Pub 11 2022 Issue 6

THE OF F I C I A L PUB L I CAT I ON OF K ANSAS BANKE RS AS SOC I AT I ON | NOV EMB E R/DEC EMB E R I S SUE 6 2022 Seasons Greeting From Your KBA Staff!

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Executive DougWareham, President andCEO Kathy Taylor, EVP, General Counsel Terri D. Thomas, EVP, COO Administration AlexOrel, SVP, Government Relations Eric Stofer, SVP, Chief Financial Officer Mary Taylor, SVP, Communications andMarketing Julie Taylor, VP, Computer and Information Systems Sara Blubaugh, VP, ExecutiveAssistant to the President andCEO Tommy Powell, KBEF/Robbins Banking InstituteDirector BreeMagee, Communications &MarketingCoordinator LynneMills, Receptionist/Special Projects Education and Conferences Brenda L. Unruh, SVP, Director, Education & Conferences/Member Services BeckyMilne, VP, Assistant Director Education&Conferences LeAnnMott, AVP, Education&Conferences NatalieWareham, Event Coordinator Insurance AlexGreig, President, KBA Insurance, Inc. Kent Owens, SVP, KBA Insurance, Inc. Elizabeth Roche, SVP, Employee Benefits Administration Jenny Figge, VP, Operations Cari Charter, AVP, KBA Insurance, Inc. Legal/Compliance Jackie Kuhn, JD, VP, Staff Attorney GwenHill, JD, VP, Staff Attorney AllisonCarpenter, JD, VP, Legal Dept.Manager Dylan Serrault, JD, VP, CFBSManager Bobby Young, JD, VP, Staff Attorney Adeel Syed, JD, AVP, Staff Attorney Neal Barclay, AVP, Compliance Specialist/Auditor Jeff Narron, AVP, Compliance Specialist/Auditor Kelly VanZwoll, JD, AVP, Staff Attorney&Gov’t Relations KerryClark, JD, Staff Attorney&Publications Editor LewisWalton, JD, Compliance Specialist/Auditor Erica Friedt, ComplianceOperations Specialist Nathan Stumme, ComplianceOperations Specialist MeridithDeForest, Administrative Legal Assistant Sarah Lynch-Chaput, Legal Intern GabeWalker, Legal Intern MiaedaHutchinson, Legal Intern TomThomsen, Legal Intern © 2022 Kansas Bankers Association | The newsLINK Group, LLC. All rights reserved. The Kansas Banker is published six times each year by The newsLINK Group, LLC for the Kansas Banker and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Kansas Bankers Association, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The Kansas Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Kansas Bankers Association. While the The Kansas Banker encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. 6 2022 KBA Federal Affairs Committee and KBA’s Bank Leaders of Kansas (BLOK) Classes March on Washington, D.C. a Success! 9 The Industry Fights Back: ABA Joins Coalition of Banking and Business Groups in Taking On the CFPB By Kathy Taylor, KBA EVP-General Counsel 10 Marriott Hotel in Wichita Hosts the 2022 Annual Conference for Lenders 14 Washington Update Reining in a Regulator Gone Rogue By Rob Nichols, President & CEO, American Bankers Association 16 The 2022 KBA Trust Conference 18 Governor Kelly Re-Elected, Supermajorities Remain, and Your 2023 Legislative Preview By Alex Orel, KBA SVP-Government Relations 20 2022 Economic Outlook & Risk Management Conference 22 Now is the Time for Bank Holding Companies to Review Shareholder Agreements: Those Drafted in the Late 1990s May Be Near Termination By Michelle Fox, McGregor (Greg) Johnson, Adam Maier, and C. Robert Monroe, Stinson LLP 24 Congratulations 2022 Graduates from Kansas 25 2023 Education Conference Preview 26 Briefly in Kansas Banking 28 For Community Banks, the Sun Also Rises: Solar Tax Credit Investments Now More Accessible By Josh Miller, CEO, KeyState Renewables 32 What Do Your Employee Benefits Offerings Say About Your Bank? By Josh Heck, Syndeo 36 Municipal Credit Update: Inflation Effects on Municipal Finances By Dana Sparkman, CFA, Senior Vice President/Municipal Analyst, The Baker Group 36 32 14

