking community? “The biggest challenges we face this year are earnings, meaningful loan growth and the plethora of new regulations. There are added headwinds in revenue and earnings, Dave Heeter is joined by daughter Kate and wife Deb at the IBA Annual Convention last fall. Dave Heeter enjoys his responsibilities with MutualBank, Muncie, and 0XWXDO)LUVW Financial Inc. &RQWLQXHG RQ SDJH
12 HќќѠіђџȱ юћјђџ юћѢюџѦȱ2014 Continued from page 11. due to increasing regulatory requirements. ȱ ȃ ȱȱȱȱȱȱ grow, because of the stagnant interest-rate environment. The cost of doing business continues to go up, and competition for loans will increase, because we all want the same good loans. Unless the economy improves substantially, there won’t be much new demand. “Essentially we’ll be taking business from each other, which puts even more pressure on earnings because, to get business to come to us, we’ll have to do something for clients that their current bank is not ǯȱ ȱȱȱȱĴȱ at providing services or charging less. “On a bigger scale, our challenge will be in identifying how banks must change their value proposition for new-age customers. There are the issues of branches, delivery of service, and security of that delivery of service — how do we change to meet the demands of consumers? “Traditionally the bank was dictating how business was going to be done. Now it is the customer who says, ‘Here’s how I’m going to do it. If you can’t accommodate me, I’ll go to somebody who will.’ Technology allows that. ȱȱȱȱȃ ȱȱ¡ȱęȱ years, the changes will be even more dramatic. As an industry, we’ll have to understand how to appeal to the customer who doesn’t want to come into the bank or interact with us, other than technologically.” How can IBA help? “Certainly training is a piece of the response, but the main answer is communication. We have to be encouraging feedback ȱȱĚ ȱ ȱ members and IBA. We need to ensure that there is a two-way Ě ȱȱǯ “As a trade association, it’s important to take the time to listen to our members for clarity on what their challenges are. We do a great job of disseminating information, but we need input from our members on what is important to them. “Advocacy also is part of the answer. Clearly IBA helps our members by protecting Pat Botts (left) and Dave Heeter work closely together in their leadership roles with MutualBank and 0XWXDO)LUVW Financial Inc. our interests as much as possible. Over the last three or four years, IBA has executed its advocacy extremely well, yet there’s always more that can be done.” Please tell a bit about your family. “We’ve had a great, great year. ȱȱ ȱȱȱřŖȱ - ding anniversary last June and Kate, our daughter, got married four days ǯȱ ȱȱȱ ȱȱȱ in October. ȱ ȃ Ȃȱȱȱȱȁ¡ȱȂȱȱ ȱ and me. We’re blessed, because Kate and her husband are in Bloomington, ȱ ȱȱȱ ȱȱȱ ǰȱ but they work here in Muncie. “We’re also lucky for the chance ȱǰȱ¢ȱ ǯȱ ȱ- teers as a travel coordinator for our church’s fellowship group, called High Street Travelers. She’s really thoughtful and practices the fellowship intent by taking great care of people. ȱ ȃ ȱȱ ȱȱ¢ȱǯȱ ȱ don’t play together all that often, but at some point we will. We’re very blessed to have some freedom and opportunity to do these things.” At the IBA Annual Convention last fall, the MutualBank team enjoyed the pristine weather. Shown are (left to right): Mike Messaglia of Krieg DeVault LLP, Indianapolis; Dave and Deb Heeter; and Pat Botts. MutualBank is headquartered in downtown Muncie. Dave Heeter explains why “Integrity Is Everything” in banking. Click on the red arrow in +RRVLHU %DQNHU 'LJLWDO at www.indianabankers.org. Video Bonus
