Community Banker Update - November 2015

Go Local forthe Holidays

Pg. 5

OFF

ICIA

L P

UB

LIC

ATI

ON

OF

THE

CO

MM

UN

ITY

BA

NK

ERS

OF

IOW

AN

OV

EMB

ER 2

015

Invest In the Future of Iowa’s Community Banks

CBI Education Foundation Pg. 4

Opposing NCUA’sBusiness Lending ProposalPg. 8

Credit Unions Move to Skirt Congress

High-Performing AdvisorPg. 12

What It Takes to Score a

2016 CBI EventsPg. 7

Get Involved In Your Association

5 Tips for FightingToday’s Cyber Risks

Pg. 6

Slow BurnExcess Cash a Drag on Profits

Pg. 18

2 COMMUNITY BANKER UPDATE | NOVEMBER 2015

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.

hard work.dedication.strategy.

W W W. F I R S T B A N K E R S B A N C . C O M

888.726.2880

INVESTMENTS ARE NOT FDIC INSUREDNOT BANK GUARANTEED & MAY LOSE VALUE

FOR INSTITUTIONAL USE ONLY

GOVERNMENT & AGENCY BONDS MUNICIPAL BONDS | MORTGAGE BACKED SECURITIES

PUBLIC FINANCE | MUTUAL FUNDS/EQUITIES CORPORATE BONDS | MUNICIPAL BOND CREDIT REVIEW

BOND PORTFOLIO ACCOUNTING & ANALYSIS ASSET/LIABILITY MANAGEMENT

NOVEMBER 2015 WEBINAR LINE-UP

Nov. 3 DirectorSeries:InterestRateRiskPolicies,Considerations& Consequences:WhatDirectorsShouldKnow

Nov. 4 RegulationERequirementsforDebitCardErrorResolution:Processing, Disclosure&Investigation

Nov. 5 MortgageLoanOrigination&Servicing:Issues,FAQs&LessonsLearned

Nov. 10 Powers-of-Attorney&LivingTrustDocuments:GuidelinesforDeposit Accounts&Loans

Nov. 12 TheNewFloodRules,IncludingtheMandatoryEscrowRuleEff.Jan.1,2016

Nov. 17 BSAComplianceSeries:Identifying,Reporting&MonitoringSuspicious Activity

Nov. 18 NewSecurityOfficerTraining:Responsibilities,BestPractices& Skill-BuildingTools

Nov. 19 NewAccountsSeries:OpeningAccountsforMinors:Ownership,Access& Transactions

Nov. 24 AccountingDevelopmentsUpdate:RecentIssues&What’sontheHorizon

COMMUNITY BANKER UPDATE | NOVEMBER 2015 3

Community Bankers of Iowa1603 22nd St, Suite 102

West Des Moines, Iowa 50266Phone: [email protected]

2015EVENTS CALENDAR

Live Seminar: How M&A Can Maximize Growth for Community Banks..............................Nov. 19(see pg 17 for details)

LOT Quarterly Meeting............................Nov. 19

In This IssueNovember2015WebinarLineup......................................2

CBIEducationFoundation.................................................4

GoLocalfortheHolidaySeason.......................................5

5TipsforFightingToday’sCyberRisks............................6

2016CBIEventSchedule..................................................7

OpposingNCUA’sMovetoSkirtCongress........................8

CommunityBankersforComplianceProgram.................9

FromtheTop.....................................................................10

FinePoints........................................................................11

WhatItTakestoScoreaHigh-PerformingAdvisor.........12

RuralMainstreetSurvey............................................14-15

PeterCownietoSpeakatLOTQuarterlyMeeting..........16

LiveSeminar:HowM&ACanMaximizeGrowth.............17

SlowBurn:ExcessCashADragOnProfits.....................18

Certified Community Banking

Security Professional™

Onsite Training

The onsite CCBSP™ is a management-level cyber security program designed to:

n Enhance your skill set and knowledge base in cyber security n Provide a framework for an entire information security program n Demonstrate how to manage each component of the information security program to ensure successful implementation

Who should attend? ISO, Auditor, IT Manager, Compliance Officer, Security Officer, Operations Officer

Date: November 17-18Location: Prairie Meadows - Altoona, IARegister: http://iowa.protectmybank.com

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.

bellbanks.com

Call me at 605.201.1864

Member FDIC

1090

7

Commercial and ag participation loans | Bank stock & ownership loans | Bank building financing | Business & personal loans for bankers

10907 CORR AD Community Bankers of Iowa.indd 1 9/15/15 11:03 AM


In2014CBIannouncedthelaunchoftheCommunityBankersofIowaEducationFoundation.ThepurposeoftheFoundationistohelpimprovethefinancialliteracyofIowa’sstudents,tosupporthighereducationforIowacollegestudentsandencourageseniorlevelstudentstoconsidercommunitybankingasacareer,tosupportcommunitybankers’professionaleducation,andtorecognizetheaccomplishmentsofcommunitybankers,bothtotheindustryandtheircommunities.

ItistheFoundation’splantobuildaself-sustainingsourceofsupportforfinancialeducationbysolicitingbothcontributionsforimmediateprojectfunding,andalsolargerdonationstoprovideforadditionalfundingthroughinvestmentearnings.TheFoundationisanIRS-approved501(c)(3)organization,governedbytheCommunityBankersofIowaCouncilofPresidents.Contributionsmadebybothpersonalandcorporatedonorsaretaxdeductibletothefullestextentofthelaw.

Major programs funded by the CBI Education Foundation include:• MoneySmartWeekElementaryPosterContest• CommunityBankersInternScholarshipProgram(Newin2015)• CommunityBankersofIowaLeadersofTomorrowScholarship

Program• CommunityBankersofIowaRobertD.DixonFoundersAward

Program• CommunityBankersofIowaLeadersofTomorrowUpand

ComingBankerAward• Ongoingeducationalopportunitiesforbankersandprospective

bankersacrossIowa.

Contributions of any size are accepted and encouraged.Variouslevelsofrecognitionhavebeenestablishedtospotlightthosewhoshowenhancedsupport.AlsoincooperationwiththeCommunityFoundationofGreaterDesMoines,donorswillingtomakeanendowmentcontributioncanrealizea25%Iowastatetaxcreditinadditiontodeductibility.Contactusfordetailsonthisexcitingprogram.

YourdonationsgorighttowheretheycandoimmeasurablegoodinmakingIowa’scommunitiesandtheirbanksanongoing,criticalpartofeverydaylife.NeverbeforehastherebeensuchafocusedefforttosupporteducationrelatedtocommunitybankingacrossIowa.

Ifyouwouldlikemoreinformationortomakeatax-deductibledonation,findtheBrochureandDonationFormonourwebsiteatcbiaonline.org/cbi-education-foundation.html,[email protected].

