PLUS! FLD Day at the Statehouse MAY / JUNE 2022 Fintech The New Frontier
Baker’s Software Solutions Service Package Includes: Asset/Liability Analysis – Interest Rate Risk Monitor (IRRM®) Your management team will find that The Baker Group’s quarterly review of the loan and deposit information outlined in the Interest Rate Risk Monitor and Asset Liability Analysis is an effective tool in managing your risk and performance. Bond Accounting – Baker Bond Accounting® (BBA) The Baker Group will provide you with accurate, easy-toread reports delivered electronically to you each month. Investment Analysis – Advanced Portfolio Monitor (APM®) The Advanced Portfolio Monitor is a key monthly report that we utilize to help you measure, monitor, and manage the overall risk and performance of your investments. Member: FINRA and SIPC www.GoBaker.com | 800.937.2257 Oklahoma City, OK | Austin, TX | Dallas, TX | Houston, TX Indianapolis, IN | Long Island, NY | Salt Lake City, UT | Springfield, IL *The Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc. Six-Month Free Trial To obtain the resources you need to maximize the performance of your financial institution, contact Ryan Hayhurst with our Financial Strategies Group at 800.937.2257, or Ryan@GoBaker.com. ! " # $ ! " " # #! # $% & ' $ ( (# ! " " # #! # $% & ' $ ( (# %## ! " # $ % &% #)*+, #)*+, #)*+, #)*+, ./, / 0)+/+ #)*+, / 1+ #)*0./+ # #)*+, & #)*+,- & #)*+, #)*+, ./, / 0)+/+ #)*+, / 1+ # + + % # ! "#$ %"&' ( !" ) ! " !" !# # * " * !" + ) # & # * ! , + * ! * $ ! # && &- & "" * ( " +' 18 H / ' / ' ' 01% 2 3! 4 4 / 5 6 / 780890:79; $ ' C ; <' / ! / 8:7 01% 2= 6 * ) > *4? 3 != > / 3' / > / 5 ) 0! . 0' + ! 4 / @ # $ * 3' - 1 0 9 * 6 * !1 !"#$%&' ( ( ( 3 ( ( ( ( * !1 + + ( ( 7?7@A& 0 9 . &/ % ) 1 * 8 A 9D A 9D 8 D9 17 872 1ABE2 978 8C 978 A7 B 899 9 9C7 777 5 8D ' 8 :B 8 :B 8 D9 17 :C2 8 8D: 97A BD 979 ;E 1A7D CB92 9A C9B 777 5 5 5 . . . 7A> . 0 <' / 6 * 5 7 7 5 5 5 ( F 6 * 5 5 5 < 5 5 5 . . . 7A> . 0 <' / * 1 2 3 ! &4("$4(&&$ ! "#"$#"%&'( ) #*+ , * . ! "#$ %"&' ( !" ) ! " !" !# # * " * !" + ) # & # * ! , + * ! * $ ! # && &- & "" * ( " +' 26 ! !" # $ % $! & ! "' ( ' % )' $! & " ' *! + !" , % ! + !" - " .! / 0 1 &.' ! 2 0!. & %' 3 1 ' 22 %/ *-4 5 *! 6! ! / (!. 27 !"# $" % & ' & ( ) *" +' & ( ) *" +, &( ) -" ( & (.(/ ". -" ( 0 1" 2"&&"3 % & 4 5( ) *" +4 5( ) - 92 % *-4 - /5 6 (" $(7 ( 8 98 6 (" ( " ( 1 / &: ; < ; < ; < ; < = < ; < ; < $" 8 -" ( $" -" ( $" -( # * 2"&&"3 -( # ; < 8 (# 1# $( ". & ( $" *" +' & % & ' & % & *, '7 ( 5 0 2"&&"3 % & 6 #( / " > "# # ( ) ; < 0 1" 98 ! " # $ % & '( )* + ,- $ * ! "## $ % % "&%#&% % '('#( )* $ + * & + ,"%"- ! , . / + 0 1 + 2 3 425 $ 4 ! ! ! 20 6 2 2 ! ! 2 2 0 6 5 7 3 55 5 5 22 2 1 % ! ( ! % %% , # # As American financial institutions—along with the rest of the world—face unprecedented times, The Baker Group is ready with tools and services to help maximize the performance of your institution. That’s why we’re offering new clients our Software Solutions* service package for a six-month free trial. Not only will you have access to our latest market research and insight from our Financial Strategies Group, you’ll be included in all of our webinars. There you’ll hear the latest Information on the economy and how it could impact your institution and its investment portfolio.
IntraFi Network Deposits can help your institution manage its balance sheet and provide its customers with access to millions in FDIC insurance. And, we still offer our full range of wholesale funding solutions. IntraFi Funding offers flexible funding solutions to help banks of all sizes meet planned or unexpected needs, regardless of their liquidity position. Same great products. New names. IntraFi.com Use of IntraFi Network Deposits and IntraFi Funding are subject to the terms, conditions, and disclosures set forth in the applicable program agreements, including the IntraFi Participating Institution Agreement. Network Deposits, IntraFi Funding, and the IntraFi hexagon are service marks and IntraFi, ICS, and CDARS are registered service marks, of IntraFi Network LLC. ICS® and CDARS® are now called CDARS and ICS deposit solutions are now IntraFi® Network DepositsSM. And all of our funding products are called IntraFi FundingSM.
