INSIDE Jim Kleinfelter serves banks through Young & Associates Inc. Story on page 10. Hoosier Banker AUGUST 2014
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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, FSB, Clarksville SecondVice Chairman ........................... Michael H. Head, First Federal Savings Bank, Evansville Immediate Past Chairman ..................... James C. Marcuccilli, STAR Financial 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, Community Bank Shares of Indiana, 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 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 ................................................................. Marlene Wells Education Meeting Coordinator ................................................................ Elizabeth Kilty 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. 8 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. ASSOCIATION UPDATE 6 PRESIDENT’S PONDERINGS S. Joe DeHaven, IBA 8 IBA STAFF SELECTIONS Elizabeth Kilty, IBA 9 IBA CALENDAR OF EVENTS COVER STORY 10 JIM KLEINFELTER: LEADINGYOUNG & ASSOCIATES IN SUPPORT OF BANKS DIRECTORS / SENIOR MANAGEMENT 16 INFORMATION SECURITY – KEEPING SECRETS FROM THE BACKYARD TO THE BOARDROOM Johnathan Biggs, Investors Title Insurance Company 20 MID-YEAR THOUGHTS ON INTEREST RATES AND THE BOND MARKET Jeffrey F. Caughron,The Baker Group PSP SHOWCASE 24 HOW TO SURVIVE THE MOST OPPRESSIVE REGULATORY STORM Andy Greenawalt, Continuity Control LENDING / CREDIT 26 REQUIREMENTS OF THE NEW LOAN ORIGINATOR RULE – MISCONCEPTIONS AND PITFALLS Brett J.Ashton, Krieg DeVault LLP DEPARTMENTS 21 TAKING IT EASY 22 COMPLIANCE CONNECTION Larry C.Tomlin, Krieg DeVault LLP 23 HONORS 25 ANNIVERSARY MILESTONES 25 FROM THE BOARD ROOM 25 IN MEMORY OF 34 NEW BRANCHES, BUILDINGS & OPENINGS 36 ASSOCIATE MEMBERS' CORNER 38 BANKING ON COMMUNITY 41 BANKERS ON THE MOVE 46 ADVERTISERS INDEX 5 Hoosier Banker august 2014 Jim Kleinfelter is president and senior consultant of Young & Associates Inc.
6 Hoosier Banker August 2014 In the fall of 1990, I left the bank at which I had worked for over 20 years to accept the opportunity to serve as chief staff officer of the Community Bankers Association of Indiana (CBAI). “Opportunity” may be something of a misstatement, as CBAI had little money, no political power, scant educational programming and, worse, very few members. It was not the smartest career move that a 40-year-old banker could make. However, I thought that I could make a difference, so I accepted the challenge. With so many areas to work on, it was difficult to set priorities. I decided to focus on increasing membership and developing new products-and-services relationships, and it seemed to be a winning formula. Within nine months, membership had increased by 40 percent, and three new endorsements of products and services were added, all of which we still have today. Within 18 months, the organization had toned up into decent financial shape. One surprise to me, though, was our Annual Convention. The first CBAI Annual Convention I experienced as a host occurred about six months after my arrival. Having attended the same event the three previous years as a banker, I felt I knew what to expect. The surprise was the tremendous amount of work that went into hosting it. There were only about 80 people in attendance, with 12 booths in the trade show, eking out $20,000 gross for the event. Over the years, the event grew and, since the 2006 merger between CBAI and the IBA, we now have about 500 people attending, and we gross over $250,000. It is still a lot of work to put on each year, but certainly worth the effort. The Annual Convention is a significant part of IBA offerings for bankers, and the 2014 version is rolling in Sept. 28-30 at the historic French Lick Springs Hotel. This year’s sports-oriented theme is, “What’s Your Game Plan?” The meeting will provide multiple opportunities for social engagement through the annual golf tournament to be held at the Donald Ross Course, various receptions and dinners, and the always-popular hospitality suite. An important part of the event has become the support of the Indiana BANKPAC through the Future Leadership Division’s silent auction and sweepstakes drawing. Along with these opportunities to network are quality speakers delivering information to invite attendees to think about various issues. Among this year’s presenters will be Damian Mason, a talented professional speaker and humorist. Also Dr. Ruby K. Payne, an expert on poverty issues, will help bankers realize the importance of their involvement in combating this critical issue. ASSOCIATION UPDATE President’s Ponderings S. Joe DeHaven, President & Chief Executive Officer, Indiana Bankers Association C M Y CM MY CY CMY K Other topics covered by outstanding speakers will include Best Practices in Banking by Geri Forehand; Generation X, Y, and Z Comparisons by Jeff Rendel; Peer Cities Study to Promote Economic Growth by Eric Doden, president of the Indiana Economic Development Corp.; Taming the Email Beast by Randall Dean; and Opportunities to Grow in a New Payments World by Virginia Heyburn of Strategic Insights at Fiserv. As always, we will be joined by representatives of the American Bankers Association and the Independent Community Bankers of