2014 Vol. 98 No. 6

INSIDE Schrage Family: Preserving Indiana's largest, family-owned private bank for ÀYH JHQHUDWLRQV Story on page 9. HOOSIER BANKER JUNE 2014

Who should attend? x Credit Analysts and Underwriters x Credit Administration,, Documentation and Servicing Staff x Loan Packagers x Attorneys Disclaimer: Cosponsorship Authorization #14-0515-55. SBA’s participation in this cosponsored activity is not an endorsement of the views, opinions, products or services of any cosponsor or other person or entity. All SBA programs and services are extended to the public on a nondiscriminatory basis. Reasonable arrangements for persons with disabilities will be made if requested at least two weeks in advance. Contact: Nancy Grose, 313-226-6075. July 31—August 1,, 2014 | Register today at: www.GreatLakesLenders.com $225 per attendee Book your hotel accommodations now to lock in the discounted rate of $100 per night $100 per night! x Commercial and Business Banking Lenders

,QGLDQD %DQNHUV $VVRFLDWLRQ 2IÀFHUV 'LUHFWRUV 6WDII ,%$ 2IÀFHUV Chairman 'DYLG : +HHWHU, MutualBank, Muncie First Vice Chairman /DUU\ : 0\HUV, First Savings Bank, FSB, Clarksville Second Vice 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 $%$ 0HPEHUVKLS &RXQFLO 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 & 0DUKHQNH iAB Financial Bank, Fort Wayne *UHJRU\ 0D[ZHOO, Farmers State Bank, Mentone 1RUWKZHVW 5HJLRQ 'LUHFWRUV $QQHWWH 0 5XVVHOO, Security Federal Savings Bank, Logansport 3DWULFN 'XIIH\, State Bank of Burnettsville .DUHQ , 0LOOHU,The Farmers Bank, Frankfort 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 Executive Vice President 3DXO : )UHHPDQ &$( Senior Vice 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 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 92/80( 12 6925 Parkdale Place Indianapolis IN 46254-4673 Phone: 317-387-9380 Fax: 317-387-9374 ZZZ LQGLDQDEDQNHUV RUJ 3XEOLVKHU 6 -RH 'H+DYHQ Editor: Laura Wilson $GYHUWLVLQJ 5RG /DVOH\ 6HQG QHZV UHOHDVHV WR IBAcommunications #LQGLDQDEDQNHUV RUJ 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 –Ž–‹Ž›œǯȱ ˜™¢ȱŽŠ•’—ŽDZȱꛜȱ˜ȱ the month preceding publication. $GYHUWLVLQJ 5DWHV DYDLODEOH upon request or online at ZZZ LQGLDQDEDQNHUV RUJ. Advertisers should provide HOHFWURQLF 3')V E\ WKH WK 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'$7( 35(6,'(17·6 321'(5,1*6 6 -RH 'H+DYHQ ,%$ 8 IBA CALENDAR OF EVENTS &29(5 6725< 0,.( 6&+5$*( /($',1* &(17,(5 ,172 7+( 1(;7 *(1(5$7,21 *5 6327/,*+7 ,%$ 6 )8785( /($'(56+,3 ',9,6,21 $'9$1&(6 7+528*+ %2$5' *52:7+ Dax Denton, IBA 363 6+2:&$6( 21($0(5,&$ $ +20( *52:1 1$7,21$/ /($'(5 Rod Lasley, IBA 23(5$7,216 7(&+12/2*< 3/$11,1* 12: &$1 /,0,7 )8785( '$7$ %5($&+ /266(6 Eric Lillard, PULSE ',5(&7256 6(1,25 0$1$*(0(17 $/7$ %(67 35$&7,&( 12 ² /,&(16,1* Johnathan Biggs, Investors Title Insurance Company ',5(&7256 6(1,25 0$1$*(0(17 +2: (50 &$1 +(/3 <285 ,167,787,21 Bharat Nair,WolfPac Integrated Risk Management '(3$570(176 ,1 0(025< 20 COMPLIANCE CONNECTION /DUU\ & 7RPOLQ .ULHJ 'H9DXOW //3 7$.,1* ,7 ($6< +21256 %$1.,1* 21 &20081,7< $11,9(56$5< 0,/(6721(6 $662&,$7( 0(0%(56 &251(5 ),1$1&,$/ /,7(5$&< ',*(67 %$1.(56 21 7+( 029( $'9(57,6(56 ,1'(; 5 HOOSIER BANKER JUNE 2014 Michael E. Schrage is chairman, chief executive SJ½GIV ERH TVIWMHIRX SJ Centier Bank, Northern -RHMERE ,I MW WLS[R SR XLI GSZIV [MXL LMW HEYKLXIV ERH X[S WSRW MR PE[ (left to right) Chris, 7XITLERMI ERH %RXLSR]

HќќѠіђџȱ юћјђџ Ѣћђ 2014 Amplify is a public relations and ›Šœœ›˜˜œȱŽě˜›ȱŽŸŽ•˜™Žȱ‹¢ȱ‘Žȱ American Bankers Association with help from banking professionals. Available to all bankers — both ABA members Š—ȱ—˜—–Ž–‹Ž›œȱȯȱ’ȱ˜ěŽ›œȱ tools to help rebuild the image of banking. For more information, visit www.amplifybankers.com  and are not. Some insist that, because of this knowledge, they do not need any kind of demographic analysis of their communities. “Big data” is the buzzword today. I am not sure exactly where small data becomes big data. I do know that today, ’‘ȱ —Ž›—ŽȱŒŠ™Š‹’•’’Žœǰȱꗍ’—ȱŠŠȱ’œȱ™›ŽĴ¢ȱŽŠœ¢ǯȱ žŒ‘ȱ data can be found inexpensively. It might be a good idea to verify all that you know about your community. For example, do you know what the poverty level is in your community? Do you know what percentage of students at your local school is on the free or reduced lunch program? Do you really know where all of the money is in your community? Though you know your community, as I knew of my great-great-grandfather’s heroics, it could be a good investment to verify what you know. If you’re right, you will have spent a few bucks to prove it. If you’re wrong, then you will likely save your bank a lot of money by not chasing the wrong prospects. We appear