2024 ISSUE 4 A Background On Brad Doran of farmbank & Expo 2024 Annual Convention
GAME ON! 2024 LEVEL UP YOUR KNOWLEDGE COMMUNITY BANKING CONFERENCE MEMBER FDIC AUGUST, 21-23, 2024 ST CHARLES, MO • AMERISTAR CASINO MONDAY 5:30-7:30 PM LEVEL UP RECEP T ION For registered attendees only REGISTER TO WIN META QUEST 3* *must be present to win FEATURED SPEAKERS Building Trust in the Digital World: The Community Banker’s Guide to Personal Branding Eric Cook, MBA WSI Consulting How to Work With & Lead People Not Like You Kelly McDonald McDonald Marketing Artificial Intelligence in Banking: Opportunities & Challenges Tim Dively, MBA CLA What’s Next for Banks and How Are Regulators Thinking About Potential Risks Allen North Federal Reserve Bank of St. Louis Get all the details and REGISTER today! WWW.MIBANC.COM/EVENTS
INSIDE THIS ISSUE PO Box 1765 Jefferson City, MO 65102 (573) 636-2751 | miba.net Editor: Matthew S. Ruge Executive Director ©2024 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. Published for the Missouri Independent Bankers Association 4. PRESIDENT’S MESSAGE Effective Community Bank Management 6. FLOURISH Connected as Independent Community Banks 7. FROM THE TOP Showing Pride in Independence 8. A VIEW FROM THE CAPITOL Corn, Wheat and Now Your Retirement Plan 10. MEET YOUR MISSOURI BANKER Andrea Hayes VP, Branch Manager, Farmers & Merchants Bank 12. LEGAL EAGLE SPOTLIGHT Intercreditor and Subordination Agreements Key Elements Bankers Should Consider 14. 47th Annual Convention & Expo 15. MIBA Lobbying Report 15. 15th Annual Security Conference 16 12 22 26 16. INNOVATION STATION Setting the Stage for Banking the Next Generation 18. LEADERSHIP AT ALL LEVELS Make Space for Creativity 21. Thank You to Our Early Convention Sponsors 22. A BACKGROUND ON Brad Doran of farmbank 24. 2024 MIBA Financial Directories Are Available! 25. 47th Annual Golf Tournament 26. The Meek … Inherit a Prominent Place in Bond Portfolios 28. 34th Annual Scholarship Auction 28. MIBA Upcoming Events 29. 2024 MIBA PAC Honor Roll 30. News From You 31. MIBA Endorsed Vendors 31. In Memory Verimore Bank Announces the Passing of Chairman Emeritus Robert Devoy 32. MIBA Associate Members 34. Upcoming Webinar Schedule The Show-Me Banker Magazine | 3
Mark Laune MIBA President Peoples Savings Bank Hermann, MO PRESIDENT’S MESSAGE Effective Community Bank Management Community bank management and operations involve overseeing the strategy of locally focused banks that primarily serve individuals and small businesses within their communities. Effective management requires a blend of financial acumen, regulatory knowledge and a deep understanding of the local markets. Some of the key components of a successful management and operation culture for a community bank include: • Strategic Planning: Developing and implementing long-term strategies to grow the bank’s market share while maintaining a strong focus on their community’s needs. • Risk Management: Identifying and assessing risk in all areas ensures that the community bank is staying strong and in regulatory compliance. • Customer Relationships: Building and maintaining strong relationships with local customers, understanding their needs and providing personalized banking solutions are the backbone of community banking. Customer service and local knowledge are the key differentiators. • Financial Management: Managing the bank’s financial health through careful monitoring of capital, liquidity and profitability. • Regulatory Compliance: Ensuring the bank adheres to applicable laws and regulations. This involves staying updated on changes in banking regulations and implementing necessary changes. • Technology and Innovation: Leveraging technology to improve banking services and operational efficiencies. • Human Resources: Recruiting, training and retaining employees who understand the community’s needs and can deliver excellent service. This also involves fostering a positive workplace culture and providing professional development opportunities. • Performance Monitoring: Regularly evaluating the bank’s performance through key metrics and adjusting strategies as needed to ensure goals are met and challenges are addressed. Effective community bank management requires balancing financial performance with a strong commitment to the community and ensuring the bank remains a trusted and integral part of the local economy. Make plans now to join your fellow community bankers at the Lodge of Four Seasons at the Lake of the Ozarks for the Annual MIBA Convention, which will be held Sept. 9-11. Sign up today! There will be many great speakers and peer conversations that are priceless for the continued success of our community banking system. 4 | The Show-Me Banker Magazine
Your business is your biggest investment. So why not give yourself the best chance to succeed? Everyone loves a good deal. But saving money on cheaper IT solutions can actually cost you more. How? Frequent downtimes. Unexpected expenses. Zero customer trust. The good news: it doesn’t have to be this way. Don’t let low-cost IT services equal lost revenue. Scan the QR code now to discover the secrets cheaper IT providers are hiding and how you can avoid falling into their trap. SEE BENEATH THE SURFACE. $ Everyone loves a good deal. But saving money on cheaper IT solutions can actually cost you more. How? Frequent downtimes. Unexpected expenses. Zero customer trust. The good news: it doesn’t have to be this way. Don’t let low-cost IT services equal lost revenue. Scan the QR code now to discover the secrets cheaper IT providers are hiding and how you can keep your company smooth sailing. The TRUTH behind IT “savings” DID YOU KNOW? Enjoy your association news anytime, anywhere. Scan the QR code to visit our online publication to stay up to date on the latest association news, share articles and read past issues. the-show-me-banker.thenewslinkgroup.org The Show-Me Banker Magazine | 5
