INSIDE In-School Bank Branches: Hands- on Financial Literacy Story on page 9. HOOSIER BANKER APRIL 2014
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Worried About the Impact of Community Rating? Financial institutions typically have one of the lowest risk factors due to the nature of the business, which helps drive down overall premiums. What community rating means for financial institutions (those not already in the IBA Group Insurance Trust), is that your premiums will likely increase at your next renewal. Why? With community rating, health insurance rates are based on a single pool which includes employers from all industries, most of which typically are much higher risks than financial institutions. But, the IBA Trust is NOT subject to community rating. This means the insurance company only looks at members of the Trust -- financial institutions with typically lower risks -- when calculating renewals. Thus, the Trust avoids community rating. Call Us or Have Your Broker Get in Touch Now! Drew Tomasik, 800.558.6206 ext. 144, dtomasik@capstonebenefits.com Steve James, 800.558.6206 ext. 112, sjames@capstonebenefits.com www.ibatrust.org
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5 HOOSIER BANKER TABLE OF CONTENTS VOLUME 98 NO. 4 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 IBA CALENDAR OF EVENTS &29(5 6725< 9 IN-SCHOOL BANK BRANCHES: HANDS-ON FINANCIAL LITERACY *5 6327/,*+7 11 ANOTHER SUCCESSFUL LEGISLATIVEYEAR FOR THE INDIANA BANKING COMMUNITY Dax Denton, IBA 363 6+2:&$6( 20 BITS-MINIMIZE RISK AND MAXIMIZE REWARDS Rod Lasley, IBA )($785(6 22 STATE DEPOSITS IN INDIANA FINANCIAL INSTITUTIONS: JULY 1 - DEC. 31, 2013 ('8&$7,21 5281' 83 24 WEBINAR TRAINING KEEPSYOU 'IN THE KNOW' Laurie A. Rees, IBA +80$1 5(6285&(6 26 COMPENSATION STRATEGIES FOR COMMUNITY BANKS John A. Doukas, Professional Bank Services Inc. ',5(&7256 6(1,25 0$1$*(0(17 30 RAMPING UP FOR THE NEW MORTGAGE RULES Annette Curton, Farmers State Bank, LaGrange '(3$570(176 18 FROM THE BOARD ROOM 19 COMPLIANCE CONNECTION Larry C.Tomlin, Krieg DeVault LLP 19 ANNIVERSARY MILESTONES 21 BANKING ON COMMUNITY 25 HONORS 29 ASSOCIATE MEMBERS' CORNER 32 BANKERS ON THE MOVE 34 ADVERTISERS INDEX 5 HOOSIER BANKER APRIL 2014 In-School Bank Branches: Hands-on Financial Literacy
6 HќќѠіђџȱ юћјђџ ѝџіљ 2014 average U.S. load of $9,366, ranking us 30th highest in the country. Having determined that Indiana has a low corporate tax rate and collection compared to other states, how do we compare in other areas? The report combines tax collec- ȱȱęȱDZ 1. Property taxes in Indiana represent 27.3 percent of total state and local tax collections, while the national average is 33.1 percent. Thus Indiana is a choice place to own a home. 2. Through general sales tax, Indiana collects 27.1 percent of its taxes, compared to the national average of 22.5 ǯȱ ȱȱĴȱȱǰȱ Ȃȱŝȱȱȱ ¡ȱȱȱȱȱęȱȱȱȱȱȱ highest rate in the country. California, at 7.5 percent, ranks alone at the top. Taxes must be collected somewhere; by placing a higher relative burden on sales taxes, we draw help from people outside of Indiana who pay our sales tax. Therefore sales tax is actually a good place to be high in relation to other states. 3. For individual income tax, Indiana relies on taxes collected from individuals — state income taxes — for a rate of 26.8 percent, compared to the national average of 21.3 percent. However this percentage does not factor in the tax reduction for individuals, passed by the 2013 General Assembly, from 3.4 percent down to 3.3 percent for taxable years 2015 and 2016, and then down further to 3.23 percent thereafter. 4. The aforementioned corporate income tax makes up řǯŗȱȱȱ Ȃȱǰȱȱ ȱȱ national average of 3.6 percent. Again that number will continue to decrease during the next several years. This tax needs to be low, because businesses pass along their tax burdens to buyers of their products in the sale price. ¢ȱȱȱ ȱȱ¡ȱǰȱ ȱĴȱȱǰȱ and companies located here can be competitive nationally and internationally. 