Florida Banking May 2022

First Bank 100 Years and Counting THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION WWW.FLORIDABANKERS.COM MAY 2022

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THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION

VOLUME 37 NUMBER 3 MAY 2022

ON THE COVER 8 ------------FirstBank: 100 Years and Counting

CONTENTS 4 - - - - - - - - -Chair’s Message 6 - - - - - - Straight Talk from the President’s Desk 12 - - - - Government Relations: The FBA Has a Successful 2022 Session 14 - -BancServ Endorsed Partner: How Community Banks Can Maximize Fintech Partnerships 16 - - - Trust Banking: Who Pays a Trustee's Attroneys' Fee? 20 - - - - - - - FBEF Donors List 22 - - - - - -Annual Washington, D.C., Trip 24 - - - - - Personal Transactions 26 -------------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 First Bank leadership, from left: Carey Soud, Miller Couse and Andrew Couse.

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

Photos by Daniese Betito, Images for Business, Orlando, FL

Images ©istock.com: PeopleImages; Melpomenem; PeskyMonkey; Yuri_Arcurs; focusphotoart

CHAIR’S MESSAGE

ADVOCATING FOR THE BANKING INDUSTRY IN WASHINGTON, D.C.

BY FAB BRUMLEY, FBA CHAIR

I t is always an honor to represent the FBA in Washington, D.C. Our recent trip on February 28 - March 3 with the Executive Committee was very successful, as we met with more than 16 representatives to discuss the issues impacting our industry. Among the many meetings, we had the opportunity to sit down with Sen. Marco Rubio’s Chief of Staff, Mike Needham, Sen. John Cornyn, Sen. Rick Scott, FED Governor Michelle Bowman, and Congressman Byron Donalds. It is also worth mentioning that we were in D.C. during President Biden’s State of the Union address as the invasion of Ukraine by Russia was in its first week. While our discussions were largely focused on banking topics, it was enlightening to hear a little bit of intelligence on those very current issues on the world stage. Our articulated points were well-received as there was mutual appreciation for the dialogue, time and attention. I’d like to recap a few of the major topics we discussed in D.C.: Climate Reporting Requirement The FBA has been very outspoken about this proposal that would position banks as the “climate police,” and we expressed our concerns to the Congressmen in D.C. about the costly burden of hiring compliance staff to evaluate customers’ carbon emissions. While the current comments suggest that these guidelines will apply to the larger systemic risk banks, history and experience has shown that rules like this often trickle down to the regional and community banks too. SBA Direct Lending This proposal would give the Small Business Administration the authority to make direct loans of $150,000 or less. We have only to look at the results of the pandemic relief efforts to understand how misguided it is for the SBA to expand beyond its original scope; while banks implemented PPP with low levels of fraud, the SBA’s EIDL program estimated nearly $80 billion in fraudulent activity. The FBA has urged our representatives to oppose this proposal that would usurp authority from

banks and authorized lenders who are already providing these services. SAFE Banking Act We support this bill because it would provide an avenue to capture the financial impact of a state-approved cannabis industry through lawful banking systems. As things are now, the federal government is out of alignment with the states, rendering a denial of banking services to legal cannabis-related businesses. So long as the businesses are legal, we should be allowed to bank an industry. ILC Loophole Our industry advocates for a level playing field with Industrial Loan Companies. These non-bank companies should be held accountable for the same supervision and regulation as banks, considering they offer the same banking services. When we speak on this issue, we emphasize the importance of upholding the separation between banking and commerce. Credit Union Taxation We are diligent in reminding our representatives of the outdated tax loophole that credit unions enjoy. The mega credit unions, those greater than $1 billion in assets, should be subject to the same federal taxes as our banks. We urge our representatives to reconsider the tax-exempt status of the mega credit unions; this cannot be ignored with our national debt reaching $30 trillion. Though you could not join us to walk the halls of Congress this year, there are many other opportunities to raise your voice for our industry. Keep an eye on your inbox for invitations to participate in Zoom calls with key representatives, be sure to heed our Calls-to-Action, and make plans to attend educational events to stay up-to-date with the goings-on of our industry. You won’t want to miss our 134th Annual Meeting in Orlando on June 5-8, with fresh and relevant content for today and tomorrow’s banking industry. If you haven’t already, be sure to register today and make your hotel reservations. We look forward to seeing each other again soon!

