INSIDE The Honorable Mike Pence upholds tradition as 50th governor of Indiana. Story on page 10. Hoosier Banker NOVEMBER 2014
Congratulations 2014 Graduates from Indiana We congratulate you on completing the rigorous 25-month program and joining the more than 20,000 alumni who have gone on to leadership positions in their organizations, associations and the financial services industry. Best wishes for continued success! 5315 Wall Street #280, Madison, WI 53718 | Ph. 800-755-6440 | Please visit gsb.org Sponsored by: Educating Professionals, Creating Leaders Joseph Anthony Cavacini Vice President/Commercial Loan Officer First Federal Savings Bank Ft. Wayne Kyle D. Clark Senior Vice President Wayne Bank and Trust Co. Richmond Dan J. Devlin Vice President State Bank of Lizton Lizton Kirby Daniel Drey Senior Vice President, CFO Kentland Bank Kentland Nathan Blaine Fansher Vice President, Commercial Loan Operations Crossroads Bank Wabash Ryan J. Fenstermaker Assistant Vice President 1st Source Bank South Bend Rachel R. Grossman Loan Documentation Manager The Friendship State Bank Friendship David B. Hawkins Vice President, Loan Documentation & Mortgage Manager Old National Bank Evansville Mary Beth Jerrells Vice President Bloomfield State Bank Bloomfield Seth P. Keirns VP, Commercial Banking First Financial Bank Fort Wayne Brandi S. Rasche Data Processing Manager Freedom Bank Dale Kindra Jo Russell Chief Internal Auditor & Fraud Officer The Friendship State Bank Friendship Mark J. Sams Senior Vice President & Chief Lending Officer The Merchants Bank & Trust Company West Harrison Matthew P. Stout Senior Manager BKD, LLP Fort Wayne Vincent Joseph Turner Vice President & Regional Manager MutualBank Goshen Not pictured: Matthew Craney Chief Lending Officer, HomeBank SB, Martinsville
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Indiana Bankers Association Officers, Directors & Staff IBA Officers Chairman ................................................................ David W. Heeter, MutualBank, Muncie FirstVice Chairman .......................................... Larry W. Myers, First Savings Bank, Clarksville SecondVice Chairman ........................... Michael H. Head, First Federal Savings Bank, Evansville Immediate Past Chairman ................................. James C. Marcuccilli, STAR Bank, Fort Wayne President and Chief Executive Officer .... S. Joe DeHaven, Indiana Bankers Association, Indianapolis Constituent Directors ICBA State Director ........................................ David M. Geis, Jackson County Bank, Seymour ABA Membership Council ....................... Michael K. Bauer,Your Community Bank, New Albany Future Leadership Division President .......... Lucas White,The Fountain Trust Company, Covington Northeast Region Directors James G. Hiatt, First State Bank of Middlebury Michael C. Marhenke, iAB Financial Bank, Fort Wayne Gregory Maxwell, Farmers State Bank, Mentone Northwest Region Directors Annette M. Russell, Security Federal Savings Bank, Logansport Patrick Duffey, State Bank of Burnettsville Karen I. Miller,The Farmers Bank, Frankfort Southeast Region Directors Dennis Wayman, State Bank of Medora George W. Ferriell, Bath State Bank Archie M. Brown, MainSource Financial Group, Greensburg Southwest Region Directors Clay W. Ewing, German American, Jasper Kurt D. Rosenberger, Our Community Bank, Spencer Matthew W. Howrey, North Salem State Bank IBA Staff President & Chief Executive Officer ........................................................... S. Joe DeHaven ExecutiveVice President .............................................................. Paul W. Freeman, CAE SeniorVice President–Government Relations ........................................ Amber R.VanTil, JD Vice President–Meetings & Events ............................................ Christina M. Bennett, CMP Vice President–Government Relations ........................................................... Dax Denton Vice President–Products & Services ................................................................. Rod Lasley Vice President–Education & Training ........................................................... Laurie A. Rees Vice President–Communications .................................................................. Laura Wilson Events & Products/Services Assistant .............................................................. Susan Clark Education Meeting Coordinator ................................................................ Elizabeth Kilty Education Meeting Coordinator ................................................................. Marlene Wells Staff Accountant ....................................................................................... Timothy Fry IT and Facilities Manager ...................................................................... Tracy Wainscott Administrative Assistant ........................................................................... Michelle Long Government Relations & Communications Office Manager ............................ Joshua A. Myers Email addresses: First initial of the staff member’s first name plus last name; example: jdoe@indianabankers.org Please send news releases to: IBAcommunications@indianabankers.org Mission To advocate for and sustain an environment in which banks can succeed. Vision To provide exemplary service to members as the premier state bank trade association in the country. Values In fulfilling our mission, we will: • Maintain the highest ethics, integrity and respect for others; • Serve with professionalism, innovation and resourcefulness; • Instill passion, positive attitude and enthusiasm; • Remain mindful that the success of the IBA is judged by the success of its members. View Hoosier Banker Digital at www.ourdigitalmags.com/ publication/?m=19522&l=1. Publication Disclaimer 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. 