America, bringing updates on the banking scene in Washington, D.C. Yet other speakers will dig a little deeper into additional subjects during breakout sessions. Throughout the Convention, spouses will enjoy opportunities to create jewelry designs, sample wines and learn the basics of gaming, with a power walk thrown in. Historically IBA spouse programming has been excellent, and this year promises to live up to those expectations. One of the highlights of the Convention each year is the exhibit hall. Many of our associate members purchase booth spaces to show attendees their latest wares. Many of our associate members also purchase advertising and sponsor various activities held at the Convention. Without the support of these companies, it would be impossible to hold the Convention at the attractive pricing levels that we do. We appreciate their support, not only at the Convention, but throughout the year at a variety of events. Service providers are an important part of the IBA family. The last night of the convention we host the chairman’s banquet, this year to be followed by the popular Endless Summer Band. Per tradition, we will draw for the winners of both the Indiana BANKPAC sweepstakes trip to the French Riviera and the door prize, an emerald-cut aquamarine and diamond bracelet in 14kt white gold. A couple of winning bankers will be very happy! By attending this year’s Convention, you will score a touchdown, swish a three pointer or hit a grand slam, depending on your favorite game. We hope to see you there! View Indiana bankers announce their plans to attend the IBA Annual Washington Trip, scheduled for Sept. 7-9. To view, click on the red arrow in Hoosier Banker Digital at www.indianabankers.org. Video Bonus
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.
8 Hoosier Banker August 2014 Hello, IBA members! I am proud to be serving you as your newest IBA team member. I joined last month as an education meeting coordinator. My responsibility is to work closely with Laurie Rees, our vice presidenteducation & training, and with Marlene Wells, our other education meeting coordinator, to make your IBA learning experience the best possible. My duties include doing anything from helping to market educational offerings, to assembling training manuals for seminars, to providing totally outstanding customer service to our bankers. Already within my first few weeks here, I have been learning a lot. One trait I hope to absorb is the incredible amount of passion here – in staff members, in the speakers who present and in the bankers we serve. Many IBA employees and bankers have been in their professions a long time … some over 25 years! I believe that longevity says a lot about the IBA and the Indiana banking community. Before joining IBA, I gained some experience as a marketing manager of L.J. Stone Co. Inc., a remodeling company. One of my jobs was to create mailers to distribute to customers, and I quickly learned to prepare for the large response from these mailers. As a small company with a big reputation (like the IBA), our phones would ring off the hook the day following a mailing. This experience has been helpful to me in learning my responsibilities at IBA. The main difference is that now I am marketing to bankers about how IBA offerings can help sharpen their skills, instead of reaching out to consumers about home remodeling projects. To market effectively is a challenge, and I love that. To me, marketing is a game – like sports – focused on how to appeal to a target audience. There’s a competitive edge to marketing that I thrive on, just as with sports. In fact, my whole life I have always had a tremendous love for sports, whether playing or just watching. Happily, I have found a way to combine the competitive thrill of sports with the excitement of marketing by pursuing a bachelor’s degree in sports administration/marketing. Currently I am completing my degree online through Ball State University, which works well for me. I am detailoriented and pretty good at time management. I like to prepare in advance because, if something is not going to be done on time, I will go to sleep thinking about it. It is a full schedule to be working full-time while completing a degree, but I have always been a busy person. When I was a student at Blackford High School in Hartford City, I was a three-sport athlete, active in multiple clubs and maintained a top 10 academic position in my class. I had little time to breathe. I loved it, and my activities gave me a chance to learn. I was immersed in student government, Spanish, art, science, history and business, all while competing athletically year-round. I also served in several leadership positions, participated in educational trips and helped with service projects, such as delivering Christmas gifts and food to the needy. These days, I continue with sports, playing slow pitch softball on Friday evenings and learning tennis on weekends. I also keep busy with my parents, siblings and six nieces and nephews. Some family members live in Florida, but most are nearby in Hartford City. A major part of my life is my boyfriend Drew, a wonderful person all-around. He’s a distribution manager with Pop Weaver Popcorn, working in the fundraising side, which supplies the Boy Scouts with its fundraising popcorn. Drew