The following banks, individuals and organizations have contributed to the CBI Education Foundation and have earned recognition for their support:

Contributor Level Donors ($1 - $999):Rolfe State Bank - Rolfe

Citizens State Bank - SheldonState Bank of Toledo - Toledo

Raccoon Valley Bank Charitable Foundation - Perry

Copper Level Donors ($1,000 - $2,499):First State Bank - BelmondAckley State Bank - Ackley

Security Savings Bank - GowrieFarmers Trust and Savings Bank - Buffalo Center

Bell State Bank & Trust - FargoFirst Heritage Bank - Shenandoah

Premier Bank - Rock ValleyIowa Trust and Savings Bank - Emmetsburg

County Bank - SigourneyHardin County State Bank - Eldora

Estate of Mrs. Robert D. DixonFederation Bank - Washington

Glenwood State Bank - GlenwoodCommercial Savings Bank - Carroll

Silver Level Donors ($5,000 - $10,000):FCNB Charitable Foundation - Mason City

cbiaonline.org/cbi-education-foundation.html

Would you like to make a tax-deductible donation to help ensure the future of community banking in Iowa? Visit our website at the address below to get more information, or to download the Brochure and Donation Form.

CBI Education FoundationConsider Making an Investment in Iowa’s Future

Contributions of any size areaccepted and encouraged!


Get Your Customers to “Go Local” for the Holiday Season

8 Ways to Make Your Debit/Credit CardsYour Customers’ First Choice for Holiday Purchases

Duringthe2014winterholidays,consumersspentover$600billion,accountingfornearly20%ofmostmerchants’retailsalesfortheyear.AccordingtotheNationalRetailFederation1,eachpersonspentanaverageof$730onfood,gifts,decorations,andmore.Formostofthosepurchases,theyusedeitheradebitorcreditcard.

Everyholidayseason,communitybanksask,“What’sitgoingtotaketogetconsumerstouseourcreditordebitcardforallofthosepurchases?”Hereareeightideastomakeyourcardrisetothetopofpeople’swalletsthisyear.

1. Enter users into a drawing.Thiscanbedonebypurchaseamount,orbynumberoftransactions.Eachpurchasemadeonadebitorcreditcardentersthecardholderintoadrawingwheretheycouldbereimbursedtheamountofthatpurchase.Alternatively,theycouldwina$500giftcard(fromyourcommunitybank,ofcourse).Anotheroptionistoautomaticallyentercustomersintoadrawingwhentheirtotalcardpurchasesexceed$500or20transactionsinaone-monthtimeperiod.Thesearerelativelyeasythresholdstomonitorandadminister,andshouldn’trequiremuchextraworkforyourbank.

2. Create “Swipes for Charity” days.Ondesignateddays,makeasmalldonationforeverycredit/debitcardtransactiontoalocalcharity.Themoreyourclientsswipe,themoreyougivetoalocalcause.Atriplewin–foryou,thecharityandforcardholders.

3. Offer cardholders local discounts.Useamobile-alertplatformtoreachusersattherighttimeandplaceastheyareshoppingandsearchingontheirmobiledeviceforholidaygifts,pumpkincheesecake,orfancyNewYear’sdresses.Offerthemmerchant-fundeddiscountsatlocalbusinesseswhentheypaywithyourbank’scard.

4. Active cardholders get free/discounted tickets or passes to local events.Bypresentingyourbank’scredit/debitcardatlocalevents,performancesandconcerts,yourcardholderscangetfreeordiscountedentry.

5. Reward shoppers with gift cards.Rewardeveryonewhospendsbeyondasetdollaramountornumberoftransactionswiththeirchoiceofgiftcardfromavarietyoflocalmerchants.

6. Set up “secret sales” for shoppers.Helplocalmerchantspromotetheirofferingstoyouruserswith“secretsales”andclient-onlybuyingincentives.Ofcourse,shoppersmustuseyourcredit/debitcardtogetthedeal.Youcanpromotethesespecialsalesonyourwebsiteandthroughemailmarketingmessages.

7. “Shop to win on Black Friday!”Thosewhouseyourcredit/debitcardonaspecialdesignatedday—BlackFridayorCyberMonday,forinstance—canbeautomaticallyenteredintoadrawing.Youcanrunthispromotionmultipletimesonmultipledays,orrunitforaextendedperiod(likeoneweek,oraweekend).

8. Offer up your CEO for a fun stunt.Challengecardholderstouseyourcredit/debitcardforadesignatednumberordollarvolumeofpurchasestoseeyourCEO(orothercelebrity/localfigurehead)makesnowangelsinredlongjohns,takea“polarbearplunge”inthelake,orperformotheroutrageousstunts.

ResearchersatGoogleThinkfoundthat48%ofshoppersdomostoftheirshoppingonorbeforeCyberMonday2.Ifyourbankwantstomakesureyourcredit/debitcardisthefirstchoicethisholidayseason,youneedtoputincentivesinplace.Hopefullythesetipsprovideaspringboardtoideasforpromotionsyourbankcanoffertoyourcustomersthisholidayseason.

Get more tips on Going Local for the Holiday Season!Visit the Go Local pages on our website for marketing ideas

and social media tips. Find your Holiday Go Local resources at:

www.cbiaonline.org/go-local-marketing-ideas.html

Reprinted from: The Financial Brand

1. Data from NRF’s 2013 Monthly Consumer Survey.2. Ipsos MediaCT, Google Post Holiday Shopping Intentions Study, January 2015.


Cyberattacksaren’tlimitedtojustdatabreachesthesedays—therearealitanyofprevalentcyberrisksthreateningyourfinancial

institution.Sure,databreachesaregettingthemostattention,butyourinstitutionfacesmorethanjustonecategoryofcyberrisk.Whetherit’ssystemoutages,adistributeddenialofservice(DDoS)attackoranyothercyberincident,youneedtobepreparedtofight.

Toensureyourfinancialinstitutionhasastrongstrategyforcybersecuritypreparedness,theFederalFinancialInstitutionsExaminationCouncil(FFIEC)recommendsyoutakeacomprehensiveapproachtomaintainthesecurityandresilienceofyourtechnologyinfrastructure.Andthatincludesestablishingofarobustcybersecurityframework.

5 Key Elements for a Strong Cybersecurity Framework Tofightbackagainstcyberthreats,theFFIECrecommendsyourfinancialinstitution’scybersecurityframeworkfocusonfivekeyareas:

1. Cyber Risk Management and OversightTostrengthenmanagementandoversightofyourfinancialinstitution’scybersecuritystrategy,followthesefoursteps:a. Testyourpoliciesandprocedureswithregularinformation

securityreviewsandITauditsb. SupportyourriskmanagementprogrambyusingtheFFIEC

CybersecurityAssessmentToolc. Providetrainingandresourcestoemployeesthatareeasyto

understand;andensureITandinformationsecuritystaffkeepupwiththeirtraining,too

d. Educateandengageseniormanagementandtheboardtodevelopastrongcultureofsecurity

2. Threat Intelligence and CollaborationToensureyouhavethemostupdatedinformationaboutindustrythreats,subscribetoemaillistsandcollaborationservicesfromreputableresourceslike:• SANSInstitute• NationalInstituteofStandardsandTechnology(NIST)• BrianKrebs(KrebsonSecurity)• BruceSchneier(SchneieronSecurity)• Cisco• FinancialServicesInformationSharingandAnalysisCenter

(FS-ISAC)**Though not officially endorsed by the federal regulatory agencies forming the FFIEC, FS-ISAC membership is highly encouraged by these agencies, and financial institutions that are not FS-ISAC members could be more likely to receive heavy scrutiny during IT exams. Put this at top of your to-do list.