11 6925 Parkdale Place Indianapolis IN 46254-4673 Phone: 317-387-9380 Fax: 317-387-9374 www.indianabankers.org Publisher: S. Joe DeHaven Editor: Laura Wilson Advertising: Rod Lasley Send news releases to: IBAcommunications @indianabankers.org 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 members. Copy deadline: first of the month preceding publication. Advertising: Rates available upon request or online at www.indianabankers.org. Advertisers should provide electronic PDFs by the 15th of the month preceding publication. Hoosier Banker advertising is available to members and associate members of the Indiana Bankers Association only. Subscriptions: Hoosier Banker subscriptions are provided free of charge exclusively to members and associate members of the Indiana Bankers Association. Public access to Hoosier Banker Digital is available at www.indianabankers.org. FEATURES 6 PRESIDENT’S PONDERINGS S. Joe DeHaven, IBA 7 BOARD REVIEW Matthew W. Howrey, North Salem State Bank 9 IBA CALENDAR OF EVENTS 14 BRIDGES OUT OF POVERTY: ONE BANK'S EXPERIENCE AS A COMMUNITY CONNECTOR Dan L. Moore, Home Bank, Martinsville 24 STATE DEPOSITS IN INDIANA FINANCIAL INSTITUTIONS COVER STORY 10 INDIANA GOV. MIKE PENCE: BALANCING BUDGETS AND PRIORITIES LENDING / CREDIT 18 SECURED PARTY WAIVES SECURITY INTEREST DUE TO FAILURE TO MONITOR DEBTOR Michael L.Weissman, Levin & Ginsburg Ltd. GR SPOTLIGHT 20 INDIANA BANKERS BREAK CONVENTION BANKPAC RECORD Amber R.Van Til, IBA PSP SHOWCASE 22 IBA WELCOMES A NEW PREFERRED SERVICE PROVIDER Rod Lasley, IBA DIRECTORS / SENIOR MANAGEMENT 26 WHEN GOOD COMPLIANCE GOES BAD Pam Perdue, Continuity Control DEPARTMENTS 15 VIDEO BONUS 15 IN MEMORY OF 16 COMPLIANCE CONNECTION Larry C.Tomlin, Krieg DeVault LLP 17 ASSOCIATE MEMBERS' CORNER 17 ANNIVERSARY MILESTONES 23 HONORABLE MENTIONS 27 TAKING IT EASY 28 NEW BRANCHES, BUILDINGS & OPENINGS 30 BANKING ON COMMUNITY 31 BANKERS ON THE MOVE 34 A+ BANKERS 34 ADVERTISERS INDEX 5 Hoosier Banker novemBer 2014 The Honorable Mike Pence was elected 50th governor of Indiana in 2012 and inaugurated on Jan. 14, 2013.
6 Hoosier Banker November 2014 November is the month that we in the United States celebrate Thanksgiving. Special “Days of Fasting” and “Days of Thanksgiving” were first recognized in other countries in the 1500s. The Protestant Reformation influenced the organization of these days in an effort to simplify the many church holidays – as many as 95 – that were being celebrated annually. Each holiday required church attendance, in addition to 52 Sundays per year, which meant foregoing work and sometimes making payment for costly celebrations. The streamlined approach advocated by Puritans was to set a limited number of Days of Fasting, to follow disasters or threats, and Days of Thanksgiving, recognizing blessings and good fortune. This religious/cultural backdrop intertwined with the story of the Puritans, who came to the New World and survived the harsh climate, with guidance from neighboring Indians. The first nationalized U.S. Thanksgiving holiday was declared by President George Washington as Nov. 26, 1789: “a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many and signal favours of Almighty God.” I suspect that, having recently won a long and brutal Revolutionary War, and having erected a new, democratic government with an established president, that indeed there was much to be thankful for. That first nationalized celebration was not, however, the first Thanksgiving Day, as various religious groups and communities had been observing the holiday at different times in the United States since 1621. The very first, of course, was in Plymouth, now located in Massachusetts. From those early beginnings through today, we celebrate and express our thankfulness for the bounty with which we have been blessed. And blessed we are to be born in the United States, where freedom reigns and we the people have the right to petition government at all levels. We have food at our disposal, plentiful shelter, outstanding health care and abundant resources. Certainly, we also face many unsolved societal problems. The world is constantly changing and, as we change with it, new issues emerge, such as cybersecurity. I am confident that we will manage cybersecurity issues and others in time. I am confident that the United States stands to increase its economic strength relative to the rest of the world. Energy and food are core resources that set the foundation upon which economic success rests. We have been and continue to be the world leader in food production. We experience more agricultural production than anyone else in the world, and the efficiency with which we produce food continues to improve. On the energy front, we have diminished our reliance on FEATURE President’s Ponderings S. Joe DeHaven, President & Chief Executive Officer, Indiana Bankers Association foreign oil from 70 percent, 40 years ago, to only 3 percent today. And it gets even better! In the past few years, three trillion barrels of oil have been discovered in the United States, and 2,500 trillion cubic feet of natural gas has been uncovered. This is enough fuel to meet the consumption of the United States for the next 100 years. Plus we have the most sophisticated financial services system in the world with which to finance all of these newfound resources. No other country on earth enjoys the intricate banking system that we have, which provides localized financial services. Our banks operate internationally, nationally, regionally and locally, allowing us to satisfy the needs of every business and consumer. Yes, we have much to be thankful for, and I believe that it will continue to get