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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 our Financial Strategies Group at 800.937.2257, or FreeTrial@GoBaker.com. Sample Municipal Summary 03/31/2017 Page 1 of 2 635,461 GO+REV 9,896,680 GO 4,752,978 REV GO 64.7% REV 31.1% GO+REV 4.2% Total : 100.0% Municipal Type 689,324 TX PSF 10,199,393 AA 4,180,764 A 215,638 NR TX PSF 4.5% AA 66.7% A 27.4% NR 1.4% Total : 100.0% Moody/S&P Composite Rating AL CA CO IA IL IN KY NM OH OK TX WA WI AL 1.9% CA 2.3% CO 1.4% IA 3.9% IL 10.8% IN 10.2% KY 2.4% NM 1.7% OH 8.0% OK 9.9% TX 33.2% WA 4.7% WI 9.6% Total: 100.0% State of Issue Individual Municipal Ratings are as of 3/19/2017, unless recently purchased. weighting based on Book Value of 15,285,119 Insd-AGM Insd-BAM Insd-PSFG Insd-PSFG, Pre-ReFunded Insd-State Aid Not Insured Not Insured, Pre-ReFunded Insd-AGM 12.0% Insd-BAM 3.4% Insd-PSFG 3.1% Insd-PSFG, Pre-ReFunded 1.4% Insd-State Aid 11.9% Not Insured 58.2% Not Insured, Pre-ReFunded 10.0% Total: 100.0% Insurance 4/13/2017 6:43:55AM - FSG / SAMP The Baker Group Software Solutions, Inc. - APMTM Although the information in this report has been obtained from sources believed to be reliable, its accuracy cannot be guaranteed. ADVANCED PORTFOLIO MONITORTM 18 18 Sample Cusip Par Cpn Book Price Market Price Gn/(Ls) *Acctg Eff Dur Eff Cnvx Underlying Municipal Credit Detail 03/31/2017 Yield Description Page 6 of 7 Muni Insurer Muni Type Moody S&P Call Date Maturity ASC 320 Gn/(Ls)% State Underlying Ratings GO | REV *DA% | DC *Per Cap | Covnt Issue Date Tax Status Overlapping D/A - Debt/Pop Net Asset Ending Beginning Cnty Jobless Security Fiscal Year Report Date *Proj 944431BL8 220,000 5.500 103.90 105.18 2,816 4.34 4.39 (0.98) WAYNE SD #112-B-BABS IL 26 Not Insured N/A N/A GO N/A A+ 12/01/20 12/01/26 AFS 1.23 IL 5.58 | -- 507 | -- 12/08/10 Taxable 8.29 - 754 WAYNE - 8% 2016 Report AD VAL TAXES 2015 4.34 3 Items 4.19 4.19 3.91 (0.30) (458) 103.36 103.40 5.311 1,160,000 Taxable Municipal Totals 39 Items Portfolio Totals 3.25 3.25 3.91 (0.26) 3.392 104.59 101.78 (409,651) 14,615,000 6,385K AA 6,918K A 1,981K NR AA 41.8% A 45.3% NR 13.0% Total: 100.0% Moody/S&P Composite Underlying Rating 1,471K Aa2 213K Aa3 1,533K A1 768K A3 11,299K N/A Aa2 9.6% Aa3 1.4% A1 10.0% A3 5.0% N/A 73.9% Total: 100.0% Moody's Underlying Rating 695K A+ 635K A 232K A13,723K N/A A+ 4.5% A 4.2% A- 1.5% N/A 89.8% Total: 100.0% S&P Underlying Rating 689K AAA 10,415K AA 4,181K A AAA 4.5% AA 68.1% A 27.4% Total: 100.0% Moody/S&P Composite Rating weighting based on Book Value of 15,285,118 * Denotes Tax Equivalent Yield (TEY) where applicable. Individual Municipal Ratings are as of 2/28/2017, unless recently purchased. * D/A% = Debt to Assesed Ratio; DC = Debt Coverage | Per Cap = Per Captia Debt; Covnt = Rate Covenant 4/13/2017 6:43:56AM - FSG / SAMP The Baker Group Software Solutions, Inc. - APMTM Although the information in this report has been obtained from sources believed to be reliable, its accuracy cannot be guaranteed. ADVANCED PORTFOLIO MONITORTM 26 26 Balances ($000's) Page 1 of 1 12/31/2019 Book Value % of Book TA **Rate Sensitive < 1 Year *Book Yield/ Rate *Reinv. Rate *12 Mo. Proj. Yield/Rate Avg. Life Effective Duration Effective Convexity Full Indx. Rate / Total is % of Segment Fixed Var. Non Int. Summary ALCO - Asset/Liability Mix Sample $20,414 4.16 46.55 53.45 46.55 0.97 0.04 0.01 0.00 Cash & Due 0.97 0.97 / 0.97 $172,210 35.10 100.65 (0.65) 14.56 2.81 4.60 3.55 (0.51) Investments j 2.81 2.64 / 0.00 (Includes MTM) $4,500 0.92 100.00 100.00 1.63 0.04 0.04 0.00 Funds Sold 2.13 2.13 / 2.13 $276,700 56.39 56.28 45.26 (1.53) 53.28 5.20 2.59 1.96 (0.22) Loans 5.37 5.47 / 5.76 $6,511 1.33 100.00 2.49 12.63 0.00 0.00 Other Earning 2.49 2.49 / 0.00 $10,358 2.11 100.00 Non-Earning $490,693 3.24 Total 68.38 28.37 100.00 38.01 4.17 3.27 2.36 (0.31) Assets 4.28 4.28 / 5.31 $276,064 56.26 66.70 33.30 12.02 0.53 7.66 4.48 0.54 Non-Maturing Deposits 0.53 0.53 / 0.53 $92,498 18.85 99.44 0.56 0.00 82.54 0.84 0.70 0.65 (0.04) Certificates of Deposit 0.84 0.81 / 0.70 $37,721 7.69 100.00 68.68 1.09 0.97 0.93 (0.02) Jumbo CDs 1.08 1.05 / 0.00 $28,250 5.76 95.58 4.42 46.90 2.06 1.95 1.89 0.03 Borrowed Funds 2.04 1.86 / 1.88 Other Paying $6,724 1.37 100.00 Non-Paying $441,257 22.36 Total 35.51 42.13 89.93 33.70 0.80 5.15 3.14 0.33 Liabilities 0.80 0.77 / 0.54 10.07 $49,436 (0.60) (0.46) Total Equity Capital 100.00 $490,693 Total Liab & Capital Liability Mix Asset Mix Liquidity Ratios Constant Benchmark ALCO Dependency Ratio Liquid Assets / TA Ratio is outside benchmark. P < 750.00% < 100.00% < 50.00% < 20.00% > 10.00% < 35.00% < 300.00% 42.39 68.11 559.71 48.04 6.31 10.19 7.69 Loans / Assets 56.39 Investments / Deposits Loans / Deposits Loans / Capital Net Borrowed Funds / Capital < 75.00% Available Line of Credit $90,500 56.39 Loan 35.10 Inv 4.16 Cash 2.11 Non-Earn 1.33 Other Earn 0.92 Others 56.26 NMD 18.85 CDs 10.07 Equity 7.69 J CDs 5.76 Borrow 1.37 Others Reliance on Wholesale Funding 9.14 < 30.00% The smallest 2% of all categories will be grouped into an 'Others' category. Jumbo CDs / TA Note: Values are rounded before printing, but full precision values are used in all calculations. * Yields/Rates are reported on EA & PL. Investments using Accounting yield. j (Ver 4.0 R7) Copyrighted 1994 - 2020 1/29/2020 3:39:46PM - SAMPLE / SMB1218 The Baker Group Software Solutions, Inc. - IRRMTM Although the information in this report has been obtained from sources believed to be reliable, its accuracy cannot be guaranteed. Interest Rate Risk Monitor ** Percentages based on maturing, repricing, and paydown balances. 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.

