Florida Banking December 2022/January 2023

CCB Community Bank: Serving its community for 75 years THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION WWW.FLORIDABANKERS.COM SEPTEMBER 2020 THE MAGAZINE OF TH FLORIDA BANKERS ASSOCIATI N WWW.FLORIDABANKERS.COM DECEMBER 2022/JANUARY 2023

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Editorial & Executive Offices 1001 Thomasville Road, Suite 201 Tallahassee, FL 32303 850-224-2265 www.floridabankers.com Advertising & Production Offices 250 Prairie Center Dr., Ste. 300 Eden Prairie, MN 55344 952-835-2275 www.nfrcom.com For advertising information, contact Erica Nelson Advertising Sales Executive 763-497-1778 Erica@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

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION

VOLUME 37

NUMBER 11

DECEMBER 2022/JANUARY 2023

ON THE COVER 8 ����������������� CCB Community Bank: Serving its community for 75 years CONTENTS 4 �������������������������� Chair’s Message 6 ������������������ Straight Talk from the President’s Desk 12 ������������� Government Relations: Odds and Ends for 2022-23 14 ����� BancServ Endorsed Partner: Banks: The Path to Service Quality and Managing Costs for the Future 16 - Trust Banking: The Season of Giving to Your Ex-Spouse? 18 - 18th Annual Florida Bankers/ California Bankers DC Fly-In 20 �����������Florida BankPac Update 24 ��������������� Personal Transactions 26 ���������������������������������������Kudos 30 ��������������������� Upcoming Events 31 ������������������������� Did You Know? 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

4

6

Bill Penney Chair Jose Cueto Chair-Elect

Fab Brumley Immediate Past Chair

Greg Nelson Second Immediate Past Chair

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On the Cover: CCB Community Bank Florida President Alan Wood and CEO Michael Andrews

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

Photos by Michael Spooneybarger

CHAIR’S MESSAGE

GRATEFUL FOR NEW ADVOCACY EXPERIENCES AS FBA CHAIR

BY BILL PENNEY, FBA CHAIR

T he first sixmonths of representing ourmembership and industry as FBA Chair have been a whirlwind of new experiences. To quote “Mama Told Me (Not to Come)”, my favorite Three Dog Night song, “I seen so many things I ain’t never seen before.” Joint Visit to Washington, D.C., with the California Bankers Association On this important advocacy trip, we met with more than 10 representatives and key policymakers to discuss the issues impacting our industry. I, along with Steve Andrews of Western Bankers, led the Florida and California Bankers delegation to the White House to meet with Bharat Ramamurti, deputy economic advisor to the President. As free market entrepreneurs, we don’t always share the same free enterprise values with the current Administration, but this is why it’s all the more important that we engage with them. We made the point that our hardworking men and women in the banking industry help Americans make their dreams come true every day by financing that first car loan, home loan, or business loan. During this trip, we also had the opportunity to attend a panel discussion on Small Business Credit, hosted by Rep. Blaine Luetkemeyer and Rep. Young Kim. Representatives Claudia Tenney and Roger Williams were also in attendance. I sat on the panel alongside California bankers Josh Denney, Todd Hollander, and Rebecca Miller. I must admit it’s pretty cool to walk into a Congressional meeting room and see your name on the nameplate at the table (note to self: stay humble!). We spoke about our belief that there is too much government intrusion and regulation at all levels for the small business community. Other topics of discussion included: • Simplifying SBA authorization and approval. • Increasing the definition of an SBA small business loan from $350K to $500K. • Modernizing SBA technology. • The problem with tax-exempt credit unions buying banks.

• Scaling regulation to size and risk profile. …just to name a few. I was proud to represent you, our Florida bankers, at this meeting! Gubernatorial Debate I had the opportunity to attend the Gubernatorial Debate in Fort Pierce on October 24, thanks to the FBA’s strong relationship with the Governor’s office. I was joined by fellow banker Keith Costello, CEO of Locality Bank, Ft. Lauderdale. Keith and I witnessed democracy in action. It was fascinating to observe the crowd; while some complied with the rules prohibiting speaking and clapping, many others did not. Both sides escalated from there, and it was interesting to see how the officials handled the crowd on this live TV broadcast. I thought the moderator asked excellent questions. Unfortunately, one minute is simply not enough time for a meaningful answer. Ron DeSantis Election Night Celebration (almost) In 1967, folk group Peter, Paul and Mary sang, “All my bags are packed, I’m ready to go…” Mine were, too, on November 8 as I was planning to drive to Tampa to attend the Ron DeSantis Election Night Celebration. I had never been to an election party and was quite excited to have the opportunity to attend and represent you. I guess Peter, Paul and Mary did not have to deal with hurricanes, but my plans were derailed when Hurricane Nicole decided to target Palm Beach and the Treasure Coast for landfall. I wisely stayed home and watched the Governor’s acceptance speech on TV. Oh well, next time! Our advocacy never stops! It is exciting, gratifying, and humbling to be a part of the work that the FBA does on behalf of our banking industry. I am honored to represent you as FBA Chair. If the first six months of my tenure is any indication, there is much more to look forward to as we enter into 2023 and close out the fiscal year!

