2023 ISSUE 2 COMMUNI TY BANKI NG MONTH • COMMUNI TY BANKI NG MONTH • COMMUNI TY BANKI NG MONTH • APRIL IS Community Banking MONTH
INVESTMENT PRODUCTS Municipal Bonds Mortgage-Backed Securities Govt. & Agency Bonds Corporate Bonds Brokered CDs Money Market Instruments Structured Products Equities Mutual Funds ETFs FINANCIAL SERVICES Public Finance Investment Portfolio Accounting Portfolio Analytics Interest Rate Risk Reporting Asset/Liability Management Reporting Municipal Credit Reviews Balance Sheet Policy Development and Review Comprehensive SOLUTIONS 888-726-2880 FBBS believes the success of your team is the future of our firm. MEMBER FINRA & SIPC. INVESTMENTS ARE NOT FDIC INSURED, NOT BANK GUARANTEED & MAY LOSE VALUE. COLORADO | ILLINOIS | IOWA | KANSAS | MISSOURI | NEBRASKA | OKLAHOMA | TEXAS | TENNESSEE | VIRGINIA Ever since I met Chris Bryan, I have been impressed with how professional & knowledgeable he is in his work for MIB. Chris knows what MIB can do for Banks and he knows what he can do for your Bank. He brings energy and enthusiasm to everything he is associated with. Chris has the “IT” factor and he makes everyone around him better. He is who you would want on your team and he makes the MIB team better. Chris Bryan with customer Brock Nuckolls of Rock Port, Missouri WHY ? Brock Nuckolls, President/CEO Citizens Bank and Trust of Rock Port Lending Services Operational Services Audit Services* MEMBER FDIC Audit Services are offered thru MIB Banc Services, LLC, a subsidiary of our holding company. 800-347-4MIB mibanc.com *
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INSIDE THIS ISSUE 17 20 26 28 Published for the Missouri Independent Bankers Association P.O. Box 1765 Jefferson City, MO 65102 573.636.2751 | miba.net Editor: Matthew S. Ruge Executive Director ©2023 The Missouri Independent Bankers Association | The newsLINK Group, LLC. All rights reserved. The Show-Me Banker Magazine is published six times a year by The newsLINK Group, LLC for The Missouri Independent Bankers Association 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 Missouri Independent 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 Show-Me Banker Magazine is a collective work, and as such, some articles are submitted by authors who are independent of The Missouri Independent Bankers Association. While The Missouri Independent Bankers Association 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. MADE IN THE USA 06. President’s Message Be Proud to Be a Community Banker 07. Community Banking Month 08. Flourish 09. From the Top 10. A View From The Capitol 12. MIBA Lobbying 12. ICBA Capital Summit 2023 13. Meet Your Missouri Banker Ben Compton, Hawthorn Bank 14. Legal Eagle Spotlight: Subchapter V Bankruptcy Lenders, Time to Change Your Playbook 17. A Background On Mark Thatcher Sr. & Mark Thatcher Jr., Bankers Security 20. The Five Percenters Current Bond Yields Have Long-Term Appeal 22. News From You 23. MIBA Upcoming Events 24. Save the Date 46th Annual MIBA Convention & Exhibition 26. Using IT Governance to Achieve Your Bank’s Business Goals 28. MIBA 2023 Winter Summit 30. Rising Interest Rates Complicate Banks’ Investment Portfolios 31. 2022/23 MIBA PAC Honor Roll 32. FPC Excited About Faster Payments 34. Upcoming Webinar Schedule 4 | The Show-Me Banker Magazine
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Main Street vs. Wall Street is a typical conversation with small business owners. They see that every new legislation or initiative in the press seems to be set up for large companies while neglecting the small business owners’ needs. At the same time, these small business owners often turn to large banks to provide them with their financial services. They see the flashy ads, the high-priced locations, and the fancy branches. It all seems so good until it isn’t. Unfortunately, many of them learned that the large banks turn their backs on them when times get hard, or they have a noncookie-cutter need. They all needed a community bank that would understand their needs and focus on them. Community banks aren’t in business to raise capital from significant investment funds or pacify market expectations; instead, they are there to be a part of their community. As you well know, the joy of being a community banker is connecting with everyone around you. You live, eat, and work together. Community banks are an integral piece of the fabric that makes Main Street in any given community. We are members of the Rotary, City Council members, and volunteers, and we feel the struggles and nuances of our communities. As an industry, we provide access to vital funds and critical resources to business owners. In our communities, we provide guidance and training on everything from best practices in managing financial statements to dealing with regulatory issues. We are a fountain of knowledge the community needs and actively seeks. Community bankers are constantly giving back, and financial education is one of the most important things we provide. While Wall Street offers flashy advertising and slick slogans, the real meat and potatoes of what small business owners need come from Main Street banks. We will be there through it all. We are not pulling out of the market when it is no longer the most lucrative place to be, as execs in a New York high-rise are prone to do. We are in it for the long haul. Be proud to be part of something so vital to our communities. Be proud to be a community banker. ■ PRESIDENT’S MESSAGE “Community banks are an integral piece of the fabric that makes Main Street in any given community.” Be Proud to Be a Community Banker @tmbender Tyler Bender MIBA President Midwest Regional Bank Clayton, MO 6 | The Show-Me Banker Magazine
April 2023 Community Banking Month April is Community Banking Month—a celebration of the independent spirit and unwavering commitment of community banks to help consumers and small businesses achieve their financial goals to create communities of prosperity. VISIT MIBA.NET FOR A FULL SUITE OF COMMUNITY BANKING MATERIALS