Rebeca Romero Rainey ICBA President and CEO @romerorainey FLOURISH When you enter ICBA’s headquarters, you are greeted with a large U.S. map that contains a peg for each community bank and a singular cord linking them all together. It not only demonstrates our collective impact; it also represents the strength of our financial system, built on thousands of local economies around the country and fueled by community banks. Much more than surface-level connections, community bank relationships run deep. With detailed knowledge of the communities in which they live, play and work, community bankers make informed decisions using insights beyond standard credit models. Consider a new small business that doesn’t make sense on paper but that you, as a financial steward of the community, know meets a community need or will be in demand. This type of insight can only be derived from being part of the community — not thousands of miles away in some ivory lending tower. That sense of presence, of connectedness, makes all the difference. Recently, Dave Fishwick, whose story was featured in the movie “The Bank of Dave,” spoke at our Capital Summit. His message was a reminder of how unique our model is outside of America’s borders, how paramount it is that we defend it with fervor and how important the work we do to protect relationship banking is. It’s the foundation of everything we do! Community banks need to flourish so we can continue to fight for the little guy and stand up for what matters in our communities. We need to be there, so our customers have access to the financial services they need when they need them most. The current environment threatens this paradigm. One-size-fits-all regulations don’t support our efforts. An uneven playing field puts us at a disadvantage. Mounting and constricting regulations hinder our ability to tailor our offerings. And the taxpayer-subsidized acquisition of taxpaying community banks further diminishes our numbers, while stripping away a vital community tie. Now, more than ever, as we think about the impact of our banks, we need to stand up and fight. We can’t take our independence for granted, and independence requires action. It’s up to us to amplify our voices far and wide and make sure the leaders of this nation pay attention. So, as you recently celebrated Independence Day, I hope you take time to revel in the role you play in our country’s financial wellness and recommit to your independence. Because it’s bankers like you who are making the country better, one community at a time. Connected as Independent Community Banks 6 | The Show-Me Banker Magazine
Lucas White ICBA Chairman President of The Fountain Trust Company FROM THE TOP Showing Pride in Independence Coming off the recent holiday in July, I find myself reflecting more about independence. This nation was founded by rabble-rousers looking to do things differently, and that’s exactly who we are as community bankers. We stand up to the status quo to offer products that meet the needs of our communities, which are as diverse as this great nation. Our independence empowers us by providing the freedom to do things our way. For instance, if we’re working with a seasonal business with cyclical cash flows, we can structure their loan in a way that will most benefit them. We don’t have to fit them into a particular box; we build the loan around them. Our independence also offers flexibility in how we run our banks as businesses. We can set our priorities and consider the big picture beyond returns and revenue. For example, my bank just went through a core conversion, and at the same time, our monthly profits were shrinking slightly. With the stress levels around the core conversion at their height, we made the executive decision to wait to address profits until its conclusion. We wanted our team to celebrate their hard work, not immediately pivot to a new issue. Our independence also brings with it a sincere connection to our communities. Our support goes beyond writing a big check; it sits at the heart of who we are as community bankers. Case in point: Just over a year ago, our community experienced a tragic event where a seventh grader, who had been bullied in school, committed suicide. It was heartwrenching for the entire community. So, our bank decided to help with recovery: We contracted with a speaker we’d seen at ICBA LIVE to come to the middle and high schools and discuss ways to stop bullying and be kinder to each other. After that session, a sixth grader came up to me to thank the bank for sponsoring the session. She said she had contemplated suicide before, and it helped to know that people cared. That’s why we do what we do — because we care about and can positively support our communities. With that impact in mind, we need to hold onto our independence at all costs. At the same time, we must continue to look for opportunities to level the playing field. We will persist in lobbying for tiered regulation because we should have less of a compliance burden than a $3 trillion bank. Advocacy matters, because it will help to ensure a brighter future for our communities — the future our forefathers would have wanted. “We need to hold onto our independence at all costs. At the same time, we must continue to look for opportunities to level the playing field.” The Show-Me Banker Magazine | 7
During the Cold War, most Americans would be alarmed if they discovered their everyday purchases and government-backed retirement funds were financing the Soviet’s military, its strategic initiatives and even providing employment opportunities. Unfortunately, most policymakers in Washington, D.C., and business leaders across the country fail to apply this same logic against the Chinese Communist Party. The United States and the USSR raced to achieve world dominance for four decades. Much like the CCP today, the USSR denied their citizens fundamental human rights, silenced free speech, dismantled civil society and crushed any opposition. In Soviet Russia, political dissidents, ethnic and religious minorities, and anyone who disagreed with the government were often sent to labor camps. Quite similarly, the CCP is committing genocide against the Uyghur people, arresting opposition leaders and controlling every aspect of its citizens’ daily lives. The USSR and the CCP tactics are not that different, and neither is the CCP’s quest to overthrow the United States as a leader on the world stage. The lessons learned from the Cold War need to be modernized to tackle the challenges presented by the looming threat of the CCP. It is just as absurd today to send our resources, investments and technology to Communist China as it was during the height of the first Cold War. You might be asking yourself, what is wrong with trade? It has to be good for the U.S. economy, right? In theory, yes, but not when we outsource good-paying jobs, inevitably stimulating the economy of an adversary seeking to neutralize us on the world stage. Every dollar we send to Communist China in time builds a larger and stronger Chinese military, all resources