DIRECTORS & STAFF HOOSIER BANKER MAGAZINE indiana.bank Celebrating 125 Years Publisher: Amber R. Van Til Editor: Laura Wilson Advertising: Rod Lasley Design: The Westcott Group Inc. Submissions: HB@indiana.bank Advertising: Media kits are available at indiana.bank. Advertising is reserved for members and associate members of the Indiana Bankers Association. Deadlines: Editorial and ad reservations are due the 20th of the month, two months before publication. Subscriptions: Subscriptions are provided free of charge to members and associate members of the Indiana Bankers Association. About: 8LI ƥEKWLMT TYFPMGEXMSR SJ XLI -RHMERE &EROIVW Association, Hoosier Banker is distributed to all banks and thrifts headquartered in Indiana, IBA- member banks headquartered out-of-state and IBA associate members. Publication Disclaimer Hoosier Banker (ISSN 0018 473X) is published bimonthly by the IBA Service Corp., a subsidiary of IBA Holding Company Inc., which is a wholly owned subsidiary of the Indiana Bankers Association. Material published in Hoosier Banker and on the IBA website is the property of the IBA. All rights reserved. Contact IBA )QEMP -&% WXEJJ YWMRK ƤVWX REQI MRMXMEP ERH PEWX REQI TPYW “@indiana.bank” – example: jdoe@indiana.bank Indiana Bankers Association ;SSHƤIPH 'VSWWMRK &PZH 7YMXI ) Indianapolis IN 46240-7321 317-387-9380 Vol. 106 No. 3 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: -R JYPƤPPMRK SYV QMWWMSR [I [MPP 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. IBA BOARD OF DIRECTORS 3JƤGIVW Garry D. Kleer, Chairman.............................................................................. First Bank Richmond Jamie R. Shinabarger, First Vice Chairman .............. Springs Valley Bank & Trust Company, Jasper Benjamin J. Bochnowski, Second Vice Chairman ..................................... Peoples Bank, Munster Michael S. Zahn, Immediate Past Chairman....................... First Federal Savings Bank, Huntington Amber R. Van Til, President and CEO............................ Indiana Bankers Association, Indianapolis Constituent Directors Michael K. Bauer, ABA Membership Council ..................................WesBanco Bank, Wheeling, WV Michael H. Head, ICBA State Director ..................................First Federal Savings Bank, Evansville Jon-Myckle D. Price, FLD President ............................Security Federal Savings Bank, Logansport Regional and At-Large Directors David M. Findlay, At-Large ...................................................................... Lake City Bank, Warsaw Kent A. Liechty, At-Large ............................................................................... First Bank of Berne Jeffrey W. Gump, North Region ............................................Farmers and Merchants Bank, Laotto Daniel Maddox, North Region ...................................................... Citizens State Bank, New Castle Jacqueline M. Ruge-Perkins, North Region ...........................................First State Bank of Porter Lisa Arnold, South Region...................................................................... Home Bank, Martinsville Gregory Inman, South Region....................................... Scottsburg Building and Loan Association John M. Kennedy, South Region .......................................................+VIIRƤIPH &EROMRK 'SQTER] IBA FUTURE LEADERSHIP DIVISION ADVISORY BOARD Jon-Myckle D. Price, President ................................... Security Federal Savings Bank, Logansport Brock C. Goggins, Vice President .................................................German American Bank, Jasper Greg Barnes Jr. .......................................................................................STAR Bank, Fort Wayne Emily Boardman ..................................................................................Crossroads Bank, Wabash Jenilee Bransteter .........................................................................................First Bank of Berne Joshua Burrows ....................................................................................Home Bank, Martinsville Michael J. Clampitt ................................................................................North Salem State Bank Ryan Cook ....................................................................................Mutual Savings Bank, Franklin Kyle Goodwin ...............................................................................................DeMotte State Bank 'LVMWXSTLIV +VMJƤXL .........................................................................First Harrison Bank, Corydon Ryan Hart ...............................................................................................Lake City Bank, Warsaw Zach Hockersmith ..................................................Hoosier Heartland State Bank, Crawfordsville Andrea McGordon .......................................................................... Old National Bank, Evansville Amanda Morris-Feldman ................................................... First Federal Savings Bank, Rochester Laura Shake ............................................................................The National Bank of Indianapolis IBA STAFF Amber R. Van Til ............................................................................................President and CEO Rod Lasley .............................................................................................. 'LMIJ 3TIVEXMRK 3JƤGIV Dax Denton .................................................................................................. 'LMIJ 4SPMG] 3JƤGIV Christina M. Bennett, CMP ....................................................Vice President - Meetings & Events Josh Myers .......................................................................Vice President - Member Engagement Laurie A. Rees ...................................................................Vice President - Education & Training Ross Teare .......................................................................Vice President - Government Relations Laura Wilson ........................................................................... Vice President - Communications Emily Brooks ..............................................................................Member Engagement Specialist Maria L. Dowers ...................................................Executive & Government Relations Coordinator Susan Clark ......................................................................Events & Products/Services Assistant Elizabeth DeHaven .......................................................................................Education Manager Beth Abney .................................................................................Education Meeting Coordinator Timothy Fry .....................................................................................................Staff Accountant Tracy Kubly ................................................................................................Technology Manager
