Florida Banking April 2022

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION WWW.FLORIDABANKERS.COM APRIL 2022

BayFirst Bank, formerly First Home Bank Diversifying Locally & Nationally

Editorial & Executive Offices 1001 Thomasville Road, Suite 201 Tallahassee, FL 32303 850-224-2265 www.floridabankers.com Advertising & Production Offices 945 Winnetka Ave. N., Ste. 145 Golden Valley, MN 55427 952-835-2275 A For advertising information, contact Greg McCurry Senior VP - Business Development 952-835-2275 Greg@NFRcom.com For reprints or single issues, contact 800-336-1120 Statements of fact and opinion are made on the responsibility of the authors alone and do not imply an opinion or endorsement on the part of the officers or members of FBA. Florida Banking is published 11 times annually with a combined issue in December/January. Subscription price is $50 per year for nonmembers. Postmaster, send address changes to Florida Bankers Association, P.O. Box 1360, Tallahassee, FL 32302. Copyright 2022 Alex Sanchez President and Chief Executive Officer Fax 952-835-2295 www.nfrcom.com

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION

VOLUME 37 NUMBER 2 APRIL 2022

ON THE COVER 8 - - - - - - - - - - BayFirst Bank: Diversifying Locally & Nationally CONTENTS 4 - - - - - - - - -Chair’s Message 6 - - - - - - Straight Talk from the President’s Desk 12 - - - - Government Relations: Why You Are Important 14 - -BancServ Endorsed Partner: Is It Time For Your Bank To Get Noticed? Start Blogging 16 - - Trust Banking: Leveling the Playing Field to Keep Florida SLATS in Florida 19 - - -FBEF: Help Us Spread the Word About the FBEF 20 - - - - - The FBA Remembers Past Chair Bob Epling 20 - - - - - - -Call for FBA Chair 21 - - - - -Florida Banks Receive Distributions From American Bankers Mutual Insurance Ltd. 22 - - - - - Personal Transactions 24 -------------Kudos 28 - - - - - - FBA Staff Spotlight 30 - - - - - - - Upcoming Events 31 - - - - - - - - DidYouKnow? 31 - - - - - Advertising Directory

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Florida Bankers Association asanchez@floridabankers.com Pamela Ricco Executive Vice President and Chief Operating Officer Florida Bankers Association pricco@floridabankers.com Brooke Harrison Publications Director Florida Bankers Association bharrison@floridabankers.com

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Fab Brumley Chair

Bill Penney Chair-Elect

Greg Nelson Immediate Past Chair

Lloyd DeVaux Second Immediate Past Chair

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On the Cover: The BayFirst Bank leadership, from left: Anthony Leo, Robin Oliver and Thomas Zernick.

Florida Bankers Association: The voice of Florida banking since 1888.

Photos by Daniese Betito, Images for Business, Orlando, Fla.

Images ©istock.com/ Roberto Galan; mattjeacock; choness

CHAIR’S MESSAGE

MEGA CREDIT UNION TAXATION: WHY WE WON’T GIVE UP

BY FAB BRUMLEY, FBA CHAIR

F irst, let me thank those of you who have joined us on important Zoom calls with representatives from Washington, D.C. In the past couple of months, we have met with both Congressmen and Senators on both sides of the political aisle to conduct another virtual “D.C. fly-in.” We must also thank our sponsors of the event, including FHLBank Atlanta, NFP, SouthState, and Crowe.

We seize every opportunity to speak out about this issue because, though tedious, repetition is important; repetition is key; repetition is how we advocate; repetition is necessary; repetition breeds influence; the squeaky wheel gets the grease. This is a lesson that many a lobbyist has learned amid the legislative Session … you must say your

piece more than once if you are to win a legislator’s loyalty in the long term. This is why the FBA has a dedicated team of lobbyists who continue to nurture their relationships with representatives and follow up again and again. And this is why we are proud that Alex Sanchez is known for his outspoken stance concerning mega credit unions; so much so that representatives are teasingly surprised when Alex raises the issue at the end of the call rather than in the first five minutes. It is our consistency over the long-term that will drive the change in the end. We should never assume that our arguments are falling on deaf ears, because

Why are these calls important? Why does Alex ask us to be on camera? Florida is a critically important state that continues to grow in population and economy. So, our collective voices matter to our legislators and give us the opportunity to be heard as we advocate for our industry as a united front. Our representatives lean in hard when they see bankers from all over the state listening attentively and asking relevant questions. It may seem redundant to cover the same topics over and over, but that consistency in masses eventually yields rewards.

“ WE SHOULD NEVER ASSUME THAT OUR

ARGUMENTS ARE FALLING ON DEAF EARS, BECAUSE IN THE END EVERYONE WILL KNOW THAT THIS UNFAIR COMPETITION FOR OUR COMMUNITY BANKS ALSO CHEATS OUR FEDERAL GOVERNMENT OF MUCH-NEEDED TAX DOLLARS.”