3. Cybersecurity ControlsImplementcybersecuritycontrolstohelpyourfinancialinstitutionprevent,detectandmitigatecybersecurityevents.Therearethreecategoriesofcybersecuritycontrols:

a. Physical Security Controls:Thesecontrolstraditionallytightenperimeterbuildingsecurityandlimitaccesstoserverroomsandnetworkoperationscenters.

b. Logical Security Controls:Thisisyourfirstlineofdefenseif

ahackerbreachesyourphysicalcontrols.Logicalcontrolstypicallyincludeidentification,authentication,authorizationandaccountabilitytools.

c. Other Controls:Thiscategoryincludespoliciesandprocedures,trainingandeducation,andemployeereactionandresponse.

4.External Dependency ManagementManageanyexternalsolutionsthatyourinstitutionusesbyundergoingthesethreeevaluations:

a. Business Impact Analysis (BIA):Determinethelikelyimpacttoyourorganizationifavendor,productorserviceceasedtoexistorfunctionproperly

b. Cybersecurity Risk Assessment:Identifytherisksforaparticularvendororserviceandhowlikelyeachriskistoaffectthatrelationshipsoyoucanprepareaccordingly

c. Vendor Management:ReadtheFFIEC’snewAppendixJfromtheBusinessContinuityHandbooktohelpdetermineifadequatecontrolsareinplaceamongexternaldependencies

5. Incident Management and ResilienceUpdateyourincidentresponseandbusinesscontinuityplans(BCP)toincludethewords“cyberincident”and/or“cyberrisks.”Whilethesetopicsmayalreadybecovered,theverbiagereducesquestionsandhelpssatisfyregulators.Besureyourplansactuallycontaintheinformationneededtohelpyoueffectivelyrespondtocyberattacks.

Get a Little Help from Your FriendsDoescybersecurityfeeloverwhelming?You’renotalone.Trustedthird-partyproviderscanhelpyoueffectivelyaddressandmanagerisksoyoucanbuildastrongcybersecurityprogram.Getalittlehelpfromyourfriends—knowyourrisks,protectyourdataandfeelconfidentinyourregulator-recommendedapproachtocybersecuritypreparedness.

Steve Sanders, CSI’s vice president of Internal Audit, oversees the evaluation and mitigation of risks associated with IT, financial and operational systems. For more information about CBI Endorsed Member Computer Services, Inc., visit csiweb.com.

Written By: Steve SandersVP - Internal Audit

CSI Regulatory Compliance

5 Tips for Fighting Today’s Cyber Risks


2016 CBI Event ScheduleNetwork with Colleagues, Learn from the Experts, and Support Your Association

CommunityBankersofIowawasformedandcontinuestofocusonlyontheissuesconfrontingindependentcommunitybanks.Tothatend,CBIholdsandsponsorsanumberofinformativeandentertainingeventsthroughouttheyear,intendedtoeducateourmembers,providenetworkingopportunities,raisefundsforeducationalandadvocacyeffortsandsupporttheprofessionaldevelopmentofIowa’scommunitybankers.

BelowisascheduleoftentativedatesformajorCBIeventsbeingheldduring2016.Thisisnotanexhaustivelistofallliveevents,anddatesaresubjecttochange.

FindamorecomprehensivelistofallCBIevents,includingdeadlinesandwebinarofferings,inour2016AnnualPlanner&ResourceGuide,availableDecember2015.

April 12-14• SHAZAM Conference

April 14• Iowa Division of Banking Day with

the Superintendent-Des Moines

April 23-30• Money Smart Week

Poster Contest held from Feb-Apr

April 25-27• ICBA Washington Policy Summit

Washington DC

July 13-15• CBI 45th Annual Convention

Okoboji, Iowa

August 11• CBI 4th State Fair Conference

Prairie Meadows Conference Center Altoona

February 18• Leaders of Tomorrow Quarterly Meeting

Location TBD

March 6-10• ICBA National Convention

New Orleans, LA

March 24-25• 13th Annual Leaders of Tomorrow

Leadership Development Conference Hilton Garden Inn, West Des Moines

April• Community Banking Month

April 5-6• CBI Spring Community Bank Summits

Apr. 5 - Waterloo; Apr. 6 - Riverside

April 12-13• Community Bankers for Compliance

Spring Session

August 18• Leaders of Tomorrow Quarterly

Meeting-Location TBD

September 12• 9th Annual Golf Tournament &

Business Symposium Hyperion Field Club, Johnston, Iowa

September 20-21• Community Bankers for Compliance

Fall Session

October 11-13• Fall Community Bank Summits

Locations TBD

November 17• Leaders of Tomorrow Quarterly

Meeting-Location TBD


ICBAandcommunitybankersacrossthenationrecentlylaunchedavolleyofoppositiontothetax-exemptcreditunionindustry’slatestattempttowidenitslendingauthority.WhileCapitolHillhasrepeatedlyrejectedcreditunioneffortstoexpandintocommerciallending,theNationalCreditUnionAdministrationisattemptinganotherendrunaroundthelegislativebranchonbehalfoftheindustryitregulates.

TheNCUAproposalwouldexpandloopholestothecreditunioncaponbusiness-lendingauthority.Incommentletterstotheagency,ICBAandcommunitybankerslaidoutalitanyofproblemswiththeproposal,includinghowitwouldcircumventCongress,jeopardizethesafetyandsoundnessofcreditunionsandplaceunduerisksonU.S.taxpayers.

Indecent proposalTheNCUA’sproposedrulewouldreplacestrictrequirementsandlimitationsoncommerciallendingbyfederallyinsuredcreditunionswithabstractprinciplesthatwouldprovideamuchmoreopenlendingframework.Whilefederallawcapsmemberbusinesslendingat12.25percentofacreditunion’stotalassets,the

regulator’sproposalwouldapplyadditionalflexibilitytothecapandwouldevenentertaintheideaofmovingbeyondthestatutorycapaltogether.

Amongitsprovisions,theproposedrulewouldeliminatearequirementthatborrowerspersonallyguaranteeloans,removeexplicitloan-to-valuelimitsandallowloanstoasingleborrowertototalupto25percentofthelender’snetworth.Italsowouldliftlimitsonconstructionanddevelopmentloansandclarifythatnonmemberloanparticipationswillnotcountagainstthecap.

Creditunionswouldberequiredtoestablisharisk-managementplatformwitharatingsystemandacommercialloanpolicythataddressestheparticularsofhowcommercialloanswouldbeoriginated.However,creditunionswithtotalassetsoflessthan$250millionandtotalcommercialloansthatdonotexceed15percentofnetworthwouldnotberequiredtoadoptacommercialloanpolicy.

Combating mission creepICBAandcommunitybankerswroteinformalcommentlettersthatexpandinglendingcreditunionauthoritywhilerelaxingregulatoryoversightwoulddefycongressionalintentandcontinuethetax-subsidizedindustry’songoingmissioncreepintocommercialbanking.Whilethe12.25percentstatutorycapshouldbeinflexible,theproposedrulewouldexpandonexistingloopholes,whichcouldallowlargecreditunionstoengageinmillionsorevenbillionsofdollarsofbusinessloansoutsidethecap.