5. ȱȱęǰȱȱ¢ȱȱȃother taxes,” Indiana is at a level of 15.8 percent, compared with the U.S. average of 19.4 percent. ȱ ǰȱ Ȃȱ¡ȱȱȱȱȱ ȱȱ ȱȱȱȱĴȱȱȱȱȱǯȱ ȱ Ĵȱ ȱȱȱȱ ȱȱȱȱȱȱ capita average income level, which we will need to do for Hoosiers to improve economically compared with the rest of the country. I have only scratched the surface of the information ȱȱȃ ȱǭȱ ǯȄȱ ȱȱȱȱ 55-page report, go to: www.taxfoundation.org. If you, like me, are fascinated by numbers, taxes and economic data, this is a must read! Recently the Tax Foundation, a nonpartisan research think tank founded in 1937, released its annual ¢ȱȱȱ¡ǰȱȃ ȱǭȱ Figures: How Does Your State Compare?” The report provides comparative listings of all the states in a variety of categories. I am pleased to report that Indiana fared well. Tax Freedom Day,® which is the day that the average taxpayer has made enough money to cover all of his or her federal, state and local taxes for that year, came to Indiana on April 13, ranking us 26th best in the country. Compared to Mississippi and Louisiana, which both reached their tax freedom days in late March, ȱȂȱȱǯȱ ȱȱȱ ǰȱ ȱ ¢ȱȱ ȱ ǰȱ ȱ ȱȱȱȱ¡ȱ freedom days until early May, we look very good. Like Indiana, the other 44 states are reaching their tax freedom days sometime in April. Another measure covered in the report is the average ¡ȱȱȱȱȱŘŖŗŘǯȱ ȂȱȱǞřǰřŞśǰȱ ȱȱ highest state, Connecticut, is more than double at $7,150! ȱȱǰȱ Ȃȱȱȱȱȱȱ $59,687, while Indiana ranks 38th at $38,119. So while Connecticut taxes are much higher, at nearly 12 percent ȱȱȱȱ ȂȱŞǯşȱǰȱȱȱ is not as stark as the raw data suggests. The U.S. averages were a total tax burden of $4,217 on income of $43,735, for ȱȱȱşǯŜśȱǯȱ ȱȱ¢ȱĴȱ on both total tax dollars and tax percentage. Turning to business taxes, Indiana is the 10th most business-friendly state in the country, even before taking into account the reductions in corporate and ęȱȱ¡ȱȱȱȱŘŖŗŚȱ General Assembly. The action taken in 2014 will result in a 4.9 percent corporation tax rate in 2021 and a rate of ŚǯşȱȱȱęȱȱȱŘŖŘřǯȱ ȱȱ implementation of these tax reductions in Indiana, and assuming that other states do not likewise reduce their business taxes, Indiana will be the No. 1 business-friendly state in the nation. ȱ ȱȱ ȱȱȱȱĴȱȱȱ ȱȯȱȱȱȱ¢ȱȱ ȱȱȯȱȱȱ Hoosier state. It also should create opportunities for banks operating in Indiana to grow their loan portfolios, as new ȱȱȱȱǯȱ ǰȱȱ ȱȱ banks currently not operating in Indiana to locate some of ȱȱǰȱȱ¢ȱȱǯ Another interesting fact from the Tax Foundation report is that the Indiana state-only debt per capita is $3,449, compared to the U.S. average of $3,678, ranking us 24th highest. State and local debt was at $7,597, compared to the ASSOCIATION UPDATE PRESIDENT’S PONDERINGS 6 -RH 'H+DYHQ 3UHVLGHQW &KLHI ([HFXWLYH 2IÀFHU ,QGLDQD %DQNHUV $VVRFLDWLRQ
In today’s environment, Correspondent relationships are more important than ever and you can take advantage of Stock Yards Bank’s position as one of the largest and strongest banks based in this region. We are committed to working with the community banks of Indiana and we want to be your bank’s partner when you have needs around capital, liquidity, acquisition financing, stock buy backs and more, in addition to retirement plans and other trust services. Give James or Jim a call and put our experienced team to work for your bank. Jim McKenzie Correspondent Banking James Brown Correspondent Banking Lending Services Holding Company Shareholder Groups Bank Credit Needs And More! Deposit Services Fed Fund Sweeps Wire Transfer Automated Clearing House And More! International Services Foreign Exchange (CHECKS & WIRES) Letters of Credit And more! NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Wealth Management Services Jim McKenzie has over 40 years of banking experience, 36 years of those years as a correspondent banker. James Brown has over 20 years of banking experience in Retail, Small Business, Corporate and Correspondent Banking. (502) 625-0878 jim.mckenzie@syb.com (502) 625-9330 james.brown@syb.com THE CORRESPONDENT BANKING TEAM Retirement Plans Investment Management Insurance Trust Partnering And More! www.syb.com The good guys.
