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BLOK Session IV
A Lesson in
LeadershipPage10
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8
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YBOK at the Federal Reserve
22 Briefly... In Kansas Banking
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BLOK Session IV
A Lesson in Leadership
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20 Security
Officer’s By-Word
Cash Shortages
Young Bank Officers of Kansas
k a n s a s
18
KBA By-Laws Review Process Results in
Change in KBA Regions
By Chuck Stones
4
i n d u s t r y
By Donald M. Towle, President
Kansas Bankers Surety Company
23 Banking Industry Changes Continue in
2013/2014
By Brian Mall, [email protected]
12
Maag Scramble at Firekeeper
16
Trust Conference
24
Wheat Supplies Rebounding More Slowly
By Jeff Holiday, Associate Director, MetLife Agricultural Investments
18 2013 CFO Forum
27 Security Awareness Fundamentals
19 In Fond Memory
29
Managing Sensitivity to Market Risk
FDIC Amplifies the Importance of Interest By Russ Horn, CISA, CISSP, CRISC
Rate Risk Management
By Jeffrey F. Caughron Associate Partner The Baker Group LP
© 2013 Kansas Bankers Association | The newsLINK Group, LLC. All rights reserved. The Kansas Banker is published eight times each year by The newsLINK Group, LLC for the Kansas
Bankers Association and is the official publication for this association. The information contained in this publication is intended to provide general information for review and consideration.
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
specific 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 serviced advertised. The Kansas Bankers Association is a collective work and as such some articles are submitted by authors that are independent of the Kansas Bankers
Association. While 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.
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KBA Leaders Ledger
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KBA By-Laws Review Process Results in
Change in KBA Regions
By Chuck Stones
E
very five
years
the KBA
undergoes
a review of
the by-laws that govern the
Association.
The By-laws Taskforce met on January 10 and agreed upon a
number of minor “housekeeping” changes they feel should be
made.
After those changes were discussed and agreed upon, the topic
of the current size of the Board was brought up and discussed
thoroughly.
6
A couple of key questions came up during the discussion:
• Is the KBA Board too large to be efficient and truly
effective?
• If we were starting from scratch, how large would we
design the Board to be?
• And how would we structure it? Is geography the best
way to determine bank representation?
During the discussion some of the key topics included:
• The feeling that a 3 year term is important in order to gain
competency during the Board members’ term.
•
•
A certain amount of “historical” representation should be
maintained.
Banks should continue to feel like they were adequately
represented.
The Taskforce also reviewed the Board make up of several
other state bankers associations.
In light of these discussion points, the Taskforce decided
that they felt like the Board was too large for maximum
effectiveness. They thought that 12 Board members was likely
the best number of Board members. However, in order to
address the other concerns regarding bank representation and
historical representation, it was determined that the number
of Board members would need to be larger than 12. They also
determined that geography was still the best way to determine
bank representation.
The proposal from the Taskforce is that we reduce the number
of KBA Regions from 6 to 3 thereby reducing the size of the
Board from 29 to 20. (see map)
These changes were approved at the KBA Annual Meeting on
August 10 at the Broadmoor Hotel in Colorado Springs.
The Board nomination and election process is unchanged and
will be effective for the election beginning 2014.
Region 2
Region 1
Region 3
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Hands-on Cyber Attacks:
The Offensive & Defensive of Current Threats
December 5, 2013
Junction City
Courtyard Marriott
Co-Sponsored by
This one-day, highly interactive seminar will provide hands-on
exercises to help you be better prepared to proactively prevent
attacks and deal with them effectively should they occur.
Lunch and refreshments will be provided by
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785-232-3444
7
When the winds of change
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YBOK at the Federal Reserve
Young Bank Officers of Kansas
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T
he 2013 YBOK Fall Conference was
held at the Federal Reserve Bank of Kansas
City on September 5-6. YBOK President Jarrod
Rowland, Alden State Bank, Sterling, opened the
conference with a welcome and introductions.
KBA Chairman Leonard Wolfe was in attendance and delivered
a short message on the important role bankers can play in
the efforts to repeal the mortgage registration tax in the next
legislative session.
President of the Federal Reserve Bank of Kansas City Esther
George provided the history of the KC Federal Reserve Bank
before leading into a discussion on monetary policy. She
described the shift in policy that has existed since 2008 and
the role of the Federal Reserve in continued quantitative
easing with 85 billion dollars in purchased mortgage backed
commodities and treasury bonds monthly. As a voting member
in 2013, George has been the sole dissenter in continued
quantitative easing policy. She explained that she is skeptical
that benefits offset risk in regard to imbalance and distortion in
markets when the Federal Reserve takes the safe assets leaving
others to take greater risks with other investments. The banking
industry’s challenge is interest rate policy according to George.
The group was addressed by Federal Reserve Bank Regional
Economist Jason Brown following President George’s
presentation. Brown prepared an in-depth look at the U.S.
economic position. The GDP growth has been moderate and
is expected to continue at the same pace. Consumer spending
has been the primary driver of growth followed by private
domestic investment. He discussed the impact of inflation and
unemployment rates on the GDP as well. Higher wage jobs
are slowly returning to the region. He concluded with data
demonstrating that oil prices are favorable for more production
in Kansas but the outlook for agriculture producers is mixed
depending on the region.
A CEO Panel consisted of current and former KBA board
members. Travis Hicks, Great American Bank, De Soto, Kurt
Knutson, Freedom Bank, Overland Park and Mark Larrabee,
Arvest Bank, Shawnee Mission provided well thought out
answers to questions from moderator Doug Wareham, SVP of
Government Relations, KBA.
“Winning with Analytics: What Banks Can Learn from
Moneyball” was provided by Ted Triplett. In a fast paced
presentation, Ted demonstrated how analytics can play a role
in developing strategy in a bank. His presentation was aided
with video clips from the movie Moneyball. The meeting
portion of the conference concluded with a presentation from
former professional baseball player and banker, Kent Maggard.
Using examples from his career in baseball as well as multiple
years in banking Kent provided life lessons in teamwork and
leadership.
A reception at Boulevard Brewery provided an opportunity
for continued discussion and networking. The YBOK golf
scramble was held at The Golf Club of Kansas in Lenexa
on Friday morning. A golf clinic was offered as an alternate
activity and both were well attended.
The 2014 YBOK Spring Conference will be held in Wichita on
May 1st.
