Community Banker Update - May 2016

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REGISTRATIONIS NOW OPEN!

45TH ANNUAL CONVENTION

PREVIEW ISSUE

2 COMMUNITY BANKER UPDATE | MAY 2016

Want To AttendA Webinar?

View a complete calendar andregister for CBI-sponsored webinarsand events at www.cbiaonline.org

or Call Us at 515.453.1495for more information.

One Source. One Call. mibanc.com Your Bankers’ Bank 800-347-4642

Member FDIC | Member Federal Reserve System

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Doug Pfeifer402-480-0333

Stacy Snyder515-468-9688

GET IN THE

GAMEProviding correspondent banking services to community banks.

May 3 Loan Participation Due Diligence: Practices, Documentation, Servicing & Risks

May 5 Conducting the Annual Physical Security Review

May 10 Quarterly Emerging Leader Series: Effective Branch Administration Monitoring

May 11 Fee Income Strategies 2016: Challenges, Issues & a Look Ahead

May 12 Regulator Issues for the Credit Analyst

May 13 Line-by-Line Review of New Bankruptcy Forms Including Major Changes Effective December 2015

May 17 Director Series: Strategies for Remaining Independent: Alternatives to Selling

May 18 Managing the Force-Placed Insurance Process

May 19 Wire Transfer Compliance, Including International Remittances

May 20 Examining Complex TRID Issues, Part 2: Closing Disclosure, Tolerances & the Good Faith Analysis

May 24 AuditComplianceSeries:DevelopingQuality&EfficiencyinYourITAudit

May 25 Debt Collection Series: Real Estate Loan Workouts, Deeds in Lieu, ShortSales,Foreclosures,DeficiencyJudgments&Receiverships

May 26 Understanding & Managing the CFPB Complaint Process

MAY 2016 WEBINAR LINE-UP

COMMUNITY BANKER UPDATE | MAY 2016 3

In This Issue45th Annual Convention Preview .........................4-5Community Banker Update Movesto Digital-Only Format .............................................. 6BSA/AML Conference Coming May 26 ................... 7 SHAZAM Offering Media Relations Training ........... 7LOTUp&ComingBankeroftheYearAward .......... 8Nominate a Banker for the Founders’ Award ......... 9 Branch Transformation: Part 2 ........................ 10-11ICBA Washington Policy Summit Recap ................12Gus Barker Named President of Community Bankof Oelwein ...............................................................13From the Top ...........................................................14Fine Points ..............................................................15Protect or Pay: Cybersecurity .................................16The Bottom-Up Approach: Funds Management ... 17Common BOLI Objections ......................................18 News from CBI Members .......................................19 Rural Mainstreet Survey .................................. 20-21WhyWouldYouAudittheACH? .............................22

NEW! BSA/AML Conference ............................... May 26 LOT Up & Coming Banker AwardNominations Due .................................................. June 3 Robert D. Dixon Founders’ AwardNominations Due .................................................. June 3 NEW! Media Relations Training ......................... June 8-9 PAC Auction Donations Due .............................. June 2445th Management Conference &Annual Convention ........................................ July 13-154th State Fair Conference ................................. Aug. 11LOT Quarterly Meeting ....................................... Aug. 18 9th Annual Golf Tournament ............................ Sep. 12Community Bankers for ComplianceFall Session.................................................... Sep. 20-21Community Banking SummitsFall Sessions ................................................... Oct. 11-13

CBI EVENTS CALENDAR

Community Bankers of Iowa1603 22nd St, Suite 102West Des Moines, Iowa 50266Phone: 515.453.1495www.cbiaonline.org

American Mortgage& Equity Consultants

Welcome NewCBI Member!

Community Bankers of Iowa would like towelcome the following company to the

association, and thank them for their support:

After nearly three months on the job as the new CEO of CBI, I could not be any more excited to beleadingthisfineorganizationandabouttheopportunities we have going forward. There is still much to learn and a lot I don’t know. But, here’s what I do know after a short time in this position:

First,Iinheritedanamazingstaffthatisexperienced,dedicated,hard-working and a joy with which to work. I thank Pretty Patel, JackieHaleyandKrissyLeeforbeingpatientwithmeasIlearnthe ropes at CBI, and for seamlessly maintaining a good product for our members during my transition.

Secondly, bankers are the “cream of the crop.” I’ve met many of you and can’t wait to meet those I have not yet had theopportunitytomeet.Youareleadersofyourrespectivecommunities and State--smart, ethical, professional, involved, hard-working, social and just a pleasure to be around. I feel honored each day to have the opportunity to represent you and yourfinecommunitybanks.

Finally, there is no shortage of issues and challenges facing community banks. But, we have a great story to tell our customers, policy-makers, regulators, the media and the general public. I look forward to putting my skills and experience in public policy and advocacy to work for community banks in the months and years ahead. Please feel free to contact me anytime with questions, concerns, thoughts, ideas or suggestions. Now that I have a base of knowledge about CBI, its products and services, and the issues important to its members, I will be traveling around the state to learn more about how CBI can better serve your needs. I hope to see you soon!


Join Us at CBI’s 45th Management Conference & Annual Convention

REGISTRATION IS NOW OPEN!

July 13-15, 2016

Community Bankers of Iowa has a legacy of defending Iowa’s community banks, helping to chart a course as do each of our members banks in serving their communities. CBI’s 45th Management Conference and Annual Convention representsthe importance of community banks’ dedication to their communities, and to support them in providing that service for years to come. At this year’s meeting Iowa’s community bankers are “Navigating the Future.”

The Convention strives to unite community bankers through educationfromnationallyrecognizedspeakers,accesstothelatest products and services, and numerous opportunities for networking, camaraderie, and the exchange of ideas with community bankers statewide. Meet up with old friends and new at the Kickoff Reception, on the lake during the 12th Annual Catch and Release Fishing Tournament, on the golf courseduring the Mixed Pair and Bankers’ Golf Tournaments, andat the Gala and PAC Auction.

This year features a BRAND NEW EVENT, CBI’s 5K Run/Walk tobenefittheCBIPACfund.ThisexcitingadditiontoConventionactivities provides an opportunity for families to get some sunrise exercisealongOkoboji’sbeautifulGreatLakesSpineTrail.Your

$20 donation to the CBI PAC also provides breakfast and commemorative5KRun/Walkt-shirts!

Guest speakers at the 45th Annual Convention include Peter Ricchiuti, professor at Tulane University’s Freeman School of Business, political journalist Stephen Hayes; comedic keynote speaker Mack Dryden; and ICBA’s new Chairman Rebeca Romero Rainey.YoucanalsogetasneakpeakatalocalIowabusinessat the Town Hall Breakfast, this year featuring Wells Blue Bunny. Great breakout sessions are scheduled as well, featuring the ever-popular federal Regulators’ Panel, a discussion on the rural economy given by well-known economist Ernie Goss, and how to “Survive and Thrive In This Increasingly Disrupted Banking Economy” with Howard Hagen, partner at Dickinson Mackaman Tyler&HagenPClawfirm.

JoinusonthevoyageandregistertodaytoattendCBI’s45thManagement Conference and Annual Convention. Register by June 12 and save on registration fees! Additional information and registration is available online atcbiaonline.org. If you have any questions about the Convention, please call us at 515.453.1495.

Check your snail mail! Get detailed info on events and more in the 45th Annual Convention brochure.

RebecaRomero Rainey

StephenHayes

PeterRicchiuti

MackDryden

ErnieGoss

JamesLaPierre

HowardHagen

JeffJensen

RonHansen

General Session Featured Speakers Regulators’ Panel

Take A Look At This Guest Speaker Lineup!Rural

Economy

BankingEconomy

Disruption

Get in early and register at reduced rates!