that should be invested in the American people, economy and financial infrastructure. The more goods we purchase from Communist China equals fewer jobs in our communities. While it may be convenient to have cheap goods at just the click of a button, we need to weigh the costs against offshoring our manufacturing and supply chains. Many failed to realize, both then and now, that the United States invested our agricultural and economic resources in the USSR at the height of the Cold War. The U.S. supplied Soviet Russia with livestock, corn and wheat, accounting for 60-80% of sales to the USSR for the first half of the 1980s. We fueled their economy, fed their livestock and empowered an adversary that wished to do us harm. Now, taxpayer funds at the state and federal levels have unknowingly invested federal employees’ hard-earned retirement funds into CCPcontrolled entities and Chinese MilitaryIndustrial Companies. Not only are critical supply chains being outsourced to the detriment of our workforce, but now our retirement funds are directly invested into Communist China’s military. While your retirement fund is arguably just as important as corn, wheat and livestock, the principle of investing in an adversary’s economy could not be more foolish. We are feeding the lion that is trying to eat us. Congressman Blaine Luetkemeyer Missouri’s 3rd Congressional District A VIEW FROM THE CAPITOL Corn, Wheat and Now Your Retirement Plan 8 | The Show-Me Banker Magazine
Where is your main bank and branches located? What is the market like? Our main office is in Saint Clair, and we have locations in High Ridge, Eureka and Lonedell. What is something unique about your bank? FMB is a community bank that has been independently owned for over 110 years. FMB is like “Cheers,” the TV show, “Where everybody knows your name.” I know everyone says they pride themselves in customer service, but our staff honestly does an excellent job of addressing customers by name, which in return makes them comfortable having in-depth conversations. Something unique about our bank is we have a location inside a gas station. This location handles almost every banking need except for lending. I bet you didn’t think you could ever walk into a gas station and open a checking account. How did you get started in the banking business? I worked in the cash office of a retail store for four years, managing and balancing the registers. They offered me a management position, but I did not want to work evenings and weekends, so I applied at the FMB High Ridge location since it was close to home. I did not know one single thing about the banking industry, but FMB offered me a receptionist position. I’ve worked in every position from receptionist to assistant branch manager when I started learning residential and commercial lending and was promoted to my current role as VP, branch manager. Andrea Hayes VP, Branch Manager Farmers & Merchants Bank MEET YOUR MISSOURI BANKER 10 | The Show-Me Banker Magazine
What is the most important thing you have learned from this career so far? As a manager, the most important thing I have learned is to be empathetic. There are a lot of emotions when you are dealing with multiple personalities. To be an effective manager, you must learn to manage each employee differently. I also use this skill when working with customers, as finances can bring out many emotions, sometimes difficult ones. What prompted you to want to begin a career in banking? When I walked into FMB to apply for a job I had no idea I would absolutely love it — that it would become my career and I’d still be working here 20 years later. What is the most interesting thing you have learned from this transition to the banking industry? Banking has taught me that consumers rely heavily on your expertise. Most customers know what their need is but they rely on us to direct them to the product that best fits those needs. Customers want to bank with someone they trust and who puts their best interest first. Tell us about the bank’s community investment efforts. We love to give back to our community, so we created a mascot debit card program where we donate a portion of our inner change income to local school districts. Customers are able choose if they would like the mascot debit card, which allows them to help their local district. To date, we have donated over $207,000. Each school district is free to utilize the funds to meet their needs. FMB is also a top contributor for the United Way. FMB has donated over $59,000 in the past five years. Those funds are made up of employee contributions, corporate matches and various internal employee fundraisers throughout the year. What is the bank’s biggest challenge in internet banking/mobile banking? One of the biggest challenges in internet/mobile banking is how to promote a service channel while combating fraud. What’s your favorite thing about your bank/banking in general? My absolute favorite thing about FMB is my coworkers and our team atmosphere. Even with multiple locations we all communicate often and have a bond that is like a family. We celebrate life events together and treat each other with respect. My favorite thing about banking is helping our customers. I have been working at the same location for 20 years and have formed friendships with many customers. I have watched children become adults and have had the privilege to help them finance their first automobile and even purchase or build their first home. Being able to assist families with their financial needs to make their dreams a reality is very rewarding. If you didn’t have a career in banking, what other career would you choose? If I were not in banking, I would want a career where I could use my artistic abilities. I love to make crafts, draw and paint. Andrea loves spending time with her kids at the ball fields. The Show-Me Banker Magazine | 11
