AG Lending for Leaner Times - Missouri Independent Bankers

Transcription

THE
SHOW ME
BANKER
THE VOICE FOR MISSOURI’S INDEPENDENT BANKERS
April 2016
U.S. Supreme Court’s 4-4 Decision Involving
MIBA Member Community Bank of Raymore Leaves a
Patchwork of Confusion in its Wake
Also in this issue:
AG Lending for Leaner Times
(See inside story on page 16)
Dan Ward
573-230-7716
Chris Bryan
816-501-6481
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APRIL 2016
FEATURES
10 Background on
William C. “Bill” Esry
16 AG Lending for
Leaner Times
18 AG Lending:
Equity Matters But Don’t
Neglect Cash Flow
20 Missouri Agricultural
and Small Business
Development Authority
INSIDE THIS ISSUE
THE SHOW-ME BANKER
is published by the Missouri Independent
Bankers Association
Matthew S. Ruge, Executive Director
Editor: Gina Meyer,
Marketing & Events Coordinator
4
Message From The President
5
From the Chairman
27 MIBA 39th Annual Convention & Exhibition
Preliminary Schedule
27 Thank You Early Sponsors
6
Fine Points
28 Annual MIBA Scholarship Award
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8
Meet Your MO Banker
30 MIBA Dates & Events
12 U.S. Supreme Court’s 4-4 Decision
Involving MIBA Member Community Bank of
Raymore Leaves a Patchwork of Confusion
in its Wake
30 Advertisers’ Index
15 MIBA PAC Honor Roll
21 News From You
22 ICBA Annual Convention & Post Trip
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8
MESSAGE
From the MIBA President
T
Jack Wagner
Adrian Bank, Adrian
4
his month, we cover the outlook for
the agriculture economy. Even though
I have been associated with Ag-related
banks my entire career, I’m not an authority of the very complex agriculture business of
farming and ranching. Today’s agriculture is a global business and therefore is affected by the economies of all nations worldwide, not just the USA.
That is not to say that we (USA) haven’t depended
on Ag trade in the past. We have. But the developing nations, such as Brazil, are now producing
more soybeans than the USA for the first time ever.
Our global ability to produce grain, feed products and meat are overwhelming; and even with
the rapid growth of our world population, the Ag
economy has been able to keep pace with the food
demands worldwide. As we look to the current
markets and expectations for 2016, I am not real
enthused about what may lie ahead. For the first
time in years, we may have input costs that could
approach expected revenues, thus Ag financing
will have some real challenges. All we need to do is
review the prices of grain and cattle in recent years
and look at what the levels are today. And most of
what I have reviewed looks like softer prices in the
future, as well.
I am somewhat convinced that the cattle market
was artificially high in most of 2014 and parts of
2015, even with the friendly inventory numbers
that indicated our inventories were at levels of
the early 1950s. I also believe that the major correction last fall and early winter may have been
an over correction, as well. On the grain side of
things, the softer prices have been a result of improvements made in the seed business and how
many products are more drought-resistant.
The comparison of seed genetics today versus
20 years ago is like night and day, according to
those in the know. Agriculture will always have
challenges, due in large part to our global weather
patterns. If we were in a perfect world, everyone
wants to see timely rains and warm humid summer weather to produce a perfect corn crop. In
agriculture, however, it doesn’t always work that
way. And if we don’t have that perfect weather
The Show-Me Banker / April 2016
pattern, we may see the Ag economy suffer and
the financing challenges it may bring.
As noted above, agriculture is a global business and not just centered around grain farming
and the cattle business, but all the supporting
businesses such as equipment, chemicals, seed,
veterinary and much more. In my recent review
of an article covering one of the major Ag equipment manufacturing companies, it didn’t give a
very rosy picture for the next three years. Sales are
lower in the Ag equipment manufacturing. Even
worse, sales are in a free fall in the construction
equipment business, due in large part to lower energy demands and an oversupply of oil.
This also affects our local equipment dealers
in our communities and thus our local economies. In our local economy, very few major
businesses are not in some way related to agriculture. I am confident that may be the case
for most of our bankers in the state, although
there is usually some diversification in the larger communities. With the lower grain and cattle
prices, and with the challenges of Ag equipment manufacturing, I am confident that we
have seen land prices top out and in some cases
moved to lower levels.
Yes, there are still strong prices for a quarter
section that may lie next to your farm, that you
may have to have. For the most part, though, I am
seeing a flattening of prices. As most of you can
attest, we have had a good to excellent results in
the last 10 years, but that may come to a halt in
2016. One saving grace in the near term may be
the lower fuel prices, which also has a direct effect
on the cost of fertilizers, chemicals and other Agrelated products.
So be ready to sharpen your pencils when it
comes time to reviewing cash-flow expectations
in 2016. Some of us may have experienced the
real challenges of the 1980s with record-high interest rates, droughts, and lower grain and cattle
prices. I’m not expecting we will face those challenges, and thankful most all of our clients have
built equity in the last five to 10 years to allay
these challenges. ■
From the
CHAIRMAN
Tell Your Story
W
Rebeca
Romero
Rainey
Chairman of ICBA
ow, what a journey! For me as
ICBA’s new chairman, it’s so
exciting to think that it’s only
just begun.
As a third-generation community banker, I’m
deeply honored to be your new ICBA chairman. I
look forward to a year filled with meeting so many
of you on my travels — having the chance to hear
your stories and what you are doing to make your
communities great. I also am so thrilled to think
about all the amazing and powerful work we will
accomplish — at our community banks, in our
communities and as an industry.
I loved seeing so many familiar faces, and meeting so many of you at ICBA’s national convention
in New Orleans last month. What a gathering it
was! I was so energized by the educational workshops, networking events, Expo exhibits and,
most important, my conversations with you — my
fellow community bankers. Your stories and passion for what you do never cease to amaze me.
That’s why during my convention speech I was
so adamant about asking you to tell your community bank’s story in the year ahead. We are all involved now in writing our industry’s next chapter.
How exciting is that!
At the convention, I recounted when I first
took over my family’s community bank from
my dad, Martin, and there were moments when
I would tell him, “You are not going to believe
what happened today.”
