Pub. 10 2021 Issue 6 1 OF F I C I AL PUB L I CAT ION OF KANSAS BANKE RS ASSOC I AT ION | S E P T EMBE R/OC TOBE R 2020 THE OF F I C I AL PUB L I CAT ION OF KANSAS BANKE RS ASSOC I AT ION | NOVEMBE R/DE C EMBE R 2021 I SSUE 6 2021 Holiday Greetings from your KBA Staff
316.265.2811 • 816.221.6300 • @BKDFS Your direct line to peace of mind. In today’s increasingly connected world, your financial institution faces numerous risks. BKD’s cyber team can help you develop a plan to protect against unforeseen attacks. Whether you want to prepare for the worst, respond to a breach, or remedy weaknesses in your systems, BKD is ready to assist. Everyone needs a trusted advisor. Who’s yours?
4 6 President’s Message: Strategic Planning Matters Doug Wareham, KBA President & CEO 8 2021 KBA Trust Conference 10 2021 Economic Outlook & Risk Management Conference 14 Washington Update: To Pay or Not to Pay: Ransomware Attacks Offer an Unsavory Choice Rob Nichols, ABA President & CEO 16 Turn to Workspace Interiors by Office Depot® for Your Bank’s Next Furnishing Project 20 The Loyalty Factor: Translating Relationships into Non-Interest Income By Achim Griesel and Sean Payant, Haberfeld 22 Education Calendar 23 New Faces at KBA 24 Briefly in Kansas Banking 26 In Memory 28 Check in on Your Security Routine By Samantha Torrez, Conetrix Executive DougWareham, President andCEO Kathy Taylor, EVP, General Counsel Terri D. Thomas, EVP, Legal Department Director Administration AlexOrel, SVP, Government Relations Eric Stofer, SVP, Chief Financial Officer Mary Taylor, SVP, Communications andMarketing Julie Taylor, VP, Computer and Information Systems Sara Blubaugh, VP, ExecutiveAssistant to the President andCEO BreeMagee, Communications &MarketingCoordinator LynneMills, Receptionist/Special Projects Education and Conferences Brenda L. Unruh, SVP, Director, Education & Conferences/Member Services BeckyMilne, VP, Education&Conferences LeAnnMott, AVP, Education&Conferences, NatalieWareham, Event Coordinator Insurance AlexGreig, President, KBA Insurance, Inc. Kent Owens, SVP, KBA Insurance, Inc. Elizabeth Roche, SVP, Employee Benefits Administration Jenny Figge, VP, Operations Cari Charter, AVP, KBA Insurance, Inc. KarlaCharay, AgencyCoordinator Legal/KBCS Jackie Kuhn, VP, Staff Attorney GwenHill, VP, Staff Attorney AllisonCarpenter, VP, Staff Attorney/Senior ComplianceAuditor Bobby Young, VP, Staff Attorney/ IT andHRConsultant Dylan Serrault, VP, Staff Attorney/ComplianceAuditor Adeel Syed, AVP, Staff Attorney Neal Barclay, AVP, Compliance Specialist/Auditor Jeff Narron, AVP, Compliance Specialist/Auditor Kelly VanZwoll, AVP, Staff Attorney and Government Relations LewisWalton, ComplianceAuditor KerryClark, Publications Editor andCompliance Specialist MeridithDeForest, Administrative Legal Assistant Koren Kabriel, PT Administrative Legal Assistant © 2021 Kansas Bankers Association | The newsLINK Group, LLC. All rights reserved. The Kansas Banker is published six times each year by The newsLINK Group, LLC for the Kansas Banker and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Kansas Bankers Association, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The Kansas Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Kansas Bankers Association. While the The Kansas Banker encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. 8 10 24
*weighted average Thomas Badolato, SVP, Institutional Relationships TomBadolato@em.bhgbanks.com • (315) 509-2717 BHGLoanHub.com/KS FICO:* 736 Income:* $279,000 AVG Loan Size: $113,900 Years in Industry:* 20 DSCR:* 2.5 Average 2021 BHG borrower: High-quality borrowers on-demand. TO LEARN MORE ABOUT BHG, PLEASE CONTACT:
6 Strategic Planning Matters President Abraham Lincoln was once credited with saying “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” I couldn’t agree more with President Lincoln’s sentiment and I consider myself fortunate to work for an industry and organization that takes preparation and planning, for the short and long-term, very seriously. When I first arrived at the KBA in 2004, I quickly recognized how critically important planning, more specifically strategic planning, is for Kansas banks and Kansas bankers. Investing time and energy to chart a pathway for growth and success is fundamental for Kansas banks and I’m pleased to report the same high-level of commitment to developing objectives and strategies to move us forward is also a top priority for your Kansas Bankers Association (KBA). The strategic plan adopted by KBA’s Board of Directors during the fall of 2018 has served our Association and its members well. During the past three years, several specific goals were achieved that made our industry more competitive, increased services provided to Kansas banks and strengthened the financial ability of the KBA to respond to threats facing our industry. Adopting tax equity legislation at the Kansas Statehouse this past spring to level the playing field with the Farm Credit System was a direct product of the strategic plan adopted by the KBA Board. Likewise, the fact that a growing number of Kansas banks continue to benefit from the legal and compliance services provided by Kansas Bankers Consulting Services is also a strategic plan investment outcome. That same strategic process also helped us achieve organizational efficiencies and financial objectives that can be directly credited to the foresight and goals established by KBA’s Board of Directors that were aggressively implemented by our KBA staff team. KBA’s Board of Directors recently put their stamp of approval on the latest set of banker-driven goals and objectives that will guide the KBA moving forward. Banker feedback was the centerpiece of a strategic planning process held in midSeptember that led to a reaffirmation of KBA’s mission statement and four objectives highlighted on the page opposite of this article. I want to thank every bank CEO that helped us launch our strategic planning process this past summer by providing us constructive feedback on the direction of our industry and association. Your input mattered, and at the KBA, so does strategic planning. “Give me six hours to chop down a tree and I wi l l spend the f irst four sharpening the axe.” - President Abraham Lincoln By Doug Wareham, KBA President & CEO PRESIDENT’S MESSAGE:
Pub. 10 2021 Issue 6 7 KBA Strategic Plan 2022-2024 Communities need banks. Banks need community. Mission Statement: Together we support our member banks and bankers with leadership, advocacy and education to benefit the communities and customers they serve. www.ksbankers.com Goall #1: Enhance our industry image-building and work force development strategies to benefit KBA banks. Utilize banker-driven marketing strategies. Deploy a customized marketing toolbox for members. Engage our future generation of bankers. Goall #2: Advocate for a business and regulatory environment that sustains the competitiveness and profitability of Kansas banks. Intensify the fight for a level playing field. Energize individual BankPAC participation. Encourage engagement in KBA advocacy initiatives. Goall #3: Leverage the power and knowledge of KBAmembers to foster progress and address banking industry challenges. Employ technology to enhance peer communication. Facilitate bankers teaching bankers. Grow networking opportunities through KBA events. Goall #4: Create more diverse revenue streams to ensure the long-term financial stability of KBA. Maximize growth opportunities for all KBA products. Realize full potential of Kansas Bankers Educational Foundation. Strengthen relationships with KBA business partners.