2016 convention brochure cover

Design C

EVENT GUIDE


Partner with us.Our correspondent bankers will get you clear answers and fast decisions. As your partner, we will help you enhance your customer relationships. As your bank grows, we’ll help you meet your needs.

Together,let’s make it happen.

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Based in Des Moines, IA,serving Iowa, Nebraskaand South Dakota.

Community bankers will be honored during award presentations at the 45th Annual Convention’s Kickoff Reception.

Mingle and view new products and services at the Convention’sGala / PAC Auction / Tradeshow event.

Learn about industry trends, get valuable information,and get motivated during the General Sessions.

Gather on the greens at the 45th Annual Convention’sMixed-Pair and Bankers’ Golf Tournaments.

Reasons to AttendCBI’s 45th Annual Convention:

CBI PAC AuctionThurs. July 14, 2016

Now TakingDonations!

CBI’s Live and Silent PAC Auctions are being held during our 45th Annual Convention. We still need more items to be auctioned!

If you’d like to donate cash or items to be put up for bids, download donation forms on the Convention page at cbiaonline.organdreturnthemtotheCBIoffice,faxto515.453.1498,oremail to [email protected]. Pictures of donations may also be emailed to [email protected]. Please return completed forms by June 24, 2016.

Please bring all donated items to the registration desk in the lobby of the Arrowwood Resort in Okoboji, Iowa no later than Wednesday evening, July 13, 2016.

Please note that the CBI PAC cannot accept corporate contributions, anonymous contributions, or a contribution in the name of or on behalf of another person.


Community Banker Update will be moving to an exclusively digital format beginningwiththeJune2016 issue. The new format

will bring a much more dynamic way to get the latest in CBI and industry news. Watch videos, interact with social media networks and take polls and surveys--all brought to you in the monthly magazineyoualreadyreceiveasabenefitofbeingaCommunityBankers of Iowa member.

All current Community Banker Update subscribers will be automatically moved to the digital format mailing list. Please note that some of our print-copy subscribers will not be added to the digitallists,duetohavingnoemailaddressonfilewithCBI.Thosesubscriberswillbenotifiedviaphoneorpostmailtoprovideupdated information.

If you wish to continue to have the newsletter sent directly to your email inbox, but currently receive only the print copy, submit your name and email address on the form below to ensure that you keep receiving Community Banker Update each month.

Doyouhaveco-workersatyourorganizationwhowouldbenefitfrom receiving Community Banker Update?Includethemontheform below to have them added to the digital mailing lists as well. Pleaseprovidefullname,professionaltitle,bank/organizationname,andcurrentemailaddress.Youmayalsoemailyoursubscription requests or questions directly to CBI Communications [email protected].

COMMUNITY BANKER UPDATE IS MOVINGTO DIGITAL-ONLY FORMAT IN JUNE

Make sure you keep receiving Community Banker Update! Enter your name and email address below to continue your subscriptionwhenitmovestodigital-onlyformatinJune.

Knowanyoneinyourorganizationthatcouldbenefitfromthisnewsletter?Addthemtothesubscriptionlistsothey’llreceivetheirowncopy of Community Banker Update each month:

Duplicatethispagetoaddmorerecipients.PleaseFAXthisentirepageto515-453-1498oremailklee@cbiaonline.org.

(Name) (Email)

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The best media relations training comes from experienced reporters. In conjunction with CBI, SHAZAM now provides Media Relations training forthefinancialservicessector--auniqueopportunity for you to have the inside scoop on theinnerworkingsofmediaorganizations.

Get exclusive training at live, one-day seminars led by Patrick Dix, Senior Public Relations Manager for SHAZAM and veteran television anchor with 25 years of experience. Attend either oftheseeducationaleventstobeheldJune8atBankersTrustinClive,IA,orJune9atGuarantyBank & Trust in Cedar Rapids. Seminars will run from 9:00 am - 4:00 pm and are broken into two course sessions, with lunch provided.

Course DescriptionsSession 1: Media FundamentalsThisfirsthalfoftheMediaRelationsseminar,Media Fundamentals reveals the process of how localnewsorganizationswork.Usingpractical,real-world examples, Patrick will illustrate why

content is newsworthy and how your expertise feeds into the process.You’lllearnthethreecriticalelementsofanystoryandhowtomakesurethey’reincludedinYOURstory.

Session 2: Media Interview TechniquesPart two of the Media Relations seminar teaches Media Interview Techniques, building on the foundation of Media Fundamentals withanin-depthlookathowyourfinancialinstitutioncraftsitsmessageduringaninterview.Patrickwilloutlinethefiveessentialstepstobepreparedforasuccessfulinterview.Tofinish,yourteam will practice their new skills in role play exercises and have the opportunity to answer questions from a real reporter!

SPACE IS LIMITED! Register today to gain the skills needed to representyourorganizationinthebestlight.Visitcbiaonline.orgtoregisterandformoreinformation,[email protected] or 515-453-1495 with questions.

Valuable PR Training with SHAZAMAttend Media Relations

Training Seminars June 8 & 9

SHAZAM’s Senior PR Manager Patrick

Dix will lead Media Relations

training on June 8 & 9.

THANK YOU SHAZAM, 2016 CBI Hall of Fame Sponsor and Platinum Sponsor of CBI’s 45th Annual Convention. Be sure to visit their booth at the Tradeshow!

CBIandYoung&AssociatesIncareholdingaone-dayBSA/AMLConference on May 26 from 9:00 am - 4:00 pm at the Sheraton Hotel in West Des Moines. This seminar helps to keep BSA personnel informed of industry trends, regulatory focuses, proposed rules, and other information relevant to the BSA professional.

TheprogramisdesignedtofocusspecificallyonallapplicableBSAactivity over the last 12 months and will focus on:

• FinCEN activity and emerging trends• Developing money service business management• Regulatory Update• Case Studies• SAR Filing Guidance• Roundtable Discussion: Compliance Challenges

Who Should AttendThis conference is ideally suited to employees with BSA/AML responsibilities who have a basic understanding of anti-money launderinglawsandregulations,including:BSAofficers,complianceofficers,auditors,headtellersandriskmanagers.

Visit cbiaonline.org for more information and to register or review the eventbrochure.Questions?CallJackieHaleyat515-453-1495oremail [email protected].

Compliance Professionals!Get Industry Updates at theBSA/AML Conference May 26

THANK YOUYOUNG & ASSOCIATES,BronzeSponsorofCBI’s45th Annual Convention!


“CBI’s LOT has been very beneficial to me, not only as a banker, but also as an individual. The group has shown me the ins and outs of the banking industry, but also has allowed me to grow as a leader in my bank, community and family.I can honestly tell you this has been one of the most beneficial groups for me.”

LOT Member Matt MuellerThe State Bank, Spirit Lake

Visit cbiaonline.org or call 515.453.1495 for informationon becoming a member of CBI’s LOT program.

Leaders of Tomorrow

MaxiMizeYour Potential

with CBi’sleaders of toMorrow

Annually the Community Bankers of Iowa’s Leaders of Tomorrow(LOT)grouprecognizesonecommunitybankerwhoseperformance and achievements in banking have earned the respect of his or her peers as the Up & Coming Community Banker of the Year.Nowisthetimetorecognizeandnominateanindividualinyourbankwhoexemplifiesthebestofthefutureof independent community banking! Nominees will be evaluated on their individual achievements in banking, bank performance, and community involvement.

