INSIDE Community State Bank of Southwestern Indiana thrives in Posey County. Story on page 10. Hoosier Banker DECEMBER 2015
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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 indianabankers.org 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. Indiana Bankers Association Officers, Directors & Staff IBA Officers Chairman ...................................................... Larry W. Myers, First Savings Bank, Clarksville FirstVice Chairman ............................... Michael H. Head, First Federal Savings Bank, Evansville SecondVice Chairman ................. Annette M. Russell, Security Federal Savings Bank, Logansport Immediate Past Chairman ............................................ David W. Heeter, MutualBank, Muncie President and Chief Executive Officer ..... S. Joe DeHaven, Indiana Bankers Association, Indianapolis Constituent Directors ICBA State Director ........................................ David M. Geis, Jackson County Bank, Seymour ABA Membership Council ....................... Michael K. Bauer,Your Community Bank, New Albany Future Leadership Division President .......... Lucas White,The Fountain Trust Company, Covington Non-Indiana Headquartered Bank Director ............... Tim Massey, BMO Harris Bank, Indianapolis Northeast Region Directors Michael C. Marhenke, iAB Financial Bank, Fort Wayne Gregory Maxwell, Farmers State Bank, Mentone Michael S. Zahn, First Federal Savings Bank, Huntington Northwest Region Directors Patrick Duffey, State Bank of Burnettsville Arden L. Cramer, Logansport Savings Bank Vacancy Southeast Region Directors George W. Ferriell, Bath State Bank Archie M. Brown Jr., MainSource Financial Group, Greensburg Dennis Wayman, State Bank of Medora Southwest Region Directors Kurt D. Rosenberger, Our Community Bank, Spencer Matthew W. Howrey, North Salem State Bank Clay W. Ewing, German American, Jasper IBA Staff President & Chief Executive Officer ........................................................... S. Joe DeHaven ExecutiveVice President .............................................................. Paul W. Freeman, CAE ExecutiveVice President .................................................................. 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 ................................................................. Marcy Borden 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
TABLE OF CONTENTS VOLUME 99 NO. 12 6925 Parkdale Place Indianapolis IN 46254-4673 Phone: 317-387-9380 Fax: 317-387-9374 Twitter @indianabankers www.indianabankers.org Publisher: S. Joe DeHaven Editor: Laura Wilson Advertising: Rod Lasley Email 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. 5 Hoosier Banker DecemBer 2015 COVER STORY 9 STEVE BENNETT: POSEY COUNTY BANK LEADER FEATURES 6 PRESIDENT’S PONDERINGS S. Joe DeHaven, IBA 8 IBA CALENDAR OF EVENTS 12 THE NEXT NOW: BUILDING A NEW BRAND OF LEADER Dax Denton, IBA 14 WILD,WILD TECH Camden R. Fine, ICBA 16 PROUD TO HAVE SERVED AMERICA’S HOMETOWN BANKERS Frank Keating,ABA DIRECTORS / SENIOR MANAGEMENT 18 M&A TRANSACTIONS:AVOIDING THE ‘REGULATORY PENALTY BOX’ Michael J. Messaglia, Krieg DeVault LLP PSP SHOWCASE 22 PSP UPDATE:YEAR-END SUMMARY Rod Lasley, IBA OPERATIONS / TECHNOLOGY 28 ONLINE ACCOUNTS – PERCEPTIONVS. REALITY Achim Griesel, Haberfeld Associates DEPARTMENTS 11 ASSOCIATE MEMBERS’ CORNER 17 IN MEMORY OF 21 HONORABLE MENTIONS 25 TAKING IT EASY 25 VIDEO BONUS 26 COMPLIANCE CONNECTION Brett J.Ashton, Krieg DeVault LLP 30 BANKING ON COMMUNITY 31 FROM THE BOARD ROOM 32 BANKERS ON THE MOVE 34 ADVERTISERS INDEX Steven A. Bennett is president and chief executive officer of Community State Bank of Southwestern Indiana, Poseyville.