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The CEO Panel consisted of former or current KBA board members from left to right are Travis Hicks,
(Great American Bank, DeSoto), Kurt Knutson (Freedom Bank, Overland Park), and Mark Larrabee
(Arvest Bank, Shawnee Mission)
Federal Reserve Bank of Kansas City
President Esther George decribes her
reasoning as the only dissenting vote
to continue quantitive easing as an
economic strategy.
Jason Brown, Regional Economist,
described the current economic
conditions and short term outlook.
KBA Chairman-elect Kelly Mason, First National Bank in Pratt, enjoyed a discussion between sessions with Kerry Hatzenbuehler, Kennedy and Coe, Ryan Pierce, Bankers’ Bank of
Kansas and Danny Mason, Community National Bank Branch.
k a n s a s
YBOK President Jarrod Rowland,
Alden State Bank, Sterling, welcomed attendees to the 2013 Fall
Conference.
Ted Triplett, led a fast-paced session
on how analytics can improve bank
performance.
9
Several attendees tried their hand at
golf through a clinic held during the golf
tournament. Pictured is Anna Baker,
INTRUST Bank, N.A., practicing her drive
with the golf pro.
Kent Maggard shared his story of success from
the pitchers mound to the board room.
November 2013
Pictured from left to right are Ian Worrell, INTRUST Bank, N.A., Michael Needham, First
Security Bank, Paola, Dustin DeWitt, and Eric DeCoursey, BKD, LLP.
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BLOK Session IV
A Lesson in Leadership
10
BLOK classmates Darlene Schmidt, State Bank of Delphos, Delphos; Codi Mason, Centera Bank, Sublette; Christine May, Guaranty
State Bank and Trust Company, Beloit; Jan Endicott, Stockgrowers State Bank, Ashland; Sara Blubaugh, KBA staff; and Brian Eilert,
First National Bank, Beloit, helped promote BLOK to attendees of KBA’s annual Jim Maag Golf Scramble.
O
n September 23 and 24, the Bank
Leaders of Kansas class joined in on the
Maag Scramble, BLOK alumni dinner and the
final BLOK session focused on leadership. Following a day of networking on the golf
course, the group engaged in an interactive discussion with
former KBA President Harold Stones and former ABA/KBA
Chairman Earl McVicker, President of Central Bank & Trust
Co., Hutchinson. Several BLOK alumni and KBA leadership
joined the class for dinner and live entertainment that evening
in Holton.
The class gathered at the Prairie Band Conference Center on
the 24th for a day focused on leadership and accountability.
Ted Garnett, Performance Consulting, LLC, led the interactive
session with a mixture of lecture and small group activity.
He established the importance of goal setting through real
life stories that the group could relate to. Garnett’s program
focused on the difference between leadership and management
and he reinforced the significance of trust in any relationship.
The 2013 BLOK class will graduate at the Harold A. Stones
Public Affairs Conference in February 2014. Applications
for the 2014 BLOK class are being accepted. Contact Sara
Blubaugh at (785) 232-3444 or e-mail her at
[email protected] for more information.
A sincere thank you to BLOK Grand sponsors
Bankers’ Bank of Kansas
FHLBank Topeka
Kansas Bankers Surety Company
KBA Insurance, Inc.
Kennedy and Coe, LLC
Professional Bank Consultants, LLC
Promontory Interfinancial Network
UMB Bank, N.A
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Former KBA President Earl McVicker and former KBA Executive Vice President Harold Stones challenged the 2013 BLOK class to
become persistent, goal-oriented advocates for the banking industry.
Several members of the 2013 BLOK Class participated in KBA’s Jim Maag Golf Scramble held at Firekeeper Golf Course near Mayetta,
Kansas. Pictured are Wes Spohr, INTRUST Bank, N.A., Wichita; Mike Miller, Montezuma State Bank, Copeland; Doug Wareham, KBA
staff; and Craig Heideman, Kaw Valley Bank, Topeka.
Trust, speed and execution were the leadership themes
exercised during the final training session for the 2013 Bank
Leaders of Kansas (BLOK) Class.
2013 BLOK Class members Todd English, Western State Bank,
Dodge City; Miki Bowman, Farmers & Drovers Bank, Council Grove;
Tim Smith, Astra Bank, Hays; and Patrick Harbert, Equity Bank,
Wichita, pause for a photo during the Jim Maag Golf Scramble that
coincided with BLOK Session IV.
Matt Needham, CrossFirst Advisors (pictured center) learns the importance of
developing a high level of trust among his 2013 BLOK Class teammates.
November 2013
Ted Garnett, President of Performance
Resources Consulting challenged members
of the 2013 BLOK Class to raise the levels
of accountability and execution within their
individual banks.
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Maag Scramble at
Firekeeper
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Ron Johnson, Community National Bank, Seneca; Machelle VanTrump, Citizens State Bank & Trust Co., Ellsworth; Dean Johnson, The Capital
Corporation, LLC, Overland Park; and David Brownback, Citizens State Bank and Trust Co., Ellsworth, pause for a team photo as the Firekeeper flag
behind them demonstrates the wind that day.
T
his year’s annual KBA golf tournament, The Jim Maag Scramble, was held at
the beautiful Firekeeper Golf Course just north of
Topeka. A full field of 72 golfers enjoyed another
great tournament as the weather was again a
perfect partner and the golf wasn’t bad either.
The Jim Maag Trophy, which goes to the overall champion,
returned to VisionBank in Topeka as the team of Tim Krueger,
VisionBank, Tom Bals, VisionBank, Mike Sobba, Strunk LLC,
Kansas City, and Mark Krueger, Deluxe won the event carding
an eleven under par 61 to take the top honors. In the second
flight the team of David Alley, Greg Sims and Eric Schroeder,
all of CrossFirst Bank, Leawood, and Eric Stofer, KBA shot a 4
under round of 68 to take home the top honors in their flight.
This year’s event featured an opening night reception and
a putting contest, with the title of “The Greatest Putter in
the World” at stake. With over forty entries in this NCAA
tournament bracket style contest the putts were falling as
tension mounted and players quickly moved their way through
their bracket. In the end, the final four of Jimmy Cooper,
Patriots Bank, Garnett, Alan Meyer, State Bank of Bern,
Axtell; Scott Cooper, Patriots Bank, Garnett; and Mike Miller,
Montezuma State Bank, Copeland, squared off in an epic puttoff that saw Meyer and Miller squeak out victories after “The
Putt of Death.” In the 6-hole Championship putt-off Miller
grabbed an early lead with a hole in one on the always tricky
number 2 on the orange course. Meyer stayed close the whole
way, but when his final putt didn’t drop and Miller’s did, Mike
Miller was crowned “The Greatest Putter in the World.”