Hoosier Banker 5 CONTENTS 12 COVER STORY The Fintech Frontier Emily Brooks, IBA 18 ARTICLE SPOTLIGHT Grassroots Advocacy Engagement Josh Myers, IBA FEATURES 6 Vantage Viewpoint Amber R. Van Til, IBA 7 Chairman’s Report Garry D. Kleer, First Bank Richmond 8 -&% 1IQFIV &IRIƤXW 6ITSVX 11 IBA Calendar of Events 40 The Story We Tell Rebeca Romero Rainey, ICBA 44 Cryptocurrencies Robert S. Nichols, ABA 45 The ABCs of CDIAC Carl D. White II, Federal Reserve Bank of St. Louis AG BANKING 20 Input Costs Increase for Farmers Brady Brewer, Purdue University GR SUMMIT 22 2022 Legislative Session Summary Dax Denton and Ross Teare, IBA PRODUCTS & SERVICES PROFILE 24 Insurance Offerings Rod Lasley, IBA COMPLIANCE CONNECTION 27 Check Fraud Brett J. Ashton, Krieg DeVault LLP DIRECTORS / SENIOR MANAGEMENT 29 Key MBS Themes Andrea F. Pringle, The Baker Group 37 Post-LIBOR Landscape Richard L. Sandor, American Financial Exchange INDIANA BANK & THRIFT STOCK UPDATE 31 Stock Analysis Michael A. Renninger, Renninger & Associates LLC PSP SHOWCASE 32 A Solution Where You Can Place Your Trust Shawn M. Norris, NFP HUMAN RESOURCES 34 Pregnancy Discrimination and Accommodations Debra A. Mastrian, SmithAmundsen LLC CLOSING NOTE 54 IBA Board Review J. Daniel Maddox, Citizens State Bank, New Castle DEPARTMENTS 17 Banking on Community 17 Banking Center News 17 In Memory of 25 Taking It Easy 28 From the Board Room 38 Honorable Mentions 42 Associate Members Corner 47 Bankers on the Move 53 Advertisers Index 18 54 In This Issue 12 The New Frontier Grassroots Advocacy Engagement "When starting a career in banking, look for a company whose values align with yours & whose leaders inspire you."
6 MAY / JUNE 2022 It’s that time of the year again when the Indiana Bankers Association presents a summary of the prior calendar year. Our 2021 member benefits report is laid out on pages 8 and 9. In a sense, last year was our bridge between the pandemic that overshadowed 2020 and our current backto-normal state. As always, last year was busy. It also was financially healthy, thanks to member support, staff effort and outstanding guidance from the IBA Board of Directors. I often wonder how other not-for-profits fare without the benefit bank leaders serving on their boards and audit committees. I also wonder how other organizations manage without the generosity of dedicated associate members. Much of the IBA’s financial strength is due to service providers that support the IBA through trade show engagement, sponsorships, display advertising and more. Their engagement also keeps event costs low for member bankers. As shown in the pie charts on this page, the IBA continues to spend relatively little on office management and administration. Instead, the bulk of our investments go to the benefit of members through educational offerings, convening events, government relations work and communications. VANTAGE VIEWPOINT Don’t Miss Out! How we bring in revenue also is revealing of the extent of member and associate member support. Rather than rely heavily on dues income, most of our income comes from member offerings, as well as investments and other sources. As a result, we have one of the lowest dues structures among all of the state bankers associations throughout the country. Of course, we can’t linger too long on reviewing the past. The future beckons, and we need to be ever prepared to meet it with strength. I’m pleased to let you know that we are closing in on sharing with you the IBA’s new strategic plan, designed to take us through 2024. Similarly to our last strategic plan, this one is ambitious, innovative and focused on helping us to prepare for the future to keep the Indiana banking community thriving. Our former plan had five pillars of growth goals, and this one does, as well. The five pillars of our upcoming strategic plan are: Next-Level GR, Next-Level Talent, Operational Effectiveness, New Ventures and Future Opportunities. We’ll be updating you shortly with details of this roadmap to future success. In the meantime, let’s also enjoy the present. Now is an opportune time to ramp up grassroots advocacy by connecting with legislators, as Chairman Kleer addresses on the facing page. We also have a host of convening and networking events scheduled to keep us all connected and working in sync for the betterment of banking. HB Amber R. Van Til President and CEO Indiana Bankers Association avantil@indiana.bank @grbanker Annual Washington Trip July 11-13 Join the chorus and make your voice heard on industry issues at our nation’s capital. FLD Leadership Conference Aug. 18-19 Emerging leaders build skills and strengthen networks at this Future Leadership Division event. Annual Convention Sept. 11-13 This year’s event celebrates IBA’s 125th anniversary as bank leaders convene and connect. For event updates, visit: indiana.bank/calendar 40% Education, Training & Events 20% Products & Services 25% Membership Dues 7% Products & Services 3% Communications 49% Education, Training & Events 21% Management & General 18% Government Relations 5% Communications 8% Investment Income 4% Contributions IBA EXPENSES IBA INCOME