to be entering a period where the economy should be improving at a much faster pace than during the past several years. Now is the time to set your game plan. Now is the time to gather the statistical data — big or small — on which to base that plan. I now know the real story of The Great Locomotive Chase and have discovered that there were two William ’ĴŽ—Ž›œȱ ‘˜ȱœŽ›ŸŽȱ’—ȱ‘Žȱ ’Ÿ’•ȱ Š›ǯȱ ¢ȱ›ŽŠȬ›ŽŠȬ ›Š—Š‘Ž›ȱ ’ĴŽ—Ž›ȱ Šœȱ—˜ȱ‘Žȱ˜—Žȱ ‘˜ȱœ˜•ŽȱŠȱ ˜—Ž- Ž›ŠŽȱ›Š’—ȱŠ—ȱ ŠœȱŠ Š›Žȱ‘Žȱ ŽŠ•ȱ˜ȱ ˜—˜›ǰȱ‹žȱ‘Žȱ was the one who walked all night after a full day of march- ’—ȱŠ—ȱꐑ’—ȱ˜ȱ‹ž›¢ȱ‘’œȱ‹›˜‘Ž›ǯȱ ȱ‘’—”ȱ‘Ž¢ȱ Ž›Žȱ‹˜‘ȱ heroes. ȱ ȱŠ•œ˜ȱ‘’—”ȱ’ȱ™Š¢œȱ˜ȱ˜ȱ‘Žȱ›ŽœŽŠ›Œ‘ȱŠ—ȱꗍȱ˜žȱ‘Žȱ facts, just in case our beliefs are wrong. As I sat down to write this month’s President’s Ponderings, my great-great-grandfather was on my mind. His name was William Pittenger, and family lore had portrayed him as a Civil War hero. I have often heard the story of how he had stolen a Confederate train, creating a turning point in the war. I decided to go to the Internet to see what more I could learn. Sure enough, Sgt. William ’ĴŽ—Ž›ǰȱŠ•˜—ȱ ’‘ȱŘŗȱ˜‘Ž›ȱ–Ž—ȱ”—˜ —ȱŠœȱ —›Ž Ȃœȱ Raiders, stole a Confederate train with the mission of destroying bridges and rail lines between Atlanta and Chattanooga. The mission was not accomplished to the level expected, and it was not a turning point in the war. Of the 22 men, all but six were hung or shot by the Confederates upon ŒŠ™ž›Žǯȱ ‘Žȱ˜‘Ž›œǰȱ’—Œ•ž’—ȱ ’ĴŽ—Ž›ǰȱ Ž›Žȱ‘Ž•ȱŠœȱ prisoners of war until they escaped and made it back to the Union side. ȱ ’ĴŽ—Ž›ȱŠ—ȱ‘Žȱ˜‘Ž›ȱ꟎ȱœ˜•’Ž›œȱŠ••ȱ Ž›ŽȱŠ Š›Žȱ ‘Žȱ ŽŠ•ȱ˜ȱ ˜—˜›ǯȱ ’ĴŽ—Ž›ȱ Ž—ȱ˜—ȱ˜ȱ ›’ŽȱŠȱ‹˜˜”ȱ about this adventure, which Disney made into a movie in the 1950s. I recall watching the movie as a child. It was titled The Great Locomotive ChaseǰȱŠ—ȱ ’ĴŽ—Ž›ȱ ŠœȱŽ™’Œ- ed as one of the principal heroes. ȱ ȱŒ˜—’—žŽȱ–¢ȱ›ŽœŽŠ›Œ‘ȱŠ—ȱ˜ž—ȱ‘Šȱ ’ĴŽ—Ž›ȱ Šœȱ born in Ohio and died in California. That perplexed me, since I knew that my great-great-grandfather was born and ’Žȱ’—ȱ ž—Œ’Žǰȱ —’Š—Šǯȱ •œ˜ǰȱ’ȱž›—œȱ˜žȱ‘Šȱ‘ŽȱŠ‹˜ŸŽȱ heroics occurred in April 1862. I reviewed my great-greatgrandfather’s information and saw that he had enlisted in February 1865. So after all of these years of believing that my greatgreat-grandfather had been a “locomotive chase” hero in the Civil War, I found that I was wrong. He did not enlist ž—’•ȱŠ•–˜œȱ‘›ŽŽȱ¢ŽŠ›œȱŠŽ›ȱ‘Žȱ˜‘Ž›ȱ ’••’Š–ȱ ’ĴŽ—Ž›ȱ had become the hero. ȱ ¢ȱ›ŽŠȬ›ŽŠȬ›Š—Š‘Ž›ȱ ’ĴŽ—Ž›ȱ’ȱœŽŽȱœ˜–ŽȱŠŒ- tion during the Civil War. He and his brother were march- ’—ȱœ’Žȱ‹¢ȱœ’Žȱ ‘Ž—ȱŠȱœ—’™Ž›ȱŠĴŠŒ”ȱ”’••Žȱ‘’œȱ‹›˜‘Ž›ǯȱ He was not allowed to stop and bury his brother, as the commanders thought it too dangerous. They continued to march several more miles before stopping for camp. ȱ ¢ȱ›ŽŠȬ›ŽŠȬ›Š—Š‘Ž›ȱ‘Ž—ȱ Š•”Žȱ‹ŠŒ”ȱ˜ȱ‘Žȱœ’Žȱ ˜ȱ‘’œȱ‹›˜‘Ž›ȂœȱŠĴŠŒ”ǰȱŠŸŽȱ‘’–ȱŠȱ™›˜™Ž›ȱ‹ž›’Š•ǰȱŠ—ȱ›Ž- turned to the camp. Later in life, he took my grandmother to Tennessee to show her where his brother was buried. That made him a family hero, if not a Civil War hero. Often I hear bankers tell me that they know their communities. They know everyone there, who has money and who doesn’t. They know where all of the opportunities are ASSOCIATION UPDATE PRESIDENT’S PONDERINGS 6 -RH 'H+DYHQ 3UHVLGHQW &KLHI ([HFXWLYH 2IÀFHU ,QGLDQD %DQNHUV $VVRFLDWLRQ Amplif ›Šœœ›˜˜ America fromb toal Š— to b v $PSOLI\ <RXU (IIRUWV

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ASSOCIATION UPDATE CALENDAR OF EVENTS Register online at ZZZ LQGLDQDEDQNHUV RUJ FDOHQGDU FIP 8 HќќѠіђџȱ юћјђџ Ѣћђȱ2014 Alternative Delivery Channels … $YDLODEOH DW \RXU FRQYHQLHQFH YLD :HELQDU &' 520 RU 2Q 'HPDQG „ Compliance for Mortgage Loan Processors -XO\ u ,%$ &HQWHU „ Auditing RESPA -XO\ u ,%$ &HQWHU „ Flood Rules for Lenders and Operations -XO\ u ,%$ &HQWHU „ +XPDQ 5HVRXUFH 'LUHFWRU )RUXP -XO\ u ,%$ &HQWHU „ Introduction to Consumer Loan Origination and Compliance -XO\ u ,%$ &HQWHU „ A Workshop for Loan Assistants and Loan Processors -XO\ u ,%$ &HQWHU „ BSA for the Frontline -XO\ u 6KHUPDQ +RXVH %DWHVYLOOH -XO\ u %HVW :HVWHUQ ([HFXWLYH 3OD]D Lafayette -XO\ u )RUW :D\QH +RWHO -XO\ u &KDSPDQ·V 5HVWDXUDQW Bloomington -XO\ u %HVW :HVWHUQ 3OXV 1HZ $OEDQ\ -XO\ u +XQWLQJEXUJ (YHQW &HQWHU „ Analyzing Commercial Real Estate Cash )ORZ DQG 8SGDWLQJ 0RQLWRULQJ 3URSHUW\ Values -XO\ u ,%$ &HQWHU „ Administering Construction Loans -XO\ u ,%$ &HQWHU „ The Total Teller: Compliance, Security and Legal Issues $XJ u ,%$ &HQWHU „ Advanced New Accounts $XJ u ,%$ &HQWHU „ IBA Leadership Development Program: Session 3 - 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9 HќќѠіђџȱ юћјђџ Ѣћђ 2014 &RQWLQXHG RQ SDJH &29(5 6725< Imagine a bank that excels in customer