He told me, “Rebeca, you need to start writing some of these stories down because over
the years you won’t want to forget what happens, what changes, what stays the same and,
more important, what the outcomes or lessons
are.” In many ways, he was telling me that I
had the content for a great book. But that isn’t
just me — it’s “we.” We as community bankers
have the content for many great stories, and we
need to tell them.
Our stories are incredible, really an anthology of impact, change, resilience, growth and
evolution. The collective story of community
banking includes who you are, who we are,
what we do, where we are today, our challenges
and our opportunities. It also includes the history that came before us, and of the future we
are developing together.
We need to tell our stories to everyone — our
potential customers, our communities and our
policymakers. We are community bankers, and
that is something different, something authentic, something to be proud of and something that
matters. Our economic weight is powerful, our
impact is powerful and our story is powerful.
We can’t afford to let Wall Street, the megabanks,
credit unions or the regulators tell our story — or
inaccurately tell our story — for us.
Now more than ever, we need your voice as part
of our industry’s story, because together there’s no
telling what we can accomplish. We have every
opportunity to make the most of our story and
pave the way for a bright future for our industry
and our communities.
I look forward to working with all of you over
the next year as we tell our story. I know that good
things will come of it. ■
Rebeca Romero Rainey is chairman and CEO of Centinel Bank
of Taos, in Taos, N.M.
www.miba.net / The Show-Me Banker
5
FINE POINTS
ICBA Has Your Back
H
Camden R.
Fine
ICBA President and CEO
6
aving your back. That’s a principle
that means a lot to ICBA, and it’s
one that means a lot to me personally. I learned about it firsthand as a
cadet at the Virginia Military Institute. At VMI, we
absolutely had to rely on each other on post and off,
whether performing a difficult military maneuver
or gathering together informally off campus.
That’s why community banking resonates so
strongly with me. Community bankers aren’t just
there for their customers during work hours on
weekdays. You are there for them all day and every
day to ensure they continue to thrive in every way.
That’s true of community bankers everywhere. It’s
what makes you community bankers.
Just as you have your customers’ backs, ICBA
has your back. It’s what ICBA does. It’s why the
association was created. Without fail and without
hesitation, you can count on ICBA to vigorously
defend and promote your community bank and
your industry’s reputation. No other national association can be counted on to be there every single time your interests are threatened — no matter
who opposes us.
Of course, the megabanks want the public to
believe that all banks are the same. But we all
know that all banks are not the same. Community
banks cannot and should not be associated with
those that nearly destroyed our financial system
and economy. Your institutions had nothing to
do with the toxic mortgage-backed securities,
credit default swaps and synthetic derivatives that
tanked the global economy eight years ago. You
and your institutions never strayed from securely
and honestly serving the true and essential financial needs of your customers and communities.
We cannot and will not allow megabanks to tarnish your sterling reputations. We must not allow
them to usurp the positive image that community
banks have rightfully earned among policymakers and the public. Thanks to your good work and
the outspoken, persistent efforts of ICBA, nearly
everyone understands that Wall Street megabanks
and Main Street community banks are fundamentally different. Today, even the regulators openly
acknowledge the distinct differences hardwired
into those separate business models.
This is why ICBA exists. Community banks
must have distinct representation in Washington. That’s precisely why ICBA and its nationwide members have achieved an extraordinary
number of policy accomplishments for our industry, both this past year as well as consistently
over so many years. ICBA has, virtually alone,
spearheaded a successful push for tiered regulation for community banks in which banking
rules are proportionately scaled to an institution’s size and risk. One-size-fits-all regulation
doesn’t work, and ICBA has successfully pressed
that argument to policymakers.
Certainly, ICBA and community banks have
more work to do in Washington, but we will
get it done. Our institutions and communities
will prevail. With and through ICBA, the only
national association with the exclusive mission
to ensure that community banks continue to
flourish, we can accomplish almost anything
when we stand together — when we have each
other’s backs.
ICBA has your back, and we always will. By our
heritage and record of accomplishments, it is the
essence of who we are and what we do. ■
•
Equitable Mortgage NMLS#255114
•
417-887-6688
909 E Republic Rd Springfield, MO 65807
MO 141714; AR 103326; KS 0002143
MEET YOUR
MO BANKER
Kevin Fallon
Vice President, Commercial Banker
Community Bank of Raymore, Raymore, MO
SMB: Where are your main bank and branches located? How
do you view your market?
KF: Our main branch is located in Raymore, Cass County, Mo.,
with additional branches in Peculiar and Harrisonville. Cass
County is on the southeastern edge of metropolitan Kansas City.
North Cass County, where our branches are located, and particularly Raymore, has experienced steady growth, buoyed by a
strong public school system; good highway access and relatively
short commutes to the rest of the metro area; and affordable
housing. In Peculiar and Harrisonville, eight and 16 miles further south respectively, residential development virtually shut
down during the recession but has begun to pick back up as well.
SMB: How is your bank distinguished from others?
KF: Our bank is the largest bank chartered in Cass County and
was the first bank chartered after the Great Depression. It was
chartered in 1979 by a group of local businessmen who were
tired of the big banks dictating how business was done in the
community. They subsequently made the very astute decision
23 years ago to sell the bank to Bill McDaniel, a small-town guy
who had spent his career in the banking business. Bill worked
hard and put together a team that has grown the bank to what
it is today. A unique aspect of our operation is that we have a
very large trust department. We are now a $200 million bank
8
but have a market value of trust assets under management of
more than $700 million.
SMB: How did you get started in the banking business?
KF: I entered a light job market with a finance degree in 2003,
post dot com, post 9/11. Very few employers were hiring college grads with no real work experience; the banking sector was
one of very few exceptions. After interviewing with several big
banks, I caught on as a credit analyst at a smaller but rapidly
growing commercial bank with an entrepreneurial mindset
that was a great fit for me.
SMB: What prompted you to enter the world of finance?
KF: My father is a CPA who has spent his career in investments
for life insurance companies. I interned in his investment department for several years in high school and college; as a result, I knew I wanted to be in the business world in some capacity. I landed in banking as I indicated; and although it has at
times been a roller coaster ride, I have found a real home that I
love at Community Bank of Raymore.
SMB: What is the most important thing you’ve learned from
your career?