13 HќќѠіђџȱ юћјђџ юћѢюџѦ 2014 Ĵȱ ǯȱ , chief executive ĜȱȱSecurity Federal Savings Bank, Logansport, has been inducted into the newly created Indiana University Kokomo Alumni Hall of Fame. She was inducted in November 2013 in recognition of her previously having been honored with the I.U. Kokomo Alumni Association’s ȱ ȱ ȱȱ ŘŖŖŜǯȱ ȱȱ ¢ȱ ȱ ȱ ȱȱŗşşŗǯȱ ȱęȱ public accountant, she is a graduate of Indiana University-Kokomo, of the Graduate School of Bank Investments and Financial Management and of the Stonier Graduate School of Banking. She was named Chamber of Commerce Business Woman of the ȱȱŘŖŖŝȬŖŞȱȱȱ ȱ ȱȱ Banking by NorthWestern Financial Review £ȱȱŘŖŗŖǯȱ ȱȱȱ member of the board of directors of the Indiana Bankers Association, and she completed the IBA Leadership ȱ ȱȱŘŖŗřǯ Keven Jennings, vice president, commercial lending at ¢Ĵȱ Savings Bank, has been honored with the Lender of the Year award ¢ȱȱ ȱ ȱ ǯȱ ǻ Ǽȱȱ ȱ ǯȱ ȱ ȱ£ȱȱȱ ȱȱ meeting held in Merrillville on Nov. 7, 2013. Jennings had the most loans ȱȱȱ ǯȱ HONORS Allison Melangton, president of Indiana Sports Corp., has been elected to the board of director of OneAmerica Financial Partners Inc., parent company of OneAmerica, AUL Retirement Services, Indianapolis. She has served in various capacities from 1994 to 2008, including leading Indianapolis’s successful bid to host the 2012 Super Bowl. In 2008 Melangton was named president ȱȱ¡ȱĜȱȱȱ 2012 Indianapolis Super Bowl Host Ĵȱȱȱȱ ȱ Sports Corp. as president in 2012. Previously she directed events for 11 years for USA Gymnastics and ASSOCIATE MEMBERS’ CORNER also worked at eight Olympic Games, including time as an associate producer for NBC Sports. Melangton is a graduate of Colorado State University. Alicia Beck has rejoined Robert Steele Agency Inc., Brownsburg, as director of sales and operations. She originally joined the company in 2005 and has eight years of commercial sales and operations management experience. For the past three years, Beck worked for the Fleet Management division of Enterprise Holdings. She earned a bachelor’s degree from Purdue University. 7ZR 0HPEHU %DQNV &KDQJH 1DPHV Two member banks of the Indiana Bankers Association have changed ǰȱěȱ ǯȱŗǯ % Forethought Federal Savings Bank is now ClearPoint Federal Bank & Trust, Batesville — website: www.clearpointfederal.com; % Indiana Community Bank is now Talmer West Bank, Goshen – website: www.talmerwest.com.
14 HќќѠіђџȱ юћјђџ юћѢюџѦȱ2014 COMPLIANCE CONNECTION Questions: Consumer Loan Fees – Last year, the Legislature changed the allowable loan origination fees for loans made under the Uniform Consumer Credit Code (UCCC).1 Is it permissible that my bank charges an origination fee, but ȱȱȱȱǵȱ ȱ the $50 limitation on origination fees mean I can only charge that much for a processing fee? How do I calculate ȱȱęȱȱȱȱ of the UCCC if I charge both, and am I allowed to charge these fees if ȱȱȱȱȱȱęȱ charge on my loans? Answer: In the 2013 legislative session, the General Assembly passed Senate Enrolled Act 238 (SEA 238), changing certain of the amounts that a lender may charge in connection with a Consumer Credit Sale,2 a Consumer Loan3 and a Supervised Loan.4 Included in these changes were amendments to the UCCC to allow lenders to charge a “loan origination fee” of $50 on a Consumer Loan5 or Supervised Loan.6 These origination fees are considered non-refundable, earned at the time of closing, and are not included in the calculation of the ȱęȱ7 under the UCCC. The UCCC generally