is kind and completely honest – he couldn’t tell a lie even while playing a mere game of Monopoly. We share the same passion for sports and business – he’s the one teaching me to play tennis! We do not agree on everything, though, as his choice of music couldn’t be more opposite from me. (His George Strait songs put me to sleep.) One of Drew’s many strengths is patience. Not only is he teaching me tennis, but he also is introducing me to golf. So far I’m not the best at it; I swing at the golf ball with a softball swing. Usually, instead of playing, I simply walk with Drew while he plays. Even if it’s hot out, there’s almost always a cool breeze. We do that almost every Sunday. All of our lives, Drew and I lived within 20 minutes of each other, but it wasn’t until college that we met. I often say he’s the “best” person I know, and I’m lucky to have met him. I’m also lucky to be part of the IBA. I enjoy challenges, and I’m happiest when I’m around people. Plus, at this point in my life, I had wanted to find a situation where I could immerse myself completely and love what I do. I have found that here on the IBA team. Staff Selections Elizabeth Kilty, Education Meeting Coordinator, Indiana Bankers Association ASSOCIATION UPDATE
CALENDAR UPDATE 9 Hoosier Banker August 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 IBA Annual Washington Trip Sept. 7-9 - Washington, DC Trust Officer/Financial Adviser Forum Sept. 9 - IBA Center Senior Retail Banking Forum Sept. 10 - IBA Center Risk Management Officer Forum Sept. 11 - IBA Center State of Indiana Safe Deposit Operations 2014 Guidelines and Update Sept. 11 - IBA Center Annual Security Management Seminar Sept. 16 - IBA Center Advanced Agricultural Lenders: Strategic Marketing and Planning Conference Sept. 17-18 - Best Western Executive Plaza, Lafayette Mortgage Lending School Sept. 17-19 - IBA Center BSA/AML Compliance Management Sept. 22 - Fort Wayne Hotel Sept. 23 - IBA Center IRS Compliance for Financial Institutions Sept. 23 - IBA Center Indiana Deposit Account Administration Sept. 24 - IBA Center Sept. 25 - Best Western Plus, New Albany Advanced Credit Analyst Sept. 25-26 - IBA Center IBA Annual Convention Sept. 28-30 - French Lick Springs Resort Small Business Banker Development Program Session 1 - The Fundamentals of Small Business Oct. 1 - IBA Center Small Business Banker Development Program Session 2 - Underwriting Small Business Loans Oct. 2 - IBA Center ACH Compliance and Processing Oct. 2 - IBA Center Community Bankers for Compliance School Lending Module Oct. 6-9 - IBA Center 2014 FDIC Banker College Oct. 9 - Hilton Indianapolis North Hotel HMDA - Update and Review Oct. 10 - IBA Center CFO Forum Group 1 - Oct. 14 - IBA Center Group 2 - Oct. 17 - IBA Center Lenders Comprehensive Guide to Mortgage Lending Oct. 14-15 - IBA Center Senior Lenders Forum Group 1 - Oct. 15 - IBA Center Group 2 - Oct. 16 - IBA Center Small Business Banker Development Program Session 3 - Getting in Front of Your Prospect Oct. 16 - IBA Center IRA Basics Oct. 21 - IBA Center Advanced IRAs Oct. 22 - IBA Center Consumer Loan Documentation Oct. 22 - IBA Center 2014 IBA Leadership Development Program Session 4 - Who Dares Wins Oct. 22-24 - Wooded Glenn Executive Retreat & Conference Center, Henryville Commercial Loan Documentation Oct. 23 - IBA Center Lending to Municipalities Oct. 24 - IBA Center Internal Audit and Risk Management School Oct. 27-28 - IBA Center Audit Committee Responsibilities Oct. 29 - IBA Center Small Business Banker Development Program Session 4 - Sales: Making the Call Oct. 29 - IBA Center Future Leadership Division Conference - Bridging Bankers, Building Leaders Oct. 29-30 - Sheraton Indianapolis Hotel Annual Regulatory Training for the Frontline Nov. 3 - Huntingburg Event Center Nov. 4 - Best Western Plus, New Albany Nov. 5 - Chapman’s Restaurant, Bloomington Nov. 6 - Sherman House, Batesville Nov. 17 - Best Western, Lafayette Nov. 18 - Fort Wayne Hotel Branch Management Series: Session 4 - Raising the Bar for Sustainable Growth Nov. 4 - IBA Center 2014 Community Bankers for Compliance School - Operations Module Nov. 5-6 - IBA Center IT and Operations Officer Forum Group 1 - Nov. 6 - IBA Center Group 2 - Nov. 7 - IBA Center Human Resource Directors Forum Nov. 12 - IBA Center Fundamentals of Commercial Lending Nov. 13-14 - IBA Center Community Bankers for Compliance Series - Session 4 Nov. 17 - Courtyard by Marriott Fort Wayne Nov. 18 - IBA Center Nov. 19 - IBA Center IT Security and Risk Management Conference Nov. 19-20 - Hilton Indianapolis North Hotel Sept. 3 - Clarifying Signature Card Confusion - Personal and Business Accounts: Compliance,Account Titling and Ownership Sept. 3 - Bitcoin for Bankers Sept. 8 - The Art and Science of Asking Questions Sept. 8 - Managing Maturing HELOCs: New Interagency Guidance, Special Regulation Z Requirements and Compliance Sept. 9 - Appraisal Review for Residential Mortgage Decisions Sept. 9 - Detecting and Preventing a Corporate Account Takeover Sept. 9 - Opening New Accounts for LLCs Sept. 10 - Customer Complaints and the CFPB Sept. 10 - Opening Donation, Memorial and Other Accounts for Nonprofit Organizations Sept. 11 - Countdown to Basel III: Deadline for Community Bank Compliance: January 2015 Sept. 11 - Power of Attorney and Living Trust