KF: I have learned two big lessons. First, I am someone with
an entrepreneurial spirit, with a natural slant for a higher risk tolerance
than is prudent in our business. I have
seen and learned that value is created
through a consistent, well-defined,
and sometimes relatively conservative
approach to lending, balanced with a
willingness to take calculated risks in
the interest of supporting good people
and well run businesses.
The second lesson I have learned is
that we don’t always have to overcomplicate this business. I have been at banks
where politics, big egos and unrealistic goals drove decisions, and that led
to inconsistency, overpromising and
under-delivering. I am thankful to now be at a bank with a small
group of rational decision makers with no big egos and no alternative agendas, which translates to an ability to respond quickly and
set clear expectations for our customers and prospective customers.
SMB: Tell us about the bank’s community investment efforts.
KF: Being a locally owned community bank, we are relentless
in our efforts to support the community in every way possible.
Our team is in leadership roles on numerous boards, including
the president of the Raymore Chamber of Commerce, boards
on the Peculiar and Harrisonville chambers, The Cass County
Economic Development Council, Ray Pec School Foundation,
Cass County Community Health Foundation, Harrisonville &
Cass County Business Women Leaders, Bright Futures of Cass
County, and others.
But we don’t just sit in the leadership chair. We also go to
work, from organizing the back-to-school “Stuff the Bus” campaign for underprivileged students, running concessions for
the Raymore Fall Festival in the Park, hosting the Ray Pec Varsity Football pasta feed, Emerald Club monthly luncheons and
trips for our retirement age customers, and countless others.
SMB: What is the bank’s biggest challenge in the area of
Internet banking?
little things we do —
such as greeting our
customers by name,
having popcorn and
cookies in the lobby,
breakfast with Santa
and the Easter bunny,
wrapping customers’
Christmas presents
for them, even goofy
things like selfie contests — are the things
that can have the biggest impact.
SMB: Why do you
belong to the MIBA’s
ECB (Emerging
Community
Bankers) program?
Chairman of CBR and Raymore Chamber of
Commerce person of the Year Bill McDaniel
throwing out the first pitch for Raymore Day
at the K.
KF: I am blessed the bank feels it is worth it to make the investment in me. Not to take anything away from the content
of the awesome program the MIBA puts together for us at the
annual conference, but for me it’s about the people. I have been
able to meet some great people who are going through similar but unique experiences in varying positions and levels in
their organizations. There are operations people, lenders like
myself, CFOs, even bank presidents in the group. Their ideas
and career aspirations energize me to continue to seek opportunities for growth within my organization and to be the best
I can be. ■
KF: Obviously, a continuing challenge is to be able to stay in
front of the ever-evolving threats to information security, but
that is outside my bailiwick. I actually believe as far as the products themselves go, community banks are well positioned. We
can let the big banks make the large investments and work out
the kinks on the cutting-edge technology, and then we can pick
and choose what to invest in when we see evidence of what
works and what doesn’t. As a bank that
does see the value and makes the investment in technology, it is important for us to
make our customers and prospective cusexperience ideas
tomers aware that we have the same products as the big banks (i.e., Internet banking,
mobile deposit, etc.)
I think our biggest challenge stems from
the impact of Internet banking with the
next generation of consumers. We have to
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9
BA C K GR O U N D
ON
William C.
“Bill” Esry
By Kristin Rulon, Assistant Editor, BankNews Media
I
t’s a moment we all feel, or at least hope to experience in
our careers — the moment when we know that we have
chosen the right career for ourselves; that we are heading down the right path. Granted, our career paths have
bumps and curves throughout our lifetimes and maybe even a
fork or two in the road, but there are moments when one can
10
breathe a sigh of relief knowing that they are doing exactly what
they are supposed to be doing at that time.
For Bill Esry, president and CEO of Blue Ridge Bank and
Trust in Independence, Mo., he can trace back several moments
in his life that were guiding him down the path to become a
community banker.
One in particular was when he was in ninth grade he was
asked to write an essay for his “Introduction to Business” class.
“I chose to write about what it means to be a community
banker,” he said. “I pretty much knew after that.”
But still, you might ask, what about that essay sparked
his interest in banking? Looking even farther back into
Esry’s life, community banking has always been a part of
his family.
His grandfather and two great uncles (William, Robert and
Walter Reich) founded the bank in 1958, located in a storefront
facility at the Blue Ridge Mall.
The mall, developed by members of the Reich family on a
parcel of land that was part of the family’s large produce farm,
earned acclaim as the first suburban shopping mall in the Midwest, according to Blue Ridge’s website.
“There was a picture taken the day the bank opened,” Esry
said. “I’m in the picture, six months old, in a stroller.”
Growing up with bankers in the family gave him a realistic
look at what it truly means to be community banker — and he
wanted to carry on the tradition.
Esry started working summers while attending Westminster
College and after graduation, he started full-time.
“I developed a broad knowledge of the banking industry having worked in almost every department within the bank,” he
said. “I even had the privilege to work with my grandfather,
full-time at the bank for 18 years.”
Esry began his career with the bank in 1976, and was elected
the fifth president and chief operating officer in 1996. In 2001,
he was elected the chief executive officer and he has served
on various bank industry boards, including MIBA, serving as
president in 2006-’07 and various MIBA committees. He also
attended the Graduate School of Banking.
Blue Ridge Bank and Trust started with just six employees
in 1958 and since then has grown into a bank with more
than $500 million in assets with an additional $400 million
in assets under trust management, nine locations, and 131
full-time employees.
“We are about the only community bank in Eastern Jackson
County to sustain the same name, the same ownership and the
same location for 57 years,” Esry said.
Blue Ridge Bank prides itself on providing the services larger
competitors offer; however, Esry said, what makes the bank
stand out is the experienced team at Blue Ridge and the caring
associates “who go above and beyond helping their customers.”
Many multi-generational families are customers of Blue
Ridge, which is also a good indicator that the bank is providing services all generations want, including technologybased services.
“We recognize the demands of our customers and have implemented products and services such as mobile banking, text banking, and mobile deposit to meet their needs,” Esry said. “Community
bankers have to find a balance between providing these services inhouse or finding the right partners who help us provide the services.
We feel we have the right products in place to remain competitive.”
The banking industry is no stranger to change and community banks have to be careful not to be pulled in too deep into
the storm of increasing regulations.
“Community banks are managing the ever-changing regulatory requirements very carefully and seeking outside advice
when needed,” Esry said. “Our industry is changing and we
have to be vigilant.”