True relationships withstand the test of time, ebbing and flowing with the cycles of life, and such is the case with the community bank — customer connection. It’s not unusual to hear about a community bank having served a family or a business for generations, and that’s a testament to the strength of the relationship. As we consider marketing in this month’s issue, I took time to reflect on exactly what differentiates the community banker and how marketing can help in growing and retaining business. I kept coming back to the fact that, for community banks, marketing often points to finding ways to educate, support and grow the community, as well as customer knowledge and awareness. By extension, these promotional efforts assume a natural role in a community bank’s journey, just enhancing what are already mission-critical initiatives. For example, consider ICBA Chairman Brad Bolton’s Community Spirit Bank in Red Bay, Alabama, and its work to share tips for financial resolutions in the local paper. Offering that information to the community helps individuals strengthen their financial savvy and supports a broader story of community bank leadership. Or look to ICBA Past Chairman Bob Fisher’s bank, Tioga State Bank, in Spencer, New York, and how it teams up with local television stations to support cause-related activities, like the No Shave November Cure the Blue 5K. Not only does this event help raise funds for an important program, it also demonstrates the bank’s involvement with and commitment to its community. These examples offer only a snapshot of what community banks all over the country do to support their communities from a missionbased approach. In many cases, the added promotion these efforts deliver is a side benefit to serving the community. That’s precisely why these efforts are successful: they garner attention because they are the right things to do. These stories create a value proposition around why banking with a community bank is so vital, and the differentiation from megabanks and credit unions happens by leading with the community bank relationship model front and center. So, as you think about your bank’s planned storytelling this year, know that ICBA is standing by to help. In fact, stay tuned for a very exciting announcement that we’ll be making during ICBA LIVE, which will shine a light on what differentiates community banking. And our work won’t stop there. We invite to you join us in this next step of our journey as we continue to tell the community banking story. Because beyond promotion, what you do matters to the customers and communities you serve. You are and will remain a partner through your customers’ lives and financial journeys. From a marketing perspective, that’s an ideal place to be. ■ FLOURISH “For community banks, marketing often points to finding ways to educate, support and grow the community, as well as customer knowledge and awareness.” Rebeca Romero Rainey ICBA President and CEO @romerorainey 8 | The Show-Me Banker Magazine
FROM THE TOP Brad Bolton ICBA Chairman “I am grateful to have had the opportunity to serve as chairman. I will continue to advocate for community banking and, for the rest of my career, will stand side by side with you to fight our future battles.” @bradmbolton S erving as ICBA Chairman has been one of the highest honors of my life. It’s hard to put into words how special this experience is. The work you’re doing every day puts real faces and names to the communities we’re fighting for, and it has been a privilege to be your representative at the national level. Yet, it takes the voices of many to make a true impact. That’s why I’ve asked community bankers to sacrifice a few minutes every day to advocate for our industry. We are what stands between our customers and an overreaching federal government and regulatory system. We hold the line for Main Street America, which needs us. In today’s environment, that vigilance is critical to staying ahead of emerging threats. Each day brings forward new concerns, and we have to stay focused on who we are and who we represent. So, keep pressing forward in defending this great industry we get the opportunity to serve. For example, every community banker has a primary focus on how they can better serve their customers. It isn’t about making more money, but how we respond to community needs. We should also remind policymakers that community bankers are small business owners, too. And even though we have fiduciary and regulatory responsibilities to remain profitable and provide a return to our shareholders, our focus always comes back to how we can serve our customers better. In maintaining that focus on our relationshipcentric mission, we will continue to thrive. That’s why it’s vital for community banks to remain independent, and a big theme for me has been encouraging bank executives to identify their next generation of leaders. There are those within your institution who share your vision and passion. Support their development and groom them to take the reins. Without your bank, your communities are at risk. So, make a succession plan to ensure your bank remains the lifeblood of the community. With that in mind, I implore you to keep fighting for Main Street. Keep raising your voices to advocate for your customers. Keep engaging with innovative companies to grow, evolve and better serve. Keep identifying future leaders to ensure the longevity of your institution because your communities need you in their corner. I want to close by saying I am grateful to have had the opportunity to serve as Chairman. I will continue to advocate for community banking and, for the rest of my career, will stand side by side with you to fight our future battles. With that passion leading, I’m confident we’ll witness the continued growth and success of our beloved industry. ■ My Top Three Reflections on Community Banking 1. Never take our community bank mission for granted; advocate for it. 2. Keep innovating and implementing new technologies for your customers. 3. Someone at your bank wants to lead it for the next generation. Let them. 2023 Issue 2 | 9