8 2021 KBA Trust Conference The 2021 KBA Trust Conference was held in person October 20 -21 at the DoubleTree by Hilton in Lawrence. Susie Roberts, KBA Trust Division President, welcomed all attendees with announcements and introduced the first speaker of the conference, John Tousley from Goldman Sachs, with “Market and Economic Perspectives.” Tousley’s presentation addressed the prevailing macroeconomic conditions, including global growth, monetary policy, Fed outlook and geopolitical policy. Following the macro review, he addressed the implications for capital markets with a review of equity, rates, credit, FX and commodities. Risks to these views from Goldman Sachs were then addressed, including political landscape, re-opening of global economies, inflation expectations, and COVID-19. Following lunch and the trade show, the first keynote speaker of the afternoon was Paul Long from FUNDAMISM with his presentation, “What’s Good?” The question was asked, “How do today’s best companies accelerate business results?” Long presented how engaging employees, celebrating all that’s GOOD, and creating a culture of experience empowers a workforce to create joy, FUN and fulfillment. Following Long’s presentation, attendees broke for refreshments and the introduction of business partners. Steve Stasiukonis, Secure Network Technologies, was up next with “Cryptocurrency and the Blockchain: Digital Dollars or Counterfeit Currency.” In this session, cryptocurrency and its management vehicle – known as the Blockchain – were explained. He also explained how cryptocurrency is used to purchase anything like cars and homes, as well as drugs and other illegal items. It was an eye-opener for anyone interested in digital currency, the technologies of Blockchain and what they needed to know working in a financial institution. After another refreshment break, Mary Green from Federated Hermes shared “Responsibility Works: Generating Long-Term Wealth Through Sustained Investing.” With institutional and investor interest in ESG investing continuing to intensify, getting to the heart of the emerging investment trend presents an unparalleled opportunity for advisers. Attendees were able to cultivate a deeper understanding of ESG investing to be well-positioned to align their clients’ portfolios with their goals and ultimately strengthen their client relationships. At the end of the day, attendees adjourned for the reception – sponsored by Federated Hermes – to network. On day two of the conference, the first speaker was Chris Kuehl, Armada Corporate Intelligence, with “What a Ride: Where Are We at the End of 2021?” Kuehl discussed how, in just over a year, we have gone from the depths to a growth we haven’t seen in decades. Massive levels of unemployment to labor shortages, depressed pricing and rampant inflation. He answered the questions: “What do we look like now, and what does 2022 have in store?” Next was Stewart Weaver, of Foulston Siefkin, LLP, with “Ethics and the Impaired Lawyer.” He examined the ethical considerations of impairment regarding the attorney suffering the affliction and other attorneys with whom the impaired lawyer may practice and/or come in contact. After a refreshment break, Cannon Financial subject matter expert Larry Divers shared his presentation, “Retirement Planning in 2021.” This session focused on the SECURE Act’s effect on Qualified Retirement Plans and IRA Distributions and their impact on estate planning techniques. He also discussed how individuals who took hardship withdrawals and loans under the CARES Act may contribute to IRAs and 401(k)s in the following three years. Divers wrapped up the conference with the 2021 Washington Update. This session was a legislative refresh focusing on Personal Trust, Investment Management, and Lifetime Income Planning. It addressed various topics, including Cybersecurity, ESG Investing, and the SECURE Acts 1.0 and 2.0. The KBA Trust Division Board had a successful 2021 conference with great networking and insightful presentations.
Pub. 10 2021 Issue 6 9 Attendees were welcomed by KBA Trust President Susie Roberts, Bank of Labor in Shawnee. LeAnn Mott, AVP – Education & Conferences at the KBA, reconnected with John Thaemert, Citizens State Bank & Trust in Ellsworth, and Barbara Braa, Central Trust Company in Lawrence. Paul Long from FUNDAMISM presented “What’s Good?!” on how attendees could engage their employees, celebrating all that’s GOOD and how to create a culture of experience that empowers their workforce. KBA Trust Board members were introduced during the Conference. Conference attendees networked with vendors throughout the day. Susie Roberts, 2020-2021 KBA Trust Division President from Bank of Labor in Shawnee, was awarded for her time and dedication to the KBA Trust Division.