Requirements for consideration include:• Nominated individuals should exemplify the best in the

future of independent community banking and be an integral part of their institution’s leadership plan;

• Nominees must work at a bank that is a member of the Community Bankers of Iowa;

• Nominees should be a member of the Leaders of Tomorrow program (but it is not a requirement).

The Up & Coming Banker of theYearisanhonorthatwillberecognizedataceremonyat CBI’s 45th Management Conference and Annual Convention,July13-15,2016in Okoboji, Iowa. The honoree will be featured in an issue of CBI’s weekly e-newsletter CommonCENTS, and the August edition of the Community Banker Update.

Complete and return the nomination form by June 3, 2016. Forms can be downloaded on the CBI website at cbiaonline.org.SubmitformstotheCBIofficeby Mail: 1603 22nd St, Suite 102West Des Moines, IA 50266; by Faxat515.453.1498;orby Email at [email protected]. Contact 515-453-1495 with questions.

Recognize Your Community Banking Peers

Nominate the Next Up & ComingCommunity Banker of the Year

Submit nominations online, or download a Nomination Form at cbiaonline.org.

Find it under Programs>Leaders of Tomorrow>Up & Coming Banker of the Year.

VISIT THE LEADERS OF TOMORROW TABLE at the 45th Annual Convention’s Gala and Tradeshow to learn more about this

exciting leadership development program, and enter for a chance to win FREE registration to their 2017 Leadership Development Conference!


What matters to your bank?

✔ Security✔ Protecting

Customer Information

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— Sean Noonan, President/CEO – Farmers State BankFarmers State Bank was chartered in 1895 in Whittemore, IA. Today the bank has three locations – Whittemore, Algona, and West Bend, IA, 21 employees, and $107 M in assets.

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Reward Those Who ServeNominate an Iowa Community Banker

for the Robert D. Dixon Founders’ AwardOver the last 45 years the leadership of CBI has provided direction, support, and guidance to your association. Without them, the spirit of the original founders would not have resulted intheusefulorganizationservingyoutoday.Eachsummer,wetake a moment to honor one of those leaders with the Robert D. Dixon Founders’ Award,recognizingacommunitybankerthathas not only modeled the best in community leadership, but also in service to the community banking industry.

It is now that time for community bankers across the state to enter nominations for this prestigious award. Please take a moment to think about the bankers you have known who have demonstrated devotion, leadership and involvement with the community banking industry and CBI, and suggest someone for recognition this year.

The Robert D. Dixon Founders’ Award is an honor that will be recognizedataceremonyatCBI’s45thManagementConferenceandAnnualConvention,July13-15,2016inOkoboji.Thehonoree will be featured in an issue of CBI’s weekly e-newsletter CommonCENTS, and the August edition of the Community Banker Update.

Make your nominations by June 3, 2016. The nomination form can be completed online and is found on the CBI website at

cbiaonline.org, under “About CBI” and “Robert D. Dixon Founders’ Award”. There you may also download formsandsubmittotheCBIofficeby Mail: 1603 22nd St Suite 102, West Des Moines, IA 50266; by Fax at 515.453.1498;orby Email [email protected].

Please note that only CBI membersare eligible to nominate for or to receive the Founders’ Award.Contact 515-453-1495 with questions.

2015 - Marti Rodamaker2014 - Steve Lane2013 - Dale Torpey2012 - C.E. Walsh2011-KurtHenstorf2010 - Larry Winum2009-JamesBrown2008 - Harold Harms

2007 - Steven Tscherter2006-ArnoldC.Schulz2005-O.JayThomson2004 - Ollie Hansen2003 - Robert D. Dixon, JohnSpies, Richard E. Randall, JohnDean

Previous Robert D. Dixon Founders’ Award Recipients:


With all the conversation about Branch Transformation accompanied by the lack of any real consensus as to what the end state looks like, there is clarity on several critical elements that are mandatory as a starting point. The role of the branch

channelgoingforwardiskeytoprofitability.Transformingthebranch is more than just changing signage and layout. It requires changes in processes, policies and culture. A critical part of these changes is positioning a branch to deliver value to clientele that goes beyond basic transaction processing. To do so, branch staff must be educated, empowered and enabled to deliver high-value client interactions.

EducatedIn August of 2014, the ABA announced its new Universal Banker [UB]Certificate,“whichisdesignedtopreparefrontlinebranchstaff to serve as the single point of contact for satisfying the diverse needs of walk-in customers.”

“Universal bankers have multifaceted job responsibilities that range from basic transaction processing to product and service sales and referrals. The certificate’s curriculum focuses on key product knowledge, relationship building, customer service and expert referral skills.”1

ThefinancialindustryhasbeentalkingabouttheneedforUBsnow for several years. This makes perfect sense at a time when branchesarebeingdown-sizedandstaffingreduced.Italsoresonates with the larger transition of branches from transaction centerstofinancialservicescenters.Nowtheconcepthassomedefinitionthanksbothtothefinancialinstitutionswhohavesharedtheir experiences as well as the industry thought leaders who havealsoweighed-in.AUBcertificateiscertainlyagoodstart,but the collective experience of those who started the transition fromtellerstouniversalbankersdefinesotherkeyelementstoasuccessful transition.

Make sure that the right expectations have been set. While it could be that universal bankers might coexist with traditional tellers in a given branch where transaction volumes so justify, the new normal is to staff branches with UBs instead of tellers. FIs need to understand that this change requires a different sort of individual with ‘soft skills.’ It is likely that not all of the current teller staff will be able to make this transition. It is also a sure bet that FIs will need to adjust their recruiting and hiring practices.

EvenwiththeavailabilityofCertification,banksandcreditunionswill need to aggressively re-train staff. UBs earn higher incomes as

compared to tellers. The change to UBs, therefore, must be more than nominal. They need to be more productive on a wider variety of tasks and duties.

Inarecentreport,DeloitteCenterforFinancialServicesconfirmsthe importance of proper training but adds, “Retraining staff to take on new roles is not enough-empowering them to provide tailored solutions to customer problems is equally pressing.”2

EmpoweredIt is also critical that branch staff be empowered. With increased adoption of mobile and online channels, there will be fewer and fewer face-to-face interaction opportunities. For those that remain, the stakes are much higher.

In addition to supporting branch staff with full access to the customer’s data, the frontline staff must have some level of decision-makingauthoritytofixproblemsonthespot.Fordecisions that require higher authority beyond what the local staff can decide, quick and direct access to someone with that level of authority is essential.

Again, according to Deloitte, “Achieving one-touch resolution of every customer complaint is probably impossible for any bank today, but training and empowering branch staff enables banks to work toward that ideal.”3

ConsultingfirmMcKinseyexpressesasimilarview,“Front-lineskills, capabilities, systems and processes are wasted investments if the front line is not empowered and motivated to use them.”4

EnabledBranchconfigurationsmustfacilitateanewcustomerinteraction.Universal Bankers cannot be “tethered” to a traditional teller line. According to Bancography, “…the teller line must be redesigned to allow an employee to easily migrate from a paying and receiving station to a sales and service workstation.5 Others call for a total branch redesign to an open plan concept or ‘dialog banking,’ a concept pioneered by Glory legacy companies dating back to the early 2000s.

Branch Transformation: Getting Started Pt 2 of 3Reprinted from “Perspectives”, a Glory Global Solutions newsletter.Part 1 appeared in the April 2016 issue of Community Banker Update,and Part 3 will appear in the June issue.


Technology also plays a key enabling role. According to Lawrence Freeborn, a senior research analyst at IDC Financial Insights, “Just as the rise of new technology has threatened the branch in the past few years, it also holds the key to their continued relevance. By implementing the right solutions, a bank can ensure that its branches are cost-effective and play their role in offering excellent customer experience.”6

The consensus seems to be that the transition to Universal Bankers must be supported by technology that makes the more mundane transaction processing simpler, faster, and more customer-focused. Enter the Teller Cash Recycler!