Congressman Blaine Luetkemeyer Missouri’s 3rd Congressional District A VIEW FROM THE CAPITOL The first few months of the 118th Congress have been off to a productive and busy start. Since my last column, Committee assignments have been finalized, and I’ve got some new responsibilities this Congress. I will continue serving on the House Financial Services Committee and will now be leading the Subcommittee on National Security, Illicit Finance and International Financial Institutions as Chairman. I termed out as Chairman of the Financial Institutions and Consumer Protections Subcommittee, but I will remain on that subcommittee and the Housing and Insurance Subcommittee. I’ll also be serving on the House Small Business Committee and have been chosen to serve on the Select Committee on the Chinese Communist Party (CCP), where our work will intersect nicely with my new Subcommittee Chairmanship. I’m looking forward to our work on the National Security Subcommittee as we have jurisdiction over all financial matters related to the national security interests of the United States — including sanctions, CFIUS, financial intelligence, money laundering and international financial institutions like the IMF and World Bank. And very importantly, we oversee the U.S. economic response to China, who is undoubtedly our biggest international threat. As we saw with the pandemic, relying on any foreign government — especially one with such corrupt leaders — is a massive threat to our national security. For decades now, we’ve allowed Chinese companies to access our capital markets while stealing our intellectual property and ignoring our laws. U.S. companies have also partnered with the CCP to invest billions of dollars into the Chinese economy. This all needs to stop. Our first full committee hearing in the House Financial Services Committee was “Combatting the Threat from China” and our first markup included several, bipartisan China-related bills. In our markup, we addressed the need to disincentivize Chinese aggression toward Taiwan by publishing top Chinese leaders’ assets; pushed for Taiwan’s membership at the IMF and greater transparency in China’s exchange rate disclosures; and a bill to require the Treasury Secretary to report on global economic risks emanating from the Chinese financial sector — to name a few. I have also introduced a bill since then to prohibit the use of the Chinese Central Bank Digital Currency, also known as the Digital Yuan, by U.S. licensed money service businesses. Clear barriers to prevent the CCP from monitoring the transactions and collecting the financial data of American consumers and businesses need to be established, and this bill is a necessary step to do that. I’m very pleased my colleagues from both sides of the aisle share my view that this threat needs immediate addressing, and that we’re already working to do that. My work on the National Security Subcommittee coordinates perfectly with my role on the Select Committee on the CCP. Speaker McCarthy and Minority Leader Jeffries have populated the committee with knowledgeable people from both sides of the aisle in every jurisdiction it touches. My role focuses on Chinese investments in the U.S. and American investments in China. For too long the CCP has been able to access and use American dollars to help fund its human rights abuses and military operations. In our first Select Committee hearing, we heard incredible testimony from Ms. Tong Yi, a human rights advocate who spent four years in a Chinese “reeducation through labor” for speaking out against the regime. Hearing firsthand about her horrific experience — and having it broadcasted on national television — shed even more light on what is really going on in China and made the case for getting out of business with them that much stronger. Because the Select Committee won’t be writing legislation — just presenting policy proposals to address specific problems — it will be up to the committees of jurisdiction to write and move the bills. I fully intend to do that with the National Security Subcommittee. As we saw with the spy balloon that flew right over Missouri, China is becoming increasingly emboldened. That balloon sent a clear message that the CCP is not afraid of our military, our government, or letting the American people know they’re watching. When dealing with the secondlargest economy in the world, our economic response is just as necessary and powerful as our military might. While my committee assignments and the United States’ current geopolitical situation demand that I spend more time on China than in the past, I assure you it is in addition to — not instead of — my continued efforts on more traditional banking issues, particularly the CFPB. With multiple court rulings, including the Supreme Court’s decision on the CFPB’s funding mechanism, on the horizon, the Committee will be heavily focused on reforming the Bureau. In fact, we have already had our first Financial Institutions Subcommittee hearing on needed reforms. I look forward to discussing our proposals with MIBA members and getting your feedback. ■ 10 | The Show-Me Banker Magazine
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At this writing, the Missouri Legislature is preparing to recess for the annual legislative spring break. The break begins Friday, March 10 and ends Sunday, March 19. It signals that, when the legislature reconvenes, there will only be eight weeks left in the 2023 session. We are currently tracking 32 House and Senate bills and resolutions that are at various stages in the process. Four Senate bills on the track — SB 13, Regulation of Financial Institutions; SB 101, Lender Placed Insurance; SB 186, Crimes Involving Teller Machines; and SB 187, Commercial Financing Disclosure Act — have all passed the Senate and have been read a second time in the House. The HCS, HBs 903, et al. Foreign Ownership of Farmland has cleared the House and has been reported to the Senate. The foreign ownership of farmland issue is a hot button for business land transactions. The latest version of this bill vests the power to determine farmland ownership with the Secretary of State and the Attorney General. Currently, the law gives the determination to the Department of Agriculture. These bills are ahead of the curve as they will be referred to committee after the break and, barring a meltdown in either chamber, have a good chance of passage this session. ■ MIBA LOBBYING Report Andy Arnold Arnold & Associates 2023 INFORM • IMPACT • INSPIRE YOU'RE AN ADVOCATE FOR YOUR COMMUNITY, BE AN ADVOCATE FOR YOUR INDUSTRY. REGISTRATION IS FREE FOR ALL OF OUR NATION'S COMMUNITY BANKERS REGISTER TODAY ICBA.ORG/CAPITALSUMMIT MAY 14–17 WASHINGTON, DC 12 | The Show-Me Banker Magazine
