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March 2016

Ken Bretthorst Retires (See inside story on page 16)

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MARCH 2016

FEATURES

16 Ken Bretthorst Retires

18 Curbing Your Risk Appetite in the New Year

20 UDAAP Today: Say What You Do and Do What You Say

26 Compliance Preparedness for 2016

INSIDE THIS ISSUE THE SHOW-ME BANKER is published by the Missouri Independent Bankers Association Matthew S. Ruge, Executive Director Editor: Gina Meyer, Marketing & Events Coordinator

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Message From The President

29 Welcome New Associate Members

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From the Chairman

29 Welcome New Member Banks

7

Fine Points

30 MIBA Dates & Events

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News From You

30 Advertisers’ Index

10 Meet Your MO Banker 12 MIBA 2016 Legislative Reception 14 Background on Randy Baker 22 Community Bank Succession Planning 23 MIBA PAC Honor Roll 24 Is Your Website ADA Compliant? 28 MIBA Community Banking Directors & Officers Seminar Schedule

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MESSAGE From the MIBA President orty years ago, an examiner might ask if you had a compliance program. You replied “sure,” they checked a box, and you were done. That hasn’t been the case for a long time. We find ourselves already a third of the way through the alphabet a second time with lettered regulations. Reg O and Truth in Lending have been around a while, and today we work through DoddFrank and TRID, along with new CECL proposals. Regulations aren’t a bad thing. They give us a framework with which to operate banks. They point us (hopefully) in the right direction. They provide valuable protections for our customers. Exam teams review what we do, how we implement our policies and procedures, and the effectiveness of our efforts. We perform risk assessments for lending, operations, information technology and vendor management, just to name a few. Compliance officers and committees need to be able to offer input when management’s proposal for a change doesn’t quite work from the compliance standpoint. But we expect a good compliance team to provide suggestions for an alternative that will let the product or service move forward. Our compliance officer has a seat on the board. Not only will policies, reports and training be provided each month, but the board has the opportunity to receive answers to their compliance questions directly. The IT function of our banks should be considered part of the compliance front lines. The communication systems, firewall and intrusion prevention systems must be in place to minimize the opportunity for security breaches. Cybersecurity for the protection of customer information systems, payment systems, service providers and outside vendors require constant monitoring. The regulatory exam and outside audit process will lead to recommendations for enhancements and additions to policies and procedures. It will always be to the bank’s benefit to establish timelines and expectations for the exceptions that inevitably arise. Assign the responsibility to the people and committees that are best able to bring a resolution to the exception, and follow up on the results. If we’re not effectively reviewing our procedures,

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Jack Wagner Adrian Bank, Adrian

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we’ve set up the possibility of CMPs, UDAAP violations and enforcement actions. With each new regulation comes the expansion of the focus of regulators and heightened attention during the exams, and the challenges of implementing them correctly. No banker wants to intentionally break the rules, but oversight is critical to avoid problems. We need to encourage our lawmakers to carefully consider that a “one-size-fits-all” approach to regulation is often counterproductive. A better and more practical approach would seem to be to take into account the size and complexity of the organizations. The difference between a $100 billion bank and a $100 million bank involves challenges that vary greatly. In other words, let the Reg fit the risk. We have an opportunity this year to watch several important issues, which include HMDA error thresholds, changes to flood insurance rules and the annual privacy notice requirement, and certain loans to military personnel. Reg B and spousal signatures will be right at the top, as the U.S. Supreme Court is expected to rule on a Missouri case heard last October. Fair lending and the disparate impact concept are always a hot button. Compliance regarding third-party vendors takes constant review. The risk assessment has to be more than a mechanical exercise. We need to understand each potential exposure. Evaluate when, where and how each risk may affect the organization, and draw reasonable, realistic and practical solutions for all of the affected areas under review. Take a proactive approach. Integrate the compliance mentality into staff. When the staff knows that the board and senior management believe in it, they will give it its due attention. Regulations are complex. Choosing a compliance officer isn’t easy. It’s a unique role, requiring a person who not only reads but understands, and can digest the rules and make recommendations accordingly. Unlike income-producing areas of the bank, formulas and ratios do not provide a measure of the value received from a coordinated, dedicated compliance program. Its value, however, becomes apparent in the efficiency of operations, our relationship with regulators, and our reputation in our communities. Q

From the

CHAIRMAN Thank You, Community Bankers s I wrap up my year as ICBA chairman and my last From the Chairman column, two words come to mind. They are, quite simply, thank you. Thank you to all of you whom I’ve had the opportunity to meet over the past year during my travels, and thank you to those of you who — while our paths may not have crossed physically — stood together for one cause, community banking. I want to thank all of you for everything you did to stand up, step up and speak up for our great industry. In my convention speech last year, I asked you to do those three simple things; and without any hesitation, you did each of them. Our record demonstrates it. Thank you for diligently reaching out to your members of Congress and educating them about how issues such as regulatory burden, the Federal Reserve dividend cut and the Financial Accounting Standards Board’s proposed Current Expected Credit Loss (CECL) model would impact your community bank and the communities you serve. You answered ICBA’s Calls to Action and activated letters through the Be Heard advocacy website. You didn’t waver, and you didn’t sit back and wait for someone else to hit send. You did it, and it’s because of you that we moved a lot of mountains during the past year. The Fed dividend measure is a prime example. Because of ICBA’s and community bankers’ advocacy to scrap Senate-passed legislation that would have required all Fed-member banks to pay for federal highways via cuts to Fed dividend

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Jack Hartings Chairman of ICBA

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The Show-Me Banker / March 2016

payments, lawmakers agreed to exempt community banks under $10 billion in assets — with larger banks receiving relief as well. While ICBA and community bankers pushed to completely drop the dividend cut ever since the ill-conceived proposal advanced last July, this community bank exemption will save our industry an estimated $200 million yearly. With more than 1,800 members of the Federal Reserve at less than $10 billion in assets, the benefits will be felt in communities nationwide. That’s a huge win right there. Another great example is FASB’s CECL accounting proposal. Because we spoke out in unison, we got on FASB’s radar. Its officials didn’t have a choice but to listen. So finally, it happened. FASB agreed to host a roundtable last month as the direct result of our relentless advocacy. We got our seat at the table. We got our chance to be heard. And being heard is what it’s all about. It’s the first step to constructive dialogue between us and key stakeholders. It’s about educating and understanding. It’s about putting others in our shoes. Because you live it and believe in it, you can best help them do just that. It’s this dedication and passion for our industry, your relentless dedication to your customers and communities, and how you run your bank that makes me so proud to be a community banker. It’s been such a privilege to represent you and our industry over the past year. I thank you for the opportunity and look forward to continue to work alongside each and every one of you in the years to come as a proud community banker. Q

FINE POINTS From Farce to Menace o here we go again. It’s yet another disturbing proposal from the National Credit Union Administration to bureaucratically finagle its way around Congress and federal law. Even as nearly one-third of Americans are already members of a credit union, it seems there’s almost nothing the NCUA still won’t try to further expand the market reach and special tax-exempt privileges of the credit unions it supervises. Talk about your captive regulator! When credit unions say “Jump,” the NCUA says, “How high?” Last month, the NCUA’s sweeping, 167-page proposal to hand federal credit unions virtually unlimited freedom to serve almost any person of any means anywhere rightly drew an avalanche of letters from infuriated community bankers. If adopted by the NCUA’s unelected three-member board, the proposal would impose comprehensive and substantive regulatory changes that would allow federal credit unions to cobble together ever larger, more disparate and more imaginative fields of membership. While the Federal Credit Union Act clearly limits membership in community credit unions to serving individuals and organizations within a well-defined local community, for example, the proposal would recognize some entire congressional districts as local communities. Even more obviously absurd, one provision would allow community credit unions in seven states — Montana, Alaska, Delaware, North Dakota, South Dakota, Vermont and Wyoming — to serve their entire state. Basically, all air-breathing mammals in the United States would qualify to be credit union members. The multiple provisions of the NCUA’s