10 Ty Brull and Jonny Hulse with CalTech, Olathe, KS (KBA Endorsed Vendor). Dennis Zimmerman, Commerce Bank, Kansas City, MO and Bank Management Committee Chair Mike Cearley, Centera Bank, Sublette, KS. 2021 Economic Outlook & Risk Management Conference The Wichita Marriott Hotel was the location for the 2021 Economic & Risk Management Conference Nov. 3–4. With many CEOs, CFOs and investment bankers on hand, the program provided high-level and timely bank development and planning information. KBA Chairman Mike Ewy, Community State Bank, Coffeyville, welcomed attendees, thanked conference sponsors, and gave special recognition before introducing the first keynote speaker, economist Chris Kuehl with Armada Corporate Intelligence. In his talk titled, “Navigating the Post-Pandemic Economy: New Worries with the Relief,” Kuehl discussed that as we have emerged from the pandemic nightmare – to a degree – we face new challenges. Some sectors of the economy are still having issues, including travel, manufacturing, and entertainment, to name a few – but the overall economy model is predicted to experience growth. Further, he explained the lack of job seekers and how this affects our industry and the entire labor market. Lastly, he shared how the just-in-time model we have all grown accustomed to is broken. With supply chain issues, people and companies are hoarding products to make sure they have what they need, causing others to go without. “Data Break: What’s my Risk?” was presented by Dr. Robert Minniti. Cyber fraud is growing. In 2020 alone, 791,790 incidents totaled $4.2 billion in losses. Minniti broke down the Internet Crime Complaint Center’s (ICS3) top four schemes: phishing, vishing, smishing, and pharming, and the impact a breach can have on a financial institution. He shared some very eye-opening examples of how extremely vulnerable we are and how easy it is for cybercriminals to obtain personal information off the dark web. Following lunch, the conference had three options for breakout sessions that included: • “ALCO & Balance Sheet Management in the Era of COVID-19” Al Forrester, FICAST/Empyrean Solutions • “The Economic Factors Influencing Interest Rate Risk” A.W. Spellmeyer, First Bankers’ Bank • “Internal Audit’s Role in Risk Management” Janice Harden, Wipfli In the day’s final session, “2021 Economic Forecast – The Light at the End of the Tunnel,” K.C. Mathews, UMB, provided a hopeful economic forecast. We are coming out of the tunnel; economic activity will naturally moderate as the cycle matures. We think GDP will end the year around 6% and slow to 4% in 2022.
Pub. 10 2021 Issue 6 11 Stanley Strecker and Jim McLaughlin with Central States Capital Markets, Prairie Village, KS. Alan Deines, Beneficient Fiduciary Financial, Hesston, KS; Matt Lephardt, Patrick Smith and Cole Thompson, BOK Financial, Overland Park, KS. Presenter KC Mathews, Commerce Bank, Kansas City, MO. Current KBA Chairman Mike Ewy, Community State Bank, Coffeyville, KS. Historic cycles may give us some clues to the future. While this cycle is a bit unique due to the pandemic, nevertheless, since WWII the average cycle has lasted 54 months. With that in mind, the current cycle could be moving into its last two-thirds. History tells us that equity performance moderates in the last two-thirds of the cycle, yet returns have been far superior to bonds and cash. We may see some slowdown in the data as the economy deals with the delta variant, shortages, and inflation. Offsetting these issues: continued strong demand for goods, lean inventories, and low borrowing costs will support GDP growth. We are in the Great Recovery phase, and it will continue into 2022. Day two of the conference began with Sean Payant, Haberfeld’s session, “Upside Down Thinking on Efficiency: Change Your Priorities to Change Your Results.” Financial institution executives spend considerable time thinking about strategies to improve efficiency to improve overall profitability. Often, this includes a focus on expense reductions. “Once a financial institution can no longer materially improve its efficiency ratio by further reducing costs, what’s next?” asks Payant. He then shared his thoughts on a solution. Rather than focusing on reducing expenses, focus on increasing core/PFI customer relationships. The majority of banks could significantly increase core customer acquisition if they put the energy effort and budget toward this goal. In the end, you will make more money, AND your efficiency ratio will improve. Jackson Hataway, Missouri Bankers Association, presented a talk on “Competition and Success in a New Landscape.” Banks and new competitors are entering markets and business areas they have previously been unwilling to undertake. There is a lot of new penetration into verticals or geographies that were already owned by banks OR that banks felt like they could not get. Hataway emphasized how banks need to consider how this impacts their competitive stance and what it will mean about their subsequent growth efforts. The conference closed with an inspiring presentation, “Brace for Impact,” by Dave Sanderson. When U.S. Airways Flight 1549, or Continued on page 12
12 Continued from page 11 Bank Management Committee Chair Mike Cearley, Centera Bank, Sublette and Presenter Jackson Hataway, Missouri Bankers Association. Presenter Sean Payant, Haberfeld, Lincoln, NE. “The Miracle on the Hudson,” ditched into the Hudson River Jan. 15, 2009, Dave Sanderson knew he was exactly where he was supposed to be. The last passenger off the back of the plane on that fateful day, he was largely responsible for the well-being and safety of others, risking his own life in frigid water to help other passengers off the plane. Sanderson thought only of helping others despite the hazard to himself and emerged from the wreckage with a mission: to encourage others to do the right thing. In his stirring presentation, Sanderson shared the story of Flight 1549, revealing the inner strength it took to make it through the day and how teamwork, leadership, and state management can help overcome any obstacle. Mark your calendars for next year’s conference: Nov. 2–3, 2022, in Manhattan. Thank you to this year’s sponsors: Gold: CalTech, FHLBank Topeka, Graduate School of Banking at Colorado, KBA Insurance, Inc., KBA/NBA Schools of Banking, Mammoth Creative Co., UMB. Silver: BOK Financial, Central States Capital Markets, Cornerstone Advisors, Country Club Bank Capital Markets Group, IntraFi Network. Bronze: Bankers’ Bank of Kansas, Commerce Bank, Complete Compliance, Cox Business, FHN Financial, INTRUST Bank. Presenter Chris Kuehl, Armada Corporate Intelligence, Kansas City, KS. Josie Bunch and Blair Suddarth, Graduate School of Banking at Colorado in Boulder.