4 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

STRAIGHT TALK FROM THE PRESIDENT’S DESK

SHOULD BANKERS BE THE CLIMATE POLICE?

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

R ecently FED Board Governor nominee Sarah Bloom Raskin withdrew as President Joe Biden’s pick to be the Federal Reserve’s top bank regulatory member. Democratic Sen. Joe Manchin said publicly he would not vote to confirm her to the Fed Board. Why did this happen? Sen. Manchin was opposed to Ms. Raskin’s views that the nation’s banking industry should act as the “climate police” and limit lending to the fossil fuel related industries. The FBA has been a consistent, firm and clear voice on this issue. We, like everyone, want a clean and beautiful environment in which to live, work and play. There is no question about that. And if the Biden Administration or any other Administration (Democrat or Republican) wants to pass federal laws or regulations to make those industries and companies that rely on fossil fuels illegal, they should, and the banking industry will not bank them. But for Congress and the President to shirk their legislative responsibilities and place the burden on banks to enforce federal environmental guidelines against our customers is not fair, just or right, and would kill the community banking sector in our nation. Simply put, community banks (and many regional banks, too), cannot afford to hire carbon emissions experts to review loan portfolios to enforce such federal environmental guidelines. Let me repeat: it would kill community banks; more banks would merge and even fewer would be started. The current voices of those in charge in Washington are acting to make the banking industry, and others too, the climate police. The Securities and Exchange Commission on March 21 issued a sweeping proposal to require companies, including publicly traded banks, to report the amount of greenhouse gasses they emit, their exposure to climate change risks and the emissions produced by companies that use their products. Federal Reserve Chairman Jerome Powell has also made climate change a focus at the central bank. The

Fed recently joined the Network for Greening the Financial System, a panel of global financial regulators, and has started looking at ways to make the banks it supervises plan for climate change. The FBA has stated our position in meetings in Washington and on Zoom meetings with regulators, elected officials and anyone and everyone we have met with. We have also been firm and consistent in communicating these concerns on national television interviews. As a personal note, I am outraged when I hear people like Drs. Raskin and Omarova (both Biden nominees) proclaim their love for community banks. While they proclaim that love, they propose ideas that would kill community banks. In Dr. Omarova’s case, her manifesto advocated for the transfer of checking and savings accounts from banks to the Federal Reserve Bank of the United States. In effect, that would kill community banks’ source of funding, thereby killing community banks. Dr. Raskin wanted community banks to become the “climate police.” Even Democratic Senators could not stand for this act of hypocrisy and defeated their nominations in the Senate. How can you say you love community banks and then impose costly regulatory burdens that would kill them? Since 1888, the FBA has worked to ensure that the voices and interests of the banking industry are heard loud and clear. This is but another issue where that mission, with your help and participation, is being achieved. But our work has just begun. The FBA will return to Washington this month to sound the alarms that our nation’s banks play a vital role in providing the capital to make Americans home- and business owners. We need banks of all sizes to exist, as each play a different role in enhancing the economic vitality of Americans and the communities they serve. But as the nation’s number of community banks continues to shrink each day, policy makers cannot continue to talk from both sides of their mouths on the impact of these types of regulatory issues.

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

The FBA meets with Senator Rick Scott (top left), Congressman Bill Posey (top right), and Congressman Byron Donalds in Washington, D.C.

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8 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

F irst Bank celebrates its 100th anniversary this year as one of the oldest community banks in Florida. Founded in 1922, First Bank has grown steadily alongside its agricultural community of Clewiston, nicknamed “America’s sweetest town” for its thriving sugar industry. The city is named for A.C. Clewis, a Tampa developer and banker who was involved in the founding of First Bank. Clewis has an interesting connection to the Florida Bankers Association, as well; his grandson Clewis Howell was Chairman of the FBA in 1973. “[Clewis] saw a need for local business people to help the town flourish. That was a time when the Florida land boom was going on; the founders wanted to have a bank to build commerce,” said First Bank Chairman Miller Couse. “Community banks understand the unique businesses that flourish in small towns. If you’re going to borrow money in any of our seven locations, we want to be involved. The attorney, the farmer, the mechanic… whomever it might be, we have a loan on our books for that business.” In addition to its commercial and consumer lending, the bank also has a large concentration of municipal deposits, which are then used to fund loans to other local municipal organizations. “Our services are broad and diverse because we develop products to meet our customers’ needs. Although this tends to be less efficient at times, it serves our customers well. Overall, the profit takes care of itself,” said Carey Soud, First Bank president and CEO. “It’s not just a financial investment [for us]; our lives and our hearts are here.” First Bank’s longest tenured employee has worked at the bank for 50 years. Several members of the management team are not far behind, having worked at First Bank for 47 and 48 years. The bank offers an employee stock ownership plan. First Bank employees own about 20 percent of the bank. “We are truly community owned and operated,” said Deborah Van Sickle, senior vice president and chief lending officer. “Every decision our employees make is for their investment. During the financial crisis, everybody reached into their pockets and said, ‘We’ll keep going and we’ll come out of this,’ because we’re all investors.”