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Camden R. Fine ICBA President and CEO

proposal would, in combination, essentially render any field of membership requirements a meaningless policy fig leaf, particularly for multicommon bond credit unions and community credit unions. As ICBA wrote to the NCUA, this proposal makes a mockery of both the plain language and the clear intent of the Federal Credit Union Act. If credit unions or their regulator want to eliminate the common bond requirement, those credit unions should be taxed like banks and be required to shoulder the same set of regulatory standards. Or, more simply, they should adopt a bank or thrift charter. Certainly the NCUA’s obsessiveness in pushing against its regulatory limits has had almost no limits in years. In February, the NCUA dramatically expanded loopholes for member-businesslending rules for credit unions, a self-serving and imprudent policy change that only a few large bank-like credit unions could or would take advantage of. More perplexing, the NCUA is championing legislation to allow credit unions to raise investor capital, a maneuver that would jeopardize if not betray the very member-owned model for which the agency so enthusiastically cheerleads. The NCUA’s unbounded regulatory mischief has gone from silly to absurd. It’s now bordering on reckless disregard for the red letter of the law. So, yes, here we go again. But this time around it’s different. By flouting congressional authority, the tax-exempt credit union model intended to serve only people of modest means and limited constituencies is on the verge of becoming fraudulent. Rest assured that ICBA will vigorously oppose this newest NCUA proposal as a major threat. Q

The National Credit Union Administration approved a final rule relaxing member-business-lending rules for tax-exempt credit unions. In a statement, ICBA said the vote to dramatically expand loopholes to the statutory lending cap sidesteps Congress on behalf of growth-oriented credit unions that are subsidized by the American taxpayer.

www.miba.net / The Show-Me Banker

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NEWS From you KCB Bank KCB Bank is proud to announce that Darin E. Miles has joined our community bank as vice president. Miles has worked in banking for more than 15 years. He began his career with Wells Fargo Bank, and then moved to Platte Valley Bank. Most recently, he was with Great Southern Bank, where he Miles managed a substantial loan portfolio as a commercial loan officer. As a relationship manager, he also built and strengthened new and existing client relationships. “We are so pleased to welcome Darin. His diverse experience and extensive knowledge are valuable assets to KCB Bank and our customers,” said KCB Bank President and CEO Larry Ellington. “He genuinely wants to ensure that everyone has the best banking experience at our bank.” A Northland resident, Miles will work out of the KCB Bank locations in Gladstone, 99 N.E. 72nd St., and in Liberty at 110 S. Stewart Road. “Having the best people work at KCB Bank helps us provide the best service,” said Ellington. “People like Darin help support the continued success of the bank, its communities and our customers.” KCB Bank has a long and stable history of providing financial services to our communities’ businesses and families. In addition to its headquarters in Kearney, KCB has a drive-thru express in Kearney and locations in Liberty, Gladstone and Bonner Springs, Kan. In addition, KCB Bank has a loan production office in Lee’s Summit. For more information, visit www.kcbbank.com. Midwest Independent Bank (MIB) announces promotions: Christopher (Chris) Bryan was promoted to senior vice president/relationship manager. Bryan will continue to assist current customers and prospects with correspondent banking products and services in the western side of the state of Missouri. Bryan received a bachelor’s degree in business administration with an emphasis in Bryan finance and banking from the University of Missouri in Columbia. Bryan also attended the University of Chicago, Booth School of BusinessEssentials of Effective Sales Management. 8

The Show-Me Banker / March 2016

Cole Holloway was promoted to AVP/ information technology director. Holloway has close to 15 years of IT experience, plus a wealth of knowledge on computer systems. He came to MIB in early 2015 from IBM, where he was a subject matter expert for the Columbia VMware team. Holloway graduated from William Woods Holloway University in 2005 with a bachelor’s degree in computer science. Mark Leesman was promoted to assistant vice president/project conversion officer. In his new role, Leesman will directly oversee project work on behalf of the bank operations division. Additionally, he will have oversight responsibility for the conversion/onboarding experience of new respondent bank customers. As a bankLeesman ers’ bank, owned by the community banks MIB serves, customer experience remains top priority. Leesman’s appointment to this newly created position is just one example of MIB’s focus toward the ongoing success of community banks throughout the Midwest. Mark joined MIB in July 2011 as a safekeeping specialist; and in August 2012, he transferred to the position of systems support specialist. He received his bachelor’s degree in business, with an emphasis in entrepreneurship, from the University of Illinois in Champaign. He recently graduated from the Missouri Bankers Association (MBA) School of Bank Management. Erin Schwaller was promoted to vice president/operations officer. In her new role, Erin’s primary responsibility includes the daily supervision of those operational team members engaged in traditional correspondent customer care activities to include payment processing, (i.e., ACH, domestic wire transfer, cash Schwaller letter and international services), information reporting, overnight investment, safekeeping, and all related clearing and settlement activity for MIB’s shareholders and community bank clients throughout the Midwest. In 2007, Schwaller attained her AAP (Accredited ACH Professional) certification. She is a 2013 graduate of the Missouri Bankers Association (MBA) School of Bank Management and received the NCP (National Check Payments) certification that same year.

MIB is a “bankers’ bank” that provides a wide array of correspondent banking services to close to 550 financial institutions throughout the Midwest. Based in Jefferson City, MIB’s banking services are provided exclusively to financial institutions. The website for MIB is www.mibanc.com. Regional Missouri Bank Regional Missouri Bank has been your local community bank since 1908. “Our goal is to support the growth of the communities we serve,” said Patrick Kussman, president and COO. “Regional Missouri Bank is locally owned and has a very rich history of being involved in each of our communities. We are large enough to serve any of your financial needs, but small enough to care and keep our customers as the priority.” When asked how the bank has been able to maintain success through many economic situations, Kussman added, “We do this through friendly, prompt and personalized service from our knowledgeable staff. Customers are provided with solutions for their financial needs. We look for opportunities to provide loans to small businesses and municipalities, keeping jobs local and business communities healthy. Last but certainly not least, we support our communities through economic contributions and the civic involvement of our employees.” People make the difference and Regional Missouri Bank is proud of their employees and what they bring to each of the bank branches in the communities of Marceline, Keytesville, Salisbury, Glasgow and Paris. With this in mind, they have released the slate of promotions of employees during their board meeting January 21, 2016. Annette Nannemann Senior Vice President/ Cashier/BSA Officer Kim Kendrick Senior Vice President/ Branch Manager Salisbury Kimberly Corbin Senior Vice President/ Human Resources/ Branch Manager Marceline Jordan Lichtenberg Vice President/Secondary Market Beth Roby Assistant Vice President/ Private Banker Jessica Watson Assistant Vice President/ Assistant Cashier Ashley Rowe Assistant Vice President/ Internal Auditor/Loan Review Ben Bell Assistant Vice President/ Facilities Manager Jo Reynolds Assistant Vice President/ Branch Manager Paris Betty Vasser Assistant Vice President/ Asst Branch Manager Salisbury Lydia Wagy Loan Officer Michelle Kelly Central Loan Processor