Pub. 10 2021 Issue 6 13 huschblackwell.com Business is no longer usual. Neither is our approach. At Husch Blackwell, we have built our law firm around one idea: to lead our clients from where they are to where they want to be. Our Banking & Finance attorneys understand the nuances, concerns and demands of the market, helping banking executives and financial professionals navigate a complex and evolving business environment. The choice of a lawyer is an important decision and should not be based solely upon advertisements. Arizona | California | Colorado | Illinois | Massachusetts | Missouri | Nebraska | Rhode Island | Tennessee | Texas | Utah Washington, DC | Wisconsin | The Link (Virtual Office)
14 It’s the message a CEO never wants to receive: “We’ve got your data and you need to pay up if you want it back.” Unfortunately, that message is landing in CEO inboxes increasingly often, as ransomware attacks ramp up in the U.S. In just the first six months of 2021, the Financial Crimes Enforcement Network identified $590 million in ransomware-related Suspicious Activity Reports – a 42% increase from the 2020 total of $416 million. And FinCEN reports that we could be on track to see a higher transaction value for ransomware-related SARs than we’ve seen in the past 10 years combined. Ransomware attacks – which use malware to encrypt files on a computer or mobile device and render it unusable until a ransom is paid – present companies with an unsavory dilemma: pay a ransom to a criminal actor, or lose a potentially devastating amount of data, which could seriously compromise business operations. These kinds of attacks are evolving quickly in sophistication and scope, and virtually any business could be targeted at any time. What’s perhaps most concerning is that criminal actors are increasingly targeting critical infrastructure entities, as we saw in the Colonial Pipeline incident earlier this year that caused a shutdown of a major East Coast oil provider. They’ve also begun branching out into “extortion-ware,” in which the hacker not only encrypts sensitive data but then goes the extra step and threatens publicly to release it unless the institution complies with their demands. By Rob Nichols, President & CEO, American Bankers Association To Pay or Not to Pay: Ransomware Attacks Offer an Unsavory Choice WASHINGTON UPDATE
Pub. 10 2021 Issue 6 15 Given the potential operational and reputational consequences of these types of cyberattacks, banks need to have a plan in advance for how they’ll respond. There are a number of factors to consider. First, while most companies choose to pay – cyber insurer Marsh McLennan reports that more than 60% of ransomware victims pay the requested ransom – it’s not always guaranteed that the encrypted data will be fully restored. In fact, one survey of more than 5,000 I.T. decision-makers worldwide found that about half of those who did pay a ransom only recovered 65% of their compromised data. Twenty-nine percent said they only recouped about 50%. And even if a company’s ransom hacker unlocks all the encrypted data after the ransom is paid, the company will still need to take steps to clean that data and ensure it can’t be easily re-encrypted. On the other hand, there are also several good reasons not to pay a ransom. There are the societal costs to consider – paying the ransom could perpetrate attacks on other institutions or entice the hacker to hit you again for more money. Paying a ransom could also erode trust from customers and business partners, as payment could signal a lack of continuity planning and preparation. Either way, the first time you think about ransomware attacks and how to handle them should not be after your bank has fallen victim to one. To that end, ABA in October released a new Ransomware Toolkit, which provides helpful guides for protecting your bank against ransomware attacks, responding in the event of an attack, and determining whether to pay a ransom. The toolkit can be downloaded at aba.com/ ransomware. Ransomware represents a serious threat to all businesses. But the good news is that the financial sector is ahead of the game when it comes to cybersecurity, given the rigorous regulatory framework to which banks adhere. After all, as we found in a recent ABA/Morning Consult poll, consumers overwhelmingly trust banks the most to keep their personal information safe and secure. By addressing the problem of ransomware head-on and taking prudent steps to prepare, we can help our industry maintain its reputation as the “gold standard” for data protection. Email Rob Nichols at nichols@aba.com. Ransomware represents a serious threat to al l businesses. But the good news is that the f inancial sector is ahead of the game when i t comes to cybersecuri t y, given the rigorous regulatory framework to which banks adhere.