Where are your main bank and branches located? We are located at the Belton branch, but we are headquartered in Jefferson City and have 22 locations throughout the State of Missouri. What is something unique about your bank? We are very involved within the community and are a familyoriented bank. When I was going through the interview process, I was told that I would never miss one of my kids’ events due to my job and that has always been the case. How did you get started in the banking business? While I was in college, I worked for a community bank in my hometown during the summer and I really enjoyed it. I was pursuing an accounting degree at the time, and I knew I liked working with numbers, so it was a natural fit. What is the most important thing you’ve learned from this career so far? As much as you would like to, you aren’t going to be able to help everyone with their financing needs for various reasons. It’s better to be honest up front and see if you can’t provide them with other solutions. I find that this job has taught me how to be a better businessman and communicator. MISSOURI BANKER Meet Your Ben Compton Market President — Belton Hawthorn Bank “It’s very rewarding helping people try to achieve their goals. ” Tell us about the Bank’s community investment efforts. Each region of the Bank is very involved within their community, whether that is offering scholarships at the local schools, having annual coat drives, donating food during the holidays and donating to the local fundraisers. What is the Bank’s biggest challenge in the area of Internet banking/mobile banking? Staying current with the changes in the technological advances that are advantageous to our customers. We currently have a highly successful and convenient internet and mobile banking platform along with our treasury services product. We will need to stay competitive to retain and gain new customers in the future. What’s your favorite thing about your bank or banking in general? Being able to help local families and businesses with whatever banking needs they may have. It’s very rewarding helping people try to achieve their goals. If you didn’t have a career in banking, what other career would you choose? I would pursue something in real estate such as a commercial real estate broker. I have personally flipped two homes and have always been passionate about real estate. ■ 2023 Issue 2 | 13
LEGAL EAGLE SPOTLIGHT There can be no mistake that small businesses represent the backbone of the Missouri economy. According to the Small Business Administration’s 2022 Small Business Profile, there are approximately 542,700 small businesses in the State of Missouri, which represents 99.4% of all Missouri businesses. The COVID-19 pandemic posed an existential threat to most small businesses. In response, several governmental programs were enacted to help keep small businesses afloat. As these programs sunset and the country enters into a time of rising interest rates and continued inflationary pressures, the financial health of small businesses continues to be at risk. Many businesses may have no other choice but to consider bankruptcy relief if they want to keep their doors open. In particular, many small businesses may elect Subchapter V bankruptcy treatment. Subchapter V Bankruptcy In February 2020, the Small Business Reorganization Act of 2019 became effective. As part of this Act, Congress created Subchapter V, which alters the rules of a traditional Chapter 11 bankruptcy. Subchapter V was designed to make bankruptcy restructuring more feasible and affordable for small businesses. Subchapter V is only available to a “Small Business Debtor.” A “Small Business Debtor” is a defined term under the Bankruptcy Code. Corporations, limited liability companies, partnerships and sole proprietorships can elect to Subchapter V treatment, provided that 50% or more of the entity’s debt comes from business or commercial activities. A single asset real estate entity in addition to public companies and their affiliates do not qualify for Subchapter V treatment. Currently, the breadth of Subchapter V eligibility is being tested with several lower courts taking differing positions on the same. In its pre-pandemic form, Subchapter V had limited utility because it was available only to those debtors that owed less than $2,725,625 in non-contingent, liquidated, business-related debts. In response to the pandemic, the debt limitation was increased to $7,500,000, making it more widely available. This higher debt limit is currently set to sunset on June 21, 2024. A Lender Playbook Change Prior to Subchapter V being created, financial restructuring through a traditional Chapter 11 was cost-prohibitive for small businesses. A business would have to propose its plan of reorganization or liquidation and then generally engage in an expensive and lengthy process to get that plan approved by the bankruptcy court. Many small businesses did not have the financial wherewithal to make it through such an arduous process. Thus, many Chapter 11 cases resulted in the immediate sale of the debtor’s assets and, in some cases, the shuttering of the business. Subchapter V eliminates many of these barriers and moves at a rapid rate. Subchapter V, however, changes the playbook on how a lender should approach a bankruptcy case. For instance, a bankruptcy plan is going to be generally filed within 90 days of the petition date and eliminates the “disclosure statement” stage of the case. This means plan approval will come much