John R. Cline John R. Cline, 88, of Mexico, passed away at 11:50 a.m. on Wednesday, January 27, 2016 in Mexico. A Mass of Christian Burial was held at 10 a.m. Saturday at St. Brendan Catholic Church with Fr. Mark Porterfield officiating. Burial with military honors followed in East Lawn Memorial Park. John was born Aug. 26, 1927 in Monett, the son of R. Lee and Bessie (Curry) Cline. On Feb. 11, 1984, he married Mary Jo Moeller. Mr. Cline was a 1945 graduate of Monett High School. In 1949, he earned a Bachelor’s Degree in Economics from Drury University. He was a veteran of the U.S. Navy. John moved to Mexico in 1969 and served as President for Commerce Bank and Martinsburg Bank and Trust. Mr. Cline was a member of St. Brendan Catholic Church and the Mexico Rotary Club. He had served as VicePresident for the Missouri Jaycees in the 1950s. John also served on many boards, including Presser Performing Arts Center, Mexico YMCA, Missouri Prairie Foundation, Missouri Independent Bankers Association, and the Missouri Veterans Home. He was a Past-President of the Mexico Chamber of Commerce and later received the Col. C.R. Stribling Jr. Community Service Award. John enjoyed golfing, hunting and fishing. He was an avid sports fan, especially the Missouri Tigers and St. Louis Cardinals. Survivors include his wife, Mary Jo Cline of the home; his former wife, Patricia McQueen of Seattle, Wash. and their four children, Carol (Mike) Hammer of St. Louis, Caryn Cline (Dan Greenblatt), Emilee Cline (Dan Nowak), and John David Cline (Jennifer Griffith), all of Seattle, Wash. area; two step-sons, Tim (Beth) Crews and Tom (Molly) Crews, all of Mexico; five grandchildren, four great-grandchildren, and five step-grandchildren; and one sister, Ermalee (Duke) Albright of McKinleyville, Cal. Memorial donations may be made to the Presser Performing Arts Center or the Mexico YMCA. Both may be sent in care of Arnold Funeral Home, 425 S. Jefferson, Mexico, MO 65265. Q

Compliance Corner, Director’s Supplement and Capitol Comments can be found on our website, www.miba.net. Look under “For Members” then “Monthly Updates.” www.miba.net / The Show-Me Banker

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MEET YOUR MO BANKER Joe Kollmeyer, Senior Vice President MIB Bank Jefferson City, MO SMB: Where are your main bank and branches located? What is the market like? JK: MIB’s main bank is located in Jefferson City, Mo., and we have a branch in Lincoln, Neb. Our market area includes all of Missouri, Nebraska, Iowa and Illinois, and we have six relationship managers that work throughout those states. Because of this large geographical area, we have a very diverse customer base that includes community banks in both rural and metropolitan markets and everything in between. SMB: What services to you provide? JK: MIB is a bankers’ bank and provides correspondent banking services to community banks throughout the Midwest. As a bankers’ bank, we are not owned by individual shareholders but are owned by the community banks that we serve, much like a cooperative. We have no other corporate purpose than to serve our community bank customers. We do not compete in the retail banking marketplace and provide correspondent services only to financial institutions. Combined with our affiliate institutions (MIB Banc Services, LLC, and First Bankers’ Banc Securities, Inc.), we provide financial services to close to 550 community banks in the Midwest. We have a wide array of products that we offer, including item clearing, fed funds (sales/purchases), loan participation/

overline services, bank stock loans, investment services, safekeeping, credit card and merchant services, multiple electronic services, as well as loan review, audit, compliance and information technology services. Additionally, MIB administers almost $5 billion dollars on a daily basis, although we currently are only around $300 million in total assets. SMB: How did you get started in banking? JK: Honestly, as I was growing up and working through college I never had the intention of working in the banking industry; however, when I was a senior at the University of Missouri–Columbia, I attended a recruiting event and met a gentleman from a local community bank here in Jefferson City. I ended up interviewing with that bank and was offered a job soon after. I wasn’t sure at the time what I was getting into, but since I was getting married soon I figured I better just take the job and could “plan” the rest of my life after the fact. I’ve been in banking ever since. Turns out it was one of the best decisions I’ve ever made. SMB: What is the most important thing you’ve learned from this career so far? JK: I’ve learned that building relationships and networking are critical in all aspects of life, but especially so in community banking. Those relationships — whether with other bankers, customers or coworkers — provide the foundation for everything we do as community bankers. SMB: Tell us about the bank’s community investment efforts. JK: Since our “community” covers a four-state area, our investment efforts are reflected in providing the services our bank customers need to enable them to be strong banks in their respective communities. On a local basis, however, we encourage all of our employees to be involved in service groups and civic organizations. Additionally, every month we pick a local charity and our employees can donate toward that cause by making a monetary donation to be able to wear jeans to work on Thursdays.

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SMB: What is the bank’s biggest challenge in the area of Internet banking? JK: Security is by far one of the biggest challenges. As Internet banking continues to evolve, the “bad guys” become more sophisticated in their efforts as well. It’s amazing the amount of resources banks have to utilize just to stay one step ahead. SMB: Why do you belong to the MIBA’s ECB (Emerging Community Bankers) program?

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JK: ECB provides a great platform to build relationships and network with the next generation of community bankers from all over the state. It’s amazing how often I find myself reaching out to another ECB member to brainstorm over a situation or just catch up in general. It’s a great program, and I would encourage all emerging bankers to get involved. Q

Email your stories to Regina (Gina) Meyer at [email protected]

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MIBA 2016

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The Show-Me Banker / March 2016

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BACKGR OUND

ON

Randy Baker By Kristin Rulon, Assistant Editor, BankNews Media

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or many, golfing gives people a chance to unwind, enjoying peace and quiet. For Randy Baker, CEO and president of Lawson Bank, it’s a hobby for his brood of four. Baker and his wife, Katye (owner and dance director of All About Dance by Katye), daughter Jenna and stepson Braden all enjoy swinging the golf club

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whenever they all can get together. Jenna is a senior in high school and Braden is a freshman at California Polytechnic State University. “Golf is our family hobby,” Baker said. “All four of us golf together, whenever possible.” Even though playing golf is a family hobby, carpentry and spending time with his dogs, two Golden Retrievers and Zorro the family Bischon, take up a lot of his free time. “I see so many homes that could be beautiful again. I enjoy the carpentry work and would like to fix up homes to create more value and curb appeal in the neighborhood,” he said. “I could see myself in the home rehab market if I weren’t in banking. I also really enjoy marketing, especially in the social media, digital media and kiosk arena.”

Wood-working may be off the clock, but during business hours Baker is using his Kansas State University bachelor’s degree in finance and economics and Lawson Bank’s traditional banking values to build a strong rapport with customers. “We are still old fashioned and believe in relationship building and going out in person calling on our customers and prospects,” he said. “Our bank can offer all the ‘big bank’ products but with the personal touch and a very quick response. At the end of the day, almost all banks offer the same products. It really comes down to how well and how fast you can deliver.” One of Lawson Bank’s main focuses has been staying up-to-date with technology, from mobile apps, mobile deposit, ATMs, online banking, its website and social media. “We utilized and mixed age groups in multiple industries to form our advisory board, which helps give us feedback and direction,” Baker said. Lawson Bank opened its doors in 1883 in Lawson, Mo. It was founded by brothers, Washington and Addison Smith, who, according to Baker, had their fair share of stories being part of the Mexican War and California Gold Rush before beginning Lawson Bank. Today, Lawson Bank, has four locations (the main bank in Lawson and branches in Excelsior Springs, Mo., Gladstone, Mo.,

and Kansas City, Mo.) and the same pride that has kept them going for more than 130 years. The Lawson Bank in Lawson was built in 1885, serving then a community of 600. Lawson’s population now stands closer to 2,500. In 1914, a fire destroyed the building, but the “integrity and grit that began the bank kept it going,” Baker said. Although the bank has had a few ownership changes over the years, it has been owned by Dr. Stephen McCray since the early 1980s. Baker became president and CEO of Lawson Bank in 2014. Originally from Aurora, Colo., Baker began his career in 1986 with Unipac student loans, a division of U.S. Bank in Denver, Colo. He is also a graduate of the CUNA School of Lending in Madison, Wis. For the past 30 years, Baker has held the positions of chief credit officer with K-State Credit Union; senior vice president with Bank Liberty chief operating officer with Hillcrest Bank; director of marketing and sales with First Federal Bank; and senior vice president of corporate development with Citizens Bank & Trust. Baker advises young bankers starting out to not let regulations scare them away from the industry.

