Spirit of St. Louis SPRING 2011

VOLUME 3

A Word From Your President On February 24th, the St. Louis Chapter hosted a panel of local Bank CEO’s/Presidents to discuss their perspective on banking, their careers in banking and what they saw as the future of banking. The event held at Greenbriar Country Club “What’s on the Mind of Our Region’s Top Execs?” was the most successful programming event the Chapter has held to date with approximately 120 attendees. Our guest speakers included Rick Bagy of First National Bank of St. Louis, Jim Wagner of Parkside Financial bank and Trust, Bob Mathias of Cass Commercial Bank, Rick Sems of PNC bank, and our moderator for the event was Tom Hough of Carrollton Bank. The panel discussed frankly issues that got them into banking, what the most pivotal moment in their careers had been, and advice they had for others in banking. There was a great rapport among the moderator and panelists along with some friendly “jabs” at each other concerning their banks, and what their competitors were doing. All in all it was a very entertaining and informational evening. CHAPTER OFFICERS And Committee Chairs 2010-2011 President Brian E. Carroll Regions Bank 8182 Maryland Ave Saint Louis, MO 63105-3786 Tel.: 314-615-2317 Fax: 314-615-2319 [email protected] Vice President/WIB Co-Chair Carla J. Valenti Parkside Financial Bank and Trust 8112 Maryland Ave, Ste 101 Clayton, MO 63105 Tel.: 314-290-8633 Fax: 314-290-8683 [email protected] Treasurer Jeff Clapp Commerce Bank N.A. 8000 Forsyth Blvd. St. Louis, MO 63105 Tel.: 314-746-7229 Fax: 317-746-3783 [email protected]

The event was also sponsored not only by your local St. Louis RMA chapter but also by Lathrop &Gage, LLP and Larson Allen. We greatly appreciate the support by each of these sponsors to help us provide informative programming events. Each company is a proud member and sponsor of RMA and the risk management field. We were pleased to have Lathrop and Gage and Larson Allen as an integral part of this program by introducing the event, closing out the event, and providing materials for all the attendees. We had many compliments from the crowd for putting on the event and how well our speakers performed. Make sure you are able to attend next year’s President/CEO panel to hear the latest and greatest from next years selected experts and leaders in our market. Brian Carroll

Join us for this Special Event “The Changing Regulatory Landscape from Washington” Featuring Bernie Mason – RMA Regulatory Liaison And Tim Bosch – Federal Reserve Thursday, April 28, 2011 Greenbriar Hills Country Club 12655 Big Bend Blvd., Kirkwood, MO Meet & Greet 5:00-5:30 Program 5:30-7:00 Cost: $50/person prior to 4/18 and $60/person on/after 4/19 Contact Amy Payne at 314.835.3630 for more information

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Young Professionals Corner

The RMA Young Professionals group hosted a “Breakfast with Accomplished Young Professionals” at the Greenbriar Hills Country Club on February 24th. The speakers were Josh Levey of Computime, Seth Burgett of Yurbuds and Nathan McKean of Breckenridge Material Company. There were around 40 RMA members and non-members in attendance. The speakers each gave a brief description of their current roles and answered several questions of interest to young professionals. Some of the topics included: general advice to young professionals, mentors, the importance of relationship building and methods of raising capital. Each speaker discussed the importance of finding your passion, networking, finding a mentor and taking necessary risks to get where you want to be in life. The event was well-received by the attendees as well as the speakers. Coming in May, the YPs will be hosting a networking event. Watch your e-mail for the details. Past President/Friend of the Board Daniel G. Stephen First National Bank of St Louis 12230 Manchester Rd Des Peres, MO 63131 Tel.: 314-746-4620 Fax: 314-835-3773 [email protected] Past President/Long Range Planning Rita Kuster Pulaski Bank 12300 Olive Blvd. St Louis, MO 63132 Tel.: 314-878-3523 Fax: 314-878-0712 [email protected] Education James E. Dolan Citizens National Bank 7305 Manchester Ave. Maplewood, MO 63143 Tel.: 314-645-0666 Fax: 314-645-0015 [email protected] Co-Membership Chair Vincent Coleman Southern Commercial Bank 5515 South Grand Blvd. Saint Louis, MO 63111 Tel.: 314-633-6068 Fax: 314-633-6027 [email protected] Co-Membership Chair Kay Berry Franklin Capital Network 645 Hawk Run Drive O”Fallon, MO 65453 Tel.: 636-561-5279 Fax: 3144352803 [email protected] Co-Membership Chair John Novatny First Banks, Inc. 11901 Olive Blvd. Creve Coeur, MO 63141 Tel.: 314-995-8760 Fax: 314-995-8770 [email protected]