According to an American Banker article entitled Channel Changers: the Rise of the Universal Banker, “Another piece of equipment proving

key to the universal banker model is the cash recycler, which automates transactions, stores and dispenses money and lets multiple employees work out of the same drawer.”7

Not only do cash recyclers allow multiple staff to work off of a single secure cash supply, they also vastly simplify the deposit, withdrawal and balancing functions while also saving transaction processing time. By eliminating multiple manual counts, branch staff can now have greater focus on the customer and use the transaction time saved to execute selling and relationship-building strategies.

NOTES1 Quotations taken from: ABA Press Release, August 21, 20142 Getting Real About Branch Transformation: How to reinvigorate branch strategy, 2015, Deloitte, Page 6.3 Ibid, Page 74 Retail Banking Insights: The Future of U.S. Retail Banking Distribution, McKinsey & Company, February 2014, Page 5.5 Bancology Newsletter, Bancography, June 2009 6 Bank Branches Are Not Dead: But need to play complementary role in an omnichannel strategy, Firstpost.com, July 28, 20157 “Channel Changers: the Rise of the Universal Banker”, American Banker, Heather Landy and Mary Wisniewski, May 28, 2014)

For more information about CBI Affiliate Member Glory Global Solutions, contact Jeff Glantz at [email protected] or (319) 369-0295, or visit www.gloryglobalsolutions.com.


A group of community bankers from across Iowa joined community bankers from across the nation to spotlight community bank issues as part the Washington Policy Summit sponsored by ICBA,CBI’snationalaffiliate.TheSummitspotlightstheneedforcommunity bank regulatory relief, competitive parity and small business support.

AfterthedelegationheardspeakersSenatorJerryMoran(R-KS),member of the Senate Banking Committee and Larry Sabato, Professor of Politics at the University of Virginia, the bankers calledoneachoftheIowarepresentativeofficestoarticulatethe unique needs of community banks. There were also Agency Breakout Sessions featuring Martin Gruenberg, Chairman of the FDIC,ThomasCurry,ComptrolleroftheCurrency,KevinBertsch,Assoc. Director of the Division of Banking Supervision and Regulation, and CFPB Director Richard Cordray.

Attending the Summit and representing the Iowa community bankingindustrywere:KrisAusborn,IowaTrust&SavingsBank-Emmetsburg; Gus Barker, Community Bank of Oelwein; Rob Dixon,CitizensStateBank-Sheldon;WadeGort,PremierBank-RockValley;KurtHenstorf,FirstHeritageBank-Shenandoah;DaveHibbs,ICBAMidwestRegionalOffice-Urbandale;DaveCaris,CommunityBankersofIowa;MartiRodamaker,FirstCitizensNational Bank-Mason City; Charlie E. Walsh, Farmers & Merchants Bank-Burlington;CameronMiles,KeystoneSavingsBank-Keystone;RandyLudwig,FidelityBank&Trust-Dyersville,and;Larry Winum, Glenwood State Bank-Glenwood.

2016 ICBA Washington Policy SummitBankers from Iowa Lobby in DC for Community Bank Issues

CBI members pose with US Senator Jodi Ernst (center front)during the 2016 ICBA Washington Policy Summit.

The Iowa delegation at the 2016ICBA Washington Policy Summit(L-R): Rob J. Dixon, Marti Rodamaker, Larry Winum (back), Kurt Henstorf, Gus Barker, Wade Gort, Charlie E. Walsh, David Hibbs, Dave Caris, Cameron Miles, Randy Ludwig, Kris Ausborn.

Right: Part of CBI’s Iowa Delegation with Congressman Steve King. (L-R): Randy Ludwig, Dave Caris, Rep. Steve King,

Kurt Henstorf, Cameron Miles, David Hibbs, Rob J. Dixon.

US Representative David Young (fifth from left) meetingwith CBI at the 2016 Washington Policy Summit.


Verlin “Gus” Barker was appointed president/CEO of Community Bank of Oelwein by the Board of Directors on April 20, 2016. Barker replaces Paul Gray who will retain the title of Chairman of the Board and Chief InvestmentOfficer.Graystated“Iwill continue to work part time, but it was time to let someone else run the bank on a day to day basis. I’m sure the bank and the community willbenefitfromGus’sleadership.”

BarkerjoinedCommunityBankofOelweininJanuary2015.Gushasover38yearsofbankingandlendingexperience,spendingthepast5yearsasPresident,DirectorandTrustofficerofAckleyState Bank in Ackley, IA. In 1991 Gus successfully completed the Graduate School of Banking program in Madison, WI. and is also an alumni of Buena Vista University in Storm Lake, IA.

In addition to his banking career, Gus has had a strong local community presence through his involvement with various organizations.BarkerisoriginallyfromPomeroy,IAandenjoysplayingtheaccordion,golfing,huntingandfishing.

Changing of the GuardGus Barker Named President of

Community Bank of Oelwein

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Carpediem!Seizetheday!Takethebullbythehorns!

These are all things that we say from time to time, and when we do it’s meant to inspire, motivate and encourage. As community bankers, weoftenfindourselvesusingthesephrasestobring out the best in others, whether it be our staff, our customers or our fellow community leaders.

But is it time that we step back and say these phrasestoourselves?Goaheadanddoit.Howdoesthatmakeyoufeel?Ifyou’relikeme,itmakes you feel like you can take on the world one loan, one customer and one community project at a time.

But, like you, I have days that are just plain hard.Youneverhearpeoplesaythatcommunitybanking is an easy job. It’s never been easy, and right now we’re all working in an environment that’s more challenging than ever before. As increasing regulation and rules have made our jobs as community bankers harder over the years, and as we work harder to make loans that were easieryearsago,wemustrealizethatneverbefore have we had such an opportunity to take a hardship and turn it into a positive.

Youmightbescratchingyourheadrightaboutnowandasking,“Whereisshegoingwiththis?”

Well, I’m here to tell you that some of my biggest opportunities have come out of challenges. It’s up to every one of us to take a bad situation and make it into something that works for us, not against us.

Howdowedothat?Bytakinganegative,suchasincreasingly burdensome regulations, and framing a compelling story with solutions around it. We do that by providing the details—details like how you couldn’t give a loan to that coffee shop, which would have been located in an area of town that’s working to rejuvenate itself, because regulatory capital and lending requirements are too tight. Another example is how you weren’t able to make a home loan to the Smith family, a young family offour,becausethefinancialcrisisof2008is

stillhauntingthem.Yetthehard-workingfamilydeserves to get on with their lives and do the best they can in a home and in a town they’re devoted to.

All community bankers have clear examples of how regulation is harming their ability to help real people in their communities. Let’s tell these real-life stories to policymakers in Washington to do what needs to be done—get regulation off our backs so we can continue to serve our communities to the best of our abilities. By turning negatives into positive action with effective storytelling, there’s no stopping what we can accomplish.

So I encourage you, when you feel down, when you’re frustrated, to give yourself a good pep talk. Carpediem!Andrealizethatwhilemanythingsmay seem like they are out of your control, you actually are more in control of your community bank’sdestinythanyouthink.Justtakethebullby the horns!

Rebeca Romero Rainey is chairman and CEO of Centinel Bank of Taos, in Taos, N.M.

Seizing OpportunityWritten By: Rebeca Romero Rainey, Chairman of ICBA

TOPFrom the

See Rebeca during the Second General Session at CBI’s 45th Annual Convention, July13-15.Seepage4ofthisnewsletter,

or visit cbiaonline.org for details.