Next year’s event will again be held at Firekeeper on
September 21st and 22nd, 2014.
Platinum Sponsors
EverFi
Promontory Interfinancial Network, LLC
Gold Sponsors
WolfPAC
Works24
Silver Sponsors
The Capital Corporation
KBA Insurance, Inc.
Banc Consulting Partners
Stinson Morrison Hecker
FHLBank Topeka
Commerce Bank
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“B” Flight Champions: David Alley, Greg Sims and Eric Schroeder, all of
CrossFirst Bank, and Eric Stofer, KBA.
KBA Chairman-elect Kelly Mason, First
National Bank in Pratt and KBA PastChairman Frank Carson, Carson Bank,
Mulvane, enjoy the awards ceremony
following a day in the sun.
Mike Miller, Montezuma State Bank,
Copeland, was crowned “The Greatest
Putter in the World.”
Former KBA President and tournament namesake,
Jim Maag, and Jimmy Cooper, Patriots Bank, Garnett,
enjoy the atmosphere of the putting contest the evening
before the Maag Scramble.
Championship team: Tom Bals, VisionBank, Tim Krueger, VisionBank, Mark Krueger, Deluxe, and Mike Sobba, Strunk LLC.
“The final four” of the putting contest were Mike Miller, Montezuma State Bank, Scott Cooper, Patriots Bank, Jimmy Cooper,
Patriots Bank, and Alan Meyer, State Bank of Bern.
November 2013
Chris Costello, Tampa State Bank, Kent Owens, KBA Staff and
Cameron Cooper, Patriots Bank enjoy the challenge in the
putting contest.
13
Miki Bowman, Farmers and Drovers Bank, Council
Grove, attempted to outplay the rest and become
“The World’s Greatest Putter.”
Preparing
The next generation
Of community bank
Leaders
The Graduate School of Banking at Colorado (GSBC) is pleased to announce
the graduation of 18 bankers from Kansas as part of the Class of 2013.
Congratulations for completing a demanding 25 month program that places you in an elite group of
leaders in your industry. A total of 42 Kansas bankers attended the 63rd annual school session including the 18 graduates below. Best wishes on your future in banking.
The graduates are pictured left to right: Back Row: David Herbster (Community National Bank-Sabetha), Curtis Goebel
(Hanston State Bank-Hanston), Randall Wise (Peoples Exchange Bank-Belleville), Derek Olson (Centera Bank-Dodge City);
Third Row: David Thornburgh (Lyndon State Bank-Lyndon), Brandon Nordhus (Community National Bank-Seneca), Matthew
Engel (Security State Bank-Leoti), Michael Anderson (The Peoples Bank-Medicine Lodge); Second Row: David Heck (Arvest
Bank-Overland Park), Scott Rock (Central National Bank-Junction City, Darren Gragg (Bennington State Bank-Salina), Ryan
Commerford (Central National Bank-Junction City); Front Row: Timothy Metz (Douglas County Bank-Lawrence), Cindy Williams (Federal Home Loan Bank of Topeka-Topeka), Jayme Burdiek (Federal Home Loan Bank of Topeka-Topeka), Hannah
Sullivan (Citizens State Bank-Hugoton), Shanda Chambers (First National Bank-Independence), Shannon Billinger (Citizens
Bank NA-Overland Park).
Sponsored by:
1540 30th St. Suite 147, UCB 411 Boulder, CO 80309-0411
800-272-5138
http://www.gsbcolorado.org/
Educating Professionals, Creating Leaders
Congratulations 2013 Graduates from Kansas
We congratulate you on completing the rigorous 25-month program and joining the more than 20,000
alumni who have gone on to leadership positions in their organizations, associations and the financial
services industry. Best wishes for continued success!
Matt W. Bennett
Senior Vice President
The First National Bank
of Syracuse
Garden City
Tyson W. Oakes
Assistant Vice President
First National Bank,
Independence
Independence
Sara Elizabeth Girard
Vice President, Retail
Central National Bank
Topeka
Brian C. Sandberg
Loan Officer
Fidelity Bank
Wichita
Timothy P. Krueger
Senior Vice President
VisionBank
Topeka
J. Enrique Venegas
Vice President
Simmons First National
Bank
Leawood
Ryan Patrick Murphy
Senior Financial Analyst
Fidelity Bank
Wichita
5315 Wall Street #280, Madison, WI 53718
|
Sponsored by:
Ph. 800-755-6440
|
Please visit gsb.org
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Trust Conference
T
16
he 2013 KBA Trust Division
Conference was held in the elegant backdrop
of the Oread Hotel in Lawrence, Kansas. The
well-attended event opened with a presentation
from Troy Davig, SVP and Director of Research,
Federal Reserve Bank of Kansas City. The talk titled “The US
Outlook” provided an analysis of the GDP with a sustained
growth rate of 2% over several years. The rate was largely
attributed to shaky consumer confidence due to multiple debt
ceiling and fiscal cliff debates, the European crisis and natural
disasters in Japan. Davig discussed unemployment rates and
how the Bureau of Labor Statistics builds its analysis as well as
how this recovery compares to past cycles. Sequestration and
broader fiscal tightening has had an effect on the economy but
the full effect probably has not been seen yet. After reviewing
the factors impacting the housing markets, he concluded with
his view of the greatest risks to our economy. The debt ceiling
debate and continued sequestration effects on interest rates are
among Davig’s risks to an outlook decline. He also discussed
the effect of rising commodity prices, reintensification of the
financial crisis in Europe and slowed growth in emerging
markets as areas to monitor.
Co-founder of JanSport, Skip Yowell provided an entertaining
look at the story behind his business start-up and amazing
success. He was able to share his experiences of expeditions
to Nepal and Africa where he would test backpacks, the first
dome tents and other products while interacting with local
culture. “Understand your customer,” stated Yowell. Through
many action shots from his self-proclaimed hippie revolution
of mountaineering equipment, he shared his secret to success.
“I take our business seriously but I don’t take myself seriously,
you have to know how to have fun.”
A panel of experienced trust officers, Daryl Craft, Shane
McCall, John Thaemert and moderator Martha Linser, provided
a view of the “Past, Present and Future of Trust Business.”