“We have a bright future. Our customers validate our
philosophy of banking every day,” he continued. “Community bankers have to balance the in-house vs. outsource
of technology, while keeping true to our customer-centric
roots. It is community banking at its best and our customers demand it.”
Esry advises young community bankers to be like sponges,
absorbing all they can.
“Listen, watch, and learn,” he said. “This is a rapidly
changing industry and it is important that you learn from
the past, yet don’t get too distracted in looking back or
down. You must keep looking ahead and have a clear perspective on what you are trying to accomplish and how it
affects your customers.”
Young bankers should take note; Esry knows what he is talking about — his background and his passion for community
banking prove he is an expert in the banking industry.
“I love what we do as community bankers,” he said. “And I
had great role models.” ■
11
U.S. SUPREME COURT’S 4-4 DECISION
INVOLVING MIBA MEMBER
COMMUNITY BANK OF RAYMORE LEAVES
PATCHWORK OF
LEGAL CONFUSION
By Jennifer Mann
O
12
It will never be known how Scalia
may have ultimately ruled on the case.
Some observers say during oral arguments, questions and comments put
forth by Scalia would have led some to
believe he would have ruled with the
four conservative justices upholding
the 8th Circuit’s decision.
Had that been the case, it would have
settled law at the federal level – loan
guarantors are not protected under the
Equal Credit Opportunity Act. But since
the U.S. Supreme Court split, decisions in
each of the U.S. circuits stand pertaining
to whether guarantors are covered by the
ECOA, including one from the 6th U.S.
Circuit in which it ruled that loan guarantors are protected by the act.
Jack Hopkins, president of the Community Bank of Raymore, said he and the
bank obviously were pleased that the 8th
Circuit’s ruling stands.
“We’re happy that we got a victory,” said
Hopkins, “Although it would have been
great for our country to have had a 5-4
decision in our favor, it does knock down
some of (the) defenses in state cases.”
The case that eventually wound up
before the U.S. Supreme Court began in
2005 when Gary A. Hawkins and Chris
L. Patterson formed PHC Development
LLC to develop residential housing near
Peculiar, Mo., about 30 miles south of
Kansas City.
The two went to the Community
Bank of Raymore, over time seeking
four loans in excess of $2 million to
finance their residential development.
The spouses of Hawkins and Patterson,
Valerie J. Hawkins and Janice A. Patterson, signed as guarantors on the original, subsequent and renegotiated loans,
in total almost 20 sets of documents
over a five-year period. Both women
testified in depositions that they never
spoke to the bank before signing the
documents, and Gary Hawkins testified in his that he initially told the bank
that the women would be guarantors.
When the loans went into default in
2012, the Community Bank of Raymore
undertook the process of trying to recover its losses, making demand for payment
on the borrower and the four guarantors,
Image © mipan/iStock
n March 22, 2016, the
Community Bank of Raymore received good news
when the U.S. Supreme
Court split 4-4 on a case involving the
lender, meaning that a favorable ruling
from the U.S. 8th Circuit would stand.
Indeed, Hawkins v. Community Bank
of Raymore was the first 4-4 split decision from the U.S. Supreme Court after
the Feb. 13, 2016,
death of Justice
Antonin S. Scalia.
However, oral arguments in the case,
which asks whether
loan guarantors are
protected
under
the Equal Credit
Opportunity
Act,
to ok
place
o n
Oct.,
5, 2015.
including Valerie J. Hawkins and Janice
A. Patterson, on all of the loans.
Shortly thereafter, the bank was sued
by the two women, alleging that they
were forced to sign the loan documents
as guarantors, and thus the bank was in
violation of Regulation B of the Equal
Credit Opportunity Act, passed by Congress in 1974.
The ECOA, among other protections,
makes it unlawful for creditors to discriminate in any aspect of a credit transaction on the basis of sex and marital
status; and, in 1976, amendments to the
act additionally made it unlawful to discriminate on the basis of race, color, religion, national origin, age or receipt of
public assistance.
Lathrop & Gage LLP attorney, Greer
S. Lang, one of the lead attorneys for the
Community Bankers of America, based
in Washington, D.C., said the split ruling
is unfortunate for the organization and
its members.
“It does leave a mass of confusion
for the banking community,” Thomas
said. “It just leaves the circuits split on
the matter.”
Looking forward, Thomas said it’s important for banks, including those represented by the ICBA and MIBA, to document, document, document.
“I think what we’d like to remind our
community bankers is that they should
just ensure that when making a decision
or underwriting these loans, to ensure
that…they document every step in their
process, and when requesting or discussing guarantors, document that every step
of the way.
case, but a reading of the October 2015
oral arguments give hints.
For instance, early during oral arguments, John M. Duggan, the attorney
for the plaintiffs, posed a hypothetical
case to the court, saying, “First of all,
spouses who are required to sign jointly
and severally with their husbands’ businesses and their husbands are going to
understate potential adverse credit consequences in the future.”
“Let me give you an example: divorce
or death of the primary operator of the
business. If the wife has become jointly
or severally liable to repay the husband’s
debt, then she is going to be strapped
with his credit profile in a business that
she never had any operational authority,
that she was never involved in, and she
wasn’t an investor on. She was simply re-
“But under Reg. B, whether you have a creditworthy
borrower or not the fact of the matter is that a lender cannot
condition giving credit based upon getting signatures from
the spouses.” — Greer S. Lang, attorney, Lathrop & Gage LLP
Community Bank of Raymore, said the
two women took the position that “the
only reason they signed as guarantors on
the loans was that they were required to
solely on the basis of the fact that they
were married to these men.”
“But under Reg. B, whether you have a
creditworthy borrower or not,” Lang said,
“the fact of the matter is that a lender cannot condition giving credit based upon
getting signatures from the spouses. That
was true before the decision, and remains
true today.”
“The bank never said ‘We’ll only do this
if your wives sign as guarantors,’” Lang said.
“Gary Hawkins volunteered that the guarantors would be ‘me and my wife, and Chris
Patterson and his wife’ when asked (by the
bank) who the guarantors would be.”