“By turning negatives into positive action with effective storytelling, there’s no stopping what we can accomplish.”


Human beings are remarkably imaginative at rationalizingwhattheywanttobelieve.“If‘ifs’and‘buts’ were candy and nuts, oh what a party we’d have.” That saying came to mind while reading JamieDimon’sappealintheWallStreetJournallast month for industrywide unity and solidarity. If only it would be so, he opined.

In a transparently self-serving commentary, JPMorganChase’schiefexecutivewrote,nodoubtwith the coordinated consent and collusion of all the major Washington, D.C.-based megabank trade groups, “America faces enough real challengeswithoutinventingconflictswherenoneneed exist.”

In a schoolmarm’s lecturing tone, Dimon says Wall Streetmegabanksbelieveinadiversifiedfinancialsystem, too (as long as it is in Wall Street’s image). He goes on to say it’s high time for community bankers to just simmer down, clam up and link arms in good cheer with Wall Street’s mega-financialtitans.Stoppickingonthepoorput-uponmegabanks. Forgive and forget. Let’s move on.

Really,Mr.Dimon?Communitybankersshouldmerrily clink goblets with the very people and institutions that, by their reckless greed and arrogant abuse of concentrated power, pushed thenation’seconomyintofinancialfreefall?Afreefall that shattered millions of families’ lives and futures, along with hundreds of steadfast community banks on Main Street. The freefall that brought on the harsh regulatory backlash that, while annoyingly untidy for Wall Street, leaves community banks crushed and reeling to this day.

Evidently, now community banks should be grateful to feast upon the crumbs of Wall Street, as long as they mind their place and dutifully fall in line.

Of course, taking shelter under the hard-earned sterling reputations of community banks is what Wall Street really wants, and they’re frustrated that stubborn community banks haven’t come to heel. But, tell me, what meaningful cover or support hasWallStreeteverprovidedcommunitybanks?

What cooperative goodwill have megabanks spread on Main Street?Everyregulatoryburdencommunitybanksshoulder today is the direct result of a foolish or misbehavingWallStreetfinancialinstitution.Every.Single. Blasted. One.

We’ve heard this siren call for “industry unity” before from the wolves of Wall Street, but why againsoprominentlynow?Perhapsthey’reworriedabout the white-hot anger still directed against Wall Street by so many agitated American voters. Cocoonedbytheirultra-affluenceandunbridledpower, they must be shocked that millions still remember, and in fact are still living through, the extraordinarywreckageandpainofthefinancialcrisis and Great Recession. (Nearly eight years later, they must think, “Aren’t those events ancient historybynow?”)

Unicornsandcotton-candyrainbowsarefinefor Saturday afternoon daydreams. Wishing, wanting and saying something convenient, as any community banker with a week’s experience knows, is one thing, but some truths are easy to see. Dimon’s glib profession of faith in the underappreciated wonders of megabank and community bank unity, especially coming from a lifelong operative of Wall Street, is too much to stomach, let alone to believe.

Theunvarnished,less-filigreedtruthisthatWallStreet’s megabanks will always ruthlessly pursue theirownfinancialself-interests,includingwhenwriting op-ed pieces. With shareholders and market analysts to serve foremost (which includes themselves), Wall Street’s chieftains justify themselves as noble knights upholding capitalism and the American way, until of course they need a taxpayer bailout to remain solvent. That is their right, of course, just as it is the right of community banks to speak out and give voice to their own grievances.

JustasWallStreethasproventoalwayspromoteand defend its interests, community banks on Main Street will do the same for themselves. For every issue and instance, ICBA proudly and independently tows its line for community banks, not Wall Street.

Of Unicorns and RainbowsWritten By: Camden Fine, President and CEO of ICBA

FINEPOINTS

“...it is the right of community banksto speak out and give voice to their

own grievances.”

Following Mr. FineMore than 1,000 people are following Camden Fine’s tweets @Cam_Fine— are you?Visitwww.twitter.com/cam_fine.

THANK YOU ICBA, 2016 CBI Hall of Fame Sponsor and Diamond Sponsor of CBI’s 45th

Annual Convention!


In the realm of cybersecurity, pirates are making a comeback. Today, it’s less “Captain Hook” and more “Captain Hacker,” as they try to hijack your private information through a diverse arsenal of virtual weapons. And you’ll never know where they’ll strike.

The fastest growing style of cyberattack is the use of ransomware. Data pirates use malware to infect computers andrestrictusers’accesstotheirownfiles,usuallythreateningto destroy the information unless the user pays a ransom. One common method is a pop-up screen claiming to be from the FBI or other federal agency stating you’ve violated some law. Themessagecompletelyfreezesyourcomputer,lockingitdownuntilyoupayaspecifiedamountofmoney,fromhundredstothousands of dollars.

This sophisticated programming intimidates most users into paying up. Last year, according to the Internet Crime Complaint Center,U.S.businessesandconsumersexperienced$18millionin losses due to ransomware. After these ransoms are paid, many attackers still don’t unlock the data, leaving the victim out their money and their information.

Smaller institutions may think they’re not big enough to be a target, but they should think again. Cyber-attackers aren’t looking forthebiggestprize—they’relookingfortheweakestlink.Datathieves also share resources and communicate vulnerable areas and successful tactics to other hackers across the globe. So the question isn’t if your information will be targeted, but when and how.

So what can you do to protect your institution and customers from theseattacks?

Traditionally, information security has been perimeter-based, with internet-facingsystemssecuredbehindfirewalls.Butintoday’stechnology environment which is always on and always changing, cybersecurity is not something static that we can “set and forget.” Yoursecuritymustbeasdynamicastheenvironmentitprotects.We know the threat is real: systems like SHAZAM’s are “tested” by scammers probing for weak spots thousands of times every day.

One simple security step for your institution is to regularly back up yourcriticalfiles.Ideally,havingawell-segregatedbackupshouldbe able to restore your information in the event of a ransomware attempt. This should happen before the hack occurs, since ransomwarecansometimesbehiddenwithinbackupfilesaswell.

Another safeguard is to educate yourself and your staff against the lurking danger of social engineering or “phishing” hacks. This isthemostpopulartypeofattack,accountingforover38%ofalldata breaches in 2015, according to the Identity Theft Resource Center.Aphishingscammerposesasatrustworthyorganization(via email, social media, or other methods) to trick you into giving them personal data—which they can then use to install malware and gain a bigger foothold on your institution’s valuable information.

Yourmaindefenseistohaveapartnershipwithacybersecurityteam that can be on constant lookout for these ever-evolving threats. The best partners will take a two-part approach. First, they’ll help you identify weaknesses in your institution’s defenses before the thieves do. Then, they’ll work with you to set up a layeredsecurityplanthatbestfitsyourneeds.

There are no universal preventions for every possible threat, but yourorganizationcanputthetoolsinplacetodetectapendingattack, block likely attacks from succeeding, and protect your important data in a compromised environment. As hackers scavenge the virtual seas for your valuable information, equip your institution with dependable technology controls that have the flexibilitytodefendyourdata,wheneverandhowevercyber-piratestry to strike.

Kevin oversees SHAZAM’s risk, compliance and merchant sponsorship programs. His risk services team works with financial institutions and merchants to provide a variety of audit, compliance, security and sponsorship services to minimize risk. For more information about CBI Endorsed Member SHAZAM, visit shazam.net and follow @SHAZAMNetwork.