ICBAcalledontheNCUAtodemonstrateaneedfortheserelaxedstandardsandtoretainitspersonalguaranteerequirementforborrowersaswellascollateralandsecurityrequirementsformemberbusinessloans.Givenitslackofconfidenceincreditunionbusinesslending,ICBAwrote,theNCUAshouldanswerwhyitproposesweakeningcriticalprudentialsafeguards.

Bottomline:TheNCUA’scontinuedeffortstolowerbusinesslendinglimitsfloutCongressanddisregardtherisksthatcomewithoriginatingcommercialloans.Meanwhile,communitybanksthatengageincommerciallendingoperateunderalendingframeworkthathasstoodthetestoftimeandissubjecttoconstantregulatorandexaminerscrutiny.Ifthecreditunionindustrywantstoexpandfurtherintocommerciallending,itshouldfirstbuildtheframeworkneededtoperformhigh-qualityunderwritingandmanagement—whilealsoforgoingitsbroadtaxandregulatoryexemptions.

James Kendrick ([email protected]) is ICBA vice president of accounting and capital policy.

Written By: James KendrickVice President - Accounting and Capital PolicyICBA

Opposing NCUA’s Move to Skirt Congress On Credit Union Business Lending

© Copyright Employers Mutual Casualty Company 2014. All rights reserved.

Endorsed by your association.Recommended by your peers.

Home Office: Des Moines, IAwww.emcins.com CBSI is a subsidiary of

Community Bankers of Iowa

Make the EMC Choice® Financial Institution program your choice for the right insurance coverages, responsive service from a local company and competitive pricing. Count on EMC® and your independent insurance agent for protection that fits the unique needs of your community bank.


Today’scommunitybankcomplianceofficerischargedwithstayingcurrentwithallthecompliancerulesandregulationsandmakingsuretheyarebeingusedeffectivelywithinthebank.For13years,theCommunityBankersofIowahaspartneredwithCommunityBankersforCompliance(CBC),aprogramthatoffersthetoolsandinformationneededtoimplementcompliancethroughoutyourbank.Thecomplexityregulatorychangesmakesitcriticalthatyourcomplianceofficerisreadytodealwiththesechangesastheyoccur.

TheCBCprogramisthemostsuccessfulandlongestrunningcompliancetrainingprograminthecountryandprovidesup-to-dateinformationoncomplianceissuesanddevelopmentsinbankregulations,aswellasproventechniquesformaintainingyourin-bankcomplianceprogram.Havingreceivedapprovalfromregulatoryagencies,theprogramhasbeeninstrumentalinhelpingover2,000communitybankersacrossthenationdevelopanincreasedunderstandingandabilitytodealwithregulatoryissues.

AnnualmembershiptotheCBCProgramincludesfiveinter-relatedcomplianceservices:

1. Live Regulatory Seminars.Twoliveseminarsareprovidedthroughouttheyear.Adetailedmanualisprovidedtoeachparticipant.

2. Webcasts - Regulatory Update.Fourregulatoryupdatesessionsarepresentedinwebcastformatonseparatedays.

Eachwebcastdiscussescurrentnewsandregulatorychangesthatmayhaveanimpactoncommunitybanks.Eachwebcastwillbe1.5hours,includingquestionsandanswers.Adetailedmanual,writteninfullnarrative,willbeprovided.

3. Monthly Newsletter.TheComplianceUpdatenewsletterissenttoprogrammemberseachmonth.Itprovidesanupdateofcomplianceissuesthatimpactcommunitybanks.

4. Compliance Hotline.MembersoftheprogrammayvisitYoung&Associates’websiteorcalltheirtoll-freenumberforcomplianceofficerquestionsthatariseonadailybasis.Thisserviceensuresthatyourbankisjustaphonecallawayfromtheinformationyouneedinordertoansweryourcompliancequestions.

5. CBC Members-Only Web Page.ThisdedicatedwebpageisreservedforbanksthatareregisteredmembersoftheCommunityBankersforComplianceProgram.Inityouwillfindspecialandtimelyinformationandtoolsthatcanbeusedtoenhancetheregulatorycompliancefunctionatyourbank.

FormoreinfoortoregisterfortheCommunityBankersforComplianceprogram,visitourwebsiteatcbiaonline.orgorcontactPrettyPatelat515.453.1495orppatel@cbiaonline.org.

Be Prepared for Upcoming Compliance Changes:Enroll in the Community Bankers for Compliance Program

800.967.2645 | eojohnson.com

Core system expertise matters to

WCF Financial Bank.

What Matters?

“ Locknet® has more than proved themselves to us. They have been involved in our core conversion, an acquisition, and the

new construction of our main location. They thoroughly knew our new system and worked seamlessly with our vendor.

Having that expertise on our team is very comforting.“— Kyle Swon, Market President – Webster City, WCF Financial Bank

• Budget predictability• Proactive instead of reactive IT• 1 – 3 – 5 year budgeting

• A solid foundation of security and efficiency

BUSINESS PROFILE:WCF Financial Bank is a community bank with two locations – Webster City and Independence, Iowa.

What matters most to your financial institution?

When security matters – Locknet®’s Keysuite™ fully managed IT services provides:


Tech Is KingWritten By: Jack Hartings, Chairman of ICBA

Ourcustomerslovetechnology.Atleast,that’swhatI’vefoundtobetrueatThePeoplesBankCo.inColdwater,Ohio.Likemanyofyou,I’mamazedatwheretechnologyhastakenourbusiness,andIlookforwardtoseeingwhereitcontinuestotakeus.Withoutadoubt,technologyhastheabilitytocatapultourbusinesstothenextlevelanddeepenourcustomerrelationships.

Communitybankshaveahugeadvantageinthetechnologyspace.Wearethetotalpackage.Wearerelationshiplendersthatdoeverythinginourpowertobestserveourcustomersandourcommunities.Ourcustomerslovethefactthatwelookoutfortheirbestinterestsandtheinterestsofourcommunity.It’sthisrelationshipbankingexperienceandtrustthatcommunitybankcustomershavecometoexpectandappreciate

So,whenyoutakethisstrongfoundationoftrust,serviceandrelationships,andadditinwithpowerful,efficientand24-houraday/sevendaysaweektechnology—somethingthatpeoplelove—youhaveawinningequationandsomethingthatcustomerswillundoubtedlytreasureandrespondtoforyearstocome.

Allofthistalkoftechnologytakesmebackto2013whenThePeoplesBanklauncheditsmobilebankingservice.Asacommunitybanker,mytopconcernwashowourcustomerswouldrespondtoit.Wouldtheyhavequestions?Wouldtheyuseit?Wouldmymoreseniorcustomersneedassistancewithunderstandingandusingit?

Withthesequestionscirclinginmymind,Ikeptaskingourstafftoseeifanyonehadcalledinwithquestionsaboutournewmobilebankingservice.

Onedaypassed,no;threedayspassed,no;twoweekspassed,no.Iwasthinking,“Well,ifwearen’tgettingquestions,maybecustomersaren’tinterestedorjustaren’ttakingadvantageofit.”So,wecheckedthenumbersanditturnedoutthatthereweremorethan250customersusingtheproductinthefirstmonth,andtodaywehavemorethan1,400mobilebankingusers.

Wow—notonlywereourcustomersinterestedintheproductandusingit,buttheydidn’thaveanyquestions.Theylovetechnologyandknewhowtoleverageit!