And there is no issue that we have fought longer or harder for than a level playing field with credit unions. While smaller and targeted credit unions in their traditional scope play a role in the financial services sector, some have expanded beyond that scope. The mega credit unions — those greater than $1 billion in asset size who are acquiring our tax-paying Community Banks should also be taxed like a bank. With our national debt reaching $30 trillion, it is time to re-consider the tax-exempt status of these mega credit unions and require their support of the defense of our country and the care of our seniors and veterans.

in the end everyone will know that this unfair competition for our community banks also cheats our federal government of much-needed tax dollars. Our industry has had a busy first quarter advocating for the banking industry. If our representatives say nothing else about us, let it be this: “The Florida bankers keep showing up!” Please continue to support our efforts. Get involved and stay up-to-date by attending events to network with bankers and legislators, and by answering FBA’s Calls-to-Action. I hope to see you at our 134th Annual Meeting in Orlando on June 5-8. You can register online today at www.floridabankers.com.

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STRAIGHT TALK FROM THE PRESIDENT’S DESK

TIME FOR AN ATTITUDE OF SERVICE AND SACRIFICE

BY ALEJANDRO “ALEX” SANCHEZ, FBA PRESIDENT AND CHIEF EXECUTIVE OFFICER

“ASK NOT WHAT YOUR COUNTRY CAN DO FOR YOU – ASK WHAT YOU CAN DO FOR YOUR COUNTRY.” - JOHN F. KENNEDY

country. They are only asking we take care of them so they can provide for their families. Most of us do not have the kind of job that when we leave our homes in the morning, we don’t know whether we will return that evening. While there are many critics out there, and it is easy to be one, I don’t see these same critics serving others in need like our first responders, police officers and our military. Our country faces challenges ahead both internally and externally. While many of us hoped for a more peaceful and civil world after the Berlin Wall came tumbling down in 1989, events like 9/11, Covid, the issue of Ukraine, the growing menace of China as a world superpower, and a $30 trillion national debt that continues to be out of control causes us to keep President Kennedy’s moving and inspiring words of service and sacrifice in mind.

P resident John Kennedy challenged our nation with those famous words, and I think the time has come for us to heed them again as a nation. What a difference a few decades make since President Kennedy uttered those words, asking Americans to do more in the name of our country. He obviously was not suggesting that we seek some tangible reward or other compensation from our country, but that we give back. I wonder sometimes, if President Kennedy were President today and he spoke his famous quote again, what would people say? How would they take his words today in 2022? His words are as noble and uplifting today as they were back then. President Kennedy’s words are still being fulfilled by many Americans who serve us each and every day… The many first responders, nurses and medical staff who risked it all at the height of Covid to serve and care for us, the police officers and firefighters who lay it on the line each day, and especially the men and women in our military. The courageous and noble men and women in many professions who serve us could be doing something safer, with better work hours for more pay. Yet they have chosen to give to our society, to fulfill the needs of our country, to sacrifice their time by working weekends and midnight shifts, to do what their passions and hearts call for in service to others and

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

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Diversifying Locally & Nationally BayFirst Bank

8 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

Y ou will soon know First Home Bank by a new name: BayFirst Bank, illustrating the bank’s commitment to the community of Tampa Bay even as it continues to grow in the national market. Headquartered in St. Petersburg, the bank was founded in 1999 and recapitalized in 2011. Anthony (Tony) Leo has served as CEO of BayFirst Financial Corp. since 2013. When Leo joined the bank, it had $69 million in assets and two banking centers. Today, BayFirst Bank is just shy of a billion dollars in assets with seven banking centers and 23 residential mortgage loan production offices around the nation. The bank’s SBA lending division, CreditBench, is among the top 15 national lenders in the country and the No. 1 SBA 7(a) lender in the Tampa Bay region. As the bank grew, its leadership discussed the evolving business model and realized that the company’s ethos was no longer being reflected in the name “First Home Bank.” “It was time to refresh the overall branding and design. The new branding is more representative of our progressive organization,” Leo said. “BayFirst is unique, eye-catching, and reflects who we are as a national lender. At the same time, it speaks to our focus on Tampa Bay first.” The bank’s transition is underway. The rebrand features a new logo with the triangular “play” button over the “i” in BayFirst, symbolizing the bank’s forward-thinking approach.

Last August, Tampa was ranked by Forbes as the top emerging tech city in the United States. BayFirst Bank is leaning into this reputation by partnering with fintechs and working with other local innovators. “We have always had a lot of comfort in applying technology to banking. Technology supports our bank’s talent,” said Chief Technology Officer John Macaluso. The BayFirst team has created an advanced technology platform to extend its personal banking services with innovative digital products and is in the process of building a similar digital platform for SBA and commercial loans. “We want to be the bank that individuals, families and businesses think of first for their banking services,” Leo said. “We continue to grow here in Tampa Bay, because at our heart, we are a community bank despite the national lending services we provide through residential mortgages and SBA loans.” According to Leo, the bank does not have a niche business but rather a broad business model to serve its customers with a full set of banking products and services. That said, BayFirst Bank provides additional services that set it apart, including its TrendSetters Club for members 50 years or better and its Cash Kids Club. “Our Cash Kids Club provides kids the opportunity to understand the value of money and to make savings fun. At the same time, it introduces the bank to new families throughout the Tampa Bay region,” Leo said. BayFirst Bank, Continued on page 10

The BayFirst Bank leadership, from left, are: Tony Leo, Matthew Luckey, Tom Zernick, Brandi Jaber, Lewis Benner, Robin Oliver, Jeff Hunt, and John Macaluso.