6 2022 KBA Federal Affairs Committee and KBA’s Bank Leaders of Kansas (BLOK) Classes March on Washington, D.C. a Success! Members of the KBA Federal Affairs Committee, KBA officer, and KBA Bank Leaders of Kansas (BLOK) classes from 2020-2021 and 2022 spent several days — Sept. 19-23 — in our nation’s capital to lobby Kansas’ members of Congress and to visit with Federal banking regulators about issues of importance to the banking industry. The group included two BLOK classes and the 20202021 BLOK class could finally attend despite the pandemic’s best efforts to keep them home! BLOK classes started their visit with a guided night tour of Washington, D.C., with morning sessions beginning on Monday, Sept. 19, at the American Bankers Association (ABA) and the U.S. Capitol. On Tuesday, Sept. 20, the group teamed up with KBA’s officer team and KBA Federal Affairs committee and spent time with the OCC, FDIC and CFPB on regulatory priorities, including Overdraft Programs, CRA Modernization, and Climate Risk Management. On Wednesday, Sept. 21, almost 60 bankers visited Capitol Hill to talk about ECORA, Section 1071 Small Business Reporting relief, and Credit Card Interchange and Routing Mandates. The trip concluded with a networking evening reception open to all our Congressional Delegation members and their staff. U.S. Senator Jerry Moran U.S. Senator Jerry Moran, who serves on the U.S. Senate Banking Committee, reaffirmed his support for several KBA initiatives during a briefing with the Senator on Capitol Hill. U.S. Senator Roger Marshall U.S. Senator Roger Marshall provided his perspective on headwinds threatening the U.S. economy during a special briefing for Kansas bankers hosted in the U.S. Senate Russell Office Building. KBA Chairman Shan Hanes and CFPB Director Chopra KBA Chairman Shan Hanes stressed the need for a broader community bank exemption from the CFPB’s 1071 Small Business Reporting Rule to CFPB Director Rohit Chopra.

Pub. 11 2022 Issue 6 7 ABA 101 Matt Brown, SVP, State Association Alliance, and Kirsten Sutton, EVP, Congressional Relations and Legislative Affairs, welcomed the BLOK class to the ABA and gave them an overview of the services provided by ABA and how best to get involved with the ABA and federal government relations. Congressman Tracey Mann and KBA Officers Kansas 1st District Congressman Tracey Mann joined KBA’s Federal Affairs Committee and KBA’s Bank Leaders of Kansas (BLOK) Classes for a rise and shine breakfast update on the November elections that will likely reshape leadership in the U.S. House of Representatives. Congressman Jake LaTurner Cong. Jake LaTurner (2nd District) expressed strong support for the KBA-supported Enhancing Credit Opportunities for Rural America (ECORA) Act during his Capitol Hill meeting with Kansas bankers. Congressman Ron Estes Cong. Ron Estes (4th District) discussed a host of KBA-supported initiatives during KBA’s visit to his Washington office, and he also took time to catch up with industry leaders at a KBA-hosted reception for the Kansas Delegation and staff. Congresswoman Sharice Davids, Legislative Director, Brandon Naylor and KBA Past Chairman Mike Ewy KBA Federal Affairs Committee Chairman Mike Ewy encouraged Brandon Naylor, Legislative Director for Cong. Sharice Davids (3rd District) to consider lending support for the ECORA Act in light of the rising interest rate environment negatively impacting Kansas ag producers.

8 Chiefs of Staff Panel Brent Robertson, Chief of Staff to U. S. Senator Roger Marshall, and Braden Dreiling, Chief of Staff to U.S. Congressman Jake LaTurner, explain the day in the life of the Chief of Staff. They also talked about how best to communicate with their office and how they arrived to where they are today. BLOK Class Guided D.C. Tour Kyle Campbell, President & CEO of Astra Bank in Abilene and Vice Chair of Eisenhower Foundation, explains the work to the BLOK classes that went into constructing the memorial of Kansas’ favorite son and 34th President, Dwight D. Eisenhower. The class also visited the Lincoln Memorial, The White House, Jefferson Memorial, and many more! 2020-2021 Bank Leaders of Kansas Class 2022 Bank Leaders of Kansas Class Thank you to this year’s Sponsors!