ASSOCIATION UPDATE CALENDAR OF EVENTS Register online at www.indianabankers.org/calendar.cfm 8 HќќѠіђџȱ юћјђџ ѝџіљȱ2014 Alternative Delivery Channels … $YDLODEOH DW \RXU FRQYHQLHQFH YLD :HELQDU &' 520 RU 2Q 'HPDQG Business Cash Flow Basics and Global Cash Flow Integration Issues 0D\ u ,%$ &HQWHU The 2014 IBA Leadership Development Program: Session 2 - “Do Something That Scares You” 0D\ u :RRGHG *OHQ ([HFXWLYH 5HWUHDW DQG &RQIHUHQFH &HQWHU Henryville Community Bankers for Compliance Series - Session 2:The Flood Rules - Keeping the Issue of Flood Insurance on Your Bank Staff Radar 0D\ u &RXUW\DUG E\ 0DUULRWW )RUW :D\QH 0D\ u ,%$ &HQWHU 0D\ u ,%$ &HQWHU Senior Retail Lenders Forum 0D\ u ,%$ &HQWHU Train The Trainer: Plans, Programs and Processes That Work 0D\ u ,%$ &HQWHU Branch Stratagies Workshop 0D\ u ,%$ &HQWHU 7UXVW 2IÀFHU )LQDQFLDO $GYLVRU )RUXP New 0D\ u ,%$ &HQWHU Trust-Based Selling:The New 5 Cs 0D\ u ,%$ &HQWHU 5LVN 0DQDJHPHQW 2IÀFHU )RUXP 0D\ u ,%$ &HQWHU Conducting Internal Compliance Reviews for Appraisals and Evaluations -XQH u ,%$ &HQWHU Commercial Lending School -XQH u ,%$ &HQWHU Simplifying Your IT Risk Management Program -XQH u ,%$ &HQWHU CFO Forum: -XQH u ,%$ &HQWHU *URXS -XQH u ,%$ &HQWHU *URXS Basic Banking School: Session 3 - Integrated Bank Security and Compliance -XQH u ,%$ &HQWHU Senior Lender Forum: -XQH u ,%$ &HQWHU *URXS -XQH u ,%$ &HQWHU *URXS BSA/AML Compliance School -XQH u ,%$ &HQWHU Real Estate Lending Compliance -XQH u ,%$ &HQWHU ,7 DQG 2SHUDWLRQV 2IÀFHUV )RUXP -XQH u ,%$ &HQWHU *URXS -XQH u ,%$ &HQWHU *URXS Compliance for Mortgage Loan Processors -XO\ u ,%$ &HQWHU Auditing RESPA -XO\ u ,%$ &HQWHU Flood Rules for Lenders and Operators -XO\ u ,%$ &HQWHU Human Resource Director Forum -XO\ u ,%$ &HQWHU Introduction to Consumer Loan Origination and Compliance -XO\ u ,%$ &HQWHU A Workshop for Loan Assistants and Loan Processors -XO\ u ,%$ &HQWHU Analyzing Cash Flow From Income Producing and Rental Real Estate -XO\ u ,%$ &HQWHU Administering Construction Loans -XO\ u ,%$ &HQWHU The 2014 IBA Leadership Development Program: Session 3 - Limitations Are Self-Imposed $XJ u :RRGHG *OHQ ([HFXWLYH 5HWUHDW DQG &RQIHUHQFH &HQWHU Henryville Community Bankers for Compliance Series – Session 3 $XJ u &RXUW\DUG E\ 0DUULRWW )RUW :D\QH $XJ u ,%$ &HQWHU $XJ u ,%$ &HQWHU Call Report Update and Review $XJ u ,%$ &HQWHU Regional Bank Director Workshop $XJ u )RUW :D\QH +RWHO $XJ u :RRGHG *OHQ ([HFXWLYH 5HWUHDW DQG &RQIHUHQFH &HQWHU Henryville $XJ u ,%$ &HQWHU Branch Management Series: Session 3 - Leading, Developing and Engaging the Team $XJ u ,%$ &HQWHU Basic Banking School: Session 4 - Regulatory Guidelines and Examinations $XJ u ,%$ &HQWHU Vendor Management $XJ u ,%$ &HQWHU Asset Liability Management Seminar $XJ u ,%$ &HQWHU 7UXVW 2IÀFHU )LQDQFLDO $GYLVHU )RUXP Sept. 9 u ,%$ &HQWHU Senior Retail Banking Forum 6HSW u ,%$ &HQWHU 5LVN 0DQDJHPHQW 2IÀFHU )RUXP 6HSW u ,%$ &HQWHU State of Indiana Safe Deposit Operations: 2014 Guidelines & Update 6HSW u ,%$ &HQWHU Annual Security Management Seminar 6HSW u ,%$ &HQWHU Mortgage Lending School 6HSW u ,%$ &HQWHU BSA/AML Compliance Management 6HSW u ,%$ &HQWHU IRS Compliance for Financial Institutions 6HSW u ,%$ &HQWHU Deposit Account Administration 6HSW u ,%$ &HQWHU Advanced Credit Analyst 6HSW u ,%$ &HQWHU IBA Annual Convention 6HSW u )UHQFK /LFN 6SULQJV 5HVRUW 0D\ u Opening Trust Accounts in Indiana: Documenting Authority and Liability 0D\ u Accounting Titling, Ownership and Signatories 0D\ u Calculating and Maintaining the Allowance for Loan and Lease Losses 0D\ u Introduction to SBA Lending 0D\ u Motivating Your Sales Team 0D\ u Excel Explained: Introduction to Spreadsheets 0D\ u Introduction to Residential Mortgage Underwriting 0D\ u Commandments for Dealing With Regulators 0D\ u Customer Service Under the CFPB 0D\ u Emerging Leaders Education: How to Avoid Lender Liability Claims - Compliance, Regulatory Issues and Best Practices 0D\ u Analyzing Start-Up Businesses 0D\ u Auditing Your Loan Portfolio: Consumer, Commercial and Real Estate 0D\ u Improving Employee Performance in Everyday Work Situations and Reviews 0D\ u Risk Management Series: Regulator Issues in Interest-Rate Risk: Current Trends, Shock Analysis and Best Practices 0D\ u Dealing With Appraisals 0D\ u Implementing the New ACH Security Framework Requirements by Dec. 31, 2014 0D\ u Handling Loan Applications - Required Training for Loan Originators 0D\ u Opening New Accounts III - Trusts and Minor Accounts 0D\ u Reporting Your Customers’ Credit: Understanding the Increasing Regulatory Requirements 0D\ u Business Accounts:Who Is Authorized to Open, Close,Transact? 