Itellyouthisstorybecause,atfirst,Iwasabitskeptical.Iclingtothetraditionalvaluesofcommunitybankingbutalsorealizethatthefutureiscomingandtechnologyispartofthatfuture.Communitybankcustomershavebecomeaccustomedtothebestpossibleproductsandcustomerservice,andit’suptoustokeepthattraditiongoingwhileleveragingthebenefitsthattechnologyhastooffer.Ourcustomersexpecttheseservicesfromus.

Nowisthetimetoembracewhattechnologicalinnovationhastoofferanduseitasatoolforcontinuingtomakethecommunitybankexperiencethebestitcanbe.Whetherit’satthebranch,onlineorviaasmartphoneapp,thecommunitybankexperienceshouldnotbelimitedtobranchhours.Technologyisanotherwaytoreachyourcustomers.It’sthatsimple.

Jack Hastings is Chairman of ICBA, and President and CEO of The People’s Bank in Coldwater, Ohio.

TOPFrom the

“...the future is coming and technology is part of that future.”


Mobile,mobile,everywhere,butbarelytimetothink.

Welcometomobilemania.Financialinnovationisbooming.It’sfreewheelingandchaotic.Italsocontinuestotransformtheoperationalandcompetitivecontoursofourindustry.

MobiletechnologycombinedwithInternetconnectivityresultsinalotofdata.Thinkaboutit.Withemail,searchenginesandmobilegeolocation,companieshavedataonwhoyouare,whereyouare,whatsitesyouvisit,whatyouhaveboughtandwhatyouareplanningtobuy.Andmanyofthosecompanieswanttooffervariousbank-likeservices.

Communitybankingintoday’srapidlydigitizingworldisrifewithpowerfulrewards,butalsowithchallengesanduncertaintiestoo.Fortunately,communitybanksarepatientlyandprudentlyadoptingpowerfulmobileandinformationtechnologyinwondrousways.Yourinstitutionshaveallthetechnologythatanyconsumerorbusinesscouldneedorthatanyotherreputablefinancialcompanyisproviding.Butweallneedtotellthatstorymore.

Certainly,communitybankshavevaluable,reliabletechnologypartners,andweincreasinglyhaveformidabletechnologycompetitorstoo.So-calledFinTechfirmsarecreatingnewdigitalplatformsforconsumersandbusinessestoeasilyaccessnewprovidersofloans,payments,investmentsandfinancialdata(andevendigitalcurrencies).Thesenon-FDIC-insuredcompanies,includingmarketplacelenders,areenticingconsumerstobypassFDIC-insuredmainstreambanksfornew-fangled,sometimesriskyorharmfulproducts.Manyoftheseleveragedataanalyticsinhighlysophisticatedways.Wecannottakethemlightly.

Withinthisdisruptiveenvironmentoffinancialtechnologyinnovation,whatshouldICBAandcommunitybanksdotocontinuedeliveringthebest,mostconvenientandsafesttechnologyforourcustomers?ICBAseesthreekeypriorities.

1. Promotebank-centricpayments.Asanindustryandasacountry,wehavetocontinueadvocatingthebenefitsofabank-centricpaymentssystem.Banksareproven,secureintermediariesformovingmoney.Thevalueofourtestedcontrols,security

protocolsandprotections,includingfederaldepositinsurance,mustbeunderstoodandsupportedbyconsumersandpolicymakersalike.Wecannotallowrandomdisruptionordisintermediationfrominfanttechnologyfirmstoundermineourlongstandingbankingandpaymentssystems.

2. Upholduniformstandardsforeveryone.Consumersneedanddeservethesamesafetyandreliabilityfromallfinancialservicesproviders.Consistentcomplianceofconsumerprotectionsmustbeenforcedforbankandnonbankproviders.FederalandstateregulatoryframeworksforthelicensingandregulationofFinTechproductsandservicesshouldbethesameasthoseforthebankingindustry.

3. Continueinnovating.Asanindustrywecan’tstopinnovating—withourtrustedpartnersandwithinourowninstitutions.Whilemaximizingournimbleness,wehavetocapitalizeonourproven,longstandingbusinessmodelwhilealsoadoptingthebesttoolsthedigitalworldprovides.Thisincludesmodernizingourexistingbankingandpaymentsinfrastructure.Inshort,wehavetobehigh-techandhigh-touch.

Ofcourse,pursuingtheseprioritieswillrequirenavigatingthecomplexitiesoftoday’sgallopingfinancialinnovation.Butwhat’scertainisthatdigitalbankingandongoingtechnologyinnovationareheretostay,whichiswonderfulanddauntingatthesametime.Butwe’reuptothechallenge.Wemayhavetoleanintotoday’sdigitalworldtogether,buttheopportunitiesfordoingsowillremainasrewardingforusandourcustomersaseverbefore.

Wild, Wild TechWrittenBy:CamdenFine,PresidentandCEOofICBA

FINEPOINTS

“Community banks are patientlyand prudently adopting powerful

mobile and information technologyin wondrous ways.”

Following Mr. FineMorethan1,000peoplearefollowingCamdenFine’stweets@Cam_Fine—areyou?Visitwww.twitter.com/cam_fine.


Weallknowthenameofthegameinfinancialadvisorrecruiting:bignamebroker-dealersandevenbiggerchecksoftentakethecakeinscoringquality

financialadvisors.Asacommunitybanker,itcanfeellikeyou’refacedwithmorethanjustanuphillbattle.Wegetit.Notonlydoyouneedanexperienced,talented,high-performingadvisor,butyoualsoneedonethatisaglove-likefitwithyourculture,customers,andcommunity.Thesolution?Partnerwithabroker-dealerthatspecializesinrecruitinghigh-calibercommunitybankfinancialconsultantsforyouron-siteinvestmentprogram.

Asacommunitybanker,youstillwantthecreamofthecropevenifyou’renotoneofthecolossalbanksoftheworld.Andfrankly,youdeserveit.Youneedafinancialadvisorthathastheability,theattitudeandtheculturalfit.Inthesamebreath,thehigh-performingadvisoryoujustdescribedisn’tjustgoingtomovetheirpracticewithnoreturnontheirrelocation…andwedon’tnecessarilymeancash.

What’s Your Advisor Value Proposition? Intoday’sfinancialservicesenvironment,financialadvisorrecruitingiscontinuouslyevolving.Whiletherearemanymoreoptionsandopportunitiestochoosefromthaninyearspast,theevolvingregulatorylandscapedoesn’tnecessarilymakeiteasyforanadvisortoconverttheirpracticetoadifferentbroker-dealer.Asacommunitybanker,youneedapartnerthatprovidesyourprospectivefinancialadvisorwithasoundvaluepropositionthatspeakstohis/herneedsinadditiontothevaluepropositionthebankitselfandtheopportunityoffers.

Partneringwithabroker-dealerthatcreatesatailor-madeenvironmentfortopcommunitybankfinancialinstitutionsandtheiradvisorstothriveiniskey.Whenyouworkwithafullservicebroker-dealercreatedbyfinancialconsultants,forfinancialconsultants,thefirmwillunderstandwhatmakestheforemostperformingadvisorstick,howtohelpthemexcelevenmore,andhowtokeepthemhappy.Attheendoftheday,yoursuccessstemsfromyouradvisor’ssuccess.