6 Hoosier Banker December 2015 FEATURE President’s Ponderings S. Joe DeHaven, President & Chief Executive Officer, Indiana Bankers Association We all enjoy coming together to celebrate birthdays and anniversaries. Often we lavish gifts on whoever is celebrating a particular occasion. Soon, Hoosiers everywhere will have reason to celebrate a milestone day. It could either be called a birthday or an anniversary but, either way, it will be a day of immense pride. This upcoming event will not require gift giving, though you may want to purchase mementos for yourself or loved ones. As members of the Indiana banking community, we will all be participating in this celebration, which starts this month and continues for an entire year. What is this momentous event? If you have not already guessed, Dec. 11, 2016, will mark 200 years since Indiana was admitted to the United States of America. For the past few years, a governor-appointed Indiana Bicentennial Commission has been planning a variety of ways for Hoosiers to take part in this important occasion. There will be a statewide torch relay through all 92 counties, a commemorative book showcasing the people and landscapes of Indiana, exciting historic re-enactments, multiple galas and celebrations, and the minting of a bicentennial medal. Events officially commence on Dec. 11, 2015, and conclude one year later, on the 200th birthday of our great state. One hundred years ago, a similar celebration marked Indiana’s first century of statehood. Like today, there were numerous ways that Hoosiers celebrated, including the minting of a centennial medal. Back then, in 1816, your Indiana Bankers Association was a fledgling 19-year-old organization, but nevertheless stepped up as presenting sponsor of the medal. In 1966, the state again had cause to celebrate, marking its 150-year anniversary, for which IBAmember banks made sesquicentennial medals available to the public. I was a senior in high school at the time, and I recall old men growing beards to celebrate the occasion. This year, I am proud to report that the IBA has again accepted the honor of serving as presenting sponsor of the bicentennial medal, with unanimous support from your board of directors. The crafting of this medal has been months in the making. Its design resulted from a competition among 50+ artists who submitted more than 100 designs. The winning design was created by Donna Weaver of Vevay, a retired sculptor-engraver of the U.S. Mint and a certified Indiana artisan. The design interweaves past and current imagery on the front side of the medal with a trompe l’oeil “peel back” effect. The upper half of the obverse highlights images of historic Indiana, including a horse and plow and the Corydon Statehouse; the lower portion of the same side shows views of Indiana today, complete with a highgrade tractor, sleek IndyCar and other modern-day sights. Anchored on the reverse side with the Indiana state seal, the bicentennial medal is a stunning keepsake sized in two options ‒ 1¾-inch and 3-inch ‒ with both sizes available in either antique bronze or limited-edition silver. The reason the board so enthusiastically approved serving as the presenting sponsor of the medal is that this sponsorship makes IBA-member banks the exclusive outlets for the official medal order forms. The only other means of placing orders for the medals is online through the state of Indiana website. The IBA will soon be packaging and sending promotional displays and medal order forms to each member bank, in ample quantity for each of your branches, upon the delivery of the printed materials to us. The packaging that we send will include clear instructions and IBA logo window clings, since the logo identifies your bank as a medal order form location. Your participation should be seamless, because your bank will only be making order forms available. There will be no medals on inventory, and no funds to collect. Instead, the state will accept the orders, collect monies and ship the medals, leaving you free to serve the banking needs of your customers. For those banks which would like to do more to promote this effort, the IBA has set up an online supply of materials for your marketing team to download as statement stuffers, posters, customizable print advertisements and other images.* Also, you may choose to purchase medals for display or to provide to employees or customers at your discretion. The board and staff of the Indiana Bankers Association are proud to provide this year-long opportunity for our members to celebrate this auspicious occasion collectively. Congratulations to Indiana for 200 years of statehood! * Online supplies are available through a members-only webpage at: indianabankers.org/bicentennial.
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CALENDAR UPDATE Calendar of events Register online at indianabankers.org/education-events The IBA Center for Professional Development is located at 6925 Parkdale Place, Indianapolis. Phone: 317-387-9380 Twitter: @IndianaBankers Alternative Delivery Channels … Available at your convenience via Webinar, CD-ROM or On-Demand Analyzing Personal Financial Statements andTax Returns Jan. 12 - IBA Center Analyzing Corporate Financial Statements andTax Returns Jan. 13 - IBA Center Measuring Financial Conditions and Performance for Agricultural Business Jan. 14 - IBA Center Calculating Global Cash Flow Analysis the Proper Way Jan. 14 - IBA Center Branch Management Series: Session I, Managing a Successful Branch Jan. 19 - IBA Center Retail Banking Forum Jan. 20 - IBA Center BSA Graduate School Jan. 20-21 - IBA Center Risk Management Officer Forum Jan 21 - IBA Center Community Bankers for Compliance Series - Session I Feb. 8 - Courtyard by Marriott, Fort Wayne Feb. 9 - IBA Center Feb. 10 - IBA Center CRE Appraisals: Reviewing and Interpreting Feb. 11 - IBA Center CRE Cash Flow:Analyzing IncomeProducing or Rental Real Estate Feb. 12 - IBA Center Chief Financial Officer Forum Feb. 16 - Group 1 - IBA Center Feb. 19 - Group 2 - IBA Center Auditing Integrated Disclosures Feb. 17 - IBA Center Senior Lender Forum Feb. 17 - Group 1 - IBA Center Feb. 18 - Group 2 - IBA Center Call Report: Review and Update Feb. 18 - IBA Center IRA Basics Feb. 23 - IBA Center Marketing Directors Forum Feb. 23 - IBA Center Advanced IRA Review and Update Feb. 24 - IBA Center IT and Operations Officer Forum Feb. 25 - Group 1 - IBA Center Feb. 26 - Group 2 - IBA Center Training the Credit Analyst March 2-3 - IBA Center Residential Construction Lending March 8 - IBA Center How to Prepare and File Uniform Commercial Code Financial Statements March 9 - IBA Center Calculating and Maintaining the Allowance for Loan and Lease Losses, Including a Review of the Proposed CECL March 10 - IBA Center Writing Compliant Real Estate Evaluations Internally March 15 - IBA Center Indiana Deposit Account Administration March 15 - IBA Center March 16 - Fort Wayne Hotel Navigating and Understanding the Indiana Code for Compliance Professionals March 17 - IBA Center, Indianapolis Leadership Development Program - Session 1: It’s Simple, But It Isn’t Easy March 22-25 - Wooded Glen Retreat & Conference Center, Henryville TRID Essentials March 29 - IBA Center Trust Forum April 5 - IBA Center Social Media Bootcamp April 12-13 – Location TBD Certified Teller Program April 18-19 – Location TBD Branch Management Series: Session 2- Growing the Retail Bank April 19 – Location TBD Community Reinvestment Act April 19 – Location TBD Flood Insurance April 20 – Location TBD Certified Teller Program April 20-21 – Location TBD Certified Teller Program April 25-26 – Location TBD Lending Essentials April 25-26 – Location TBD Community Bankers for Compliance Series - Session 2 May 9 - Courtyard by Marriott, Fort Wayne May 10 – IBA Center May 11 – IBA Center Leadership Development Program - Session 2: Do SomethingThat Scares You May 11-13 – Wooded Glen Retreat & Conference Center, Henryville Senior Retail Banking Forum May 18 – IBA Center Risk Management Officer Forum May 19 – IBA Center Compliance for Loan Processors May 19 – Location TBD Commercial Lending School June 5-10 – IBA Center Chief Financial Officer Forum June 14 - Group 1 – IBA Center June 17 - Group 2 – IBA Center Senior Lender Forum June 15 - Group 1 – IBA Center June 16 - Group 2 – IBA Center Real Estate Lending Compliance June 15-16 - IBA Center IT & Operations Officer Forum June 23 - Group 1 – IBA Center June 24 - Group 2 – IBA Center Marketing Directors Forum June 28 – IBA Center BSA/AML Compliance School June 28-29 – IBA Center Jan. 12 - Avoiding Compliance Violations in Advertising Jan. 13 - Debt Collection Series:The Essentials of Collection Law Jan. 14 - Cyber Series: Maximizing Cybersecurity Soundness and Minimizing Incidents Jan. 20 - IRA and Health Savings Account Update and Review Jan. 21 - Adjustable-Rate Mortgage Rules Changes Effective April 1, 2016 Jan. 26 - Demystifying Rules for TRID Tolerances Jan. 27 - Completing the CTR, Line-by-Line Jan. 28 - Directors Series: Managing Reports to the Board - Requirements,Timing, Delivery Options, Risks and Concerns Feb. 2 - Denied Loan Requirements: Consumer, Commercial and Real Estate Feb. 3 - Dealing With ACH Tax Refunds: Exceptions, Posting and Liabilities Feb. 4 - HR Series: Managing and Administering Employee Compensation and Benefit Programs Feb. 9 - Medallion and Signature Guarantee Rules and Risks Feb. 11 - New Compliance Officer Boot Camp Feb. 17 - HVCRE Appraisal Review: Issues and Case Studies Feb. 18 - Audit Compliance Series: Overseeing Bank Performance - The Role of Audit Feb. 23 - Determining Cash Flow From Personal Tax Returns Part 1: Schedules A, B, C and D Feb. 25 - Understanding Personal Account Ownership and FDIC Rules March 1 - Telephone Consumer Protection Act:WhatYou Need to Know About the New Requirements March 3 - Required Compliance for Commercial Loans Secured by Real Estate March 8 - Director Series:What Directors Should Know About CECL,ALLL and New Credit Impairment Standards March 9 - Post EMV Card Liability Shift: Managing and Mitigating Card-Not-Present Fraud March 10 - SBA Lending Update: Regulations,Trends and Overview of SBA One March 15 - Emerging Leader Series: Developing Executive Presence Skills - Presentations, Poise and Professionalism March 16 - Determining Cash Flow From Personal Tax Returns Part 2: Schedules E and F March 17 - Flood Insurance Compliance Update and FAQs March 22 - Cyber Series: Outsourcing Tech Services: Regulations, Examiner Expectations and Actions for Vendor Management March 24 - DevelopingYour Same-Day ACH Game Plan March 29 - Debt Collection Series:Your Customer Has Filed Bankruptcy - Now What? March 30 - Hot Topics in Social Media Strategies:Techniques and Trends for Community Banks March 30 - Hot Topics in Social Media Strategies:Techniques & Trends for Community Banks 8 Hoosier Banker December 2015
9 Hoosier Banker December 2015 Continued on page 10. COVER STORY Nestled among fertile cornfields in Posey County is the main office of Community State Bank of Southwestern Indiana, a $75 million bank operating solely in Posey County, located on the banks of the Ohio and Wabash rivers. It also is the workplace of Steven A. Bennett, 60, president and chief executive officer of the bank. Hoosier Banker interviewed Steve Bennett last July, when the fields in Posey County were brimming with full yields. What is the history of Community State Bank of Southwestern Indiana? “It started as an originator for small loans in the town of Cynthiana in 1899, and it operated that way for several years. Then it incorporated as a bank in 1905 and became statechartered in the 1920s. But our history really goes back to 1899. “It was in the 1960s that we started to expand. We started by opening an office in St. Wendel in the late ’60s on the Posey County/ Vanderburgh County line. We opened the office in Poseyville in the late 1980s.” According to your website, Community State Bank employees donated nearly 600 hours to more than 20 community organizations last year. How do you maintain this strong culture of community service? “Our staff is a giving group of people, and are very generous with their time. There are a lot of instances where I’ll go to an event one evening, and two or three of our people are there helping and donating their time ‒ and I didn’t even know they would be there. “That happens a lot, but it’s not just us. You see that commitment from most of the banks in Posey County. “I’m on several local boards ‒ the Posey County Chamber of Commerce and the Southwest Indiana Chamber of Commerce. I’m also active with the boards of the Posey County Economic Development Partnership and the Posey County United Way.” Why is Poseyville called the ‘Pride of Indiana’? “It’s a wonderful agriculturalleaning community. The ground here is excellent for farming. Agriculture is a big industry, but there also are other large businesses here. There’s a big thermoplastics plant called SABIC ‒ formerly GE Plastics ‒ that employs about 1,200 people. The Country Mark refinery in Mount Vernon is a large employer, as is GAF Roofing, which has a facility in Mount Vernon. “We also have Consolidated Grain and Barge, Valero Energy, Bristol Myers and several other industries at or near the Southwind Port of Indiana. Posey County is a riverfront county, with the Wabash River on the west and the Ohio on the south, and Steve Bennett: Posey County Bank Leader Steve Bennett has been with Community State Bank of Southwestern Indiana since 2007.