faster in a Subchapter V case. In addition to the increased speed, Subchapter V eliminates several requirements that provided negotiating leverage to creditors in the planning process. In particular, Subchapter V eliminates the “absolute priority rule” and the requirement of an “impaired accepting class.” Stated simply, the absolute priority rule provides that, unless unsecured creditors are paid in full, holders of equity interests may not receive or retain anything under the plan. Requiring strict compliance with the absolute priority rule provides creditors with a substantial amount of leverage in plan negotiations. Further, in a traditional Chapter 11 case, the debtor must get at least one class of non-insider creditors to vote in favor of their plan. In some cases, debtors would get creative in forming this impaired accepting class and there would be substantial litigation as to Subchapter V Bankruptcy Lenders, Time to Change Your Playbook By Eric L. Johnson and Elizabeth M. Lally, Spencer Fane LLP 14 | The Show-Me Banker Magazine
“In addition to the increased speed, Subchapter V eliminates several requirements that provided negotiating leverage to creditors in the planning process.” whether this creativity constituted improper “gerrymandering.” In Subchapter V, the debtor can confirm a plan even if all creditors vote “no” if certain other requirements are met. In short, Subchapter V makes it easier for the small business debtor to “cram down” a plan on its creditors. Accordingly, lenders must be prepared to act fast and re-examine existing (even if seldom used) provisions of the Bankruptcy Code to either reclaim leverage in plan negotiations and/or prevent the confirmation of an unacceptable plan. Further, a lender should be prepared to work with its borrower and the newly created Subchapter V trustee to see if a consensual plan may be reached. Conclusion Subchapter V is designed to be fast-moving and supportive of a debtor’s reorganizational efforts. Lenders should be careful not to sit back and “wait and see” what happens but should be prepared to work proactively in order to secure their rights and treatment. Failure to do so may result in a loss of negotiating leverage and/or an unacceptable modification of the loan being “crammed down” upon the lender. ■ Spencer Fane attorneys Eric Johnson and Elizabeth Lally can be reached at ejohnson@spencerfane.com and elally@spencerfane.com, respectively. Are you ready for growth? Advertise in this magazine and watch your revenue soar. A place where your company gets wings! Contact us today to get your spot. 801.676.9722 | 855.747.4003 sales@thenewslinkgroup.com 2023 Issue 2 | 15
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A BACKGROUND ON Mark Thatcher Sr. & Mark Thatcher Jr., BANKERS SECURITY Bankers Security (BSI) was founded in 1981 by Chris Thatcher. What started as a vault door and bank lock company quickly evolved into a full-service bank equipment company servicing the Midwest. Chris loved to teach and share his skills with anyone who wanted to learn; his peers and bankers have kindly referred to him as a security expert. One of his many talents was working on vault door time locks; the skills required for this job are similar to that of a watch/clockmaker. Companies from across the United States would send Chris their time locks to be repaired and serviced. Today, Chris’s son and grandson are proud and honored to carry on his vision since his retirement in 1997. “My father developed a tremendously loyal customer base,” said Mark Thatcher Sr., President and CEO. “Customers enjoyed the advantage of his 20 years of experience, enhanced by the personal touch of a familyowned business.” Sustaining continued growth over the years, the company has remained true to its mission of building a lasting relationship with its customers through its products and the unrivaled services they provide. We recently sat down with Mark Thatcher Sr. and Mark Thatcher Jr. and talked with them about their business, life and hobbies. What follows are excerpts from our conversation. We hope you enjoy getting to know them as much as we did. “This is not just a job. We love what we do and care about our customers.” Mark Thatcher Sr. and Mark Thatcher Jr. Mark Thatcher Sr., Chris Thatcher, and Mark Thatcher Jr. 2023 Issue 2 | 17
Have you had important mentors during your career so far? Who were they, and what was the most important lesson you learned from them? I would have to start with my father; he taught me not just the skills part of our business but how to make customers happy. There have been many others as well. Some have passed on, and I fondly remember them, while others remain my very dear friends to this day. What three recommendations would you have for someone if you were mentoring them? 1. Create good customer relationships and always do a little more than is expected. 2. Learn patience. 3. Work hard and don’t quit. Do you have any last words summarizing your thoughts for anyone reading your article? My 40th year with BSI is this March. My son, Mark Jr., likes to say, “One year in bank equipment is like dog years, so it’s actually like 280 years.” BSI has pretty much defined my life, professionally speaking. I love this industry, and I care about the clients we serve. I truly enjoy helping customers solve their needs through typical solutions or by different and creative means. Mark Thatcher Sr. Mark is the President and CEO of BSI. His day-to-day responsibilities include company operations, working with office staff, and, his favorite, entertaining clients. Mark owns a boat and enjoys taking his clients out on The Lake of the Ozarks, a place he has frequently enjoyed over the past 21 years. Do you have any hobbies? Besides boating, I love designing. Right now, I am designing a home made out of shipping containers. Over the past few years, I have designed and built temporary and mobile banks, and ATM enclosures from shipping containers. This hobby provides me with a great creative outlet that is multidimensional and allows my work and play to blend. What are some of your company’s