45TH ANNUAL CONVENTION PHOTO REVIEW Pub. 11 2022 Issue 4 CommunityBanker The
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Sample Municipal Summary 03/31/2017 Page 1 of 2 635,461 GO+REV 9,896,680 GO 4,752,978 REV GO 64.7% REV 31.1% GO+REV 4.2% Total : 100.0% Municipal Type 689,324 TX PSF 10,199,393 AA 4,180,764 A 215,638 NR TX PSF 4.5% AA 66.7% A 27.4% NR 1.4% Total : 100.0% Moody/S&P Composite Rating AL CA CO IA IL IN KY NM OH OK TX WA WI AL 1.9% CA 2.3% CO 1.4% IA 3.9% IL 10.8% IN 10.2% KY 2.4% NM 1.7% OH 8.0% OK 9.9% TX 33.2% WA 4.7% WI 9.6% Total: 100.0% State of Issue Individual Municipal Ratings are as of 3/19/2017, unless recently purchased. weighting based on Book Value of 15,285,119 Insd-AGM Insd-BAM Insd-PSFG Insd-PSFG, Pre-ReFunded Insd-State Aid Not Insured Not Insured, Pre-ReFunded Insd-AGM 12.0% Insd-BAM 3.4% Insd-PSFG 3.1% Insd-PSFG, Pre-ReFunded 1.4% Insd-State Aid 11.9% Not Insured 58.2% Not Insured, Pre-ReFunded 10.0% Total: 100.0% Insurance 4/13/2017 6:43:55AM - FSG / SAMP The Baker Group Software Solutions, Inc. - APMTM Although the information in this report has been obtained from sources believed to be reliable, its accuracy cannot be guaranteed. ADVANCED PORTFOLIO MONITORTM 18 18 Sample Cusip Par Cpn Book Price Market Price Gn/(Ls) *Acctg Eff Dur Eff Cnvx Underlying Municipal Credit Detail 03/31/2017 Yield Description Page 6 of 7 Muni Insurer Muni Type Moody S&P Call Date Maturity ASC 320 Gn/(Ls)% State Underlying Ratings GO | REV *DA% | DC *Per Cap | Covnt Issue Date Tax Status Overlapping D/A - Debt/Pop Net Asset Ending Beginning Cnty Jobless Security Fiscal Year Report Date *Proj 944431BL8 220,000 5.500 103.90 105.18 2,816 4.34 4.39 (0.98) WAYNE SD #112-B-BABS IL 26 Not Insured N/A N/A GO N/A A+ 12/01/20 12/01/26 AFS 1.23 IL 5.58 | -- 507 | -- 12/08/10 Taxable 8.29 - 754 WAYNE - 8% 2016 Report AD VAL TAXES 2015 4.34 3 Items 4.19 4.19 3.91 (0.30) (458) 103.36 103.40 5.311 1,160,000 Taxable Municipal Totals 39 Items Portfolio Totals 3.25 3.25 3.91 (0.26) 3.392 104.59 101.78 (409,651) 14,615,000 6,385K AA 6,918K A 1,981K NR AA 41.8% A 45.3% NR 13.0% Total: 100.0% Moody/S&P Composite Underlying Rating 1,471K Aa2 213K Aa3 1,533K A1 768K A3 11,299K N/A Aa2 9.6% Aa3 1.4% A1 10.0% A3 5.0% N/A 73.9% Total: 100.0% Moody's Underlying Rating 695K A+ 635K A 232K A13,723K N/A A+ 4.5% A 4.2% A- 1.5% N/A 89.8% Total: 100.0% S&P Underlying Rating 689K AAA 10,415K AA 4,181K A AAA 4.5% AA 68.1% A 27.4% Total: 100.0% Moody/S&P Composite Rating weighting based on Book Value of 15,285,118 * Denotes Tax Equivalent Yield (TEY) where applicable. Individual Municipal Ratings are as of 2/28/2017, unless recently purchased. * D/A% = Debt to Assesed Ratio; DC = Debt Coverage | Per Cap = Per Captia Debt; Covnt = Rate Covenant 4/13/2017 6:43:56AM - FSG / SAMP The Baker Group Software Solutions, Inc. - APMTM Although the information in this report has been obtained from sources believed to be reliable, its accuracy cannot be guaranteed. ADVANCED PORTFOLIO MONITORTM 26 26 Balances ($000's) Page 1 of 1 12/31/2019 Book Value % of Book TA **Rate Sensitive < 1 Year *Book Yield/ Rate *Reinv. Rate *12 Mo. Proj. Yield/Rate Avg. Life Effective Duration Effective Convexity Full Indx. Rate / Total is % of Segment Fixed Var. Non Int. Summary ALCO - Asset/Liability Mix Sample $20,414 4.16 46.55 53.45 46.55 0.97 0.04 0.01 0.00 Cash & Due 0.97 0.97 / 0.97 $172,210 35.10 100.65 (0.65) 14.56 2.81 4.60 3.55 (0.51) Investments j 2.81 2.64 / 0.00 (Includes MTM) $4,500 0.92 100.00 100.00 1.63 0.04 0.04 0.00 Funds Sold 2.13 2.13 / 2.13 $276,700 56.39 56.28 45.26 (1.53) 53.28 5.20 2.59 1.96 (0.22) Loans 5.37 5.47 / 5.76 $6,511 1.33 100.00 2.49 12.63 0.00 0.00 Other Earning 2.49 2.49 / 0.00 $10,358 2.11 100.00 Non-Earning $490,693 3.24 Total 68.38 28.37 100.00 38.01 4.17 3.27 2.36 (0.31) Assets 4.28 4.28 / 5.31 $276,064 56.26 66.70 33.30 12.02 0.53 7.66 4.48 0.54 Non-Maturing Deposits 0.53 0.53 / 0.53 $92,498 18.85 99.44 0.56 0.00 82.54 0.84 0.70 0.65 (0.04) Certificates of Deposit 0.84 0.81 / 0.70 $37,721 7.69 100.00 68.68 1.09 0.97 0.93 (0.02) Jumbo CDs 1.08 1.05 / 0.00 $28,250 5.76 95.58 4.42 46.90 2.06 1.95 1.89 0.03 Borrowed Funds 2.04 1.86 / 1.88 Other Paying $6,724 1.37 100.00 Non-Paying $441,257 22.36 Total 35.51 42.13 89.93 33.70 0.80 5.15 3.14 0.33 Liabilities 0.80 0.77 / 0.54 10.07 $49,436 (0.60) (0.46) Total Equity Capital 100.00 $490,693 Total Liab & Capital Liability Mix Asset Mix Liquidity Ratios Constant Benchmark ALCO Dependency Ratio Liquid Assets / TA Ratio is outside benchmark. P < 750.00% < 100.00% < 50.00% < 20.00% > 10.00% < 35.00% < 300.00% 42.39 68.11 559.71 48.04 6.31 10.19 7.69 Loans / Assets 56.39 Investments / Deposits Loans / Deposits Loans / Capital Net Borrowed Funds / Capital < 75.00% Available Line of Credit $90,500 56.39 Loan 35.10 Inv 4.16 Cash 2.11 Non-Earn 1.33 Other Earn 0.92 Others 56.26 NMD 18.85 CDs 10.07 Equity 7.69 J CDs 5.76 Borrow 1.37 Others Reliance on Wholesale Funding 9.14 < 30.00% The smallest 2% of all categories will be grouped into an 'Others' category. Jumbo CDs / TA Note: Values are rounded before printing, but full precision values are used