“Young bankers need to understand there are so many career paths in banking,” he said. “You can go the retail banking avenue, loan or deposit operations, commercial banking, agriculture banking, finance, investment, bond trading, etc. Take your time and learn all the departments and then decide what you like best. Be patient. Instant gratification doesn’t exist.” And as far as dealing with those notso-scary regulations, Baker knows many banks are struggling because of the extra costs to outsource or hire additional staff to meet the increasing regulation demands. “It seems like we have an audit for everything today,” he said. “Most of us are looking for the most cost-effective approach. I believe that most of us are really looking at our business model and explaining it to our examiners because the majority of regulation doesn’t seem to apply to a lot of community banks.”

So what does the future hold for community banks with regulations breathing down their necks? Baker disagrees with the so-called trends of doom and gloom. “I believe community banking will grow again. People still believe in the relationship and knowing where they bank,” he said. “Community banks tend to be more open and eager to work with our customers. The only thing I see getting in the way are bank regulations and technology costs. The costs are challenging, and we have to get more creative on how we make money.” Q

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KEN BRETTHORST RETIRES By Kristin Rulon, Assistant Editor, BankNews Media hat comes to mind when you hear the word “retirement”? Cultivating a hobby? Crossing off bucket list items? Simply slowing down? For Ken Bretthorst, former CEO and vice chairman of the board for First Bankers’ Banc Securities, Inc., retirement combines all three elements. Bretthorst, who began his first day of retirement March 1, plans on spending

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more time with family, specifically his daughter Angela, her husband Dave and their children Connor and Annalise. In fact, Bretthorst already has a few family trips on the books, including one celebrating a milestone anniversary for him and wife, Susan. “We will be celebrating our 50th wedding anniversary this year,” Bretthorst said. “We will be taking an Alaskan cruise with the whole family. It will be a great time.” Bretthorst also plans on keeping in touch with all the friends he’s made throughout his 47-year career in the financial industry and enjoying more R&R fishing during retirement. “I’m looking forward to not having to get up so early,” Bretthorst said, with a chuckle. He may be done wearing dress shirt and slacks almost every day of the week, but that doesn’t mean he’s throwing in the towel and all his expertise with it. “I will be performing portfolio consulting work and still plan to be very active with the MIBA,” he said.

When a young Ken Bretthorst signed up with the Army, banking was the furthest thing from his mind. His education at the University of Missouri-St. Louis, serving his country and spending time with Susan were his priorities. He had no idea he would end up the CEO and vice chairman of the board for First Bankers’ Banc Securities, Inc. A year and a half into his Army career in intelligence, he remembers asking superiors if he was going to Vietnam. He was told no, and so he decided to marry and start his life with Susan. Then, one year later, he was deployed to Vietnam. “Can you imagine,” he said. “Married one year and then sent to Vietnam.” But they made it work, communicating with each other when they could (Bretthorst recalls being able to call his wife every few weeks, when possible). It wasn’t easy but the fact that Susan and Bretthorst have known each other since kindergarten could have played a role in their relationship handling the distance. “We spent 12 grades together, 13 if you count kindergarten in New Franklin,” he said. “We really have known each other a long time and I’d say we are pretty good partners. She’s always been very supportive. Even early in my banking career when I was traveling a lot, she was home

with our daughter, taking care of everything. She’s been great.” A year and a half later, Bretthorst was out of the service, home with Susan, and continuing his college education. He graduated with a bachelor’s degree in business management from the University of Missouri-St. Louis, and started working in the investments department with Centerre Bank in 1969 for Frank Spinner. During his 15-year career at Centerre Bank, Bretthorst graduated from the Graduate School of Banking at the University of Washington and Columbia University’s Executive Sales Management Program, located in New York. In 1984, along with three other investment professionals, he started First St. Louis Securities, Inc., a firm that specialized in serving the investment needs of community banks and bankers. He is actively involved in the portfolio management of a great number of community banks throughout the Midwest. In the fall of 2006, Bankers’ Banc Investment Services, LLC, comprised of MIB, Inc., and three other bankers’ banks or bankers’ bank holding companies, completed the acquisition of First St. Louis Securities, Inc. During first quarter 2007, the name of First St. Louis Securities, Inc., was changed to First Bankers’ Banc Securities, Inc., to better reflect the geographical area where the company conducts business. “First St. Louis Securities, Inc., and First Bankers’ Banc Securities, Inc., are what I would consider to be part of my greatest achievements in my career,” he said. “That and all the friendships I have developed over the years. Those are becoming more and more important to me.” His close friend Harold Miles, president and CEO of Bank of Advance, has known Bretthorst since the mid-1980s. “Ken is an absolute gentleman that graciously gave his time to educate and mentor me, and I’m proud to have him as a friend,” Miles said. “His familiar advice ‘Don’t bet the bank’ has always guided my investment decisions.”

Miles has many fond memories with Bretthorst, particularly of Bretthorst taking Miles and his wife, Paula, out to dinner, sharing stories. “He’s got some good ones,” Miles added. “Another fond memory I have of Ken is him taking time to come visit us at the hospital when my daughter, Faith, was there.” Matt Ruge, executive director of the MIBA, has known Bretthorst for at least 30 years. “Ken has been a great friend to myself, my family and the association,” Ruge said. “My favorite Ken story was in Phoenix at Ruth’s Chris, where he didn’t order a filet. In 10 years of going with Ken to Ruth’s Chris, he always got the filet. Well, he ordered the ribeye. When it came he asked who ordered this? The waitress said you, and he looked at dad, Jimmy and I and said, ‘Boys I’ve made a terrible mistake.” Bretthorst has spoken before numerous state examiners groups, taught at the Federal Deposit Insurance Corporation (FDIC) Examiners School in Washington, D.C., and was an instructor for more than 15 years at the Graduate School of Banking at the University of Wisconsin and the Missouri School of Banking. He authored a chapter on Federal Agency Securities for the Bankers Handbook, where he served on the editorial board, and has written numerous articles for the Sheshunoff Bank Funds Management Report publication.