Protect or Pay:Cybersecurity in theAge of Ransomware

Written By: Kevin ChristensenVice President of Risk and Financial ServicesSHAZAM

THANK YOU SHAZAM, 2016 CBI Hall of Fame Sponsor and Platinum Sponsor of CBI’s 45th Annual Convention. Be sure to visit their booth at the Tradeshow!


Good news attends this investment column!You’renotgoingtohavetogrindthrough another rant on roll-downs, tax-equivalent yields or convexity. This one deals with the ever-popular and scintillating topic of—wait for it—deposit

liabilities. While your community bank is probably paying the least it has ever paid to fund its operations, there are products and strategies that you can employ now to ensure that your community bank’s cost of funds going forward is below its peers’.

It’sonlynaturalthatafinancialstatementreader’seyesmigratetotheassetsofthebalancesheetfirst.Afterall,mostofuswere taught to read from top to bottom. More importantly, a community bank’s primary risk is credit quality, and that means the loan portfolio. So once a reader works her way down to the deposit liabilities, most of the potential trouble spots have been examined. Which is not to say the funding aspect deserves afterthoughtstatusasadriverofprofitability.

Typical liabilitiesOnthecontrary,itcanbeviewedasaprofit(able)center.Morerecently, though, cheap deposits have been very easy to come by. Intheaftermathofthefinancialmeltdownof2008,communitybanksweredelugedwiththeflight-to-qualitydepositsthatexaminers consider “hot money.” One of the metrics for this is the amount of non-interest bearing (NIB) liabilities that reside in FDIC-insured shops.

Attheendof2015NIBliabilitiestopped$3trillionforthefirsttime ever. They exceeded the amount of brokered deposits and CDs combined. NIB deposits have grown by over 75 percent in just thepastfiveyears,whichiswhyexaminershavebeenwarningcommunity banks to have their liquidity management procedures ready to kick into gear.

One happy residue of this deposit revolution is the extremely low cost of funds for FDIC-insured institutions. The median community bankisnowpayingabout35basispoints,allin,tofinancethebalance sheet. And believe it or not, there are ways to improve upon that.

You own the optionIf your community bank has not seen the need to use brokered deposits, there are some points that you may want to consider. Theyareanefficientwaytoraiseliquidityquickly,andmanytimesat lower rates than your own market. They also don’t require any collateral, and importantly, you can determine within reason the duration of those liabilities.

And for a few basis points more cost, you can issue brokered CDs with a call feature, in which the community bank, for a welcome

change, has the option. The normal structure is for the CDs to be callable at your discretion after a year, and then at any interest payment date. Recently, four-year callable CDs were available atatotalcostof1.18percent,whentraditionalnon-callablescost1.10percent.The8-basispointpremiumcouldwellcomeinhandy over the next four years, if your community bank’s asset mix and funding undergo a change, and you need to pay off the borrowing early.

Pay fixed postureAnother opportunity is to use a traditionally popular funding source, the Federal Home Loan Bank (FHLB), to help cut your bank’sborrowingcosts.MostFHLBdistrictsofferfloating-rateadvances that are typically tied to LIBOR. Given the disruption in the interest rate swaps market, and the seeming interest by the Federal Reserve in raising short-term interest rates, this may be a goodtimetofixthecostsonyourbank’sdeposits.

Recently,FHLBfloating-rateadvanceswereofferedatacostofabout 79 basis points, or 0.79 percent. At the same time, the four-yearFHLBfixed-rateadvanceswereavailableatabout1.42percent.Thestrategyforacommunitybankistoborrowfloating-rateadvancesandconvertthemtofixed-rateusinggenericinterest rate swaps.

In a recent live example, a community bank was able to create $5millioninfixed-rateadvancesatacostofonly1.16percent.This was actually very near what Uncle Sam pays to borrow for the same time frame, and far below the 1.42 percent cost of the FHLB. And, if rates do indeed begin to rise, this borrowing will actuallyshowsignificantappreciationfromanEconomicValueofEquity (EVE) standpoint.

The conclusion is that currently there are ways to 1.) position your community bank for a higher-rate environment by diversifying your funding sources, and 2.) at lower costs than traditional borrowing. And you can do so without relying on “hot” money and improving the EVE in a higher rate environment. The bottom-up strategy to ratemanagementcanindeedbebeneficialtoyourbottomline.

Jim Reber is president and CEO of ICBA Securities and can be reached at 800-422-6442 or [email protected].

Written By: Jim ReberPresident & CEO - ICBA Securities

THANK YOU ICBA SECURITIES/VINING SPARKS, 2016 CBI Hall of Fame Sponsor and Platinum Sponsor of CBI’s 45th Annual Convention. Be sure to visit their booth at the Tradeshow!

The Bottom-Up ApproachCost of funds managementcan be highly beneficial


Bank-owned life insurance (BOLI) is not new. In fact, most of the nation’s largest banks, as well of thousands of community banks, have purchased

BOLI – a life insurance policy written on the life of an employee. The purchase of BOLI is considered “best practice” and a common strategytomanagetheescalatingemployeebenefitcosts.BOLIhas a track record of outperforming like investments such as US treasuries, mortgaged-backed securities and municipal bonds. However, even with today’s prevalence of BOLI and regulatory backing, objections to owning this asset still exist. Below is a listing of two common BOLI objections and areas of concern:

1. The perception of BOLI’s liquidity; and2. Personal or philosophical beliefs.

BOLI is intended to be a long-term asset as gains are tax deferred. Furthermore, gains are tax-free if held until death of the insured. Rightfully so, are reluctant to surrender BOLI to increase liquidity asthegainswouldbesubjecttoincometaxanda10%excisetax.Banks that have this concern surrounding liquidity though typically have strong loan demand and may have alternative plans for capital, such as branch expansions or acquisitions.

The more unsettling objection is philosophical in nature regarding the discomfort of receiving payment on the lives of either current or former employees. Reputation risk should always be considered, however it is imperative to understand the reason of implementing a BOLI programs, which may include the following:

1. Generate tax-advantaged income to offset the liabilities andrecoverthecostsofcertainemployeebenefitplans,including healthcare plans, group term insurance, retirement plans and 401(k) contributions.

2. Generate stable revenue from non-loan sources;3. Provide competitive returns with superior credit quality;4. Increase earnings per share and shareholder value; and5. Protect the bank from the death of a key management

employee by reimbursing the bank for lost skills and knowledge and to fund the search for a replacement.

What is often forgotten is that the “why” behind BOLI helps the insured executives as well. As an insured in a BOLI program, executives need to understand that ultimately the bank will receive funds at his or her death. However, they need to also understand thatthisallowsthebanktoincreaseprofitabilitywhichinturnbenefitsallemployeesintheformofexpandedbenefitsandprofitsharing.Oncebothpointsareunderstood,executivesrealizethetrade off and are willing to participant in properly designed BOLI programs.

For more information on CBI Endorsed Member Executive Benefits Network’s products and services, contact Managing Director Pat Marget at [email protected] or 414-431.9681.

Written By: Lindsey Bessy, Financial AdvisorExecutive Benefits Network

Common BOLI Objections

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Don’tforgetaboutDell’ssavingsbenefitforCBImemberbanksandtheircustomers,employeesandfamilies!This partnership offers a range of options, and you may use the discount for personal purchases as well!

Current offers include:• Save39%offselectPowerEdgeServers$899&up• Save39%offOptiPlexDesktopsandLatitudeLaptops• Saveanextra10%offselectXPS&InspironPCs• Save39%offDellPrecisionWorkstations• Saveanextra5%offselectDellelectronics&accessories

These deals will be available until May 31, 2016, but CBI member savings are available from Dell all year long. On average, CBI members enjoysavingsofapproximately30%oneachorder.