Following the panel discussion, Shon Robben, Arthur-Green,
LLP, gave a talk titled “Planning Alternatives for Farming and
Non-Farming Heirs.” Shon shared various considerations for a
farming estate plan with fewer liquid assets and uncertain land
values among others. He had many pointers to tax planning,
exemptions, and recommendations for business classifications. Cindy Hermes, Director of Public Outreach for the Kansas
Insurance Department, shared details about the new health
plans available in Kansas as a result of the Affordable Care Act.
She listed the various plans available as well as levels of care
and premium structure.
With a unique perspective on investment strategies, William
Ehling, Federated Investors, shared many decision tools for
the fixed income investor. He addressed the concerns of debt
growth that exceeds GDP, the lackluster economic recovery
and bonds versus stocks in this economy.
Stan Haithcock, “Stan the Annuity Man,” explained the
pitfalls and benefits of various types of annuities. Annuities
don’t have to be a forbidden route but understanding how to
purchase them for the contractually guaranteed benefits and
not falling for the sales oriented hype is essential to making
a good annuity choice for your clients. He warned that
fraudulent internet sales are likely to increase with the boomer
generation looking for “guaranteed” income. Comparing
annuities for their features, fees and for their financial strength
is an essential part of the analysis. The financial strength can
be compared by using Comdex ratings. The conference was
wrapped up with a presentation by Matthew Bish, Foulston
Siefkin, LLP, titled “More Expensive by the Dozen: Twelve
Frequent Estate Planning Mistakes which Cause Most Estate
Plans to be Flawed.” His presentation and solution strategies
are supportive of clients using professional fiduciaries to avoid
some of these mistakes.
The KBA Trust Division officers and members provided a
heartfelt farewell to Elaine Martin. Elaine has provided 12
years of support to the Trust Division and will be missed. We
wish her well in her retirement.
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A panel of Trust Division Directors from left to right are John Thaemert (Citizens State Bank &
Trust, Ellsworth), Daryl Craft (GTrust Financial Partners, Topeka) and Shane McCall (The Peoples
Bank, Smith Center).
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Troy Davig, Economist from Federal
Reserve Bank of Kansas City, provided
an overview of economic trends.
17
Stan Haithcock, “Stan the Annuity Man,”
ran a full court press in the spirit of annuity
investments.
John Thaemert and Barbara Braa thank Elaine Martin for serving the Trust Division for so
many years. They wish her well in her retirement.
KBA Trust Division President Barbara
Braa welcomed attendees to the 2013
Trust Conference.
November 2013
The Alfred Packer Memorial String Band provided after dinner entertainment for
conference attendees.
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2013 CFO Forum
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A
ll seats in the KBA’s Chandler
Board Room were full for the 3rd annual CFO
Forum on September 17, 2013. The session was
facilitated by Paul Sims, President of Guided
Solutions. The entire day was full of interactive
discussion accompanied by a message of opportunity in a
changing industry. Initial topics included recent experiences
in Kansas banks relating to loan demand, rates in response
to the economy and trending bank acquisitions. As mergers
between institutions occur, policies and procedures are much
more easily joined than the diversified cultures among merging
parties.
The day was very interactive as Paul Sims led discussion on
best practices in vendor management and challenges with
due diligence requirements for bank investments. There is a
balancing act in many banks as the Federal Reserve considers
raising rates and CFO’s are faced with managing long term
investments in an uncertain environment. Risk management
practices are becoming a vital component of daily operations as
examiners focus on future capital planning and other forward
looking risk assessments. Mr. Sims spent some time describing
considerations for assessing global risk as a greater component
of various silos of risk measured now. From an enterprise
risk management prospective, the CFO is the tip of the spear
looking at what they can gain from the process rather than
viewing it as something they are required to do.
The banking industry is increasingly ramping up cyber security.
Internal staff and outside threats are getting smarter and
testing needs to be more sophisticated. Vulnerability/intrusion
testing is essential for external fraud, but it was emphasized
that consistently reviewing internal access and controls are
fundamental to preventing internal fraud. Noting that fraud is
much more likely to be identified by internal staff, training is
also an important component of any fraud prevention program.
Wrapping up the day with a discussion on improving efficiency
and productivity provided for a collaborative exchange of ideas
with many examples shared.
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In Fond Memory
Gerald A. “Gerry” Schaffer
Gerry Schaffer passed away Thursday, August 29, 2013
in Colby, Kansas at the age of 73. He was a banker in
Hoxie throughout his career. He retired in 1997 after
37 years at the First National Bank of Hoxie. He was
an active member of the Kansas Bankers Association
and, as a member of the Federal Affairs Committee
he traveled to Washington D.C. to advocate for his
profession and Kansas Agriculture. He was invited
to join the American Bankers Association’s National
Agriculture Committee where he served for three years.
Gerry is fondly remembered by his wife, Darlene, four
children and ten grandchildren.
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Reach your target audience affordably.
advertise
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KRIS MONTIONE
Advertising Sales
727.475.9827 or 855.747.4003
[email protected]
19
November 2013
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SECURITY OFFICER’S BY-WORD
CASH SHORTAGES
By Donald M. Towle, President
Kansas Bankers Surety Company
C
ash shortages are a serious and
growing problem in banking today. But the
problem, which is extremely serious and
expensive in some banks, does not seem to exist
in other banks. In an effort to find the reason for
the wide differences between problem and non-problem banks
which otherwise seemed similar, a careful study was made of
the cash shortages trend in banks.
20
The following factors were considered in the evaluation of the
banks in regard to their cash shortages:
• Teller salaries
• Teller turnover
• Teller training methods
• Lobby traffic patterns
• Lobby vs. drive-up tellers
• Number of transactions handled
• Geographic location of the bank
• Urban vs. rural banks
• Large, medium, and small banks
• Day of the week
• Month of the year
• Cash handling procedures
• Attitudes of bank management
• Education level of tellers
• Male vs. female tellers
We were able to find a correlation between poor salaries and
turnover, but not between poor salaries and cash shortages.
There was a correlation between teller errors and lack of
training, and turnover, but cash shortages were less than other
teller errors. We found that large urban banks as a general rule
paid tellers less than rural banks paid their tellers, but there
was no significant difference in cash shortages between urban
and rural banks. No day of the week had significantly more
cash shortages, except Mondays. However, when the fact that
many banks carry over Friday evening and Saturday teller
transactions to balance into Monday’s business was considered,
Monday cash shortages did not stand out over any other day of
the week. Two factors did show up significantly in the study.
The month of the year and the attitude of bank management
are very important factors in the number and amount of cash
shortages that any bank will suffer.
Month of Year
Cash shortages are significantly higher from November 1 to the
end of the first week in January. That time period has held true
for many years. There are more cash shortages in banks during
that 10-week period than in the balance of the year combined.
We were unable to prove any reason for that period of time to
stand out the way it did. We can only speculate the need for
extra cash at Christmas time might be the reason.
Management’s Attitude
The attitude of bank management turned out to be the real
key to the amount of cash shortages suffered by banks, both
large and small, urban and rural. In banks with excessive cash
shortages, the attitude of bank management was in whole or in
part as follows:
• “Everyone makes mistakes.”
• “Our tellers do a good job considering the amount of cash
that they must handle.”
• “The owners will not allow us to pay good salaries, so we
have to expect more errors in cash.”
• “Accurate, careful tellers are just not available in today’s
market.”
• “We expect too much of our tellers now.”
• “We are just one big happy family here.”
• “Strict cash handling rules and procedures create unhappy
employees and more turnover.”
• “We don’t want our employees to feel that we do not trust
them.”
• “We trust our tellers.”
• In banks with little or no cash shortages the attitude of
bank management was, in whole or in part, as follows:
• “We will not stand for excessive teller offages.”
• “We have not had a cash shortage of more than $100 in
over three years, that we could not find.”
• “When a teller is out of balance, everyone stays until the
money is found.”
• “We dismiss any teller who has too many cash shortages.”
• “We check every transaction until the money is found.”
• “We are just as concerned about overage as shortage
because it means that a customer was shorted by our
bank.”
• “Teller bonuses are related to their accuracy in our bank.”
• “We were short $300 one time in the last year and we
think we know the person who got the money. The
customer kept the savings withdrawal ticket and denied
ever being in the bank on that day.”
• “We are proud of our teller balancing record and
everyone is working very hard to maintain the record.”
The conclusion of the study is that the cash shortages in any
bank will rise to any amount that the bank’s management
considers normal and tolerable, whether that amount is $50 per
year or $50,000 per year. The real key to less cash shortages is
the attitude of management, not the accuracy or quality of the
tellers.
For more information, please give us a call at (785) 228-0000.
Are you looking for the calm in the storm?...
•
For over 100 years, we have been serving Community Banks with:
Superior and Innovative Products
• Financial Institution Crime Bond
• Directors & Officers Indemnity
• Bank Employment Practices Defense Policy
• Check Kiting Fraud Indemnification Policy
• Internet Banking Theft Catastrophe Bond
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• Cost of Replacing Compromised Bank Cards Policy
• Competitive Premiums
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For more information, give us a call at (785) 228-0000.
A Live, Intelligent Human Being Will Always Answer The Phone!
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A Member Of The Berkshire Hathaway Inc. Group of Insurance Companies
Phone (785) 228-0000 - Fax (785) 228-0079
1220 SW Executive Drive - 66615
P.O. Box 1654, Topeka, KS 66601
RatedA++ (Superior) By A.M. Best
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Briefly... In Kansas Banking
Ed Splichal, Kansas Bank Commissioner
Kansas Bank Commissioner Ed Splichal sent a letter of resignation
to Governor Brownback to be effective on November 1, 2013. In an
e-mail to all Kansas state-chartered banks Splichal sited his wife’s
health issue for this decision and noted that he wants to demonstrate
the same level of support for her that she has offered him. No announcement has been made for plans for naming Splichal’s replacement.
Julie Huber, Equity Bank Branch, Wichita
The Wichita Business Journal recognized 20 women who
are leading Wichita businesses in a variety of sectors,
from banking to real estate to manufacturing to education.
Julie Huber, Equity Bank, 2012 graduate of BLOK (Bank
Leaders of Kansas), was recognized in this elite group of
women. According to The Wichita Business Journal, Huber stated that
a secret to success is learning “and always be willing to learn something hard.” She says she’s always wanted to know all about the banks
at which she works, not just about her particular job. From her start
as a drive-through teller for a bank in McPherson in 1992, she’s risen
through the ranks to executive vice president and chief credit officer at
Equity Bank, which she joined in 2003.
22
Rick Chochon, American State Bank and Trust Company, Great Bend
Rick Chochon has been named the new President and
CEO of American State Bank and Trust Company. Chochon succeeds Don LacKamp who will remain with the
organization in a dual role as its Executive Vice-Chairman
and as President and CEO of American State Bancshares, the parent
company of American State Bank. Since 1992, Chochon managed
Pinnacle Banks in Shelby and Arnold, Nebraska and in 1999 became
market president of the Columbus branch.
Tonya Barta, Farmers State Bank, Holton
The Farmers State Bank in Holton, KS is pleased to
announce Tonya Barta as their new President and CEO.
Barta will also serve on the Bank’s Board of Directors.
Tonya is a graduate of Kansas State University and has
25 years of banking experience. She and her husband,
Brooks and two kids, live in Holton.
Ora H. Reynolds, Metcalf Bank, Overland Park
Tom Fitzsimmons, chairman of Metcalf Bank, announced
the election of Ora H. Reynolds to the board of directors
of Metcalf Bank. Ms. Reynolds is president of Hunt
Midwest Real Estate Development, Inc. in Kansas City,
Missouri. She directs the development, marketing, sales
and leasing of more than 6,000 acres of industrial, commercial, retail
and residential properties owned by the company. She is also focused
on strategic planning and expansion within and outside the Kansas
City metro area.
Country Club Bank announces top executive promotions
William “Bill” Teiwes has been promoted to chief risk
officer. Formerly he was executive vice president/chief
operating officer. He joined Country Club Bank in 1994,
and will mark 50 years in banking in 2014.
Douglas Axon has been promoted to chief administrative
and operations officer. Most recently he was the CFO for
the bank. A CPA, he has three decades of banking and auditing experience, and joined Country Club Bank in 2004.
Ashly C. Hanson has been promoted to CFO. Most recently she served as senior vice president/controller. She
has 25 years of banking experience, and joined Country
Club Bank in 1988.
Jo Kinsey has been promoted to executive vice president/
director of retail banking. Most recently she was senior
vice president /director of retail banking. She has 37 years
of banking experience, and joined Country Club Bank in
2004.