Documents Sept. 11 - Marketing and Advertising Compliance - The First UDAAP Hotspot Sept. 16 - Emerging Leaders Education:Writing Effective Credit Memos and Loan Narratives Sept. 16 - Do’s and Don’ts of Indiana Minor Accounts Sept. 17 - Auditing Social Media: Planning and Risk-Control Matrices Sept. 17 - Morale and Motivation for Supervisors: Keeping Team Members Enthusiastic About Their Jobs Sept. 18 - Electronic Business Records: Seven-Step Strategy for Effective and Compliant Record Management Sept. 23 - Director Series:The Role of the Board in the Examination Process Sept. 23 - Commercial Construction Lending Sept. 23 - First Impressions: New Customer Onboarding Strategies Sept. 24 - Understanding Title Insurance Policies and Endorsements Sept. 25 - Legal Liabilities When Check Fraud Occurs Sept. 25 - AreYou ProtectingYour SBA Guaranty? Sept. 30 - Commercial Loan Grading: Methodology, Credit Risk and Examiner Perspective Oct. 2 - Opening Trust Accounts: Documenting Authority and Liability Oct. 6 - Build a No-Excuses Sales Environment Oct. 7 - Compliance and Legal Issues in Employee Screening: Pre-Hire and Post-Hire Oct. 7 - Analyzing Tax Returns for Mortgage Decisions Oct. 8 - Risk Management Series: Defining Risk Management Officer Expectations and Responsibilities Oct. 9 - The Eight Keys to Teller Excellence Oct. 9 -Your Depositor Has Died: Now What? Oct. 14 - EverythingYou Need to Know About Regulation CC Oct. 15 - ReportingYour Credit Data, E-OSCAR, METRO2 and FACTA and CFPB Compliance Oct. 15 - Recent Accounting Developments and Future Issues Oct. 16 - Managing the Force-Placed Flood Insurance Process Oct. 21 - Ratio Analysis to Determine Financial Strength Oct. 22 - How to Reduce IT Risk Assessment Time by 70 Percent and Still Satisfy Examiners and Your Board Oct. 23 - Successful Collections: Scripting to Collect in Full
10 Hoosier Banker August 2014 COVER STORY Jim Kleinfelter enjoys meeting with members of the Indiana banking community. The prerequisite for consulting in any field is to have personal experience in that field. Jim Kleinfelter, 59, of bank consulting company Young & Associates Inc., has ample banking background to support his position as president and senior consultant. Before joining Young & Associates, Kleinfelter served for 27 years as a community bank executive and senior lender. His past work experience includes the former Society National Bank of Northwest Ohio, Bank One Wooster and, most recently, 17 years with The Savings Bank and Trust (formerly The Orrville Savings Bank). Kleinfelter also is an educator, having served as an instructor for the American Institute of Banking and for several state bankers associations, including the Indiana Bankers Association. Community outreach includes board service with Central American Medical Outreach, Orrville Rotary and various youth and church activities. He is a graduate of Bowling Green State University and of multiple banking schools. Young & Associates, based in Kent, Ohio, and Phoenix, was founded in 1978 by Gary J. Young, who now serves the company as chief executive officer and senior consultant. Originally named Young Marketing Services, the organization has branched beyond it initial focus into a consulting company that covers numerous areas of banking. Young & Associates Inc. is an IBA associate member. Hoosier Banker recently interviewed Jim Kleinfelter about his role in the banking community. What services does Young & Associates Inc. provide to the banking community? “We fill service niches in a variety of consulting areas for community banks all over the United States. We do for banks what they either don’t have the expertise or the independence to do themselves. “Our sweet spot is the Midwest, in part because we started in Ohio – but Indiana seems like home – and also because there are more community banks in Indiana, Ohio and Illinois than in most states. The community banks we work with range from $20 million to $2+ billion in asset size. “Our consulting services include regulatory compliance, both for deposit operations and lending compliance. We provide a great deal of safety and soundness services for the lending area, such as loan review, ALLL* analysis, stress testing and appraisal reviews. We also do management consulting in the areas of strategic planning, management studies and branch feasibility studies, and we provide some other consulting services. “Several years ago, we created an internal audit division to perform traditional internal auditing and risk-control risk assessments. Plus we offer loan servicing for small numbers of loans that the bank holding company might own, or servicing of land contracts because of the changes in the regulations as a result of the Dodd-Frank Act. “We also do some human resources and marketing consulting. For a community bank, it may not be worth it to service these areas themselves, because it’s a lot of work with relatively small return. “Finally, we are very big in education. Through the Indiana Bankers Association, we present Jim Kleinfelter: Leading Young & Associates in Support of Banks Continued on page 12. * Allowance for loan and lease loss