Formoreinformationandtotakeadvantageoftheprogram,visitwww.Dell.com/ICBA.Needhelp?CalltheMemberservicelineat1-800-757-8442tospeakwithaDellrepresentative.Tomaximizeyoursavings,besuretoincludetheuniqueCBI/ICBAMemberID#141351622 when placing your order.

Save On Equipment Costs with the Dell Member Purchasing Plan

Four years ago, Dickinson Law launchedanartprogramatthefirmto give Iowa artists a free venue to

display their work and to celebrate the talent we are fortunate to have throughout the state. This summer Dickinson Law is hosting their4thAnnualOpenHouseforclientsandguestsonFriday,June24th,coincidingwiththefirstdayoftheDesMoinesArtsFestival.The Open House will be held from 4:30 – 6:30 pm.

Drinksandappetizerswillbeservedwhileyouadmiretheworksof these talented artists: Pam Dennis; Ryk Weiss; Bob Cooper, JeanaMeier;AnnaHornsby;TerryDooley;JenniferLeathersby;Ian Steward; Grant Thye; Thomas Hagen; and Hilde DeBruyne. These artists who will have their works on display at the Open House entrust Dickinson Law with their paintings, photographs, sculptures and other works for up to a year.

For more information on CBI AffiliateMemberDickinsonLaw’s 4th Annual Open House, visit www.dickinsonlaw.com or email [email protected].

News from CBIAffiliate&AssociateMembers

Dickinson Law to Celebrate ArtDuring Their 4th Annual Open House

2016 Golf OutingsJune 6Bankers’ Bank Golf OutingDes Moines Golf & Country ClubDes Moines, IA (by invitation only)

June 6CliftonLarsonAllen Golf TournamentBlue Top Ridge Golf Course - Riverside, IA

June 6Quad City Bank & Trust Golf OutingGlen Oaks Country Club - West Des Moines, IA

June 20UMB Golf OutingWakonda Golf Club - Des Moines, IA

July 13CBI Mixed-Pair Golf TournamentBrooks National Golf Club - Okoboji, IA(for registered attendees of CBI’s 45th Annual Convention)

July 15CBI Bankers’ Golf TournamentBrooks National Golf Club - Okoboji, IA(for registered attendees of CBI’s 45th Annual Convention)

August 15MIB Golf OutingHyperionFieldClub-Johnston,IA

September 12CBI 9th Annual Golf TournamentHyperionFieldClub-Johnston,IA

THANK YOU DICKINSON LAW, 45th Annual Convention Star Sponsor! See Dickinson Law attorney Howard Hagen at the Convention during his

Breakout Session on banking disruption. See page 4, or

visit cbiaonline.org for details.


April Survey Results at a Glance:• For an eighth straight month, the Rural Mainstreet Index fell

below growth neutral.• Almost one-third of bankers support an April Federal Reserve

short term interest rate hike.• Farmland prices remained below growth neutral for the 29th

straight month. • Cash farmland rents are down by 7 percent over the past year.• More than four of ten bankers reported rising regulatory costs

arethebiggestthreattobankingoperationsoverthenextfiveyears.

OMAHA, Neb. – The Creighton University Rural Mainstreet Index for April fell unexpectedly from March’s very weak reading, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: After increasing for two straight months, the Rural Mainstreet Index (RMI), which ranges between 0 and 100, sank to 38.2fromMarch’s40.2.

“This is the eighth straight month the overall index has moved below growth neutral. Even though agriculture and energy commodity prices have increased recently, they remain well below prices12monthsearlier,”saidErnieGoss,JackA.MacAllisterChair in Regional Economics at Creighton University’s Heider College of Business. “Compared to 12 months earlier, prices for farmproductsaredownby16percentandenergyproductsare8percent lower.”

Farming and Ranching: The farmland and ranchland price index for April rose to 26.7 from 20.2 in March. This is the 29th straight month the index has moved below growth neutral.

As in previous months, there is a great deal of variation across the region in the direction and magnitude of farmland prices, with prices growing in some portions of the region.

Bankers reported an average cash rent per acre for 2016 of $211 which is down by 7 percent from April of last year. But bankers indicatedthattherewouldbesignificantvariationamongfarmers.JeffreyGerhart,chairmanofBankofNewmanGroveinNewmanGrove,Nebraskasaid,“Cashflowiskingandwillcontinuetobethe difference maker for producers. Those who manage it well will benefit,thosewhodon’tmanageitwellwillnot.”

The April farm equipment-sales index climbed to a frail 11.1 from March’s record low 6.7. “Weakness in farm income and low agriculture commodity prices continue to constrain the sale of agriculture equipment across the region. Reductions in farm prices have negatively affected the agriculture equipment dealers and

manufacturers of farm equipment in the region,” said Goss.

Banking:TheAprilloan-volumeindexdippedto71.8fromlastmonth’s72.1.Thechecking-depositindexslippedto47.8fromMarch’s53.4,whiletheindexforcertificatesofdepositandothersavingsinstrumentsadvancedto44.4from38.6inMarch.

This month bankers were asked to identify the greatest challenge facing their banking operations over the next 5 years. More 43.5 percent reported rising regulatory costs was the biggest threat.

However, David Steffensmeier, president of the First National Bank in Beemer, Nebraska, said, “Low farm income and plummeting farmland values rank equally (as a threat).”

Hiring: Contrary to other economic indicators, Rural Mainstreet businesses maintained employment levels for the month with an index of 50.0, down from March’s 60.3. “Even so, Rural Mainstreet employment is down by 0.7 percent from this time last year. This contrasts to an employment gain of approximately 1.7 percent for urban areas of the region,” said Goss.

Confidence:Theconfidenceindex,whichreflectsexpectationsfortheeconomysixmonthsout,increasedto34.8from30.1inMarchindicating a continuing pessimistic outlook among bankers. “Higher agriculture commodity prices pushed the index up slightly to April’s sub-par reading,” said Goss.

Home and Retail Sales: Home sales remain the bright spot of the RuralMainstreeteconomywithanAprilindexof58.9from55.8inMarch.TheAprilretail-salesindexreboundedtoaweak37.8from30.1 last month. “Home sales held up for the month, but rural retailers have yet to experience retail sales gains resulting from lower in fuel costs,” said Goss.

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months downtheroad.BankersfromColorado,Illinois,Iowa,Kansas,Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included. The survey is supported by a grant from Security State Bank in Ansley, Neb.

This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.

Main Street Economic Survey

C r e i g h t o nU N I V E R S I T Y

Rural Mainstreet Economy Remains Weak for April:Almost One-Third of Bank CEOs Support April Fed Rate Hike

Ernie Goss


Colorado: Colorado’s Rural Mainstreet Index (RMI) sank to 43.6 from 51.9 in March. The farmland and ranchland-price index expandedto66.3fromMarch’s58.8.Colorado’shiringindexforAprilroseto64.0fromMarch’s63.8.

Illinois:TheAprilRMIforIllinoiswasunchangedfromMarch’s37.8.The farmland-price index expanded to 22.2 from March’s 16.0. The state’snew-hiringindexslippedto47.9fromlastmonth’s48.2.

Iowa: The April RMI for Iowa slumped to 41.2 from March’s 50.2. Iowa’s farmland-price index for April climbed to 45.6 from 39.1 in March. Iowa’s new-hiring index for April dropped slightly to 56.4 from 56.6 in March.

Kansas:TheKansasRMIforAprilfellto34.4fromMarch’s37.0.Thestate’sfarmland-priceindexforAprilslumpedto8.9fromMarch’s12.3.Thenew-hiringindexforKansasdeclinedto43.1from 44.9 in March.