service, and yet puts employ- ŽŽœȱꛜǯȱ ȱ‹Š—”ȱ ’‘ȱŠ—ȱ’–™›Žœœ’ŸŽȱ Şȱ™Ž›ŒŽ—ȱ›˜ ‘ȱ›ŠŽǰȱ‘ŠȱœŽŽ”œȱœŠěȱ with “servant’s hearts.” A bank led by a competitive former athlete who, three decades ago, transformed his outlook so dramatically that some œ’••ȱ›ŽŽ›ȱ˜ȱ‘’–ȱŠœȱ‘Žȱȃ—Ž Ȅȱ ’”Žǯ The bank is Centier Bank, Indiana’s largest, private, family-owned bank. It was established in 1895 as Bank of Whiting by Henry Schrage a German immigrant who fought in the Civil War and helped found the bank’s namesake town. In 1991 the bank was renamed Centier Bank, and headquarters were ›Ž•˜ŒŠŽȱ˜ȱ Ž››’••Ÿ’••Žǯȱ ‘Žȱ Ž—’Ž›ȱ name is a play on “century,” in honor of the bank’s longevity; “center,” as ›ŽŽ›Ž—ŒŽȱ˜ȱ‘Žȱ‹Š—”Ȃœȱꛜȱ‹›Š—Œ‘ȱ location on Center Street; and “premier,” signifying Centier as a premier provider of services. When Henry Schrage established the bank nearly 120 years ago, he began a leadership legacy that would continue with his son Walter, grandson Walter Jr. and now great-grand- œ˜—ȱ ’Œ‘ŠŽ•ȱ ǯȱ Œ‘›ŠŽǰȱ ‘˜ȱœŽ›ŸŽœȱ today as chairman, chief executive ˜ĜŒŽ›ȱŠ—ȱ™›Žœ’Ž—ǯ ȱ ’”Žȱ Œ‘›ŠŽǰȱŜŜǰȱ“˜’—Žȱ‘Žȱ‹Š—”ȱ in 1972 as a loan and investment ofꌎ›ǯȱ Žȱ•ŠŽ›ȱœŽ›ŸŽȱŠœȱŠȱŒ˜––Ž›Œ’Š•ȱ lender and assistant branch manager before being named president; he was elected chairman of the board in 1982. With 42 years of banking experience, he is a member of the Indiana Bankers Association Forty Year Club and indicates that he plans to remain ‹Š—”ȱ™›Žœ’Ž—ȱŠ—ȱ ȱ˜›ȱŠȱ•ŽŠœȱ nine more years. ȱ žŒŠŽȱŠȱ ž•ŸŽ›ȱ ’•’Š›¢ȱ ŒŠ- emy, Denison University and the University of Colorado, Schrage initially was hesitant to follow the banking footsteps of his predecessors. However once he decided in his mid-20s to join the bank, what followed was a transformation for both Schrage and Centier. Recently Hoosier Banker inter- Ÿ’Ž Žȱ ’”Žȱ Œ‘›ŠŽȱŠ‹˜žȱ‘’œȱŽ¡™Ž- riences. What are your duties as chairman, Œ‘’ŽȱŽ¡ŽŒž’ŸŽȱ˜ĜŒŽ›ȱŠ—ȱ™›Žœ’Ž—ȱ of Centier Bank? “It’s somewhat common in smaller ‹Š—”œȱ˜›ȱ‘ŽȱŒ‘Š’›–Š—ȱŠ—ȱ‘Žȱ ȱ to be the same. As banks grow larger, those duties and responsibilities are more divided. At some point, as the bank grows to $5 billion, we’ll look at a separation of duties and responsibilities. ȱ ȃ ¢ȱŒ‘Š’›–Š—ȱ¢™Žȱž’ŽœȱŠ—ȱ roles are to coordinate the outside board members. There are 13 board members – myself plus 12. They’re all outside directors, diverse both geographically as well as professionally. “Apart from myself, none of our directors are either Centier employees or Schrage family members. This arrangement is intended to keep the board objective. ȱ ȃ ¢ȱ›˜•ŽȱŠœȱŒ‘Š’›–Š—ȱ’œȱ˜ȱ–Š”Žȱ sure that directors participate actively in directing the future of the bank. I encourage them to engage in the com- –’ĴŽŽȱœ›žŒž›Žȱ˜ȱ‘Žȱ‹Š—”ǯȱ They serve on a number of bank management committees, interacting with the management team, and that role is at least as important as participating in the monthly board meetings.” How do you ensure that your banking family legacy continues? ȱ ȃ Žȱ—˜ ȱ‘ŠŸŽȱ‘Žȱꏝ‘ȱ generation in the bank in the form of two son-in-laws and my daughter. ¢ȱ ’Žȱ ’••ȱŠ—ȱŠ—˜‘Ž›ȱŠž‘Ž›ȱ also work part-time at the bank. “I’m working on my grandkids now for the sixth generation. They’re only four and three years old, but we’re working on it through exposure. They come into the bank with me sometimes on weekends. ȱ ȃ ˜œ•¢ȱ‘Žȱ•ŽŠŒ¢ȱŒ˜—’—žŽœȱ‹¢ȱ’—- stilling sound values. By that I mean mentoring and teaching the values of integrity, respect, friendship and loyalty. “In order to have a continuity of a family business in the competitive structure of today’s business environ- –Ž—ǰȱ¢˜žȱ‘ŠŸŽȱ˜ȱ–Š”ŽȱœŠŒ›’ęŒŽœǯȱ You cannot indulge in the ultimate lifestyle and expect your kids or ›Š—”’œȱ—˜ȱ˜ȱ‹ŽȱŠěŽŒŽȱ‹¢ȱ‘Žȱ excesses. “Strong grassroots values are necessary to perpetuate a family business, so I’m careful about not spoiling my children and grandchildren. They need to be strengthened, as steel is by ꛎǰȱ˜ȱ–Š”Žȱ‘Ž–ȱœ›˜—ȱŠ—ȱ˜ȱ’ŸŽȱ them the fortitude to get through tough times, not just the good times.” Mike Schrage: Leading Centier Into the Next Generation 0LFKDHO ( 6FKUDJH