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12 Hoosier Banker August 2014 Continued from page 10. seminars and webinars on the topics that we cover, and act as core provider of IBA’s Community Bankers for Compliance. We also provide education for about a dozen other state trade associations. “As a byproduct of our education and consulting, through our product division we sell policies, policy templates, toolkits and simple models for doing some analysis. We can help banks customize those tools, if they so desire.” Your website states, “Banking has witnessed an enormous amount of change over the years, and we have embraced that change.” How has Young & Associates embraced change? “When Gary Young started this company in 1978, the focus was on human resources and marketing consulting. We still perform those services, but where marketing was originally the largest share of our business, it’s now a minor part. “To respond to industry demands, we have added areas including regulatory compliance, management, lending and loan review services, education and products. We needed to change in order to meet the needs of our clients. It’s our job to understand change. “Our consultants are continually picking up additional skills to become experts in new fields. If we don’t feel we can garner all needed expertise in-house, we will partner with other firms to complement our offerings.” What accounts for Young & Associates’ staying power? “It goes back to the philosophy of our founder, Gary Young: We do what we said we were going to do, for the price we said we were going to do it, and within the timeframe that we said we were going to do it. “Along with that philosophy is the belief that, if you hire the right people, you will attract and retain business. We seek people who not only are talented, but who also have the client relation skills that are needed in a long-term consulting arrangement. If you hire the right people, they can carry out the mission of Young & Associates.” What is your role with the company? “As president of the company, I’m basically the chief operating officer. I spend about half my time working with the other managers of the company to make it possible for them to do their jobs. The other half of my time, I work with clients in strategic planning, management studies and some additional areas. “I still spend a good bit of my time out with our loan review teams. Sometimes I’m the reviewer in charge, and sometimes I’m a worker bee. It gives me a chance to get into banks and continue to understand their challenges firsthand.” How did your career develop? “I graduated from Bowling Green State University in Ohio in 1977 with a degree in marketing. I graduated on a Saturday, and that Monday Consultants to the Financial Industry Young & Associates, Inc. Liquidity Planning Strategic Planning Regulatory Assistance Stock Valuations Capital Markets Expansion & De Novo Bank Charters Internal Audit Information Technology Recruitment & Human Resources Lending & Loan Review Compliance Policy Development Serving Community Banks Since 1978
13 Hoosier Banker August 2014 a band-aid. The corporate office is in Orville, Ohio, but most of the resources are now functioning in Honduras on a daily basis. “Maybe it’s a little selfish, but I do community service because it feels good and it’s the right thing to do. For me, it comes from the way I was raised by my parents, who were very giving people.” I started my career with Tri-County National Bank — an affiliate of the Society Banc Corporation, which later became part of the KeyBank system. “My goal was to work at the bank for one year, then go work for the world’s largest brewer, AnheuserBusch in St. Louis. But it turned out that I really liked banking. “Banking wasn’t at all what I expected. There was much more variety, and the people were smart and well-rounded – not staid and formal. Then, of course, I got to meet the customers, and I enjoyed that aspect so much. “I began in the loan collection area, then moved up through retail, consumer lending and the branch system. Eventually I had an opportunity to go to a Bank One affiliate in another part of Ohio to specialize in the commercial lending area. “I spent four years as a commercial loan specialist, and it balanced me out in terms of management and overall lending. Then the opportunity came to serve as a senior lender at a community bank in the same market, where I spent 17 years. “It was during that time that I got to know Gary Young, because Young & Associates was the bank’s prime consulting firm. I liked Gary from day one. I always looked forward to his visits, and we got a lot of decisions made with Gary’s facilitation. “Finally the bank sold to a larger bank. I was going to have a position with comparable pay, but totally different responsibilities. That’s when Gary gave me the chance to come run Young & Associates. “It was such a great opportunity that Gary gave me. He had a great idea in establishing this company, and then he welcomed me to come in and exploit opportunities for growth and expansion. He was very supportive, along with other key people – Ivan Garrabrant, Sally Scudiere and Wayne Linder. I couldn’t have done it without Gary and his long-time company pillars.” What do you enjoy most about your career? “This position gives me a balance between being structured and entrepreneurial, which satisfies the entrepreneurial spirit in me. Plus it’s never the same day twice here, just like in