in all calculations. * Yields/Rates are reported on EA & PL. Investments using Accounting yield. j (Ver 4.0 R7) Copyrighted 1994 - 2020 1/29/2020 3:39:46PM - SAMPLE / SMB1218 The Baker Group Software Solutions, Inc. - IRRMTM Although the information in this report has been obtained from sources believed to be reliable, its accuracy cannot be guaranteed. Interest Rate Risk Monitor ** Percentages based on maturing, repricing, and paydown balances. As American financial institutions—along with the rest of the world—face unprecedented times, The Baker Group is ready with tools and services to help maximize the performance of your institution. That’s why we’re offering new clients our Software Solutions* service package for a six-month free trial. Not only will you have access to our latest market research and insight from our Financial Strategies Group, you’ll be included in all of our webinars. There you’ll hear the latest Information on the economy and how it could impact your institution and its investment portfolio.
VACB Board of Directors © 2022 Virginia Association of Community Banks | The newsLINK Group, LLC. All rights reserved. The Community Banker is published four times each year byThe newsLINK Group, LLC for the Virginia Association of Community Banks and is the official publication for this association. The information contained in this publication is intended to provide general information for review and consideration. 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 specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Virginia Association of Community Banks, 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 Community Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Virginia Association of Community Banks. WhileThe Community Banker encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855-747-4003. CONTENTS 8 13 CHAIR Jay A. Stafford Benchmark Community Bank Kenbridge CHAIR-ELECT Tara Y. Harrison Virginia National Bank Charlottesville VICE CHAIR Joseph R. Witt, CPA The Old Point National Bank Hampton IMMEDIATE PAST CHAIRMAN Dennis A. Dysart First Bank Strasburg ICBA VIRGINIA DELEGATE Mark Hanna F&M Bank Timberville PRESIDENT & CEO Steven C. Yeakel, CAE VACB Richmond VACB STAFF Katharine C. Garner, CMP Vice President Education & Communications Kelli C. Mallinger Member Services Administrator VACB DIRECTORS CLASS OF 2023 J. Steven Grist CornerStone Bank Lexington James E. Hendricks Village Bank Midlothian Lisa E. Kilgour MainStreet Bank Fairfax Paul M. Mylum National Bank Roanoke Thomas L. Rasey, Jr. The Farmers Bank of Appomattox Appomattox CLASS OF 2024 Chris Snodgrass The Bank of Marion Marion Blake M. Edwards, Jr. Skyline National Bank Independence CLASS OF 2025 Dabney T.P. Gilliam, Jr. The Bank of Charlotte County Phoenix Bryan P. Thompson Highlands Community Bank Covington 2 President’s Message Banker Engagement Fuels a Successful Association 4 Chairman’s Message From Convention to Strategic Planning 7 2023 Officers Elected at VACB's 45th Annual Convention & Trade Show. 8 45th Annual Convention Photo Review 10 45th Annual Convention & Trade Show Exhibit Hall Prize Winners 11 Thank you, Convention Sponsors! 12 Connections 13 The Call to Educate 14 VACB 2023 Educational Offerings 15 ATM Thefts 17 Poor Drilling Procedures Create “Rich” Box Renter 20 Upcoming Webinars
The CommunityBanker 2 President’s Message By Steven C. Yeakel, CAE VACB President and CEO The source of my optimism, of course, is you, our member bankers. Your engagement in 2022 has laid a foundation of support from which we will continue to build. Banker Engagement Fuels a Successful Association! Between the time I write these words and the time you read them, so many important things will have happened. The “Lame Duck” Congressional session, which has not yet started, will be finished or nearly finished. A runoff election in Georgia will have determined how strong the Democrat majority in the U.S. Senate is (not a typo!), ending the most unusual off-year election season in many years. And on the personal side, we are all experiencing the unfolding of the holiday season, reaching its final crescendo, and all the joy that goes with it. In addition to all of that, the urgency of the long “to-do list” created by the objectives in our new strategic plan is keeping the staff and volunteer leadership of VACB fully engaged as we end our year. But rather than fret over what may or may not occur through this busy time, I’d prefer to think positively about what might happen. In Congress, the SAFE Cannabis Banking Act would become session-ending legislation, and legislation to close the ILC loophole will gain momentum. Here at VACB, our task forces on education and revenue generation will be sources of new ideas and fresh perspectives. And every member bank will have completed and submitted their banker contact forms. The source of my optimism, of course, is you, our member bankers. The contributions made by Dennis Dysart in his year as chairman have been unique and transformative. And as you can see in the first column from 2023 chairman Jay Stafford, his leadership is already producing valuable synergy. Our other new officers and our directors add great value to our work. The convention was a source of great energy for all who took part. And it all started with our membership meetings earlier in the year, which laid a foundation of support from which we will continue to build. Banker engagement fuels a successful association. With continuing thanks for your enduring support, I wish you, your team, and your family happy holidays and a great 2023!