10 HќќѠіђџȱ юћјђџ Ѣћђȱ2014 &29(5 6725< The values you mentioned sound similar to your bank values. “Yes, our values are integrity, respect, friendship, caring and loyalty. These values were constructed — not by me personally — in the late ’80s. At that time, I was going through a personality shift and adjusting my outlook on life. I was no longer as interested in growing the bank as big as possible, or making as much money as possible. “I shifted my thinking to more of a preservation type of philosophy, asking: ‘What is it that I want to be known for? What is it that I want to preserve?’ “Bank-wide, we re-examined our cultural value orientation. We gathered together about 100 people from all levels of the organization — about a third of the total employee base, and spent an intense afternoon in roundtable focus groups. “Associates looked at what the bank values were at that time, and what they should be in the future. I moderated as they shared ideas, and we came up with a set of values that we felt we could embrace for the long-term. “That was the start of the cultural revolution that took place at Centier Bank. Before that, I had exercised a strong, autocratic leadership style. It was not until that transformation that I started to grow what we call a servant’s heart — the belief that we have been placed here to help and to serve others. “It was a big transformation for me, and some people in the bank ›ŽŽ›ȱ˜ȱ’ȱŠœȱȁ˜•ȱ ’”ŽȂȱvs. ‘new ’”ŽǯȂȱ Ž˜›Žȱ‘Žȱ•ŠŽȱŗşŞŖœǰȱ Ȃȱ˜ȱ anything to get to the top of the mountain, but those mountain tops ‹ŽŒŠ–Žȱž—ž•ę••’—ǯ “I wanted to steer the future direction of the bank away from the materialism of success. So many people view success as being wealth, title, position, accolades, but it is in œŽ›Ÿ’ŒŽȱ‘Šȱ Žȱꗍȱ•Šœ’—ȱž•ę••–Ž—ȱ in life.” Was there a trigger to this transformation? “The trigger was that, in the early to mid ’80s, we went through a major depression here in northwest —’Š—Šǯȱ ȱŠěŽŒŽȱŠ••ȱ˜ȱ‘Žȱ–’••œȱŠ—ȱ ›Žę—Ž›’ŽœǰȱŠ—ȱ‹Šœ’ŒŠ••¢ȱ ȱŠ•–˜œȱ•˜œȱ the bank. “So I had to rethink the importance of longevity and preparing longterm for the future, rather than maximizing current opportunities. ȱ Šœȱ‘Šȱ’ĜŒž•ȱꗊ—Œ’Š•ȱŒ›’œ’œȱ that made me realize that maybe I wasn’t on the best path to long-term ž•ę••–Ž—ǯȄ What prompted you to continue family tradition and join the bank? “Growing up in Whiting, I was the Ž¡™ŽŒŽȱ‘Ž’›ȱŠ™™Š›Ž—ǯȱ ¢ȱ›ŽŠȬ grandfather established the bank in the city of Whiting, and my grandfather was the mayor for three terms, so we were one of the founding families. “So as a child, I carried around that expectation, and it wasn’t always the greatest thing to carry around. Later, when I had the opportunity, I went away to Culver ’•’Š›¢ȱ ŒŠŽ–¢ǰȱŠȱ small, private school. We were 810 guys in ‘ŽȱŒ˜›—ꎕœȱ˜ȱ —’- ana, and it gave me a feeling of being part of something cohesive. “I spent a couple of summers working in the bank, which ȱ’ȱ—˜ȱ•’”Žǯȱ ¢ȱ™Ž›œ˜—Š•’¢ȱ Šœȱ —˜ȱŠĴž—Žȱ˜ȱœŽ›Ÿ’—ȱŠœȱŠȱŽ••Ž›ȱ˜›ȱŠȱ loan processor. I started to steer away from banking and, midway through my college career in economics, I began to lean toward coaching. “Athletics was very big for me. One of my mentors was my high school wrestling coach at the Academy. I wanted to spend my life the same way, developing talented athletes – both for athletic prowess and for values. “When I got out of college, the choices were Vietnam, grad school for business, or look for a prep school to coach in, because I didn’t have enough courses to become a public school coach. I ended up applying for all three. “When I didn’t get drafted and the ™›Ž™ȱœŒ‘˜˜•ȱ˜ěŽ›œȱ Ž›Ž—Ȃȱ˜˜ȱŠĴ›ŠŒ- tive, I enrolled at the University of ˜•˜›Š˜ȱ’—ȱ ˜ž•Ž›ȱ˜ȱŽȱ–¢ȱ ȱ ’—ȱꗊ—ŒŽǯȱ ȱ Š—Žȱ˜ȱœŽŽȱ’ȱ ȱ•’”Žȱ ‹Š—”’—ȱŠ—ȱꗊ—ŒŽȱ–˜›Žȱ‘Š—ȱ ȱ’ȱ economics. ȱ ȃ ‘Ž›Žȱ ȱ ŠœȱŽ¡™˜œŽȱ˜›ȱ‘Žȱꛜȱ time to some exciting faculty and students in the banking, marketing and ꗊ—ŒŽȱꎕœǯȱ Ž›ȱŠȱœŽ–ŽœŽ›ȱ‘Ž›Žǰȱ I made a decision that I would like to try banking. “I told my dad I would come in Continued from page 9. &RQWLQXHG RQ SDJH &HQWLHU·V ´'HFODUDWLRQ RI ,QGHSHQGHQFHµ OLVWV signatures of nearly 700 employees, with a promise to remain independently owned and operated for JHQHUDWLRQV WR FRPH &HQWLHU·V KHDGTXDUWHUV IHDWXUHV DQ DUFK UHSOLFD RI WKH EDQN·V RULJLQDO EXLOGLQJ HQWUDQFH

Member FDIC 1-888-CENTIER CENTIER.COM Who Centier? LaPorte Marshall Hamilton M St. Joseph Tippecanoe Allen Lake Porter Centier has 50 locations in Lake, Porter, La Porte, St. Joseph, Marshall, Allen, Tippecanoe, and Hamilton counties. Preserving independent hometown banking for generations to come. largest private Indiana’s bank. family-owned Since 1895