Pub. 11 2022 Issue 6 9 By Kathy Taylor, KBA EVP-General Counsel The Industry Fights Back ABA Joins Coalition of Banking and Business Groups in Taking On the CFPB On Sept. 28, 2022, a coalition of banking and business groups filed a lawsuit in the District Court for the Eastern District of Texas against the Consumer Financial Protection Bureau (CFPB) and Rohit Chopra in his capacity as Director of the Bureau. The plaintiffs – the American Bankers Association, the U.S. Chamber of Commerce, the Longview Chamber of Commerce, the Texas Bankers Association, the Independent Bankers Association of Texas, the Texas Association of Business and the Consumer Bankers Association – challenged the CFPB’s recent changes to the Unfair, Deceptive or Abusive Acts or Practices (UDAAP) section of the bureau’s exam manual. While the plaintiffs fully support the fair enforcement of the nation’s anti-discrimination laws, the petition sets forth their arguments that the expansion of the CFPB’s authority in these changes to the exam manual exceeds the authority granted to the bureau by the law as written: 1. The CFPB exceeds its statutory authority outlined in the Dodd-Frank Act. The recent update to its examination manual adopts the novel position that the CFPB can examine entities for alleged discriminatory conduct under its UDAAP authority. But the CFPB cannot regulate discrimination under its UDAAP authority at all because Congress declined to give the CFPB authority to enforce anti-discrimination principles except in specific circumstances. 2. The updated exam manual is “arbitrary” and “capricious” in violation of the Administrative Procedure Act (APA). The CFPB reads Dodd-Frank as giving it the broadest possible authority to regulate both disparate treatment and disparate impacts. In touting the update, the CFPB stated that “[c]onsumers can be harmed by discrimination regardless of whether it is intentional,” so examiners will consider “discriminatory outcomes.” 3. The CFPB’s updated manual violates the APA’s procedural requirements because it constitutes a legislative rule that failed to go through notice and comment. The CFPB unilaterally acted to expand its authority to enforce antidiscrimination laws and to apply that authority to all entities it examines, the equivalent of “rulemaking” for which the process under the APA is designed but was not followed. The APA requires that agency action be set aside if it is promulgated “without observance of procedure required by law.” The petition further states that this Court’s intervention is needed to ensure that the CFPB is accountable to legal constraints, the rule of law, and the public as it pursues an aggressive agenda with far-reaching implications for the American economy, plaintiffs and their members. The KBA applauds the bold move by the plaintiffs as they carefully weighed the costs of pursuing such a lawsuit against the risks of allowing such behavior to go unchecked. The unilateral action by this agency is bigger than the banking industry alone. The CFPB examiners, under this expanded authority, could seek detailed records of bank customers to investigate potential discrimination, which could require customers to maintain records unrelated to the purpose of the loan or other financial transaction they need from their bank. In addition, if rulemaking without any input from the public or time for the affected industry to react and prepare is allowed to stand, the implications for other industries and consumers from other similarly positioned agencies could be devastating. To see the entire petition, go to https://www.aba.com/-/media/documents/amicus-briefs/cfpb-abacomplaint-2022928.pdf ?rev=5b59d046bda849b89a2d215f47eaf72a

10 Mike Ewy, KBA Past Chairman and President and CEO of Community State Bank in Coffeyville, kicked off day one of the 2022 Annual Conference for Lenders, which was held Oct. 6-7 at the Marriott Hotel in Wichita. The first speaker of the Conference was David Ruffin, IntelliCredit Company, with his presentation, “Navigating COVID-19 and the Rough Credit Cycle in its Aftermath.” Ruffin shared how a black swan named COVID-19 has ushered in a swift and dramatic end to the prolonged and recently benign credit cycle. Despite economic stimuli and regulatory relief, attendees can expect the credit degradation prompted by this crisis to be problematic and extensive. After a quick break and visits with exhibitors, attendees were introduced to the next speaker, Dr. Roger Tutterow, Kennesaw State University, with his presentation, “Where to Go from Here: Navigating in a Post-COVID World.” This session provided a timely overview of global, national and regional economies, including recent developments in the effect of COVID-19 on the retail sector and real estate, the cause and effects of the recent changes in energy prices, the structure and effect of the recent changes in energy prices, the structure and effect of recent fiscal stimulus and the linkages between trade policy and currency valuation. Emphasis was placed on recent volatility in the short-term funding market, the return to the zero-rate policy, the inflation outlook and implications for fixed income performance, etc. Following lunch, attendees spent a good majority of the afternoon attending breakout sessions which included topics such as “Lending Regulatory Update,” “Hemp, CBD & Marijuana Banking,” and “We Don’t Know What We Don’t Know” Concerns: Addressing Some Common Issues and Differences in Approach from Lender and Lawyer.” Wrapping up the first day, the “Minority Business Lending: An Opportunity that Increases Profitability Panel Discussion” was kicked off by moderator Doug Wareham, KBA President and Marriott Hotel in Wichita Hosts the 2022 Annual Conference for Lenders David Ruf fin, Intellicredit Company, was the first speaker at the 2022 Annual Conference for Lenders in Wichita with his presentation, “Navigating COVID-19 & the Rough Credit in its Af termath.” Mike Ewy, Past KBA Chairman and President & CEO of Community State Bank in Cof feyville, welcomed all at tendees to the conference on day one.