The CommunityBanker 4 Chairman’s Message By Jay Stafford, VACB Chairman Benchmark Community Bank From Convention to Strategic Planning When my calendar flipped to November, I immediately thought of Thanksgiving and for all that I am thankful: family, friends, and my community among them. Your membership in VACB is a key entry on my thankful list, as well as your support in allowing me the opportunity to chair this great association. I am grateful to those who joined us in Williamsburg in October for the 2022 Annual VACB Convention. It was a great in-person event, and the lineup of speakers was the best in recent memory. Thanks to Steve, Katharine, and Kelli for a great convention. Likewise, I would like to give a special thanks to Dennis Dysart for his leadership over this past year. He played such a pivotal role in our outreach efforts and in developing a new strategic plan whose implementation is now my task to lead. This trip to Williamsburg had special meaning for me. Being in Williamsburg reminds me not only about the formation of our country, but also makes me think of our association’s almost half-century of service to Virginia’s banking industry. The role of banking in supporting our economic stability applies to all of us in our industry and, especially to those of us whose banks helped establish this organization. I am the third VACB Chairman from Benchmark, so the significant role our association plays in our industry is particularly meaningful for me. As your Board begins to focus on 2023, several strategic objectives have been identified. While operating with a sturdy foundation, VACB is facing so many of the same challenges as our business customers: How do we drive member value? When asking our members what they feel is our most important value proposition, we repeatedly hear “delivery of undiluted advocacy strictly for community banks.” There are similarities – and many striking differences – among all financial institutions, one of the most notable being the recent effort to reduce or eliminate our ability to charge overdraft fees. While many of the largest banks can easily absorb this loss of income elsewhere on the income statement, community banks operating to serve their communities are often unable to follow suit. Expect VACB and ICBA to push back on this issue with our help. How do we increase and diversify revenue? Revenue generation has become a much bigger issue for our association as we continue to see mergers and acquisitions affecting our revenue from member dues. Additionally, the availability of education programs across many channels and through a variety of vendors has spurred competition for these programs to an unforeseen level. How do we identify and deliver a unique product that attracts virtual and in-person attendance and supports revenue generation for the association? Continued on page 6
The CommunityBanker 6 What is our long-term operating plan? Establishing a long-term operating plan requires finding the best ways to realize a threelegged stool of productive advocacy, solid educational offerings, and quality collaborative value for our members. These three components are vital to VACB paving the way to a vibrant future. We began addressing these issues in 2022 when we combined membership calls with regional meetings around the state. Because of the daily challenges we all face, the importance of member collaboration cannot be overstated. Getting to know each other better and building robust communication lies at the heart of galvanizing VACB and the future of our organization dedicated to community banking. How do we plan for management succession? Finally, the next two years will be a prelude to change as Steve prepares for retirement. Steve Yeakel has brought to our association a level of community bank advocacy that will be difficult to replicate. Still, we must look to the future of the organization and how to both design VACB’s path while incorporating Steve’s legacy, reputation, and successes on our behalf. The answers to these questions singularly and as a group lie in the following: • Ensure your bank contacts are current at the VACB. Are the right people receiving VACB communications so you do not miss valuable information and educational opportunities? • Plan to attend the ICBA Capital Summit in Washington, D.C. (May 2-5, 2023). Your participation in the Virginia delegation feeds into the saying, “There is strength in numbers.” What an opportunity to visit our nation’s capital during an ICBA event so close to home and ensure our voices are heard by our lawmakers. • Put the annual convention in Roanoke on your calendar (Oct. 1-3, 2023). Consider bringing other