16 Turn to Workspace Interiors by Office Depot® for Your Bank’s Next Furnishing Project Article courtesy of Workspace Interiors by Office Depot® KBA’s endorsed partner – Workspace Interiors by Office Depot® – is a full-service office furniture dealership that can meet all your bank’s needs. Whether you’re looking for a partner to manage the entire process of your next project or one that can support your architecture and design firm, count on Workspace Interiors. Everything You Need to Realize Your Ideas – All in One Place Our professional team and network of 200-plus manufacturers enable us to provide service on all of the logistical aspects of furnishing your design – so you can stay focused on your business. You supply the vision. We’ll make it a reality. We’re Invested in the Outcome of Your Project, Big or Small Our nationwide reach provides better buying power, scalable services and flexible offerings. That means you’ll find a wider range of improved options to fit within your budget. • North American in scope with a single operating platform • Nationwide reach for consistent support across the country • Single point of contact for seamless service and one set of standards • Scalable support and resources Workspace Interiors by Office Depot draws on a range of turnkey planning and installation services to provide assistance at every project stage. Whether your project is well-defined or not defined at all, we have the resources and knowledge to help you every step of the way. With more than 250 dedicated furniture consultants, Workspace Interiors by Office Depot® puts efficiency, cost savings and control at your service – so you have space to work and room to grow. Case Study: Clackamas County Bank Comfort meets community in an environment fueled by innovation. Clackamas County Bank leveraged the national state bankers association’s Office Depot program to receive additional discounting for the furnishing of their new branch. In December 2018, the ground was broken for the new 8,400-square-foot two-story office with multiple amenities, and Workspace Interiors was there from the beginning. Rendering Results, From Start to Finish Because Clackamas County Bank hadn’t built a new facility in decades, having a consultative approach was essential. Workspace Interiors presented a variety of “good,” “better,” and “best” design options to the bank’s stakeholders. The entire project was rendered in 3D color images of the actual
Pub. 10 2021 Issue 6 17 furniture and finishes to help members of the project team clearly visualize the results so that they could make informed and unanimous selections during each step of the project. These options were then provided to the bank’s interior design firm. Workspace Interiors also provided specifications and handled all installation of the furniture. Optimizing Environments and Maximizing Value Presentations and ongoing interface from Workspace Interiors reassured everyone involved of the value Workspace Interiors provided. Thanks to the partnership, Clackamas County Bank was able to leverage a reserved manufacturing and shipping schedule. Workspace Interiors received the bank’s products and stored them locally to meet the bank’s opening date. During that time, weekly meetings were held in-person, along with videoconferencing and phone meetings so that the bank could select components and elements that would help bring its new location to life. From design to build, every project component shared a singular focus: be inviting to the community and customers of Clackamas County Bank. With the addition of a large community room that includes amenities such as a full kitchen and outdoor deck with fireplace – as well as private conference rooms – the bank is now able to extend invitations to local nonprofits as well as to their customers to reserve and use these spaces. Partner with Workspace Interiors to gain extensive expertise in existing trends, proven solutions and innovative products so you can get the most out of your workplace – from concept to completion. To learn more, contact Cheryl Krawczyk at 760-622-0112 or Cheryl.Krawczyk@workspaceinteriorsod.com.
18 A community bank leveraged the national state bankers association Office Depot program to receive exclusive discounts on the furnishing of their new 8,400-square-foot office with multiple amenities. For help with your next project and to obtain discounts through the Association’s Office Depot program, contact Cheryl Krawczyk at 760-622-0112 or cheryl.krawczyk@workspaceinteriorsod.com. Creative Services Space planning Specifications 3D views & renderings Finish specifications Installation drawings Project Management Establishment of project parameters Project administration Ongoing support Labor Services Delivery Installation & reconfiguration Warehousing Move management Disposition & redeployment of assets Financial Services Leasing Renting Financing Used furniture brokerage Other Services Standards programs Sustainability/LEED E-commerce Workspace Interiors by Office Depot® is a full-service office furniture dealership that can meet all your bank’s needs. Whether you’re looking for a partner to manage the entire process of your next project or one that can support your architecture and design firm, you count on Workspace Interiors.
Pub. 10 2021 Issue 6 19 info@bancalliance.com @BancAlliance Join 300+ Community Banks by Becoming a Member of the BancAlliance Network: Grow and Diversify your Loan Portfolios Maintain and/or Grow your Customer Base Participate in Engaging and High-Quality Training Connect and Network with other Community Banks BancAlliance provides community banks with efficient access to lending services available only through membership Kris Montione | 727.475.9827 kris@thenewslinkgroup.com ARE YOU READY FOR GROWTH? ADVERTISE IN THIS MAGAZINE AND GET YOUR BRAND IN THE HANDS OF YOUR TARGET MARKET.
20 The events of the pandemic have challenged our institutions in ways previously unknown and, in some cases, unimagined. Today, we are faced with three challenges: a prolonged low-rate environment with continued margin compression, waning loan demand in many institutions, and an increasing number of customer transactions moving to the digital arena. Much has been written lately regarding the validity of the branch in the current environment. Has community banking been changed forever based on consumers’ digital behaviors? Possibly. Is some of this for the best? Definitely. Does the branch still have value? Absolutely! Community banking is about community support. It’s about being present and accessible. Unless your strategic plan is to shutter your branches and vacate your communities, we encourage you to keep reading. Margin compression is real. So, what can you do? You can offset a portion of it by shifting your deposit mix toward low- or non-interest-bearing deposits. Adding long-term, low-rate deposit relationships should always be the foundation of any strategy, and community bank data shows your branches are the key to shifting your deposit mix. While new core relationships are strategic in managing and maintaining your margins, they are also a key driver of additional non-interest-income (NII); this is a critical component in the shorter term. Financial institutions must increase their NII to offset some of the interest income/margin challenges. To accomplish growing those new relationships, you must do three things: 1. B ring more new customer relationships into your organization. 2. S erve all of your customers better than any other financial institution has previously. 