WWW.FLORIDABANKERS.COM APRIL 2022 — 9

move forward, my goal is to partner with both Tony and Tom to scale for the future.” Zernick said: “Our theme for the year is the cross pollination of all our business lines. This really took foundation during PPP. All of us, regardless of the product line we served, came together to take care of those employees that needed a paycheck.” During the pandemic, the leadership team initiated a weekly company-wide “What’s Next” call to update the company on products, services and successes. “When we came out of PPP, we made a decision to keep that same level of communication and continue to leverage each other. We have become amazingly transparent between the divisions,” Zernick said. “Folks who join us realize we’re very entrepreneurial and very open as an executive team. Employees at most billion-dollar banks don’t have easy access to their CEO or division president. And we’re the opposite of that. We believe that our employees are

BayFirst Bank, Continued from page 9

Kids can download BayFirst’s interactive, kid friendly app to help build money management habits and learn how to save. Not to mention, the Club’s mascot is a friendly golden retriever named Cash. “Cash embodies the personal side of community banking. Even though we are progressive in the way we approach banking, we are still a traditional community bank with the personalized, friendly service that customers would expect,” Leo said. BayFirst Bank also offers unique products and services to reach the underserved in its community. “We are committed to corporate social responsibility,” Leo said. “We take responsibility toward reaching the underserved and supporting those needs in our community as part of our central corporate mission.” BayFirst’s NuStart Checking account program is designed to help those in difficult credit circumstances

get their banking back on its feet. After 12 consecutive months without any non-sufficient funds, the NuStart account can convert to a checking account of the customer’s choice. In addition, the bank has a business lending program that focuses on reaching out to minority-owned businesses, as well as a special team of mortgage loan originators known as the PEACE (providing equitable access to credit envoys) Team, which is dedicated to reaching minority communities and low-income borrowers. BayFirst also recently celebrated the opening

high performing because they have access to us and because we engage with them.” At the core of BayFirst’s culture is a desire to meet the needs of all its stakeholders, including employees, customers, shareholders, and the community. “We’ve developed the most attractive set of employee benefits available. Last year alone we introduced paid parental leave for the birth or adoption of a child, student loan assistance, and childcare match, just to name a few,” Leo said. Staying true to its

“WHEN WE CAME OUT OF PPP, WE MADE A DECISION TO KEEP THAT SAME LEVEL OF COMMUNICATION AND CONTINUE TO LEVERAGE EACH OTHER. WE HAVE BECOME AMAZINGLY TRANSPARENT BETWEEN THE DIVISIONS.”

- THOMAS ZERNICK

mission to help both employees and customers achieve “what’s next,” the bank introduced the NextMortgage employee home loan program. The program provides employees fixed rate, secondary market mortgage loans at or below the bank’s cost to make and sell the mortgage. “We offer these types of benefits because we believe an engaged team provides superior customer service and attracts new customers, providing more profit to our shareholders, a portion of which can be shared to further increase compensation and benefits,” Leo said. “And the cycle continues … success breeds success.” “I believe that we have achieved what we have because we lead by example and because we hire the best,” Zernick said. “It’s been a rewarding experience to see our bank go from $100 million dollars when I joined to a billion dollars today.”

of a loan production office and financial resource center located in the Newtown Community of North Sarasota — the first of its kind in this historically underserved district with a rich African American heritage. Leo credits his collaborative leadership team for the bank’s rapid growth and diversification. The bank recently announced key executive promotions: Tom Zernick, who served as president of the SBA lending division CreditBench, has been promoted to bank president. Robin Oliver has been promoted to chief operating officer while remaining the company’s chief financial officer. “We’re now a public company, so that’s certainly very new to us,” Oliver said. “We’ve got a great team, and great technology, and we want to use these resources in the most efficient way possible. As we

10 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

ANTHONY N. LEO, CHIEF EXECUTIVE OFFICER Anthony N. Leo has served as Chief Executive Officer of BayFirst Financial Corp. since 2013. Leo previously served as Executive Vice President & Managing Director of Community Banks, Inc., a diversified financial holding company based in Harrisburg, Penn. He began his career as Vice President & Associate Counsel for the National Bank of Washington, D.C., and later was Vice President & Corporate Counsel for FB&T Corporation, Hanover, Penn. Leo received his Bachelor of Arts degree with distinction from The George Washington University and his Juris Doctorate from The George Washington University Law School. He is a member of the Bar of the District of Columbia and the State of Maryland.