banking. “Mostly I enjoy the people I’ve met and the things I’ve learned. It all comes down to treating people right, and my banking background helps. “I can relate to our clients, because I’ve spent a lot of time as the point person in examinations, with bank directors. I think that I understand how to balance regulatory expectations with the practical expectations of customers and shareholders. “I’ve learned that not all regulators are bad. There are a lot of good regulators out there, and their intention is to help the bank run better. If I can help to balance out the banker/regulator relationship, it’s rewarding.” What is your community service philosophy? “My current main involvement is an organization called CAMO, which stands for Central American Medical Outreach. It’s a great organization founded by a passionate, talented lady named Kathy Tschiegg. “CAMO concentrates on Honduras, where Kathy had been a Peace Corps volunteer in the ’70s. She has established a beachhead there with medical clinics, recreational facility, counseling and a women’s shelter. “The key is that it’s sustainable work, not A frequent sponsor of IBA events,Young & Associates Inc. was active at the 2014 IBA Mega Conference. Jim Kleinfelter (left) credits Gary J.Young, founder of Young & Associates Inc., as having “a tremendous amount of focus, energy and great ideas.” Continued on page 14.
14 Hoosier Banker August 2014 Amplify is a public relations and grassroots effort developed by the American Bankers Association with help from banking professionals. Available to all bankers — both ABA members and nonmembers — it offers tools to help rebuild the image of banking. For more information, visit www. amplifybankers. com. t farmer. My parents raised five children – I have three brothers and a sister, and they’re all good people. “I also have the good fortune to be married to Elizabeth, who goes by Betty. She works for the Cleveland Clinic and has been a registered nurse for more than 35 years. She’s a great lady with a good sense of humor. “Largely through Betty’s efforts, we have three wonderful adult children – Jessica, Jennifer and Andrew. They’re all out of college now and selfsufficient. I feel lucky. “I also am lucky to have been influenced by my father, who encouraged reading and exploration. I have a natural sense of curiosity, and he nurtured it. “I admire Thomas Edison, who tried 2,300 options before he got the Please tell a bit about your family. “Both of my parents grew up in the Depression and, like others in their generation, they were hardworking and resourceful. My dad would take excess produce from our garden and drop it off at the homes of less-fortunate families. “Somehow he found time to do that, even though he worked both as a millwright full-time and as a Continued from page 13. Jim and Betty Kleinfelter have been married for 31 years. first incandescent light bulb to work well. That’s my dad. He would try, and then try again. “The attitude he instilled in me is, just try it. If it doesn’t work, try something else. “I’ve been fortunate all the way around.” t AmplifyYour Efforts CAPTIVE INSURANCE FEASIBILITY AND MANAGEMENT DELAWARE AND NEVADA INVESTMENT SUBSIDIARIES AND HOLDING COMPANIES CUSTODY PORTFOLIO ACCOUNTING INVESTMENT MANAGEMENT Mindy Walser mwalser@wilmingtontrust.com 702.866.2203 Mary Alice Avery mavery@wilmingtontrust.com 302.636.6127 ©2013 Wilmington Trust Corporation. Affiliates in Arizona, California, Connecticut, Delaware, Maryland, Michigan, Minnesota, Nevada, New Jersey, New York, Pennsylvania, South Carolina, Texas, Vermont, Cayman Islands, Channel Islands, Dublin, Frankfurt, London, and Luxembourg. All rights reserved. The business world is an increasingly volatile place. Managing through change demands the expertise that Wilmington Trust clients have come to expect. We bring a world of experience to the table. We’ve been there, we’re ready, and we’re capable of things you haven’t even imagined yet. Entity Management Experience Lives Here GET IN TOUCH WITH EXPERIENCE TODAY BY CALLING 866.829.1928 OR EMAIL: EXPERIENCE@WILMINGTONTRUST.COM. Richard Klumpp rklumpp@wilmingtontrust.com 302.651.8356
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16 Hoosier Banker August 2014 DIRECTORS / SENIOR MANAGEMENT We all learned how to keep a secret in the backyard as a small child – “Do not tell anyone.” If you intentionally or unintentionally divulged another’s secret, then you were subject to their wrath. The lessons we learned growing up become more complicated, as we have to communicate with others for legitimate reasons, and such communications have to be kept secret. We call it keeping information in confidence; therefore, we develop procedures and policies to keep information confidential. Today, we must not only know how to keep information confidential, but we have to demonstrate that we have procedures in place to ensure confidentiality. What Is Non-Public Personal Information? Secrets can be in many forms, but knowledge of a person’s financial secrets, which can be used against them, provides the holder of such information a great deal of power. Congress recognized the need to outline standards for protecting financial information and, in 1999, passed the Gramm-Leach-Bliley Act (GLB). GLB required certain protections for non-public