3. Make them loyal customers by increasing relational intensity over time. The Loyalty Factor Bringing in more relationships should be data-driven, and the data shows the checking account and the branches are key. Looking at data from over 100 community-based financial institutions, and over 2.5 million households/ businesses illustrate this point (see fig.1). The vast majority, or 72%, of consumer and business relationships at community financial institutions, begin with a checking account. In other words, the checking account provides the best opportunity to create customer loyalty; it is the gateway to primary financial institution status (PFI), allowing your bank first right of refusal on other products and services 68% of the time. In addition, customers who have their checking account with your bank outpace other customers when it comes to regarding products and services, generating additional NII. Even during the pandemic, and with limited access to community-based financial institutions branch networks, client data shows that over 90% of new PFI relationships have come through branch channels (in-person, appointments, drive-thru, telephone). The value of your branches cannot be ignored. The more customer loyalty you build, the more interest income and NII they The Loyalty Factor: Translating Relationships into Non-Interest Income By Achim Griesel and Sean Payant , Haber feld
Pub. 10 2021 Issue 6 21 generate. With consumer and business customers having almost six products and services with their primary financial institution – the math works. Most importantly, the more loyal customers you have, the better your bank will perform now and in the future. Segmenting data from several million customers based on their tenure with the community financial institution shows that loyal customers, over their lifetime, generate dramatically more NII (see fig.2). In addition, annual NII contribution peaks once customers have been with their PFI for a few years. Further analysis of the data explains why the checking account revenue stream does not continue to grow. Customer age demographics drive it. In general, more mature customers tend to drive more checking deposits than checking NII. Creating Loyalty To create loyalty, it is imperative your organization be positioned to capture new customers when they are ready to switch. The data shows that up to 12% of current retail and business customers consistently switch financial institutions. A recent study published by The Financial Brand indicated this number could be as high as 22% post-COVID, driven primarily by the failures of the big banks to adequately serve customers during the pandemic. So how do you position your organization for growth? 1. Checking Product: You need to get your checking product right. Confusing product does not create value, and in turn, develop customer loyalty. 2. Processes: You must remove barriers. Your account opening policies and customer identification program (CIP) practices often inhibit growth rather than encourage it. Read them for yourself. 3. Promotion: Community financial institutions have an audience that needs to be maximized and optimized within a defined footprint. If your bank isn’t using targeted, data-driven print and digital marketing to grow PFI customers, you are missing too many growth opportunities. 4. People: Your team members must be equipped with the skills and the product knowledge to develop genuine relationships with customers – customer loyalty is created through customer connections. The Bottom Line 1. T o create loyalty, you have to get the new customer first. 2. Th e checking account is the key to the PFI relationship. 3. O nce you have them, products, processes, promotion and people move up the loyalty ladder. 4. Th e longer customers stay, the more they will contribute. 5. You can do things to accelerate that growth. 6. C ustomers are not all the same. You must understand their lifecycle journey with your bank. As with any strategy, there is no silver bullet. But instead, your bank should be looking for a long-term loyalty payoff. Achim Griesel is president, and Dr. Sean Payant serves as the Chief Strategy Officer at Haberfeld, a data-driven consulting firm specializing in core relationships and profitability growth for community-based financial institutions. Achim can be reached at 402.323.3793 or achim@haberfeld.com. Sean can be reached at 402.323.3614 or sean@haberfeld.com. fig. 1 fig. 2
22 EDUCATION CALENDAR Conferences Schools Seminars/Workshops Sunflower Webinars December 2021 2- Security Management – Salina 2022 • January 20 - HMDA • January 25 - ACH • January 26 - Compliance Officer Boot Camp • January 27 - Notary • February 7-8 - Bank Technology & Operations Conference – Wichita • February 9 - Public Affairs Conference – Topeka • February 15- Winter IRA, Basic– Virtual • February 16 - Winter IRA, Advanced– Virtual • February 22-23 - Call Report Review & Update– Virtual • February 28 - March 4 - Schools of Lending Principles- Kearney, NE • March 2-3 - Kansas Ag Bankers Conference - Manhattan • March 9 - Advanced BSA • March 15, 17 - Account Documentation - Virtual • March 16 - Deposit Compliance - Virtual • March 24-25 - Women in Banking Conference - Overland Park • March 29-30 - Tri-State HR & Marketing Conference - Overland Park • April 4-8 - School of Banking Fundamentals - Manhattan • April 6 - Key Ratio Analysis: Calculating and Interpreting the Numbers Correctly • April 7 - Basic Personal & Tax Return Analysis • April 12-13 - Cybersecurity Update • April 20-21 - CRE • April 11-13 - MOKAN Trust Conference - Overland Park
Pub. 10 2021 Issue 6 23 New Faces at KBA Alex Greig KBA is pleased to announce that Alex Greig has joined our staff team to serve as President of KBA Insurance, Inc. Alex served as the statewide Insurance Sales Manager with AAA from 2012 to 2018 and most recently was a Director of Retail Insurance Sales for AAA where he managed insurance sales, personnel, and offices in an eight-state region. He officially assumed this position Friday, October 15. “Alex comes to us with very strong and proven insurance sales, leadership and management skillset,” states Doug Wareham, KBA President & CEO. “I’m very excited about the insurance agency management experience he will bring to this position, and I’m confident he’ll carry on the strong tradition of service and knowledge that Kansas bankers expect from our KBA Insurance Team.” Alex was raised on a family farm near Osborne, Kansas, and currently resides with his wife and three children in Topeka. He enjoys golfing, hunting, fishing, traveling, sports and spending time with his family. Karla Charay We are very excited to announce that Karla Charay joined our KBA Insurance team on October 25 as our Insurance Agency Coordinator. Karla will assist throughout the insurance department and will be an additional resource to assist our member banks. Karla comes with a background in banking, including working as a teller supervisor and mortgage loan processor. Most recently, she was working with the State of Kansas as a public service administrator. Her experience will be a great benefit to our insurance team and member banks. Please join us in welcoming Karla. Natalie Wareham The Kansas Bankers Association’s Education and Conferences department has a new Event Coordinator! Natalie Wareham is no stranger to Kansas bankers and our association, having attended many of our events in the past. She comes to us from the Secretary of State’s office, where she coordinated meetings and events, and she is a recent KU graduate. Brenda L. Unruh, SVP – Director of Education and Conferences, states: “Natalie brings with her a fresh perspective on statewide events, and we look forward to the positive impact she will have on our programs. Look for her out on the road with our team next spring.”