THOMAS G. ZERNICK, PRESIDENT

Thomas G. Zernick is the President of First Home Bank. Prior to joining First Home Bank in 2016, Zernick served as Florida Market President for Stearns Bank, and as an SBA Product Manager for HomeBanc in Tampa. Before relocating to Florida, Zernick served as a Community Bank President and SBA President for Republic Bank in Michigan. Zernick received his Bachelor of Business Administration degree from the University of Notre Dame.

Robin L. Oliver serves as Chief Operating Officer and Chief Financial Officer for First Home Bank and BayFirst Financial Corp. Prior to joining First Home Bank in 2018, Oliver served as Controller for a financial institution in Kentucky, and for the first 16 years of her career, she served multiple financial institution clients in public accounting as an auditor with Crowe LLP. Oliver is a Certified Public Accountant and received her Bachelor of Arts degree in Accounting from the University of Kentucky. ROBIN L. OLIVER, CHIEF OPERATING OFFICER AND CHIEF FINANCIAL OFFICER

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GOVERNMENT RELATIONS

WHY YOU ARE IMPORTANT

BY ANTHONY DIMARCO, FBA EXECUTIVE VICE PRESIDENT AND DIRECTOR OF GOVERNMENT AFFAIRS

A s we end the 2022 Session, I am reminded how FBA leaders and staff have told or written you about why you are important to the FBA’s success. Simply put, we could not succeed without your involvement and help. I am more convinced than ever about this fact after every Session. The best example of this is our ongoing fight with the credit unions over public deposits. Since 2009, the credit unions have filed their public deposits bill almost annually; it is either not heard, or passes one subcommittee and then dies. Prior to this Session,

issue. The League annually receives and donates more campaign dollars than we do. This Session was no different. The bills were filed in the House and Senate. House Bill 1559 was given a hearing and passed by the House Insurance & Banking Subcommittee. We were able to stop the bill from being heard again in the House or ever in the Senate. We expect this bill to be a much harder fight next Session and we need YOU to defeat this legislation. You — our members — must contribute, attend our lunches and dinners, attend Capitol Day and

the public deposits bill had not been scheduled for a hearing since 2017. It is the credit unions’ top priority. They have hired two of the best lobbying firms in town and VyStar has hired inhouse lobbyists to pass the bill. They also contribute a great deal of money to various state campaigns during the elections. The League of

the Washington trip, and answer Calls to Action. Your participation is much more than the tip of the spear to stop or pass legislation; it is the main ingredient. Let’s break it down more. When you give to our state BankPac, you enable us to support legislators who will support our issues. However, we must do

“YOUR PARTICIPATION IS MUCH MORE THAN THE TIP OF THE SPEAR TO STOP OR PASS LEGISLATION; IT IS THE MAIN INGREDIENT.”

Southeastern Credit Unions (League) has raised more than $575,000 through January 31, 2022. That’s right, more than half a million dollars. Most of these funds have come from large, multi-billion dollar credit unions, including: VyStar - $115,000; MidFlorida - $32,000; Spacecoast - $42,000; First Commerce - $24,000; and the biggest amount is from SunCoast - $127,000. Even the League is giving to its own PAC - $175,000. That is a great deal of money for mom and pop credit unions to contribute to its PAC. This is not a one election

better and give more. The credit unions have outraised us by more than two-to-one in state campaign contributions to date. This enables them to out-contribute us too. We cannot continue to be outspent like this — it is a dead-end policy for us. Trust me, I have seen industries lose because one side clearly outspent another in one election cycle. Second in our favor is our members’ work with legislators back home. Many legislators heard individually from his or her banker from home. Your calls are important. I know that in a prior Session,

12 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

one legislator told us that she was going to support us in the credit union fight because her local banker called, and, “When he calls I know it is important to him!” The same goes for your board members. Have them get to know your area legislators too. But many legislators do not know their local bankers. There is no reason for this. Even members who may not always vote with us must hear from a local banker or they will never vote for us. Remember, we are here to advocate for banking, not other issues. We have had liberal democrats and conservative republicans supporting our issues that will not agree on much else. There are several ways to get to know your legislators. When you are at a local service club, chamber of commerce, or the like and there are legislators present, please go up and introduce yourself to them. Maybe take them out for a cup of coffee to get to know them. Take time to have them come to the bank and meet your staff and board and let them know what issues are important to us. You can also explain to them the difference between a bank and a credit union. Many do not understand the difference. They simply know that banks and credit unions do kind of the same thing and therefore think there isn’t really a difference. We would be happy to send you talking points to help

you get the conversation going. We can also attend, if available, to help facilitate the meeting. You can also attend an FBA luncheon or Leadership Dinner to solidify these relationships. However, you cannot wait until Session or a Call to Action to do any of this because it will be too late. Third, please answer our Calls to Action and have your fellow bankers and board members do so as well. The number of responses can help sway a legislator if they are undecided. We have also seen success when a board member explains to a legislator why he or she is hurting or helping a bank with legislation. The board member can give them a slightly different perspective as a non-banker. Fourth, attend Capitol Day and the DC Trip. The legislator takes notice when a banker comes all the way from home to meet with him or her. They know that you have taken the time to inform them about issues that are important to our industry. However, the meeting will be even more beneficial if you have gotten to know the legislator prior to coming to Tallahassee or DC. Stopping the credit union bill is always tough, and it will only get tougher if our industry does not take these four steps. We need to take all of these steps to ensure our success on this issue and many more. We hope that you will continue to help us.