Hoosier Banker 7 IBA Quasquicentennial Celebrating 125 Years Learn more at ndiana.bank/history #IBA125Years Imagine a job that requires you to make decisions in areas where you might lack expertise. These decisions can have far-reaching implications, sometimes for years to come. What’s more, you have a limited timespan in which to make these weighty decisions. Such is the life of a legislator. At both the state and national levels, senators and representatives make multiple decisions, but not always in areas where they have strong backgrounds. While most legislators are experts in at least one area, no single legislator can be an expert on everything. That’s why input from constituents is vital. Good decision-making relies on access to reliable information, and bankers can be of great service by clarifying complex financial topics, as well as pointing out potential unintended consequences of legislation that initially may seem to be a good idea. The Indiana Bankers Association is fortunate to have a strong Government Relations Team, but IBA advocacy is only as strong as its grassroots support. While legislators hold our GR Team in high regard, they especially appreciate direct feedback from constituents. Grassroots advocacy is most efficient when relationships are formed in advance. The goal is to give legislators an opportunity to get to know you well ahead of critical decision-making moments, so that when a financial topic comes up, you are the reliable “go to” for insights and clarification. Now that Indiana’s short session has concluded, take a few moments to pick up the phone and introduce yourself to your elected officials, if they don’t already know you. If they do know you, now is a good time to reinforce existing relationships to keep the lines of communication open. Additionally, the IBA offers several opportunities to bolster relationship-building. At this time of year, the IBA is hosting a series of regional meetings to bring legislators and bankers together at area restaurants for relaxed lunchtime gatherings. Please be on the lookout for information from the IBA about a regional meeting near you, and make it a priority to attend at least one meeting this year. Each regional meeting starts with a briefing on topics of the day, so that you’ll be well-prepared when legislators join in for lunch. On the national level, the IBA Annual Washington Trip is scheduled for July 11-13, giving you the chance to meet with members of the Indiana congressional delegation, plus representatives of national bank trade associations, federal departments and agencies. Be sure to sign up early, since some site visits require advance clearance. Grassroots advocacy is essential to keeping legislators educated about the complexities of banking, enabling them to make sound decisions to keep our state and industry strong. Your participation in this process is much appreciated. HB CHAIRMAN’S REPORT ,SQI &EROɄŵ $,SQI&EROC ŵ 1EVGL 170 books were donated by Home Bank employees during Read Across America! Thanks, Brianna and Amy, for coordinating this book drive with United Way of Central Indiana (@uwci) - your efforts made a lot of lives better! 78%6 &EROɄŵɄ$7XEV*MRERGMEP ŵ 1EVGL Erin Schlick, Zionsville Branch Manager, and Amanda Rubeck, 7IRMSV 6IXEMP 7EPIW 3JƤGIV TEVXMGMTEXIH MR $1]>ZMPPI7GLSSPW Do Days last week. They helped pack 11,000 meals for the Million Meal Movement. The event was sponsored by the Zionsville Rotary Club. *MVWX 7EZMRKW &EROɄŵɄ$JWFMRHMERE ŵ 1EVGL Our Employee Charity Committee was pleased to present LifeSprings Health with a donation of $4,600, raised and donated completely by our employees. WX 7SYVGI &ERO ŵɄ$ WX7SYVGI&ERO ŵ 1EVGL Last week’s JA in a Day was a big success! Several 1st Source team members, plus other community members, spent the day with local students & it looks like everyone had a great time. Thank you for your #communityleadership & support of JA’s important work in our local schools! *MVWX ,EVVMWSR &EROɄŵɄ$*MVWX,EVVMWSR ŵ 1EVGL Our Salem branch is doing a drive for Washington County Food Bank. Please help us by bringing non-perishables and bathroom and laundry supplies through March 25! *SPPS[ -&% 8[MXXIV $MRHMEREFEROIVW NOTABLE QUOTES Bank Community Service on Twitter Garry D. Kleer Chairman Indiana Bankers Association Chairman, President and CEO First Bank Richmond
8 MAY / JUNE 2022 Indiana Bankers Association 1IQFIV &IRIƤXW 6ITSVX 0 200 400 600 800 1000
Hoosier Banker 9 0 10 20 30 40 50 60 70 80
Community banking is the American story. ©2022 Performance Trust Capital Partners, LLC. All rights reserved. Member FINRA/SIPC. performancetrust.com We exist to arm your team with insights, strategies, and tools, to LIPT XLIQ QEOI QSVI SFNIGXMZI GSRǰ HIRX HIGMWMSRW WS ]SY GER remain the heartbeat of your community for generations to come.
Hoosier Banker 11 View full calendar and register online at indiana.bank/calendar, or click on the icons above in HB Digital. IBA Center for Professional Development | 8425 Woodfield Crossing Blvd., Suite 155E | Indianapolis, IN 46240 | 317-387-9380 ONLINE Build knowledge via webinars or on-demand. CLASSROOM Learn with peers in a classroom setting. SCHOOLS Deepen understanding through multi-day learning. EVENTS Experience a variety of IBA gatherings. CONFERENCES Convene and connect at signature IBA events. Celebrating 125 Years Calendar of Events CALENDAR UPDATE Mega Conference May 9-11 • Indiana Convention Center Indianapolis Community Bankers for Compliance Program - Session 2 - The APR and its Impact – 5YEPMƤIH 1SVXKEKI ,410 ,3)4% 10% May 17 • IBA Center May 18 • Indiana Wesleyan University Fort Wayne &ERO 7IGYVMX] 3JƤGIV *SVYQ May 19 • IBA Center Administering Construction Loans May 19 • IBA Center Essentials of Banking II - Business Operations and Management May 19 • Virtual IT Prioritize – Responding to New IT Guidance May 25 • IBA Center Consumer Loan Documentation May 25 • IBA Center Commercial Loan Documentation May 26 • IBA Center Measuring and Analyzing Financial Conditions and Performance June 2 • IBA Center Consumer Lending School June 8-9 • IBA Center 'LMIJ *MRERGMEP 3JƤGIV *SVYQ June 9 • Group 1 • IBA Center June 10 • Group 2 • IBA Center 'SQTPMERGI 3JƤGIV *SVYQ June 14 • IBA Center Bank Operations Bootcamp June 14 • IBA Center Fair Lending Compliance June 15 • IBA Center Senior Lender Forum June 15 • Group 1 • IBA Center June 16 • Group 2 • IBA Center Collaborative Communication June 16 • IBA Center Emerging Leaders Digital Program June 21 • Virtual BSA/AML Compliance School June 22-23 • IBA Center Marketing Forum June 28 • IBA