24 KBAWelcomes Capitol Federal® Savings Bank KBA is very pleased to report Capitol Federal® Savings Bank (CapFed®), led by Chairman, President & CEO, John Dicus, has joined the ranks of KBA member banks. CapFed was founded in 1893 and is headquartered in Topeka. With 45 traditional branches and nine in-store locations, the bank has a network that extends across Kansas and into Missouri. And to them, we say: Welcome Aboard! Hoytal Receives 50 Years in Banking Award Joseph (Joe) Hoytal is celebrating 50 years in his banking career with Capitol Federal Savings Bank in Topeka where he most recently served as VP of Commercial Lending and BRIEFLY IN KANSAS BANKING L to R: Doug Wareham, KBA President & CEO; John Dicus, Chairman, President & CEO; Joe Hoytal, Vice President; Bob Kobbeman, Chief Commercial Banking Officer, Capitol Federal Savings Bank. retired on Oct. 8 of this year. Joe started working at Home State Bank in Kansas City, KS in June 1971 working several positions within the bank such as in the mailroom, Paying and Receiving Teller, Installment Loan Officer, working in the loan and discount window and Audit Assistant. In October, 1975, Joe worked at Wyandotte Bank in KC (an affiliate of Home State Bank) as a Loan and Discount Teller, Assistant Cashier and Teller Supervisor, Assistant to the Comptroller, VP of Installment Lending and VP of Operations and Security Officer. Joe became VP of Operations and Security Officer, Cashier, Director and SVP of Lending at the Tower Bank in KC from March of 1980 to January 1985. That January in ‘85 saw Joe become EVP, Senior Lender, Director and President of Southwest Bank & Trust, which was an affiliate of Tower Bank. Southwest Bank & Trust then merged into Capital City Bank in January 1993. From ‘93 to 2018 at Capital City Bank in Topeka, Joe was EVP, Senior Lender, CRA Officer, Security Officer, Senior Lender, Loan Officer and Secretary to the Board where he also oversaw Capital City Bank merged into Capitol Federal Savings Bank in 2018. From August 2018 to October 2021, Joe served as VP of Commercial Lending. Several highlights of Joe’s career in banking were being on the KBA Rewards Committee and Committee Chair and an instructor at the American Institute of Banking for AIB classes held at Washburn University.
Pub. 10 2021 Issue 6 25 United Bank & Trust Set to Acquire Three New Locations United Bank & Trust (UBT), based out of Marysville, and (Equity), based out of Wichita, announced the entry of a definitive purchase and assumption agreement, with UBT acquiring certain assets and assuming deposits of bank locations in Concordia, Belleville and Clyde, from Equity Bank. UBT and Equity anticipate completing the acquisition in the second quarter of 2022. “We’re pleased to add community bankers in strong communities to our northern Kansas footprint, and we’re eager to work with the teams and customers who helped make ASBT and Equity locations a great resource for customers,” said Leonard Wolfe, President/Chairman of UBT. “We share similar qualities with Equity, in that we do what’s right for our customers, regions, and our team members, and we’re pleased with the fit. We’re eager to continue serving customers in our northern Kansas footprint.” Richard Campbell Joins the 50 Year Club Richard W. Campbell, Astra Bank in Abilene, is celebrating 50 years of his banking career. He started as an assistant cashier at Scandia State Bank in Scandia, KS, in September 1971, when he was out of high school and attending K-State. He served as a cashier from October 1973 to April 1983 and then became Bank President, a position he held from April 1983 to May 2007. Other positions Richard held were on the Board of Directors for Scandia State Bank (from 1974 to 2007), Chairman of Board of Directors for the First National Bank of Belleville (from 1991 to 2007), and Chairman of the Board of Directors for Astra Bank in Scandia (from 2007 to the present). One of the most significant changes Richard witnessed in his years of banking was the change in the use of technology. Now, there are more internet capabilities that his bank did not have before, and from that, he realized the benefits his bank had to expand. His main goal was to work with customers to help them achieve their goals and dreams while also providing opportunities for employees to progress in the bank during his presidency. When Richard retired from the bank, his son, Kyle Campbell, became President. L to R: Doug Wareham, KBA President/CEO and Richard Campbell, Chairman of the Board, Astra Bank, Abilene. Do you have news to share wi th our Kansas banking communi t y? We want to know! Please contact Mary Taylor, KBA’s SVPCommunicat ions & Market ing at 785-232-3444 or emai l mtaylor@ksbankers.com.