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BANCSERV ENDORSED PARTNER: BANK MARKETING CENTER

IS IT TIME FOR YOUR BANK TO GET NOTICED? START BLOGGING

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BY NEAL REYNOLDS, PRESIDENT, BANKMARKETINGCENTER.COM

S ocial media marketing has taken on even greater importance over the last two years and blogging has become an even more important component of social media marketing. The name of the game, the key to growing deposits, customers and revenues is growing relationships. That hasn’t changed. What has changed is the way consumers

of their overall marketing. And blogging should be a major focus. Not only can blogging connect with your customers, build relationships, increase brand awareness and generate sales leads, but it’s also efficient, effective and measurable. Blogging facilitates interaction, interaction equals engagement, engagement equals relationship and relationship equals loyalty and (ideally) increased revenue.

behave, and at the heart of it, a watershed shift from in line to online. Take customer service, for example. Customer service has always been an important component of a bank’s offerings, right? According to tech consulting firm CapTech, in their 2021 Innovations Study, communication with a company using online chat has increased 18 percent, from 28 percent in 2020 to 46 percent in 2021. Another statistic? Fifty-four percent said they would always choose a chatbot over a human customer service rep if it saved them 10 minutes. Goodbye human being, hello chatbot. I’ve found that online chat customer service has come a long way over the last

“NOT ONLY CAN BLOGGING CONNECT WITH YOUR CUSTOMERS, BUILD RELATIONSHIPS, INCREASE BRAND AWARENESS AND GENERATE SALES LEADS, BUT IT’S ALSO EFFICIENT, EFFECTIVE AND MEASURABLE.”

Blogging helps people find you

Start by thinking about the size of your website. How many pages are there? Probably not that many. And think about how often you update the content on those pages. Probably not that often. This is where your blog comes in. Every time you create and publish a blog post, search engines consider that yet another indexed page on your website. This means that with each blog, you’re creating one more opportunity for your site, through that blog post, to show up on the search engine results page (SERP) and drive traffic to your website in a prospect’s organic search.

couple of years and I guess we have advancements in technologies such as AI and Machine Learning to thank for that. This is just one example of how critical your “digital presentation” is. So, it’s no surprise that banks have been working hard over the last two years to execute strategies that make social media marketing an integral part

Blog content can take many forms Every time you create and post a blog, you’re creating content that 1) you can share across your social platforms and 2) people who see it can share. So, with blogging, you’re not only strengthening your social reach with the blog itself. You’re also creating

14 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

a web of engagement points that connect with each other and ultimately lead everyone you’ve engaged right to your website. Blogs can drive long-term results Hubspot says: “Imagine you sit down for an hour on Sunday to write and publish a blog post. Let’s say that blog post gets you 100 views and 10 leads on Monday. You get another 50 views and five leads on Tuesday as a few more people find it through social media. But after a couple of days, most of the fanfare from that post dies down, and you've netted 150 views and 15 leads. It's not over.” Since that post is now ranking, it means that for days, weeks, months and years to come, you can continue to get traffic from that blog post. That’s because a blog post can bring traffic to your site long after it was first posted. In fact, according to Hubspot, “about 90 percent of the leads we generate every month come from blog posts published in previous months. Sometimes years ago.” Is this a comprehensive treatise on blog posting?

No. There are several additional benefits to blogging that we haven’t discussed here. And, there are several companies out there that can advise you on how to get the most of your blogging, from software and templates to guidance on creating a blogging editorial calendar. My hope here is that you’ve learned just enough about blogging “to be dangerous,” as the saying goes. It’s a terrific tool for engaging customers and generating leads, so get out there and give it a try! Oh, and by the way. We’ve been taking our own advice. By blogging and posting regularly, we now find ourselves on the first page in a “bank marketing” organic search. So, yes, it works! BankMarketingCenter.com (BMC) is a web-based marketing portal that empowers banks to produce professionally designed, bank-branded marketing materials in a matter of seconds. As an endorsed partner of the Florida Bankers Association, our member banks receive a 20 percent discount on the already low-cost monthly subscription. For more information or to schedule a no-obligation demo, visit www.bankmarketingcenter.com.