Guarantor Policy: Satisfaction Guaranteed The authors offer guidance on the ins and outs of loan guarantees. By Dev Strischek and Carla Holloway

Napoleon advised in his Maxims, “The best way to keep one’s word is not to give it,” and then went on to ruin Europe for a generation. Despite Napoleon’s Machiavellian advice, most cultures assign considerable value to vows that are kept and promises that are fulfilled. Certainly today, we expect people, products, and services to perform as promised, warranted, or guaranteed. When we buy a product or service, we derive some comfort from being told that it comes with a guarantee. If it fails to work as promised, the seller agrees to replace or fix it at no charge or to take it back and refund the purchase price. In banking, when a loan fails to perform and the borrower cannot repay the bank, a willing and able guarantor can repay the obligation. Consumer bankers look regularly for cosigners or co-borrowers to shore up their loans to individuals. What complicates a loan request from a business borrower is that, first, the borrower is often an entity instead of an individual and, second, the reason for borrowing through the entity instead of as an individual is the entity’s limitedliability legal structure. The intent of this article is to resolve this complication and provide some overall guidance on writing a commercial borrower guarantee. The Guarantee: Available on Demand The term guarantee refers to a guarantee of payment. A guarantee obligates the guarantor to remedy any default by the borrower without requiring the bank to first pursue collection from the borrower, liquidate collateral, or press for payment from any other guarantor. Business borrowers tend to be entities rather than individuals, and the entities usually take the corporate form. Forming as a corporation is appealing to owners because it offers infinite life and limits the liability of its owners to their investment. In theory, the owners are not responsible for the corporation’s debts, so guarantees from an entity’s principals allow the lender to “pierce the corporate veil” of limited liability and make the principals’ income and wealth accessible to the bank. Mechanics Banks extend credit accommodations to creditworthy borrowers and expect credit obligations to be repaid from their borrowers’ cash flow. Credit relationships are structured typically with both primary and secondary sources of repayment because, in addition to taking the assets being financed as collateral, requiring a guarantor as a secondary cushion of protection generally reduces credit risk and helps ensure repayment according to the original credit terms. However, both collateral and guarantees are secondary sources of repayment, because neither is available until the borrower defaults, and their value at default is likely to be less than at inception of the loan. Continued on Page 4

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Welcome New Members

Programming Co-Chair/Audit Scott Lively Larson Allen 600 Washington Ave. Suite 1800 St Louis, MO 63101 (314) 925-4300 (314) 9254350 [email protected] Programming Co-Chair Wendi Alper-Pressman Lathrop & Gage LLP 7701 Forsyth Suite 400 St Louis, MO 63105 (314) 613-2800 (314) 613-2801 [email protected] Communications Chair Gail Beisman Commerce Bank N.A. 8000 Forsyth Blvd. Suite 500 St Louis, MO 63105 (314) 746-7224 (314) 746-8712 [email protected] WIB Co-Chair/Long Range Planning Patricia A. O’Herin PNC Financial Services Group 120 South Central Avenue St. Louis, MO 63105 (314) 898-1423 [email protected] Young Professionals Co-Chair/Audit Bert Purdy BKD, LLP One Metropolitan Square 211 N. Broadway Suite 600 St Louis, MO 63102 (314) 231-9844 ext 24023 (314) 231-9731 [email protected]

Joseph Grana – First National Bank of St. Louis Lindsey Bernaix – Pulaski Bank Tim Kleinschmidt – Regions Financial Corp. Lawrance Giglio – First National Bank of St. Louis Dan Baker – Business Bank of St. Louis Jonathan Holley – Montgomery Bank NA Garrett Watson – Business Bank of St. Louis Gregg Peters – First National Bank of St. Louis Yao Shi – Regions Bank Jon Hustedt – Business Bank of St. Louis Cory Daniel – Montgomery Bank Kathy Bader – Virtual Realty Enterprises LLC David Bell – PrivateBank & Trust Company Teresa James – Bank of America Doug Potts – Commerce Bancshares Steven Reed – PNC Bank, NA John Slaid – PrivateBank & Trust Company Robert Uthoff – Liberty Savings Bank FSB Henry Warshaw – Virtual Realty Enterprises LLC

More Upcoming Events Log on to www.rmahq.org for a full list of events and seminars Audio Conference Series (Log on to www.rmahq.org for details on these and other upcoming Audio Conferences) Credit Risk Challenges during the Next 18 Months – April 12, 2011 Back to Basics: Understanding a True Asset Based Loan – May 10, 2011 TBD – June 7, 2011