better for generations to come. Happy Thanksgiving to you, and thank you for your support of IBA and your service to your customers and communities. Branch Management Graduates On Nov. 4, participating bankers completed the 2014 Branch Management Series of the Indiana Bankers Association. Pictured are (row 1, left to right): Sarah Corder,West End Bank, Richmond; Alexa Chamberlin, Citizens State Bank, Pendleton; Tammy Wilson, Lafayette Savings Bank; Kylene Sickafus, Security Federal Savings Bank, Logansport; Rebecca Piercy, Security Federal Savings Bank, Logansport; Kelly Maynard, Security Federal Savings Bank, Logansport; Jenny Tolbert, Bloomfield State Bank, Bloomington; Danielle Hill, Farmers State Bank,Topeka; Jessica Brodock, Farmers State Bank, Fremont; (row 2, left to right): Beverly Vaught, First National Bank of Carmi, Illinois; Melissa Lundmark, First Farmers Bank and Trust Company,Wabash; Diana Graham, First Farmers Bank and Trust Company,Terre Haute; Tyler Swago, iAB Financial Bank, Fort Wayne; Erica Bennett, iAB Financial Bank, Fort Wayne; Kelli Brandt, Garrett State Bank, Fort Wayne; Larry Simpson, Lafayette Savings Bank; Kaitlyn Donahue,The Peoples State Bank, Bloomington; James Ross, Farmers State Bank, LaGrange; (row3, left to right): Beth Isaacs, First Bank Richmond, NA, Cambridge City; Sarah Fry, Napoleon State Bank, Greensburg; Regina Hall, First Harrison Bank, Corydon; Brittany Kiesler, First Harrison Bank, Corydon; Roxann Scott, First Farmers Bank and Trust Company, Dana; Kyle White, First Bank of Berne; and (row 4, left to right): Dan Holland, Mid-Southern Savings Bank, Orleans; Boubacar Balde,The National Bank of Indianapolis; Kyler McReynolds, Peoples Trust & Savings Bank, Newburgh; Ben Knowles,The National Bank of Indianapolis, Carmel; Steve Bryant,The Peoples State Bank, Bloomington; Erik Miller, Bloomfield State Bank, Bloomington; and Ben Sparrenberger, Peoples Trust & Savings Bank, Newburgh.
7 Hoosier Banker November 2014 I am lucky to be a banker. Banking was not my first career choice. Instead I began my career as a bank examiner for the Indiana Department of Financial Institutions (DFI). Before graduating from Indiana University, several organizations came to campus to recruit, including the FDIC. Through them, I met John Schroeder, a DFI deputy director. He persuaded me to interview with DFI recruiters, who sold me on the educational opportunities. So after graduation, right after 9/11, I went to work as an examiner. I was assigned to the southern half of the state, working with about 55 banks. It was an opportunity to meet and get to know a lot of bankers. The job required some traveling coast to coast, so my wife Julie and I had the chance to visit California, New York, Las Vegas and other great locations. It was fun and exciting, but that all changed in 2008 when our oldest child was born. With both Julie and me traveling extensively for work, something had to give. Fortunately I had the chance to join North Salem State Bank as chief financial officer. I thought it would be a quiet, nine-to-five job but, as any community banker knows, it doesn’t work that way. Most days I’m at work before 6 a.m. The hours are long but flexible, allowing me to prioritize family – the culture of this bank. Even now that I’m president and chief executive officer, I’ve never had to miss a practice, a game, a sick kid or even a dentist appointment. Everybody at this bank knows that family comes first. That commitment makes for better, more loyal employees. It’s amazing how dedicated our people are. My function, as with all CEOs, is to help our bank make money, which we do by providing quality customer service. Consequently I spend a lot of time at the branches, meeting with new and potential customers, or helping to resolve problems. There’s a lot of “windshield time” – driving around meeting with folks, talking with bank officers and going to chamber events. I also do anything from making loans to managing our 70 employees to cleaning restrooms. It’s a typical community bank president’s responsibility. Luckily I’ve had a lot of good mentors along the way. When I started at the DFI, Paul Brockman, who was my boss, and Jim Cooper, former deputy director, took me under their wings and led me through the learning process. They even persuaded me to go back to school at night to get my MBA at Indiana University. I also met a lot of great bankers, like Bob Heuchan in Franklin, while I was examining banks. He and others helped me learn the business of banking. Now that I’m involved with IBA, my network has deepened and widened. There are people like Pat Glotzbach, Steve Denhart and others who I can call anytime if I need help or just have questions. My most influential mentor is John Colvin, chairman of North Salem State Bank. When I was first appointed president, John met with me every morning for coffee. We met at 5:30 or 6 a.m., which was late for John. We’d review what had happened the day before, what problems to be prepared for, and which of our customers might need help. And as a 31-year-old “kid,” I needed all the help I could get. John gave me guidance above and beyond what I expected, and he still does. On days that he doesn’t come into the bank, he’ll text me to see how things are going, or to ask about my kids. He even comes to my boys’ baseball and football games. John helped instill our bank’s culture of community service and focus on the people around us. We have employees on nearly every board of every civic organization in the four counties we serve. We run fairs, we coach Little League teams, we’re out in the community every day. It’s also in our bloodline to be a part of the political arena. We stay involved with our bank trade associations, so we can have a say in the legislative