Robert W. “Bob” Healy has been promoted to executive
vice president/chief credit risk officer after serving as senior vice president /chief credit risk assessment officer. He
has 26 years of banking experience, and joined Country
Club Bank in 2011.
Sheri Cuda has been promoted to executive vice president/deposit operations. Most recently she was senior
vice president/deposit operations. She has more than three
decades of banking experience, and joined Country Club
Bank in 1981.
Jennifer Fenton has been promoted to controller after serving as
assistant controller. Her banking experience includes two years as a
teller at Commerce Bank & Trust in Topeka (now CoreFirst Bank) and
nine years at Country Club Bank.
James Stallbaumer, Stockgrowers State Bank, Maple Hill
James Stallbaumer, Rossville, is being appointed to a three-year term
on the Kansas Real Estate Appraisal Board. The Kansas Real Estate
Appraisal Board regulates real estate appraiser’s licenses, provides
access to appraisers’ education resources and informs appraisers of
industry news. Mr. Stallbaumer earned a bachelor degree from Kansas
State University. He is currently the President of Stockgrowers State
Bank in Maple Hill, Kansas.
Julie Taylor
Julie celebrated her 20 year anniversary with the KBA
on September 20th. Julie started with KBA as a part-time
office assistant with two young boys at home. After three
years she went full-time and started taking on additional
roles. She currently manages the BankPAC accounts
and the association database as the BankPAC Treasurer/Information
Systems Coordinator. Congratulations Julie!
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Banking Industry Changes
Continue in 2013/2014
By Brian Mall, [email protected]
D
oes it feel as if the banking
industry is in a state of constant flux? With new
regulations, Basel III, Dodd-Frank Act and
income tax changes, the answer seems to be yes.
Here is an overview of some of the significant
tax changes that could impact your bank and its shareholders.
Basel III Deferred Tax Restrictions
On July 2, 2013, the Federal Reserve released the Basel III
standards, which modified how and when deferred tax assets
can be factored into regulatory capital. In general, Basel III
does not go into effect until January 1, 2015, for community
banks, and the rules are phased in over a five-year period.
Under both the current and the new standards, the starting point
is generally accepted accounting principles (GAAP) deferred
tax asset (DTA)/deferred tax liability (DTL). However, there
are some key distinctions after the starting point.
Basel III Treatment of DTAs:
• First, allocate DTLs pro-rata to offset DTAs.
• Second, any remaining DTAs related to net operating loss
carry-forwards and/or credit carry-forwards are backed
out of Tier 1 capital. In other words, a bank cannot use
future projected taxable income to support these types of
DTAs.
• Third, DTAs are allowed as long as they can be carried
back against taxes paid previously and they do not exceed
the new threshold deduction computations:
o Individually, less than 10 percent of adjusted Common Equity Tier 1 (CET1).
o Collectively, less than 15 percent of CET1.
• Finally, there is a 250 percent risk weighting on allowable
DTAs.
In general, the Basel III standards are much more restrictive
and will result in a reduction of DTAs allowed in regulatory
capital. Banks should familiarize themselves with these new
rules and evaluate planning strategies to help mitigate the
effects of the new standards.
The IRS anticipates most businesses will need to file various
elections to conform to the new regulations. Now that the
regulations are final, banks should work with their advisors to
implement these new regulations.
2013 Kansas Law Change
In 2012, Kansas House Bill 2117 changed the tax landscape
for Kansas individuals beginning in 2013. The bill eliminated
state income taxes on certain activities and reduced the state tax
rates on the rest of the activities. Here is a comparison of the
significant changes:
Schedule C
Pre - H.B. 2117
Post - H.B. 2117
Taxable
Exempt
Taxable
Exempt
Sole proprietor & Single-member
LLC
Schedule E
23
S corporations, Partnerships,
Trusts, Royalties & Rental Real
Estate
Schedule F
Taxable
Exempt
6.45%
4.90%
3.50%
3.00%
Farm
Maximum Tax Rate
Being phased down over six years
Minimum Tax Rate
Being phased down over six years
In addition to the changes listed above, the standard deductions
were increased and itemized deductions were either eliminated
or decreased. However, banks still will be required to file the
Kansas Privilege Tax Return, Form K-130, and pay the tax
accordingly. In addition, the bank’s S corp shareholders will be
permitted to deduct holding company losses while excluding
the bank income, as tax was already paid at the bank level.
The taxation treatment of bank S corp earnings in Kansas will
remain consistent with prior years.
Conclusion
While this article summarizes some of the key 2013/2014 tax
changes that will affect your bank and its shareholders, please
visit the BKD Thought Center at bkd.com/thought-center for
more information.
This information was written by qualified, experienced BKD professionals, but
applying specific information to your situation requires careful consideration
of facts and circumstances. Consult your BKD advisor before acting on any
matter covered here. Article reprinted with permission from BKD, LLP, bkd.
com. All rights reserved.
November 2013
2014 Final Repair Regulations
In September 2013, the IRS issued final repair regulations and
these are effective January 1, 2014. Below is a summary of
significant changes in the final regulations:
• The regulations implemented a simplified de minimis
rule. The safe harbor allows a taxpayer to expense an item
as long as the cost does not exceed $5,000 per invoice or
per item as substantiated by the invoice.
o The aforementioned safe harbor applies only to a taxpayer if the taxpayer has applicable financial statements.
o To use this safe harbor, banks must have a written policy to expense this dollar amount for books; the policy must be in place by the end of 2013.
• The regulations expand the routine maintenance safe
harbor to include buildings and structural components.
•
An item is considered routine if the taxpayer expects
to replace it more than once over a 10-year period.
“Routine” items can be expensed as incurred by the bank.
The final regulations allow a taxpayer to elect to follow
book capital improvement cost accounting, but only if the
bank capitalizes the item for books.
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Wheat Supplies Rebounding
More Slowly
By Jeff Holiday, Associate Director, MetLife Agricultural Investments
T
24
he usually quiet wheat market
suddenly got more than its fair share of attention
this past spring when news surfaced of geneticallymodified wheat found growing in an Oregon field.