Subordination agreements and intercreditor agreements are often utilized to establish priority and rights when two or more lenders have liens in the same borrower’s collateral. Although these agreements are referenced interchangeably, a subordination agreement is an agreement between two or more lenders to address priority in specific liens and repayment priority, while an intercreditor agreement is an agreement between lenders to address lien priority and other rights in the event the borrower defaults on its obligations owed to a lender or files for bankruptcy. This article summarizes some of the key elements lenders should consider when negotiating subordination agreements and intercreditor agreements. Key Elements To Consider Defining the Scope of First Lender and Second Lender Obligations One of the first elements lenders should consider when negotiating subordination agreements and intercreditor agreements is the scope of the obligations of the borrower to each lender. Each lender should carefully consider how the borrower’s obligations are defined and which of those obligations also fall within the scope of the obligations owed to the other lender. If the senior obligations include amounts that a subordinate lender did not anticipate, such as increases to the senior loan amount, the subordinate lender could recover less than expected under the subordination provisions. Depending on negotiating power, subordinate lenders may consider negotiating a cap on the senior loan amount and/or a borrowing base limit applicable to the senior loan. Senior lenders, on the other hand, should seek flexibility in how its obligations are defined so that it may increase such obligations without needing the other lender’s consent should the borrower have additional financing needs. Standstill Provisions Payment Blockage Most intercreditor agreements contain standstill provisions that dictate the enforcement actions a subordinate lender can take against collateral that both lenders have a security interest in (referred to as “common collateral”) during a specified standstill period. During a standstill period, senior lenders have an opportunity to consider whether to take enforcement action against the collateral without interference from the subordinate lender. When negotiating a standstill provision, lenders will want to consider and define (i) the events that trigger a standstill period, (ii) the duration of a standstill period and (iii) what occurs after the standstill period has expired. Standstill provisions may be triggered by a borrower’s failure to make timely payments or otherwise comply with its obligations under the loan documents. Senior lenders often negotiate for the standstill period to be as long as possible, while subordinate lenders try to limit the length, especially if the value Intercreditor and Subordination Agreements LEGAL EAGLE SPOTLIGHT Key Elements Bankers Should Consider By Taylor Chase and Heather Morris, Spencer Fane LLP 12 | The Show-Me Banker Magazine
of the collateral may decline during such period. After a standstill period expires, the subordinate lender can then exercise its rights against the collateral under the terms of the subordination and intercreditor agreement. Payment Blockage Payment blockage provisions are another key element lenders should consider when entering into subordination and intercreditor agreements. These provisions allow a senior lender to block payments to a subordinate lender under certain conditions, usually when there is a default on the senior lender’s debt. Payment blockage provisions generally require that a borrower’s available funds are used to satisfy senior debt obligations before payments are made to subordinate lenders. The parties should clearly outline the specific conditions triggering a payment blockage, the duration of the blockage period, any exceptions to the payment blockage, and whether missed payments to the subordinate creditor can be made after the triggering condition has been cleared. Amendment Restrictions Amendment restrictions within subordination and intercreditor agreements govern the ability of the borrower and lenders to amend the terms of the underlying credit facility. Typically, subordination and intercreditor agreements provide that material amendments to the senior facility, such as increasing the principal amount beyond any applicable cap, increasing the interest rate, increasing fees owed to the senior lender, and maturity date extensions require the consent of the subordinate lender. These provisions protect subordinate lenders from unexpected changes that could negatively affect their ability to collect debt payments or collateral proceeds in the event of a default. BANCMAC COMMUNITY BANC MORTGAGE CORP. YOUR COMMUNITY BANK MORTGAGE PARTNER bancmac.com mortgages@bancmac.com 888.821.7729 | NMLS# 571147 BancMac provides correspondent and wholesale lending and is your Community Bank Mortgage Partner to help your financial institution originate fixed-rate secondary market loans including: PROGRAMS • Conventional Loans • USDA Rural Development Loans • Rural Living (Hobby Farm) Loans • VA Loans • Jumbo Loans • FHA Loans OUR PARTNERS RECEIVE: • Superior Service & Competitive Pricing • No Minimum Volumes • Significant, Non-Interest Fee Income • Non-Solicit Protections & More Conclusion Subordination and intercreditor agreements are essential tools used in financing transactions involving multiple lenders to facilitate and manage each lender’s rights and expectations with respect to security interests and the borrower’s payment obligations. By understanding key elements, including the scope of the senior and subordinate obligations, payment blockage provisions, standstill provisions and amendment restrictions, lenders are better positioned to effectively protect their interests and navigate the complexities of subordination and intercreditor agreements, particularly in the event of a borrower default or bankruptcy filing. Taylor Chase and Heather Morris are members of the Spencer Fane Banking and Financial Services team. They can be reached at tchase@spencerfane.com or (816) 292-8801 and hmorris@spencerfane.com or (816) 292-8387, respectively. The Show-Me Banker Magazine | 13
September 9-11, 2024 The Lodge of Four Seasons, Lake Ozark, MO Join Us For An Exciting Line-up of Speakers and Events This Year! Monday Golf Tournament, Opening Expo Reception & Rooftop Rendezvous Tuesday General Session, Expo, Scholarship Auction & President’s Dinner Wednesday Closing Session