Pub. 11 2022 Issue 6 11 Dr. Roger Tut terow from Kennesaw State University presented “Where to Go from Here: Navigating in a Post-COVID World.” Melissa Nelson-Baldwin from South Bend Industrial Hemp presented the latest information about the ins and outs of the industrial hemp industry. KBA’s Terri Thomas, JD, EVP & COO, Legal Depar tment/KBCS Director, introduced Melissa Nelson-Baldwin from South Bend Industrial Hemp during the breakout sessions. CEO. Panelists included: Jim Echols, Renaissance Management & Training Solutions, LLP; Mark Schepers, Community Bank, Liberal; Teresa Randle, The Plains State Bank, Liberal; and Ernesto Hodison, Capitol Federal Savings Bank, Lawrence. Attendees ended the day with refreshments and conversations with the Exhibitors. Colby May, Lending Chairman from Equity Bank in Wichita, kicked off day two and introduced the first speaker, Chris Kuehl from Armada Corporate Intelligence. Chris Kuehl’s presentation was “Navigating the Post-Pandemic Economy: New Worries with the Relief.” Attendees were able to see the new challenges they may face after having emerged from the pandemic and what they can now expect in the next year. Next was Andrew McCrea, American Countryside, with “Kansas Banks’ Role in Creating Total Town Makeovers.” Ag and rural economies sit at a unique crossroads. Farm income has risen with increased commodity prices and 2020 government program payments. Ag land and machinery prices are growing at a fast pace. Yet, the story for non-ag businesses that support farmers in rural communities may not be the same. Smaller towns supporting agriculture may struggle to keep small businesses open, maintain quality schools and provide a place for younger people to work and establish homes and families. Kansas banks play an important role in what happens next. The conference was wrapped up with the final speaker, Alex Weber, American Ninja Warrior, with his presentation, “The Positivity Edge: The Key to Record-Breaking Achievement in Any Season.” How do you tap into the ultimate creativity, confidence, and resourcefulness when it matters most, and the stakes are high? You need a reliable way to avoid living and working in unproductive energy, where stress is high, solutions seem limited, mistakes are repeated, and perceived challenges only grow stronger. Instead, you need to activate The Positive Energy Edge. Thank you to our Conference Sponsors and to all attendees able to make it!

12 Chris Kuehl, Armada Corporate Intelligence, presented “Navigating the Post-Pandemic Economy: New Worries with the Relief.” (Lef t to Right) The “Minority Business Lending: An Oppor tunity that Increases Profitability Panel Discussion” included Doug Wareham, KBA President & CEO; Jim Echols, Renaissance Management & Training Solutions, LLC; Ernesto Hodison, Capitol Federal Savings Bank, Lawrence; Teresa Randle, The Plains State Bank, Liberal; and Mark Schepers, Community Bank, Liberal. Speaker Andrew McCrea with American Countryside, presented “Kansas Banks Role in Creating Total Town Makeovers.” Alex Weber, American Ninja Warrior, closed out the conference with his energized presentation, “The Positivity Edge: The Key to RecordBreaking Achievement in Any Season.” (Lef t to Right) Mike Ewy, Past KBA Chairman and President & CEO of Community State Bank in Cof feyville; Greg Schreiner, KANZA Bank, Kingman; and Kent Owens, SVP of KBA Insurance, Inc., enjoyed networking at the conference. Colby May, Lending Chairman from Equity Bank in Wichita, welcomes at tendees to day two of the conference.

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14 WASHINGTON UPDATE By Rob Nichols, President & CEO, American Bankers Association Reining in a Regulator Gone Rogue In an American Banker op-ed earlier this year, I called out the CFPB under the leadership of Rohit Chopra as a “regulator gone rogue.” I’m not alone in my criticism: in September, 12 Republican lawmakers took the bureau to task over what they called a “radical and highly-politicized agenda unbounded by statutory limits.” Unfortunately, the bureau has continued to push legal boundaries on several different fronts in recent months. First, the bureau has waged an aggressive PR campaign against so-called “junk fees” – using a term it coined to demonize the legitimate fees, including overdraft fees, that banks charge consumers for the products and services they offer. Throwing these fees in with things like concert ticket processing fees, resort fees and other surprise fees charged by retailers and hospitality businesses was a deliberate move to confuse the public about the well-disclosed fees they currently pay. (For the record, banks don’t charge resort or ticket fees, nor does the CFPB have authority to regulate those types of fees.) Another alarming step by the Chopra bureau was its decision to update the UDAAP section of its exam manual in a way that fundamentally upends the regulatory approach to fair lending supervision and enforcement, without providing industry stakeholders or the public the opportunity to provide feedback through the notice and comment process under the Administrative Procedure Act. Instead, the CFPB chose to take a backdoor route to expand its authority – giving itself the ability to examine for alleged disparate treatment or impact across all areas of bank operations using the authorities granted by the Dodd-Frank Act under its authority to prevent “unfair, deceptive or abusive acts or practices.” In reality, the CFPB’s authority to enforce anti-discrimination laws is limited to credit products. It’s clear that this move is an

Pub. 11 2022 Issue 6 15 ABA fully supports the fair enforcement of the nation’s antidiscrimination laws. We simply believe these laws should be enforced by regulators within the boundaries set by Congress. attempt by the bureau to set itself up as a “super-regulator” of financial practices using authority Congress did not give it. To be clear: ABA fully supports the fair enforcement of the nation’s anti-discrimination laws. We simply believe these laws should be enforced by regulators within the boundaries set by Congress. This updated manual does not qualify. Given that the bureau has not seen fit to rescind the manual – despite previous calls from ABA and other trade groups – we were left with no choice but to pursue legal action. ABA’s lawsuit – filed in late September jointly with the U.S. Chamber of Commerce, the Longview Chamber of Commerce, the Texas Bankers Association, the Independent Bankers Association of Texas, the Texas Association of Business and the Consumer Bankers Association – alleges violations of the APA in three ways. First, the bureau is exceeding its statutory authority outlined in Dodd-Frank, which is clear that “unfairness” under UDAAP and discrimination are distinct concepts that should not be conflated. Second, the updated manual is “arbitrary and capricious,” in violation of the APA. Finally, it violates the APA’s procedural requirements because it constitutes a legislative rule that failed to go through notice and comment. It’s never our preference to take legal action against a regulator. And this lawsuit doesn’t mean we’ve given up on finding common ground with the bureau. In fact, on issues like the need to protect consumer data, the need to make sure nonbanks face the same regulatory requirements as banks for similar activities, or the importance of relationship banking, our goals are very much aligned. But when a regulator – any regulator – takes a step like this to dramatically expand its regulatory reach without authorization from Congress or any opportunity for the public to weigh in, ABA will respond on behalf of our members and the industry we represent. Email Rob Nichols at nichols@aba.com.