10 Hoosier Banker December 2015 county planners did a super job of taking advantage of areas outside of the floodplain to develop industrial sites on. “As a result, there is a tremendous industrial base here. It’s a prosperous county, with a low unemployment rate and high average earnings. Posey County does very well.” Personal Background Steve Bennett has always been a banker, apart from college summer stints with the Indiana State Highway Department. He began his career in 1977 with Old National Bank, Evansville, as a management trainee after earning a bachelor’s degree in economics from Hanover College. Bennett worked in several areas of Old National, including branch management, commercial lending, credit card and loan review. He completed an MBA from the University of Evansville in 1982. In 1994 Bennett was serving as vice president and manager of the Old National Boonville office, when he was sent to become president and CEO of Peoples Bank and Trust Company in Mount Vernon, an Old National affiliate. In 1999 Peoples was converted to an Old National branch office, and Bennett was named community bank president based in Mount Vernon ‒ also overseeing Carmi, Illinois, and some Evansville offices. His opportunities with Old National continued to expand, culminating with his position as executive vice president and corporate head of small business lending/ banking for Old National Bancorp. He joined Community State Bank of Southwestern Indiana in 2007, when he came on board as president and CEO. Bennett is married to Tina, a retired Mount Vernon kindergarten teacher who now works parttime at “A Pinch of Sugar,” a specialty bakery in Evansville. Their grown Continued from page 9. William Bender (left), chairman of the board of Community State Bank of Southwestern Indiana and local attorney, chats with Steve Bennett in the main office lobby.The background quilt commemorates the bank’s contributions to Relay for Life fundraisers for the United Way. son, Sam, has followed his father’s footsteps as a banker and is employed as a credit analyst for Old National Bank. Sam lives in Evansville with his wife, Christina, a social worker in a hospice center. What are your duties as president and CEO of Community State Bank of Southwestern Indiana? “Typical of a bank this size, I do a little bit of everything, from pulling weeds in the flowerbed to reviewing large loans. We’re one of the smaller banks in the state, with 22½ full-time equivalent people and five offices. There are seven of us in the main office ‒ and we’re all good at pulling weeds. “As with any bank, there are different groups that we are here to serve. We do everything we can to take care of our customers, and we also work hard to take care of our shareholders, to make sure they get a fair return for their investment. “Part of my responsibility also is to make sure our employees are happy, because we can’t accomplish any of our goals without retaining top people. We have very good employees here.” What influenced you to choose banking as a career? “My father, Alan Bennett, is a lifelong banker. He was a longtime banker with Peoples Trust & Savings Steve Bennett (far left) gathers with main office staff (left to right): Carol Rodgers, Christy Antey, Nancy Jessie and Kerry Cox. Among awards and recognitions in the office of Steve Bennett hangs a framed quote by President Calvin Coolidge:“There is no dignity quite so impressive, nor independence so important, as living within your means.”