12 HќќѠіђџȱ юћјђџ Ѣћђȱ2014 Š—ȱ›¢ȱ‹Š—”’—ȱ˜›ȱ꟎ȱ¢ŽŠ›œǰȱŠœȱ long as we could expand the bank. I didn’t want to work in Whiting only. ȱ ȃ ¢ȱŠ‘Ž›ȱ’—Ȃȱ Š—ȱ˜ȱŽ¡™Š—ȱ outside of Whiting, so his reaction was guarded. But he gave me the latitude to expand and choose future ‹›Š—Œ‘ȱœ’Žœǰȱ™•žœȱ ˜›”ȱ˜žȱœŠĜ—ȱ needs, marketing programs and different types of lending. “I fell on my face a number of times, and I credit my father for giving me the latitude to experience setbacks. Parents can have trouble •ŽĴ’—ȱ‘Ž’›ȱ”’œȱ•ŽŠ›—ȱ‘Žȱ‘Š›ȱ Š¢ǰȱ so I give my father a lot of credit. “In the long run, the experience gave me an appreciation for risk and tolerance, and determination to leave a legacy of Centier as a familyowned, private bank for future generations. “We have a Centier ‘Declaration of Independence’ that each new associate signs. It is their acknowledgement that they’re going to do what they can to make sure we preserve our independence as a private, family-owned bank.” Please tell a bit about Centier’s community outreach. “Partnering is very important to us, and we partner with schools and community organizations in as many ways as we can. One way ’œȱ‹¢ȱ™›˜–˜’—ȱꗊ—Œ’Š•ȱ•’Ž›ŠŒ¢ǯ ȱȱȱȱȃ Žȱ‘ŠŸŽȱŠȱž••Ȭ’–Žȱꗊ—Œ’Š•ȱŒŠ- pabilities coordinator who works with Centier associates as they go into schools and community centers to help students and adults develop ˜˜ȱꗊ—Œ’Š•ȱ‘Š‹’œǯȱ ˜–Žȱ˜ȱ our presenters are bilingual and work in markets of large Hispanic populations. “A venture we are working on is a public television œŽ›’ŽœȱŒŠ••Žȱȁ ˜—Ž¢ȱ Ž—œŽǰȂȱ geared toward adults. The show brings in experts to talk about fraud, identity theft and related topics. “Another form of outreach is the Schrage Family Foundation scholarship program. We established it 20 years ago, on our 100th anniversary. Unlike many scholarships, ours is not weighted heavily toward need or academics. “Instead, ours is two-thirds weighted on leadership in the school and leadership in the community. A lot of our scholarship recipients Š›Žȱ Š•Žȱ Œ˜žœǰȱ˜›ȱ¢˜ž—ȱ™Ž˜™•Žȱ who are active in their churches or synagogues, or school newspaper editors. “Centier also partners with charitable organizations, much of it in sweat equity. When our associates join an organization, we want them to be active and to lead in some capacity, whether by chairing a fundraiser or serving in a presidential position.” Centier Bank has been recognized as one of the Best Places to Work by the Indiana Chamber of Commerce continually since 2007. What is the secret of this success? “The secret to this success starts with hiring. We hire people with servant’s hearts. It makes for a great Continued from page 10. 6LQFH &HQWLHU KDV PDGH WKH ,QGLDQD &KDPEHU·V 7RS OLVW RI %HVW 3ODFHV WR :RUN LQ ,QGLDQD ,W ZDV UDQNHG 1R LQ 6RFLDO PHGLD KDV EHFRPH DQ LQWHJUDO SDUW RI WKH FRPSDQ\·V FRPPXQLFDWLRQ FKDQQHOV WKH EDQN KDV RYHU )DFHERRN ´OLNHV µ

13 HќќѠіђџȱ юћјђџ Ѣћђ 2014 Depression, he put his entire estate into trust. None of it was given to any of his kids. It was all put in trust to be used as a loan loss provision for the bank. “His own family members could not access his estate for 10 years after he died. He wanted to make sure the bank made it through the Depression. ¢ȱ›ŽŠȬ›Š—Š‘Ž›ȱ’ȱ’ȱ˜ȱœŠŸŽȱ the bank. I am blessed to have had the opportunity to continue a journey that began through past generations and I will leave a cultural and family banking legacy for generations to come!”  Mike Schrage is featured in "Paying )RUZDUG D %DQNLQJ /HJDF\ &OLFN RQ WKH red arrow in +RRVLHU %DQNHU 'LJLWDO at ZZZ LQGLDQDEDQNHUV RUJ Video Bonus work environment. ȃ ŽȱŠ•œ˜ȱ™žȱ˜ž›ȱŠœœ˜Œ’ŠŽœȱꛜǰȱ before our customers and our shareholders. The reason is that if we are treating our employees really well, they are going to treat our customers really well - it is genuine - and our customers notice. We personalize our interactions, whether through a greeting or the way we welcome visitors or the way we talk with each other. “To help with the personal touch, every three weeks I meet with new employees in small groups of four to eight people. We share who and what Centier is, and our vision for the future. It’s an opportunity for them to get to know me and to feel comfort- Š‹•ŽȱŒŠ••’—ȱ–Žȱȁ ’”ŽȂȱ’—œŽŠȱ˜ȱȁ ›ǯȱ Schrage.’ “We also have a care fund, ad- –’—’œŽ›Žȱ‹¢ȱŠȱŒŠ›ŽȱŒ˜––’ĴŽŽǯȱ Žȱ take donations and hold fundraising events, and the funds raised are available for associates, who apply on an anonymous basis if they have needs. It might be that they’re behind on their mortgage or utility payment, or that their spouse has experienced job loss. We’ll raise about $50,000 this year to distribute to families at Centier who are in need. “And we have an in-house clinic, with free health screenings for all 700 Centier employees, plus free treatments and free generic prescriptions. ‘ŽȱŒ•’—’Œȱ’œȱœŠěŽȱ ’‘ȱŠȱ doctor, a nurse practitioner and a medical health coaching assistant. Žȱ‘ŠŸŽȱ˜—Žȱ˜—ȱ‘Žȱ–Š’—ȱ̘˜›ȱ˜ȱ ˜ž›ȱ Ž››’••Ÿ’••Žȱ‘ŽŠšžŠ›Ž›œǰȱ™•žœȱ facilities at various other places in the state that our people can go to. “Our culture is very deep, we hire the right people, and we do what we can to take care of them.” ˜ȱ‘ŠŸŽȱ¢˜žȱ˜ž—ȱ‘Šȱž•ę••- ment that you were seeking in the 1980s? “Yes, though I didn’t know what I was seeking … sort of like not knowing what is on the other side of the ocean. But I kept pursuing it, despite some falls, and it’s been an interesting journey. “In some ways our transformation in the ’80s pales in comparison to what my great-grandfather did as our founder. During the Great Centier supports its workforce with wellness amenities and programs to promote healthy lifestyle choices, including an onsite 2XU+HDOWK FOLQLF &HQWLHU·V DQQXDO PHHWLQJV IHDWXUH WKHPHV VXFK DV WKH ´3ULFH LV 5LJKW µ GXULQJ ZKLFK D EDQN DVVRFLDWH ZRQ D WULS WR +DZDLL

14 HќќѠіђџȱ юћјђџ Ѣћђȱ2014 *5 6327/,*+7 The Future Leadership Division (FLD) of the Indiana Bankers Association was created to promote the Hoosier banking industry by fostering career growth and advancement for emerging bank •ŽŠŽ›œȱœŠŽ ’Žǯȱ ȱ˜ěŽ›œȱ networking, volunteer and educational opportunities to assist the next generation of industry leaders. Currently the FLD is seeking new members; membership is free and available to all employees of IBAmember institutions. For information about joining, please contact Dax Denton at 317-917-8047, email ddenton@indianabankers.org. ȱ ŽŠ—’–Žǰȱ˜ȱŠŒŒ˜––˜ŠŽȱ ȱ growth mode, the Division recently has expanded its board by adding three new directors. IBA welcomes the following new FLD board members, who will help strategize the direction of the Division and execute initiatives to ensure future vitality: Benjamin J. Bochnowski, Peoples Bank, Munster Ben Bochnowski has joined the FLD board as a Northwest Region director. He was named chief ˜™Ž›Š’—ȱ˜ĜŒŽ›ȱ and executive vice president of People Bank in August 2013 and has been serving on the bank’s board since April. He joined the bank in 2010. Bochnowski serves on the board of directors of the Dunes National Park Association, the Legacy Foundation and volunteers ’‘ȱ‘Žȱ —›Ž™›Ž—Žž›œ‘’™ȱ ˜˜ŒŠ–™ȱ for Veterans with Disabilities at Purdue and the Volunteer Income Tax Assistance (VITA) program. He earned a bachelor’s degree from the —’ŸŽ›œ’¢ȱ˜ȱ ’Œ‘’Š—ǰȱ˜••˜ Žȱ‹¢ȱ Š—ȱ ȱ›˜–ȱ ȱ‹žœ’—ŽœœȱœŒ‘˜˜•ȱ in Barcelona, Spain. Bochnowski is a graduate of the American Bankers Association Stonier Graduate School of Banking, with a leadership ŒŽ›’ęŒŠŽȱ›˜–ȱ‘Žȱ ‘Š›˜—ȱ Œ‘˜˜•ȱ at the University of Pennsylvania. Stephanie Schrage, Centier Bank, Northern Indiana Stephanie Schrage has joined the FLD board as a Northwest Region director. She began her career in 2007 with LaSalle Bank, Chicago, in its commercial banking development program. Subsequently she served as a credit analyst and debt products ˜ĜŒŽ›ȱ ’‘ȱ Š—”ȱ˜ȱ –Ž›’ŒŠǯȱ Currently Schrage is an executive ˜ĜŒŽ›ȱ ’‘ȱ Ž—’Ž›ȱ Š—”ǰȱ ‘Ž›Žȱ she also has worked as a risk management and commercial loan ˜ĜŒŽ›ǯȱ ‘ŽȱŽŠ›—Žȱ‹ŠŒ‘Ž•˜›ȂœȱŠ—ȱ ȱŽ›ŽŽœȱ›˜–ȱ‘Žȱ —’ŸŽ›œ’¢ȱ ˜ȱ ’Š–’ǯȱ ’’˜—Š••¢ȱ Œ‘›ŠŽȱ’œȱ a graduate of the IBA Commercial Lending School, the Southwest Graduate School of Banking in Dallas Š—ȱ‘Žȱ ’—Š—Œ’Š•ȱ Š—ŠŽ›œȱ Œ‘˜˜•ȱŠȱ the University of Wisconsin. J. Daniel Maddox, Citizens State Bank, New Castle Š—ȱ Š˜¡ȱ has joined the FLD board as a Northeast Region director. He is chief ˜™Ž›Š’—ȱ˜ĜŒŽ›ȱ and director of Citizens State Bank. Š˜¡ȱ Šœȱ—Š–Žȱ˜ȱ‘’œȱ™˜œ’’˜—ȱ in September 2013, prior to which he served as senior vice president of Town Financial Corp. He serves on the boards of directors of the Indiana State Chamber of Commerce; of the Blackford County Community Foundation, where he also chairs ‘Žȱ —ŸŽœ–Ž—ȱ ˜––’ĴŽŽDzȱŠ—ȱ ˜ȱ‘Žȱ •ŠŒ”˜›ȱ ˜ž—¢ȱ ǯȱ Additionally he is active with ‘Žȱ •ŠŒ”˜›ȱ ˜ž—¢ȱ Œ˜—˜–’Œȱ ŽŸŽ•˜™–Ž—ȱ ˜›™ǯȱ Š˜¡ȱ earned a bachelor’s degree from the University of Vermont and has completed the Graduate School of Banking at the University of Wisconsin. Additionally the following bankers serve on the FLD board of directors: Board president - Lucas White, The Fountain Trust Company, Covington IBA’s Future Leadership Division Advances Through Board Growth

15 HќќѠіђџȱ юћјђџ Ѣћђ 2014 Board vice president - Kristin Marcuccilli, STAR Bank, Fort Wayne Lisa Arnoldǰȱ ˜–Žȱ Š—”ȱ ǰȱ Š›’—œŸ’••Ž Jay A. Baker, German American, Jasper Craig Buse, Springs Valley Bank & Trust Company, French Lick Mark Demske, Community State Bank, Avilla Kirby Drey, Kentland Bank J. Todd Frossard, Your Community Bank, New Albany Anthony M. Gambaiani, Jackson County Bank, Seymour Andrew J. Saner, ȱ Š’— ˜ž›ŒŽȱ Š—”ǰȱ ›ŽŽ—œ‹ž› Jeremy Siegleǰȱ Š—”ȱ˜ȱ ˜•Œ˜Ĵ Melodie K. Yarnell, Jackson County Bank, Seymour  The IBA Future Leadership Division is hosting four roundtable discussions across the state. The purpose of these meetings is to provide a platform for an open discussion among career-minded bankers related to pertinent is- œžŽœȱŠŒ’—ȱ‘Žȱ’—žœ›¢ǯȱ ŠŒ‘ȱ meeting will start at 2 p.m., with a half-hour social and networking reception, followed immediately by a one-hour roundtable discussion. ȱ ‘˜œŽȱ’—Ž›ŽœŽȱ’—ȱŠĴŽ—’—ȱ a FLD roundtable discussion are welcomed to participate in the IBA regional meeting beforehand, ˜›ȱ–Š¢ȱŠĴŽ—ȱ‘Žȱ ȱ›˜ž—- table portion only at 2 p.m. For more information or to RSVP, Œ˜—ŠŒȱ ˜œ‘ȱ ¢Ž›œȱŠȱřŗŝȬşŗŝȬ 8047, email: jmyers@indianabankers.org. % ž•¢ȱŞDZȱ ŽěŽ›œ˜—Ÿ’••Ž – žŒ”‘ŽŠȱ ˜ž—Š’—ȱ ›’•• % July 9: Evansville – Biaggi’s Ristorante Italiano % Aug. 19: Fort Wayne – Biaggi’s Ristorante Italiano % žǯȱŘŗȱȮȱ ŠŠ¢ŽĴŽ – Serendipity )/' WR +RVW 5RXQGWDEOH 'LVFXVVLRQV 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. The American Bankers Association (through its subsidiary, the Corporation for American Banking) has endorsed services provided by Equias Alliance. Todd Andritsch is a registered representative of and securities are offered through ProEquities, Inc., a Registered Broker/Dealer, and member FINRA and SIPC Equias Alliance LLC is independent of ProEquities, Inc. ©2014 Equias Alliance www.equiasalliance.com Todd Andritsch tandritsch@equiasalliance.com 11416 Forest Knoll Circle Fishers, IN 46037 Tel: 317-517-5000 Equias Alliance helps banks in Indiana, and across the country, meet their financial goals, manage benefit liabilities and enhance shareholder value with a custom designed BOLI program. Todd and the team at Equias Alliance want to be your source for strategic benefit and BOLI solutions. In Indiana, The Checkered Flag for BOLI is Todd Andritsch!

HќќѠіђџȱ юћјђџ Ѣћђȱ2014 363 6+2:&$6( As bankers, you tell your clients to deal with your bank because you are local, you know your clients ‹ŽĴŽ›ǰȱ¢˜žȱ”—˜ ȱ‘Žȱ•˜ŒŠ•ȱŽŒ˜—˜–¢ǰȱ you can make decisions faster, and you are always available right down the street. For many of the same reasons, the Indiana Bankers Association enjoys a Preferred Service Provider (PSP) relationship with OneAmerica-AUL Retirement Services. Based in Indianapolis, OneAmerica knows what’s important to the residents of Indiana. Additionally it ranks among the top 10 nationwide as a provider of retirement services. OneAmerica is a mutual organization, accountable to those it serves, and always listening and striving to meet its clients’ needs. The company services nearly 10,000 retirement plans, consisting of $24 billion in retirement assets. OneAmerica has remained strong throughout the current challenging economic times, and it continues ˜ȱ›˜ ȱŠ—ȱŽ¡™Š—ȱ’œȱ˜ěŽ›’—œǯȱ OneAmerica consistently maintains Š—ȱ Ƹȱǻ ž™Ž›’˜›Ǽȱ›Š’—ȱ›˜–ȱ ǯ ǯȱ Best Co. for the American United Life Insurance Company. As you begin to review areas within your bank that have not been looked at for a few years — due to your prior focus being on asset quality, earnings and survival during the economic downturn — your bank’s retirement plan is likely near the top of the review list. OneAmerica-AUL Retirement Services is an excellent choice to consider as you review your plan provider to determine the best ˜ěŽ›’—ȱ˜›ȱ¢˜ž›ȱŽ–™•˜¢ŽŽœǯȱ ȱ members have exclusive access to preferred pricing on various retirement products, including 401(k), employer-sponsored 403(b), voluntary 403(b) and 457 (DCP), along with employee stock ownership яќѢѡȱѡѕђȱ Ѣѡѕќџ Rod Lasley is vice president-products & services of the Indiana Bankers Association, and also serves Šœȱ™›Žœ’Ž—ȱ˜ȱ‘Žȱ˜›Ȭ™›˜ęȱŒ˜–™Š—’Žœȱ˜ —Žȱ‹¢ȱ the IBA. He can be reached at 317-387-9380, email: RLasley@indianabankers.org. OneAmerica: A Home-Grown National Leader ™•Š—œȱǻ œǼȱŠ—ȱ™›˜ęȬœ‘Š›’—ȱ plans. In addition to providing your bank with a strong employee retirement plan, OneAmerica can work with you to bring these same quality programs to your clients. This opportunity allows you to provide additional services to your customers, creating stronger relationships and demonstrating that you truly are a full-service bank, tending to ‘Ž’›ȱœŠěœȱŠœȱ Ž••ȱ‘Ž’›ȱ‹žœ’—Žœœǯȱ This turnkey program requires no ꗊ—Œ’Š•ȱ’—ŸŽœ–Ž—ȱ˜—ȱ‘Žȱ™Š›ȱ˜ȱ the bank; your team may become as involved as you choose in the sales and promotion of retirement services to clients. OneAmerica will work with your bank’s broker or adviser regarding your bank’s program. The company also will work with your trust department or wealth management team to explore opportunities to provide retirement services to your clients. Let the strength of OneAmericaAUL Retirement Services help your ꗊ—Œ’Š•ȱ’—œ’ž’˜—ȱ˜ȱ˜›’¢ȱ—˜ȱ˜—•¢ȱ your bank’s retirement services, but also those of your clients. Further, take advantage of the convenience of your provider’s being located here in Indiana. For more information regarding —Ž –Ž›’ŒŠǰȱŒ˜—ŠŒȱ ŠĴ‘Ž ȱ ‘Š—”œȱŠȱ–ŠĴ‘Ž ǯœ‘Š—”œȓ oneamerica.com or 317-285-4070; or Amy Rice at amy.rice@oneamerica. com or 317-285-2099. Or contact me at ‘Žȱ ȱ˜ĜŒŽœȱŠȱřŗŝȬřŞŝȬşřŞŖǰȱŽ–Š’•DZȱ rlasley@indianabankers.org. 