While not a food safety threat to consumers, its
unauthorized use led major buyers like Japan to temporarily
halt wheat imports from the US Once confirmed as an isolated
event, however, trade returned to normal. Since then, fewer
headlines have shifted the market’s focus to the tighter than
usual supplies, pushing prices higher this fall. The expectation
of a rebound in foreign wheat production was put to the test
this year due to less-than-ideal growing conditions across
parts of Europe and Asia, adding uncertainty and putting some
upward pressure on wheat prices this fall despite a backdrop
of long-term declines in grain prices. Lately, US and global
stockpiles of wheat have been revised downward, suggesting
a flat to modestly declining wheat inventories relative to yearago levels. This is a far cry from US corn stockpiles projected
to more than double by next summer. These different dynamics
indicate that wheat may again become pricier relative to corn,
suggesting feed wheat could lose popularity.
160
140
Top Wheat Producers
million tons
7%
0%
120
2012/13
2013/14F
% change
-3%
100
80
-7%
60
43%
40
16%
20
15% 3%
40% 20%
0
Source: USDA
World Wheat Production (million tons)
EU
2011/12
2012/13
2013/14F
% change 13 vs.
‘12
138.1
133.1
142.9
7%
-4%
China
117.4
121
121
0%
3%
India
86.9
94.88
92
-3%
9%
Wheat is more widely grown around the world than corn, but
big players like the US, the EU, Canada, Australia and Russia
dominate the export market. In recent years, eyes have been
on the US and the continued drought could cut production an
estimated 7% in the 2013/14 growing year. Russia anticipates a
43% increase in output this year, although late summer reports
have been less optimistic and could signal rising pressure on
wheat prices that was simply non-existent back in June and
July. Even from South America, near-term bullish momentum
is also possible with Argentina directing more domestic
supplies to local flour millers amid high domestic prices. These
trends are easing global competition and giving more support
to US wheat exports.
Future global demand remains to be seen, but early predictions
call for a nearly 4% increase in the coming year. So far, China
is holding strong, with plans to buy more foreign wheat this
year, amid rising domestic feedgrain demand. This would run
contrary to the perception that the global economic slowdown
can cause grain demand to follow suit, such market evidence
is limited. Historically, any declining grain consumption was
essentially tied to periods of high prices and limited supplies
rather than economic recessions. The versatility of wheat
– a major food ingredient and also a feedgrain in livestock
production – suggests it would take severe economic hardship
to cut wheat demand, which is not in the cards right now. The
Chinese economy is indeed slowing, but at a moderate pace.
Yet, global wheat consumption is projected to grow next year
following a slight demand decline due to tighter supplies and
higher prices rather than any significant slowdown in global
economic growth.
Overall, the wheat market still illustrates strong demand
combined with a rebounding supply side, albeit slower than
anticipated for 2013/14. This supports wheat prices with a
return to a sizable premium over corn that had shrunk in the
past year due to tight supplies boosting corn prices. At the
farm level, this could impact crop budgets for grain growers
who have favored corn over wheat for several years now. Such
changes in grain pricing dynamics could shift crop production
strategies highlighting the benefit of established agricultural
lenders who can demonstrate flexibility and reliability with
regard to farmers’ long-term capital needs amid volatile times.
US
54.4
61.76
57.5
-7%
14%
Russia
56.24
37.7
54
43%
-33%
Canada
25.3
27.2
31.5
16%
8%
Australia
29.9
22.1
25.5
15%
-26%
Pakistan
25
23.3
24
3%
-7%
Ukraine
22.3
15.76
22
40%
-29%
methodologies will permit. However, MetLife makes no representations or
Argentina
15.5
10
12
20%
-35%
warranties, either express or implied, to any persons as to the completeness,
World
697.2
655.2
708.89
8%
-6%
14 vs. ‘13
All information contained herein has been obtained by MetLife from sources
believed by it to be reliable. The analysis, opinions, forecasts and predictions
contained herein are believed by MetLife to be as accurate as the data and
accuracy and reliability of such information, forecast and/or predictions and
expressly disclaims any liability with respect to any of the foregoing. For more
information, call 720.936.8362
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Apply for the 2014 Class
Application Deadline:
December 2, 2013
Session I: Building a Confident KBA Volunteer Leader/Public Affairs Conference
February 4-6, 2014, Topeka
Session II: Federal Reserve Bank 101/Tri-State Leadership Conference
March 25-27, 2014; Overland Park
Session III: March on Capitol Hill
June 8-11, 2014; Washington, D.C.
Session IV: Improving Bank Performance and Building Teams That Work
September 22-23; Mayetta, KS
Contact Sara Blubaugh ([email protected]) at the KBA for a 2014 BLOK application and for more details.
Turn to Metlife Agricultural
Investments for your client’s
agricultural real estate loan needs.
25
MetLife provides an outlet for banks to offer long-term,
fixed rate agricultural real estate loans to their existing and
prospective clients.
Whether your clients are looking to expand their operation
or refinance an existing mortgage, together we can tailor a
loan to fit their needs with MetLife as your preferred lender.
• Fixed interest rates from 3 to 30 years
• MetLife does the underwriting, appraisal, and prepares the loan
documentation
• Local representative to handle the loan from application to
closing
To see how you can grow your business with MetLife
Agricultural Investments, contact
Jeff Holaday
Cell: 720.936.8362
Email: [email protected]
www.metlife.com/ag
Agricultural Investments
© 2013 METLIFE, INC. PEANUTS © 2013 Peanuts Worldwide
Nothing contained herein should be construed as a commitment by MetLife or any of its affiliates
to enter into any specific financing transaction.
November 2013
Mike Borowski
Northeast Kansas
Cell: 402.525.2757
Email: [email protected]
Using Tablets
in the Cloud
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By Nathan Dahlstrom of CoNetrix
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Security Awareness
Fundamentals
By Russ Horn, CISA, CISSP, CRISC
M
y daughter started basketball season this week. During the parent and coaches
meeting, the coaches talked about how they plan
to focus on the fundamentals of basketball with
our kids. Michael Jordan was quoted as saying;
“When I was young, I had to learn the fundamentals of basketball.
You can have all the physical ability in the world, but you still have
to know the fundamentals.” Even he knew the importance of knowing
the fundamentals.
Just like in basketball, to be successful with an information security
program, we need to make sure our employees know and understand
information security fundamentals. Without our people knowing and
practicing these fundamentals, we cannot expect to succeed in providing a safe and secure computing environment.
Principles of Information Security
First, let’s define what we mean when we say information security. In general terms, information security refers to the confidentiality,
integrity, and availability of information; sometimes referred to as the
CIA triad. But, in terms of information security awareness training for
employees, we are typically talking about training our users to protect
information and defend from unauthorized access, use, disclosure,
perusal, or destruction.