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WWW.FLORIDABANKERS.COM APRIL 2022 — 15

TRUST BANKING

LEVELING THE PLAYING FIELD TO KEEP FLORIDA SLATS IN FLORIDA: PROPOSED AMENDMENT TO FLA. STAT. §736.0505(3) EXPLAINED

MICHAEL M. RUBENSTEIN, JD, LLM, MBA, CTFA, BMO WEALTH MANAGEMENT, SENIOR FIDUCIARY ADVISOR SOUTHEAST REGION

W e are currently living in a golden age for generational tax planning in the United States. The federal gift and estate tax exemption (the “Exemption”) is high ($12.06 million per individual), and the top federal gift and estate tax rate is relatively low (40 percent). Thus, if a married couple dies in 2022, any amount under $24.12 million is exempt from gift and estate tax, and any amount over $24.12 million is taxed at 40 percent. 1 Compare this to 2001, when married couples were taxed at any amount over $1.35 million, and the top estate tax rate was 55 percent. 2 For taxpayers wishing to transfer large amounts of wealth, times are good. However, with all things, this too will come to an end. In 2017, Congress passed The Tax Cuts and Jobs Act (the “TCJA”). The TCJA doubled the Exemption from $5 million to $10 million (indexed for inflation as of 2010). 3 Taxpayers can now transfer more wealth than ever free of gift and/or estate tax. However, there’s a catch. The doubling of the Exemption is temporary and scheduled to end (or “sunset”) at the end of 2025. As a result, if Congress takes no action, in 2026 the Exemption will revert to pre-TCJA values to an estimated $7 million. 4 This temporary increase in the Exemption provides a unique gift and estate tax planning opportunity, and there are many tax planning strategies that could be used to take advantage of this opportunity. One of the more popular strategies is the Spousal Lifetime Access Trust (“SLAT”). Spousal Lifetime Access Trust A SLAT is an irrevocable, completed gift trust that one spouse (the “donor-spouse”) creates for the benefit of the other spouse (the “beneficiary-spouse”). As the name implies, the spouse has lifetime access to the trust . Assuming Congress takes no action, when the Exemption increases to a projected $14 million in 2025, Recent History of the Gift and Estate Tax Exemption

each spouse could gift $14 million into a SLAT for the benefit of the other. They could each use their $14 million Exemption, and they would owe no gift tax on these gifts as they are fully covered by the Exemption. If they use the $14 million Exemption before it decreases to a projected $7 million in 2026, then the decrease should be irrelevant as the money has already been gifted and is no longer part of their taxable estates. 5 If they do not use the $14 million Exemption before 2026, then, when the Exemption decreases to $7 million, the additional $7 million will be part of their taxable estate. When they die, the additional $7 million will be taxed at 40 percent resulting in $2.8 million of estate tax per spouse ($5.6 million combined). Additionally, once assets are out of an individual’s taxable estate, they are no longer subject to creditor claims on that individual. Therefore, although the main consideration is typically the tax planning, there are attractive asset protection features to SLAT as well. The Issue: Unintended Planning Consequences Upon Death of the First Spouse For spouses who wish to use their Exemptions, but also access the assets during their lifetimes, a SLAT is the best of both worlds. But what happens when the first spouse dies? Is it possible for the donor-spouse to become the beneficiary of the SLAT holding the assets that they originally gifted away after the death of the beneficiary-spouse? Yes. But, again, there’s a catch. Under current Fla. Stat. §736.0505, a future beneficial interest in the donor-spouse will subject the SLAT property to creditor claims under Florida law, resulting in estate tax inclusion under federal law. The proposed amendment attempts to address this federal tax issue by limiting creditor rights under state law. 6 If the purpose of a SLAT is to gift assets out of the donor-spouse’s estate, then this potential inclusion into their estate is bad for the Florida residents.

Trust Banking, Continued on page 18

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themselves to become a beneficiary after the beneficiary spouse dies. In either case, the assets would not be subject to creditor claims, but, if option two is selected, then the SLAT would be removed from Florida. The proposed amendment would allow the donor-spouse to use a Florida SLAT to achieve the same planning already allowed in other states and keep the SLAT in Florida. Keeping Florida Assets in Florida The proposed amendment to Fla. Stat. § 736.0505(3) would take effect on July 1, 2022, if passed. It would allow Florida residents to use Florida SLATs with peace of mind that the planning will work as intended. If they do not have this peace of mind in Florida, they may opt to create these trusts in any of the 10 other states where this planning is more advantageous under current law. This amendment will even the playing field with these other states in terms of this issue and make Florida a more attractive state for tax and estate planning purposes. Ultimately, this amendment will keep Florida SLATs in Florida where they can continue to use Florida trust companies, investment firms and banks. Michael M. Rubenstein, JD, LLM, MBA, CTFA is the Senior Fiduciary Advisor of the Southeast US Region for BMO Wealth Management. Rubenstein serves as an advisor in the areas of tax, trust and estate planning to high-net-worth individuals, families, trusts, and organizations, including closely-held and family-owned businesses. Michael provides customized advanced planning strategies to integrate client objectives with “best practices” to achieve tax, legacy, and estate planning goals. 1 IRC 2010(c) 2 PL 105-34 "Taxpayer Relief Act of 1997"; https:/ taxfoundation.org/federal-estate-and-gift-tax-rates exemptions-and-exclusions-1916-2014/ 3 IRC 2010(c)(3)(C) 4 A projected and round amount based on 2.2% annual inflation on $5 million indexed for inflation as of 2010. 5 84 FR 64995 6 See. E.g. Rev. Ruling 76-103; Fla. Stat. § 736.0505(1)(b) 7 See Ariz. Rev. Stat. §14-10505(E); Del. Code Ann. tit. 12, §3536(c); Ky. Rev. Stat. Ann. §386B.5-020(8) (a); Miss. Code Ann. §91-8-504(d); N.H. Rev. Stat. Ann. §564-B:5-505; N.C. Gen. Stat. §36C-5-505(c); S.D.C.L. §55-1-36; Tenn. Code Ann. §35-15 505(d),(h); Tex. Prop. Code §112.035(g); Wisc. Stat. Ann. §701.0505(2)(e). 8 Fla. Stat. § 726.105 9 Fla. Stat. § 726.108; As discussed above, this creditor access would also cause the same assets to be deemed part of the individual’s taxable estate.