process. We have a state legislator, Rep. Thompson, serving on our board – a reminder of our responsibility as bankers to support our PACs and to educate our elected leaders on banking issues. Even though I’m here at the bank before 6 o'clock most mornings, and going to my sons’ sports practices and games six evenings a week and on weekends (both Julie and I are team coaches), I make sure I’m involved with the IBA. It’s an honor to be serving on the IBA board of directors. Home life is wildly busy, but it’s helpful that Julie’s job as human resources manager for National Starch is part-time. She works from 10 a.m. to 2 p.m., giving her time to drive the boys to and from school. Her company allows her this schedule, because she’s so good at what she does. Apart from sports, our family also spends time together on our pontoon boat. In nice weather, we take it to a lake in Owen County for fishing, swimming and other water activities. We live out in the country on 45 acres, and Julie has gotten our sons into gardening. She does lots of canning, and she’s teaching the boys to pick vegetables and experiment with different recipes and flavors. She’ll say, “Let’s go pick green beans,” and they’ll grab their buckets and go. They’ll even eat what they pick. It’s a nice life working at a community bank with dedicated staff, being part of a community I enjoy, and raising sons who stay busy with sports and the outdoors. Julie and I definitely enjoyed our past travels, but now I’m hard-pressed to leave my happy home. It’s a great life, and I’m lucky to be sharing it with so many good people. Board Review Matthew W. Howrey, IBA Southwest Region Director North Salem State Bank FEATURE
THE IBA LEADERSHIP DEVELOPMENT PROGRAM IT’S SIMPLE, BUT IT ISN’T EASY MARCH 9-12, 2015 DO SOMETHING THAT SCARES YOU JUNE 3-5, 2015 LIMITATIONS ARE SELF-IMPOSED AUGUST 19-21, 2015 WHO DARES WINS OCTOBER 14-16, 2015 An intensive, eight-month program, guaranteed to motivate and accelerate the development of leaders in the Indiana banking industry. Only 25 attendees are admitted to the program. Admissions are first-come, first-served. Applications Deadline is January 30, 2015 For more information contact Laurie Rees at (317) 387-9380 or visit indianabankers.org
CALENDAR UPDATE 9 Hoosier Banker November 2014 Calendar of events Register online at www.indianabankers.org/education-events The IBA Center for Professional Development is located at 6925 Parkdale Place, Indianapolis, 317-387-9380. Alternative Delivery Channels … Available at your convenience via Webinar, CD-ROM or On-Demand 2014 Midwest Agricultural Banking School Dec. 1-4 - Purdue University - West Lafayette Trust Officer / Financial Adviser Forum Dec. 2 - IBA Center Loan Portfolio Management: The Key to Success in 2015 and Beyond Dec. 3 - IBA Center 2014 Ag Clinic Dec. 4 - Purdue University - West Lafayette Small Business Banker Development Program: Session 4 - Reviewing Results and Perfecting Your Sales Presentation Dec. 5 - IBA Center Lending Compliance Update Dec. 8 - IBA Center Auditing the Ability to Repay Qualified Mortgages and ARMs Dec. 9 - IBA Center Advanced Commercial Lending School Dec. 11-12 - IBA Center Analyzing Tax Returns in Self-Employed and Small Business Situations Jan. 14, 2015 - IBA Center Analyzing Commercial and Industrial Business Cash Flow Jan. 15 - IBA Center Branch Management Series: Session 1 - Managing a Successful Branch Jan. 20 - IBA Center Compliance Administration and Audit Jan. 20 - IBA Center Senior Retail Lenders Forum Jan. 21 - IBA Center Auditing BSA Jan. 21 - IBA Center Risk Management Officer Forum Jan. 27 - IBA Center BSA Graduate School Jan. 27-28 - IBA Center Community Bankers for Compliance Series: Session 1 Feb. 9 - Courtyard by Marriott, Fort Wayne Feb. 10 - IBA Center Feb. 11 - IBA Center 2015 Chief Financial Officer Forum Feb. 17 - Group 1 - IBA Center Feb. 20 - Group 1 - IBA Center Fundamentals of Banking, Session 1 - Banking 101 Feb. 18 - IBA Center 2015 Senior Lender Forum Feb. 18 - Group 1 - IBA Center Feb. 19 - Group 2 - IBA Center IRA Basics Feb. 24 - IBA Center 2015 Marketing Directors Forum - New! Feb. 24 - IBA Center IRA Intermediate Issues Feb. 25 - IBA Center IT and Operations Officer Forum Feb. 26 - Group 1 - IBA Center Feb. 27 - Group 2 - IBA Center Indiana Deposit Account Administration March 5 - IBA Center IBA Leadership Development Program: Session 1 - It’s Simple, But It Isn’t Easy March 10-13 - Wooded Glen Executive Retreat & Conference Center, Henryville Implementing the Integrated Disclosure Rules March 16-17 - IBA Center 2015 Human Resources Directors Forum March 17 - IBA Center Annual Security and Risk Management Conference March 18-19 - Indianapolis Marriott North Training the Credit Analyst March 24-25 - IBA Center Trust Officer/Financial Adviser Forum April 7 - IBA Center Home Mortgage Disclosures Act Seminar April 9 - IBA Center Branch Management Series: Session 2 - Growing the Retail Bank April 21 - IBA Center Fundamentals of Banking: Session 2 - Business Operations and Management April 22 - IBA Center Train the Trainer: Plans, Programs and Processes That Work April 23 - IBA Center Senior Retail Lenders Forum May 6 - IBA Center Community Bankers for Compliance Series: Session 2 May 11 - Courtyard by Marriott - Fort Wayne May 12 - IBA Center May 13 - IBA Center Risk Management Officer Forum May 21 - IBA Center BSA/AML Compliance School June 2-3 - IBA Center IBA Leadership Development Program: Session 2 - Do Something That Scares You June 3-5 - Wooded Glen Executive Retreat & Conference Center, Henryville IBA Commercial Lending School June 7-12 - IBA Center Dec. 2 - The 10 Must-Have Skills for Customer Service Success Dec. 2 - Opening Accounts for Nonprofit Organizations Dec. 3 - Traditional and Roth IRA