Additional Upcoming Events Agricultural Operational Risk Management – Sacramento, CA May 10 – May 12, 2011 Operational Risk for Regional and Community Banks – Philadelphia, PA May 10, 2011 Los Angeles, CA June 3, 2011 Credit Department Management Forum – Philadelphia, PA June 6 – 7, 2011 Commercial Real Estate Lending Forum – Chicago, IL June 9 – June 10, 2011 Loan Review Department Managers Forum – Chicago, IL June 9 – June 10, 2011 Developing a Coherent Framework for Stress Testing – Baltimore, MD June 15, 2011

Young Professionals Chair Ryan Baumgarten Commerce Bank, N.A. 8000 Forsyth Blvd. Suite 500 St Louis, MO 63105 (314) 746-8572 (314) 746-8712 [email protected]

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Continued from Page 2 In most cases, the bank asks for a guarantee of a borrower’s debt from any third party that stands to benefit financially or economically from the extension of credit being considered. Thus, a guarantee is required of a third party having ownership in or control over the borrowing entity. The third-party guarantee ensures that the borrower’s controlling parties are committed to the terms of the proposed credit agreement. Friend of the Board Robert Eames PNC Bank [email protected]

To read this article in its entirety, please visit our website: http://www.rmahq.org/RMA/RMAJournal. Follow The RMA Journal on Facebook or Twitter.

Chapter Administrator Jill S. McBeth National City Bank 755 W Big Beaver Rd, Ste 1500 Troy, MI 48084 Tel.: 248-729-8572 Fax: 248-729-8808 [email protected] Central Regional Manager Laura W. Martin The Risk Management Association P.O. Box 66 Union, KY 41091 Tel: 859-384-1760 Fax: 859-384-1767 [email protected] Central Regional Assistance Agnes B. Santiago The Risk Management Association 1801 Market Street - Suite 300 Philadelphia, PA 19103 Tel: 215-446-4018 Fax: 215-446-4262 [email protected]

RMA Credit Risk Certification In today's rapidly changing financial services industry, you need practical, day-to-day knowledge that will help you excel in your profession. You need the latest skills, skills that are current and complete. And you need the demonstrated ability to serve a diverse base of clients. Plus, you need all of your knowledge, skills, and abilities to be validated by a respected organization like RMA. For more information, check out our website: www.rmahq.org

Upcoming St. Louis Chapter Events Lunch & Learn – “Credit Challenges During the Next 18 Months – Tuesday, April 12, 2011 Regions Financial Center, 8182 Maryland Ave., Clayton, 2nd Floor Conference Room “The Changing Regulatory Landscape from Washington” – Thursday, April 28, 2011 Greenbriar Hills Country Club Lunch & Learn – “Back to Basics: Understanding a True Asset Based Loan – Tuesday, May 10, 2011 Downtown location TBD UCA I: Cash Flow Analysis – Thursday, May 12 & Friday, May 13, 2011 8:30AM to 5:00 PM Location TBD

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Board Member Spotlight Robert E. “Bert” Purdy, CPA, CTFA

Manager St. Louis

As a member of BKD National Financial Services Group, Bert brings more than 10 years of experience to the clients he serves. He provides a wide range of accounting, auditing and consulting services. Bert works with financial institutions ranging in size from de novo banks to multibillion-dollar institutions. He manages the St. Louis office’s financial services consulting team, which provides internal audit services, Sarbanes-Oxley Act consulting, internal audit risk assessments, asset liability reviews, Automated Clearing House audits, information technology audits, trust audits and loan review services. As a Certified Trust and Financial Advisor (CTFA), Bert is recognized as a leader in providing services to trust departments, including Regulation 9 reviews and SAS 70s. He is a member of the American Institute of Certified Public Accountants and Missouri Society of Certified Public Accountants. Bert is active in the Missouri Bankers Association and Community Bankers Association of Illinois (CBAI), is a facilitator of CBAI’s Operations and Technology Forums and has spoken at other CBAI seminars. He is also on the board of the St. Louis Chapter of The Risk Management Association (RMA), is Chairman of the Young Professionals (YP) Affinity Group of the RMA’s St. Louis Chapter and is on the national YP Committee for RMA. Bert also has written articles for BKD publications. In 2007, Bert graduated from Cannon Financial Institute’s Personal Trust School and is a 2000 graduate of Harding University, Searcy, Arkansas, with a B.S. degree in accounting.

Save the Date Wednesday, October 5, 2011 2nd Annual Golf Tournament at Forest Park

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