In addition, he served on the Fixed Income Committee and on the District Business Conduct Committee of the National Association of Securities Dealers (NASD), now FINRA. He is a FINRA licensed representative in several states. In 2008, he was appointed an advisory director for Midwest Independent Bancshares, Inc., and Midwest Independent Bank. He was named director emeritus with the Missouri Independent Bankers Association in 2011. Bretthorst was assiduous during his career and advises young bankers trying to find their niche in the industry to do the same and read everything they can get their hands on. “My advice is to read and read some more and work hard,” he said. “The more you read, the more you learn and the more you succeed. Read everything you can about the industry and what’s going on around the world. And work hard, it is very rewarding.” “I really enjoyed being in this industry. I had a great time and I have no regrets.” Q

www.miba.net / The Show-Me Banker

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CURBING YOUR RISK APPETITE IN THE NEW YEAR he holidays are behind us now, and many of us have made (and possibly broken) resolutions to reign in our appetites and make better decisions regarding our personal health and fitness. This is also a great time to assess your bank’s IT fitness, curb your “risk appetite,” and resolve to tighten up loose cybersecurity controls before the next round of IT examinations. When you make your personal New Year’s resolutions, you set your goals for the new year, assess your lifestyle and implement the necessary changes to meet your goals. The same pattern holds true when setting your goals for your bank’s cybersecurity in 2016. A few simple changes can make a big difference. To set your cybersecurity goals, start by understanding your bank’s risk appetite. Next, assess your level of risk and compare it to your appetite. And, finally, make the necessary changes to reduce your exposure to cybersecurity risk and bring it in alignment with your true requirements. Simply stated, your risk appetite is the amount of exposure to cybersecurity threats your bank is willing to accept in order to compete effectively or to gain a competitive advantage within your market. Accepting zero risk is no more realistic than pledging to go on a zero calorie diet. A certain amount of Internet exposure is necessary to keep your bank’s business alive. The key is to eliminate unnecessary risk while recognizing and controlling the necessary links to the outside world. The FFIEC’s Cyber Security Self-Assessment Tool is a great place to begin your review. The first section helps you define your “Inherent Risk Profile.” As you go through the questions, it will

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Mike Gilmore RESULTS Technology, Chief Technology Officer

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The Show-Me Banker / March 2016

become clear that your inherent risk is directly linked to the number of points that your IT systems make contact with the public Internet. Assess Your True Risk Level. Look at all the ways you are using the Internet in your business and determine if they are all necessary to your business and that exposure falls within your level of risk appetite. Some examples of Internet exposure are: • Business use: email, web access to hosted applications, marketing activities, social media, website maintenance, web research, branch and core system communications, remote access to internal systems, email on mobile devices, Internet banking sites, etc. • Personal use: Shopping, personal email, social media, web browsing, guest Internet access, etc. Look at each Internet access point critically. Ask yourself if a teller really needs to check personal email on a bank computer. Does a particular workstation even need to access the Internet? Go On a Risk Diet Finally, look at ways you can limit your risk to a necessary level by eliminating or isolating unnecessary exposure to the Internet. Good cybersecurity is best achieved by using the “least permissions” principle. This means permitting each individual and network resource access only to systems, programs and websites necessary to do their specific job. For smaller banks, where one individual may wear many hats, this may pose a challenge. It is important to take security concerns into account when making task assignments.

Use whitelisting for applications and websites. This means blocking all websites and applications except those that are explicitly required for business purposes using desktop and Internet firewalls. For those that need regular access to multiple Internet sites for marketing and research, establish a separate physical network with a separate Internet connection. Internet connections and workstations can be very inexpensive, and a wireless “guest” Internet connection easy to establish. The key is to keep web traffic on a different network than your bank operations. Malware from the web can’t compromise bank security if it never touches bank systems. Start the new year right and be honest when determining what Internet access is truly necessary for your bank. It’s not necessary or desirable to go on a crash diet and eliminate Internet use entirely, but cut out the unnecessary risk and your cyber health will be much better for it. Q Mike Gilmore is chief technology officer for RESULTS Technology. Gilmore has more than 25 years in IT and is the former COO and CFO of Liberty Savings Bank. He holds a bachelor’s degree from Missouri State University, a master’s degree from the University of Arizona, and an MBA from Rockhurst University. As a former banker, Gilmore has a unique perspective on a bank’s need to meet security and compliance demands. He can be reached at [email protected].

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UDAAP TODAY: SAY WHAT YOU DO AND DO WHAT YOU SAY

Chuck Marshall KCoe Isom, CRCM

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• The practice causes or is likely to cause substantial injury; • The injury cannot reasonably be avoided; and • The injury is not outweighed by any benefits. A “substantial injury” typically takes the form of monetary harm, such as fees or costs paid by consumers because of the unfair act or practice. The injury does not have to be monetary, however: • An act or practice is deceptive when: o The act or practice misleads or is likely to mislead the consumer; o The consumer’s interpretation is reasonable under the circumstances; and o The misleading act or practice is material. • Finally, the act or practice is abusive when: o The practice materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; and o Takes advantage of the consumer’s lack of understanding, their inability to protect their interests, or their reasonable reliance on the bank or its materials representatives. Think about it this way: Could your mom, dad or best friend figure out how to earn the bonus, avoid a fee, earn a higher interest rate or get the best loan terms? The more fine print, the more questionable the ad.

UDAAP Defined The Dodd-Frank Act and the CFPB tell us what is unfair:

Your Course of Action First, clean house. Complete an assessment of the bank’s products and services to be sure there

The Show-Me Banker / March 2016

Image © bobaa22/iStock

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ommunity bank advertising has become defensive or generic in nature with statements such as “We’re here to serve you” and “friendly, knowledgeable staff.” Those are table stakes these days — merely what it takes to get in the game. So the quandary remains. How can bankers safely differentiate themselves? Banks continue to be wary of the UDAAP regulation and for good reason. The UDAAP regulation does not contain the same specific do’s, don’ts and limitations that most regulations contain. Section 1031(a) of the Dodd-Frank Act states, “The (Consumer Financial Protection) Bureau may take any action authorized … to prevent a covered person or service provider from committing or engaging in an unfair, deceptive or abusive act or practice under Federal law in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service.” When asked for a definition of an unfair, deceptive or abusive act or practice, regulators have generally responded, “We’ll know it when we see it.” And many compliance examinations these days are keenly focused in the UDAAP area. Examiners take a close look at the bank’s disclosures, advertising and the resulting loan documents and account statements to see that “the promise made is kept.”

... Identify your niche. Doing everything for everybody generally guarantees you won’t be very good at anything. are no UDAAP skeletons in the closet. Have you been keeping up with the latest UDAAP pitfalls as noted by the CFPB? Are you current on various regulator musings such as the March 2014 memo from the Kansas City FDIC Division of Depositor and Consumer Protection regarding fees associated with extended overdrafts? Then identify your niche. Doing everything for everybody generally guarantees you won’t be very good at anything. Are there opportunities, for example, to narrow your product offerings from 10 varieties of real estate loans to five or from nine deposit products to five or six? Is there technology you can implement to streamline or centralize your process? Doing fewer things and doing them better creates competitive advantage you can talk about. Some steps to take:

• Review your fees and fee structure for opportunities to fine tune (increase, decrease, or eliminate) your fees; • Survey the market (competitors, customers, and media) for new profitable product opportunities; • Add customer-friendly benefits; and • Boldly tell your story. This shouldn’t be a challenge to community bankers. Your customers are your friends and neighbors. Create and offer products that your customers want, and then offer those products in a straightforward manner with minimal fine print. Q Chuck Marshall, CRCM, improves the financial performance of community banks through strategic planning, management consulting and enterprise risk management. He advises bankers toward optimal solutions that address both bank and community needs. Contact him at [email protected].

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COMMUNITY BANK SUCCESSION PLANNING bout 8,000 baby boomers are now turning 65 years old every day, according to the American Association of Retired Persons (AARP). Included among these retirees and those soon to retire are many community bank leaders. Unfortunately, many community banks haven’t done much in the way of succession planning. As a result, a leadership crisis could be looming on the horizon in the community banking industry.