Reporting Responsibilities: Requirements, Issues and Answers Dec. 3 - Robbery Training and Other Teller Security Issues Dec. 4 - ACH Specialist Series: Handling ACH Exceptions and Returns Dec. 9 - Filing UCC Financial Statements: Getting It Right! Dec. 10 - Supporting Documentations for the ALLL Dec. 11 - Community Bank Taxation: Strategies for Short- and Long-Term Planning for the Board and Senior Management Dec. 16 - Advertising Compliance:Website, Print,TV and Radio Dec. 16 - IRS Information Reporting Dec. 16 - Compliance Perspective Dec. 17 - Denied Loan Requirements: Consumer, Commercial and Residential Dec. 18 - Self-Examination for Fair Lending Compliance Jan. 6, 2015 - HMDA:What to Know Now, and What’s on the Horizon? Jan. 7 - Apple Pay, the Mobile Payments Game Changer: Considerations and Action Steps for Community Banks Jan. 8 - Disaster Management and Continuity Planning, Including Critical Vendors Jan. 13 - IRA and HSA Update: 2014-15 TaxYears Jan. 14 - CFPB Rules for Mortgage Loan Officer Compensation Jan. 15 - Advanced Endorsements: POAs, Businesses,Trusts and More Jan. 21 - FDIC Trends and Deficiencies Cited in Matters Requiring Board Attention (MRBA) Jan. 22 - Security Officer Reports to the Board: Compliance and Best Practices in Fulfilling Your Annual Requirement Jan. 23 - Call Reports: Basel III and RC-R Changes Line-by-Line Jan. 27 - Customer Complaint and Response Management Jan. 28 - Dealing With ACH Tax Refunds: Exceptions, Posting and Bank Responsibilities Jan. 29 - Emerging Leader Series:The UBPR - Understanding Peer Group Comparison to Improve Bank Performance Feb. 3 - Revisiting Your RESPA and TILA Policies to Include the New Integrated Disclosure Requirements Feb. 4 - Understanding Appraisals and Appraisal Review Concepts for Lenders Feb. 5 - New BSA Officer Training Feb. 10 - FASB/GAAP Update, Including Proposed Modifications to ALLL Calculations Feb. 11 - Qualifying Borrowers Using Personal Tax Returns Part 1: Basics, Itemized Deductions, Interest and Dividend Income, Sole Proprietorships and Capital Gains Feb. 12 - New Accounts Series:Account-Opening Due Diligence Feb. 18 - FinCEN Guidance on Banking Marijuana Businesses Feb. 19 - Regulator Issues and Update for the Credit Analyst Feb. 24 - Advanced ACH Specialist Series: Setting and Monitoring Effective ACH Exposure Limits
10 Hoosier Banker November 2014 COVER STORY Indiana Gov. Mike Pence: Balancing Budgets and Priorities The Indiana banking industry is fortunate to operate in a legislative environment that is largely supportive of business and banking concerns. Consequently the Hoosier state has developed a reputation for fiscal solvency and economic strength, with mutual respect forged between lawmakers and the business/ banking community. A striking example of legislative support of banking came in 2013 with the passage of HEA 1018. This landmark legislation, signed into law by Gov. Mike Pence, provided Financial Institutions Tax (FIT) relief and gave permanent protection to the Public Deposit Insurance Fund, a $300 million bank-funded pool of funds that protects local taxpayers. Again this year, the Indiana General Assembly passed legislation with positive, long-term ramifications for Indiana banking. In March Gov. Pence signed into law SEA 1 which, among other provisions, phases down Indiana’s Corporate Income Tax rate from 6.5 percent in 2015 to 4.9 percent in 2021, and also phases down the FIT rate to 4.9 percent in 2023. By comparison, the FIT rate had been 8.5 percent prior to last year’s passage of HEA 1018. The Indiana Bankers Association appreciates that Gov. Pence understands banking issues and the importance of banks in maintaining a strong economy. The governor was elected to office in 2012 and inaugurated in January 2013; he has the distinction of serving as Indiana’s 50th governor. Pence previously served in public capacity when he represented Indiana’s Sixth Congressional District in Congress for six terms. Earlier in his career, he was employed with the Indiana Policy Review Foundation as president and also was radio host of “The Mike Pence Show.” The governor and First Lady Karen Pence are the parents of three grown children, Michael, Charlotte and Audrey. In October Hoosier Banker had the opportunity to interview The Honorable Mike Pence. In your first year as governor, you signed into law HEA 1018, impacting the Financial Institutions Tax and the Public Deposit Insurance Fund. What were your reasons for signing the bill? “We like to say, in this office, that we make job creation job No. 1, and our financial institutions play a vitally important role in the life of our economy in Indiana. Over the last two years, as we were moving forward legislation that was lowering income taxes, lowering the inheritance tax and lowering the corporate tax, we thought it was important also to take the opportunity to lower the tax on financial institutions. “To continue to make Indiana more competitive, we’ve got to keep an eye on hardworking Hoosiers, on our businesses and on our financial institutions so that, all working together, they have more resources to invest in ways that will create jobs and opportunities. We thought that was an important step in the last two years of moving forward the kind of tax relief that is resulting in our economy growing, and in our labor force growing in Indiana at a pace that exceeds that of almost every state in the union. “Indiana has seen our unemployment rate drop from over 8 percent to below the national average of 5.7 percent. We’ve seen our labor market grow in Indiana by more than 50,000. We’re on pace in this state for another record year in total deals by our economic development team. Gov. Mike Pence serves Hoosier citizens from his historic office at the Indiana Statehouse.