11 Hoosier Banker December 2015 Bank in my hometown of Boonville. He retired as a banker in the early 1990s, but stays active with the bank as a member of the board of directors. “When I was in college, I started hearing stories from people about how much my father had helped them. They’d say, ‘Your dad loaned me money for my first car.’ Or it might have been their first home or business. Even friends my own age would tell me, ‘Your dad helped my parents buy their first house.’ “One day my father and I were sitting in a restaurant in Evansville, and a lady came up to our table and said to him, ‘You probably don’t remember me, but you made me the loan that allowed me to go to college.’ I started to realize what a tremendous opportunity banking provides to help people. “Now that I’ve been in banking for nearly 40 years, I still feel that way. Not long ago, on National Public Radio, I heard a segment about the three most satisfying careers. They mentioned a school principal and chef as the first two. The third most satisfying career was being a loan officer, because of its capacity for helping customers. “At Community State Bank, we’re blessed to have employees who enjoy Cornfields surround the main office of Community State Bank of Southwestern Indiana. Despite crop losses throughout much of Indiana, Posey County farmers experienced abundant growth in 2015.“By the Fourth of July, it was over your head,” recounts Steve Bennett. taking good care of our customers. They know them by name when they come into the lobby, ask about their lives and needs. I am proud of the great job our staff does to help customers and our community.” t BKD LLP, Indianapolis has announced new hires and promotions, including: Tomi Yoshitomi, director; Cindy Adams, senior manager; David Raab, senior manager; Nicholas Eichelman, senior manager; Phillip Lay, senior associate; Dessy Tcholakova, senior associate; James Ward, manager; Danny Kindle, senior consultant II; and Walter Renderos, associate. Brett J. Ashton, partner, Krieg DeVault LLP, Indianapolis, has been named chair of the firm’s financial institutions practice group. Before joining the firm, he was assistant general counsel for American International Group. Ashton is active with AFSA, the American Bar Association, Indiana State Bar Association, Indianapolis Bar Association and the Government Affairs Society of Indiana. He acts as compliance consultant of the Indiana Bankers Association and is a graduate of Ball State University and of the Indiana University Robert H. McKinney School of Law. Lori Jean has joined Krieg DeVault LLP, Indianapolis, as partner and member of the financial institutions practice group. She most recently served as senior vice president, assistant general counsel and chief compliance officer with 1st Source Bank. Jean also has served as assistant general counsel for Coachmen Industries Inc., as senior managing counsel for Tellabs Operations Inc. and as a partner with the Baker & McKenzie law firm. She is a member of the Indiana Bar Association, American Bar Association, Association of Corporate Counsel and the Michiana Counsel. Jean is a graduate of Butler University and of the Villanova University School of Law. Terry A. Oznick has joined Krieg DeVault LLP, Indianapolis, as an associate and member of the financial institutions practice group. He has past banking experience, serving as a law clerk with Cambridge Savings Bank and assistant general counsel with Chase Bank. Oznick most recently served as senior counsel and vice president of Citibank, NA. He earned a bachelor’s degree from The Ohio State University and is a graduate of the New England School of Law. t AssociAte MeMbers’ corner
12 Hoosier Banker December 2015 FEATURE The Next Now” was the theme of the Indiana Bankers Association 2015 Future Leadership Division (FLD) annual conference, held Nov. 4-5 at the Renaissance Indianapolis North Hotel, Carmel. More than 65 bankers, sponsors and presenters came together for FLD’s energetic fall gathering. Events opened with a luncheon reception for prospective new FLD members. Guests mixed and mingled among current FLD board members to learn how the division can help to enhance professional development and career growth. Following the reception, the conference officially commenced with an Association overview by Joe DeHaven, IBA president and chief executive officer. Additional staff comments provided observations about the connection between FLD vision and IBA advocacy. The educational portion of the conference began with back-to-back presentations by Randy Harrington, owner of Extreme Arts & Sciences and of Strategic Arts & Sciences and Best Practices Media. With a reputation as “no-nonsense and razor sharp,” Harrington presented on evolutionary traits and forwardthinking strategies of successful organizations, illustrating concepts with an interactive “marshmallow challenge.” Future trends also played into the presentation of Steven Bullitt, assistant special agent with the U.S. Secret Service, who shared important information about the state of cybersecurity. With reallife examples and ample statistics, Bullitt persuasively covered the need to stay ahead of advancing cyber vulnerabilities. The Next Now: Building a New Brand of Leader About the Author 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 first day of the conference concluded with an evening reception, dinner banquet and keynote presentation by Jim Rechel, president of The Rechel Group Inc. Rechel recounted, with a storyteller’s talent, why it is that “overnight” success takes years in the making, and the values young professionals can adhere to throughout their lives and careers. The second day of the conference opened bright and early with breakfast and networking, followed by a visit by Tom Fite of the Indiana Department of Financial Institutions. Fite addressed the current state of banking in Indiana from DFI’s perspective. He was followed by Greyson Tuck of Gerrish McCreary Smith PC, who covered important points to consider in community banking in the future. Rounding out the conference was Donna Van Natten of Accountability Measures Inc., who engaged the audience in the power of body language and leadership. Through humor and role-playing, she left attendees energized, upbeat and confident. As the New Year approaches, the IBA encourages up-and-coming bank professionals to consider the Future Leadership Division as an avenue for valuable networking, volunteer and educational opportunities. For more information about the FLD, please contact Dax Denton at 317-917-8047, email: ddenton@indianabankers.org. t