0D\ u Opening New Accounts for LLCs 0D\ u RC-C Codes for the Call Report 0D\ u IT Audit for Community Banks 0D\ u CFPB and Interagency Guidance for Residential 0RUWJDJH )RUHFORVXUHV 0RGLÀFDWLRQV DQG :RUNRXWV -XQH u Consumer Collection Compliance Under the CFPB, UDAAP, DFCPA, FACTA and More -XQH u Branch Manager Expertise -XQH u ACH Specialist Series: How to Legally Recover Unauthorized ACH Withdrawals After the NACHA Return Deadlines -XQH u Excel Explained: Minimize Spreadsheet Errors -XQH u Head Teller Development: Improving Teller Performance -XQH u Completing the CTR Report Line-by-Line -XQH u Mobile Banking -XQH u Reg CC -XQH u Loan Pricing Strategies for Community Banks -XQH u Processing IRA Rollovers and Transfers -XQH u Call Report Preparation: Basic Lending Schedules: RC-C and RC-K -XQH u Seven Habits of Effective Credit Administration in Commercial Banks -XQH u UDAAP -XQH u &5$ 1XWV DQG %ROWV +RZ WR 'HÀQH DQ Assessment Area, Collect Data and Pass the Exam -XQH u Mainstreaming Mobile Remote Deposit Capture: Adoption, Deployment, Operations and Risks -XQH u Self-Employed Borrower Tax Implications Under WKH 1HZ &)3% ,QFRPH 9HULÀFDWLRQ 5XOHV -XQH u &RPSOLDQFH 2IÀFHU 7UDLQLQJ :LOO <RXU $0/ %6$ OFAC Program Satisfy Examiner Scrutiny? -XQH u How to Use Business Resolutions and Authorizations to Protect Your Financial Institution -XO\ u Completing the SAR Report Line-by-Line -XO\ u Successful Skip Tracing Tools and Techniques for Locating Your Customer and Recovering Collateral -XO\ u Making the Transition to Paperless Board Packages and Reporting: Electronic Access,Tablets and E-Board Portals -XO\ u Audit Report Writing
9 HќќѠіђџȱ юћјђџ ѝџіљ 2014 COVER STORY The month of April is a time of focus on consumer education. It is celebrated as National Financial Literacy Month and National Financial Capability Month. Also each April, the national bank trade associations heighten consumer/community awareness — the American Bankers Association sponsors Teach Children to Save Day, and the Independent Community Bankers of America promotes Community Bank Month. ȱ ȱȱȱȱęȱ literacy emphasis, Hoosier Banker salutes member banks which provide a ęȱȱȱȱ education through in-school bank branches. Also known ȱȃȬȱȱ savings programs,” these initiatives vary from savings- Ȭęȱȱ ȱȱ¡ȱěǯȱ Ȭ ȱȱęȱȱ ¢ȱ¡ȱȱȱęȱ services that will help them in adulthood and by introducing them to banking as a possible career path. There are two types of school/ ȱDZȱȃȬȄȱȱ and authorized bank branches. Non-bank branches are characterized by being located in a school or other facility not operated by the bank; by having bank personnel who ȱȱȱę¢ȱȱȱȱDzȱ and by restricting services from the general public. By contrast, authorized school bank branches are housed in ȱȱȱĜ¢ȱȱ¢ȱȱǯ In response to a recent inquiry to Indiana Bankers Association members, the following institutions have shared their in-school bank branches experiences. +RUL]RQ %DQN 1$ 0LFKLJDQ &LW\ Early this year, Horizon Bank, NA, culminated its partnership with Michigan City High School by opening The Wolves Branch at the school. The purpose was to provide students with an understanding of banking operations and transactions. ȱ ȱȱěȱȱ ȱ ȱ¡ȱȱ ǯȱ The branch is open one-half hour prior to the start of each school day and throughout all lunch periods. A teller station is available, as well as a customer desk with information on credit, balancing checkbooks and how to apply for loans. Wendel McCollum, principal of Michigan City High ǰȱ¢ȱȱȱȬȱDZȱȃ ȱȱȱ ȱȱ££ȱȱȱǯȱ Ȃȱ¢ȱ¡ȱȱ £ȱȱȱȱȱǯȄ /D3RUWH 6DYLQJV %DQN In 2013 LaPorte Savings Bank formed The SLICER ȱȱ ȱ ȱ ǯȱ ȱȱȱ when the school superintendent reached out to the president of the bank. The branch operates with help from ȱȱěȱǰȱ ȱȱȱȱ ǯȱ It is open weekdays from 7:15 to 7:45 a.m. and from 10:15 In-School Bank Branches: Hands-on Financial Literacy The Wolves Branch of Horizon Bank, NA, Michigan City, opened in Michigan City High School in January. Literacy Month and National Financial Capability Mon awareness — the Americ Children to Save D Community Bank Mont ę Hoosi ę education through in-sch bank branches. Also know ȃȬ initiatives vary from savin Ȭę ¡ ěǯ ę ¢ ¡ ę adulthood and by introducing the to banking as a possible career pat DZ ȃȬȄ characterized by being located in a school or other facili not operated by the bank; by having bank personnel wh ę¢ &RQWLQXHG RQ SDJH