11 Hoosier Banker November 2014 Continued on page 12. Gov. Mike Pence and first Lady Karen Pence cut the ribbon in July at the inaugural Farnborough International Air Show to promote Indiana’s attractive business environment. “I believe our overall tax environment, including the relief that we passed on the financial institutions tax, has played a key role in creating the kind of environment that’s resulting in a growing Indiana economy.” Your website states that you are “dedicated to continuing Indiana on a pathway to success through fiscal responsibility, economic development and educational opportunity for every Hoosier child.” What can the Indiana banking community do to assist? “It’s more about what the banking community is already doing in Indiana. One of the strengths of our financial institutions in the state of Indiana is the longstanding tradition of community partnership and philanthropic support that comes out of our financial institutions. “Whether it be working with an individual or business customer in making financing available that results in a growing economy; whether it’s partnering with our local schools in ways that encourage engagement with our teachers and classrooms, particularly in career education; or whether it be banks’ philanthropic support of everything from Little League in the community to virtually every worthy cause in cities large and small in Indiana, our Indiana banking community plays a leading role in the economic vitality of our communities. Their support is reflected in the success of our schools and in the quality of life in communities around Indiana.” Where were you raised? “I was born and raised in Columbus, Indiana, and I’ll never forget when I got my first passbook savings account at Irwin Union Bank and Trust. I was old enough to have my dad take me down to the bank and open up an account and begin to learn to save. “I know banking is big business, and Indiana is fortunate to have some very significant financial institutions that are in our state and do business in our state. But for me, my experience with banking has always been that of a smalltown guy who could walk into the lobby of the bank with his folks, who would know the teller and the branch manager. “That childhood experience shaped my view of banking in Indiana. I recognize what a vital role it plays in ensuring that our families, our businesses and our communities have the resources to keep growing.” What role does the banking industry play overall in the ongoing economic success of Indiana? “Reliable access to capital is essential for Indiana companies to be able to invest and to grow, and banks are the primary source of credit. In 2013, banks nationwide financed more than $287 billion of small business loans, out of a total of $1.5 trillion of business loans. These loans support expansion plans, they support hiring, and they support capital investment. “Banks also work in their local communities through programs like the Community Reinvestment Act (CRA) and are active partners in local development projects. Additionally there are many other, subtle ways that banks are a glue for our community. At its very core, the banking industry is the leading source of capital that keeps Indiana business moving.” Both you and First Lady Karen Pence keep full schedules, including Mrs. Pence chairing the state’s bicentennial celebration in 2016. How do you balance your challenging time commitments? “We’ve been in public life together for 14 years. For us, it really is about putting family first. “That doesn’t mean that we don’t work a lot of hours. Today, for example, we started out at the Governor’s Conference for Women, where Mrs. Pence spoke, and I spoke, then it was a quick kiss on the cheek, and we both went off to the rest of our schedules for the day. But then we’ll see each other by the end of the day. “Protecting family time – time with our kids when they’re home – has been the key for how being in public service has not only been a time when our family has survived, but it’s been a time when we feel like our family has prospered. I feel that my wife and I, and my kids and I, are Gov. Mike Pence accepts the Outstanding Achievement in State Tax Reform award, presented by The Tax Foundation in April.
12 Hoosier Banker November 2014 Continued from page 11. closer because we’ve been in public service together, and we do things together as often as our schedules permit. “When I first started running for office, we used to load the kids in the minivan and head out to county fairs to shake hands and hand out fliers. In a very real sense, our kids to this day – even though they’re away to college – still feel a great sense of ownership about our family’s involvement in public life. That’s been important. “The last thing we believe in is taking Sundays off. Sunday is always family day for us. We get up and attend church and Colts home football games. Other than that, Sunday is a time when we like to power down, regroup and catch up. It’s been a source of rest and refreshment for us over the years. “I really do believe that your balance – and I say this even when I’m not talking to bankers – is the key to your success. Your balance in your bank account certainly is key to your success, but the balance in your life, I truly believe, makes you more effective at work and more fulfilled at home. “Throughout my public career, we’ve always sought to encourage people who work for us to make time for family, to make time for friends, to make time for those things that renew and enrich them – be that a community of faith or local volunteer activities. We’ll always hold that view.” What insights have you gained from those who have influenced you in your life? “I think that to know Mike Pence, you have to know our family. ‘Governor’ is what I do, and the greatest privilege I will ever have is to serve as governor of Indiana, but my family is who I am. Not just as a husband and a father, but we have a large, extended family in Indiana. “My mother is 82 years young and lives in our hometown of Columbus. We see her often and can’t keep up with her. My three brothers and two sisters are all very successful. I’m proud of them and their careers, and of all our nieces and nephews. “When I think of those who have influenced me over the years, it begins with my dad. He passed away when I was 28 years old, but is still a guiding influence in my life. I think of my mom, who is an amazing human being, the daughter of immigrants to this country. She and my dad really lived the American dream. “The circle widens from there, but the greatest influences in my life have been a great family, great parents, and having brothers and sisters that are always there to encourage, always there to tell you like it is and always there to inspire you. “I never grow tired of people coming up to me and telling me, ‘I knew your dad.’ I love to hear stories about my dad, even though he’s been gone for decades. “I love it when people come up and say they know my brothers or my sisters. The Pence family is a great big, loud, crowded-at-holidays family, and we wouldn’t have it any other way.” There is much speculation about your potential interest in running for the office of president of the United States. Would you please comment? “I’m always flattered anytime my name is mentioned for the highest office in the land, but I really think that the attention that we’ve received is more of a reflection on the success that the people of Indiana have enjoyed over much of the last 10 years. People are talking about Indiana everywhere. “When I travel around the country telling Indiana’s story, or at all kinds of venues, people want to know how we’ve managed to pursue a course where we’ve balanced budgets, we have strong reserves, and we have a Triple A bond rating from all the major credit agencies. This progress comes even while we’ve been cutting taxes for individuals, for corporations and for financial institutions, and while investing new dollars in education and infrastructure. “The phrase that I use when I travel is that ‘Indiana is the state that works.’ I’m staying focused on the future of the people of Indiana and on the opportunities that are in front of the people of our state. We’ll let my future take care of itself.” t Gov. Mike Pence speaks at the Tax Competitiveness and Simplification Conference in June. Against a backdrop of family photos, Gov. Mike Pence works from his Statehouse office desk.The red “hot line” phone is reserved exclusively for First Lady Karen Pence.