personal information (NPI) in the hands of certain companies. In order to protect NPI, it is essential to understand what it is and where it is. Non-public personal information: personally identifiable data such as information provided by a customer on a form or application, information about a customer’s transactions, or any other information about a customer which is otherwise unavailable to the general public. NPI includes first name or first initial and last name, coupled with any of the following: Social Security number, driver’s license number, state-issued identification number, credit card number, debit card number or other financial account numbers. This definition of NPI is rather broad in that two or more pieces of publically available information can be collected with the intention of influencing a consumer credit decision and be considered NPI. If you have an individual’s name or address, that does not amount to NPI. Add the fact that that individual is involved in a real estate transaction, and it becomes NPI. Most information handled in a real estate transaction will rise to the standard when viewed collectively. About the Author Jonathan Biggs is vice president for risk management at Investors Title Insurance Company and a member of the ALTA Best Practice Task Force. He joined the company in 2012, prior to which he served for more than 20 years for a law firm in Durham, North Carolina. Biggs is a past president of the Durham Bar Association’s Young Lawyers Division and of the Durham Junior Chamber of Commerce. He has been recognized with The Distinguished Service Award by the Durham Jaycees Inc. and, in 1999, was named one of the Five Outstanding Young North Carolinians by the North Carolina Junior Chamber of Commerce. Biggs is a graduate of Duke University and of the Wake Forest University School of Law. The author can be reached at 800-326-4842, email: jbiggs @invtitle.com. Investors Title Insurance Company is an associate member of the Indiana Bankers Association and an IBA Preferred Service Provider. Information Security – Keeping Secrets From the Backyard to the Boardroom The American Land Title Association (ALTA), a title insurance and settlement company, gives guidance to help ensure the protection of consumers during real estate transactions. ALTA offers seven standards — known as ALTA Best Practices — by which each bank should measure its service providers. During the next few months, Hoosier Banker will be featuring a series of articles by Investors Title Insurance Company outlining the seven best practices. The June issue covered ALTA Best Practice No. 1 — Licensing; July covered ALTA Best Practice No. 2 — Escrow Accounts: Follow the Money.
17 Hoosier Banker August 2014 Continued on page 18. What Is GLB? The Gramm-Leach-Bliley Act was first enacted for the financial sector. Financial institutions that collected NPI from consumers were required to comply. GLB goes on to include restrictions on businesses that receive NPI from covered financial institutions. If your organization fell into this category, your activities would be limited to the collection, use, storage and disposal of NPI. The requirements of GLB basically extend to all parties that are providing “financial services.” Section 4(k) (6) of the Bank Holding Company Act extended these privacy rules to all financial activities, specifically including “providing real estate settlement services.” ALTA Best Practice No. 3: Adopt and maintain a written privacy and information security program to protect Nonpublic Personal Information as required by local, state and federal law. The stated purpose of ALTA Best Practice No. 3 is as follows: “Federal and state laws (including the Gramm-Leach-Bliley Act) require title companies to develop a written information security program that describes the procedures they employ to protect Nonpublic Personal Information. The program must be appropriate to the Company’s size and complexity, the nature and scope of the Company’s activities, and the sensitivity of the customer information the Company handles. A Company evaluates and adjusts its program in light of relevant circumstances, including changes in the Company’s business or operations, or the results of security testing and monitoring.” There are three basic steps required to comply with and fulfill the purpose of ALTA Best Practice No. 3: 1. Have a written information security program; 2. Include in your written information security program all of the necessary elements; and 3. Adhere to your written information security program. What Should Be in the Written Information Security Program? a. Risk assessment. In order to tailor any information security program to a specific office, a candid and critical assessment of the risks facing that particular office should be performed. These risks could include any or all of the following: • Who has access to NPI? • How is NPI transmitted? • How and where is NPI stored? • How is NPI used in the workplace? • How vulnerable is NPI to loss due to data corruption or natural disaster? • How is NPI decommissioned, destroyed or discarded? • How is NPI vulnerable to internal and external threats? • How many third parties (e.g. IT professionals) have access to NPI? The most important step is to take the time to complete a candid risk