members of your team and/or directors. The experience will allow them to develop lasting relationships and improve their ability to contribute more to your bank. • Encourage your bank’s rising stars to become more active with the VACB. Our future depends on it. Community banking is unlike any other in terms of being involved in creating a more vibrant quality of life in our communities. I look forward to working with the board and executive committee in the upcoming year. This team of bankers has the same passion I have for community banking. Together we can tackle these issues and set a great path for VACB. In closing, your membership and engagement are both appreciated and highly valued. Steve, his team, and your board are committed to supporting you and your bank as we navigate the challenges and opportunities in 2023. Wishing each of you and yours a joyous holiday season. Continued from page 4
7 Pub. 11 2022 Issue 3 VACB 2022 ‐ 2023 OFFICERS AND NEW BOARD MEMBERS VACB Executive Committee Chairman Jay A. Stafford President & CEO Benchmark Community Bank Vice Chairman Joseph R. Witt, CPA President, Financial Services Chief Strategy Officer Old Point National Bank VACB Board of Directors ‐ Class of 2025 Chairman‐Elect Tara Y. Harrison Executive Vice President & Chief Financial Officer Virginia National Bank, Charlottesville Steven C. Yeakel, CAE President & CEO VACB, Richmond Dabney T. P. Gilliams, Jr. President & CEO The Bank of Charlotte County Bryan Thompson President & CEO Highlands Community Bank VACB Executive Committee Chai Jay A. Sta ord President & CEO Benchmark Community Bank Vice Chairman Joseph R. Witt, CPA President, Financial Services Chief Strategy Officer Old Point National Bank VACB Board of Directors ‐ Class of 2025 Chairman‐Elect Tara Y. Harrison Executive Vice President & Chief Financ Virginia National Bank, Charlottes Steven C. Yeakel, CAE President & CEO VACB, Richmond Dabney T. P. Gilliams, Jr. Bryan Thompson VACB 2022 ‐ 2023 OFFICERS AND NEW BOARD MEMBERS VACB Executive Committee C airman Jay A. Stafford President & CEO Benchmark Community Bank Vice Chairman Joseph R. Witt, CPA President, Financial Services Chief Strategy Officer Old Point National Bank VACB Board of Direct rs ‐ Class f 2025 Chairman‐Elect Tara Y. Harrison Executive Vice President & Chief Financial Officer Virginia National Bank, Charlottesville Steven C. Yeakel, CAE President & CEO VACB, Richmond Dabney T. P. Gilliams, Jr. President & CEO The Bank of Charlotte County Bryan Thompson President & CEO Highlands Community Bank VACB 2022 ‐ 2023 OFFICERS AND NEW BOARD MEMBERS VACB Executive Committee Chairman Jay A. Stafford President & CEO Benchmark Community Bank Vice Chairman Joseph R. Witt, CPA President, Financial Servi es Chief Strategy Officer Old Point National B nk VACB Board of Directors ‐ Cla s of 2025 Chairman‐Elect Tara Y. Harrison Executive Vice President & Chief Financial Officer Virginia National Bank, Charlottesville Steven C. Yeakel, CAE President & CEO VACB, Richmond Dabney T. P. Gilliams, Jr. President & CEO The Bank of Ch rlotte ounty Bryan Thompson President & CEO Highlands Community Bank 2023 Offic rs Elected at VACB's 45th Annual Convention & Trade Show VACB Executive Committee Chairman Jay A. Stafford President & CEO Benchmark Community Bank Vice Chairman Joseph R. W tt, CPA President, Financial Services Chief Strategy Officer Old Point National Bank Dabney T. P. Gilliams, Jr. President & CEO The Bank of Charlotte County Chairm ‐Elect Tar Y. Harrison Executive Vice President & Chief Financial Officer Virginia National Bank, Charlottesville President & CEO Steven C. Yeakel, CAE VACB, Richmond o President & CEO Highlands Community Bank VACB Board of Directors - Class of 2025
The CommunityBanker 8 45th Annual Convention PHOTO REVIEW
9 Pub. 11 2022 Issue 3
The CommunityBanker 10 Banc Card of America Bluetooth Speaker Tara Harrison, Virginia National Bank Brown Edwards CPAs Tailgating Package with Table-Top Grill & Accessories Donnie Kaloski, Village Bank Barret School of Banking Graduate School of Banking Tuition Credit Randy Lail, Benchmark Community Bank ICBA $150 Visa Gift Card Blake Edwards, Skyline National Bank KlariVis Blanton’s Bourbon Donnie Kaloski, Village Bank ProcessMaker Bluetooth Speaker Jay Hendricks, Village Bank QSI Bourbon Mark Reed, Pioneer Bank RABS – Equifax Sales Agent Backpack Cooler with Glasses and Wine Ronnie Williams, Benchmark Community Bank SHAZAM $200 Master Card Gift Card Lisa Kilgour, MainStreet Bank Source4 $200 Visa Gift Card Tara Harrison, Virginia National Bank The Counts Realty & Auction Group Yeti Duffle Bag Mike Ewing, Oak View National Bank VACB Financial Education Webinar Certificates Joel Cunningham, Benchmark Community Bank Lisa Rutherford, First Bank Christy Quesenbery, Village Bank Virginia 1st One-Year Membership Lyn Hayth, Bank of Botetourt Works 24 Corporation Bushnell Golf Speaker Lisa Kilgour, MainStreet Bank Exhibit Card Drawing Winners $250 Al Roberson, Benchmark Community Bank $150 Blake Edwards, Skyline National Bank VACB 45th Annual Convention & Trade Show EXHIBIT HALL PRIZE WINNERS CONGRATS TO ALL THE WINNERS!