10 HќќѠіђџȱ юћјђџ ѝџіљ 2014 Washington State Bank and one member of the school faculty guide and advise a group of 12 student workers. ȱȱȱȱȱ¢ȱȱǰȱěȱȱ accounts to students of the school. ȱ ȱ ǰȱȱȱęȱȱȱȱȱȱȱ student council sponsor. She also serves as supervisor of ȱȱȱ¢ǰȱȃ ȱȱȱȱȬȱȱ of what the students are learning in the classroom and ȱȱȱȱęȱ¢ǯȄ 2KLR 9DOOH\ )LQDQFLDO *URXS +HQGHUVRQ .\ In a long-term collaboration, Ohio Valley Financial Group has been working with Henderson County High ȱȱŗşşśȱȱȱ Ȃȱ ȱ ȱȱ ȱǯȱ ȱěȱȱȱȱȱȱȱ school faculty work with 24 student bankers. Hours of operation are weekdays from 11:15 a.m. to 1 p.m. ȱ Ĵȱ ȱȱȱȱȱȱ ȱ ȱȱ employed with Ohio Valley Financial Group as assistant ȱȱȱȱȱĜǯȱ ȱȱ ȱȱǰȱȱDZȱȃ ȱȱȱȱ Ȃȱ Corner Bank in 2000, a door was opened for me into the banking world. I have not missed a year of involvement with CCB since I participated as a high school student. It is ¢ȱȱȱȱȱȱȱȱ ȱǯ ȱ ȃ ¢ȱ¡ȱȱ ȱȱȱȱȱ ȱ¢ȱ ęȱȱ ȱ ȱ ¢ȱȱȱȱȱǯȱ I continued during college, and was fortunate to start my career with Ohio Valley upon graduation. Banking is a ȱęǰȱȱ ȱȱȱȱȱĴȱ¢ȱ start at the student bank and for the opportunities that followed.” ǯǯȱȱŗŘDZřŖȱǯǯǰȱȱȱěȱȱȱȱȱȱ services of a full-service branch. Deb Varnak, senior vice president of human resources at the bank, DZȱȃ ȱȱȱȱ¢ȱ to help our local students learn to manage their money now — before going to college or entering the workforce. This community partnership has also included helping students learn about interviewing and work ethic through their internships, partnering with various classrooms to deliver presentations throughout the school, and working with the audio visual department and students to create a video about debit card management. As technical education becomes increasingly important in schools, we look forward to further enhancing the partnership in the years to come.” 7KH 1HZ :DVKLQJWRQ 6WDWH %DQN &KDUOHVWRZQ New Washington Elementary School opened its in- ȱȱȱŘŖŗŘǯȱ ȱěȱȱȱ ȱ ȱ Student bankers sport logo wear of Colonels’ Corner Bank, sponsored by Ohio Valley Financial Group. Continued from page 11. The SLICER Branch of LaPorte Savings Bank experiences a busy Friday morning. The staff of the elementary school branch of New Washington Elementary 6FKRRO DUH VXSHUYLVHG E\ $PEHU &RRN EDFN OHIW ÀIWK JUDGH WHDFKHU DQG /RLV Glaab (back right), head teller of The New Washington State Bank. *7KH 2IÀFH RI WKH &RPSWUROOHU RI WKH &XUUHQF\ KDV SXEOLVKHG D IDFW VKHHW “School-Based Bank Savings Programs,” available at: www.occ.gov/topics/community-affairs/publications/fact-sheets/fact-sheet-school-based-bank-programs.pdf.
11 HќќѠіђџȱ юћјђџ ѝџіљ 2014 GR SPOTLIGHT The 2014 Indiana General ¢ȱȱȱ¢Ȃȱ legislative business on March 13, a full day earlier than the originally scheduled completion date. Legislators tackled several issues during this short session, including business tax, pre-kindergarten programs and moratoriums on new nursing home construction. Of the 882 bills introduced at the start of the year, more than one quarter survived to become enrolled acts. The General Assembly had Ĵȱȱȱ ȱȱȱ ȱ ȱȱǰȱĚȱȱ heavy work load completed during a short period of time. From a banking perspective, it was another successful legislative session. A broad tax reduction bill, supported by the Indiana Bankers Association, was passed that includes a further reduction of the Financial Institutions Tax to 4.9 percent by 2023. The IBA also continued to address the inequities in the Indiana tax sale statute. Moving forward as a result of the passage of SB 422, the redemption period that gives the lender the opportunity to pay the taxes will now occur before, not after, the tax sale. Additionally our industry will not ěȱȱ¢ȱȱȱ initiatives passing this year, as all problematic legislation was either altered to address concerns or killed. The following material £ȱȱ¢Ȃȱȱȱ interest to the banking industry. The ęȱȱȱȱȱ passed the 2014 General Assembly, followed by an outline of bills of concern that did not pass. Almost all of the bills following were worked on by the IBA Government Relations Team. It should be noted that many of the authors of IBA-opposed bills worked with our GR Team to address concerns or to remove the bills from consideration. It is also worth noting that we owe much of our success to the many members of the Indiana General Assembly who recognize the impact of banks on the communities they serve. One example is the passage of SB 1, which further reduces the ęȱȱȱȱȱȱŚǯşȱ percent, following a phase-in period ending in 2023. %LOOV 3DVVHG E\ WKH ,QGLDQD *HQHUDO $VVHPEO\ SB 1 – State and Local Taxation – Sen. Brandt Hershman, R-Buck Creek, and Rep. Tim Brown, R-Crawfordsville What the bill does: This bill provides that a county income tax council may adopt an ordinance to exempt from property taxation any new business personal property with an acquisition cost under $20,000 (other than mobile homes and utility personal property) that is located in the county. The bill provides that a designating body may establish an enhanced abatement schedule for personal property that may not exceed 20 years. This bill provides that if a county or municipality receives a reimbursement, repayment or penalty from a taxpayer on account ȱȱ¡¢Ȃȱȱȱ¢ȱ ȱȱȱȱęȱ provided by the taxpayer as part of a property tax abatement or on ȱȱȱ¡¢Ȃȱȱȱ comply with any other requirement to receive a property tax abatement, ȱ¢ȱȱȱęȱ Ĝȱȱȱȱȱ of the reimbursement, repayment or penalty on a pro rata basis to each taxing unit that contains the property ȱ ȱȱȱȱȱ deduction. The bill phases down the corporate income tax rate from 6.5 percent in 2015 to 4.9 percent in 2021. ȱ ȱȱȱ ȱȱęȱ institutions tax rate to 4.9 percent in 2023. Another Successful Legislative Year for the Indiana Banking Community яќѢѡȱѡѕђȱ Ѣѡѕќџ Dax Denton is vice president-government relations of the Indiana Bankers Association. He can be reached at 317-917-8047, email: ddenton@indianabankers.org. &RQWLQXHG RQ SDJH