strengths from your perspective? My father started this company with an excellent service mentality. We have tried to maintain that throughout the years. Along with service, we have also been able to “think outside the box,” which has been very successful in finding solutions to our customer’s needs. Do you have a favorite client success story? In the very early years, it was just my father and me. The company was struggling to make it. BSI, at the time, had a silent, unlisted number; somehow, a banker found us and called us for some lock work. That one job put us over the hump, and we never looked back. That customer is still with us today and is one of our biggest accounts. How long have you been a member of MIBA, and what do you see as the benefits of membership? We have been a member of MIBA since the mid-80s. We were one of the first to join and exhibit at the conventions. Our membership has been a huge part of our growth, along with establishing strong and close business relationships. ATM Enclosure, designed by Mark Thatcher Sr. Mobile Bank, designed by Mark Thatcher Sr. Temporary Bank, designed by Mark Thatcher Sr. 18 | The Show-Me Banker Magazine
Mark Thatcher Jr. Mark is the BSI Sales Manager. His dayto-day responsibilities include customer relations, sales training with the staff, various administrative duties, researching new technology, and quoting large jobs — pre-sale and on-site. How did you get into the industry? In 2006, I left a successful sales job and came to work with my family at BSI. I started working with my grandfather on vault door preventive maintenance. From there, I went on to the installation of all bank equipment, then project management and coordinating installations, and working on large projects. To this day, I always have a hard hat and tool bag in my truck, just in case. What are some of your company’s strengths from your perspective? Our caring culture sets us apart. The culture that my grandfather started still exists here almost 42 years later. Our team is passionate about customer service first, and the same passion for our industry is a really close second. Industry peers across the U.S. are discussing the innovation that takes place here, and that is a testament that we are doing right by our clients. Do you have a favorite client success story? Recently, one of our customers had a hookand-chain attack that left their ATM out of service and unrepairable. We just happened to be storing one of their spare machines and used it to swap out the damaged one. Within hours, we moved 2,500 lbs. of concrete and steel, placed the new machine, and had the ATM up and running. How are you and your company involved in the community? A cause we feel very strongly about supporting, and is near and dear to us, is the Alzheimer’s Association Heart of America Chapter. We support their research and believe in their purpose of finding ways to help those close to and caring for someone with Alzheimer’s. Our involvement with associations also includes Folds of Honor, Segs 4 Vets, and several scholarship programs. Finally, many of our FI customers contact us for help supporting their local community programs. We are always happy to give back to the communities we live and work in. What do you see as the benefits of MIBA membership? One of the benefits of the MIBA membership is that it allows us to get a glimpse of what our customers are seeing and being challenged with, which helps us become a more educated and better supplier. Have you had important mentors during your career so far? Who were they, and what was the most important lesson you learned from them? My father and grandfather. They taught me persistence and patience. My grandfather also taught me about something he thought was important: showmanship. He said, “Anyone can do this job, but doing this job professionally is where the difference is made.” What three recommendations would you have for someone if you were mentoring them? 1. If this was easy, everyone would be doing it. 2. Be patient … If that doesn’t work, be more patient. 3. If you are meant for this industry, steps one and two come naturally. Do you have any last words summarizing your thoughts for anyone reading your article? The way my grandfather started this company is the American Dream. I am proud and thankful to be a part of that legacy. We are grateful for our employees, customers, and business relationships. ■ BSI is proud to mark three generations of trusted service. In addition to their Kansas City headquarters, their growth includes satellite offices throughout the Midwest (Omaha, Denver, Springfield and St. Louis) and access to over 300 years of collective experience. They are opening their doors to new markets, bringing the strength of products developed for financial institutions to other industries and individuals. BSI customers enjoy the peace of mind they receive, knowing they are protected by the highest quality security products and services on the market. To learn more, please visit bankerssecurity.com. Mark Thatcher Jr., wife, Ashlee, daughter, Henslee and son, Hagen. 2023 Issue 2 | 19
The Five Percenters CURRENT BOND YIELDS HAVE LONG-TERM APPEAL By Jim Reber, President and CEO, ICBA Securities MIBA Endorsed Vendor I will be candid with you. Your correspondent is most assuredly not a professional journalist. And, being an accountant by trade, creativity isn’t something that comes naturally. Therefore, when composing these investment columns I often rely on some techniques I’ve learned from listening to the professionals. Among these are joke writers, specifically those for nighttime talk shows and Saturday Night Live. A few of these jokesters have said that several of our recent Commanders-in-Chief are “the gift that keeps on giving.” It occurs to me that, on a decidedly different stage, my version of this font of material is the Federal Open Market Committee (FOMC). The FOMC’s execution of monetary policy according to its dual mandate often results in wild swings in interest rates — and the resultant volatility in bond prices. The historic 2022 (and ongoing) hike in