assessment. Remember, the risk assessment is for internal use. Once it is completed, then the findings should be appropriately prioritized. b. Privacy officer. For any process or procedure in an office, someone has to take ownership of it if it is going to see a successful completion. In a small office, this duty could be another title for the principal of the company. In a larger office, this responsibility may find that a committee is needed to effectively implement and monitor an information security program. c. Authorized personnel only. Access to NPI should be granted to authorized employees who have the requisite training to be allowed to handle NPI. Regardless of who you permit to access NPI in your care, you should perform adequate employee training which conveys the importance of NPI, ensures the protection of NPI from internal and external threats, and requires the trainee to acknowledge receipt and comprehension of the information security plan. Additionally before you allow any employee access to your office and NPI, you should perform a criminal background check. Subsequent checks every three years (going back five years) are also part of this process. 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 • Full-Service Printing • Document Imaging • On-Demand Printing • On-Line Ordering Systems • Micr-Encoded Documents • Forms Management Call us for your FREE forms cost analysis! Adam McCoskey Vice President - Sales Southern Indiana 812-989-9236 arm@voluforms.com Tom Staley Vice President - Sales Central / Southern Indiana 812-258-2722 tjs@voluforms.com Susan Voyles Garr Vice President - Sales Southern Indiana 812-987-6008 svg@voluforms.com Jim Hutchinson Vice President - Sales Southern Indiana 812-258-2723 jfh@voluforms.com Scan QR code to visit www.voluforms.com
18 Hoosier Banker August 2014 DIRECTORS / SENIOR MANAGEMENT it is the truly “old school” security protections that may be the hardest change in our everyday work environment. Changing old habits is invariably harder to accomplish than learning new concepts. Physical security begins with securing the building in which NPI is stored. Old-school precautions such as a lock and burglar alarm are a good starting point. Most people already employ these trusted precautions. The next step is implementing a “clean desk policy.” Simply put, a clean desk policy is securing documents containing NPI such as open files, closed files, bank statements, applications, unrecorded loan documents, mail and basically any printed material concerning a transaction whether it is located on the desk, in the file, on the printer or even in the trash can. One point about “physical” security that may often get confused with “digital” security is the physical custody of computer equipment. It is of utmost importance to make sure that your server, backup data, laptops, smartphones and all other forms of portable media containing NPI are secure. Keeping information secure on the device is digital security. If someone loses their laptop, no matter how password-protected or encrypted the data may be, a cyber-criminal – given enough time – will be able to get to the NPI. e. Digital and electronic security, a.k.a. network security. As mentioned previously, digital security refers to keeping the NPI safe on the digital or electronic device. The first and easiest protection is to password protect data on all digital devices. Every password should be “complex.” The acceptable standard for complex passwords is that they are at least eight characters long, contain upper- and lower-case letters, at least one numeral, and are changed at least every 90 days. Additional efforts to digitally protect NPI include having an upto-date virus protection program that updates at least every day. The network should be located behind a digital firewall that protects the network from outside threats. Digital storage and transmission of NPI should be encrypted. This includes email. All email should be a hosted or internal solution that is domain specific. The use of free email accounts (such as Gmail, AOL, Yahoo or Hotmail) may not provide the security Finally, when employees leave your employ, their access to the office and the computer should be terminated immediately. In the old days, we would simply ask for the key to be returned. Today, we need to collect that key, but also terminate the employee’s passwords and change the alarm code. d. Physical security. While we may think that the entire cyber world is harder to understand and conquer, Michael A. Renninger Principal (317) 695‐7939 mrenninger@renningerllc.com Securities offered through Ausdal Financial Partners, Inc., 5187 Utica Ridge Road Davenport, IA, 52807 (563)326‐2064 Member: FINRA, SIPC. Renninger & Associates, LLC and Ausdal Financial Partners, Inc. are independently owned and operated. www.renningerllc.com "For an ObjecƟve Assessment of Your Challenges and Professional ExecuƟon of Your OpportuniƟes" Buy‐Side and Sell‐side Representa�on involving whole banks, branches, and non‐bank affiliates Stock Liquidity, Capital Development, and Strategic Planning Stock Valua�ons and Fairness Opinions CPA‐trained and CFO‐experienced Indiana professionals serving Indiana banks. Our services include: Continued from page 17.
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