Lilly Thomas, vice president and senior
regulatory counsel for the Independent
Jack Wagner, president of the Missouri Independent Bankers Association
and the chief executive officer and cochairman of Adrian Bank, agreed with
Thomas: “I guess any advice I might have
as a banker, is you’re got to dot all of your
‘I’s and cross all of your ‘T’s.
“There are very fine lines in questioning (applicants and guarantors),” Wagner
said. “It’s a very sensitive issue so you
have to be extremely careful of what you
can and cannot do.”
Lang of Lathrop & Gage agreed. Toward
that end, Lang and Thomas H. Stahl, cocounsel for the Community Bank of Raymore, will present a webinar on May 11
outlining steps and suggested procedures
for banks going forward. (For more information, go to www.lathropgage.com).
Again, it’s impossible to know how
Scalia would have ultimately ruled on the
quired to sign because she was the spouse
of the husband…”
At which point, Scalia interjected:
“Wait, wait, wait. You say she was required to sign. She wasn’t required to
sign. Somebody put a gun to her head?
She wanted the husband to get the loan
and this was the deal.”
Duggan then responded, “And I think
that’s exactly what the regulators...”
Again, Scalia interjected: “Well, but
don’t talk about it as (if) she was required
to sign. She was not required to sign ... If
he – if he was to get the loan, he had to
get her to sign, but she was not required
to sign.”
Scalia then posed a his own hypothetical situation: “Let’s — let’s —
let’s assume that I — I write a letter
of recommendation for some — some
young woman who is applying to a law
13
school, or to a college. I would really
like her to be admitted, and I’ve written a letter of recommendation to sort
of put my judgment, my reputation on
the line on her behalf. Am I an applicant to the law school?”
To which Duggan, replied, “No.”
Lang was cautious in speculating on
which way Scalia might have ruled.
“I have had cases in which I thought
questions during oral arguments were in
my favor but went the other way, and vice
versa,” Lang said. “But it did seem questioning from Justice Scalia was favorable
to our position.”
Meanwhile, Duggan on April 15, asked
the U.S. Supreme Court for a re-hearing
on the case. ■
Jennifer Mann is a legal, business and financial
freelance writer based in Kansas City, Mo. She can
be reached at Jenniferwriter@gmail.com
14
An interesting aside on legislative history of the ECOA – former
U.S. Representative, Lindy Boggs (D-La.) was instrumental in
marking up the legislation.
When the House Banking committee marked up the ECOA,
she surreptitiously and without telling other members of the
committee, inserted a provision banning discrimination due to
sex or marital status. She then made photo copies of the “new”
versions of the bill.
She then told the other committee members, “Knowing the
members composing this committee as well as I do, I’m sure
it was just an oversight that we didn’t have “sex” or “marital
status” included. I’ve taken care of that, and I trust it meets
with the committee’s approval.” The committee unanimously
approved the bill.
MIBA PAC
HONOR ROLL
Contributors to the MIBA Political Action Committee are recognized for their generosity on the Association’s website and at the MIBA
Annual Convention and Exhibition. Different levels of contribution have been set to recognize supporters of our Political Action Committee fund and to make the Association’s membership more aware of this important facet of our work on behalf of the political agenda
of community banks across Missouri. ■
NOTE: Personal or corporate campaign contributions to any PAC are not deductible in any amount for federal tax purposes.
PRESIDENT’S FAIR SHARE LEVEL
$10 per Million in Deposits up to $250M Cap
• Adrian Bank
• America’s Community Bank, Blue Springs
• Bank of Advance
• Bank of Bolivar
• Bank of Iberia
• Bank of Louisiana
• Bank of Old Monroe
• Bank of St. Elizabeth
• Bank of Urbana
• Bank Star One, Fulton
• Blue Ridge Bank and Trust Co., Independence
• BTC Bank, Bethany
• Central Bank of Kansas City
• Community Bank of Pleasant Hill
• Community Bank of Raymore
• Community State Bank of Missouri, Bowling Green
• Exchange Bank of Northeast Missouri, Kahoka
• Farmers Bank of Lincoln
• Farmers & Merchants Bank, St. Clair
• First Independent Bank, Aurora
• Fortune Bank, Arnold
• Jonesburg State Bank
• Meramec Valley Bank, Ellisville
• Metz Banking Company, Nevada
• Mid America Bank, Jefferson City
• Midwest Independent Bank, Jefferson City
• Northeast Missouri State Bank, Kirksville
• Platte Valley Bank, Platte City
• Peoples Bank & Trust Co., Troy
• Peoples Bank of Altenburg
• Pony Express Bank, Liberty
• Regional Missouri Bank, Marceline
• Security Bank of the Ozarks, Eminence
•
•
•
•
•
•
The Bank of Missouri, Perryville
The Bank of Salem
The Callaway Bank, Fulton
The Missouri Bank, Warrenton
The Missouri Bank II, Sedalia
Tipton Latham Bank, NA
PLATINUM LEVEL
$750 and up
• Farmers State Bank, Cameron
• Peoples Savings Bank, Hermann
• Town & Country Bank, Salem
GOLD LEVEL
$400-$749
• Bank of Monticello
• Citizens Bank, New Haven
• Legends Bank, Linn
• Merchants & Farmers Bank, Salisbury
SILVER LEVEL
$200 - $399
• Bank of Crocker, Waynesville
• Chillicothe State Bank
• Silex Banking Company, Silex
• State Bank of Missouri, Concordia
• The Maries County Bank, Vienna
INDIVIDUAL
•
•
•
•
•
•
David L. Barnett
Linda K. Barnett
William Byrne
Randy Kirkman
Ingrid Orchard
Airika Thompson
15
AG LENDING
FOR LEANER
TIMES
I
Scott Avis
Focus Bank,
Community Bank President
Image © PaulBiryukov/iStock
16
have been involved in agricultural lending for only 15 years, but I have seen many
changes during this time. Some of these
changes include the increase in the size
of the farm, the increase in the price of equipment and the increase in the price of inputs.
The only decrease is in the price of the commodities, which makes it very important for
farmers and lenders to work together and find
ways to minimize risks and increase profits.
As an ag lender, there are several ways I can
assist farmers with this task.
The first hurdle is to understand the true
cost to farm each acre of ground. This includes
knowing all the variable and fixed costs. Variable costs include such things as seed, chemicals,
fertilizer and fuel. The fixed costs include equipment, land and management expenses. Due to the
low commodity prices, farmers need to keep the
variable costs to a minimum. They can do this by
purchasing their diesel and fertilizer while the
price is low, and shopping around for the best deal
on chemical and seed.