16 The 2022 KBA Trust Conference occurred Oct. 20-21 at the Hilton Garden Inn in Manhattan. Brian Dutton, KBA Trust Division President from Community National Bank & Trust in Winfield, welcomed all attendees to the Conference and introduced the first speaker, Michael Stillitano, from JP Morgan. Stillitano presented “Investing in the World of Sticky Inflation.” A receding pandemic unleashed powerful pent-up demand, and escalating geopolitical tensions in commodity-intensive parts of the world are sending prices higher across various sectors. While some of these price pressures may be transitory, others may hang around for some time, namely higher wages, rising inflation expectations and rising home/rent prices, further complicating monetary policy. This explored how higher inflation and hawkish central banks will impact the investment landscape over the medium-to-long term. The 2022 KBA Trust Conference After the lunch and tradeshow, Motivational and Keynote Speaker Matt Jones energized the audience with his presentation, “Banking is a Marathon – How to Stay Motivated.” Attendees learned strategies to use to attain greater VICTORY. Jones shared his againstall-odds story of conquering cancer three times, surviving a bone marrow transplant, relearning how to walk and completing marathons around the world. Dr. Roger Tutterow, Kennesaw State University, was up next with the Economic Update. He provided a timely overview of global, national and regional economies, including recent developments COVID-19 had on the retail sector and real estate, the causes and effects of the recent changes in energy prices, the structure and effect of recent fiscal stimulus and the linkages between trade policy and currency valuation. The KBA Trust Division held its annual meeting at the end of the first day of the conference. The new slate of officers and directors was approved for 2022-2023. The second day kicked off with Bill Ehling, Federated Hermes, with “Economic Assessment and Fixed Income Outlook.” Interest rates and the economy are inherently linked in a hand-in-glove relationship. The program described Federated’s assessment of the current state of the U.S. and global economies and the opportunities available in the fixed-income markets in light of that assessment. Linda Duessel, Federated Hermes, spoke next with “Cryptocurrencies Demystified.” Bitcoin has been around since 2008, but its price, size in the market, and transaction volume has exploded in just the last few years. Most investors are aware of its existence, but they know very little else. Investors and their advisors are increasingly asking whether Bitcoin should be held in portfolios. The blockchain has been called one of the most disruptive Michael Stillitano, JP Morgan, kicked of f the 2022 KBA Trust Conference with his presentation, “Investing in the World of Sticky Inflation.” Shan Hanes, KBA Chairman and President & CEO of Hear tland Tri-State Bank in Elkhar t, welcomed all at tendees to the 2022 KBA Trust Conference in Manhat tan. Motivational and Keynote Speaker Mat t Jones energized the audience of at tendees with his presentation, “Banking is a Marathon – How to Stay Motivated.”

Pub. 11 2022 Issue 6 17 innovations since the advent of the internet. The presentation explained the concept and many others that were important to understand, as well as opportunities and risks in cryptocurrencies in general and Bitcoin in particular. Larry Divers from Cannon Financial wrapped up the second day with his presentations, “Fiduciary Advice Expanded for Retirement Discussions” and “2022 Tax Changes.” The DOL expanded the interpretation of fiduciary advice described in the preamble to the prohibited transaction exemption (PTE 2020-02). In addition, in the preamble to the PTE, the IRS and the DOL announced an expanded interpretation of fiduciary advice which means more financial institutions are fiduciaries for their recommendations to Retirement Investors and, therefore, will need the protection provided by the exemption. This first presentation reviewed the PTE 2020-02 disclosure requirements and outlined how financial professionals in compliance teams can adequately meet them. Several large tax breaks were enacted during the 2021 tax year by the American Rescue Plan, signed into law in March 2021; however, most of those tax law changes expired at the end of 2021. As a result, the Child Tax Credit, Child and Dependent Care Credit, Earned Income Credit, and other popular tax breaks are different for the 2022 tax year. Additionally, this second presentation included a summary of the key provisions of the SECURE ACT 2.0 that is highly likely to have been passed by the time of the conference. Mat t Hoy, Stevens & Brand, presented “Ethics – A Smat tering.” Dr. Roger Tut terow from Kennesaw State University presented the Economic Update to at tendees. Conference sponsors were thanked for their generous suppor t of the 2022 KBA Trust Conference. Bill Ehling, Federated Hermes, kicked of f day two of the Conference with “Economic Assessment and Fixed Income Outlook.” Linda Duessel, Federated Hermes, presented “Cryptocurrencies Demystified.” Larry Divers, Cannon Financial, closed out the Conference with his presentations, “Fiduciary Advice Expanded for Retirement Discussions” and “2022 Tax Changes.”