MIBA Lobbying Report Report Andy Arnold Arnold & Associates Gov. Parson approved HB 1803, Rep. Terry Thompson’s bill, to increase the cap on the MoBuck’s program from $800 million to $1.2 billion. Additionally, SB 1359 includes the Money Modernization Transmission ACT. The act regulates money transmission, defined as any of the following: • Selling or issuing payment instruments to a person located in Missouri. • Selling or issuing stored value to a person located in Missouri. • Receiving money for transmission from a person located in Missouri. • Payroll processing services. Money transmission does not include the provision solely of online or telecommunications services or network access. The director of the Division of Finance within the Department of Commerce and Insurance is responsible for administering this act. With only 15 regular Senate bills and 11 regular House bills passing this year, 26 in all (this total does not include appropriations bills), MIBA got two wins. Additionally, MIBA killed legislation proffered by the credit unions to expand their footprint in the state. With the August Primaries just around the corner, our next column will be a run-down of Primary winners and what we believe that means for MIBA moving forward. The Show-Me Banker Magazine | 15
INNOVATION STATION 16 | The Show-Me Banker Magazine
Setting the Stage for Banking the Next Generation By Charles E. Potts, Executive Vice President, Chief Innovation Officer, ICBA In recent years, community bankers have embraced constant change to drive the future of banking. As you follow your innovation journeys, you are also leaning into a cycle of continuous improvement: hiring, recruiting, building products and offering solutions on an ongoing basis. The start-and-stop approach of the past has given way to an approach that’s more fluid and responsive to today’s needs. Part of that decision stems from the pace of technology in today’s landscape, but it also grows out of the fact that the needs and attributes of customers and staff themselves are ever-changing. Remember when preparing for millennials was our primary focus? The oldest members of that cohort are now in their 40s, with Gen Z already in their mid-to-late 20s. If that isn’t indicative of how much change is happening at all times, nothing is. Generational Evolution We’re really getting at the important business concept of generational evolution, where preparing for the next generation develops into a continuous, cyclical flow. For instance, if you’re going to invest in a banking product for teenagers, you have to consider what happens when those customers aren’t teenagers anymore. Or, if you put an emphasis on a banking product for seniors, what happens when you have fewer senior citizen accounts? You must factor in the generational evolution of your customers, not just build point-in-time solutions. To that point, next-generation customers may never step foot in a branch. While people of my generation are digital migrants having moved into a digital space, Gen Z comprises digital natives who have never known anything but digital-first solutions. This leads to a profound generational and cultural difference in how Gen Z views acquiring services of all kinds: their expectations start with digital and self-service. While they will still seek the high-touch support of community banks, that digital banking experience becomes the entry point to banking for this generation. Designing Next-Generation Banking As community banks continue to advance on this intergenerational path, start with your current and target customers. Talking to them and getting their perspectives on how they acquire and consume banking services can provide the insights necessary for what’s next. The more you talk to them, the better you can anticipate their continuous evolution so you can effectively position your bank to reflect the customers you are trying to grow and nurture. Charles E. Potts is ICBA’s executive vice president and chief innovation officer. Potts drives ICBA’s innovation initiatives and financial technology strategies. The Show-Me Banker Magazine | 17
LEADERSHIP AT ALL LEVELS Make Space for Creativity 18 | The Show-Me Banker Magazine
By Lindsay LaNore, ICBA Out of all the qualities that make a great leader, it could be argued that creativity ranks highest. It’s an essential tool in the workplace that can help with problem solving or change management and projects that aren’t headed in the intended direction. Creative leaders are actively experimental and encourage experimentation within their teams. They take calculated risks and encourage disruptive innovation. Fueling creativity can also be a great motivator and increase productivity. It taps into the emotional side of work, and with that comes the opportunity for personal growth and fulfillment. So, how do you foster creativity, when it can feel like an elusive concept? Start by carving out time to be creative. Give your team permission to schedule time for something they don’t normally do. Let them research an area of interest within their role, or give them space to get to know how another bank department works. If you can, allow them to have flexible schedules or work in a different physical area of the bank for a change in scenery. Break some habits! You can also try injecting downtime into the week, whether it’s 20 minutes at the end of a team meeting to brainstorm ideas informally, a fun team-building activity, a meeting outside of the office or a walking meeting. Physical exercise has been shown to encourage creativity, and a change of scene is perfect for outside‑the‑box thinking. More from ICBA For more inspiration, check out ICBA Education’s Creativity and Innovation in the Workplace online training course. Don’t impose limits on creativity. Encourage your team to come up with ideas — as many as possible — and to share them, even if they think they’re bad. Flex your creative muscles. It’s easy to obsess over perfection, but spontaneity can produce much more interesting ideas and solutions. On a similar note, make space for failure. Obviously, failing can be challenging, even dangerous at times, but letting it happen under controlled circumstances invites innovation, without fear of reprisal. As a leader, ask questions to draw out responses from your team. What are the biggest challenges we face as a team? What are some creative solutions to consider? What’s the worst thing you do as a bank? How would you change it? What’s the best thing we do as a team and how can we apply it to other processes? What’s one thing you learned from someone recently and how can you apply that learning to work? Leaders should create a space to explore ideas. Whether it’s an ideas jar, a brainstorming board or an online form, let everyone add their ideas as they come up. Give the suggestions space to breathe, then come back and discuss them all during an informal team meeting. Brainstorming in groups helps form bigger-picture ideas. Looking at things from different perspectives expands possibilities. And as a bonus, it can also be very bonding. Incentivize sharing new ideas by rewarding the most successful ones. Start with small changes and work up to bigger ones. And most of all, remember to have fun with it. DID YOU KNOW? According to color psychology, the color blue boosts creativity. Blue is associated with nature, peace and tranquility — all things that create a safe space, making people more willing to explore and imagine new things. The Show-Me Banker Magazine | 19