Marketing plays another key role in maximizing profits. Selling the crop at the elevator
at time of delivery is usually not the best approach to selling crops. Knowing the total costs
per acre to grow the crop and having an idea
of the historical yields will give a good idea of
the break-even price that is needed. Knowing
their break-even price will help farmers make
better choices to determine a price they can
sell their crop and make a profit that will keep them in a
good financial position.
Another important element is for farmers to meet with their
crop insurance agent to choose insurance that best meets their
needs. Weather is one of the many aspects that farmers have
zero control over. Having a drought or too much rain can drastically affect yields and can destroy everything a farmer has
built over a career. Crop insurance is a newer tool but is a very
important tool for a farmer to have to still be able to meet financial obligations, even in face of a disaster.
Increasing yields without significantly increasing production
costs also can have a dramatic effect on profits. Some of these
include soil testing, using seed varieties that best match their
soil, and determining if tillage and irrigation are beneficial to
a particular farm.
And, finally, trying to minimize the fixed costs, such as
equipment and land, can help increase the farmer’s profits.
It may be beneficial for the farmer to lease a piece of equipment instead of purchasing it in these economic times.
Another option can be to have joint ventures with other
farmers to share the equipment and the expense. It may
also be cheaper to outsource or custom hire to spray, fertilize or harvest the crop. It could also be advisable to refinance any farmland they own and stretch it over a longer
period to decrease fixed costs.
All these tools have to be utilized in this changing agricultural environment. The best farmers in years past were the ones
with clean fields and good yields. That is not the case anymore.
The best farmers now understand their variable and fixed costs,
and realize that marketing their crops is essential in weathering
these low commodity prices.
Ag lenders have to constantly evolve, and we have to do a
better job at meeting the challenges of today’s agricultural environment. I believe this can be done by knowing how much
it costs to farm each acre of land, being a better marketer, and
searching for ways to decrease the variable and fixed costs,
while finding ways to increase yields and using crop insurance
to protect against disasters. ■
17
AG LENDING:
EQUITY MATTERS BUT DON’T
NEGLECT CASH FLOW
B
K.Coe Isom
18
Clearly, equity is important. Reasonable leverage
provides options for addressing short-term challenges in a farming operation.Too many farmers,
however, believe their net worth alone will get them
through a credit renewal.
We recommend farmers focus on demonstrating repayment capacity by creating an 18-month
crop-year cash-flow budget.
A cash-flow budget should cover all cropyear expenses from fall work and prepaid expenses through marketing grain, often months
after harvest.
Image © themacx/iStock
Peter Martin
elieve it or not, some producers and
lenders believe borrowing money simply takes equity and that cash flow is of
secondary importance. You and I both
know that when it comes to agricultural lending,
or any lending for that matter, regulators and experienced lenders are looking to repayment analysis first and foremost.
Yet many farmers don’t understand or aren’t willing or able to provide the proper records to allow
a thorough repayment analysis that include sensitization of different yields, prices and input costs.
“Give clients an electronic budget format into which they
plug their numbers. If you don’t have one handy, point
them toward a consultant or an extension resource with
Image © cnythzl/iStock
which you’ve had good experience.”
This analysis not only helps determine the proper-size operating note, it identifies potential losses, carry-over debt and other
non-operating cash outlays that may end up on the line. It serves
as a blueprint for expected performance in the coming crop year.
The question is how do we convince farmers to complete
them? There are a few things you can do to promote this cash
budgeting process and thereby reduce risk in your portfolio:
1. Cultivate a deeper relationship with your clients. Knowing
your client and his or her business is one of the best ways
to prevent and identify problems. Everyone is pushing
for a global analysis of repayment capacity, which you
can only do if you truly know your customer.I consistently find farm CEOs are eager to discuss their business
with advisors. You are an advisor, so don’t be shy about
engaging your customers in dialogue about their business and future plans. In fact, in a survey our firm just
completed, 81 percent of farmers valued the relationship
and interaction with their lender. The good ones want to
talk to you about their operation.
2. Be a source of information.
Keeping with the theme of
being an advisor, don’t hesitate to offer advice to your
customer. Consider providing an industry newsletter
or other news source for
your clients to access. Talk
to them about what you
read and what you’re hearing. Challenge their budget
assumptions based on what
you know.
3. Make it easy for them. Give clients an electronic budget format into which they plug their
numbers. If you don’t have one
handy, point them toward a
consultant or an extension resource with which you’ve had
good experience.
With a solid budget in hand, I encourage farmers and
lenders to make this the focus of a quarterly discussion.
Where are we versus where we expected to be? Are the
differences simply the result of timing or are revenues or
expenses off ?
This exercise will give you significant insight into an operation and its ability to weather low commodity prices. You’ll
be far better equipped to make prudent lending decisions by
having this degree of transparency.
Your client will also have better information to work with.
They’ll be better able to assess strengths and weaknesses in
their operation.
During the good times, we often overlook detailed analysis of
borrowers. The challenges in agriculture today mean we must
quickly return to the disciplined practice of sound lending. At
its core, I believe this entails a comprehensive examination of
repayment capacity. ■
This column is not a substitute for financial advice.
19
MISSOURI AGRICULTURAL
AND SMALL BUSINESS
DEVELOPMENT AUTHORITY
T
20
acquisition; construction; improvement; rehabilitation;
or operation of land; buildings; facilities; equipment; machinery; and animal waste facilities used to produce poultry, hogs, beef or dairy cattle or other animals in a single
purpose animal facility.
• Missouri Value-Added Loan Guarantee — The Missouri
Value-Added Loan Guarantee Program provides a 50 percent first-loss guarantee to lenders who make agricultural
business development loans for the acquisition, construction, improvement or rehabilitation of agricultural property used for the purpose of processing, manufacturing,
marketing, exporting and adding value to an agricultural
product. The loan amount cannot exceed $250,000.
• Animal Waste Treatment System Loan — Finances up
to 100 percent of animal waste treatment systems for fewer than 1,000 units per farm. This loan can be amortized
for up to 10 years at an interest rate of 5.43 percent.