Trust Banking, Continued from page 16

Not to fear, there is a solution. The Florida residents could choose to perform the same tax planning in a different state. In fact, there are 10 other states (Washington, D.C. inclusive) that allow for similar tax planning via SLATs without causing inclusion into the donor-spouse’s estate. 7 Should the Florida resident family choose to use an out-of-state trust, they may also choose to use out-of-state trustees and banks as well. The assets in the SLAT would then be removed from Florida, which is bad for Florida banks. The Solution: Fla. Stat. §736.0505(3) The proposed amendment to Fla. Stat. §736.0505(3) was drafted to address this issue. The proposed amendment provides that a beneficial interest in the donor-spouse after the lifetime of the beneficiary spouse will not cause the SLAT to be subject to the donor spouse’s creditors, so long as the donor-spouse was not a beneficiary of the SLAT (within the meaning of Fla. Stat. §736.0103(19)(a)) during the beneficiary spouse’s lifetime and the SLAT was a completed gift for federal tax purposes. Currently, Florida residents are at a distinct disadvantage compared to residents of other states which have enacted laws permitting this planning without exposing the SLAT to the donor-spouse’s creditors. The proposed amendment to Fla. Stat. §736.0505(3) would provide Florida residents the same gift and estate tax planning opportunities already available to residents of those other states. Florida residents will be able to keep their assets in Florida SLATs, rather than SLATs in other states, and achieve their planning goals. What About Creditor Claims Against Settlor? This article has focused almost exclusively on tax planning, and this is because SLATs are mainly used for tax planning. However, the title of Fla. Stat. §736.0505 is “creditors’ claims against settlor” ; therefore, I would be remiss to not expand on the creditor claim issues. When assets are transferred into a SLAT, they are intended to be removed from the estate of the donor spouse, and not subject to future creditor claims against the individual. Future being a key word. If an individual has a current creditor and transfers assets into a SLAT with the “actual intent to hinder, delay or defraud” the creditor, then this would be a fraudulent conveyance under Florida law. 8 The creditor can prove their claim was prior to the transfer, void the transfer, and access the funds for payment. 9 If the Florida resident had concerns about future creditor claims, then the Florida resident could still use SLAT planning and fully protect the assets from creditor claims. However, under current law, the Florida resident would have to choose between two options; (1) use a Florida SLAT and not permit themselves to become a beneficiary after the beneficiary-spouse dies, or (2) use a SLAT in any of 10 other states that already have a version of this proposed amendment and permit

18 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

FLORIDA BANKERS EDUCATIONAL FOUNDATION

DO YOU HAVE A MINUTE? HELP US SPREAD THE WORD ABOUT THE FBEF

BY LETTY NEWTON, DIRECTOR OF FLORIDA BANKERS EDUCATIONAL FOUNDATION (FBEF)

T he Florida Bankers Association (FBA) wants to help Florida bankers, but we need your help. The FBEF webpage has a 1-minute informational video that we want all Florida bankers to watch so they can learn more about the benefits that the FBEF offers. If you know someone in Florida banking who is working to complete their college degree and needs financial assistance, please tell them to go to

Attending FBA’s Annual Meeting and looking for a way to show your support for the FBEF? The FBEF fundraiser at the 2022 FBA Annual Meeting in Orlando will be a golf outing on Monday, June 6. Details on this golf outing will be posted soon at FloridaBankers.com/AnnualMeeting so please be on the lookout for this information.

FloridaBankers.com/FBEF. Help us spread the word by sharing this video and online information with other bankers so all Florida bankers will know that the FBEF is here to help. FBEF funding applications are accepted throughout the year, with application deadlines of May 1, August 1, November 1 and February 1. Applications and eligibility information can be found online at FloridaBankers. com/FBEF. If you are thinking of applying for FBEF funding, please contact FBEF Director Letty Newton at (850) 701-3522 or lnewton@floridabankers.com for more information on how the FBEF can help you. The FBEF is a 501(c)(3) non profit corporation registered with the Florida Department of Agriculture & Consumer Services, Registration #CH7621. Contributions to the FBEF are tax deductible. Organized in 1956, the FBEF continues to help bankers throughout Florida advance their careers through education.