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A BACKGROUND ON Brad Doran of farmbank Brad Doran is Chairman and CEO of farmbank with locations in Green City, Milan and Kirksville, Missouri. The history of the bank and how it came to serve these small rural communities is an interesting story. From 1880-1930, banking institutions in Green City followed the trend of other banks in Missouri. First, there was a bank located on the south side of the square. That bank was not open long. Other early banks were the Bank of Green City, City National Bank and the American National Bank of Green City. City National Bank was consolidated with the American National Bank. The downward economic trend that gripped the nation ultimately led to that bank closing in 1927. As the Great Depression intensified and business conditions continued to decline, the Bank of Green City closed in 1930. For the next few years, Green City was without a bank, and the citizens had to go elsewhere to conduct their banking business. The Green City Credit Union was established in 1934 and relieved the situation to some degree, but the community was badly in need of a commercial bank. Around that time, B.L. Stutler had completed the liquidation of the closed banks in Sullivan and Putnam counties, and he and Mrs. Stutler organized the Farmers Bank of Green City (FBGC). The charter for FBGC was issued on Nov. 13, 1943, the bank opened for business on Nov. 23, 1943, and it continues to operate today. The first board of directors of FBGC consisted of Dr. J.D. Bohrer, T.S. Hardinger, Glenn E. Kent, Henry Myers and B.L. Stutler. Later, Jane Stutler succeeded Mr. Hardinger as a director, and Dr. Bohrer was succeeded by Bernard Stutler. On May 1, 1960, the Stutlers sold their interest in the bank to Oppenheimer Industries of Kansas City. Then in January 1977, the Oppenheimers sold the bank to Samuel T. Davis of Cameron, Missouri (Kingston & Clarksdale bank owners). In 1978, the bank was sold to Gary N. Edwards and Lloyd Edwards and then to Randy Riley. In 1989, the bank was purchased by Stan Grotenhuis, Lena Grotenhuis and Audrey Savage. In 1995, the management of the bank was taken over by Brad’s mother Lena Grotenhuis. Brad started his banking career in the eighth grade working as a janitor at Casey State Bank. By the age of 16, he had begun working as a teller. He continued working for the bank when he was in college, learning bookkeeping and even doing loan reviews. Brad graduated from Eastern Illinois University in 1997 with a B.S. in accounting. After graduation, he spent a few years in public accounting working at LWH CPA, LLP. Then he became an information systems auditor for ADM, and later, he advanced to an accounting supervisor role within ADM Transportation. Brad made his move back into the banking industry in 2008 when he took a position as the Vice President of IT with Hickory Point Bank. He then served as Senior Vice President over operations & IT, becoming involved with indirect lending. Being back in the banking industry was a good fit, and Brad decided that banking was where he belonged. In 2014 Brad’s stepfather, Stan, passed away, and soon thereafter, his mother, Lena, stepped down from management of the bank. Brad decided to take on a new challenge to manage the family bank. He enjoys working in a small bank because he gets to “wear a lot of hats and never gets bored.” Brad used his prior experience to make numerous changes that were overdue. He oversaw the implementation of a new core system in June of 2016 and mobile banking in June 2017 and continues to lead the bank forward as innovative technology becomes available that benefits customers. Brad knew the bank had to become larger to compete in today’s market, so he opened a branch in Kirksville, Missouri, in December of 2021. 22 | The Show-Me Banker Magazine
In 2022, Brad rebranded the bank name to “farmbank” to go along with the expansion into more communities. The bank currently has approximately $76 million in assets. In his own words, Brad describes farmbank’s strengths: “Since we are small and locally owned, we’re able to make decisions very quickly. We cater to our customer’s needs easily because there is not a lot of red tape like larger banks have.” Being a member of MIBA is important to Brad because of the benefits to farmbank. “It’s a great organization. They have a lot of resources that help bankers, especially when it comes to various regulatory issues or when new regulations come up. The training and insight provided is invaluable.” Brad continued, “One of the bigger benefits is the networking opportunities, meeting other bank owners and collaborating with colleagues. Every year, I look forward to the annual MIBA convention, where I get to learn about emerging issues in the banking industry and catch up with colleagues.” When mentoring others, Brad shares lessons he has learned over the years: • Never stop learning. • Find what you are really passionate about and direct your career path in that direction. • Set goals and hold yourself accountable. When Brad is not working, he enjoys spending time with his beautiful wife, Bethany. Brad and Bethany started dating when she was 14 and he was 16. They just celebrated their 27th wedding anniversary. Brad and Bethany are both very proud of their three daughters. Brookelyn, 23, graduated from the University of Missouri in 2022 and is now working for the University Hospital in the NICU department. Bridgette, 22, graduated from Flagler University in St. Augustine, Florida. She is currently working on her MBA and plans to attend law school. Brylee, 19, is a sophomore at the University of Missouri, majoring in diagnostic science. They also have three dogs and three cats that keep them entertained. Brad invites you to call anytime to collaborate on innovative ideas or do a little problem solving. The Show-Me Banker Magazine | 23
MIBA FINANCIAL DIRECTORIES 2024 THANK YOU Each MIBA Member receives a complimentary copy, but you NEED these resource directories throughout your bank. Order now and get your extra copies ASAP!