The Missouri Agricultural and Small Business Development
Authority is well positioned to work with lenders on agricultural projects to the benefit of both the lender and borrower.
Missouri Agricultural and Small Business
Development Authority
1616 Missouri Blvd.
Jefferson City, MO 65102
Phone 573-751-2129
E-mail: masbda@mda.mo.gov ■
Image © Nomadsoul1/iStock
he Missouri Agricultural and Small Business Development Authority (MASBDA) was established to
promote the development of agriculture, small business and agriculture-related pollution control facilities. To achieve these goals, MASBDA has developed a wideranging group of programs to assist farmers and ranchers with
their many financing needs. Many of MASBDA’s programs are
complimentary with local bank financing. Please see the information listed below for a highlight of the programs and services
offered by MASBDA:
• Beginning Farmer Loan — This program assists Missouri
beginning farmers in acquiring agricultural property at reduced rates. Bonds are issued and the interest rate on the
bonds are exempt from federal and state income taxes, which
allows the bank to pass on a lower rate to the borrower.
• Family Farm Breeding Livestock Tax Credit — This
program is for the purchase of breeding livestock. By issuing tax credits to a lender for an approved project, the
borrower’s first year interest payment is free. This program is targeted towards smaller loans where the borrower’s gross agricultural sales are less than $250,000 for
the previous year.
• Single Purpose Animal Facilities Loan Guarantee —
This program provides a 50 percent first-loss guarantee on collateralized loans up to $250,000 that lenders
make to independent livestock producers to finance the
NEWS
From you
Holly House
Mark Smith
Matt Sinnett, president/CEO of Midwest
Independent Bancshares, Inc. (MIB, Inc.),
announces the promotion of Holly House
to vice president/internal auditor with
Midwest Independent Bank (MIB), and
also to president of MIB Banc Services,
LLC (MIBBS).
House has held various positions while
employed with MIB. She is responsible
House
for conducting internal audits throughout
the organization, as well as managing and assisting the staff at
MIBBS with external customer audits. Holly has more than 17
years of experience in the banking industry.
In 2007, she completed the Certified Community Bank Internal Auditor Program (CCBIA) thru Independent Community
Bankers of America (ICBA). House graduated from Columbia
College with a business administration degree with an emphasis in finance.
Sam Berendzen, CEO of American Trust
Bank, Kirksville, Mo., is pleased to announce
that Mark L. Smith has joined the bank as
president and chief financial officer.
Smith has 35 years of experience in the
community banking industry and was
most recently executive vice president and
chief credit officer for First Community
National Bank in Cuba, Mo. He also was
Smith
president and CEO of First Missouri Bank in
Brookfield, Mo., from 1992 to 2014.
Phil Duley recently retired as chief financial officer of American
Trust Bank after nearly 40 years in community banking in Northeast Missouri. Duley had been with the bank since March 2011.
The bank has promoted Aimee Thomas to assistant financial
officer. Thomas is also the bank’s technology officer and assists
with financial officer duties. Aimee has 14 years of experience
in community banking and has been with American Trust
since November 2013. ■
We want to hear
News
From You
Email your stories to
Regina (Gina) Meyer at rmeyer@miba.net
21
MIBA 2016
ICBA Annual Convention & Post Trip
March 2016, New Orleans, La.
22
Thank You to Our ICBA Annual
Convention & Post Trip Sponsors!
23
“For Those Who Want Reliable and Unrivaled Protection.”
With the announced closing of KBS by Berkshire Hathaway, many of you will be in the market
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Bond. With so many different coverage options available there is a possibility that gaps in
coverage can be created if a professional coverage analysis and comparison are not done.
2XU)LQDQFLDO,QVWLWXWLRQ7HDPKHUHDWThe Insurance Group is prepared to assist you with this
process. We will gladly obtain replacement quotes and provide you with a customized price/
coverage comparison at no cost to you.
As a long standing Associate Member of MIBA ZHKDYH IRXQGWKDWWKHYDOXHV RIWKH 0,%$
DQGLWVPHPEHUVDUHYHU\VLPLODUWRRXURZQ2XUÀUPVWLOOEHOLHYHVLQVWURQJFXVWRPHUVHUYLFH
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exploring the markets available for our bank customers. Each company that we represent is
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The Insurance Group staffs teams of fully licensed and experienced professionals that specialL]HLQYDULRXVDVSHFWVRIWKHLQVXUDQFHQHHGVRIRXUFXVWRPHUV2XU)LQDQFLDO,QVWLWXWLRQ
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smooth as possible for you.
We would welcome the opportunity to review your coverage’s and provide a side by side
FRPSDULVRQIRU\RXUFRQVLGHUDWLRQ7KLVDVVHVVPHQWVHUYLFHDQGFRPSDULVRQLVSURYLGHGWR
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.QRZOHGJHDEOHSHUVRQQHOJRRGVROLGFRPSDQLHVDQGVXSHULRUFXVWRPHUVHUYLFHLVZK\7KH
,QVXUDQFH*URXSLVWKHEHVWFKRLFHWRDVVLVW\RXUEDQNZLWKWKLVWUDQVLWLRQ3OHDVHJLYHXVDFDOO
DWRXU&ROXPELDRIÀFHRU\RXFDQHPDLORXU([HFXWLYH9LFH3UHVLGHQWJim Ford
at jford@theinsurancegrp.com.
Endorsed Services
24
DIRECTORS
RS & OFFICERS
R
RS SEMINAR
R
AR
Tuesday, May 17th
4:00 pm
6:00-9:00 pm
Workshop Registration Desk Open
Hotel Lobby
Cocktail Reception & Dinner
Kinderhook Ballroom ~ Take elevator in H
Toad restaurant down to the 2nd level.
Casual attire.
10:15
:15 am
Br
Break
BREAKS
AK SPONSORED
AKS
RED
D BY EQUITABLE
LE MORTGAGE
AGE
10:30 am 11:00 am
Focus on BSA: What You Need to
Know
Presented by Nancy Schoolman,
CRCM ~ Director, BKD, LLP
11:00 am 11:30 am
Case Discussion: U.S. Supreme Court
Affirms Decision Excluding Guarantors
from ECOA Protection
Presented by Greer S. Lang,
Lathrop & Gage LLP
11:30 am 12:00 Noon
The Key to Maximizing Consumer
Relationships
Presented by Bob Vedder, Kasasa
Noon
Lunch
Lakeside Room. First floor of hotel, lake level.