4 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

FBA Chair Bill Penney represented Florida bankers as a panelist on the Small Business Lending roundtable in Washington, D.C.

FBA Chair Bill Penney (right) with Rep. Blaine Luetkemeyer in Washington, D.C.

FBA Chair Bill Penney with Rep. Young Kim at the Small Business Lending roundtable.

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STRAIGHT TALK FROM THE PRESIDENT’S DESK

IT IS AN HONOR SERVING YOU AS FBA CEO

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

A s the third CEO in the FBA’s 135 years, I have certain perspectives and observations that I want to share with you. First, to Floyd Call, our first FBA CEO, and John Milstead, our second, I want to thank these two gentlemen looking down from above for their tremendous service to our industry and the FBA. I know that if I could ask them today, they would feel the same way I do: it is a tremendous honor to sit in my chair each day as FBA CEO. In fact, I have kept the same desk, coffee table, and credenza that my two predecessors had.

In 1888, Florida had a population of 376,000 from Key West to Pensacola. Today, with a population over 23 million and growing each day, our state has become a global business, residential, and vacation destination. Florida bankers then and now have worked hard to enhance the economic vitality of the persons and communities they serve. Former FBA Chair Godfrey Smith from Capital City Bank once told me that banks are a reflection of the communities they serve. Godfrey was so right, and I share his thoughts on shows like

FOX Business’ Mornings with Maria, hosted by financial journalist Maria Bartiromo. Simply put, if our banks are doing well, so too is the local economy of the communities we serve. On a larger scale, if the nation’s economy is well, our banks will also be doing well. Our indus t ry provides the capital that makes the economy go. We recognize that a regulatory framework is necessary to help maintain a safe and sound banking industry in any nation. No one has ever argued for a system free of regulations. No one. But there are tipping points that can shift this delicate balance,

I see so many successful bankers involved in the FBA, and that of course gives me tremendous joy. There is a certain incredible satisfaction in getting involved with the FBA; I see it each day in bankers who travel to Tallahassee or Washington to attend FBA leadership events, whether for a Senator, Governor, Fed Governor, member of Congress, or other key policymakers. When bankers decide to walk the hallways of Capitol Hill in our state or national capital in Washington, they are fulfilling the spirit, intent,

“WHEN BANKERS DECIDE TO WALK THE HALLWAYS OF CAPITOL HILL... THEY ARE FULFILLING THE SPIRIT, INTENT, AND DEDICATION THAT OUR FOUNDING BANKERS HAD...”

and dedication that our founding bankers had on the early evening of February 28, 1888, when they gathered in Jacksonville for the first organizational meeting of the FBA. On that historic day in Florida, bankers wanted to ensure that we created a united voice to speak up for an industry that plays a critical role in the economy. Little did they know, their state of Florida would become the third largest state in the United States.

and I believe our nation is there today. Washington, and to some extent, our state capitals, need to stop concentrating on the FDIC banking system to implement their rules, such as treating banks like the “climate police.” When we were deputized years ago for BSA/AML reasons, it was at tremendous costs to our industry, especially our community banks. The President’s recent comments about our industry having “junk fees” were quite frankly insulting. I did

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

not appreciate the President’s comments implying that our industry, an industry heavily regulated by the federal government, should be compared to selling concert tickets and grouped with unregulated industries that in some instances charge “junk and hidden fees.” Are ticket sellers regulated by the Office of the Comptroller, the Federal Reserve Bank of the United States, the Federal Deposit Insurance Corporation, or a state financial services department? No, of course not. I don’t know about you, but I was outraged by the President’s comments comparing our industry with these others. In fact, in order to refresh my memory, I recently opened a new checking account at one of our banks. As

clear as water, the non-sufficient fund disclosure was stated in large letter font size: “Do you want overdraft protection?” It was not hidden in the fine print, but clearly disclosed in the process of opening the account. I selected “no”, but if I had selected “yes”, there was another notice about how overdraft protection works, in language that was easy to understand. As I walk the hallways of Congress with bankers fighting and advocating for a sensible and reasonable regulatory regime, I see their passion. That is the same passion that Mr. Call and Mr. Milstead also saw in our bankers who gave back to our industry. The satisfaction gained by “lobbying” for the profession that provides for your livelihood is priceless.

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8 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

Serving its communities for 75 years CCB Community Bank

C CB Community Bank, founded in 1947 in Andalusia, Ala., celebrated its 75th anniversary in 2022 with gratitude for the support of its bankers and local communities. Today, the bank has two locations in Alabama and three locations in North Florida with branches in Crestview, Niceville, and most recently, DeFuniak Springs. The bank celebrated the milestone anniversary with “lots of cake and ice cream,” and luncheons at each of its branches serving both employees and the local community. The anniversary celebration culminated with a barbecue in the bank’s hometown and an outdoor concert featuring country music singer Lee Greenwood, which CCB Community Bank sponsored as a kickoff event welcoming the Vietnam Traveling Memorial Wall to town. Bank leadership believed this to be the perfect opportunity Andrews has been with CCB Community Bank for more than 20 years; he opened his first checking account with the bank, which was previously called Covington County Bank. Andrews assumed the position of CEO in 2020 when long-term CEO Tom Lane retired. Lane served as CEO for 38 years. “Tom Lane brought CCB Community Bank from $50 million in assets to where it is today,”Andrews said. Today, the bank has $608 million in assets. “He had a huge influence on this bank, and he was the driver of our expansion into Florida.” The bank honored Lane for his service during the 75th anniversary festivities earlier this year, as there were no opportunities for special events when he retired during the pandemic. In celebrating its milestone anniversary, CCB Community Bank felt it was important to include retirees and former employees as appreciation for their service. “We’ve had many long-term employees who have seen the bank grow, and they’ve been a big part of our success. It’s all about the people,” said Florida President Alan Wood. to show its gratitude for the community’s support. “We’ve been around for 75 years, and it’s because of the community and our bankers,” said CEO Michael Andrews.