Diamond Thank you, Convention Sponsors! Platinum Gold Silver Bronze
The CommunityBanker 12 Digital transformation. Those words have been bandied about with increasing fervor, fueled by a heightened sense of urgency. Yet, while the digital movement has increased pace, it’s more of an evolution than a revolution. When I think about this concept of “going digital” in our industry, I’m struck by the fact that it’s a continual evolution over time. The habits of our customers change, and we’re constantly walking beside them, transforming our services to meet their needs. It’s never been about being bleeding edge or doing what everyone else is doing, but about better addressing the interests of our distinct communities. And in today’s shifting landscape, it’s more important than ever to make sure we’re evaluating our offerings with blinders off. How honestly are we assessing our products and services? How are we ensuring our channels and tools are meeting customer needs? If we’re still updating our technology plans once every three years as we’ve always done, is that enough? While these questions are challenging, there is information surrounding us that can help shed light on the right responses. For example, consider your transaction volume: How are payments clearing today versus three-to-five years ago, and why? Or listen at account opening: What questions are being raised relative to your products? And consider your customer service center, teller insights and other channels: What inquiries are coming through? What are customers asking for at the frontline? These findings will give you greater insights into where technology is meeting needs and where you may need to shift to meet new digital expectations. And when and how you do this depends on your audience. Customers are transforming at different paces, so analyzing the steps you can take to have the greatest impact will enable you to be strategic in product planning and create efficiencies for your bank in the process. So, as you read this issue, I encourage you to think of the articles as resources in your digital evolution. In addition, ICBA Bancard has produced a digital transformation white paper and workbook to guide community banks more specifically in their evaluation process of digital payments and strategies. These tools are available to ICBA members and can be downloaded on our website. No matter what approach you take, now’s the time to make sure you’re considering what’s next for your customers’ digital journey. Shifting your tech plans and processes to keep pace with the changing environment will guarantee that you can support customers in new ways, maintaining the same level of service they seek and expect. Connect with Rebeca @romerorainey Connections The habits of our customers change, and we’re constantly walking beside them, transforming our services to meet their needs. By Rebeca Romero Rainey, President and CEO, ICBA
13 Pub. 11 2022 Issue 3 How would you describe your bank’s workforce? Is it robust or holding its own? Did the pandemic affect your hiring efforts, and where to look to find potential candidates? What is your bank’s process when looking to hire staff? Do you look inward when openings arise and see who in your current pool of talent would be a good fit for the position you are trying to fill? I know, I know, that’s a lot of questions, but they do have a point! VACB can’t help funneling candidates to your institution, but we can help with promoting from within the bank. What’s your process for staff who show a lot of potential and would be a great fit for a promotion or a larger role within the institution if they had just a little more training and knowledge about banking? There’s no need to look any further than VACB. Throughout the year, VACB offers best-in-class training for a range of topics critical to today’s community banks and their employees’ success. We engage trainers who are community bank-centric with their programs. Many have been community bankers in their early working lives, and they get it! They understand the community banking model and tailor their programs and materials with the community banking student in mind. Read on to learn about some of the planned programming for the coming year. VACB will launch the Essentials of Banking program for its seventh year in 2023. This is just one example of how a manager can expose staff to all that a bank is and does as a business and for its customers. These fundamental sessions cover banking from the teller line to the board room. Other programs we will be holding in 2023 include our Advanced BSA/AML Program, Universal Banker Certification Program, Retail Banking Leadership Series, and Essentials of Commercial Credit Analysis. Be sure to refer to the page in this issue outlining the dates for the programs we already have planned for the year. Additionally, we will hold Risk Management and Internal Audit sessions, but our dates haven’t been finalized as of this publication. And finally, I would be remiss not to mention one of the most enduring programs VACB offers its members. Our VACB Compliance Forum was formed in 1988 and has been an education crown jewel ever since. We are very fortunate to have one of the best regulatory compliance speakers in the country leading this program. Patti Joyner with Financial Solutions, Inc. is our speaker and compliance guru for the members of our Compliance Forum program. With quarterly meetings, interim webinars, newsletters, and a compliance hotline to get questions answered, how can a bank afford NOT to participate in this offering? A well-trained and well-informed compliance officer is one of the bank’s best lines of defense in these times of heightened regulatory scrutiny. As I close, here’s one other education kernel to consider. VACB is a nimble organization and if there’s a program that would benefit your bank, just let us know. We have contacts and insights across a broad range of topics and can pull programs together quickly. Call on us. We are here to serve you, our members! The Call to Educate By Katharine Garner, CMP