On Monday, September 9th, MIBA will hold it's 47th Annual Convention Golf Tournament at THE COVE, A Robert Trent Jones Sr. Signature Golf Course. The Tournament tees off at 10:00 am. Entry fee per person is $175- Includes 2 mulligans, breakfast with Bloody Mary & Mimosa Bar, lunch, refreshments, cart and green fees. You must be a fully registered convention attendee or exhibitor to participate in the tournament. The Cove
Inherit a Prominent Place in Bond Portfolios By Jim Reber, President and CEO, ICBA Securities There are a whole lot of anomalies in community banking in the waning stages of this restrictive Fed cycle. One of the overriding themes is the sheer duration of the process. We’re now fully one year past the last tightening, which has left the effective overnight rate at 5.375% since July 2023, and given rise to the “higher for longer” sound bite. The past six tightening cycles have averaged well under a year between the last hike and the first ease. We will be soon approaching another record: the longest-ever pause between the last hike and the first cut is 15 months, from June 2006 to September 2007. There are myriad implications on community bank operations from this year-plus hibernation. Being a representative of the broker-dealer industry, I’d like to point out the attractive yields available in most any investment sector that banks care about. Baked into this decadent batter, however, are three obstacles for portfolio managers. The Meek … 26 | The Show-Me Banker Magazine
Hills To Climb The first is this persistently inverted yield curve, which is now more than 2 years old. This makes decision-making dicier: Extend, and forego current income for future total return benefits, or stay short and invest at today’s higher yields, and accept some reinvestment risk? The second is the still-to-be-determined outcome of the great deposit shuffle, which really began with Silicon Valley Bank’s demise in March 2023. The disintermediation of core deposits continues. Many community banks have, for the first time ever, entered the brokered deposit market. FHLBank system advances nearly tripled between March 2022 and March 2023, from $375 million to $1.04 trillion. The third is the hefty unrealized losses as quantified in the AOCI account at virtually all depositories. As of the end of June, those losses are still in the neighborhood of 12% of face value. This number has actually gotten a bit worse since the Fed hit the pause button, as yield spreads have remained historically wide and the effect of the inverted curve has taken root. Simply Elegant Here’s what estimable investment managers have noticed: It can pay to rid oneself of option risk. That’s a complicated way to say that the simplest bonds may have the best relative value in mid-2024. So far this year, a large percentage of bonds purchased by community banks have been treasury and non-callable (“bullet”) agencies. This may be the first year in a generation for high performing portfolios to hold more treasuries than municipal bonds. The current appeal of treasuries and agencies is due to the nominal yields, which investors sense may be short-lived. Add to this the lock-in benefits of a bond that cannot be redeemed early, and you’ve got a winner. Many portfolio managers are building in some future ability to swap out of these highly liquid instruments for others with better market yields once the yield curve assumes its normal shape. Also, munis continue to be prohibitively expensive for C corporations. Investment grade tax-frees trade at levels that are “through the curve” (i.e., lower than treasuries) for most maturities out to 10 years. Born To Run Mortgage-backed securities (MBS) continue to play a significant role for community bank balance sheets. In aggregate, MBS still comprise the majority of all positions in bond portfolios. The runup in their sector weightings took place between 2019 and 2021, and as a group their unrealized losses are well over 10%. Those positions are paying down at a torturously slow pace as new mortgage rates remain elevated. Still, their appeal in the current market stems from the ready supply of product at prices deeply discounted to par. One day, there could be an acceleration of refinance activity, and MBS with purchase prices in the mid- to low-90s will show a big bump in book yields if mortgage rates drop 200 basis points (2%). A popular example is the “Hybrid ARM.” Hybrids are issued by your favorite government sponsored enterprises (GSE), namely Fannie Mae, Freddie Mac and Ginnie Mae. They have 30-year amortization periods, and a fixed rate period between three and 10 years that you can pick. After the “roll date,” the remaining face value will float annually. And this: they’re available at well over 5% yields, and no premium risk. Best News Yet We have established that the highest-yielding bond portfolios have a healthy dose of the most simplistic bonds. What else is a departure from convention is that the shorter the collection of investments, the better the performance. According to Stifel, as of June 30, the top quartile portfolios have an effective duration of only 3.5 years. The bottom quartile’s duration is a full year longer and has tax-equivalent yields that are exactly onehalf of the top 25%’s: 3.87% versus 1.94%. There will be a day when investment fundamentals will normalize. Positively-sloped curves, for example, will force managers onto a different branch of the decision tree. However, for the time being, less is more, and simple delivers relative value. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. The Show-Me Banker Magazine | 27