Some employees have worked at CCB Community Bank for more than 40 years. With such loyalty and longevity, both Andrews and Wood agree their employees’ commitment to the bank’s mission of community involvement and strong corporate citizenship have played a key role in its success. “We’re all paddling in the same direction; there are no questions about our core values or where we’re going. Get involved, give back, be a part of the community… that’s what we’re all about,” Andrews said. Wood added: “We want to be visible and active with local organizations; we try to talk the talk and walk the walk. We encourage our employees to find a passion and to get involved with local community organizations.” One such community partnership is with the Emerald Coast Autism Center in Niceville. CCB

Community Bank financed its first facility (featured on the cover of this issue) and the organization recently broke ground on its second facility “Emerald Coast Learning Center,” located on the Northwest Florida State College campus. The non-profit organization is dedicated to educating and improving the lives of individuals with autism in Okaloosa and Walton counties and surrounding areas.

“WE’VE BEEN AROUND FOR 75 YEARS, AND IT’S BECAUSE OF THE COMMUNITY AND OUR BANKERS.”

- MICHAEL ANDREWS

“ECAC is helping our entire community. People are moving to this area because of the facility and what they’re doing. This organization is impacting lives, and for us to have just a small part in that is very satisfying,” Wood said. CCB Community Bank operates a local decision making model. Andrews and Wood believe that it’s important for each branch to have the autonomy to make decisions. “We want to be able to give our customers decisions in a prompt, timely manner,” Andrews said. “It doesn’t matter if it’s a $5,000 or a $5 million loan — it’s important to the person sitting across the desk, and therefore it’s important to us. We want to make sure that decisions are made by the people our customers are dealing with.” The bank also has an advisory board in Florida CCB Community Bank, Continued on page 10

WWW.FLORIDABANKERS.COM DECEMBER 2022/JANUARY 2023 — 9

We’ll be able to grow with the community. We’ve got great bankers there, too, and that brings immediate credibility to our name. We have a good mix of Alabama and Florida bankers.”

CCB Community Bank, Continued from page 9

that assists in strategic planning. “Our advisory board is made up of some of the key movers and shakers in our communities, and they’ve added a lot of enthusiasm and guidance,” Wood said. The advisory board was involved in the strategic p l ann i ng f o r t h e n ew DeFuniak Springs branch, which opened in June. CCB Community Bank opened its first location in Florida in 2007; the Florida market has allowed the bank to diversify its portfolio with more consumer-driven and commerc i a l l ending . In Alabama, the bank has a heavy agricultural influence. “We’ve been well received in DeFuniak Springs. It matches the communi ty atmosphere that we look for,” Andrews said. Wood added: “There is a lot of growth occurring in North and South Walton county, and we believe this is going to be a great location for us long-term.

Senior Lender and Chief Credit Officer Jean Supple lives in DeFuniak Springs and has strong name recognition in that market, though she works out of the Andalusia corporate office. Andrews and Wood also credit COO William “Wem” Mellown III and CFO Wendy Butler, both of whom have worked for CCB Community Bank for more than 25 years. During the anniversary festivities, the team came across a photo of high-school-aged Butler accepting a college scholarship from retired CEO Lane.

“WE WANT TO BE VISIBLE AND ACTIVE WITH LOCAL ORGANIZATIONS; WE TRY TO TALK THE TALK AND WALK THE WALK."

- ALAN WOOD

“That just goes to show you what we’re talking about, as far as being involved in our community… it always pays itself forward. That’s not the reason we do it, but ultimately I feel if we are engaged with the

Ribbon cutting at the CCB Community Bank DeFuniak Springs Grand Opening.

10 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

community on a consistent basis, we will be rewarded,” Andrews said. Over the course of its 75-year history, CCB Community Bank has survived devastating hurricanes, the Great Recession, and the Covid-19 pandemic, all while maintaining its dedication to serving its communities. “During the recession, what made me proudest is that we pushed forward and continued lending. Many communities relied on their community banks at that time,” Andrews said. “We embrace community, and in turn they embrace us.”

CCB Community Bank's newest location in DeFuniak Springs.

MICHAEL ANDREWS

Michael Andrews is CEO and Chairman of CCB Community Bank. Andrews has been with CCB Community Bank for more than 23 years. Before being named CEO in July 2020, he was the executive vice president and senior lending officer/loan administrator for the bank for more than 10 years. He began his banking career more than 30 years ago as a commercial lender at SouthTrust Bank. Andrews is a native of Andalusia and graduated from Auburn University, with a Bachelor of Business Administration in Finance. He and his wife, Wendy, reside in Andalusia and have two grown daughters, Caroline and Lillian.