12 HќќѠіђџȱ юћјђџ ѝџіљȱ2014 The bill establishes the Commission on Business Personal Property and Business Taxation to study certain issues during the 2014 legislative interim. What you need to know: The Financial Institutions Tax (FIT), which has operated in parity with the Corporate Income Tax, was not included in the reduction to 4.9 percent. Last year the IBA GR Team fought to maintain the FIT at an equal level with the Corporate Income Tax reduction. The IBA sought the same reduction in the FIT that the corporate income tax rate receives. A reduction in the FIT from 6.5 percent to 4.9 percent should impact the state revenues on an annual basis of close to $15 million. The scheduled FIT reduction is as follows: % 2019 – 6.25 percent % 2020 – 6 percent % 2021 – 5.5 percent % 2022 – 5 percent % 2023 – 4.9 percent. SB 36 – Probate, Trust, and Transfer ȱ ȱ ĴȱȮȱSen. Mike Delph, R-Carmel, and Rep. Eric Koch, R-Bedford What the bill does: This bill makes various changes to the probate and trust statutes of the Indiana code. All of the suggested changes were recommendations that came from the Probate Code Study Commission, which met during the summer of 2013. Of particular note is that the ȱęȱȱȱȱȱ dispensing with the administration of small estates are available to distributees and to persons acting on behalf of distributees, rather than to persons claiming to be entitled to ¢ȱȱȱȂȱǯ It provides for an enforcement action against a person who does not ¢ȱ ȱȱę¢Ȃȱȱ or instruction. It allows a court to ȱĴ¢Ȃȱȱȱȱȱ an enforcement proceeding, if the person: acts in bad faith in refusing to comply with the demand or instruction; or refuses to respond to ȱę¢Ȃȱȱȱȱ within 10 business days after receiving the demand or instruction, if the demand or instruction is Ĝǯ What you need to know: The small estate language was initiated by the Indiana State Bar Association, stating that banks were arbitrarily ¢ȱȱȱĜǯȱ ȱ initial language introduced in the Probate Code Study Commission that was largely drafted by the Indiana State Bar Association included heavily punitive actions against a lender for the denial of a small estate Ĝǯȱ ȱ ȱ ȱ ȱ ȱȱȱĴȱȱ ȱ the language. The result is what is currently included in the bill. SB 208 – Unclaimed Property – Sen. Greg Walker, R-Columbus, and Rep. Bob Heaton, R-Terre Haute What you need to know: The bill ȱȱĴ¢ȱȱǻ Ǽȱȱ withhold from disclosure certain personal information contained in a report or claim for unclaimed property. The bill requires unclaimed property held in a safe deposit box to be delivered to the AG not later than 30 days after the property is reported to the AG. (Current law prohibits the property from being delivered to the AG until 120 days after the property is reported.) The bill provides that an owner of interest-bearing property is entitled to receive interest that accrues after the date the property is delivered to the AG. The bill corrects an internal reference. What you need to know: This ȱ ȱȱ¢ȱȱ Ĝȱ ȱȱ ȱ Ĵ¢ȱ ǯȱ The new shortened time period for holding reported unclaimed property is regarded as a positive change for the industry. SB 329 – Home Inspections – Sen. Earline Rogers, D-Gary, and Rep. Rick Niemeyer, R-Lowell What you need to know: The bill ȱĴȱǰȱȱȱ or crawl spaces, to be inspected during a home inspection. What you need to know: This bill originated from a constituent who had received what he felt was an unsatisfactory home inspection. The new requirements were not able to be added through regulatory rulemaking. Your supplier for over 150,000 marketing and promotional items. FORMING A PARTNERSHIP WITH INDIANA BUSINESSES. 1419 Fabricon Blvd. • Jeffersonville, IN 47130 (800) 736-1326 R5 /&&7 ,0# 5 ,#(.#(! 5 R5 ) /' (.5 ' !#(! 5 5 R5 (7 ' ( 5 ,#(.#(!5 5 5R5 (7 #( 5 , ,#(!5 3-. '- 55R5 # ,7 ( ) 5 ) /' (.- 555R5 ),'-5 ( ! ' (. Call us for your FREE forms cost analysis! Adam McCoskey Vice President - Sales Southern Indiana ngh7ono7ohil arm@voluforms.com Tom Staley Vice President - Sales Central / Southern Indiana ngh7hkn7hmhh tjs@voluforms.com Susan Voyles Garr Vice President - Sales Southern Indiana 812-987-6008 svg@voluforms.com Jim Hutchinson Vice President - Sales Southern Indiana ngh7hkn7hmhi jfh@voluforms.com Scan QR code to visit www.voluforms.com Continued from page 11.