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Tom Beisner The Whitlock Company, CPA

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Timely and Orderly Planning One of the biggest keys to successful community bank succession planning is starting the planning process well in advance of the date you plan to exit the bank. It is never too early to start thinking about succession, but serious succession planning should generally start between three and five years out from your planned exit date. The first thing to think about when it comes to succession planning is to whom you want to transfer ownership of the bank. If yours is a family-owned bank and you want to keep ownership within the family, start by identifying family members or other management team members who are the best candidates for future leadership. Once you’ve identified potential future leaders, it’s time to start grooming them for future leadership responsibilities. Next, start giving these candidates real responsibility, empowerment and decision-making authority. It can be hard to let go of the reins, but successors need to be put in positions of real responsibility and then allowed to succeed or fail on their own. Conversely, yours might not be a familyowned bank, or there might not be qualified successor candidates within the ranks of family members. In this case, you need to decide if you want to recruit potential successors from outside the bank and bring them in and start grooming them for succession. If so, clearly communicate your intentions to these candidates and make sure they understand

The Show-Me Banker / March 2016

the opportunity before them. Also, structure a compensation plan that will incent them to stay with your bank during the succession planning and transition process, which will likely be a matter of years not months. Selling to Outsiders Another option is to sell your community bank to a private equity group or another bank — usually a similar-sized community bank in a merger of equals or via an acquisition by a larger regional bank. In this scenario, grooming future leaders is just as important as it is when getting family members or outside recruits ready for leadership. One of the biggest things buyers of community banks look for in acquisition candidates is depth and stability in the leadership team. Buyers will usually pay a higher multiple for community banks with strong leadership, so building a deep executive and management bench will increase the value of your bank. As you groom future leadership for your community bank, keep this important point in mind: There is a big jump when going from mid-level management to executive-level management at a community bank. Mid-level management skills are more tactical in nature, while executive-level skills require more strategic and visionary insight. Therefore, it’s important that you be intentional when it comes to helping future leaders be prepared to make this jump. Give them an opportunity to work on projects that will expand their horizons and skills beyond individual silos within the bank. Give us a call if you would like to discuss succession planning for your community bank in more detail. Q Tom Beisner, CPA, has worked in public accounting since 1986. He specializes in risk management and auditing services for financial institutions. He became a partner and community banking service leader at The Whitlock Company in 1999. Beisner is a member of the PKF North American Network’s Financial Institutions Committee (former chairman), the Missouri Bankers Association Associate Member Committee, the Oklahoma Bankers Association, the Missouri Independent Bankers Association, the Missouri Society of CPAs, the American Institute of CPAs and Leadership Springfield Alumni.

MIBA PAC

HONOR ROLL 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. Q NOTE: Personal or corporate campaign contributions to any PAC are not deductible in any amount for federal tax purposes.

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IS YOUR WEBSITE ADA COMPLIANT? The Recent Explosion in ADA Litigation Over Website Accessibility Issues. oday, it is nearly unthinkable to run a successful business, like a bank, without a website. While companies focus on the appearance, functionality and usability of their sites, however, they often inadvertently overlook how well the website interfaces with screen-reader and hearing-assistive technologies used by those with visual and hearing disabilities. Unfortunately, this innocent oversight can invite expensive litigation. For example, the National Federation of the Blind successfully certified a nationwide class of disabled individuals who had difficulty accessing Target’s website. The result was a $6 million settlement, including the retailer’s commitment (and payment of substantial fees ) to make its website accessible to disabled individuals using assistive technologies, and an attorney fee award of more than $3.7 million, which made up roughly 60 percent of the settlement amount. All companies with websites used to sell services, products or provide online banking are at risk. Indeed, a handful of law firms have recently sent hundreds, if not thousands, of aggressive demand letters to businesses of all sizes, types and locations. The demand letters allege that the companies’ websites are not accessible to disabled individuals and are therefore in violation of Title III of the Americans with Disabilities Act (ADA), as well as various state laws. These letters often include assertions of various privacy violations and seek settlements that involve substantial expenditures and time commitments by the targeted company. If a settlement is not reached, however, the target company is at great risk of being sued. To date, dozens of such lawsuits have been filed across the country, and many more are expected.

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Greer Lang Lathrop & Gage, LLP, Partner

Robin Stewart Lathrop & Gage, LLP, Of Counsel

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For example, a lawsuit was recently filed against Huntington National Bank in the U.S. District Court for the Western District of Pennsylvania. The lawsuit, among other things, alleged that the bank was in violation of the ADA because the plaintiff was denied full use and enjoyment of the bank’s website to “view account balances and recent transactions, download bank statements, order check books and transact banking tasks like fund transfers and bill payments … research various financial services, locate branch locations and ATMs, and perform a variety of other functions.” The lawsuit sought a permanent injunction against the bank to require it to retain a plaintiffapproved consultant to make the website compliant to plaintiff-approved guidelines (discussed below), require all bank employees with website involvement to undergo web accessibility training, perform costly ongoing accessibility audits and user accessibility/usability testing, and work with an agreed-upon consultant to develop an accessibility policy to be posted on its website. And even though monetary damages are not available to a plaintiff under the ADA, an ADA plaintiff is entitled to recover its reasonable attorneys’ fees where any type of judgment, including a judgment for injunctive relief, is entered against a defendant. What Does This Mean? Title III of the Americans with Disabilities Act provides that “[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation by any person who owns, leases (or

National Federation of the Blind v. Target Corp., 452 F. Supp. 2d 946 (N.D. Cal. 2006). 2 Under the settlement Target was required to pay the National Federation tens of thousands of dollars each year for three years to monitor its website, and $15,000 per session training sessions conducted by the National Federation to train Target employees. 3 Sipe v. Huntington National Bank, Case No. 15-cv-01083-AJS (W.D. Pa.), which was filed on August 17, 2015, and consolidated with Jahoda v. Foot Locker, Inc., Case No. 2:15cv-01000 (W.D. Pa.) on December 3, 2015. The Sipe case was recently settled on confidential terms and dismissed on February 3, 2016. 4 42 U.S.C. § 12182(a) 5 Earll v. eBay Inc., No. 13-15134 (9th Circ. April 1, 2015) and Cullen v. Netflix Inc., No. 13-15092 (9th Circ. April 1, 2015). 6 Nat’l Fed’n of the Blind v. Scribd Inc., No. 2:14-cv-162 at *7-10 (D. Vt. March 19, 2015).

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The Show-Me Banker / March 2016

The Department of Justice (“DOJ”), which is tasked with enforcing the ADA, has taken the position that all websites must be accessible to consumers with disabilities even if they are not tied to a physical place of business that is open to the public. leases to) or operates a place of public accommodation.”(Emphasis added). Historically, a “place of public accommodation” was interpreted to refer to a physical location (i.e., a brick and mortar building or park). What this means for non-governmental agency websites is unsettled, however. Given that the ADA was passed in 1990, a year before the first website went live, one can argue — and many have argued — that websites do not fall within the scope of the ADA. Indeed, the ADA makes no mention of websites or online services of any type. Nevertheless, several courts have held that websites are considered places of public accommodation and fall within the scope of the ADA. The courts that have taken this position differ on whether a website must be tied to a physical location before it falls under the ADA. The Ninth Circuit has held that the ADA does not apply to website-only businesses, such as eBay and Netflix. Some federal district courts, however, such as the U.S. District Court for the District of Vermont and the U.S. District Court for the District of Massachusetts, have come to the opposite conclusion. The Sixth Circuit provides some solace to businesses in that it has stated, though in a different context, that a “place of public accommodation” must be an actual physical place. The Department of Justice (DOJ), which is tasked with enforcing the ADA, has taken the position that all websites must be accessible to consumers with disabilities even if they are not tied to a physical place of business that is open to the public. In 2010, the DOJ initiated rulemaking in this area by issuing an Advanced Notice of Proposed Rulemaking. Yet the DOJ has repeatedly set and then canceled release dates for the Final Notice of Proposed Rulemaking concerning website accessibility. In December 2015, the DOJ announced that it will not issue private-sector website accessibility regulations under Title III until sometime during the fiscal year 2018. In short, there are no ADA regulations regarding websites and the circuits are split on whether a website falls under the scope of the ADA. Moreover, even those courts that have held that a website falls under the ADA have provided no guidance on the accessibility requirements. As such, businesses are left to try and figure out how to avoid the onslaught of DOJ enforcement

actions and private-sector litigation in this quickly evolving area. Hints for an answer exist, however. In the absence of DOJ regulations, many settlements approved by the DOJ and in civil litigation have implemented the World Wide Web Consortium’s Web Content Accessibility Guidelines 2.0 (WCAG) on how to make a website more accessible. These guidelines involve varying levels of accessibility, but the DOJ and counsel in civil litigation have approved settlements where a company agrees to make its website compliant with the WCAG 2.0 Level AA Guidelines. The WCAG guidelines, among other things, provide information on how to use alternative text (code embedded beneath graphics). For example, a website developer can use specific code to differentiate the headings from the text on a website. Those individuals using screen-reader software are then able to distinguish headings from other images and text. Due to the differing functionalities of websites based on computer and browser type, however, it can be difficult to make a website completely error free. What You Can Do to Protect your Institution. Because of burgeoning website accessibility litigation and the desire of most companies to provide a pleasant website experience for all of their users, it is critical that businesses proactively undertake efforts to address website accessibility issues to minimize their exposure to liability. What should you do? First, it is imperative — as a part of your risk management program — that you investigate, develop and implement a plan to identify and address website accessibility issues now, with the assistance of knowledgeable experts in the field. Second, to avoid becoming embroiled in costly and timeconsuming litigation, it is essential that you take any demand letters or claims you receive asserting ADA website accessibility issues seriously, including retaining competent counsel with experience addressing these types of claims. And finally, make sure your institution has liability insurance in place that provides coverage for this kind of an exposure and, when you receive a claim, that you timely report it to your carrier. Q

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Nat’l Ass’n of the Deaf v. Netflix Inc., 869 F. Supp. 2d 196, 201-02 (D. Mass. 2012). See, e.g., Parker v. Metropolitan Life Insurance Co., 121 F.3d 1006 (6th Cir.1997) (en banc) (reversing an earlier panel decision and holding that “[t]he clear connotation of the words in § 12181(7) is that a public accommodation is a physical place .... To interpret these terms as permitting a place of accommodation to constitute something other than a physical place is to ignore the text of the statute and the principle of noscitur a sociis”). 9 http://www.reginfo.gov/public/jsp/eAgenda/StaticContent/201510/Statement_1100.html. 10 See http://www.w3.org/TR/WCAG20/. 11 Lathrop & Gage has a team of individuals who can help provide guidance and answers in this rapidly-developing area of the law, whether in the context of litigation or as part of your risk management plan for compliance. 8

www.miba.net / The Show-Me Banker

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COMPLIANCE PREPAREDNESS FOR 2016 or bank compliance, it seems that all of 2015 was focused on TRID and the regulatory revised rules, final rules and dates. Bank lending compliance personnel were left attending many seminars and webinars, interpreting how to implement the new rules in their bank. They spent time revising policies and procedures, updating loan document software templates, and testing new loan documents. Now that the new process has finally started, it’s kind of like the let-down after a special event ends. A lot of stress and worry go into the preparation, then the implementation dates come and time ticks on. There are new deadlines and new forms to complete — along with a new required compliance review process. I’m known to my family, friends and co-workers as a “list person.” Whether the list is for a home project, packing vacation clothes (my favorite type of list), planning one of my volunteer group’s events, implementing a computer conversion or my listing daily goals, having a list helps keep all parties involved following the same processes and procedures. This is key to any successful bank compliance audit program. With the new year in full swing, I’ve developed a couple “lists” I hope will be helpful in your bank’s compliance world:

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Carol Wasenius MIB Banc Services, LLC

Preparation/Task List for 2016: • With regulatory compliance exams expanded to three-year risk-rated reviews, 26

The Show-Me Banker / March 2016

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banks should consider setting up an internal compliance review calendar for monthly, quarterly, semi-annual and annual reviews based on the bank’s deposit and lending product offerings and risk assessment. Compliance personnel should review the needs of the bank in utilizing third-party external compliance reviews. These should be customized to review the higher-risk rated areas of compliance. Be sure to allow time to review engagement scopes, request management approval and schedule audit dates. Prioritize an overview of deposit compliance regulations: Be sure the bank’s procedures (written or unwritten) meet regulations and are being interpreted and followed by bank personnel consistently at all branches. Utilize compliance audit checklists. Regulators and banking associations have been busy updating compliance manuals and checklists. Find the ones that fit your bank’s needs or adapt them to fit! Set up the 2016 preparation plan for the new HMDA changes in 2017 and 2018.

Random “List” of Compliance Review Suggestions for 2016: • Bank Controlled DDAs o Have all internally controlled DDAs been appropriately identified? o Are there reconciliations being

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THE RIGHT C O M B I N AT I O N

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completed monthly or periodically by someone other than the person using them? o Have any new accounts been opened and not added to the review list? o Did anyone leave the bank that was an authorized signer on one of these accounts? Regulation D – Excessive Transaction Monitoring o Yes, this is an old regulation, but has the bank defined a process to either change account types or close accounts after a determined amount of warnings to the customer? Is the approved process being followed by all bank personnel and o Bank procedures and processes should be defined on branch personnel? how the bank accepts these types of requests. o Is there any review of this process by the o Compliance testing should be completed on the compliance area? process to assure all personnel are following the Regulation CC – Expedited Funds Availability bank-established, multifactor authentication or o Are all branch personnel following the regulatorycall-back procedures. defined process for case-by-case and exception holds? o Do you feel confident that your procedures are being (Another older regulation process.) o Are all branch personnel using the most recent form followed 100 percent of the time? for these customer notifications? • Flood Insurance regulation changes in 2015 o Does any new personnel need training? o Verify your loan originators and loan operations deFee Schedules partment are all on the “same page” for flood insuro Many banks review fee schedules at the beginning of ance escrow rules, force placed procedures and dethe year. When changes occur, customers are notified. tached structure rules. o Did the bank’s website fee schedule get updated (if applicable)? Summary o Did new forms get placed on new account personnel’s Although 2015 had the TRID focus, many other areas of desk (and old ones destroyed)? bank compliance need attention — and that will continue to o Did lobby brochures get updated (and old need attention in the future. Q ones destroyed)? CIP Process (usually reviewed in BSA/AML Audit) o New accounts — address discrepancies. Have bank personnel review the procedures to follow in order to document address discrepancies. to Protect Your Bank’s Network o In rushing to get new accounts opened for a new member of the community, this process is often forgotten. The Whitlock Company’s knowledge and expertise are the exact combination Cybersecurity to keep your bank’s network safe. Our comprehensive IT exam will determine o With all the cybersecurity and where your network is vulnerable and how best to safeguard and strengthen it. business email compromise isThis in-depth process includes: sues, this topic doesn’t just apply • External Vulnerabilities to the IT department. Banks need • IT Controls Review to be sure all areas of bank opera• IT Policy Development tions are covered and have appro• Internal Vulnerability Testing priate procedures in place. Trust The Whitlock Company’s o Risk assessments should adsecurity specialists to keep your dress emailed wire requests and bank’s network secure. whitlockco.com emailed ACH origination files.

DIRECTORS RS & OFFICERS R RS SEMINAR R AR Tuesday, May 17th

10:30am

Break

4:00 pm

10:45 am 11:15 am

Focus on BSA: What You Need to Know Presented by Nancy Schoolman, CRCM ~ Director, BKD, LLP

11:15 am 12:00 Noon

The Key to Maximizing Consumer Relationships Presented by Bob Vedder, Kasasa

Noon

Lunch Lakeside Room. First floor of hotel, lake level. Casual Attire (Seminar Registrant Onlyy Please) g

6:00-9:00 pm

Workshop Registration Desk Open Hotel Lobby Cocktail Reception & Dinner Kinderhook Ballroom ~ Take elevator in H Toad restaurant down to the 2nd level. Casual attire. DINNER ER R SPONSORED ED D BY BY KASASA SA Welcome & Introductions Jack Wagner MIBA President Adrian Bank, Adrian

Wednesday, May 18th 7:00 am

Breakfast Lakeside Room ~ First floor of hotel, lake level. Casual ua attire. BREAKFAST ST T SPONSORED ED D BY BY BKD LLP LP

7:30 am 8:15 am

8:15 am 8:30 am 9:15 am

The Effects BOLI Has On Your Bank’s Key Ratios Presented by Josh Miskovich, Bank Financial Services Group

Break Move next door for morning session. The U.S. Economic Outlook and Monetary Policy Presented by Chuck Morris, Vice President & Economist Federal Reserve Bank of Kansas City

LUNCH CH H SP SPONSORED PON PO N OR NSO NSOR ORE ED E D BY BY MID IDWEST DW W S WES ST T IND NDEPENDENT N DEPE ENDEN ENDE DE EN NT N T BA ANK AN NK K& FIRST S BANKERS ST RS R S’ BANC NC SECURITIES ES S, INC N C. Overview of the Condition of State Chartered Banks, Trends We Are Seeing and Areas of Concern Presented by Debra J. Hardman, Acting Commissioner Missouri Division of Finance 1:30 pm

Seminar Adjourns

1:30 pm

MIBA Board of Directors Meeting Lakeside Room. of hotel, lake level. m. First F floor f BOARD AR RD D ME EETING EE ETIN E NG N G BRE REAK R EA EA AK K SP SPONSORED S PO ONS ONS ONSO SO OR RE ED E D BY BY BANK NK K FINANCIAL AL SERVICES AL E GROUP ES UP UP

Contact To Register 9:15 am 10:30 am

Redefining the Banking Industry— Trends and Changes Impacting the Industry Presented by Don Hutson, CPA, Partner BKD, LLP

Missouri Independent Bankers Association PO Box 1765 • Jefferson City, MO 573.636.2751 Fax: 573.636.2753 Email: [email protected]

Welcome New Associate Members USDA RURAL DEVELOPMENT 601 Business Loop 70 W., Ste. 235 Columbia, MO 65203 573-876-0976 Fax: 855-830-0685

Hays Companies 16091 Swingley Ridge Rd., Ste. 160 Chesterfield, MO 63017 636-590-4125 Fax: 636-590-4101

Contact: Matt Moore, Business Program Director E-Mail: [email protected] Website: www.rd.usda.gov/mo

Email: [email protected] Website: www.hayscompanies.com

USDA Rural Development is committed to helping improve the economy and quality of life in rural America. Through our programs, we help rural Americans in many ways. We offer loans, grants and loan guarantees to support essential services such as housing, economic development, health care, first responder services and equipment, and water, electric and communications infrastructure. We promote economic development by supporting loans to businesses through banks, credit unions and community-managed lending pools. We offer technical assistance and information to help agricultural producers and cooperatives get started and improve the effectiveness of their operations. We provide technical assistance to help communities undertake community empowerment programs. We help rural residents buy or rent safe, affordable housing and make health and safety repairs to their homes. We are “committed to the future of rural communities.”

HUFFMAN SECURITY COMPANY, INC. 1312 Lonedell Rd. Arnold, MO 63010 636-282-7233 Fax: 636-296-2844 Contact: Angie Behrens, President/CEO Email: [email protected] Website: huffmansecurity.com For more than 30 years, Huffman Security has provided security solutions to financial institutions. We provide financial bank equipment and product information to suit your needs. Contact us to learn more.

Hays Companies is the second largest privately owned risk management company. We can provide consultative services in risk management, healthcare reform/compliance, alternative funding, cyber liability and executive risk. Q

Welcome New Member Banks County Bank, Brunswick Putnam County State Bank, Milan Macon-Atlanta State Bank, Macon

www.miba.net / The Show-Me Banker

29

DATES & EVENTS MARCH WEBINARS

MAY

To register go to www.miba.net/Education, click on 2016 Webinar Schedule, select a webinar or webinar series and pricing, view cart to confirm, then proceed to checkout.

17-18 Directors & Officers Seminar Camden on the Lake, Lake Ozark, Mo.

15

16

Quarterly Emerging Leader Series: Developing Executive Presence Skills: Presentations, Poise & Professionalism 2 - 3:30pm Determining Cash Flow from Personal Tax Returns Part 2: Schedules E & F 2 - 3:30pm

17

Flood Insurance Compliance Update & FAQs 2 - 3:30pm

22

Cyber Series: Outsourcing Tech Services: Regulations, Examiner Expectations & Actions for Vendor Management 2 - 3:30pm

24

Developing Your Same-Day ACH Game Plan 2 - 3:30pm

29

Debt Collections Series: Your Customer Has Filed Bankruptcy, Now What? 2 - 3:30pm

30

Hot Topics in Social Media Strategies: Techniques & Trends for Community Banks 2 - 3:30pm

APRIL WEBINARS 5

Managing IRA Beneficiary Designations & Distributions 2 - 3:30pm

24

CBC Quarterly Meeting The Broadway, Columbia, Mo.

JULY 19-20 Committee & Board Meeting Camden on the Lake, Lake Ozark, Mo. 20-22 ECB Summer Conference Camden on the Lake, Lake Ozark, Mo.

ADVERTISERS’ INDEX

23 BKD 314-231-5544 | www.bkd.com

13 Equitable Mortgage 417-887-6688

2

First Bankers’ Banc Securities 888-726-2880 | www.firstbankersbanc.com

32 KBS 785-228-0000 | www.kbsforbanks.com

6

Completing the SAR Line-by-Line 2 - 3:30pm

2

7

Audit Compliance Series: Auditing Basel III & the New Capital Planning Guides 2 - 3:30pm

31 Shazam

12

The Top 10 Credit Risk Consideration in Agricultural Lending 2 - 3:30pm

MIB 888-818-7200 | www.mibanc.com 855-314-1212 | www.shazam.net

5

The Insurance Group 800-711-8052 | www.theinsurancegrp.com

27 The Whitlock Company 417-881-0145 | www.whitlockco.com

13

ACH Rules Update 2016 2 - 3:30pm

11 Welch Systems, Inc.

14

Your Depositor Has Died: Actions to Take, Mistakes to Avoid 2 - 3:30pm

19 Williams Keepers LLC

30

The Show-Me Banker / March 2016

800-322-2657 | www.welchsystems.com 573-442-6171 | www.williamskeepers.com

MET

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