ALAN WOOD

Alan Wood joined CCB Community Bank in 2009 as its Florida President. His role with CCB focuses on growing and diversifying the bank in its Florida markets. Headquartered in Alabama, CCB currently has locations in Crestview, Niceville and recently opened a fifth location in DeFuniak Springs, Fla. Wood’s career in banking spans more than 35 years, primarily concentrated in commercial lending. He previously held senior management roles with two community banks in Alabama. Wood is very active in the community, serving on numerous nonprofit boards. He and his wife, Tracy, live in Niceville and have three grown children and two granddaughters.

WWW.FLORIDABANKERS.COM DECEMBER 2022/JANUARY 2023 — 11

GOVERNMENT RELATIONS

ODDS AND ENDS FOR 2022-23

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

A new year is beginning with a slew of new possibilities. What will transpire in 2023? Your guess is as good as mine. Election Results Florida Republicans gained firm control of federal and state offices. As expected, Republicans made gains in Florida’s Congressional delegation, due to changing voting registration, redistricting, and the party in power usually losing seats in the midterms. Before the election, the Florida Congressional delegation consisted of 27 members — 16 Republicans and 11 Democrats. With redistricting, Florida gained one congressional seat. The Republicans appear to have picked up four seats and the new delegation will be made up of 20 Republicans and eight Democrats. In addition, Sen. Marco Rubio was reelected. In Tallahassee, Governor Ron DeSantis, Attorney General Ashley Moody, and CFO Jimmy Patronis were reelected in their statewide races. Wilton Simpson will now join the Cabinet as the Republican Agriculture Commissioner. Along with Sen. Rick Scott, all statewide elected officials will be Republican for the first time since Reconstruction. Governance In Washington, D.C., regardless of whether it is one or both chambers, we will have a divided government. What will this mean for the banking industry? Will the regulators appointed by the President be more mindful of the legislative branch of government as they push their respective agendas? It is doubtful, but there should be plenty of hearings on Capitol Hill. In Tallahassee, the new favorite parlor game is whether Governor DeSantis will run for president in 2024? Will he run regardless of whether Trump announces that he is also running? There have been mixed signals on these questions during the last week of the election. (I make no predictions here. Sorry!) We do know that there will be a Special Session in December to address the rising cost and lack of

availability of property insurance. We can probably expect more insurance legislation during the March to May Regular Session as well. We expect to see the credit unions make another run at public deposits. We will also see legislation on PACE lending and ESG. Please be ready to answer our Calls to Action on these or any other pieces of legislation. Economy The biggest question facing the economy is whether the Fed can tame inflation through rate hikes, or overshoot and head the economy into a recession? Depending on which expert you ask, you will get a variety of answers to these questions. But it is safe to say that the economy is a big player in the 2022 elections, and the impact will be felt throughout 2023. Banking Industry Trends What is in store for the banking industry as a whole across Florida? Will there be more mergers with other community banks or with credit unions? What is the future of cryptocurrency and crypto banks in 2023? Bitcoin and other cryptocurrencies saw a massive drop in value in 2022. Will this continue in 2023? Will there be regulation of the industry? We are also watching crypto banks sprouting across the country.The FBA is opposed to any new crypto bank that does not have the same regulation as our members, including the assessments to pay for our regulators. What other new competitors may be on the horizon? Who expected the growth of fintechs 20 years ago? The one thing that is constant is change. The economy is in a constant state of flux. It was just a little more than 20 years ago that we had the dot com bubble.Who foresaw the Covid-19 pandemic in 2019? What is the future of climate change and how will that impact our regulations and the economy? In summary, who knows what 2023 holds? We can only wait to see what tomorrow brings. We hope you had a great 2022 and here is to an even better 2023!

12 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

MARCH 22 , 2023 , 2 23

during the 2023 Legislative Session and spend a day at the Capitol discussing important banking and economic issues with Florida legislators. The day ends with Capitol Night - a dinner held at FBA headquarters. Capitol Night is a wonderful opportunity for bankers to network with elected of fi cials and their peers. t e 2 23 Le islative Sessio a s e a day at the Capitol discussing i portant a ki a eco o ic issues ith Florida legislators. The day ends with Capitol ight - a dinner held at F headquarters. Capitol ight is a onderful opportunity for bankers to net ork ith elected of fi cials and their peers. duri

Capitol Day: 12:00 - 4:30 pm Capitol ay: 12:00 - 4:30 p

Meet with Florida’s bankers on important banking issues Luncheon with a keynote speaker + Capitol Night: 5:00 - 9:00 pm Enjoy great seafood and networking at FBA Headquarters Meet with Florida’s bankers on i portant banking issues Luncheon with a keynote speaker + Capitol Night: 5:00 - 9:00 p Enjoy great seafood and networking at FBA Headquarters

For event details and to register, please visit www. fl oridabankers.com/CDCN For event details and to register, please visit . fl oridabankers.co /CDCN

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BANCSERV ENDORSED PARTNER: ICI CONSULTING

BANKS: THE PATH TO SERVICE QUALITY AND MANAGING COSTS FOR THE FUTURE F L O R I D A B A N K E R S A S S O C I A T I O N

BY BRYAN T. DI LELLA, SENIOR VICE PRESIDENT AT ICI CONSULTING

In our efforts to continue to offer the very highest quality products, services and solutions to our member banks, the Florida Bankers Association is extremely pleased to announce our most recent endorsement, ICI Consulting, providing core and ancillary solutions. ICI Consulting has demonstrated a commitment to our industry, our association and our member banks. BancServ, Inc. is very proud to endorse ICI Consulting, a Florida-based business, and we sincerely hope you will not hesitate to consider them should the need arise.