18 After a whirlwind election cycle that focused on unfavorable ratings of U.S. President Joe Biden, former Kansas Governor Sam Brownback’s record, and concerns about the economy, Governor Laura Kelly successfully held off a challenge by Kansas Attorney General Derek Schmidt. Immediately following Kelly’s victory speech, Republican Party officials took critical aim at the Independent Gubernatorial campaign run by Kansas Senator Dennis Pyle. Pyle changed his party affiliation from Republican to Independent to run as a conservative alternative to Schmidt. When all the votes were counted, he received close to the number of votes that separated Kelly and Schmidt. However, that alone was not the deciding factor in this race. Pyle’s presence in the race made it difficult for Schmidt’s campaign message to attract and retain the independent voters, moderate and conservative wings of the party. Nonetheless, most statehouse insiders agree the Kelly campaign ran a great campaign focused on governing from the middle and keeping our schools funded. That message ultimately won the day. We congratulate Governor Kelly on her hard-fought victory and look forward to working with her as she begins her second four-year term. Governor Kelly Re-Elected, Supermajorities Remain, and Your 2023 Legislative Preview Governor Kelly will be in a position familiar to her first term, negotiating with a Republican supermajority in both the Senate and House. Only the House was up for election this year, and Republicans held their supermajority, retaining 85 of their 86 seats. That retention is critical because 84 votes are needed to pass constitutional amendments or override a gubernatorial veto, setting the stage for ongoing veto battles between Governor Kelly and the Republican-controlled Legislature. Although the Governor and Legislature will have their differences on policy, there is momentum from both sides of the political aisle to work together on meaningful reform to state tax policy. Republicans and Democrats both campaigned on this issue due to the favorable fiscal position the state is predicted to be in for the next two years. According to the most recent report by the Consensus Revenue Estimating Group (CREG), the group tasked with predicting the state’s financial picture, Kansas is looking at having a $2.3B surplus in FY 2023 and $3.2B in FY 2024. These large ending balances help fuel conversations to return money to Kansas taxpayers through property tax relief or to exempt retirement benefits, such as social security, from state tax policy. Both will absolutely be debated next year, along with other corporate, sales, and food tax reductions. The question will be, how much should the state return in this unpredictable and inflationary economic situation without being put in a position to raise taxes again to fund the government? Alex Orel, KBA SVP-Government Relations

Pub. 11 2022 Issue 6 19 While taxes will be a significant issue when the Kansas Legislature returns to Topeka in January, there will also be a discussion on environmental, social, and governance (ESG) legislation. This type of legislation can threaten the free market and negatively impact how banks and businesses currently do business. You may have read the article entitled “Will the ESG Pendulum Become a Wrecking Ball?” penned by Doug Wareham, KBA President & CEO, in the August issue of the Kansas Banker. Undoubtedly, our industry will be caught in the middle of conflicting state legislation and federal regulatory guidance that could affect the extension of credit to lawful businesses. Kansas lawmakers have their eyes set on addressing the ESG issue at the state level by looking at model legislation that would penalize banks and businesses for not doing business with specific industries and legislation that could require the state’s pension fund to divest from those companies that push an ESG agenda. While their intentions are well-placed, the unintended consequences of these policies are troubling. They could open our industry to significant liability or create burdensome government overregulation in the free market. But it remains that something needs to be done to address this issue that could hurt. While it is the legislature’s right to protect core sectors of our economy, we will work to ensure the policies implemented don’t put the banking industry in the middle of a political wrecking ball. While the issues mentioned above will undoubtedly consume much of the Capitol air, your KBA government relations (GR) team is dedicated to continuing to look for policies to modernize our Kansas trust code, develop guidance for implementing our state-level tax bill that exempts interest earned on agricultural real estate and rural housing loans from state taxation, and begin the discussion on the use of public funds and how they are invested in Kansas banks and Kansas communities. The 2023 Legislative Session is right around the corner and your team is eager to work on behalf of you and the industry. It is an honor to represent you in Topeka. It’s time to get to work! If you have any questions or want to know how to help with our GR efforts, please do not hesitate to contact Alex at aorel@ksbankers.com or call the KBA office at (785) 232-3444.