Center IT Forum June 29 • Group 1 • IBA Center June 30 • Group 2 • IBA Center Annual Washington Trip July 11-13 • The Willard Hotel Washington, D.C. Emerging Leaders Digital Program July 12 • Virtual Professional Development/Education/Training Forum July 12 • IBA Center Essentials of Banking: Session 3 July 13 • Virtual Branch Manager Forum July 14 • IBA Center Human Resource Directors Forum July 19 • IBA Center Risk Management Forum July 22 • IBA Center Emerging Leaders Digital Program Aug. 9 • Virtual Community Bankers for Compliance Program - Session 3 Aug. 9 • IBA Center Aug. 10 • Indiana Wesleyan University Fort Wayne Branch Management Series: Session 3, Growing the Retail Branch Aug. 16 • IBA Center Small Business Lending Workshop: No More Cold Calls Aug. 16 • IBA Center CRE Lending for Non-CRE Lenders Aug. 17 • IBA Center FLD Leadership Conference Aug. 18-19 • Hyatt Place Indianapolis / Downtown Leadership Development Program - Session 3 Aug. 23-25 • Abe Martin Lodge • Nashville Compliance for Loan Processors Aug. 24 • IBA Center Enhance Your Bank’s Performance With Strategic Marketing Management Aug. 30 • IBA Center &ERO 7IGYVMX] 3JƤGIV *SVYQ Sept. 1 • IBA Center Annual Convention Sept. 11-13 • French Lick Resort NOTE: For the latest information about IBA event dates, locations and format, please visit: indiana.bank/calendar
The Fintech Frontier What it is, what it can do COVER ARTICLE 12 MAY / JUNE 2022
In today’s world, convenience is king. Consumer expectations are higher than ever, and many industries are scrambling to catch up. This trend has been emerging slowly but surely into the banking industry as well, as regulations catch up with rapidly changing technology and consumer habits. In many cases, fintechs are behind this migration to convenience in the banking industry. Fintech, a term that refers to the integration of technology into banking and financial services and the companies that provide these services, is exploding with popularity at a nearly untenable rate. CB Insights, a market intelligence platform, found in its 2021 State of Fintech report that global fintech funding reached a record $132 billion in 2021, more than double the 2020 figure. “The fourth quarter of 2021 alone saw $35 billion in funding, which is just below the all-time quarterly record,” the report noted. “Every major fintech category saw record funding in 2021, signaling that the fintech boom is being driven by broad interest in the space.” A 2021 report by the American Bankers Association in partnership with Accenture suggests that traditional banking institutions that embrace innovation and new technology are in an advantageous position in today’s business environment in comparison to less tech-savvy institutions. Per the report: “Banking has come to a tipping point where great digital customer experiences are necessary but insufficient to win. With a new wave of digital-only players fragmenting and rebuilding the banking value chain with innovative propositions, it is not enough for incumbents to be the best digital versions of themselves. To keep pace, they must drive product and proposition innovation and embrace new roles in the value chain.” In a recent interview, Charles Potts, executive vice president and chief innovation officer of the Independent Community Bankers of America, estimated that about 35,000 fintechs are currently in existence. Some, he said, are “solutions looking for a problem.” Potts explained that when done well, however, fintechs can be an answer to growing consumer expectations in the banking and finance industry. Banking as a Platform (BaaP) is perhaps the most common way consumers currently interact with fintechs. The BaaP model describes a fintech (or any nonfinancial company) providing services to financial institutions. These services can be remarkably simple in concept, such as the function of a bank’s mobile app, or the ability to originate a loan online. BaaP is often as fundamental as using technology to streamline or improve upon a bank’s current offerings. Conversely, fintechs are often limited in the financial services they can offer without banking charters. This is where the emerging Banking as a Service (BaaS) model comes into play. A growing number of banks, such as Fishers-based First Internet Bank of Indiana, are actively seeking partnerships with fintechs. This kind of partnership allows fintechs to expand their offerings to provide products and services that are generally available only through banks, such as loans or credit cards. Banks, on the other hand, benefit by opening new accounts and gaining access to a new, niche customer base. Fintechs can also allow banks to be more competitive. A study published in February by the Federal Deposit Insurance Corp. found that tech-savvy banks outcompeted their more traditional competitors on certain financial products. In examining Paycheck Protection Program loan volumes, the study found that banks in the top 15% for tech adoption made more loans than similarly sized competitors by 9 percentage points, and more frequently gained customers outside their usual markets. Emily Brooks Member Engagement Specialist Indiana Bankers Association ebrooks@indiana.bank n the ban perh d finan Hoosier Banker 13
The root question for many banks wading into the fintech industry is: Are fintechs something I’m competing against, or instead can fintechs help me? The answer is that both can be true, and that tradeoff muddies the waters. In February, the Indiana Bankers Association surveyed 22 Indiana bank leaders on their thoughts, experiences and concerns with fintechs. Approximately 36% of respondents indicated that their banks are currently utilizing or partnering with fintechs. When asked what excites them about the potential of fintech, many respondents cited “We’re engaged with a few firms to start using bots in our mundane functions. We engaged with a firm to predict account closures. We’re considering a crypto fintech as well.” “Online loans, mobile banking, mobile payments.” “We have invested in a fintech-focused venture fund that is providing great access to many fintechs.” “Using for mortgage and personal loan applications, credit card applications, instant issue debit cards, looking