M eet your customers where they are. I recently visited my local bank branch to conduct a routine transaction that could not be performed digitally or at the ATM.While speaking with the teller, I learned about a new product to consider. On the way out, the branch manager greeted me and held the door as I exited. We had a quick chat. She asked if all my banking needs were being met. There was even a handshake farewell. Imagine that! I left the branch feeling good about my banking relationship. As the effects of the pandemic continue to abate, the economy is faced with a new set of challenges not completely unrelated to the global health shock. Inflation at levels not seen in 40 years, slowing growth, and rising interest rates, among other conditions, are top concerns for citizens and the banking industry that serves them. In the FDIC’s Quarterly Banking Profile for the second quarter of 2022, the agency reported the following among 4,771 financial institutions over the course of one year: an increase in net interest margin, loan growth and favorable credit quality, along with a decline in net income (due to provision expense) and a moderate decline in deposits (for the first time since second quarter 2018). While the economy and thus the banking sector adjusts to these current challenges, there is one area that has not changed — delivering superior customer service. It is hard work to delight customers, but when you do, the results are great and lead to growth and enhanced profitability. In our advisory work at ICI Consulting for banks nationwide on technology solutions, we find that when vendors fail to deliver functional products with great service and support, banks often leave in favor of a vendor that will.

Of course, there is more than one way to deliver superior customer service. Before and certainly through the course of the pandemic, we have seen the increased demand for access to banking services through digital channels. The rapid adoption of Digital Banking has exacerbated the need for banks to have responsive and innovative digital and mobile offerings. Indeed, the pandemic accelerated the use of such channels among a rising set of customers who may not have interacted with their financial institution in this manner before. For banks that are really tuned into their customer base, it is obvious that effective digital channels, and even in-branch customer service, must be a part of current and future strategy. This is the contemporary path to service quality for those banks and they are prepared to invest in it. Notably, service quality is mostly the result of the management and philosophy of the bank. As with most any business, customers want to see that their bank cares: that it values the relationship and understands the customers’ needs regardless of where and when interaction takes place. If banks embrace this intense customer focus, they will forge new paths to service quality. One ICI Consulting client that kept its branches open and operational boldly stated: “We never had to ask our customers to make an appointment to visit a branch.” In part, service will only be as good as the software tools banks use to implement Digital Banking. Therefore, a comprehensive survey of the institution’s requirements and a rigorous evaluation of current offerings is demanding the attention of bank executives to be competitive in the market, responsive to existing customers and in a position to attract new ones. Banks must look ahead to a time when the economy stabilizes,

14 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

and people return to their normal routines. To secure a long-term and stable customer base, banks will need to grow by catering to a younger demographic, while still providing superior service to their clients. Attracting and servicing future generations will require innovative new products and services delivered through Digital Channels. Banks must also anticipate the likely challenges ahead and be prepared for a time when growth levels out. When this occurs, one of the most dependable actions is to control costs. With few exceptions, data processing expenses are among the top three expenditures, along with salary and benefits, and premises and fixed assets, that a financial institution incurs on an ongoing basis. Data processing expenses, which include an institution’s spending on core processing and ancillary systems, are easily addressable cost reduction targets. The ancillary systems are key applications that surround and interact with the core system. They include important services like ATM/EFT, credit card, online banking, mobile banking, loan origination and servicing, payments, wire transfer, cash management, document management, BSA/AML, IT security, check processing, among others. These ancillary systems are as important as the core system because they not only support the key business functions of the institution, but also serve as touchpoints for customers. We also see banks aggressively pursuing new strategies to expand and emphasize digital channels — many that shrewdly started such projects prior to the onset of the pandemic. In modernizing their digital channels, banks are not only reaching more customers, but they are doing so with more innovative and integrated applications while potentially reducing data processing spend. Furthermore, they are making a sound investment in what will become a vital channel through which customers will be served in the future. Banks are also making changes to the digital channel to address a shifting mix of commercial or consumer business, integration to the core system and even because of variable vendor product and support plans.When reviewing data processing systems contracts, grouping ancillary products that serve the digital channel with other important applications and especially the core system will naturally increase the purchasing power and thus negotiation leverage for the bank.We commonly recommend this holistic approach to our clients as it tends to yield the best results. Banks will do a great service to their customers and shareholders by closely examining and monitoring data processing costs. There is a wide range of pricing models in the industry. The best way to gain insight on comparable market prices is to conduct a competitive evaluation of alternatives. The banks that take the time to do so and start the process 24 to 30 months prior to contract expiration will see the best outcome — in terms of finding solutions that effectively serve customers and addressing the institution’s business