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18 HќќѠіђџȱ юћјђџ Ѣћђȱ2014 23(5$7,216 7(&+12/2*< Financial institution professionals and their cardholders, as well Šœȱ–Ž›Œ‘Š—œȱŠ—ȱ˜‘Ž›ȱꗊ—Œ’Š•ȱ services organizations, are understandably on edge these days. ŽŒŽ—ȱ‘’‘Ȭ™›˜ę•Žȱ™˜’—Ȭ˜ȬœŠ•Žȱ security breaches have revealed a pressing need to reevaluate card security. While the investigations into the breaches will likely sharpen defenses in the future, now is the ’–Žȱ˜ȱ™•Š—ȱ˜›ȱ‘Žȱ—Ž¡ȱŒ¢‹Ž›ȱŠĴŠŒ”ǯ The Threat Landscape Fraudsters have proved to be intelligent, coordinated, strategic Š—ȱœŽŠ•‘¢ǯȱ ‘Žȱ—˜—™›˜ęȱ ›’ŸŠŒ¢ȱ Rights Clearinghouse calculates ‘Šȱ‹žœ’—ŽœœŽœǰȱ’—Œ•ž’—ȱꗊ—Œ’Š•ȱ institutions and retail outlets, have reported 1,571 breaches involving 470 –’••’˜—ȱŒžœ˜–Ž›ȱꗊ—Œ’Š•ȱ›ŽŒ˜›œȱ over the past nine years. ‘ŽœŽȱŠĴŠŒ”œȱŠ›Žȱ—˜ȱ˜™™˜›ž—’œ’ŒDzȱ they are the result of deliberate Žě˜›œȱŠ—ȱ•˜—ȬŽ›–ȱ™•Š——’—ǯȱ Ÿ’Ž—ŒŽȱœžŽœœȱ‘Žȱ‹›ŽŠŒ‘Žœȱ last holiday season probably were launched much earlier in the year, with hackers compromising systems, exploring how much they could do without being detected, then waiting patiently for a convenient moment to exploit their plan. The risk of similar events will continue to challenge the ‹Š—”’—ȱ’—žœ›¢ǰȱŠ—ȱꗊ—Œ’Š•ȱ institutions can expect increased scrutiny of everything, ranging from the standards and practices of technology service providers and their core processors to the type of payment cards issued. Third-party risks were already in the crosshairs of regulators prior ˜ȱ‘Žȱ‹›ŽŠŒ‘Žœǰȱ ’‘ȱ‘Žȱ ĜŒŽȱ˜ȱ the Comptroller of the Currency issuing updated guidance for banks to shore up defenses by improving their vendor management programs. ’”Ž ’œŽȱ‘Žȱ™žœ‘ȱ˜ Š›ȱ‘Žȱ Șȱ standard has been boosted by the breaches. Time for Planning A fraud incident response plan is an essential tool that can provide structure and rational thinking during the stress and anxiety that accompany these types of events. —¢ȱꗊ—Œ’Š•ȱ’—œ’ž’˜—ȱ‘Šȱ˜Žœȱ not have a formalized plan in place should consider developing one as part of its risk management process. During the chaotic and emotional response to recent holiday breaches, it was easy to distinguish between ‘Žȱꗊ—Œ’Š•ȱ’—œ’ž’˜—œȱ‘Šȱ‘ŠȱŠȱ plan in place — and had rehearsed these situations — from those that did not. A plan takes into account the trying conditions that accompany a fraud incident, and ™›˜Ÿ’Žœȱ‘Žȱꗊ—Œ’Š•ȱ’—œ’ž’˜—ȱ with a framework for making critical business decisions. ȱ œœŽ—’Š•ȱŽ•Ž–Ž—œȱ˜ȱŠȱ›Šžȱ incident response plan include: % ›˜ę•Žœȱ˜ȱ›Š—œŠŒ’˜—Ȭ•ŽŸŽ•ȱ activity to aid in the rule strategy development process; % Contact information for all process participants, including internal and external departments, vendors, decision-makers, approvers, etc. Planning Now Can Limit Future Data Breach Losses яќѢѡȱѡѕђȱ Ѣѡѕќџ Eric Lillard is vice president of fraud and operations for PULSE, a Discover Financial Services company headquartered in Houston. He joined the company in 2010 and is accountable for delivering fraud miti- Š’˜—ȱœŽ›Ÿ’ŒŽœȱŠœȱ™Š›ȱ˜ȱ‘Žȱ ȱ Ž‹’ ›˜ŽŒ® ™›˜žŒȱœž’Žǯȱ ›ŽŸ’˜žœ•¢ȱ ’••Š›ȱ ˜›”Žȱ˜›ȱ ŠœŽ›- Š›ȱ ˜›• ’Žȱ˜›ȱŗŗȱ¢ŽŠ›œȱŠ—ȱ˜›ȱ ¢Œ›˜ȱ —ŒǯǰȱŠ—ȱ information security consultancy. He earned a bachelor’s degree from Southern Illinois University and is ™ž›œž’—ȱŠȱ–ŠœŽ›ȂœȱŽ›ŽŽȱ›˜–ȱ ’œœ˜ž›’ȱ ŠŽȱ —’ŸŽ›œ’¢ǯȱ ‘ŽȱŠž‘˜›ȱŒŠ—ȱ ‹Žȱ›ŽŠŒ‘ŽȱŠȱŞřŘȬŘŗŚȬŖŗŘŜǰȱŽ–Š’•DZȱŽ›’Œ•’••Š›ȓ™ž•œŽ—Ž ˜›”ǯŒ˜–ǯȱ ȱ’œȱ an associate member of the Indiana Bankers Association.

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