The CommunityBanker 14 VACB 2023 Educational Offerings VACB Compliance Forum Program March 7 - Richmond March 9 - Abingdon/Hybrid* May 23 - Richmond May 25 - Abingdon/Hybrid* September 12 - Richmond September 14 - Abingdon/Hybrid* December 5 - Richmond December 7 - Abingdon/Hybrid* *These meeting will be presented in person and offered on the Zoom platform. Advanced BSA/AML for Community Banks February 7 & 8 - Richmond The Satterfield Center for Community Banking in Virginia VACB Essentials of Banking* Presented Virtually in conjunction with the Community Bankers Association of Georgia and the Missouri Independent Bankers Association February 15 | March 28 May 24 | June 21 *All four sessions will be presented virtually on the Zoom platform. Universal Banker Certification Program* October 18 & 19 *This program will be presented virtually on the Zoom platform. 2023 Retail Banking Leadership Series: Building a High Performing Retail Team May 16 & 17 - Richmond June 13 & 14 - Richmond The Satterfield Center for Community Banking in Virginia Essentials of Commercial Credit Analysis May 18 & 19 - Richmond June 15 & 16 - Richmond The Satterfield Center for Community Banking in Virginia Advanced BSA/AML Virtual Update October 12 - via Zoom Fair Credit Reporting Act Deep Dive January 19 & 20 - Staunton Hotel 24 South Learn more at www.vacb.org Refer to the VACB Website Calendar for full program details! Additional programs will be added throughout the year!
15 Pub. 11 2022 Issue 3 By Travelers In addition to all of the everyday risks banks and credit unions need to guard against, the COVID-19 pandemic resulted in a significant increase in ATM thefts across the country. The spike hasn’t been surprising due to a number of factors, but the costs and damage resulting from these attacks are often considerable. Fortunately, there are steps banks and credit unions can take to help prevent becoming a victim of ATM theft. During challenging financial times when people are facing desperate situations, there is usually an uptick in bank robberies. There was an increase throughout the 2009 recession, for instance. With the pandemic in 2020, there was an increase in the U.S. unemployment rate, with more people out of work and ample time on their hands. Because COVID limited the number of people permitted in indoor facilities – or prevented them from entering altogether – bank lobby access was impacted, forcing more customers to use the ATM, which is often outside or in an entryway. Since more of a bank’s customers are not going into the lobby but instead using the ATM, more money is being placed in the machines to meet demand. Thieves were quick to catch on to this practice and began targeting ATMs with more frequency. Often, a vehicle or piece of construction equipment is used to dislodge and remove the entire machine. “Smash-and-grab events have become quite common, and they can be rather costly because, in addition to the money lost, there is often physical damage to the building,” said Tracey Santor, Product Manager for Financial Institution Bonds at Travelers. “There are a number of steps banks should strongly consider taking to reduce this risk, including purchasing ATM insurance coverage.” Deterrents include: • Installing concrete barriers or bollards around the ATM to make it more difficult for thieves to access the machine using a vehicle or machinery. •Adding lighting and surveillance cameras. • Placing dye packs and GPS devices inside an ATM so if the machine is jostled or removed, the packs explode, and the location can be tracked. Even though regulators require FI bond crime insurance coverage, ATM coverage is not mandatory, and it can be added to the bond and P&C policy as an endorsement, even if the machine is not located on the premises. Without it, an ATM theft wouldn’t be a covered event. Insurance carriers such as Travelers have products and resources available, so banks and credit unions have coverage when a crime occurs. According to a recent article from The Wall Street Journal, the number of attempted ATM smash-and-grabs increased by 150% from 2019 to 2020. Now is the time to ensure your bank has done everything possible to protect against this type of incident. To learn more, have a conversation with your insurance broker or agent, or contact an insurance carrier. Travelers is committed to managing and mitigating risks and exposures, backed by financial stability and a dedicated team – from underwriters to claim professionals – whose mission is to insure and protect a company’s assets. For more information, visit www.travelers.com or talk to your independent insurance agent about social engineering coverage. ATM Thefts
The CommunityBanker 16
17 Pub. 11 2022 Issue 3 Nationwide, every day of every year, safe deposit box rental payments become delinquent. At what point should the financial institution intervene? Specific state and federal regulations and nationally accepted procedures, letters, affidavits, and notices are necessary when you notify a renter or take legal action when his box rent is overdue. First, the financial institution must mail an annual box-rental-due notice. The second step would be a friendly 10-day rent-due reminder, then a 30-day past-due notice and finally, a properly worded, legal demand-for-payment letter must be mailed with the required federal (SCRA) regulatory notice included. If none of these efforts bring forth a payment or response, the financial institution has no other recourse. The box should be drilled, and its contents (if any) inventoried and impounded. Most delinquent boxes are often found to be empty. To avoid potential liability, strict procedures dictate the handling of confiscated box contents. To illustrate the pitfalls of following flawed or careless procedures, let’s examine a past-due box situation that occurred at a small financial institution: After taking appropriate actions to notify a renter that his box rental payment was long overdue, and when no response was forthcoming, the box was drilled. The contents were inventoried, listed in detail, and the institution took possession of the items. So far, so good – right? Wrong! The items were placed in a manila envelope and stored in an unlocked file cabinet. This is where the problems began. One day, 18 months later, the renter showed up to claim his property. He watched the safe deposit attendant walk across the lobby, open an unlocked file cabinet and remove a large envelope. The observant (perhaps dishonest) box renter examined the envelope’s contents, frowned, and slammed the envelope on the attendant’s desk. “This is not my stuff!” he bellowed. He asserted that a valuable coin collection was missing. Worthless coins had been substituted for his collection, and the financial institution’s inventory list was bogus. The unhappy and irate renter retained legal counsel and filed a lawsuit. After lengthy legal maneuvering by both sides, the lawsuit went to trial. During the trial, the emotional renter claimed the missing coins represented his total life savings. The financial institution testified that the box was indeed drilled, and the renter was properly notified his box rental payment was long overdue. His box contents had been inventoried and listed. Then the institution had to admit that these items had been placed in a manila envelope and left in an unsecured file cabinet for 18 months. The jury, moved by the renter’s pitiful testimony and disgusted by the institution’s lackadaisical attitude toward the safekeeping of his property, found in favor of the plaintiff to the tune of $107,000. The financial institution attorney’s subsequent appeal was unsuccessful and cost the institution an additional $80,000 in legal fees. Because the institution did not have a satisfactory defense during either trial, this expensive second attempt was predictably futile. Poor Drilling Procedures Create “Rich” Box Renter by David P. McGuinn , President, Safe Deposit Specialists Continued on page 18
The CommunityBanker 18 828 Main St, 15th Floor Lynchburg VA 24504 www.countsauction.com Call us for your Auction & Appraisal needs. 434-525-2991 Had the bank adhered to the following five critical steps, it could have avoided the entire litigation process. Step 1. State Regulations Follow your state and federal (SCRA) delinquent box rent and unclaimed property regulations closely. These requirements differ from state to state, but most state laws dictate the required time periods, the type of notice given and the required procedures to be followed when drilling a past-due box. Step 2. Sending Notices After mailing your annual rent-due invoices, if the rent is not paid, send only one friendly reminder and one past-due second notice. If there is no response to these notices, it is a waste of time and postage to continue sending notices each month. Wait until it’s time to send your final delinquent notice, and make sure it’s worded properly. Unless your state law requires a written disclosure that the box will be drilled and contents impounded, never mention this in your final letter. Tell the renter that you will be taking legal action against him, and you may turn him over to a credit-reporting agency if he doesn’t respond within a specified number of days. Most drilled past-due boxes are empty, and obviously, your renter knows this and will ignore your demand letter and throw it away. Hopefully, this harsh language will get his attention. Step 3. Drilling Box After the required notification period expires, the box can be drilled, and the contents inventoried. This must be done under dual control on a properly worded box content inventory affidavit. Nothing listed on this affidavit should appraise the box contents. (i.e., never list items as gold, silver, diamonds, etc. They should be listed as yellow or white metal or jewelry with blue, red or clear stones). A notary should also be present to notarize the inventory affidavit, which creates a proper legal document. Step 4. Safekeeping Contents After the box contents are inventoried, they should be placed in a tamper-resistant envelope and locked in a safekeeping area under dual control. A copy of the signed inventory affidavit should be secured in a sealed, clear pouch on the back of this envelope. The box renter’s name, address, due date, box number, drill date and all other essential information must be visible for recordkeeping and retention purposes. Step 5. Report Unclaimed Property If your renter never claims the drilled box contents, most states have a specific unclaimed property reporting period, usually three to seven years. When this retention period expires, these abandoned box contents must be reported and/or delivered to the state, and these authorities will usually auction the unclaimed items. In Conclusion After reviewing these five important steps, how did your past-due box drilling procedures stack up? Do you have copies of your state and federal (SCRA) safe deposit past due and unclaimed property regulations? Do you have a properly worded renter notification letter and box content inventory affidavit? Do you secure all drilled boxes in tamper-resistant envelopes and provide dual control safekeeping protection? If you have difficulties with any issues and need assistance or additional information, contact David P. McGuinn at sdspec@aol.com, (713) 937‑9929, or www.sdspec.com. McGuinn, President and founder of Safe Deposit Specialists in Houston, is a former bank Senior Vice President and Cashier and is often referred to nationwide as the safe deposit guru. In all 50 states, he has trained over 350,000 safe deposit personnel since 1969. He has created numerous CD or USB formatted procedures and regulatory/compliance manuals, employee training DVDs, brochures, custom renter notification letters, and many other safe deposit products, including state-specific drilling procedures, inventory affidavits and tamper-resistant envelopes for drilled past due boxes. For over 50 years, McGuinn’s seminars, manuals, forms and other resources have been considered the accepted standard for the financial industry. Continued from page 17 To avoid potential liability, strict procedures dictate the handling of confiscated box contents.