requirements at the best price and terms. This goal can be mainly achieved by either negotiating new technology contracts or renegotiating existing technology contracts. While some executives deem the technology review process painful, it nevertheless remains an important part of appropriate due diligence by the institution in a key area that is the foundation of efficient and cost-effective operations. Unless the bank enjoys annual contracts, most banks maintain multi-year contracts with the vendors of core processing and ancillary systems. With the opportunity to review alternative solutions and/or address costs only every five, seven or 10 years, it is wise to take advantage of the typical contract cycle to carefully review these business-critical applications. If not then, when? Since 1994, ICI Consulting has been a leading bank and credit union advisor nationwide. ICI is a consulting firm that supports financial institutions by providing core processing assessments, gap analyses, vendor evaluations, contract negotiation and conversion services. ICI Consulting is well known for saving clients time and money during core processing and ancillary systems evaluations and negotiations with the providers of these business-critical solutions. http://ici-consulting.com About the Author: Bryan T. Di Lella has more than 30 years of information technology industry experience in the financial, regulatory, and federal government sectors. Over the course of his career, he has consistently focused on developing business relationships by listening to clients’ needs and translating requirements into viable business solutions. About Keith Hagen, Point of Contact for FBA Members: Keith Hagen is a 47-year veteran of the financial industry, experienced with institutions of all asset ranges as well as the technology companies that support them. He began his career in a small community bank in Pine Mountain, Ga., followed by 18 years with Trust Company of Georgia, now Truist. Hagen subsequently entered the FI processing environment with FFMC and Fiserv, where he spent 25 years working with banks and credit unions to formulate strategies and execution of operational processes and all aspects of data, transactions, and payment processing. He has also assisted FI’s with their processing decisions, contractual negotiations, and management of mergers, acquisitions, and branch openings. Hagen is a Georgia native now residing in Panama City, Fla. He attended Darton College in Albany, Ga. and Columbus College in Columbus, Ga. Hagen is married with four children and eight grandchildren. His hobbies include fishing, amateur radio, gardening, and woodworking, and he has held a private pilot’s license for several years. Hagen can be reached at keith.hagen@ici-consulting.com or his cell number, 770-826-2020.

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TRUST BANKING

THE SEASON OF GIVING… TO YOUR EX-SPOUSE?

BY KELLY O’KEEFE, SHAREHOLDER, STEARNS WEAVER MILLER

T he holiday season and the spirit of giving that comes with it are here. But are you giving to those whom you intended? This is a good time to check your beneficiary designations, especially if you are divorced. Otherwise, you might be giving your ex-spouse an unintended holiday gift. Year-end is also a good time for those responsible for paying out a decedent’s interest in a non-probate asset to reacquaint themselves with what to do when an ex-spouse is the designated beneficiary. Florida’s post-divorce “automatic” revocation statute, section 732.703, Florida Statutes (the “Revocation Statute”), renders void upon divorce a decedent’s beneficiary designation of an ex-spouse for non-probate assets, such as life insurance policies, individual retirement accounts and payable on death accounts. But that revocation is not always automatic — there are plenty of exceptions in the Revocation Statute. There are certain non-probate assets that are excluded from it altogether. There are also certain circumstances where the right boxes must be checked to assure that the Revocation Statute, and the protections it affords, apply. This article examines some of those exceptions — some you may be familiar with, but some may surprise you. If you fail to recognize these exceptions, you could find yourself at the center of a beneficiary designation lawsuit. The ERISA Exception to the Revocation Statute One of the exceptions to the Revocation Statute arises from a tale as old as time. While happily married, Spouse A designates Spouse B as the beneficiary of Spouse A’s retirement account. After some time, the two divorce, but Spouse A fails to update the beneficiary designation. Then, Spouse A dies with Spouse B still listed as the beneficiary. Is Spouse B entitled to those distributions? What are the plan administrator’s responsibilities? Does the plan fiduciary have a responsibility to wade through state law and marriage settlement agreements to determine if Spouse B, the listed beneficiary, is entitled to those retirement distributions?

If the plan is covered by the federal Employee Retirement Security Act (“ERISA”), Florida’s Revocation Statute does not apply. ERISA compels a fiduciary to administer the plan “in accordance with the documents and instruments governing the plan,” including making payments to a “beneficiary” who is “designated by a participant, or by the terms of [the] plan.” In keeping with ERISA’s general state-law preemption scheme, the U.S. Supreme Court held that ERISA’s directives regarding payments preempt the application of state law, like Florida’s Revocation Statute, that automatically revokes upon divorce the designation of a spouse as a beneficiary of an ERISA governed plan. Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 147-48 (2001). Consequently, where Spouse A never updated the beneficiary designation, the plan administrator must make distributions to Spouse B, regardless of the divorce or possible agreement among all parties involved to override the beneficiary designation. But, the story does not end there for those who would otherwise be entitled to a distribution that the ERISA-governed plan was forced to make to the ex-spouse. They can pursue a state claim against the ex-spouse to recover the funds. For example, where there is a divorce decree in which the ex-spouse waived entitlement to the ERISA controlled plan, courts have typically looked to state contract law and concluded that ERISA does not invalidate the waiver. In Martinez-Olson v. Estate of Olson, 328 So. 3d 14 (Fla. 3d DCA 2021), the former spouse waived any interest in the decedent’s 401(k) plan under the marriage settlement agreement. The court recognized suits to recover proceeds after they are distributed by the ERISA plan administrator are permissible, and held that the decedent’s estate could enforce the waiver in the marital settlement agreement against the ex-spouse. That is because ERISA no longer is implicated once the benefits are distributed to the designated beneficiary. Other Exceptions to the Revocation Statute Federal preemption is only one of the many exceptions to the Revocation Statute listed in section