13 Hoosier Banker November 2014 Investing in Homeownership Mortgage Purchase Program for sales of 5-30 year fixed-rate mortgages. Strengthening Communities Grants for affordable housing to support community initiatives. Supporting Growth Advances for funding small farm and small agri-business. Enhancing Credit Letters of Credit for facilitating residential housing finance and community lending. Managing Balance Sheets Advances for asset/liability and interest rate risk management. Expanding Local Economies Funding for commercial loans and small business to support and preserve jobs. Revitalizing Neighborhoods A Community Investment Program advance mixed with an Affordable Housing Program grant supports economically diverse housing and commerce. FEDERAL HOME LOAN BANK OF INDIANAPOLIS 8250 Woodfield Crossing Blvd. ^ Indianapolis, IN ^ fhlbi.com
14 Hoosier Banker November 2014 The book Bridges Out of Poverty: Strategies for Professionals and Communities (by Ruby K. Payne, Philip E. DeVol and Terie Dreussi Smith) addresses the root causes of poverty and provides a model to support individuals as they build resources. Over 100 leaders in our community came to each of the two forums, which featured DeVol and Dreussi Smith as speakers. With that type of positive response, it became clear that we had the interest and momentum to form a steering committee and develop plans for an initiative. Almost two years later, Morgan For our small community bank based in Morgan County, it was very painful for us to witness an escalation in the levels of poverty around us. In 2012 a group of Home Bank employees learned about the “Bridges Out of Poverty” program and its unique approach to understanding and addressing the poverty problem. Following two community forums underwritten by our bank, a countywide movement began, bringing together the many sectors of our community with a goal to make meaningful impact and change lives. FEATURE About the Author Dan L. Moore is president and chief executive officer of Home Bank, Martinsville, which he joined in 1978. He serves as a board member of the Morgan County Economic Development Corp., as a director of the Federal Home Loan Bank of Indianapolis and as a member of the mutual institutions board of the Independent Community Bankers of America. He is a past member of the board of the Indiana Bankers Association. Additionally Moore is a director of the Confessing Movement of the United Methodist Church, serves as chairman of the building committee of First United Methodist Church of Martinsville and is past chairman of the Barbara Jordan YMCA. He is a graduate of Indiana State University and earned a master’s degree from Indiana Wesleyan University. Moore also is a graduate of the School of Executive Development and has served as an adjunct instructor at the University of Indianapolis. The author can be reached at 765-342-6695, email: dmoore@homebanksb.com. Home Bank, Martinsville, is a member of the Indiana Bankers Association. Bridges Out of Poverty: One Bank’s Experience as a Community Connector County Bridges Out of Poverty (MCBOP) is now a collaborative organization with representation from multiple sectors in our community, including private business, education, nonprofit agencies, the faith community and health care. Our organization has evolved to include a subcommittee structure reflecting different areas of focus: data measurement to assess poverty and its impact, poverty education and training for local employers, transportation issues, quality housing, economic development, fund development for projects and “Getting Ahead” classes. The latter is the critical “boots on the ground” part of the initiative, a program working directly with individuals to help them move out of the cycle of situational and generational poverty. “Getting Ahead in a Just-Gettin’-by World” is a 45-hour workshop, developed by DeVol, involving rigorous work with the support of a trained facilitator and co-facilitator. Through Getting Ahead, participants examine their own experiences of poverty, assess their current resources, and learn how to build more resources as they move toward self-sufficiency. The essence of Getting Ahead is putting tools into the hands of those in poverty to make a difference in their own lives. As of this date, Morgan County Bridges Out of Poverty has trained four Getting Ahead facilitators and is
15 Hoosier Banker November 2014 now sponsoring its third class, with funding and plans in place for another to follow early in 2015. Follow-up is of pivotal importance, so MCBOP leads a group of volunteers who are available to meet regularly with Getting Ahead graduates and provide ongoing support. As bankers, we are privileged to hold positions of trust and influence within our respective communities. At Home Bank, we had an opportunity to serve as a “connector,” bringing the right individuals together to communicate about poverty and to Dr. Ruby K. Payne, founder of the Bridges out of Poverty program, and Dan L. Moore, president and CEO of Home Bank, Martinsville, explain ViewVideo Bonus Online infotex Working on your technology plan? my.infotex.com/planning www.infotex.com (800) 466-9939 Paul E. Allen, 65, senior vice president/operations and security officer of First Bank Richmond, NA, died Sept. 29. He served in the banking industry for 46 years, beginning his career in 1968. Allen joined First Bank Richmond, NA, in 1976. He was a long-time board member for the Starr-Gennett Foundation and a member of the Hiram Masonic Lodge #417. He attended Indiana University East and was a graduate of the Bank Administration Institute. Allen was a member of the Indiana Bankers Association Forty Year Club. Robert Graham Smith, 86, director and retired president of Mutual Savings Bank, Franklin, died Aug. 25. He served as bank president from 1973 to 1991 and was in service as a director at the time of his death. Smith was a member of the Franklin College board of trustees, of the Franklin Rotary Club, of Phi Delta Theta and of the Chapel by the Sea Church in Fort Myers, Florida. He was a veteran of the U.S. Army, serving in World War II, and a graduate of Franklin College. t In MeMory of begin crafting a vision for change. Even in our small community, poverty is a monumental, complex problem. Our efforts have just begun; however, what we have now is hope and a path for action. t Staff of Home Bank, Martinsville, work with community advocates to facilitate the Morgan County Bridges Out of Poverty project. the premise of the program. To view the video, click on the red arrow in Hoosier Banker Digital at www. indianabankers.org.