interest rates, while painful for bondholders, has at least produced a yield environment that is worthy of an investment column. Very Recent Past In 2020 and 2021, investment brokers were doing their best to help community banks make good decisions about how to invest the mountains of cash that were sitting on their balance sheets, earning next to nothing. In fact, a number of investments that were several years in duration earned well less than fifty basis points (0.5%). This is what happened when short-term rates were anchored at near zero, and the Fed wasn’t “thinking about thinking about” changing anything. In fact, “The Quest for One Percent” could have been the title of this very column barely a year ago. For example, the five-year Treasury note issued in December 2021 has a coupon of 0.375%. Fifteen-year mortgage-backed securities (MBS) with 1% coupons were trading for a while at prices above 100.00; today they’re worth around 86 cents on the dollar. Opportunity is Present So now, as 2023 is well underway, it’s quite easy to buy a bond with a yield of 5% or higher. Thanks to overnight investments being in the high-four percents as of this writing and quite possibly headed to the mid-five percents, even short investments (particularly those with call options attached) can be found with 5.5% returns. The inverted yield curve needs mentioning. The “2-to-10” part on the curve is reaching historic levels in both the degree and duration of inversion. It has produced a dilemma for portfolio managers. Intuitively, shorter bonds that yield more than longer ones sound sweet. This is a reminder that the bond market is predicting a recession, and it’s sometime soon. Another consequence of the curve’s shape and the rate cycle is that the municipal bond market currently does not offer relative value. Tax-equivalent yields out to 10 years are actually lower than the Treasury curve. Home-Made Liquidity Of course, all this 5% yield-opportunity stuff doesn’t help a community bank that has no remaining liquidity to take advantage of it. From the looks of things, that includes a lot of institutions. The FDIC reports that Federal Home Loan Bank advances increased 32% in the fourth quarter of 2022 alone. One strategy that comes to mind is the advance purchase of investments, financed by borrowed money that will be paid off by future bond portfolio cash flows. The general framework is this: • Calculate your next two to three years’ cash flows from investments • Use wholesale funds to finance a matching term and amount • Use the proceeds to buy bonds with prepayment protection at today’s rates 20 | The Show-Me Banker Magazine
This makes sense for any financial institution unless it has no borrowing capacity, is leveraged as far as is feasible, or has exposure to rising rates. By all indications, most community banks have room on all these fronts. Each time the bank pays down borrowings with existing cash flow, the bank is removing low-yielding bonds, relatively high-cost borrowings and is de-levering. All the while, it has greatly boosted its overall bond portfolio yield and hasn’t booked any losses on sales. And at the end of this two- to three-year period, voilà! The bank owns a high-yielding set of bonds, hopefully with unrealized gains, free and clear. Of course, this isn’t to say that bonds purchased early in 2023 won’t have some dip in their values, at least initially if the FOMC continues to push rates higher. Generally, though, 5% yields have proven to be quite attractive over longer periods. A little creativity can help get those five percenters on board. That’s something even a professional joke writer can’t poke fun at. ■ Jim Reber (jreber@icbasecurities.com) is President and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. ICBA Securities/Stifel 2023 Road Show ICBA Securities and its exclusive broker Stifel are presenting half-day conferences in several locations in upcoming months. We will be in Boston, MA, on May 2; Kansas City, MO, on May 10; Denver, CO, on June 21; and Atlanta, GA, on June 27. There is no cost to attend, and CPE credit is offered. To register, visit icbasecurities.com. Economic Insight Live Dr. Lindsey Piegza, Stifel’s Chief Economist, presents her next quarterly economic outlook webcast on April 6 at 12 pm CST. For more information, contact your Stifel sales representative or Jim Reber. 2023 Issue 2 | 21
NEWS From You On Feb. 27, 2023, CB Resource, Inc., a risk management firm, ranked MRV Banks first on its CB Top Ten™ list of community banks with assets between $500 million and $1 billion. The firm identifies the top 10% of community banks throughout the nation and provides industry insights to promote and enhance overall performance. In the fourth quarter 2022 report, it recognized MRV Banks’s overall performance when compared to other community banks with the same assets. “It’s a tremendous honor to receive this kind of national distinction for the work we do at MRV Banks,” said Doug Watson, MRV Banks President & CEO. “It’s also gratifying because we know this recognition is given based on actual data compared to our peers. The fact that our bank is still so young, but successfully growing, is a wonderful testament to our business philosophy and commitment to community values.” The CB Top Ten™ categorizes community banks into five peer groups based on total assets. The firm provides a summary of the top 10% of community banks based on key performance indicators. Those include asset growth, return on average assets, return on average equity, net interest margin, efficiency ratio, non-performing assets, non-interest-bearing deposits and non-interest income. This report is produced annually and quarterly. Risk Management Firm Ranks MRV Banks No. 1 in Nation Among Community Banks Founded in 2007, MRV Banks is one of the fastest-growing banks in Missouri. With more than $650 million dollars in assets, it is the 49th largest bank in the state of Missouri out of 215 state-chartered banks. MRV Banks has locations in Ste. Genevieve, Cape Girardeau, Festus, and St. Charles, its newest location. MRV Banks has a