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732.703(4). The Revocation Statute also does not apply to state administered retirement plans under Chapter 121. §732.703(4)(j) Other exceptions to the Revocation Statute allow a Florida resident who wants to maintain, or is required to maintain, his or her former spouse as the beneficiary of a life insurance policy, retirement account or other non-probate asset to avoid revocation of the beneficiary designation. Specifically, if a Florida resident designated the ex-spouse as the beneficiary of a non-probate asset covered by the Revocation Statute after the divorce decree, the Revocation Statute will not apply to invalidate the designation. §732.703(4) (b). Effective July 1, 2021, Florida residents may also, post-divorce, designate in their wills or revocable trusts that an ex-spouse will be an irrevocable beneficiary of an asset. §732.703(4)(c). To fall within these exceptions to the Revocation Statute, the decedent must actively affirm the ex-spouse designation post divorce. A Florida resident may also include language in a revocable trust that overrides the Revocation Statute. §732.703(4)(c). However, a Florida resident cannot use the Revocation Statute to avoid his or her obligations to an ex-spouse. If a divorce decree specifically requires that the asset be maintained for the benefit of a former spouse or children of the marriage, the Revocation Statute recognizes this as an exception, provided other assets of the decedent filling the requirement do not exist at the time of decedent’s death. §732.703(4) (d). A Florida resident cannot rely on the Revocation Statute to revoke the designation of an ex-spouse if the designation unilaterally cannot be modified or is irrevocable. §732.703(4)(e) and (f). Surprisingly, joint accounts are not covered by the Revocation Statute either. §732.703(4)(h). That means an ex-spouse who remains on a joint account post divorce will retain joint ownership of the account. The question remains as to whether others who would be beneficiaries of the decedent spouse may pursue those funds from the ex-spouse/joint account holder based on a divorce decree, as is permitted with funds disbursed from ERISA plans. While section 732.703 is designed to keep banks and insurance companies out of the line of fire in family disputes over beneficiary-designations on non-probate assets, there are some non-probate assets that require financial institutions to follow specific guidelines before deeming an ex-spouse beneficiary designation revoked. The Revocation Statute identifies specific assets in section 732.703(3)(d), (e) and (f) for which the payor has no liability for paying out the decedent’s interest in the asset to any designated beneficiary. Those include POD accounts, a security or other account registered in a transfer-on-death form, and a life insurance policy, annuity or other similar contract that is not held within an employee benefit plan or a tax-qualified retirement account such as an IRA. For the assets listed in section 732.703(3)(a), (b) and (c), identifying the appropriate beneficiary Conditions on the Application of Florida’s Revocation Statute

becomes more complicated for the payor. These assets include a life insurance policy, annuity or other similar contract held within an employee benefit plan or a tax-qualified retirement account, an employee benefit plan itself, and an individual retirement account described in sections 408 or 408A of the Internal Revenue Code of 1986 (“Code”), including an individual retirement annuity described in section 408(b) of the Code. For these assets, the payor must examine whether the governing instrument containing the beneficiary designation expressly designates a spouse. If the governing instrument either contains no information about the relationship between decedent and beneficiary or expressly states that the designated beneficiary is not the decedent’s spouse, the payor may make payment to the named beneficiary. If there is an explicit spousal designation in the governing document, then the payor must review the death certificate and do one of four things. If the death certificate confirms that the decedent and designated spouse were married when decedent died, the payor may distribute to the spouse. If the death certificate states that the decedent was not married or was married to a person other than the designated spouse, the payor may make the distribution to the secondary beneficiary. If the death certificate is silent as to the decedent’s marital status at the time of death, the payor may make payment to the primary beneficiary upon receipt of an affidavit from the primary beneficiary confirming that he or she was married to the decedent at the time of death, or pay the secondary beneficiary upon receipt of an affidavit from the secondary beneficiary that confirms the decedent was not legally married to the primary beneficiary on the date of his or her death. Conclusion Much of today’s wealth is passing through non probate assets and many marriages end in divorce. It is thus critically important that Florida residents review their beneficiary designations regularly because the Revocation Statute, while it affirms significant protection, will not always invalidate an unintended gift to an ex-spouse. It is equally important that payors recognize that, while the Revocation Statute provides them with some protection from being dragged into beneficiary designation disputes, the protection is limited — it comes with some arduous conditions that you should carefully consider with your counsel before making a distribution relying on the Revocation Statute. Kelly O’Keefe is a shareholder in Stearns Weaver Miller’s Tallahassee office. She represents professional and family member fiduciaries in complex and high stakes estate, probate and trust disputes and litigation. O’Keefe is the chair of the Tallahassee Regional Estate Planning Council, and a subcommittee chair for the Florida Probate Rules Committee. She is regularly recognized by The Best Lawyers in America, Florida Trend and Super Lawyers magazines and is AV Preeminent Rated by Martindale-Hubbell. You can reach her at kokeefe@stearnsweaver.com.