Minnesota: The April RMI for Minnesotatumbledto38.0fromMarch’s 44.7. Minnesota’s farmland-price index climbed to 32.9 from 28.8inMarch.Thenew-hiringindexforthestatedeclinedto51.8fromlastmonth’s52.8.AccordingtoPeteHaddeland, CEO of the First National Bank in Mahnomen, “Land values seem to be holding steady.”

Missouri: The April RMI for Missouri increasedto27.8from25.1inMarch.The farmland-price index expanded to 28.7fromMarch’s15.8.Missouri’snew-hiring index declined to 23.6 from March’s 32.1.

Nebraska: The Nebraska RMI for April sankto40.5from48.9inMarch.

Thestate’sfarmland-priceindexgrewto42.8fromMarch’s38.0.Nebraska’s new-hiring index climbed to 57.3 from 56.2 in March.

North Dakota: The North Dakota RMI for April increased to a regional low of 14.9 from March’s 14.7, also a regional low. The farmland-price index increased to 13.4 from 10.7 in March. North Dakota’s new-hiring index expanded to 35.6 from March’s 33.2.

South Dakota: The April RMI for South Dakota sank to 37.4 from 39.2inMarch.Thefarmland-priceindexgrewto24.3from15.8inMarch.SouthDakota’snew-hiringindexplummetedto37.8fromMarch’s 50.0.

Wyoming: The April RMI for Wyoming declined to 31.4 from March’s 34.5. The April farmland and ranchland-price index slipped to10.5from10.7inMarch.Wyoming’snew-hiringindexfellto37.8from March’s 41.5.

Table 2: The Rural Mainstreet EconomyApril 2016 Percentage of bankers reporting

Absolutely Not No Depends on Data Yes Absolutely

YesShould the Federal Reserve raise short term interest rates (the funds rate) at their meetingslaterthismonth?

11.1% 26.8% 31.0% 24.4% 6.7%

Below $100 $100 - $199 $200 - $299 $300 - $399 Over $399

What is your estimate of the average per acre cash rent for non-irrigated crop land (not pasture) in your area for 2016:

13.0% 19.6% 60.9% 6.5% 0.0%

Rising regulatory costs

Slow to negative area economic

growth

Increasing competition from credit unions &

Farm CreditFarm

foreclosures Other

Forafive-yeartimehorizon,whichofthefollowing represents the biggest economic challenge to your banking operations and/or profitability:

43.5% 23.9% 8.7% 8.8% 15.1%

Follow Ernie Goss on Twitter:www.twitter.com/erniegoss

Tables 1 & 2 summarize survey findingsNext month’s survey results will be released on the third Thursday of the month, May 19.

Table 1: Rural Mainstreet Economy One Year Ago and Last Two Months:(index > 50 indicates expansion)

Apr. 2015 Mar. 2016 Apr. 2016Area economic index 46.0 40.2 38.0Loan volume 69.0 70.7 71.8

Checking deposits 50.1 53.3 47.8

Certificates of deposit and savings instruments 38.0 39.1 44.4Farmland prices 39.4 22.8 26.7Farm equipment sales 15.6 6.7 11.1Home sales 58.2 55.8 58.9Hiring 54.2 51.2 50.0Retail business 44.0 35.6 37.8Confidence index (area economy six months out) 47.0 30.1 34.8

See Ernie Goss at his Rural Economy breakout session at CBI’s45thAnnualConvention,July13-15.Seepage4ofthis newsletter, or visit cbiaonline.org for details.


Call SHAZAM today.

Delivering Unlimited Possibilities

855-314-1212 | shazam.net | @SHAZAMNetwork

We believe community financial institutions must stay in control of their

future. Since 1976, we’ve been providing community financial institutions

with choice and innovation to compete in the market. From debit cards

to core processing to marketing services and more, we deliver.

SHAZAM is a financial services company offering you choice and flexibility to use the products and services that meet YOUR needs.

METThe short answer is because an annual ACH Rules Compliance Audit is required by NACHA, the governing body of the ACH Network.Notgoodenough?Consider

the following: Regulators expect internal controls, checks and balances of the payments system, billions of dollars move daily via ACH and fraudsters are constantly inventing techniques to siphon funds from your accounts. That audit of your internal policies and controlsseemsabitmoreappealingnow,doesn’tit?

AnACHAuditexaminesthefinenuancesofACHtoensureyour institution is adhering to the NACHA Operating Rules and establishing procedures to ensure your operations are running smoothly with few errors and exceptions, including:

• Returns are processed timely and properly to avoid unnecessary losses

• Agreements are obtained to outline responsibilities and warranties

• Entries are posted to the correct accounts

• Files are appropriately monitored to protect against account takeover, fraud or legal action

• Originationfilesaremonitoredagainstappropriateexposurelimits prior to transmission to mitigate risk.

TheACHAuditisyouropportunityasafinancialinstitutiontoidentify, enhance and correct your internal policies, procedures and processes before a costly problem occurs or a regulatory exceptionisidentifiedbyyourexaminer.ThatACHNetworkisalsothe only payment system that governs itself by everyone agreeing to play by the “rules.” Don’t forget to do your part. Conducting your ACH Audit not only protects the ACH Network as a whole, but helps your institution identify problems before an issue arises.

Jennifer Kline is the Director of Audit Services for EPCOR, a not-for-profit trade association providing electronic payments and risk management information, education, support and national industry representation to U.S. financial institutions. For more information about CBI Affiliate Member EPCOR, visit epcor.org.

Why Would YouAudit the ACH?Isn’t it all automated?

Written By: Jennifer Kline, AAP, NCPDirector, Audit Services - EPCOR

After more than three years of persistent ICBA and community banking industry education and advocacy, the Financial Accounting Standards Board has made important ICBA-advocated revisions to its proposed Current Expected Credit Loss accounting update.

As redrafted, the revised CECL accounting guidance proposal is moreflexibleandscalableforcommunitybanks.Itwillallowthemtocontinue using their personal understanding of their local markets—instead of complex modeling systems—to determine their loan-loss reserves. By allowing community banks to evaluate and adjust their loan-loss amounts using qualitative factors, historical losses, and current systems, such as spreadsheets and narratives, FASB has made important changes to its proposed accounting standard.

Representing the nation’s community banks at a recent FASB industry meeting on the CECL guidance, ICBA called on FASB to communicate and work with the federal banking agencies and auditors on these changes to ensure they are implemented appropriately.

“FASB has clearly listened to the concerns of ICBA and the nation’s

communitybanks,”saidViceChairmanTimothyK.Zimmerman,who helped represent community banks during discussions with FASBofficials.“Therevisedstandardincludesimportantchangesthat address concerns with the irreversible damage the CECL model would have had on community bank lending to local consumers.”

ICBA,itsaffiliatedstateassociations,andcommunitybankershaveworked to address problems with FASB’s CECL proposal since it was introduced in 2011, including delivering a petition to FASB with nearly 5,000 signatures. Most recently, a coalition of ICBA community bankers met with FASB at a February roundtable to continue the industry’s campaign for an alternative accounting plan that allows loan-loss provisions to be based on historical losses and other factors they deem relevant based upon their knowledge of the local marketplace.

After the guidance is approved, ICBA will work to ensure that the intentofthestandardtoallowflexibilityandscalabilityismaintainedthroughout the implementation of the standard.

James Kendrick ([email protected]) is ICBA Vice President of Accounting and Capital Policy.

Accounting Change: FASB Revises CECL Standard for Community BanksWritten By: James Kendrick, Vice President, Accounting and Capital Policy - ICBA

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Community Banker Update - May 2016