Casual Attire
eg
ly Please)
(Seminar Registrant
Only
DINNER
NER
R SPONSORED
RED
D BY KASASA
ASA
Welcome & Introductions
Jack Wagner
MIBA President
Adrian Bank, Adrian
Wednesday, May 18th
7:00 am
Breakfast
Lakeside Room ~ First floor of hotel,
lake level. Casual
asual attire.
BREAKFAST
ST SPONSORED
RED
D BY BKD LLP
7:30 am 8:15 am
The Effects BOLI Has
On Your Bank’s Key Ratios
Presented by Josh Miskovich,
Bank Financial Services Group
8:15 am
Break
Move next door for morning session.
8:30 am 9:15 am
The U.S. Economic Outlook
and Monetary Policy
Presented by Chuck Morris,
Vice President & Economist
Federal Reserve Bank of Kansas City
9:15 am 10:15 am
Redefining the Banking Industry—
Trends and Changes Impacting the
Industry
Presented by Don Hutson,
CPA, Partner BKD, LLP
LUNCH
CH SPON
SPONSORED
SP
ONSORE
ONSORE
RED
RE
D BY MIDWE
IDWEST
ID
WEST INDEPEN
WEST
NDEPENDENT
ND
ENDENT
ENDE
DENT
DE
NT BAN
ANK &
FIRST
ST BANKERS
RS’ BANC SECURITIES
IES
S, INC.
Overview of the Condition of State
Chartered Banks, Trends We Are
Seeing and Areas of Concern
Presented by Debra J. Hardman,
Acting Commissioner
Missouri Division of Finance
1:30 pm
Seminar Adjourns
1:30 pm
MIBA Board of Directors Meeting
m. First
F floor
f
l, lake level.
Lakeside Room.
of hotel,
Contact MIBA To Register
Email: mlawson@miba.net
BOARD
RD MEE
EETING
EETI
NG BREAK
REAK SPONSO
SPONSORED
SP
SPON
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SORE
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Lake Ozark, Missouri
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BACK BY
POPULAR DEMAND
At the MIBA 39th Annual
Convention & Exhibition
Wednesday, Sept. 14, 2016
Save the Date!
Featuring:
Well Hungarians
ANNUAL MIBA SCHOLARSHIP AWARDS
For Member Bank Employees or their Dependents
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Image © Jane_Kelly/iStock
MIBA Security Conference
September 28-30, 2016
The Broadway
Columbia, MO
Compliance Corner,
For Sale:
Director’s Supplement and
Portable Bank Facility
Capitol Comments
can be found on our website,
www.miba.net.
1848 sq. ft. double modular banking facility
(28 X 66). Includes three offices, lobby space
for three desks, break room, kitchenette,
bathroom, storage room, IT room, two station
front teller line, single station drive thru with
electric deal drawer.
Look under “For Members”
then “Monthly Updates.”
For additional information and
pictures please contact:
Mark Thatcher, Bankers Security
877-358-0883
markt@bankerssecurity.com
COMMUNITY BANKERS FOR COMPLIANCE PROGRAM
“MIBA’s CBC Program is a great way for compliance professionals to stay current on all new and existing
ting regulations.
Through the quarterly meetings, monthlyy newsletters and
professional networking, our bank has been
en able to remain
proactive in the ever-changing, fast paced environment of
bank compliance.”
— Calen Bestgen, Senior Vice President at The Tipton Latham Bank, N.A.
for the Community Bankers for Compliance Program
rogram
Image © macgyverhh/iStock
For more information on the
CBC Program contact
Michelle Lawson at mlawson@miba.net
net
29
DATES & EVENTS
APRIL WEBINARS
12
To register go to www.miba.net/Education, click on 2016 Webinar
Schedule, select a webinar or webinar series and pricing, view
cart to confirm, then proceed to checkout.
MAY
19
New Federal Regulations Targeting Student
17-18 Directors & Officers Seminar
Camden on the Lake, Lake Ozark, MO
Accounts, Including Debit & Prepaid Cards:
Effective July 1, 2016
24
HR Series: Managing Absenteeism &
Leaves of Absence
2 - 3:30pm
21
Effective Management of Credit Report Disputes
2 - 3:30pm
26
Call Report Series: Examining Bank Assets,
Liabilities & Income in Call Report Preparation
2 - 3:30pm
27
Examining Complex TRID Issues, Part 1: Application
Through Loan Estimate & Revised Loan Estimate
2 - 3:30pm
28
Regulator Expectations for Risk Assessment:
Policies, Procedures & Steps in Obtaining
Board Approval
2 - 3:30pm
CBC Quarterly Meeting
The Broadway, Columbia, MO
2 - 3:30pm
20
Regulator Issues for the Credit Analyst
2 - 3:30pm
JULY
19-20 Committee & Board Meeting
20-22 ECB Summer Conference
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10
11
30
Loan Participation Due Diligence: Practices,
Documentation, Servicing & Risks
2 - 3:30pm
Conducting the Annual Physical Security Review
2 - 3:30pm
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MIB ..............................................................................2
888-818-7200 | www.mibanc.com
Quarterly Emerging Leader Series: Effective Branch
Administration Monitoring
Shazam................................................................... 31
855-314-1212 | www.shazam.net
2 - 3:30pm
Fee Income Strategies 2016: Challenges, Issues
Welch Systems Inc. ........................................ 17
800-322-2657 | www.welchsystems.com
& a Look Ahead
2 - 3:30pm
Williams Keepers LLC .................................... 14
573-442-6171 | www.williamskeepers.com
MET
SHAZAM is a financial services company offering
you choice and flexibility to use the products and
services that meet YOUR needs.
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.
Call SHAZAM today.
Delivering Unlimited Possibilities
855-314-1212 | shazam.net | @SHAZAMNetwork
OVER 100 YEARS OF PROVIDING
RISK TRANSFER
SOLUTIONS
FOR COMMUNITY BANKS
Delivering today, securing tomorrow.
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+RPHVWDWH,QVXUDQFH&RPSDQ\%++,&UDWHG$
Contact KBS! 785.228.0000 • marketing@KBSforBanks.com • kbsforbanks.com
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