Whiletop-producingadvisorsareallprofitable,theyallhavedifferentapproachestotheirbusiness.That’swhatmakesanopenproductplatformavitalsolutiontothesuccessofabank’sinvestmentprogram.

Oneofthebiggestadvantagesyoucangiveyouradvisor–andoneofthebiggestreturnsonyourinvestment–ispartneringwithabroker-dealerthatprovidesanopenproductplatform.Thisfreedomallowsyouradvisoraccesstomoreproductsandservices,soheorshecandowhat’sbestfortheirclient’sneeds,notthebroker-dealer’s.Notpushingbroker-dealerproprietaryproductsmeansyourindustry-leadingadvisorhasthefreedomtochoosefromawidearrayofindependentproductchoiceswithoutthepressureofpromotingapreferredvendororbroker-dealermotive.Theycancontinuetobethesuccessfuladvisortheyhavebeenthroughtheirmosteffectiveandpreferredbusinessapproach.

Your Support TeamThebestbroker-dealerswillhaveadedicatedteaminplacetoensureyouradvisorexpectationsarenotonlymetbutexceeded.Workingwithabroker-dealertosupportyourrecruitingneedswillhelpensureyou’renotonlyproactivelygrowingyournon-depositincomethroughyourprogram,butthatyourprogramissomething

you’reproudof.Havingtherightadvisorwillbringenormousvaluetoyourprogram,bankandrelationships–theincreasednon-depositincomeistheicingonthecake!

Theforemostbroker-dealerrecruitingteamswillconcludeahighlyproactivesearchthatincludesarangeofbestpracticestosourcecandidatesbasedontheindividualinstitution’sprofileandneeds.Theserecruitingteamswillcometoyouwitharefinedlistofhigh-calibercandidateswhomtheyknowinsideandout.They’llunderstandhoweachcandidatedoesbusinessandhavearealunderstandingofwhotheindividualisandtheirpresenceinthecommunity.Thesebroker-dealerswillactivelycompletetheupmostduediligencepriortoreachingyouandyourteaminordertomaketheprocessseamlessandthecandidatelisthigh-quality.

Understanding Your Candidates Processeslikeperformingpredictiveindexanalysesonthemost-fittingcandidatesiscrucialtounderstandingwhatmotivatesthemandhowtheybuildtheirbusiness.Ensureyourbroker-dealerusesthesetypesoftoolstohelpyoufullyunderstandyourfuturefinancialadvisorandmakecertainheorsheistherightfitforyourbank,communityandcustomers.

Questionsyouwanttoknowlike,“Howdidtheirclientsbecometheirclients,”“Whoaretheirclients,andwilltheyfitinwithourbankclientele,”and“Isheorshecapableofbuildingtheirownclienteleratherthansimplycapitalizingonourcustomers?”shouldallbeansweredbyyourbroker-dealerrecruitingteampriortoyoueverspeakingwiththecandidate.

The Right Partner Haveyouconsideredpartneringwithabroker-dealerspecializinginhelpingcommunitybanksincreasetheirnon-depositincomeviaaninvestmentprogramfullyequippedwithanindustry-leadingfinancialadvisorthatwillaffordyoutheperformanceyouneedcoupledwiththesamecultureandvaluesasthecommunitiesyouserve?

Ifyourbroker-dealerandtheirrecruitingteamistrulythepartneritshouldbe,youwillfeelnotonlyconfidentbutproudinyourcandidatedecisionandtheoutlookofyourprogram.Collaboratewiththebroker-dealerthatprovidesyouthesupportandexpertiseyouneed,andtherestsimplyfallsintoplace.

Since 1992, Investment Professionals, Inc. has specialized in the increase of ROA/ROE and on-site delivery of investment programs for community financial institutions across the U.S. For more information about CBI Endorsed Member Investment Professionals visit www.invpro.com.

What it Takes to Score a High-Performing AdvisorIn Your Community Bank

ICBA_7168 2015 Ad Campaign.indd 1 12/2/14 2:41 PM


October Survey Results at a Glance:• Forasecondstraightmonth,theRuralMainstreetIndexfall

belowgrowthneutral.• Bankersreportthatalmostone-thirdofcornsalesbelow

breakeven.• Cashrentsplummetbyapproximately15percentfromlast

yearatthistime.• Farmequipmentsalesdeclinetorecordlow.• Approximately27.9percentofbankers.

OMAHA,Neb.–TheCreightonUniversityRuralMainstreetIndexforOctoberfellfromSeptember’sweakreading,accordingtothemonthlysurveyofbankCEOsinruralareasofa10-stateregiondependentonagricultureand/orenergy.

Overall:TheRuralMainstreetIndex(RMI),whichrangesbetween0and100,sankto44.4fromSeptember’s49.0andwellbelowAugust’sgrowthneutral50.0.Infact,notoneofthe10statessurveyedhadandRMIabove50.0.

“Thisisthethirdstraightmonththattheoverallindexhasdeclined,reflectingweaknessstemmingfromloweragricultureandenergycommoditypricesandfromdownturnsinmanufacturingexports,”saidErnieGoss,JackA.MacAllisterChairinRegionalEconomicsatCreightonUniversity’sHeiderCollegeofBusiness.

Regionalmanufacturersareexperiencingweakerconditions.Forexample,JamesShafer,CEOofTheFirstNationalBankinTremont,Illinois,reported,“Caterpillar’sannouncedlayoffsof5,000employeesishavinganegativeimpactontheentirecentralIllinois.”

Farming and Ranching:ThefarmlandandranchlandpriceindexforOctoberfellto31.0from35.5inSeptember.“Thisisthe23rdstraightmonththeindexhasmovedbelowgrowthneutral.But,asinpreviousmonths,thereisagreatdealofvariationacrosstheregioninthedirectionandmagnitudeoffarmlandprices,”saidGoss.

Thismonthbankersreportedonthelevelofcashrentsforfarmland.Onaverage,yearlycashrentsacrosstheregionwere$229peracre.“Thisiswellbelowrentsrecordedsixmonthsagoandthisisthefirsttimethatwemeasuredanyrealdownturnincashrents,”saidGoss.

AccordingtoDavidSteffensmeier,presidentoftheFirstNationalBankinBeemer,Nebraska,“Sincecornandsoybeanpricesaredownaminimumof25percent,overallcashrentneedstoadjustdownaswell.Itwillbeinterestingtowatchifthatispossiblethis

fallandwinter.”

TheOctoberfarmequipment-salesindexslumpedtoarecordlow10.8fromSeptember’sanemic14.2.“The2014and2015downturnsinfarmincomecontinuetoreducesalesandproductionofagricultureequipmentdealersandproducersacrosstheregion.BankersremainpessimisticabouttheshortandintermediateprospectsforagricultureequipmentdealersandproducersonRuralMainstreet,”saidGoss.

Banking:TheOctoberloan-volumeindexdippedto71.6fromlastmonth’s72.0.Thechecking-depositindexdeclinedto51.2fromSeptember’s54.2,whiletheindexforcertificatesofdepositandothersavingsinstrumentsdippedto40.9from41.7inSeptember.