26 IN MEMORY Frank Carmine Sabatini 1932-2021 Frank Carmine Sabatini, born in 1932, 89 years of age, passed away Sunday, October 24, 2021, after a lengthy battle with Alzheimer’s disease. He was surrounded by family at his home in Topeka, Kansas. Frank was born in Chicago, Illinois, a first-generation Italian American. After graduating from Chicago Tilden Tech High School, he earned a football scholarship which brought him to the University of Kansas. He graduated from KU with a B.S. degree in Industrial Management and a Juris doctorate. Frank served our country in the U.S. Army at Fort Benning, Georgia, and continued his service in the Army National Guard. He was a director of Fidelity State Bank & Trust Co. in Topeka until purchasing Capital City Bank & Trust from Georgia Neese Gray in 1979. Frank grew the community bank to include 11 regional locations before merging with Capital Federal in 2018. He served on countless boards and committees, always willing to give time, treasure and talent to organizations that made a positive impact on people and the community. He served with love, could see potential in people, and worked tirelessly to develop that potential. Howard K. Loomis 1927-2021 Howard K. Loomis, President of The Peoples Bank, Pratt, for 35 years and its Board Chairman for 18 years, died Friday, September 24, 2021, in Pratt, Kansas Howard was born April 9, 1927, the son of Arthur L. and Genevieve Krey Loomis, educated in Omaha Public Schools, and graduated from Omaha Central High School in 1945. He followed his parent’s footsteps and attended Cornell University in Ithaca, New York, where he earned a Bachelor of Arts degree in 1949 and a Master of Business Administration in 1950. During the Korean War, he was a member of the Army of the United States stationed at Fort Riley, Kansas, auditing payroll records of the 10th Infantry Division. Since his education and work experience were in finance, Howard looked for opportunities in Kansas banking. A resident of Pratt since July 1963, he arranged to become involved in the management of The Peoples Bank over many years. At the state level, he was vice president and director of the Kansas Bankers Association and the Kansas Association of Commerce, and a board member (and commanding general for two years) of the Kansas Cavalry, Economic Lifelines, Kansas, Inc., and Kansas Wildscape Foundation. He served as a director of the Federal Reserve Bank of Kansas City (during the Paul Volcker era as Fed Chairman) from 1979 to 1986. Then allowed by Kansas law, The Peoples Bank established an office in Medicine Lodge, and acquired the Sharon Valley State Bank and the Farmers State Bank of Hardtner and Kiowa. It recently added offices in Greensburg and Kingman in south-central Kansas and Smith Center, Lebanon, Luray, and Osborne in north-central Kansas.
Pub. 10 2021 Issue 6 27 Visit Us Online. ksbankers.com
28 Check in on Your Security Routine Whether you work from home fulltime, go to the office a couple of days a week, or work full-time in the office, each of us have adjusted our routines to deal with this new lifestyle from the COVID-19 pandemic. With these adjusted routines, it is imperative that we check in on our security routines to ensure the safety of our information and customer information. Some of the tactics we have relied upon in the past can still be helpful to us today, even if our routines look different. So, what does it mean to “check in” on our security routines? Consider these questions: • What kind of habits make up a security routine? • How can I monitor these habits and controls for myself and my employees as we encounter different types of risk every day? • Is there guidance I can turn to for extra tips? Change Passwords Frequently Many institutions have implemented policies that force passwords to be changed on some sort of frequency to prevent fraudulent logins. Even if an account you use doesn’t have this type of policy in place, consider updating passwords for your frequently used accounts to ensure further security. Don’t Share Passwords out of Convenience If you’re an administrator, manager, or officer of some sort for your institution, you may have elevated administrative privileges for certain accounts. None of your passwords should ever be shared with anyone else, including those within your organization. This can lead to unauthorized access, misuse, alteration, and destruction of data. Implement Multi-Factor Authentication This is especially helpful for employees working from home who must access your institution’s network over a VPN. Home networks are not always as secure as the network of By Samantha Torrez, Conetrix
Pub. 10 2021 Issue 6 29 your financial institution, and your employees should have to verify their identity before accessing the company network from a different location. Track Incidents One of the best ways we learn is from previous incidents that have occurred. Whether it’s a phishing attempt, fraud from a customer, or ransomware, each incident should be tracked and analyzed thoroughly. Documenting the occurrence of incidents ensures you are prepared to handle that situation when it arises in the future. Schedule Regular Exercises / Tests Testing your institution’s response to downtime, closures, or inability to access information can be critical for when those situations occur in real life. Are your employees prepared for how to continue critical operations if there’s a network outage, or if they cannot report to their normal job site? Documenting these procedures in a business continuity plan is a start, but executing those procedures helps you identify gaps and areas that need improvement. If You’re Unsure, Verify Authenticity Suspicious emails are still a common problem for many businesses. These phishing emails are dangerous to the well-being of your institution and the safety of customer information. If you receive an email from someone you do not know, or a strange email that you were not expecting, take the necessary steps to verify the legitimacy of the email. As you verify the legitimacy, do not click any links or open attachments that may be included in the email. Schedule Annual Security Awareness Training Improperly trained employees pose a large security risk to your institution. Even employees with low-level access to secure information should be trained to understand the importance of keeping information secure, and how to easily detect and report problems. Everyone at your institution plays a role in keeping customer and internal information secure, and creating an environment where risks can be taught, discussed, and used for educational purposes is vital. At least once a year, enroll all employees in security awareness training. As part of the security awareness training, conduct simulated phishing tests. If certain employees continuously fail your simulated phishing tests, take that as indication that additional security awareness training is needed. What are my Next Steps? As you check in on your security routine, remember that you can always refer to guidance for additional tools and verification. One of the best new references from the FFIEC is the “Authentication and Access to Financial Institution Services and Systems” guidance, published in August 2021. This guidance focuses on practices you can implement at your institution to keep your customers, employees, and third-party service providers secure in your banking environment. Review this guidance and determine how your institution can improve security practices here: https://www.ffiec.gov/press/pr081121.htm Checking in on your security routine not only benefits your own knowledge and skills, but it benefits the overall well-being and security of your information, so your institution can continue to thrive and provide exceptional service. Samantha Torrez has been working in the customer and IT service industry for almost 10 years. She has been with the Tandem Suppor t Team for f ive years, building relationships with customers every day as they use the Tandem sof tware. Samantha thrives on instilling comprehensive training for her teammates and customers and f inding the best solution to each problem she encounters. She has spoken at several conferences and published several blog posts over her knowledge of vendor management , business continuity planning, and more. Test ing your inst i tut ion’s response to downt ime, closures, or inabi l i t y to access informat ion can be cri t ical for when those si tuat ions occur in real l i fe.
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy ODQxMjUw