First Bank’s core values are about faith, honor and building lasting relationships. During the pandemic, for example, the bank ordered meals for its staff once a week from a different restaurant to support its local customers. “We believe that life is a stewardship; it’s given to us to honor God and give back to Him, and certainly our profession is one of stewardship. People entrust us with their money and we try to utilize it for the best of the community,” Soud said. Soud became president of First Bank in 2008. He has a background in public accounting and agriculture, which is how he first met Miller Couse. “I had been actively searching for somebody to replace me down the road,” Miller Couse said. “I was chairman, president and CEO, and didn’t want to be all three. Carey turned up at the right time.” Van Sickle said: “I think what’s also made the bank successful is that the management teams over the many years have always had a succession plan.” So too does Soud have a succession plan. He looks to Miller’s son Andrew Couse to follow him as the next president of First Bank. Andrew Couse currently serves as executive vice president and chief operating officer. First Bank, Continued on page 10

“COMMUNITY BANKS UNDERSTAND THE UNIQUE BUSINESSES THAT FLOURISH IN SMALL TOWNS.”

- MILLER COUSE

WWW.FLORIDABANKERS.COM MAY 2022 — 9

size at the time. The bank was also on the cutting edge of check imaging in 1994. Looking forward, there are big changes on the horizon for the Clewiston community, as the local Airglades International Airport develops a new, state of-the-art perishable cargo airport for goods like South American flowers, fruits and vegetables, and seafood. “Miami is congested; the idea is that they would land the planes here and save time getting the cargo on the road so there’s less spoilage,” Andrew Couse said. The project appears to be close to the goal line and is anticipated to require several hundred million dollars in future investment in the next two to three years, and add scores of new jobs. “Think about the lottery… you can almost visualize spending the $20 million dollar jackpot, but you run out of imagination when the jackpot reaches $400 or $500 million. And that’s kind of what this airport would be for us. We don’t yet have the imagination to really comprehend what the economic impact will be,” Andrew Couse said. Even so, First Bank is equipped to weather the changes, just as it has adapted over its 100-year history to survive the recession, natural disasters and the recent pandemic. “The way you make it 100 years through multiple crises is about having grounded leaders who make sound decisions in the moment with the best information available. What do we need to do? How do we make this right? It’s about people who are committed to rolling up their sleeves and doing what needs to be done… no matter what crisis is in front of you,” Andrew Couse said. Soud added: “What does it take to survive 100 years? I’ve thought a lot about that. It doesn’t make you arrogant or proud, it humbles you. We’ve seen the best and worst of times and through it all we are grateful for the wisdom and guidance of our Heavenly Father.”

First Bank, Continued from page 9

Soud said: “I’m passing the baton between the father who’s been my mentor, and a great one — one of the best bankers this state has ever known, honestly — to his son. The bank has a bright future, I’m certain of that.” Like Soud, Andrew Couse did not come from a banking background. He graduated from the University of Florida with a Bachelor’s degree in Music Education and taught high school band. He grew up as the son of a banker with “zero interest” in the bank. Things changed when he made plans to return home. He asked his father what it meant to be a banker; the rest is history. “He was like a sponge,” said Van Sickle, referring to Andrew Couse’s curiosity and desire to learn the ropes. “We’ve always had extreme longevity, and there were people at the bank who had been doing what they’d been doing for 10-15 years… and I show up and go, ‘Well, why do you do it that way?’ I wasn’t trying to challenge anyone, but I wanted to understand. I’m sure I ruffled plenty of feathers,” said Andrew Couse. “But you can see a theme at First Bank, and it’s that we’ll grow our own. We believe that if you find the right people, you can make them bankers.” When Andrew Couse joined the bank in 2005, he became interested in online banking and digital conversions, participating in the document imaging process to convert paper files to digital images. Last year, he worked with a vendor to implement the latest technology and automate Round 2 of the PPP process. “We have not shied away from technology and have also expanded our physical footprint knowing that our customers like the digital conveniences we offer but at times would still like to visit their local office,” Miller Couse said. First Bank added its first ATM in 1976. The team bought its first computer in 1988, which was considered a big move for a community bank of their

Clewiston is nicknamed "America's sweetest town" for its thriving sugar industry.

10 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

MILLER COUSE Miller Couse is chairman of First Bank. He joined the bank in 1974 as a loan officer after serving in the U.S. Army in Military Intelligence. The bank had $19 million in assets when he started but has grown to $640 million today. Couse received the Florida Bankers Association’s Banker of the Year award in 2005 and served as Chair in 2008. He was born in Moore Haven, Florida and attended Edison Community College (now Florida Southwestern State College) on a basketball scholarship. He received a degree in agriculture from the University of Florida, where he met his wife Toni.

CAREY SOUD Carey Soud is president and CEO of First Bank, a local bank that has served the Glades communities since 1922. The bank has served the Glades communities since 1922 and celebrates its Centennial Anniversary this year. Soud serves on FBA’s Board of Directors and is the Chair of BancServ. He is an active Rotarian, treasurer of Florida Southwestern State College Foundation, past president of Gulf Citrus Growers Association and past treasurer of Florida Citrus Mutual. Before banking, Soud had a career in the citrus industry and public accounting. He is a CPA with an MBA from Liberty University and the University of South Florida. Soud and his wife Julie have lived in Labelle, Florida for 42 years. He has taught the Bible for over 40 years and has served in prison and recovery ministries. Soud enjoys flying, golfing and spending time with his five grandchildren.

ANDREW COUSE Andrew Couse is executive vice president and chief operating officer of First Bank. He joined the bank in February 2005 and learned banking from the ground up, starting as a teller and working in new accounts. He spent time working in the data center and in loan servicing on his way to becoming a commercial lender. After his years as a loan officer, Couse oversaw the implementation of a new online banking platform and a BSA system and furthered banking education by serving as BSA officer, e-banking officer, and retail banking officer. As COO he oversees the retail banking and branch operations, deposit operations, digital and self-service banking and loan servicing. Active in his community, Couse chairs the Glades County Economic Development Council and has served as past president and past treasurer of the Rotary Club of Clewiston.

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GOVERNMENT RELATIONS

THE FBA HAS A SUCCESSFUL 2022 SESSION

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

T he FBA had a successful Session. We passed our bills on LIBOR and doc stamp suspension on emergency loans. We defeated bills on public deposits, data privacy, and PACE. We aided the Office of Financial Regulation (OFR) in increasing funding for examiners’ salaries to help retain them. We also amended bills dealing with mortgage estoppel letters, UCC Pick Your Partners, Kearney case, and trust accounting to name a few. We are also happy that legislation passed on increased financial literacy in schools, and the Rule Against Perpetuities for trust accounts was increased to 1,000 years (something we advocated for several years ago). Some of these bills are listed below. As a reminder, all bills are subject to Gov. DeSantis’ veto. Consumer Data Privacy – FAILED The biggest issue the FBA and the entire business community faced this Session was consumer data privacy. House Bill 9 passed the House but was never heard in the Senate. We met several times with the House and Senate sponsors over the last two Sessions and offered several amendments. While some were taken, our major amendment was not. Our main amendment was to exempt Gramm-Leach-Bliley financial institutions. We were opposed to the bill because it created a state privacy regime that would have caused undue burden and created litigation uncertainty. Bills We Supported: LIBOR – PASSED Thank you Rep. Stevenson and Sen. Gruters (HB 925) The FBA has worked to have safe harbor legislation passed that mirrors New York and Alabama laws so that when a financial contract containing LIBOR is not amended before LIBOR ceases to be used, the financial contract will automatically switch