COME ONE, COME ALL! HAPPY HOUR & HORS D'OEUVRES FOR BANKERS & EXHIBITORS September is right around the corner where we will gather for another exciting Convention & Exhibition for our MIBA Membership, family and friends. This year's 34th annual MIBA Scholarship Auction on Tuesday, September 10th, 2024, is at The Lodge of Four Seasons Golf Resort & Spa Shiki. We hope you are thinking about what special gift you will donate. On Tuesday, the Exhibit Hall will close at 2:30 p.m. and the Happy Hour Reception and Silent/Live auction will begin at 4:30 p.m. in the Granada Ballroom. All registered bankers and exhibitors are invited and welcome to join the "Bidding Frenzy" for all items donated! If you already have your gift to donate, call the MIBA offices at (573) 6362751 or go to MIBA.net > For Members > Annual Convention & Exhibition for your donation form. Donations to and purchases at the auction are not deductible for federal income tax purposes. SEPTEMBER MIBA 47th Annual Convention & Expo WEB.MIBA.NET/EVENTS SEPTEMBER OCTOBER 9-11 15th Annual Security Conference MIBA Office - Jefferson City, MO Lake Ozark, MO MIBA Office - Jefferson City, MO SEPTEMBER 3rd Quarter CBC Meeting Retail Management Workshop 26-27 AUGUST 22 OCTOBER 22 HR Summit MIBA Office - Jefferson City, MO MIBA Office - Jefferson City, MO MIBA Office - Jefferson City, MO Essentials of Commercial Credit Analysis Part I & II 9-11 24-25
2024 MIBA PAC Honor Roll July 1, 2024 Contributors to the MIBA Political Action Committee are recognized for their generosity on the Association’s website and at the MIBA Annual Convention and Exhibition. Different levels of contribution have been set to recognize supporters of our Political Action Committee fund and to make the Association’s membership more aware of this important facet of our work on behalf of the political agenda of community banks across Missouri. NOTE: PERSONAL or CORPORATE CAMPAIGN CONTRIBUTIONS TO ANY PAC ARE NOT DEDUCTIBLE IN ANY AMOUNT FOR FEDERAL TAX PURPOSES. PRESIDENT’S FAIR SHARE LEVEL $10 per Million in Deposits up to $250M • Bank of Advance • Bank of Iberia • Bank of Old Monroe • Bank of Salem • Belgrade State Bank • Blue Ridge Bank and Trust Co., Independence • BTC Bank, Bethany • Community Bank of Pleasant Hill • Community Bank of Raymore • Community State Bank of Missouri, Bowling Green • Citizens Bank, New Haven • Exchange Bank of Missouri, Fayette • Exchange Bank of Northeast Missouri, Kahoka • Farmers & Merchants Bank, St. Clair • farmbank, Green City • FCNB Bank, Steelville • First Bank of the Lake • First State Community Bank, Farmington • Jonesburg State Bank • Metz Banking Company, Nevada • Midwest Independent BankersBank, Jefferson City • Midwest Regional Bank, Clayton • New Frontier Bank, St. Charles • Peoples Bank & Trust Co., Troy • Peoples Bank of Altenburg • Peoples Bank of Wyaconda, Kahoka • Peoples Saving Bank, Hermann • Preferred Bank, Rothville • Regional Missouri Bank, Marceline • The Missouri Bank, Warrenton • Town & Country Bank, Salem PLATINUM LEVEL $750 and up • Sherwood Community Bank, Creighton • United State Bank, Lewistown GOLD LEVEL $400-$749 • Community Point Bank, Russellville SILVER LEVEL $200-$399 • 1st Advantage Bank, St. Peters • Bank of Crocker • Chillicothe State Bank • Farmers State Bank, Cameron • Silex Banking Company • State Bank of Missouri, Concordia The Show-Me Banker Magazine | 29
Mid America Bank Hires Barnes and Ferguson Mid America Bank is pleased to announce Trisha Barnes and Anastasia Ferguson have joined the Bank as VP, treasury management officers. In this role, Barnes and Ferguson will be responsible for cultivating client relationships as well as the administration and development of the bank’s business services and treasury management products. Trisha Barnes has 15 years of banking experience and has served in various business development positions across various industries. Barnes is passionate about understanding her client’s needs and working to find their business solutions. Barnes and her husband reside in Jefferson City and have four children. She is a committed member of several local organizations, some of which include Jefferson City Chamber of Commerce, Columbia Chamber of Commerce, Jefferson City Area Young Professionals and Big Brothers Big Sisters Advisory Board. Anastasia Ferguson has worked her way through the banking industry starting as a teller and has most recently served in a treasury management position. Ferguson is excited about getting to know her clients and celebrating business successes with them. Ferguson and her husband reside in Fulton and have four children. She is passionate about United Way, Rise Up where she serves as treasurer and the Super Sam Foundation. She is also on the board for State Technical College of Missouri. Mid America Bank is delighted to welcome both Trisha and Anastasia to the team. If your business needs business services such as business checking, collection solutions, payable solutions, fraud protection or cash concentration solutions, reach out at treasurymanagement@midambk.com. Trisha and Anastasia are ready to serve as your partner to help you and your business succeed. Mid America Bank Hires Nunn as SVP, Chief Operations Officer Mid America Bank is pleased to announce Holly Nunn has accepted the position of senior vice president, chief operations officer. In this role, Nunn will be responsible for all operational activities for the bank, including loan, deposit, digital and retail operations. Nunn brings more than 20 years of banking experience to Mid America Bank which includes previously serving as the director of operations for another local company. Nunn holds a bachelor’s degree in business administration from Columbia College. In addition, she completed the Graduate School of Banking in Madison, Wisconsin. In her role, she enjoys that banking is ever-evolving, presenting a unique opportunity to continually enhance clients’ banking experiences. Nunn resides in Jefferson City with her husband and two children. Outside of work, she serves as president of Capital Arts, serves on the Jefferson City Schools Foundation board and is passionate about suicide awareness and prevention. Mid America Bank is delighted to welcome Holly Nunn to the team. Established in 1914, Mid America Bank prides itself on being a proud, locally-owned and operated community bank that’s good for you and your community too! Visit them online at midambk.com. Trisha Barnes Anastasia Ferguson NEWS FROM YOU 30 | The Show-Me Banker Magazine
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