13 HќќѠіђџȱ юћјђџ ѝџіљ 2014 &RQWLQXHG RQ SDJH SB 332 – State and Local Investments – Sen. Travis Holdman, R- Markle, and Rep. Mark Messmer, R-Jasper What the bill does: The bill provides that investments in municipal securities must have a ȱęȱ¢ȱȱęȱ¢ȱȱ less. The bill permits the treasurer of state to invest with supranational issuers. (Current law limits the investment to the International Bank for Reconstruction and Redevelopment and to the African Development Bank.) It provides that a public depository may invest funds in the same investments and for the same terms that the treasurer of state may invest funds of the state. The bill amends the Indiana Code provision that allows the treasurer of state to lend certain securities if the agreement under which the securities are lent is collateralized to provide that: (1) cash; or (2) non-cash ǰȱȱȱȱȱęȱ by the custodian holding the noncash collateral, are acceptable forms of collateral. (Current law provides that cash or certain interest-bearing obligations of the federal government are acceptable forms of collateral.) What you need to know: The bill provides for an additional type of investment of public funds by banks. It allows public depositories to invest in the same funds/investments that the state treasurer is currently Ĵȱȱȱȱȱȱǯ SB 334 – Mortgage Lending – Sen. Greg Walker, R-Columbus, and Rep. Woody Burton, R-Whiteland What the bill does: The bill provides that a depository institution that is exempt from the Indiana statute concerning the licensing ȱȱȱęȬȱȱ transactions may voluntarily register with the Department of Financial Institutions (DFI) for the purpose of retaining and sponsoring, under an ¡ȱ Ĵȱǰȱȱ mortgage loan originators, if the depository institution does the following: % Must assume responsibility for and reasonably supervises the activities of the licensed loan originators; % Must comply with certain requirements under the statute concerning: registering with the Nationwide Mortgage Licensing System and Registry (NMLSR); maintaining a surety bond; Ĵȱȱȱȱ Dzȱ ȱęȱęȱȱ ȱ the DFI. The bill also requires cooperation with the DFI and provides access to records and documents, as required by the department in examining the activities of the licensed loan originators. The bill makes conforming amendments to similar provisions in the Uniform Consumer Credit Code concerning the licensing of creditors in subordinate-lien mortgage transactions. What you need to know: This bill was initiated by State Farm® Insurance. Under current Indiana law, because State Farm agents are independent contractors (rather than employees) of State Farm Bank, they must license themselves as both an individual mortgage loan originator and as a mortgage broker company. In order to shift the mortgage broker company requirements from the independent agents to the bank itself, State Farm Bank sought a legislative change that would allow it to register as an exempt company in Indiana for the purpose of providing the required sponsorship and for undertaking the associated obligations of the mortgage broker company requirements. Each agent involved with State Farm Bank mortgage products would still be required to obtain a mortgage loan originator license. Similar exempt company registration laws have been ȱȱŘŘȱǯȱ Ȃȱȱȱ this bill was neutral. HB 375 – Business Financing Arrangements – Sen. Travis Holdman, R- Markle, and Rep. Kathy Heuer, R-Columbia City What the bill does:ȱ ęȱ that the following are not securities ȱȱ ȱŘřDZȱǻŗǼȱȱȱ capital investment tax credit; (2) a ęȱȱȱ ȱȱ development corporation indicating ȱȱ¡¢ȱȱęȱȱ requirements of the corporation and is entitled to a venture capital ȱ¡ȱǯȱ ȱęȱ ȃȱȄȱȱȱ purposes of the Uniform Securities Act. It adds exemptions to the Uniform Securities Act for certain transactions. What you need to know: HB 375 allows for the use of the Internet for crowdfunding. The original bill held the escrow agent liable if the investment was not given to the proper recipient based upon the investment agreement. The IBA ȱ ȱȱȂȱĜǰȱ ȱ Ĝȱȱȱ ¢ȱȱ ȱ and the bill author to amend the bill to absolve the escrow agent of all liability. SB 393 – Study of Collateral Recovery Agencies – Sen. John Waterman, R-Shelburn, and Rep. Tom Washburne, R-Evansville What you need to know: This bill urges the Legislative Council to ȱȱȱ¢ȱĴȱȱ the 2014 legislative interim the topic of the statutory changes contained in SB 393-2014, as introduced, concerning regulation of collateral recovery agencies that engage in the business of locating, recovering or repossessing collateral on behalf of the legal owner of the collateral. What you need to know: The ȱǰȱȱǰȱĴȱ to regulate collateral recovery agencies this year. It was scaled back to the current version for discussion ȱȱȱ¢ȱĴǯȱ ȱ ȱȱĴȱȱȱȱ businesses through the consumer ȱȱȱȱ Ĝȱȱ ȱ ȱ Ĵ¢ȱ ǯȱ ȱ IBA will be monitoring this issue throughout the summer. HB 422 – Abandoned Housing – Sen. ȱ Ĵǰȱ Ȭȱ ǰȱȱ ǯȱ Ed Clere, R-New Albany