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14 Hoosier Banker December 2015 FEATURE Mobile, mobile, everywhere, but barely time to think. Welcome to mobile mania. Financial innovation is booming. It’s freewheeling and chaotic. It also continues to transform the operational and competitive contours of our industry. Mobile technology, combined with Internet connectivity, results in a lot of data. Think about it. With email, search engines and mobile geolocation, companies have data on who you are, where you are, what sites you visit, what you have bought and what you are planning to buy. Many of those companies want to offer various bank-like services. Community banking in today’s rapidly digitizing world is rife with powerful rewards, but also with challenges and uncertainties. Fortunately, community banks are patiently and prudently adopting powerful mobile and information technology in wondrous ways. Your institutions have all the technology that any consumer or business could need, or that any other reputable financial company is providing. But we all need to tell that story more. Certainly community banks have valuable, reliable technology partners, and we increasingly have formidable technology competitors, too. So-called FinTech firms are creating new digital platforms for consumers and businesses to easily access new providers of loans, payments, investments and financial data (and even digital currencies). These nonFDIC-insured companies, including marketplace lenders, are enticing consumers to bypass FDIC-insured mainstream banks for new-fangled, sometimes risky or harmful products. Many of these leverage data analytics in highly sophisticated ways. We cannot take them lightly. Within this disruptive environment of financial technology innovation, what should the Independent Community Bankers of America and community banks do to continue delivering the best, most convenient and safest technology for our customers? ICBA sees three key priorities: 1. Promote bank-centric payments. As an industry and as a country, we have to continue advocating the benefits of a bank-centric payments system. Banks are proven, secure intermediaries for moving money. The value of our tested controls, security protocols and protections, including federal deposit insurance, must be understood and supported by consumers and policymakers alike. We cannot allow random disruption or disintermediation from infant technology firms to undermine our longstanding banking and payments systems. 2. Uphold uniform standards for everyone. Consumers need and deserve the same safety and reliability from all financial services providers. Consistent compliance of consumer protections must be enforced for bank and nonbank providers. Federal and state regulatory frameworks for the licensing and regulation of FinTech products and services should be the same as those for the banking industry. 3. Continue innovating. As an industry, we can’t stop innovating — with our trusted partners and within our own institutions. While maximizing our nimbleness, we have to capitalize on our proven, longstanding business model, while also adopting the best tools the digital world provides. This includes modernizing our existing banking and payments infrastructure. In short, we have to be hightech and high-touch. Of course, pursuing these priorities will require navigating the complexities of today’s galloping financial innovation. What’s certain is that digital banking and ongoing technology innovation are here to stay, which is wonderful and daunting at the same time. But we’re up to the challenge. We may have to lean into today’s digital world together, but the opportunities for doing so will remain as rewarding for us and our customers as ever before. t Wild, Wild Tech About the Author Camden R. Fine is president and chief executive officer of the Independent Community Bankers of America. He came to ICBA from Midwest Independent Bank, Jefferson City, Missouri, where he chartered and organized the bankers’ bank and served as president and CEO for nearly 20 years. A long-time member of ICBA prior to becoming the association’s president and CEO, Fine served on several association standing committees and on the ICBA board of directors. The author can be reached at: cam.fine@icba.org.
Mark Wade • Carmel, IN • 317.523.4342 www.BankersBankUSA.com Madison, WI • Des Moines, IA • Indianapolis, IN • Springfield, IL Member FDIC • Equal Housing Lender Always your partner, never your competitor.™ Your goal is our focus. Since 1981, community banks have turned to Bankers’ Bank for innovative products and services to help better serve customers. Over the years, our product diversification has also enabled us to meet your bank’s ever-changing needs. Because we fully believe in and support community banking, your goal is and will continue to be our focus.
16 Hoosier Banker December 2015 FEATURE Well before I began my tenure as president and chief executive officer of the American Bankers Association, I had a sense of the crucial role that banks play in their communities. I knew, because when I was first running for governor of Oklahoma, I logged hundreds of miles visiting towns in every corner of the state. And in each of those towns, the local bank shone like a beacon. It was always the best-maintained, most respectable facility on Main Street. To me, that was a symbol of hope and prosperity, a vote of confidence in the town’s future. After five years at ABA, I can tell you that my early impressions were spot on. Hometown banks – and the good men and women who work for them – are the biggest investors in their communities. They are the reasons for good things happening in cities and towns across the country. It has been an honor to become part of such a noble profession. I leave my post proud of what we have accomplished together, and confident that ABA’s new leader, Rob Nichols, will continue to move our Agenda for America’s Hometown Banks forward. I have known Rob for several years and can vouch for his stellar credentials, policy background and established relationships with policymakers – all of which will serve you and our industry well. The current policy environment – featuring a chaotic session of Congress and intimidation of thoughtful policymakers who dare to consider corrections to the flawed Dodd-Frank Act – often forces us to measure progress in inches, not miles. But every inch or section of a rule that we make more workable for banks and their customers – as we did with several “qualified mortgage” provisions and other rules, such as Basel III and the Volcker Rule – is important. And every chink we put in the armor of our government-subsidized competitors can help us in our long-term efforts to level the playing field. There’s no changing policy affecting banks without first changing the conversation about banks and the vital role they play in our economic ecosystem. That’s something we have Proud to Have Served America’s Hometown Bankers "For an Objective Assessment Assessment of Your Challenges and Professional Execution Execution of Your Opportunities" Michael A. Renninger Renninger Principal (317) 695 (317) 695- (317) 695 7939 (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
17 Hoosier Banker December 2015 About the Author Frank Keating was named president and chief executive officer of the American Bankers Association in 2011. His appointment followed seven years of service as president and CEO of the American Council of Life Insurers and after serving two terms as governor of Oklahoma. Keating’s 30year career in law enforcement and public service included stints as an FBI agent, U.S. attorney and state prosecutor, and Oklahoma House and Senate member. Author of three award-winning children’s biographies, he earned an undergraduate degree from Georgetown University, a law degree from the University of Oklahoma and is the recipient of five honorary degrees. Keating is retiring from ABA, effective Dec. 31. done together. We have, for instance, put a real face on the industry with our America’s Hometown Banker ads, and we’ve made a point to tell policymakers how proposals affect not our banks or bottom lines, but our customers and communities. That’s putting it in language policymakers understand best and care about most. Of course, there is so much that remains on the industry’s to-do list. Dodd-Frank Act provisions, including the dreadful Durbin interchange amendment, have proved difficult to undo. As I write this, ABA is working with the state associations on a noholds-barred effort to persuade the Senate to pass regulatory relief. And we are continuing to press regulators to do what they can to tailor rules, making them appropriate for banks of different business models and risk profiles. One example: We have proposed to regulators – and they seem receptive – that well-capitalized community banks be exempted from complex Basel III capital calculations. The key to our future success is the same as it is today: banker engagement. Not that ABA and the state associations don’t play an important role in advocating for you. But when it’s time to cast a vote – on a rule or a bill – a policymaker is most likely to be persuaded by his or her constituents. That means they must hear from you. Regularly. I also urge you to engage at a broader political level. No doubt the 2016 elections will have a big impact on our industry. You can help shape the outcome of races by offering your time and talents to candidates, and by contributing to organizations like BankPac and the Financial Education and Advocacy Initiative, the 501(c)4 that ABA set up in 2012 to provide another avenue for banker political participation. Your continued engagement and partnership with your trade associations is a difference-maker. Please give them all you’ve got. The banking industry’s future is in your hands As for my future, I will leave ABA on Dec. 31 proud of having served a white-hat industry and grateful for the chance to have worked with the industry’s finest leaders. Thank you for your support, and thank you for all you do for our great nation. t Karen I. Miller, 60, president and chief executive officer of The Farmers Bank, Frankfort, died Nov. 6. She also was a member of the board of directors of the Indiana Bankers Association, serving as a northwest region director. Miller joined The Farmers Bank in 1995 and was named president and CEO in 2006. She previously was employed for 10 years with the former Clinton County Bank & Trust, Frankfort, prior to which she was a staff accountant for nine years with the CPA firm of C.S. Oats Accountancy Corp., Lebanon. Miller served on the boards of directors of the Indiana Chamber of Commerce, the Clinton County Chamber of Commerce and the Clinton County Community Foundation. Additionally she was president of Clinton County Partners in Progress, a member of the Indiana CPA Society financial services committee, and past president of Frankfort Main Street. A member of First Christian Church, Miller was a graduate of Ball State University. Paul E. Shaffer, 89, retired chairman and chief executive officer of Fort Wayne National Bank, died Nov. 8. He was a past president of the Indiana Bankers Association, serving in 1978-79. Shaffer began his career in in MeMory of 1945 with Rockford National Bank, and rejoined the bank in 1952 after service as assistant national bank examiner of the Treasury Department of the Fourth Federal Reserve district. He was named president of the bank in 1968, chairman of the board and CEO of Fort Wayne National Corp. in 1970, and chairman emeritus in 1993; he retired in 1995. Shaffer served on the governing panel of the American Bankers Association and earned the Junior Achievement Gold Leader Award, the first Annual Presidents Award by the Fort Wayne Chamber of Commerce and the Sagamore of the Wabash. He was a member of the IBA Forty Year Club and an Air Force veteran of World War II. t