at online new account applications.” “We have been mostly relying on our core provider to partner with fintechs and offer cost-effective access to solutions that also integrate well with our core.” “We partnered with Atlas StreetShares to originate, decision, document and forgive PPP loans. Atlas has come to market with an affordable commercial lending platform that we are currently evaluating.” “We are actively looking to partner with various fintechs to expand our product offering as well as our digital innovation capabilities.” “Evaluating opportunities to engage with fintech in various ways. These would include utilizing fintechs as a third-party vendor, partnering with fintechs to access new revenue streams and investing in fintechs.” “Investing in BankTech Ventures fund.” “We have not engaged with any new companies outside of our normal vendor group. However, we are entertained by the wild, vast array of clever names that the fintech folks come up with that we see in the voluminous collection of emails each week.” 0% 10% 20% 30% 40% 50% Currently using or partnering Doing little or nothing Exploring, either for first-time use or for new relationships/ partnerships 36% 45% 32% 59)78-32 ;LEX MW ]SYV FERO GYVVIRXP] HSMRK XS IRKEKI MR ƤRXIGL# plings of responses to each of the survey questions: 1. What is your bank currently doing to engage in fintech? 2. What excites you about the potential of fintech? 3. What do you seek in fintech relationships? 4. If your bank has been hesitant to engage with fintech, what are your primary concerns? Additionally, graphs indicate the number of responses in general categories, with some responses affecting more than one category. Note that this survey was conducted informally, and results are intended as general information only. Fintech may seem like a new frontier, but in reality technology has been blending with banking since the late 1800s, when the advent of the telegraph enabled the quick transfer of financial information across distances. While technology and banking have come a long way since then, what remains the same is that prudent bankers continue to weigh the potential risks, challenges and opportunities of each new offering. HB increased efficiency, attainable pricing and better ability to serve customers. Additionally, several respondents from smaller banks indicated that with these improvements, they would be in a better position to compete with larger banks. Some of the primary concerns cited with fintechs were potential regulatory issues, a hesitation to be drawn into trends, and a lack of time and/or resources to research, properly vet and train employees on new technology. Approximately 45% of survey respondents indicated that their banks are doing little to no business in the fintech environment currently, but 32% indicated that their banks are currently exploring and evaluating fintech relationships. There is some overlap between those banks already engaged with fintech and those actively seeking new relationships/partnerships. The accompanying exhibits show sam- MAY / JUNE 2022 Answers shown for each question represent a sampling of total responses.
0 2 4 6 8 10 Efficiency/agility Products and services Customer experience/growth/retention Small bank leverage Profitability Nothing 5 7 10 4 3 3 “Add efficiency and enter new revenue sources.” “I’m excited about anything that makes us more efficient.” “Give us the availability to products that we cannot offer directly because of price.” “The partnership potentials that improve our clients’ user experience are exciting us.” “Allows smaller community banks to offer the same products and services as the larger banks.” “We can provide new tools for our customers with a shorter life cycle of development and core integration.” “Ease of use with customers.” “Connecting customers with solutions that better and more easily solve financial problems.” “Finding multiple ways to reach current customers and build relationships.” “Improved digital channels/options.” “A means to engage with people who are not excited/interested about most traditional banking relationships.” “The ability to partner with a fintech can give us the agility we need to respond quickly to consumer expectations.” “Great new delivery mechanisms and a potential for significant fee income for the bank.” “The opportunity to continue to grow our bank outside of our physical footprint. The ability to utilize fintech products to deliver a better customer experience and/or improve bank efficiencies.” “It frightens me.” 5YIWXMSR ;LEX I\GMXIW ]SY EFSYX XLI TSXIRXMEP SJ ƤRXIGL# “If we were to engage in such, it would be customer retention and expansion leading to additional net income.” “Knowledge and access.” “We are focused on partnering with those who seem to have strong backing, which we think should create staying power and the ability to continually innovate. We are also focused on the relationships with the principals – high integrity and honesty. We’ve had the most success when we’ve had regular dialogue and shared feedback regarding product design and functionality.” “Automation, integration and robust customer experience.” “Transparency, security, white-label delivery to customers.” “An entity who values partnerships and knows/understands our market area.” “Security – both technological and financial.” “Mostly to have the means to engage with potential customers who don’t look to a traditional bank for their primary means of exchange.” “Scalability and affordability.” “Primarily to keep up with the pace of innovation without significant financial investments.” 0 2 4 6 8 10 Customer benefits Efficiency/integration Innovation Affordability Security/reliability Not interested 5 6 3 4 9 3 5YIWXMSR ;LEX HS ]SY WIIO MR ƤRXIGL VIPEXMSRWLMTW# Hoosier Banker 15