reputation for delivering premium banking products and services to local consumers and small business customers throughout Missouri. For more information about MRV Banks, go to www.mrvbanks.com or call 573-883-8222. ■ Marian Pfeiler Joins Community Bank of Raymore as Vice President in Trust Department Marian Pfeiler has joined Community Bank of Raymore as a Vice President in the Trust Department. She received her Master of Business Administration, with an emphasis in accounting, from the University of Phoenix. She is a resident of Raymore and has spent the last 22 years working in various accounting positions at Marine Corps Community Services. Community Bank of Raymore has locations in Raymore, Peculiar, and Harrisonville where we assist consumers and businesses in meeting their banking and wealth management needs. Our Trust Department associates work with families to help them understand what estate planning options they have and then implement the plan the families establish. ■ 22 | The Show-Me Banker Magazine
Community Bank of Pleasant Hill dba First Trust of MidAmerica is pleased to announce the appointment of Ryan Thompson. We recruited Mr. Thompson to join our Trust Department as a Vice President and Trust Officer. Among his varied duties, Ryan will add to our core function of providing fiduciary services for Employee Stock Ownership Plans (ESOPs), 401k Plans and other qualified employee retirement plans. He will bring additional strength in working with IRA clients, who are looking to rollover or add to an existing IRA, with personalized and exceptional service. Ryan has an extensive professional background that includes 10 years of providing fiduciary services to retirement plans and individual retirement arrangements including SIMPLE, SEP, Traditional and Roth. Ryan holds a Bachelor of Science degree in Management and Finance from Park University. Ryan is a northcentral Missouri native and resides in the Kansas City area. We welcome Ryan to our team! ■ Community Bank of Pleasant Hill dba First Trust of MidAmerica is pleased to announce the appointment of Jeff Akright. Mr. Akright joins our Trust Department as a Vice President and Trust Officer and will work in our trust office in St. Joseph, Missouri. Jeff will be providing fiduciary services for Employee Stock Ownership Plans (ESOPs), 401k Plans and other qualified employee retirement plans. He will bring additional strength in working with IRA clients by utilizing his years of wealth management expertise. Jeff’s professional background includes 30 years of providing fiduciary services as an Investment Advisor, Financial Advisor and Wealth Management Consultant. Jeff holds a Bachelor of Science degree in Finance from Eastern Illinois University and a CTFA certification from the Cannon Financial Institute. Jeff was raised in eastern Illinois and currently resides in the Kansas City area. We welcome Jeff to our team! ■ Community Bank of Pleasant Hill Hires New Trust Officers APRIL Social Media & Digital Marketing Seminar Directors & Officers Seminar WWW.MIBA.NET/EVENTS 4 APRIL 19 APRIL 25-26 Leadership Division Day at the Capitol MIBA Office - Jefferson City MIBA Office - Jefferson City Lodge of Four Seasons - Lake Ozark MAY Essentials in Banking - Part III CBC 2nd Quarter Meeting 14-17 MAY 24 MAY 31 ICBA Capital Summit Virtual Only Session Washington, D.C. MIBA Office - Jefferson City 2023 Issue 2 | 23
DATE Save the 46TH ANNUAL www.miba.net/convention Lodge of Four Sesons Lake Ozark, MO
Bond School Schedule Wednesday, May 10 7:00 a.m. Breakfast 8:00 a.m. Program 12:00 p.m. Lunch 1:00 p.m. Program 4:30 p.m. Adjourn 6:00 p.m. Dinner Included Thursday, May 11 7:00 a.m. Breakfast 8:00 a.m. Program 12:00 p.m. Conclusion Accommodations A block of rooms will be available at the Omni Oklahoma City Hotel. Identify yourself as a Baker Bond School attendee when calling 405.438.6500. The special room rate will be available until April 10, 2023. Hotel price: Deluxe $199 + tax. 12.5 hours of CPE credits will be earned for your attendance. Register online at GoBaker.com/ bond-school-2023. Call Skoshi Heron at 888.990.0010 for more information. MAY May 10-11, 2023 Oklahoma City, OK Omni Oklahoma City Hotel Cost: $495 Education is the foundation of performance for investment portfolio managers, and that is why The Baker Group has presented hundreds of seminars and conferences across the country over the last forty years. We continue to bring that history of educational experience to a bond school designed specifically for new portfolio managers and those needing to learn the fundamentals of fixed income investing. The Baker Bond School will give attendees the knowledge to better understand the various types of securities available, how to analyze them effectively, and how to use that knowledge to build and manage a high-performance investment portfolio within the framework of the entire balance sheet. What You Will Learn • Fundamentals of bonds and bond market investing • Understanding the impact of the economy, monetary policy, and interest rates on the bond portfolio • Demystifying the complex world of bond analytics including pricing, duration, convexity, and total return • Characteristics of high performance portfolios and how industry allocations have changed over the years • Introduction to bond types, and the pros and cons of including each in your investment portfolio • How to develop an effective municipal credit analysis process • Security selection techniques, and how to conduct effective prepurchase analysis • How to analyze bond offerings and Bloomberg screens • Regulatory implications for the bond portfolio • Incorporating investment portfolio management into asset/ liability management Who Should Attend This school is designed for CEOs, CFOs, and those new to their roles in managing or working with the investment portfolio. Directors and new members of the investment and asset/liability management committees will also benefit from the Baker Bond School. 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 Baker Bond School
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