18 Hoosier Banker December 2015 DIRECTORS / SENIOR MANAGEMENT In merger and acquisition transactions, buyers and sellers should both take care to ensure compliance with regulatory requirements prior to applying for merger approval. Failure to do so may put the acquirer in the position of having to withdraw the application. The regulatory penalty box. The Bank Merger Act1 requires an analysis of the managerial resources and future prospects of the merging entities, compliance with anti-money-laundering laws, and meeting the convenience and needs of the community to be served. Although the law does not explicitly prohibit the approval of a transaction for noncompliance, in practice the regulators typically will not approve a transaction with an outstanding enforcement action or regulatory compliance issue facing the buyer. This has become known as the “regulatory penalty box,” because acquirers are not allowed to participate in merger transactions until these issues have been resolved. Sellers facing noncompliance issues are not necessarily placed into the regulatory penalty box, provided that the buyer is capable of addressing the noncompliance issues without harming the buyer. M&T and Hudson City merger. The approval by the Board of Governors of the Federal Reserve System (Board) of the merger of M&T Bank Corp. (M&T) and Hudson City Bancorp Inc. (Hudson City) M&A Transactions: Avoiding the ‘Regulatory Penalty Box’ About the Author Michael J. Messaglia, a partner with Krieg DeVault LLP, Indianapolis, serves on the firm’s executive committee and formerly chaired the financial institutions practice group. His areas of practice include financial institutions, general corporate matters, joint ventures, mergers and acquisitions, and taxation. Messaglia has been elected to “Indiana Super Lawyers” years 2007-15, was named to the Indianapolis Business Journal “Forty Under Forty” list and was recognized by Chambers USA as a Leader in the Field of Corporate Mergers and Acquisitions. He earned a bachelor’s degree from the University of Notre Dame and a JD from the Notre Dame Law School. The author can be reached at 317-238-6249, email: mmessaglia@ kdlegal.com. Krieg DeVault LLP is a Diamond Associate Member of the Indiana Bankers Association. IS YOUR MERCHANT SERVICE PROGRAM RELEVANT? Jim Fisher • 888.311.7248 ext. 108 • jfisher@apsolutions.net • Are YOU maximizing your Revenue Stream? • Are YOU confidently using your program as an Acquisition & Retention Tool? • We will consult with YOU to tailor a Turn-Key Solution! The Partnership Approval Payment Solutions, Inc has been selected as the “Preferred Service Provider,” for IBA for merchant services/payment processing. APS will collaborate with bank partners to tailor a flexible program that will complement the bank’s goals and business model. APS offers a turn-key solution to bank partners with no liability or underwriting responsibilities while still providing back office support. Most importantly, APS maximizes non-interest revenue stream back to its bank partner and helps solidify existing relationships. Jim Fisher earned his BS in Business Administration from the University of Evansville and his MBA from the University of Southern Indiana. Jim has applied his 14 years’ of experience and in depth knowledge in the financial services industry. He joins Approval Payment Solutions as the Regional Director of Agent Bank Relationships for the Midwest. Jim Fisher, Director of Agent Banks (MW) The time to discuss your current scenario and needs is NOW! 1 12 U.S.C. § 1828(c)
19 Hoosier Banker December 2015 Continued on page 20. highlights the risks of noncompliance with regulatory requirements. This merger approval process was plagued by compliance issues from both M&T and Hudson City following the filing of the application, resulting in an approval process that stretched beyond three years. Further, the Board clarified in its approval order that such applications in the future will not be suspended while regulatory matters are being addressed; instead, the Board expects these applications to be withdrawn. As background, in August 2012, M&T and Hudson City entered into a merger agreement, providing that M&T would acquire Hudson City. The parties expected the transaction to close in the second quarter of 2013. M&T filed an application with the Federal Reserve Bank of New York in October 2012, seeking approval of the merger. Eventually the Board approved the merger on Sept. 30, 2015. BSA/AML enforcement action. During the processing of the application, a regularly scheduled examination of M&T by the Federal Reserve Bank of New York identified weaknesses in M&T’s risk-management program, including its Bank Secrecy Act/anti-money laundering compliance management program. In June 2013, M&T entered into a written enforcement action with the Federal Reserve Bank of New York to address those issues. As a result in 2013, M&T hired 285 additional employees and 151 nonstaff consultants, plus invested $60 million, to address the weaknesses. Deceptive advertising enforcement action. In a separate examination, the Consumer Financial Protection Bureau (CFPB) found that M&T had deceptively advertised free checking accounts. In October 2014, M&T consented to an enforcement action brought by the CFPB, resulting in $10.9 million in refunds to approximately 59,000 customers, and payment of a $200,000 civil money penalty. In addition, examinations by the Federal Reserve Bank of New York identified weaknesses in M&T’s consumer compliance program. Fair lending enforcement action. In March 2014, the CFPB began an examination of Hudson City to determine whether it had engaged in redlining, and in March 2015 the Department of Justice paired with CFPB in a joint investigation. Both organizations determined that Hudson City had discouraged applicants in majority black and Hispanic neighborhoods in three metropolitan statistical areas (MSAs). They alleged that Hudson City had placed bank branches and loan offices outside of these neighborhoods, had excluded these neighborhoods from Hudson City’s Community Reinvestment Act (CRA) assessment areas, and had focused its marketing outside of these neighborhoods. In September 2015, the CFPB announced a consent order, subject to court approval, resolving the actions against Hudson City and requiring more than $27 million in RAISING THE BAR Welcoming the Newest Members of Our Financial Institutions Practice Group Lori Jean, Partner ljean@kdlegal.com toznick@kdlegal.com Former Vice President and Assistant General Counsel at JPMorgan Chase Bank, N.A. PRACTICE FOCUS - Regulatory Advice - Treasury Management - Electronic Banking Terry A. Oznick, Associate Former Senior Vice President, Assistant General Counsel and Chief Compliance Officer at 1st Source Bank PRACTICE FOCUS - Financial Services Law - Banking Compliance - Corporate Representation - Transactional Advice www.kriegdevault.com Growing with Indiana’s Financial Institutions for Over 100 Years © 2015 Krieg DeVault LLP
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