16 MAY / JUNE 2022 “I seem to remember the boom of tech companies that were riding the innovation wave in the mid-2000s into 2010, and many of these names are now relegated to the dustbin of history. We tend to seek out the best possible products/services that will actually satisfy a need or demand of our customer base. Too many bells and whistles distract from our purpose.” “We need to do more homework on the costs and benefits to determine if it is something we feel is necessary or will be forced into at some point in time.” “We want to avoid those that seem to be over-promising and under-delivering. In addition, fintechs with thin backing or those racing for the exit don’t really excite us.” “Staff bandwidth and ability to deliver.” “Regulatory and compliance scrutiny or criticism.” “We have been able to provide solutions through our core processing. Vendor management and security are our concerns.” “We have not done much research to see how a fintech could benefit us. I wouldn’t say we are hesitant, just uninformed at this point.” “Certainly cost. Also, adopting a credit scoring model to decision loans is a big cultural shift.” “Our primary concerns revolve around the oversight of these fintechs and their compliance with various government regulations.” “The lack of regulatory understanding and their ability to transform the future of banking.” 0 1 2 3 4 5 6 Long-term viability Cost Compliance/regulation Security Staff/culture Integration 6 4 5 2 3 5 5YIWXMSR -J ]SYV FERO LEW FIIR LIWMXERX XS IRKEKI [MXL ƤRXIGL [LEX EVI ]SYV TVMQEV] GSRGIVRW# As of February 2022, BITS is now New Era Technology. Personalized IT Support with Global Experts • Cloud Calling, Contact Center and Collaboration • Managed Firewall, Security Detection and Response • SDWAN Design and Implementation • Microsoft Gold Partner • Telecom Agent, Procurement Monitoring, Escalations • Cloud Migration Projects • Physical Security & Surveillance • Managed Services and 24/7 US-based Customer Support Contact Us Certified Engineers & NOC Reduced Telecom Expenses 17+ Years in Banking neweratech.com/us/community-banks 877-696-7720
Hoosier Banker 17 ers in Banking Excellence. Belcher was a graduate of Purdue University and a veteran of the U.S. Army. Teresa Lynn Ledford, 73, retired regional administrative manager of National City Bank of Indiana in Greenfield, died Feb. 1. She began her banking career in 1967 with Fayette Bank and Trust Company, Connersville, serving as president at the time of the bank’s 1993 merger with NCB. Ledford retired in 2004. She had been active with organizations including the National Association of Bank Women and Altrusa International of Connersville. A graduate of University of Saint Mary of the Lake, Ledford additionally attended Loyola College and Indiana University East. HB BANKING ON COMMUNITY In January, First Bank Richmond donated $44,300 to United Way of Whitewater Valley through activities including employee pledges, a chili/soup cook-off and a $28,000 corporate contribution. In February, the bank donated $15,000 to Richmond Civic Theatre. It also made a donation of $10,000 to Circle U Help Center as the second installment toward a five-year, $50,000 commitment. HB 7LS[R EX *MVWX &ERO 6MGLQSRHŭW XL ERRYEP GLMPM WSYT GSSO SJJ FIRIƤXMRK 9RMXed Way of Whitewater Valley, are (from left) Garry Kleer, chairman, president and CEO of the bank; Tamara Brinkman, president of United Way of Whitewater Valley; Alicia Painter, director of Boys and Girls Club of Wayne County; and Becky Murray, executive director of Communities in Schools of Wayne County. Lake City Bank, Warsaw, celebrated the opening of its 52nd office at 240 E. Jackson Blvd, Ste. 103, Elkhart, with a ribbon-cutting ceremony on March 23. The new office is part of Elkhart’s River District and is the bank’s 11th location in Elkhart County. The full-service branch provides technology-driven banking solutions for business and retail clients as well as direct access to 12 Lake City specialists in commercial lending, wealth advisory and retirement services. Melissa J. Blosser, vice president, retail banking regional manager, has been named manager of the new office. She has been with the bank for 12 years. Blosser serves on the boards of Boys and Girls Club of Elkhart and the DW Victim Advocacy Center, and she is active with the Greater Elkhart Chamber of Commerce as a leadership academy liaison and leadership council member. HB 7LS[R EX XLI STIRMRK SJ XLI 0EOI 'MX] &ERO )POLEVX 6MZIV (MWXVMGX SJƤGI EVI from left: Esperanza Arias, retail banker; David Findlay, bank president and CEO; 'LVMWW] 1]IV EWWMWXERX VIXEMP FEROMRK SJƤGIV 0IZSR .SLRWSR TVIWMHIRX ERH ')3 of the Greater Elkhart Chamber of Commerce; Melissa Blosser, vice president, retail banking regional manager; Mayor Rod Roberson, Elkhart; Stephanie Leniski, 7:4 GLMIJ VIXEMP FEROMRK SJƤGIV ERH &PEOI 7LIEVIV WIRMSV VIXEMP FEROIV BANKING CENTER NEWS IN MEMORY OF Richard E. Belcher, 87, founding chairman, president and CEO of First Federal Savings Bank, Rochester, died March 30. He founded the bank in 1966 out of the back of a grocery store and continued in service even after officially retiring his bank titles. Additionally, Belcher was 1985-86 chairman of the Indiana League of Savings Institutions, which later merged with the Indiana Bankers Association. In 2021, he donated more than $3 million to multiple Fulton County nonprofits, culminating an estate plan created with his late wife, Suzanne. Belcher was honored as Rochester Chamber of Commerce Outstanding Citizen and as Northern Indiana Financial Entrepreneur of the Year, and he and Mrs. Belcher together earned the Rochester Community Service award and the Purdue University President’s Council Pinnacle award. An IBA 40 Year Club member, he was named to the 2021 class of the IBA Lead-