Hiring:Despiteweakercroppricesandpullbacksfrombusinesseswithclosetiestoagricultureandenergy,RuralMainstreetbusinessescontinuetoaddworkerstotheirpayrollsbutataslightlylowerpace.Thehiringindexfelltoastillsolid52.4from54.3inSeptember.

Confidence:Theconfidenceindex,whichreflectsexpectationsfortheeconomysixmonthsout,slidto42.1from43.8inSeptember.“Declinesformanufacturingtiedtoagriculturalcommodityandenergypricespushedbankers’economicoutlooklowerforthemonth,”saidGoss.

Home and Retail Sales:TheOctoberhome-salesindeximprovedto58.1from56.4inSeptember.TheOctoberretail-salesindexdecreasedto44.4from49.0lastmonth.“HomesalesonRuralMainstreethavebeenveryhealthyoverthelastseveralmonths.Ontheotherhand,Creighton’smonthlysurveyhasyettomeasureanyupturninretailsalesresultingfromthedownturninfuelprices.Infact,retailsalescontinuetofall,”saidGoss.

Eachmonth,communitybankpresidentsandCEOsinnonurbanagriculturallyandenergy-dependentportionsofa10-stateareaaresurveyedregardingcurrenteconomicconditionsintheircommunitiesandtheirprojectedeconomicoutlookssixmonthsdowntheroad.BankersfromColorado,Illinois,Iowa,Kansas,Minnesota,Missouri,Nebraska,NorthDakota,SouthDakotaandWyomingareincluded.ThesurveyissupportedbyagrantfromSecurityStateBankinAnsley,Neb.

Thissurveyrepresentsanearlysnapshotoftheeconomyofruralagriculturallyandenergy-dependentportionsofthenation.TheRuralMainstreetIndex(RMI)isauniqueindexcovering10regionalstates,focusingonapproximately200ruralcommunitieswithanaveragepopulationof1,300.Itgivesthemostcurrentreal-time

Main Street Economic Survey

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

Rural Mainstreet Index Falls Below Growth Neutral for October: Cash Rents on Farmland Tumble

Ernie Goss


analysisoftheruraleconomy.GossandBillMcQuillan,formerchairmanoftheIndependentCommunityBanksofAmerica,createdthemonthlyeconomicsurveyin2005.

Colorado:Thestate’sRuralMainstreetIndex(RMI)dippedto43.8from48.8inSeptember.Thefarmlandandranchlandpriceindexplummetedto24.0fromSeptember’s47.4.Colorado’shiringindexforOctoberdeclinedto50.5fromSeptemberverystrong60.1.

Illinois:TheOctoberRMIforIllinoisdeclinedto44.5from49.0inSeptember.Thefarmland-priceindexdroppedto26.8fromSeptember’s28.8.Thestate’snew-hiringindexsankto51.6fromlastmonth’s53.3.

Iowa:TheOctoberRMIforIowasankto46.9fromSeptember’s54.2.Iowa’sfarmland-priceindexforOctoberslippedto42.5fromSeptember’s44.0.Iowa’snew-hiringindexforOctoberdecreasedto57.9from60.0inSeptember.

Kansas:TheKansasRMIforOctoberslidto42.5fromSeptember’s48.6.Thestate’sfarmland-priceindexforOctoberslippedto21.8fromSeptember’s27.0.Thenew-hiringindexforthestatedeclinedto49.7from51.9inSeptember.

Minnesota:TheOctoberRMIforMinnesotaslumpedto44.0fromSeptember’s49.2.Minnesota’sfarmland-priceindexincreasedto34.2from33.0inSeptember.Thenew-hiringindexforthestate

declinedto52.9fromlastmonth’s54.6.

Missouri:TheOctoberRMIforMissouridippedto45.5from47.4inSeptember.Thefarmland-priceindexfellto18.8fromSeptember’s30.9.Missouri’snew-hiringindexexpandedtoaweak48.4fromSeptember’s44.0.

Nebraska:TheNebraskaRMIforOctoberslumpedto45.2from47.3inSeptember.Thestate’sfarmland-priceindexincreasedto21.8fromSeptember’s18.7.Nebraska’snew-hiringindexadvancedtoaweak49.7from48.6inSeptember.

North Dakota:TheNorthDakotaRMIforOctoberdecreasedto34.8from40.8inSeptember.Thefarmland-priceindexadvancedto37.0from17.8inSeptember.NorthDakota’snew-hiringindexdeclinedto37.7fromSeptember’s44.2.

South Dakota:TheOctoberRMIforSouthDakotafellto47.9fromSeptember’s54.4.Thefarmland-priceindexsankto50.0from53.3inSeptember.SouthDakota’snew-hiringindexdeclinedto60.9fromSeptember’sverystrong62.4.

Wyoming:TheOctoberRMIforWyomingslumpedto46.3fromSeptember’s50.4.TheOctoberfarmlandandranchland-priceindexslippedto29.7from30.8inSeptember.Wyoming’snew-hiringindexslippedto52.8fromSeptember’s53.4.

Table 1 summarizes survey findingsNext month’s survey results will be released on the third Thursday of the month, November 15.

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

October2014

September2015

October2015

Area economic index 43.4 49.0 44.4

Loan volume 71.7 72.0 71.6Checking deposits 49.1 54.2 51.2

Certificates of deposit and savings instruments 40.4 41.7 40.9Farmland prices 20.2 35.5 31.0Farm equipment sales 15.1 14.2 10.8Home sales 49.0 56.4 58.1Hiring 55.7 54.3 52.4Retail business 44.4 49.0 44.4Confidence index (area economy six months out) 34.6 43.8 42.1

Table 2: The Rural Mainstreet Economy, October 2015Percentage of bankers reporting

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

Whatisyourestimateoftheaverageperacrecashrentfornon-irrigatedcropland(notpasture)inyourarea?

9.5% 19.0% 54.8% 16.7% 0%

This is below breakeven This is approximately breakeven This is above

breakeven Unknown

Thecurrentspotpriceforcornis$4.00to$4.15perbushel: 30.0% 53.5% 11.6% 4.9%

Follow Ernie Goss on Twitter: www.twitter.com/erniegossFor historical data and forecasts, visit: www2.creighton.edu/business/economicoutlook


Rep. Peter Cownie to Speak atthe Next LOT Quarterly Meeting

TheCommunityBankersofIowa’sLeadersofTomorrow(LOT)programisholdingtheirQuarterlyMeetingonNovember19attheHiltonGardenInninJohnston.Markyourcalendarstodayandplanonsendingtheup-and-comingleadersinyourbanktothis

educational,networkingevent.

GuestspeakersincludeIowaRepresentativePeterCowniewhowillupdateLOTmembersondevelopmentsonIowa’sCapitolHill,andKrisAusborn,PresidentatIowaTrust&SavingsBankinEmmetsburgwhowilldiscussfraudtheyexperiencedatthebank.

Visitcbiaonline.org/lot-quarterly-meetings.htmlformoredetailsandtoregister.IfyouareinterestedinbecomingaLOTmemberandformoreinformation,contactusat515.453.1495orvisitourwebsiteatcbiaonline.org.

“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 oneof the most beneficial groups for me.”