14 HќќѠіђџȱ юћјђџ ѝџіљȱ2014 What the bill does: The bill re- ȱȱĴ¢ȱȱȱ- lish and maintain a tax sale blight registry of all persons ineligible to participate in the tax sale. It provides ȱȱęȱȱȱ or abandoned may be sold outright at the tax sale. It reduces the interest rate for payments in excess of a minimum bid from 10 percent to 5 percent. It lowers the interest rate for refunds on certain tax sales from 6 percent to 5 percent. The bill provides that the notice to a record owner of property must occur six months, instead of nine months, after the date of the tax sale. It requires the executive of a county, city or town ȱȱȱȱȱȱȱȱ real property is vacant or abandoned ȱȱęȱȱȱȱ to the county auditor for tax sales purposes. It reduces the period from six to three months when a tax sale purchaser may petition the court ȱȱȱȱȱ¢ȱ auditor to issue a tax deed if the real property is not redeemed from the ǯȱ ȱȱęȱȱȱ¢ȱ tax penalty for property sold by a ¢ȱ¡ȱȱȱęȱ of sale procedure is to be removed from the tax duplicate if the penalty is associated with a delinquency that was not due until after the date of the original tax sale, but is due before ȱȱȱȱęȱȱȱ by the county executive. The bill requires, for tax deeds executed for real property sold at a tax sale, that the county auditor submit the tax deed directly to the county recorder for recording and charge the tax sale purchaser the appropriate recording fee. It also permits the county auditor to be the only signer of a sales disclo- ȱǯȱ ȱȱȱȱȃȄȱ in determining whether a building is an unsafe building. The bill requires a business entity that seeks to register ȱȱȱȱ¡ȱȱȱȱȱęcate from the secretary of state to the county treasurer. It prohibits foreign business associations that have not registered with the secretary of state from participating in the tax sale. The bill requires persons who purchase ȱ¢ȱȱęȱȱȱ¡ȱȱ to reimburse the county for the costs of a title search. The bill permits a county to establish a paddle fee for ȱ ȱĴȱȱ¡ȱǯȱ ȱ- ȱȱěȱȱ¢ȱȱ ȱ of a foreclosed property being sold at auction if the sale is canceled. What you need to know: SB 422, ȱ¢ȱȱ ǰȱȱęcant changes to the tax sale process on abandoned homes. The lender/lien holder will now receive notice of tax sale six months before the tax sale is ǯȱ ¢ȱȱȱȱęȱ- tween six and 12 months after the tax sale by the investor who purchased ȱęȱȱȱ¢ȱȱȱ sale. SB 422 is intended to reduce the amount of out-of-state investors who ȱȱȱęȱȱ allows them to fall into disrepair. The goal is to sell the properties to investors who want the home. The bill also allows government the authority to show the home to interested parties before the tax sale. HB 1058 – Electronic Delivery and Posting of Insurance Documents – ǯȱ ¢ȱ ¢ęǰȱ Ȭȱ ǰȱ and Sen. Greg Walker, R-Columbus What the bill does: It provides for the electronic delivery of insurance notices and documents, instead of other modes of delivery otherwise required for such notices and ǯȱ ȱȱȱȂȱ consent to electronic delivery and a method to withdraw consent. It also allows electronic posting of property and casualty insurance documents under certain conditions. What you need to know: With the Ȃȱǰȱȱ- ments may be delivered electronically instead of by mail. The bill also allows for electronic postings of property and casualty documents under ȱǯȱ ȱěȱȱ ȱ ¢ȱŗǯ HB 1224 – Title Insurance – Rep. Dale DeVon, R-Granger, and Sen. Travis Holdman, R-Markle What the bill does: This bill requires the Department of Insurance (DOI) to create a title insurance consumer comparison tool. It states ȱȱęȱȱȱȱȱ that issue title insurance policies in Indiana will be included on the tool, and that the information on the tool shall be designed to allow an average consumer of ordinary intelligence to ȱȱěȱ ȱ substantially similar title insurance ȱěȱ¢ȱȱǯȱ ȱ ęȱȱȱȱȱȱȱ available to the public free of charge ȱȱ Ȃȱ ȱ¢ȱ ǯȱŗȱȱ that, after that date, when an insurer ȱȱ ǰȱȱęǰȱȱ ȱȱȱȱȂȱȱ available on the tool not more than ŗŖȱȱ¢ȱȱȱȂȱ ȱȱȱȃęȄȱ¢ȱȱ DOI. The bill also limits the amount that may be charged to each party ȱȱęȱȱȱȱ ȱĴȱȱȱȱȱ transaction to the lesser of: the actual cost associated with issuing a closing ȱĴǰȱȱǞŘśȱȱȱȱ ȱĴȱȱȱȱȱȱ a single property. What you need to know: The IBA, the Indiana Association of REALTORS® and the Indiana Builders Association had been working together on this bill since late summer. It is in response to concerns raised regarding an increase in title insurance rates since the passage of SEA 370 from last session. The purpose of HB 1224 is to provide for greater transparency of title insurance rates across the state for consumers through the publishing of rates on the website of the Department of Insurance. The bill was amended to remove the closing ȱĴȱǞŘśȱǯ ȱŗŘřśȱȮȱ ȱ ȱ ĝȱ – Rep. Gail Riecken, D-Evansville, and Sen. Travis Holdman, R-Markle What the bill does: ȱȱęȱ ȱȃȱ¢ȱęȱ institution” as a credit union that is organized or reorganized under Indiana law. It allows an eligible de- &RQWLQXHG RQ SDJH Continued from page 13.
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