allows a lender to contract for a “minimum ȱęȱȄȱȱ ȱ Loans8 and Supervised Loans9 that pre-pay of up to $45. As a result of the changes contained in SEA 238, a lender is precluded from contracting ȱȱȱęȱǰȱȱ the lender also assesses the consumer a loan origination fee. If a lender determines that it will charge the $50 loan origination fee, it should review its loan documents to ensure all refer- ȱȱȱȱȱęȱ charge is removed. If a lender chooses to charge other ȱȱę¢ȱȱȱ under the UCCC, it should bear a reasonable relationship to the services provided, be clearly disclosed to the consumer in accordance with all federal regulations, and be included in the calculation of the loan ęȱȱȱȱ ǯȱ ȱ limitation on non-refundable loan origination fees excluded from the ȱęȱȱȱȱ ȱ does not limit other fees a lender may charge. For example a lender could charge a $50 origination fee and a $75 processing fee, but would be precluded ȱȱȱȱęȱ charge. The origination fee would be considered earned at the time of closing, and not considered in the ȱȱȱȱęȱǰȱ whereas the processing fee would go into the calculation of the loan ęȱȱȱȱȱ- termining if the lender exceeded the allowable 25 percent maximum for a Consumer Loan,10 or the step-rate maximum of 36 percent, 21 percent and 15 percent for a Supervised Loan,11 depending on loan size. ABOUT COMPLIANCE CONNECTION In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance ȱěȱȱȱ Ȭęȱȱ ǯȱ ȱȱĴȱȱȱǰȱ ȱ Compliance Connection will refer the bank to a law ęǯȱ ȱȱȱȱȱ ȱȱ¢ȱLarry C. Tomlinǰȱȱ ȱ ȱ ȱ ǰȱ ǰȱ and IBA compliance consultant. Submit Compliance Connection questions to IBA’s Amber R. Van Til at avantil@indianabankers.org. 7KLV LQIRUPDWLRQ LV SURYLGHG IRU JHQHUDO HGXFDWLRQ SXUSRVHV DQG LV QRW LQWHQGHG WR EH OHJDO DGYLFH 3OHDVH FRQVXOW OHJDO FRXQVHO IRU VSHFLÀF JXLGDQFH DV WR KRZ WKLV LQIRUPDWLRQ DSSOLHV WR \RXU LQVWLWXWLRQ·V FLUFXPVWDQFHV RU VLWXDWLRQ 1 Ind. Code § 24-4.5 et seq. 2 ´&RQVXPHU &UHGLW 6DOHµ LV GHÀQHG LQ ,QG &RGH 24-4.5-1-301.5(8). 3 ´&RQVXPHU /RDQµ LV GHÀQHG LQ ,QG &RGH 4.5-24-4.5-1-301.5(9). 4 ´6XSHUYLVHG /RDQµ LV GHÀQHG LQ ,QG &RGH 4.5-3-501(1). 5 Ind. Code § 24-4.5-3-201(8). 6 Ind. Code § 24-4.5-3-508(8). 7 ´/RDQ ÀQDQFH FKDUJHµ LV GHÀQHG LQ ,QG &RGH 24-4.5-3-109. 8 Ind. Code § 24-4.5-3-201(6). 9 Ind. Code § 24-4.5-3-508(7). 10 Ind. Code § 24-4.5-3-201(1). 11 Ind. Code § 24-4.5-3-508(2) Larry J. Carr, 63, retired central region president of MainSource Bank, Greensburg, died ǯȱŘŖǰȱŘŖŗřǯȱ ȱ was in banking for more than 30 years, serving in positions including chairman, president and chief ¡ȱĜǯȱ ȱȱȱ- ing career in 1973 as a teller at First ȱ ȱȱ ǯȱ ȱ his accomplishments, he served on the board of directors of the Community Bankers Association of Indiana, on the ȱ ¢ȱ ȱ ǰȱȱ president of the Lake Manitou Chamber of Commerce, on the board of the Fort Wayne Philharmonic, as a member of Grace United Methodist Church and was active with several fraternal lodges. After retiring from banking, Carr worked ȱȱȱȱȬ ȱȱ ¢ȱ ȱ Group with one of his three daughters. He was a graduate of Ball State UniIN MEMORY OF versity and of the Graduate School of Banking at the University of Wisconsin. Hilbert “Hib” Lindsey, 78, member of the board of directors of the Springs Valley Bank & Trust Company, French Lickǰȱȱ ǯȱŗŗǰȱŘŖŗřǯȱ He joined the board in 1988 and was founder of Lindsey’s Construction. Lindsey was a member of the French Lick/West Baden Lions Club, of the French Lick American Legion Post 76 and a founding member of the French Lick Chamber of Commerce.
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