18 MAY / JUNE 2022 Josh Myers Vice President - Member Engagement Indiana Bankers Association jmyers@indiana.bank @joshmyersIN ARTICLE SPOTLIGHT The Future Leadership Division of the Indiana Bankers Association engages its members to participate in grassroots advocacy opportunities to grow as leaders in the industry. On Feb. 15, over 50 bankers from nearly 25 IBA-member banks participated in person for a premier grassroots advocacy opportunity: FLD Day at the Statehouse. Kicking off the event, FLD Advisory Board President Jon-Myckle Price of Security Federal Savings Bank, Logansport, welcomed bankers in attendance and thanked them for taking the initiative to become involved in grassroots advocacy in Indiana. Participants then enjoyed a brief trivia competition about the 2022 legislative session that included facts about the legislative process, Senate and House committees, banking issues and more. Dax Denton and Ross Teare, IBA’s Government Relations Team, provided attendees with an overview of the Association’s grassroots advocacy efforts, explained their role in the legislative process and how bankers can be involved, and provided a summary of banking legislation that had been debated during this year’s session. Next, FLD Day at the Statehouse attendees traveled across the street, through a lengthy security line, and into the Senate Chamber for the opportunity to visit with Senate Insurance and Financial Institutions Committee Chairman Andy Zay and Sen. Justin Busch. Both senators shared insights about their roles in the General Assembly, expressed admiration for bankers and the Grassroots Advocacy Engagement FLD Day at the Statehouse roles they play in their communities, and discussed the 2022 legislative session. After a lively conversation, attendees then visited the top floor of the Statehouse and packed the room that is home to the House Ways and Means Committee. House Financial Institutions and Insurance Committee Chairman Martin Carbaugh and Rep. Edward Clere joined with bankers to speak about their roles in the General Assembly and some of the major issues being discussed at the Statehouse. Following the meeting, the bankers and legislators gathered in a Statehouse stairwell for a group picture to commemorate the day. The halls of the Statehouse were abuzz with numerous other advocacy groups, but FLD Day at the Statehouse attendees made a distinctive impression with their large contingent. Bankers then broke out into smaller groups for their choice of touring the Statehouse or visiting with their own state legislators. Nearly 25 bankers took advantage of the opportunity to connect with their legislators – some creating new relationships, and others reconnecting with their legislators. Next the group traveled back to its home base at the Hilton Indianapolis Hotel & Suites for a networking lunch. Indiana State Treasurer Kelly Mitchell joined to speak with the group about her time as treasurer, major initiatives that her office has been working on, and ways that bankers can get involved. Treasurer Mitchell also took questions from attendees. The day wrapped up with a review of how attendees can remain involved
Hoosier Banker 19 in grassroots advocacy and stay connected through FLD opportunities. After the 2021 virtual event, it was energizing to once again hold this annual event in-person, and attendees shared that enthusiasm. Seeing the Statehouse in-person and all the other advocacy groups who visit every day during session is an eye-opening experience that reiterates why it is so important that bankers speak up. Thank you to the bankers who attended, the elected officials who took time to speak to the group, and the legislators who met with bankers from their districts. The FLD Day at the Statehouse is a staple of the Future Leadership Division, and we are excited to build off of the momentum from this outstanding day as we move through 2022. HB
20 MAY / JUNE 2022 Input Costs Increase for Farmers AG BANKING Brady Brewer, Ph.D. Assistant Professor, Agricultural Economics Purdue University brewer94@purdue.edu It’s no secret that farmers have seen rising input costs over the past several years. The Economic Research Service of the U.S. Department of Agriculture has estimated that farmers in the United States paid 9.4% more for total farm expenses in 2021 compared to what they paid the year before. Thus, even with increased commodity prices, farmers are still concerned with the profits they will receive for their crops in 2022. In this article, I will discuss these rising input costs and some of the implications on input prices. The caveat, however, is that these numbers are constantly changing. As of this writing, the latest USDA numbers were published on Feb. 4. In normal times, the data I use for this analysis would be considered timely, but given recent world events, these numbers have almost certainly changed due to increased fuel costs and logistical issues, as well as trade disruptions caused by political responses to the Russia/Ukraine conflict. Where possible, I will provide context to how the numbers may have changed, as almost all prices may be higher than what the USDA reported on Feb. 4. As of the latest report, the USDA expected farm expenses to increase 5.1% for the 2022 crop year compared to 2021. This number is now almost certainly higher and represents a fairly large increase that farmers will need to budget for. While some farmers have already bought or locked in prices for certain inputs such as seed or fertilizer, many inputs that are experiencing price increases remain for farmers to purchase. This increase in farm expenses is led by the categories of fertilizer and fuel. The USDA estimated that U.S. farmers will spend 12% more on fertilizer in 2022 compared to what they spent in 2021. This is on top of a 16.6% increase in 2021 compared to 2020. That compounds to a 30.6% increase from 2020 to 2022. Fuel costs are the other major culprit of increasing farm expenses. The two-year increase, 2020 to 2022, for fuel was estimated to be 35.3%. This number is likely to be the most impacted by recent world events. The U.S. Energy Information Administration listed the March 14 U.S. No. 2 Diesel Ultra Low Sulfur retail price at $5.25 per gallon, an increase of $1.30 per gallon from Feb. 7, when it was listed at $3.95 per gallon. This represents a 33% increase in just one month. Farmers who have not locked in fuel prices will most certainly see higher fuel expenses for the 2022 crop year. Other farm expenses of note that have seen increases from 2021 to 2022 include labor expenses, herbicides, pesticides, interest and land rent. Livestock farmers have also seen a substantial increase in feed for their animals, driven by higher commodity prices. Additionally, beyond input costs increasing, some farmers are experiencing challenges in even obtaining farm inputs. A recent survey from the Purdue University Center for Commercial Agricultural showed that 31% of farmers have had difficulty purchasing fertilizer from their suppliers. This article may seem dire if you are a farmer or
indiana.bankRkJQdWJsaXNoZXIy MTg3NDExNQ==