16 Hoosier Banker November 2014 COMPLIANCE CONNECTION aBout ComplianCe ConneCtion In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance program offering advice on Indiana-specific compliance questions. If the matter requires legal advice, IBA Compliance Connection will refer the bank to a law firm. The material in this issue was prepared by Larry C. Tomlin, partner with Krieg DeVault LLP, Indianapolis, and IBA compliance consultant. Submit Compliance Connection questions to IBA’s Amber R. Van Til at avantil@indianabankers.org. Question: We received a telephone call from an attorney indicating that his client obtained a judgment against one of our depositors, and that we should immediately place a hold on the funds in the depositor’s account. Are we required to take any action based upon the attorney’s instructions? Answer: Based upon the facts presented above, the Indiana Depository Financial Institutions Act (the “Act”) does not require the bank to take any action at this time. In essence the attorney is claiming that his client is a “money judgment creditor” of the bank’s depositor.1 This verbal claim is not sufficient to trigger any obligation on the part of the bank. The bank’s obligation to process a garnishment does not arise until the bank receives:2 • Notice of the garnishment proceeding; • Notice of the unpaid amount of the judgment; • Sufficient identifying information to be able to reasonably verify that the judgment defendant is a depositor; • An order to answer interrogatories; • A copy of the “Notice of Certain Exemptions and Your Right to a Prompt Hearing,” if the judgment defendant is an individual; • A court order expressly directing the bank to place a hold on a deposit account identified in the order when the above conditions are satisfied; and • Payment of $5 for each judgment defendant relating to the identifying information.3 Once the bank has received all of the documentation indicated above, it should complete a diligent search of the bank’s customer files to determine if the judgment defendant has an account with the bank. When searching the bank’s customer files for a matching account, the bank should consider the ownership and type of each possible account. Some forms of account ownership (e.g. trustee, custodian, power of attorney, payable on death, estate, escrow) may not be subject to attachment, despite being in the judgment defendant’s name, because of the judgment defendant’s role in relation to the account. The bank also should consider the Interim Final Rule regarding “Garnishment of Accounts Containing Federal Benefit Payments” jointly issued by the Department of the Treasury, Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board and Office of Personnel Management.4 If the bank has a deposit account owned by the judgment defendant, the bank must do the following: • Deduct the full fee allowed by statute.5 The current fee is $20, or the balance in the account if the balance is less than $20.6 • Restrict the withdrawal of funds from the account in an amount equal to the lesser of (1) the unpaid amount of the judgment as indicated in the documentation or (2) the balance in the account at the time of receipt of the documents, less one-half of the fee discussed above.7 • Complete and return the interrogatories, indicating the balance of the account immediately prior to deducting the fee discussed above.8 • If the judgment defendant is an individual, send the judgment defendant a (1) a copy of the Notice of Certain Exemptions and Your Right to a Prompt Hearing and (2) a written notice that the hold has been placed on the account. If the judgment defendant is not an individual, only the written notice that the hold has been placed on the account is required to be sent. The notices must be provided to each depositor whose account is affected and should be sent to the last known address of the depositor within one working day after the hold is placed.9 The bank is responsible to the judgment creditor for the balance in any account (up to the amount of the garnishment) belonging to the judgment defendant at the time the bank receives the garnishment documents. The Act, however, does not require the bank to make such payment from the account, until it receives a final order in garnishment directing it to make a payment.10 If you are unsure of your bank’s obligations with respect to a particular garnishment, it is advisable to consult with your bank’s legal counsel. t This information is provided for general education purposes and is not intended to be legal advice. Please consult legal counsel for specific guidance as to how this information applies to your institution’s circumstances or situation. 1 The procedures that the bank would follow for an adverse claim by someone who is not a money judgment creditor would vary from the procedures described herein. See Ind. Code § 28-9-3-3. 2 See Ind. Code § 28-9-3-4(b). 3 Id. § 28-9-3-4(d). 4 See Garnishment of Accounts Containing Federal Benefit Payments, 76 Fed. Reg. 9939 (February 23, 2011), to be codified at 31 C.F.R. pt. 212). 5 Ind. Code § 28-9-4-2(a)(1). 6 Id. § 28-9-4-3(b). 7 Id. § 28-9-4-2(a)(2)(A) and (B). 8 Id. § 28-9-4-3(c). 9 Id. § 28-9-4-2(a)(3) and (4). 10 Id. § 28-9-3-4(f).
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