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18TH ANNUAL FLORIDA BANKERS / CALIFORNIA BANKERS DC FLY-IN SEP. 27 – SEP. 29, 2022

PHOTOS COURTESY OF WESTERN BANKERS T he FBA’s recent Washington, D.C. “fly-in” was a successful advocacy trip in partnership with the California Bankers Association. Even with the cancellation of several bankers impacted by Hurricane Ian, Florida was well represented this year. The bankers from our two states made a big impact in the nation’s capital. Topics of discussion included the Section 1071 rulemaking, cannabis banking, digital assets, CRA modernization, and credit unions (among other things), in meetings with legislators and briefings with the FDIC and the White House. We are grateful to the representatives and key policymakers who made time to meet with our bankers and discuss issues that are important to our nation’s economy:

• Rep. Andy Barr • Rep. Blaine Luetkemeyer • Rep. Young Kim

• Sen. Marco Rubio’s Staff • Sen. John Thune’s Staff • Glen Sears, House Financial Services Committee

• Rep. Mike Waltz • Rep. French Hill • Sen. Dianne Feinstein’s Staff • Rep. Mario Diaz-Balart • FDIC Chair Martin Gruenberg

• Bharat Ramamurti, Deputy Director of the National Economic Council for Consumer Protection

18 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

WWW.FLORIDABANKERS.COM DECEMBER 2022/JANUARY 2023 — 19

Florida BankPac Update PAC contributions for 2022: $261,452.00 Contributions received between 1/1/2022 and 11/21/2022

Contact Cheryl Tucker (ctucker@floridabankers.com) when your institution achieves 100 percent board member BankPac contributions.

Shilen Patel Vijay M. Patel

Community Bank of the South Harold T. Bistline Stephen D. Crisafulli Kevin P. Markey Kevin B. Steele William T. Taylor Carlos K. Woodward Crescent Mortgage Cammie Aucoin Cypress Bank & Trust Michael J. Coleman Dana Kilborne James T. Swann Edison National Bank John P. Ammons, II Elizabeth Aurensan Greg Blurton Karen M. Brazelton Lenor M. Cross Christina DePari David M. DuVall Pamela S. Edwards Lisa A. Hobson June Howard David B. Lowden Susan Nasworthy Kim Nyberg Matthew Overmyer Patrick Philbin Geoffrey W. Roepstorff Robbie B. Roepstorff Richard H. Shera, Jr. ePayResources Michelle Lee Federal Reserve Bank of Atlanta Diana Holshue First Bank, Clewiston FL Bryan D. Beer Mary E. Hilliard Carroll Andrew Couse Miller Couse Earle E. Edwards, III Andrew J. Higginbotham Karl E. Larsen Thomas Perry Morris E. Ridgdill Carey Soud Deborah Van Sickle First Colony Bank of Florida Ralph Betancourt Edward E. Haddock, Jr. Bruce May Donald W. McIntosh, Jr.

Banks with 100 percent board member contributions: Community Bank of the South

Anand Sabapathy John Thompson CFT, International Connie Laguna Citizens Bank & Trust Wesley Barnett Brian Bracey Carlie Cosce Marianne F. George Tiffani R. Gozdur Cynthia W. Henry Vaughn H. McAshan Stephen McCullough Douglas W. McPherson William G. Middleton Shirley J. Norman Bonnie B. Parker Mark E. Schreiber J. Theron Stangry Valerie Tillmon Howard Wiggs Lori J. Wilson Patricia Jinx Wilson Citizens First Bank Joshua Biller Lindsey M. Blaise C. Dale Borrowman W. Thomas Brooks Tina M. Campbell Kristen M. Crawford Michelle Crawford Mark D. James Stephen T. Kurtz Kevin W. McDonald Mark G. Morse Steven M. Roy Danny A. Schmid Tricia M. Snodgrass Sherry B. Kelley Greg Littleton Robert A. Loftin

Edison National Bank First Bank, Clewiston

BankPac contributions:

5iron Jason Bradley American Bankers Association John Jordan American Commerce Bank, N.A. Ameris Bank Banesco Bank of America

Fabiola N. Brumley Bank of Belle Glade Stephen M. Prielozny BankFlorida BMO Private Bank Amy L. Hale Caldwell Trust Company Capital City Bank Group Thomas A. Barron William F. Butler Stanley W. Connally, Jr. Cader B. Cox, III Bonnie J. Davenport J. Kimbrough Davis William L. Moor, Jr. Kenneth D. Pratt John G. Sample, Jr. William G. Smith, Jr.

John J. Wahlen Capital City Trust Carr, Riggs & Ingram Doug Mims Central Bank

Scott J. Sullivan Bradley Weber Martina Weiss Commerce National Bank & Trust Daniele Buzzerio

David Edgar Scott Kohler Arvind Patel

Dinubhai Patel Jayesh D. Patel Jayesh K. Patel Jiten Patel Mahendra Patel Nilesh Patel Raj Patel

Community Bank Jason K. Crowe Fred Leopold Linnette Wolfgram Justin Woodard

20 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING