the correspondentthe correspondent · january 20, 2016 is the deadline to finalize team members and...
TRANSCRIPT
O n Tuesday August 25th at this years’ annual
Bluegrass Community Bankers’ Association
golf outing; our very own, Bill Fallon of BBKY had his
first career Hole-In-One, fulfilling one of the life
dreams of every golf enthusiast.
His tee shot at the 15th hole of the Griffin Gate Golf
club in Lexington, Kentucky traveled the perfect
176 yards needed to ace the hole and cement what
he called “my best round of golf in years.” The shot
was witnessed by Brendan Jacobson (NetGain) and
Brian Mullett (Bankers Healthcare Group).
Congratulations Bill!!!
Hole-In-One Announcement Article Published by: Derek Hetherington, Senior Vice President BBKY
BBKY Contact Information
Phone: 800-248-3229
Website: www.bbky.com
Helpful Fax Numbers
Operations: 502-695-0638
Wire Room: 502-848-5739
Loan Dept.: 502-695-8273
Admin.: 502-695-0221
BBKY Mortgage
Phone: 877-390-3204
Fax: 502-859-6014
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
O n Tuesday, August 4, 2015 at approximately 3:15 p.m. EST the Bankers’ Bank of Kentucky’s AT&T Voice Over IP phone service and Cellular service was disrupted. This outage was
related to a multi-state outage of service that impacted thousands of AT&T customers across Tennessee, Kentucky, Georgia and Alabama, according to media reports. The outage lasted until about 9 p.m. and was attributed to "a hardware-related network issue."
When our normal phone service is disrupted BBKY has contingency copper phone lines at our disposal. In the event that your bank’s personnel are unable to reach us via our normal business phone numbers please contact one of the numbers listed below:
(502)848-5739
(502)695-0221
(502)695-8273
BBKY would like to apologize for any inconvenience this outage may have caused and ask that you keep these numbers readily available in the case of a future communication outage.
Third Quarter 2015
Volume 4 , Issue 3
The Bankers’ Bank of Kentucky Contingency Lines Article Published by: Lynn Ellis, First Vice President BBKY
Hole-In-One!!! 1
BBKY Contingency Lines 1
CSBS Case Study 2
BBKY Career Opportunity 2
Lease Purchase Financing 3
New Standard Bearer 3
Best Places to Work 4
BBKY Mortgage Processing 5
ACA IRS Filing 6
FFIEC Call Report Update 7
Save the Date 7
Financial Statement Audit 8
Inside this issue:
CSBS Community Bank Case Study Competition Article Published by: Derek Hetherington, Senior Vice President BBKY
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
Volume 4 , Issue 3 Page 2
T he Conference of State Bank Supervisors (CSBS) last week
announced their Community Bank Case Study Competition.
They will be accepting applications from universities and students
over the next couple of months. This competition will task teams
of undergraduate student to partner with local community banks
to conduct original case studies evaluating the local economic
impact of community banks.
According to the CSBS website; the Community Bank Case
Study Competition is for undergraduate college students enrolled
at an accredited college or university with interest in banking,
finance, or other business-related field.
Under the direction of a faculty advisor, each team will partner
with a community bank to evaluate the institution's financial and
management performance, assess their small business lending
efforts and support of local organizations and charities.
January 20, 2016 is the deadline to finalize team members and
secured community bank partners. Each team will then have until
May 2, 2016 to complete the study and submit the written and
video case study. The First place team and competition finalists
will be announced on May 24, 2016.
The students on the first place team will receive a $1,000 CSBS
scholarship, present their case study at the CSBS-Federal Reserve
Policy Conference, and will have their study published in the
“Community Banking in the 21st Century” report that is released
at the annual research conference.
Competition finalists will also have their case studies published in
the “Community Banking in the 21st Century” publication.
The goal of this competition is to build a further understanding of
the community banking business model and the role community
banks play in local communities, to connect students with bank
executives, and uncover new and innovative perspectives on the
role of community banks in the banking industry.
Western Kentucky University expressed interest in participating
in this program and BBKY plans to reach out to other college and
Universities in our footprint to help locate community banks with
which to partner.
If your organization, local college or university have interest in
participating in this program, please contact Derek Hetherington
at [email protected] or 800-248-3229.
Additional Details and information on the program are available
on the Conference of State Bank Supervisors website.
T he Bankers’ Bank of Kentucky is excited to announce a wonderful opportunity to join our sales and marketing team. As the only locally owned and managed bankers bank in our market, we
have consistently provided best in class service and support to area community banks for more than 27 years. The Bankers’ Bank of Kentucky promotes a work environment that encourages diversity, embraces change, and fosters leadership from our team members. As a partner to community banks and a leader in the correspondent banking industry; we are seeking a highly motivated and focused professional to help support our mission.
The new Correspondent Calling Officer will be tasked with calling and supporting clients in our West Virginia and Eastern Kentucky markets. The calling officer will need to be customer focused and capable of both; maintaining existing client relationships and developing new partnerships. The calling officer is expected to work semi-independently and will be required to travel frequently to meet existing and potential community bank clients within the assigned market area. The calling officer will need to develop mutually beneficial partnerships, deliver sales presentations, follow up with key decision makers, and cross-sell a variety of products and services.
The Bankers’ Bank of Kentucky is an equal opportunity employer.
For a complete job description and list of qualifications please visit our posting on Careerbuilder.com
If you, or someone you know, is interested in applying; please forward a resume and cover letter to Lynn Ellis at [email protected]
Career Opportunity with BBKY Article Published by: Lynn Ellis, First Vice President BBKY
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
Volume 4 , Issue 3 Page 3
For over 27 years, BBKY has been the trusted lending partner to community banks across our
market footprint.
Contact our lending team today and find out how we can make a difference for your organization.
John Clark, EVP [email protected]
Derek Hetherington, SVP [email protected]
Stephanie Oerther, AVP [email protected]
Ashley Brown, Loan Asst.
Office: 800-248-3229 www.bbky.com
I ndependent Community Bancorp, Inc. is pleased to announce The Citizens Bank, Morehead, Kentucky as its newest Standard Bearer Shareholder. The Bankers’ Bank of Kentucky is owned by the community banks we service, and our success is assured by
those that continue to support our vision and invest in our future.
Mr. Robert Neff is President/CEO and Mr. Paul Goodpaster is EVP/COO of The Citizens Bank, which was organized on September 25, 1928. Today, The Citizens Bank has five branches serving Morehead, West Liberty, Owingsville, and Sharpsburg, Kentucky.
We would like to welcome the entire Citizens Bank team to the BBKY family and truly appreciate their support and confidence in us.
Robert D. Neff President/CEO
BBKY Welcomes New Standard Bearer Shareholder Article Published by: Lynn Ellis, First Vice President BBKY
Paul Goodpaster EVP/COO
E veryday municipal entities work hard to protect and serve their communities. Despite their efforts to budget and plan for the proper equipment and mainte-
nance necessary; Murphy's Law always presents unexpected needs and immediate demand. Unlike the private sector, municipalities are constrained by a budget so funds to update and add equipment are not always available exactly when needed. Lease Purchase Financing (LPF) is a method for local governments and nonprofits to acquire property and equipment they need through manageable installment payments of principal and interest. In virtually every state, LPF does not require voter approval, allowing a governmental entity to respond quickly and fulfill equipment needs as they arise.
The Bankers’ Bank of Kentucky in partnership with Community Leasing Partners, can now offer local municipalities a lease-purchase option on essential equipment and real estate. The leases offer CRA credit, and are tax exempt. They also provide an option to develop relationships and stronger support to local governments and authorities. Through a streamlined process, you will be guided through the entire process to help minimize paperwork and hassle, while providing support from a team of experts with over 100 years of combined experience.
Should you encounter a purchasing need for your local government, townships, fire department, school district, special purpose districts (fire, parks, utility, water, etc.) or local authorities; know that we are here to help provide you a timely, reliable and competitive option to compete for that business.
For additional information or to discuss potential opportunities, please contact Derek Hetherington at [email protected] or call 800-248-3229.
Lease Purchase Financing Article Published by: Derek Hetherington, Senior Vice President BBKY
T he American Banker released it’s third annual “Best Banks to Work for” rankings, and again the Commonwealth of Kentucky was well represented on their list. Central Bank (Lexington) made the list in each of the past two years and achieved it again
this year, while United Community Bank of West Kentucky (Morganfield) made it for the second year in a row. Independence Bank (Owensboro) found its way back on to the list for the second time in three years.
What does it take to be considered one of the “Best Banks to Work for” in America? Well it might sound easy enough, but it takes focus and dedication to fully achieve. Patrick Cole, a benefit plan senior manager at Crowe Horwath (St. Louis, MO), provided American Banker with some best practices for employers to consider. If you are looking for ways to improve your company’s work-place you might start by focusing on the following suggestions.
Update employees on their department's performance, their branch's performance and the bank's performance. "Keeping people in the know builds that commitment to the organization," Cole says.
Provide training and development. "Typically employees who desire to do a good job and are high performers are also those who want to continue to learn and improve their skills," Cole says.
Foster camaraderie in the workplace. "If people have a bond with their co-workers, that builds the bond to the organization," Cole says. "It can also increase productivity," because people struggling with a work task can go to their friends for help.
Make employees a priority. Being one of the best banks takes commitment, Cole says. "Organizations that become best banks are those that have a plan to do it," he says. "They have a strategic objective to be an employer of choice and they have performance metrics to monitor how well they're doing."
Below are some highlights of the Kentucky banks making this years list. Maybe this will spark some ideas for your organization.
No. 14: Independence Bank, Owensboro, KY Employees: 289 President and CEO: Chris Reid Highlight: Each year, local high school seniors receive scholarships, in 2015 the Bank awarded $91,800. Popular with employees: Independence charters a bus once a year for employees and a guest to go shopping in Nashville. Attendees get a long-sleeve shirt, $10 for lunch and the chance to win gift cards on the bus. Employee recognition/appreciation program: Employees can earn money toward their health insurance or gym memberships by eating healthy and exercising. Groups also walk, run, bike or climb stairs together before and after work and during lunchtime. Community service initiative: Independence intends to build a home with Habitat for Humanity in each of the nine counties where the bank operates. Employees recently completed their sixth house.
No. 27: United Community Bank of West Kentucky, Morganfield, KY Employees: 53 President and CEO: Garland Certain Popular with employees: The fitness room is always open, and free pedometers are supplied to everyone. Activity to relieve stress/promote fun: Employees enjoy wearing their ugly sweaters to work during the holidays, and having their customers vote for their favorites. Winners also receive cash prizes. Community service initiative: A favorite cause is Union County Happy Pack, a local organization that provides weekend meals to children who may not have anything to eat at home.
No. 38: Central Bank, Lexington, KY Employees: 503 President and CEO: Luther Deaton Jr. Popular with employees: Central employees can buy up to 3 vacation days per year and get reimbursed if they fail to use them. Career development/training program: A job-shadowing program allows employees to observe in other departments that look interesting to them while on the clock. Community service initiative: From April to October, Central sponsors a public concert each Thursday in downtown Lexington. Employees get free drink tickets, while 39 charities benefit from the event proceeds. To see the American Banker’s complete list of the Best Banks to work for, view the slideshow at www.americanbanker.com.
Kentucky Banks Some of the Best Places to Work Article Published by: Derek Hetherington; Senior Vice President, BBKY
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
Volume 4 , Issue 3 Page 4
Reporting Requirements for the Affordable Care Act? Article Provided by: Paycor, Inc
Bob Bruns, Major Market Sales Executive Darya Goble, Major Market Sales Executive Larry Drehs, Inside Sales
T he Affordable Care Act (commonly referred to as the ACA or Obamacare)
was created to increase the quality and affordability of health insurance for
Americans, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of healthcare for individuals and the government.
An outcome of this new legislation is that its employer mandate requires large
employers to provide affordable, minimum health coverage to full-time equivalent employees or pay a fine. The law’s individual mandate also requires individuals
to report about their health care coverage.
But let’s get back to employers…
Because their ACA IRS reporting requirements are significant. Beginning back on
January 1, 2015, large employers—those with 100 or more full-time equivalent
employees (FTEs)—became responsible for providing affordable health care coverage to full-time employees, and reporting to the IRS about the coverage they
offer. They can be penalized should they fail in either regard.
Although employers with 50-99 FTEs do not have to provide health care coverage until January 1, 2016, they are subject to the same reporting requirements in 2015
as applicable larger employers.
What Forms Are Needed for ACA IRS Filing?
1094-B and 1095-B
Forms 1094-B and 1095-B are filed with the IRS by insurance providers. These forms help verify that individuals have the minimum essential coverage that com-
plies with the individual mandate requirement of the ACA.
1094-C and 1095-C
These forms are filed by applicable large employers to verify their compliance
with the employer mandate and to help verify their employees’ compliance with
the individual mandate.
So, What Does the Affordable Care Act Mean for You?
By answering a few questions, employers can figure out their filing and reporting
responsibilities regarding the ACA.
1. Are you considered a large employer in the eyes of the law?
2. Are your health benefit plans considered affordable for your employees?
3. Which of your employees are considered full time and eligible for coverage?
Employers Have Different Obligations under the ACA
If you have 50 or more full-time equivalent employees and are fully insured:
- Insurance carrier files Form 1094-B and Form 1095-B→IRS
- Employer files Form 1094-C and Form 1095-C→IRS* - Insurance carrier furnishes Form 1095-B→Employees
- Employer furnishes Form 1095-C→Employees*
*Handled with care by Paycor
If you have 50 or more full-time equivalent employees and you’re self-insured:
- Employer files Form 1094-C and Form 1095-C→IRS*
- Employer furnishes Form 1095-C→Employees*
*Handled with care by Paycor
If you have fewer than 50 full-time equivalent employees and are fully insured,
- Insurance carrier files Form 1094-B and Form 1095-B→IRS - Insurance carrier furnishes Form 1095-B→Employees
Please note that Paycor does not file B forms.
If you have fewer than 50 full-time equivalent employees and are self-insured:
- Employer files Form 1094-B and Form 1095-B→IRS
- Employer furnishes Form 1095-B→Employees
Please note that Paycor does not file B forms.
What Happens If You Don’t File?
No company wants to invite the IRS into their business. Employers that don’t file may face penalties ranging from $30 to $100 per return, up to a maximum of $1.5
million. There is some relief in 2015: no penalties will be imposed as long as the
filing entity makes a good faith effort to comply with the Affordable Care Act. However, “good faith effort” only applies to the information on the forms, not the
date on which they are filed. In other words: all forms must still be submitted by
the filing deadline.
How Will Paycor Help Me Comply with the ACA?
Paycor helps clients file the required ACA forms with the IRS by:
Guiding clients through ACA filing based on their business and benefit rules.
Housing client and employee-specific benefit data in one place for easy IRS
reporting.
Automatically capturing data from the Paycor products and services utilized
by our clients.
Allowing clients to import or manually enter benefit data from non-Paycor
systems that is needed for ACA IRS reporting.
Providing an ACA IRS review that allows clients to validate their data prior
to filing at year end.
Producing 1095-C and 1094-C forms, mailing 1095-C forms to employers or
employees, and filing 1094-C forms on behalf of our clients.
What Can You Do Today to Be Ready for the ACA?
When it comes to preparing for ACA IRS filing, knowing what to do is crucial and it never hurts to plan ahead. With time and practice, there are steps that you
can take to ensure that you are best prepared. Paycor advises these steps:
1. PRINT THE BLANK FORMS you need to file with the IRS for reference. You’ll find links to them at paycor.com/aca or earlier in this article. Learn the
information you need track for each month. Paycor can file the 1094-C and
1095-C forms for you, but you will have to provide the information.
2. KNOW YOUR SOURCES of information. Is it in your payroll or benefits
administration system? Is it in Excel somewhere or a notebook?
3. DON’T WAIT until the end of the year to start collecting the information you
need to file at year end.
4. REGISTER FOR one of Paycor’s ACA IRS Reporting webinars for a section-
by-section review of each form.
5. JOIN US Friday, October 16, 2015 at the Bankers Bank Customer Conference
in Bowling Green, KY to discuss ACA among other important topics.
6. SIGN UP for Paycor’s ACA filing service.
For more information contact Lynn Ellis at [email protected] or 800-248-3229. In
the meantime, visit www.paycor.com/aca to find links to IRS forms, webinars,
and other resources.
The ACA is complicated, but The Bankers’ Bank of Kentucky and Paycor are
here to help you figure it out.
Important notice: This content is provided for educational purposes only and
should not be considered legal advice.
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
Volume 4 , Issue 3 Page 6
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
Volume 4 , Issue 3 Page 7
MARK YOUR CALENDARS FRIDAY, OCTOBER 16, 2015
HOLIDAY INN UNIVERSITY PLAZA HOTEL
BOWLING GREEN, KY
THE BANKERS’ BANK CUSTOMER CONFERENCE
AFFORDABLE CARE ACT—IRS REPORTING
TECHNOLOGY AND ONLINE BANKING
COST EFFECTIVE MOBILE BANKING
CLICK HERE FOR ADDITIONAL INFORMATION OR TO REGISTER.
Regulators Look to Reduce Call Report Headache Article Published by: Derek Hetherington, Senior Vice President BBKY
F ederal bank regulators announced Tuesday that they are taking steps to
ease the regulatory burden on community banks by eliminating or revising
line items on the current call report.
During the press release the Federal Financial Institutions Examination Council
(FFIEC) said "The objectives of this initiative is consistent with the feedback
the FFIEC has received as part of the regulatory review being conducted under the Economic Growth and Regulatory Paperwork Reduction Act," The proposed
changes would only affect banks and savings associations.
During the FFIEC evaluation of the Call Report, they are looking to balance reporting burden against regulatory need for reliable data. Call reports have
been a source of anxiety for community banking, and there is a consensus that
the data requirements are outdated or irrelevant. The FFIEC recognizes a need
to provide reporting relief, but must preserve the regulators ability to effectively
monitor institutions and ensure they are operating in a safe and sound manner.
The cost of compiling the report can be significant. A 2014 Independent Com-
munity Bankers of America survey found that 78% of community banks spend
more than $60,000 in annual compensation to staff tasked with preparing their call reports. The ICBA also found that a short-form report would substantially
reduce the regulatory reporting burden for over 70% of the banks surveyed.
Along with the FFIEC announcement that they are proposing a streamlined call report for community banks, the council also said it is looking at other areas
where it could reduce call report burden, including accelerating the review of
possibly unnecessary items, looking into a simplified call report, and increasing
communication between community banks and regulators.
BBKY will continue to monitor and update you on the progress of the FFIEC
proposed relief. The proposal will be open for comments once it is posted to the Federal Register. No exact date or timeline was given during the press release,
but the FFIEC plans for the proposal to take effect on the December 2015 or
March 2016 call report.
W hen a community bank’s audit committee or board of directors engages an independent certified public
accounting firm to audit their bank’s financial statements do they have a full appreciation for what this covers? While many bankers may feel that a financial statement audit pro-vides for a complete and all-encompassing range of coverage, and shall we say an “insurance policy” of their respective bank’s operations and activities; this is not entirely true. For the record, let’s ensure that both audit committees and boards of directors are cognizant of what a financial state-ment audit entails, as well as those areas in which Federal and state bank regulators are looking for further coverage in areas of significant risk that do not fall under the umbrella of an independent audit as set forth in the audit standards as promulgated by the American Institute of Certified Public Accountants (AICPA) but do nonetheless require attention for a bank to comply with the myriad of current banking regula-tions.
An excerpt, with emphasis added of key language, of industry standard wording of a “clean” or unmodified opinion of a bank’s financial statements, as set forth under Generally Ac-cepted Auditing Standards (GAAS), focusing on the responsi-bility of the auditor, is as follows:
“Auditor’s Responsibility”
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evi-dence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circum-stances. An audit also includes evaluating the appropriate-ness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.”
The intent of this article is by no means intended to question the concept of “reasonable assurance” or “material misstate-ment” it rather focuses on what a financial statement audit does not entail. As a CPA serving the banking industry for
nearly 20 years, I have experienced the misinterpretation of expectations by many individuals as to what a financial state-ment audit involves. For example, an audit of a bank’s finan-cials under GAAS, while comprehensive in nature, does not always involve several facets of the regulatory environment in which community bankers operate on a day-to-day basis, and bank examiners must enforce. For example, while CPAs do consider various risks as it relates to the regulatory arena, audits performed under GAAS, with guidance set forth via the AICPA Audit and Accounting Guide Depository and Lending Institutions: Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies, an audit un-der GAAS does not necessarily cover the following, albeit non-inclusive, areas:
Independent validation/testing in accordance with Interagency Guidelines relative to the following areas:
Allowance for Loan and Lease Losses;
Interest Rate Risk and Asset/Liability Management; and
Bank Secrecy Act and USA PATRIOT Act.
In addition, a financial statement audit, while some aspects are considered in a CPA’s risk assessment, does not cover in all aspects the regulatory considerations of the following:
Information Technology Audits;
Regulatory Compliance; and
Certain areas traditionally considered internal audit or Enterprise Risk Management in nature.
In summary, the intent of this article is to ensure that Audit Committees and/or Board of Directors are aware of what they are being provided under their current arrangements to en-sure they adhere to their responsibilities in their fiduciary capacity.
Christopher S. Nice, CPA, CISA, CGMA is a LLP Partner and Coordinator of the Financial Institutions Services Group of Arnett Carbis Toothman and is based in Charleston, WV. Chris oversees the Firm’s banking practice which provides comprehensive services to banks throughout the region in-cluding audit, loan review, compliance, tax and other con-sulting services.
Feel free to contact Chris with any question or comments, at [email protected] or 1-800-642-3601.
The CorrespondentThe Correspondent At The Heart of Community BankingAt The Heart of Community Banking
Volume 4 , Issue 3 Page 8
What Does an Audit of Your Community Bank’s Financial Statements Really Entail?
Article Published by: Christopher S. Nice, Arnett Carbis Toothman LLP