LOT Member Matt MuellerThe State Bank, Spirit Lake

Leaders of Tomorrow

MaxiMize YourPotentialwithCBi’s

leadersoftoMorrow

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


JoinPlanteMoran,Howard&HowardAttorneys,ThePrivateBankandCBIAffiliateMemberInvictusConsultingGroupforaFREEhalf-dayseminarforbankmanagementanddirectors.“How M&A Can Maximize Growth for Community Banks: Essential Strategies and Techniques”willbeheldfrom8:30amto1:30pmonThursday,November19atGlenOaksCountryClubinWestDesMoines.ThisprogramisdesignedforCEOs,CFOs,Directorsandotherc-levelofficers.

Guestspeakersattheconferenceinclude:• Adam Mustafa,Co-FounderofInvictusConsultingGroup,

presenting“Changing Analytics in the Post-Recession M&A Environment”

• Jude Sullivan and Mark Ryerson,PartnersatHoward&HowardAttorneys,speakingon“M&A Legal issues for Buyers and Sellers”

• Kevin Kehoe,ManagingDirectorwithThePrivateBankinChicago,discussing“Holding Company Financing & Credit Parameters”

• Steve Shick, PartnerwithPlanteMoranandKyle Manny,PlanteMoranSeniorManager,plusJude SullivanfromHoward&Howard.TheywillmoderatetheDueDiligenceExpertPanel.

Asbanksnavigatethisunprecedentedeconomicandregulatoryenvironment,CEOsanddirectorsareincreasinglyfacingthe

questionofhowtogrowtheirbankorganically,orwhetheramergeroracquisitioniswarranted.ThiscomplimentaryeducationalconferenceanswerskeyquestionsthatbankersmayhaveaboutM&Aandwhyadealmaymakesenseforbanks,eventhosethathaveneverconsideredM&Abefore.

Visit“M&ASeminar”undertheEventstabonourwebsiteformoreinformationandtoregister.Havemorequestions?Contactpcasaleggio@invictusgrp.com.

LIVE Seminar:How M&A Can Maximize Growth for Community Banks


Stopmeifyou’veheardthisbefore:Communitybankscollectivelyareexposedtorisingrates.TheregulatorshavewarnedusonmultipleoccasionsthattheEconomicValueofEquity(EVE)exposurehasgrown.Riskmodelsportendthatcommunitybanksarereachingforyieldandarethrowingcautionandgoodsensetothewind.

However,itseemswe’venotletthefactsgetinthewayofagoodstory.Year-over-year,the500-pluscommunitybanksthatuseViningSparksfortheirbondaccountingservicehaveseenadramaticdropinaveragedurations,eveninrising-ratescenarios.Andwecan’tattributethedroptoageneraldeclineininterestrates,becausewehavebasicallyruninplaceforayear.I’mnotjustpickingonthelowlyinvestmentportfolio.Asoftheendof2014,communitybankshavemuchlessexposuretorisingratesthanintherecentpast,iftheirownestimatesarecorrect.AgaindrawingontheViningSparkscustomerbase,theaverageEarningsatRisk(EAR)ina+200basispointscenarioisactuallypositive,at+2.14percent,andithasincreasedineachofthelastfivequarters.Anotherimportantriskmeasure,EVE,projectsanimprovementinvalueinthesame+200basispointshockfor72percentofthesebanks,whichisupfromjust30percentayearago.

Hurts to wait…Let’sstickwiththenumbersabitlonger.Ifinfactyourcommunitybankisfairlybalancedfromaninterestrateriskstandpoint,itisprettyhardtobenefitfromastrategyofwaitingonhigherratesbeforeinvesting.ItwouldtakeveryaggressiveactionbytheFed,andalmostaknee-jerkresponsebythebondmarket,forthewait-and-seeapproachtopayoff.

Awaytoquantifythisgambitistosimplycompareinterestearningsonbothoptions.ViningSparks,likemostfull-servicebrokers,canproduceaschedulethatshowsaggregateearningsandbreak-evenyieldsbetweentwooptions,withyou,thebanker,beingincharge.Youcanchoosethebondinwhichyourcommunitybankinvests,andyourprojectionofthefuturepathofFedFunds.

Usingarecentlyissuedbond,Icomparedthecashflowsfromtheseinstruments:

FedFundsyieldsdeterminedbythefuturescontractsinMay2015;andFreddieMacbondof1.30percentbondmaturingJune29,2018,callableonetimeonDec.29,2015.

Theresultsarecompelling.TheFreddieMacbond,per$1millioninvested,earnedmorethan$7,000inadditionalincomeforthethreeyears.Adelayed-startstrategy,stayinginFedFundsforone

yearandthenbuyingatwo-yearbond,wouldhavetobeabletoyield1.79percentinayearjusttobreakeven.Rightnow,theyyieldabout1percentlessthanthat.

…While options are availableStilldon’tlikethisoption?Onewaytoemploydollarstoday,andnotimpactyourcommunitybank’sEARorEVEnegatively,istopurchasetruefloating-ratesecurities.ThetwosecuritiesmostpopularwithcommunitybanksareCollateralizedMortgageObligationfloatersandSmallBusinessAdministration7(a)pools.

CMOsfloateachquarter,usually,andareindexedtomoney-marketyields.Theyhavenoperiodic(i.e.,quarterlyorannual)caps,buttheydohavelifecaps.TheSBAsarebasedonPrimeandhavenocapswhatsoever.BothsecuritieswillenjoyhigheryieldsassoonastheFedstartstoraisethetargetrateofFedFunds.

Today,CMOfloatersyieldabout40basispoints(0.40percent),dependingontheirstructure.Theyarepricedverynear100.00.SBAsyieldanywherefrom75to125basispoints.ThemainriskofSBAsispremiumrisk;thesepoolscanhavepricesthatarewellover110centsonthedollar.EitherofthemshouldoutperformFedFundswhileprovidingmonthlycashflowaswellascollateralforpledging.

Know your risksWhiletheimprovementsinEARandEVEmentionedabovearegoodnews,itmustbenotedthattheywerederivedfromuser(banker)opinions.Iwouldencourageallmembersofyourcommunitybank’sasset-liabilitycommitteetoplaceunderscrutinytheassumptionsforcostoffundsandavailabilityofliquidityinthelong-anticipatedrisingrateenvironment.

Mysummationismultifaceted.Giventhatcommunitybanksappeartohavepreppedtheirbalancesheetsforahigher-rateenvironment,plusthefactthatloandemandislessthanrobustandtheFedreallyisn’texpectingovernightratestobeappreciablyhighersoon,cashmayremainexpensivetohold.

Manyhundredsofcommunitybankshaveadoptedthestrategyofsimpleredeploymentofexcessfundsintoshort-termoptions.Themathfrombothasset-liabilityriskandinterest-incomestandpointsarrivesatthesameconclusion:Youmaybedoingyourcommunitybankmultiplefavorsbydousingtheslowburnfromexcesscash.

Jim Reber ([email protected]) is President and CEO of ICBA Securities, ICBA’s institutional fixed-income broker/dealer for community banks. For more information on CBI Endorsed Member ICBA Securities/Vining Sparks, visit icbasecurities.com.

Written By: Jim ReberPresident & CEOICBA Securities/Vining Sparks

Slow BurnExcess cash continuesto be a drag on profits

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.

MET