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TRIBUTE

THE FBA REMEMBERS PAST CHAIR BOB EPLING F BA Past Chairman Bob Epling passed away on Wednesday, February 23. The Florida Bankers Association extends its deepest sympathies to Bob’s wife, Viktoriya, and the entire Epling family.

International University. In 2003, the Florida Bankers Association presented Epling with its “Legends Award.” Epling also received the Boy Scout Silver

Beaver Award and the distinguished Jack Harding Chapter of the NFF Award. In December 2012, he was awarded an FIU Medallion, the Cal Kovens Distinguished Community Services Award.

Robert L. Epling served as president and CEO of Community Bank of Florida from 1977 until its merger with CenterState Banks in 2015. He was one of South Florida’s most distinguished business and civic leaders. Epling was president of the Community Bankers/Florida Bankers Association from 1988-90 and was named the Community Bankers of Florida’s “Banker of the Year”

Epling has served as president of banks in Lexington, Ky., and Dania and Marathon, Fla. He spent three years as an assistant bank examiner for the Federal Deposit Insurance Corporation (FDIC) in Washington, DC. In addition, his farming experience included more than 30 years as an agricultural lender, a grower of tropical fruits, and service on the Board of the Dade County Farm Bureau.

in 1993. In 1999, Epling was honored with the University Distinguished Service Award from Florida

CALL FOR FBA CHAIR 2024-25

Candidate packets are now available for the next FBA Chair representing Tier III who will serve as FBA Chair in 2024-25. Completed applications are due by May 27, 2022 , at noon ET. Only members currently representing Tier III (deposits totaling more than $20 billion) are eligible for consideration. If you have questions about your tier designation, the nomination and election process, or if you would like a Tier III candidate packet, please contact FBA Executive Vice President/COO Pamela Ricco at 850-701-3514 or pricco@floridabankers.com .

TIMELINE FOR CHAIRMAN SELECTION

• MAY 27, 2022

• FBA BOARD MEETING – FALL 2022 TIER III NOMINATING COMMITTEE REPORT

DEADLINE FOR DECLARATION OF CANDIDACY

• SPRING 2023

• FBA ANNUAL MEETING 2022

NOMINATION PLACED BEFORE MEMBERSHIP FOR APPROVAL

ANNOUNCEMENT OF CANDIDATE SLATE

• SIXTY DAYS AFTER 2022 ANNUAL MEETING CANDIDATE PERSONAL INTERVIEWS (IF APPLICABLE)

• UPON CONCLUSION OF ANNUAL MEETING 2023 CANDIDATE BEGINS TERM AS CHAIR-ELECT

20 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

$94.3 million has been declared in total distributions since 1991 Florida Banks Receive $106,171 in Distributions from American Bankers Mutual Insurance, Ltd.

A merican Bankers Mutual Insurance, Ltd., the reinsurer for the directors and officers (D&O), bond and cyber insurance program endorsed by American Bankers Association (ABA) and Florida Bankers Association (FBA), declared a $3 million distribution to be shared by qualified ABA member banks insured through ABA Insurance Services, a member of Great American Insurance Group. This is the 32nd consecutive year that the industry’s leading professional liability and bond insurance provider has declared distributions to eligible ABA member banks, bringing the total to $94.3 million since the program’s inception. Banks that purchase their directors and officers, bond, cyber and related insurance from this program and are current ABA members are eligible to receive a distribution. “This is a truly unique program, providing a long term, stable source of insurance and risk services to the banking industry while declaring distributions to eligible ABA member banks for the past 32 years,” said Gary Hemmer, chairman of American Bankers Mutual Insurance Ltd. and chairman of the board of First National Bank of Waterloo in Waterloo, Ill. “For more than three decades, the American Bankers Mutual Insurance program has been one of the many

ways ABA provides significant value to its member institutions,” said Rob Nichols, ABA president and CEO. “We take great pride in offering participating member banks both high-quality insurance products and meaningful distributions that have been paid year after year.” In order to receive a distribution in 2022, a bank must have been a member of ABA and have D&O, financial institution bond, and/or cyber insurance with ABA Insurance Services as of January 18. Distributions take place in mid-February. American Bankers Mutual Insurance, Ltd. is a bank owned, mutual insurance company that reinsures policies written for the ABA-endorsed insurance program. ABA Insurance Services, a Member of Great American Insurance Group, serves the banking industry by offering D&O, bond, cyber, and related insurance to financial institutions across the country. Co-endorsed by American Bankers Association and Florida Bankers Association, this unique insurance program has been a market leader since 1987 and is recognized by insurance and banking professionals as a secure, stable, and affordable source of coverage. For more information about ABA Insurance Services, call 800-274-5222 or visit www.abais.com.

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WWW.FLORIDABANKERS.COM APRIL 2022 — 21