20 The Manhattan Hilton Garden Inn was the location for the 2022 Economic & Risk Management Conference on Nov. 2-3. With many CEOs, CFOs and investment bankers on hand, the program provided high-level and timely information for bank development and planning. KBA Chairman Shan Hanes, Heartland Tri-State Bank in Elkhart, welcomed attendees, thanked conference sponsors, and gave special recognitions before introducing the first keynote speaker, small business expert Gene Marks. In his fast-paced and entertaining talk titled, “The Economy, Inflation & Mid-Terms: Tactics, Strategies & Actions to Increase Profitability at Your Bank … and Help Your Customers,” Marks took a deep dive into the factors causing inflation, future cost increases and – most importantly – what leaders at other businesses around the country are doing to navigate their organizations in a higher priced environment. He also provided a review of the latest federal legislation with an emphasis on business matters such as labor, healthcare, taxes, and regulations that will affect our industry moving forward. 2022 Economic Outlook & Risk Management Conference “Cryptocurrency and Central Bank Digital Currency” was presented by Brooke Ybarra, SVP, Innovation & Strategy at American Bankers Association. Ybarra provided a framework for understanding different types of digital assets, including traditional cryptocurrency, stablecoin, and central bank digital currency. She presented a high-level discussion on how banks are engaging in the cryptocurrency ecosystem and reviewed key policy and regulatory developments. Following lunch, the conference had three options for breakout sessions that included: • “CECL – A New Risk Management Tool” with Dr. Bruce Morgan, PhD., Professional Bank Consultants, LLC • “Strategic Plans, Capital Plans & Risk Appetites – How They Fit Together” with Pete Weinstock, Partner, Hunton Andrews Kurth • “Optimize Your Bank’s Balance Sheet for Flexibility in Uncertain Times” with Glenn Martin, Managing Director, IntraFi Network In the day’s final session, “Future of Banking with Fewer Employees,” Paul Minter reminded us that the future of banking with fewer employees asks us to manage this changing environment and lead ourselves, teams, and organizations to a new way of working. The labor market in 2022 forced leaders across industries to rethink work, the employee experience, and how we all cope with the local, global, technical, and social changes that impact our workplaces. Navigating the future of work requires navigating ambiguity, preparing ourselves for change, and leading others through the experience of change, all while ensuring we deliver on the most pressing needs and expectations of our businesses. We don’t know all we need to know about the future of work, but in this session, Minter reminded us we have many of the tools we need to successfully lead through this period of change. Day two of the conference began with Don Musso, President of FinPro, Inc., with his session, “State of the Economy and its Impact on Banks.” The country is literally at a fork in the road. Recent data like unemployment and consumer spending (adjusted for falling gas prices) would indicate a stronger-than-expected economy. Musso explained that rates should rise across the board and that inflation will persist at higher levels. Conversely, the long end of the rate Lef t to right: John Kilroy, UMB Bank NA in Kansas City, Natalie Regan, Country Club Bank in Prairie Village, and Francis Scheuerman, UMB Bank in Kansas City network during a refreshment break. Dustin James closed the conference with his energizing presentation, “Lead with Everyday EXCELLENCE.” Shan Hanes, KBA Chairman from Heartland Tri-State Bank in Elkhart, welcomed attendees.

Pub. 11 2022 Issue 6 21 curve, along with negative GDP, would lead us to believe we are already in a recession. Which is it? Our current thinking is that certain regions and industries are in recession while others are not. Much of this is tax policy-driven, so the low-tax states materially outperform the high-tax states. This, as of today, is not a national recession. However, we think it will become a national recession as the Fed raises rates in large increments, which will depress consumer spending. As such, we expect a strong curve inversion in the near term. Musso’s outlook is that this will not be good for community banks as our deposit rates will climb while our loan rates will remain lower than they should be. The overall compressing net interest margin will materially negatively impact earnings. Steve Wyett, BOK Financial, presented a talk on “Adventures in Economic, Monetary, and Fiscal Policy.” “The Fed has got more work to do,” said Wyett. “Inflation pressures take longer to come out of the system.” The solid rebound in the gross domestic product, or GDP, in the third quarter following two straight quarters of economic contraction may also quiet some (but not all) recession worriers. That could also prompt the Fed to continue its aggressive rate hiking stance, even if such a policy risks causing a recession down the road. The worry is that the Fed may be choosing to look more at current economic data and isn’t thinking enough about the lag effect of its existing rate hikes. Inflation in the U.S. economy may not have peaked yet, but there is a growing sense we’re pretty darn close to that. The conference closed with a highly energetic session, “Lead with Everyday EXCELLENCE” by Dustin James. We ALL can control our Emotions, Education, Experiences, and Energy, all valuable tools for business and life. To reach everyday excellence, we must focus on the internal factors we can utilize to grow and build our businesses, relationships, and life. We easily get distracted by outside factors that move us away from motivation, goals, and our game plan. This interactive closing session provided attendees with valuable tools to create an ACTION PLAN, creating a path to extreme success. Mark your calendars for next year’s conference: Nov. 8-9, 2023 in Manhattan. Thank you to this year’s sponsors! Lef t to right: Mat t Lephardt and Patrick Smith from BOK Financial Capital Markets in Overland Park, and Brady Chianciola, Profit Resources Inc., in Monroe, Georgia. Lef t to right: Jack Galle, Legacy Bank in Wichita, and Quinton Smith, INTRUST Bank, N.A. in Wichita. Lef t to right: KBA Chairman Shan Hanes, Hear tland Tri-State Bank in Elkhar t, and presenter Gene Marks, Marks Group. Lef t to right: Hetal Desai, Equity Bank in Wichita, and Tim Kemp, Of fice of the State Bank Commissioner in Topeka, catch up during the Conference. Lef t to right: Tammy Placzek, INTACT Financial Services from Minneapolis, Minnesota, and KBA’s Alex Greig, President of KBA Insurance, Inc. KBA’s President & CEO Doug Wareham speaks to at tendees about KBA’s current legislative and regulatory initiatives.

22 Many Bank Holding Companies (BHCs) have shareholder agreements that limit voting rights, buy-sell, transfer of shares and other restrictive provisions. The creation and implementation of these agreements frequently occurred when BHCs could elect to be taxed as a subchapter S corporation (S Corp) Now is the Time for Bank Holding Companies to Review Shareholder Agreements By Michelle Fox, McGregor (Greg) Johnson, Adam Maier, and C. Robert Monroe, Stinson LLP Those Drafted in the Late 1990s May Be Near Termination in 1998. Many private BHCs held as C corporations may also contain such agreements, and banks not owned by a BHC could also have such agreements. An agreement involving the stock of a banking organization cannot be perpetual under the requirements of Regulation Y (Section 225.2(d)(1)). For such an agreement to avoid being considered a “company,” it must terminate within 25 years. Although traditional corporate law allows certain agreements to last indefinitely and be continuous, an agreement that controls or owns the stock of a banking organization cannot be everlasting. Thus, to preclude the conversion to a “company,” the shareholder agreement must end within 25 years.

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