In this article, we will look at several fundamentals of information security awareness we need to instill in our employees. These fundamentals should be communicated through formal training and reinforced
periodically throughout the year in meetings, emails, posters, etc.
Internet
The Internet is now the electronic highway to the world.
We can get access to just about anything through the Internet,
but this also means just about anybody may gain access to our
system through the Internet. Below are a few security fundamentals
to keep in mind when using the Internet:
1. Be careful where you go. Malware can be installed on systems
by simply visiting a website. While it is possible for legitimate
websites to be compromised and host malware, it is much more
common on illicit websites. Therefore, be careful where you go
on the Internet.
2. Secure sites. Users of the Internet need to understand if a site
is sending/receiving information securely. The most common
method is through Hypertext Transfer Protocol Secure (HTTPS).
This is visible on the address line when a website starts with
“https://” instead of just “http://”. In addition, some browsers
offer other evidence of secure sites such as a padlock or changing
the color of the address bar. Users should never enter confidential
information (i.e. passwords, financial data, etc.) on websites that
are not secure.
3. Links and attachments. A common method used by attackers to
gain access to our systems is called phishing. Phishing typically
happens when miscreants send links or attachments in emails
or messages that install malicious software or direct the user to
compromised sites. It is best not to click on any attachments or
links in an email you are not expecting. And even better, instead
of clicking on links in an email, manually go to the sites it references.
27
Along with implementing good processes and technology solutions,
regularly training our users on the fundamentals of information security awareness can greatly increase our overall information security.
Russ Horn is the president of CoNetrix. CoNetrix is a provider of information
technology consulting, IT/GLBA audits and security testing, Aspire cloud hosting, and the developer of tandem, a security and compliance software suite
designed to help financial institutions create and maintain their Information
Security Program. Visit CoNetrix at www.conetrix.com.
November 2013
Passwords
The primary way we protect information and authenticate access
through computers is with passwords. Passwords act as the virtual
keys to our electronic vault. Therefore, we must ensure our users are
using strong, unique passwords. Here are a few quick tips to help
strengthen the fundamental of using strong passwords:
1. Use unique passwords. It is common news for us to hear a company’s site was compromised and passwords exposed. If people
use similar passwords across applications and websites, then it
is easier for perpetrators to compromise accounts. Therefore, it
is best to use a unique password for each application or at least a
unique password on critical sites.
2. Use long passwords. While many people talk about complex
passwords, and complex passwords are good, several recent studies have shown longer passwords can be much more difficult to
crack than shorter complex passwords. An easy way to remember
long passwords is to use a phrase, song, or combination of words
you will remember. In addition, you can “salt it” with complexity
by simply replacing certain letters with numbers or special characters (i.e. 1 for i, @ for a, etc.)
3. Change your passwords. Eventually, it is reasonable to believe
your password may be compromised, so it is always good to
periodically change your password.
An option many
people choose to securely store and organize
passwords is through password
management applications, like
Secret Server, LastPass, or Password
Safe. When considering these types of
password vaults, it is import to ensure the
product is secure, the company is reputable and
your master password is strong.
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l e a d i n g
a d v o c at e
f o r
t h e
b a n k i n g
i n d u s t r y
i n
k a n s a s
Managing Sensitivity to
Market Risk
FDIC Amplifies the Importance of Interest Rate Risk Management
By Jeffrey F. Caughron Associate Partner The Baker Group LP
B
ank regulators have again made
clear their intention to highlight interest rate risk
management as a point of focus. The FDIC issued
a new Financial Institution Letter (FIL) on October
8 entitled “Managing Sensitivity to Market Risk in
a Challenging Rate Environment.” Their concern, of course, is
that many banks are not adequately prepared for, or equipped to
manage, the risks to earnings and capital that would accompany
a sustained rising rate environment. This FIL follows several
other advisories and joint statements from the FFIEC regarding
interest rate risk and liquidity risk management.
In the letter, FDIC points to their concerns about recent trends
in bank balance sheets. For example, there has been a notable
increase in long-term assets funded by liabilities that may be
more rate sensitive than commonly thought. The FIL notes
that…
“For a number of FDIC-supervised institutions, the potential
exists for material securities depreciation relative to capital in
a rising interest rate environment,” …and… “Moreover, rate
sensitive liabilities may re-price faster than earning assets as
coupons on variable rate loans and investments remain below
their floor.”
•
•
Policy Framework and Prudent Exposure Limits – Boards
of directors should “formalize” risk philosophy with
sound policies and exposure limits that give management
guidance on appropriate risk management strategy.
Effective Measurement and Monitoring of Interest Rate
Risk – Management should utilize a variety of tools and
techniques for assessing risk exposures. These should
include earnings simulations, stress tests, and EVE
analysis among others.
Risk Mitigation Strategies – Use of hedging off-balancesheet derivatives are only appropriate for institutions
that have the knowledge, expertise, and resources to
understand and manage the potential risks and unintended
consequences.
29
Interest rate risk has been a priority for regulatory agencies for
several years now. Much has changed with respect to examiner
expectations of bank management teams and directors. Since
the end of 2009, banks are required to build a more thorough
ALCO process within a sound risk management framework.
The release of this FIL is a helpful reminder that interest rate
risk remains a top-of-mind issue as we move forward.
Since 1979, we’ve helped our clients improve decision-making, manage
interest rate risk, and maximize investment portfolio performance. Our proven
approach of total resource integration utilizing software and products developed by Baker’s Software Solutions* — combined with our solid investment
experience and advice — makes us the investment firm of choice for many
community financial institutions. For more information, contact Jeff Caughron
at The Baker Group: 800-937-2257, www.GoBaker.com, or email: jcaughron@
GoBaker.com.*The Baker Group LP is the sole authorized distributor for the
products and services developed and provided by The Baker Group Software
Solutions, Inc.
November 2013
Among other things, banks are reminded of the importance
of having a sufficiently detailed reporting system to keep
management and directors informed of interest rate risk
exposures. Banks should have access to simulation models
that produce stress tests on the overall balance sheet and
particularly on high duration assets. Repricing assumptions
for liabilities should be stressed as well. The FIL outlined four
specific points:
• Board and Management Oversight – Directors are
charged with the responsibility of policy development,
and should have a clear understanding of the interest
rate risk management processes in place at their bank.
Management is expected to provide the reporting tools
and other resources necessary to carry out policy.
•
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