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The CommunityBanker 20 3 - J A N 4 - J A N 5 - J A N 1 0 - J A N 1 1 - J A N 1 2 - J A N 1 7 - J A N 1 8 - J A N 1 8 - J A N 1 9 - J A N 2 4 - J A N 2 5 - J A N 2 5 - J A N 2 6 - J A N 3 1 - J A N 1 - F E B 2 - F E B 7 - F E B 8 - F E B 9 - F E B 1 4 - F E B 1 4 - F E B 1 5 - F E B 2 1 - F E B 2 2 - F E B 2 2 - F E B 2 8 - F E B F i n a l A T R / Q M R u l e s : G u i d a n c e , A T R O p t i o n s & P o l i c y U p d a t e A d v a n c e d I s s u e s i n D o r m a n t A c c o u n t s , U n c l a i m e d P r o p e r t y & E s c h e a t m e n t T h e A B C s o f R D C P r o t e c t i n g t h e S B A G u a r a n t e e S t a r t t o F i n i s h B S A O f f i c e r P a r t 1 : B S A U p d a t e f o r B S A O f f i c e r s I R A & H S A U p d a t e : D i s c o v e r W h a t ' s N e w & C h a n g i n g 2 0 2 3 C a l l R e p o r t U p d a t e B e n e f i c i a l O w n e r s h i p F i n a l R u l e : D e t a i l s & D e a d l i n e s B e g i n n i n g S e c u r i t y O f f i c e r : D o s , D o n ' t s & C o m p l i a n c e C a s h F l o w A n a l y s i s P a r t 1 : D e b t S e r v i c e C o v e r a g e , G l o b a l C a s h F l o w & M o r e C r e d i t R e p o r t i n g R i s k s i n t h e B a n k i n g E n v i r o n m e n t 2 0 2 2 H M D A S u b m i s s i o n D u e M a r c h 1 , 2 0 2 3 : U p d a t e s , C h a l l e n g e s & R e a l - L i f e E x a m p l e s Q u a l i f y i n g B o r r o w e r s U s i n g P e r s o n a l T a x R e t u r n s P a r t 1 : S c h e d u l e s B & C C T R L i n e - b y - L i n e : A c c u r a c y & I n s i g h t A n t i - M o n e y L a u n d e r i n g A c t : U p d a t e & L e s s o n s L e a r n e d M o r t g a g e D e f a u l t s : W o r k o u t s , A l t e r n a t i v e s , F o r e c l o s u r e s , S h o r t S a l e s & M o r e R e g u l a t o r y U p d a t e f o r t h e C r e d i t A n a l y s t T o p F i v e M a r k e t i n g T r e n d s f o r 2 0 2 3 & B e y o n d M a s t e r c a r d D e b i t C a r d C h a r g e b a c k s : R u l e s , R i g h t s & C h a l l e n g e s S A R L i n e - b y - L i n e : C o m p l i a n c e & D e c i s i o n - M a k i n g C a s h F l o w A n a l y s i s P a r t 2 : D e e p e r A n a l y s i s , B a l a n c e S h e e t & E x t e r n a l F a c t o r s Q u a l i f y i n g B o r r o w e r s U s i n g P e r s o n a l T a x R e t u r n s P a r t 2 : S c h e d u l e s D , E & F B S A f o r F r o n t l i n e S t a f f F i v e R e a s o n s t o P r e p a r e f o r 1 0 7 1 R u l e s : S m a l l B u s i n e s s R e p o r t i n g f o r W o m e n & M i n o r i t y O w n e d B u s i n e s s e s C o m p l i a n c e O f f i c e r s : A d v a n c e d D e p o s i t & C o n s u m e r C o m p l i a n c e T r a i n i n g T D R C o m e b a c k : Q u a l i f i c a t i o n U n d e r C E C L & E n d o f C A R E S A c t B a n k i n g M i l i t a r y P e r s o n n e l : M L A , S C R A & R e c e n t C i t a t i o n s U P C O M I N G W E B I N A R S Visit fin-ed.info/VACB for 200+ Bank Training Webinars VACB 2023 Educational Offerings VACB Compliance Forum Program March 7 - Richmond March 9 - Abingdon/Hybrid* May 23 - Richmond May 25 - Abingdon/Hybrid* Advanced BSA/AML for Community Banks February 7 & 8 - Richmond The Satterfield Center for Community Banking in Virginia VACB Essentials of Banking* Presented Virtually in conjunction with the Community Bankers Association of Georgia and the Missouri Independent Bankers Association Fair Credit Reporting Act Deep Dive January 19 & 20 - Staunton Hotel 24 South
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