to SOFR. The bills will ensure that the contract is still legally valid and binding. The intent is to keep commerce moving and not inundate the court system with legal disputes. Financial Literacy – PASSED Thank you Rep. Busatta Cabrera and Sen. Hutson (SB 1054) Also known as the Dorothy L. Hukill Financial Literacy Act, it revises the current credits for a standard high school diploma to include instruction on personal financial literacy and money management. Curriculum includes instruction on opening and managing a bank account, completing loan applications, simple contracts, receiving an inheritance, credit scores, and other basic principles The House released the annual tax package, HB 7071, which included many future tax cuts, including the annual sales tax holiday. We are happy to report that our language exempting the payment of documentary stamp tax on any loans in response to a state of emergency declared through either an executive order or a proclamation from the Governor is included in the bill. OFR Retention Budget – INCLUDED IN THE BUDGET - We are happy to report that OFR’s line item in the budget to increase compensation for examiners was fully funded. The FBA was glad to help with this funding. We want to ensure that OFR examiners stay on the job longer, instead of being hired by the federal regulators or private industry, and do not require as much on the job training by our members. of money management. Tax Package – PASSED Thank you Reps. Bobby Payne and Tommy Gregory and Sens. Ana Maria Rodriguez and Joe Gruters (HB 7071)

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Bills We Opposed: Credit Unions/Public Deposits – FAILED TO PASS Unfortunately, HB 1559 passed the House Insurance & Banking Subcommittee by an 11-5 vote. Thank you to all who answered the Call to Action. Also, thank you to Kim Davis of Capital City Bank Group, Sammie Dixon of Prime Meridian Bank, and Don May of Tallahassee National Bank for testifying at the committee meeting. The bill had two more committee stops in the House, while SB 1318 was not heard in the Senate. PACE/REEF – FAILED TO PASS Bills were filed to change the program to REEF (Resiliency Energy Environment Florida Program). The Senate bill expanded the program to commercial and government leased properties with some additional consumer protection statutes for PACE loans. The House bill had only the stricter consumer protections. Thank you to Senator Jeff Brandes (R-St. Petersburg) for filing an amendment on our behalf to require lender/ servicer approval before any PACE loan with lien priority could be attached to the property. This was in response to the PACE lenders’ assertion that we should welcome PACE loans because they increase property values. As expected, they objected to the amendment. Bills We Followed that Were of Interest to Our Members: Individual Freedom – PASSED Legislation passed expanding the Florida Civil Rights Act to provide that subjecting a person, as a condition of employment, membership, certification, licensing, credentialing, or passing an examination, to training, instruction, or any other required activity that espouses, promotes, advances, inculcates, or compels such individual to believe certain concepts constitutes discrimination based on race, color, sex, or national origin under the Act. The bills clarify that discussion of these concepts is allowed as part of a course of training or instruction, provided such training or instruction is given in an objective manner without endorsement of the concepts. There is also a public-school component to the bill. Trustee Resignation/SLATS Tweak – PASSED SB 1502 by Sen. Powell provides authorization for trustees to resign as dictated in the trust document with appropriate notice provided; removes the need for a

creditor to file a separate action against a debtor and instead substitutes the personal representative; removes unintended tax consequence regarding Spousal Lifetime Access Trusts to prevent reversion of funds when the testator spouse predeceases donor spouse. Trust Accounting Changes for Family Trusts – PASSED SB 1368 by Sen. Gruters provides for trust accounting changes in how family trust companies advise beneficiaries of trust accountings. The bill also increases the Rule Against Perpetuities from 90 to 1,000 years. Public Records Exemption for Family Trusts – PASSED SB 1304 by Sen. Gruters provides that proceedings involving family trusts are redacted from public disclosure. We could see Special Sessions on congressional districts, should the Governor veto the bill, or on property insurance, if the dire predictions of insurance company failures are true. Finally, the Legislature failed to pass a condominium inspection bill. Could that be in a Special Session as well? We will be sending a more detailed look into these bills and many more, such as condominiums and property insurance, in our annual End of Session Report. Finally, we want to thank the bank lobbying team. Thank you to our attorneys at Akerman Law Firm: Our General Counsel Ginny Childs, Betsy Hodge, and James Goldsmith. Thanks also to Fab Brumley, Bank of America; Tom Pennekamp, Truist; Rick Mahler, JPMorgan Chase; Kelly Beazley, Bank of America; Aprill Blanco, Wells Fargo; Lisette Carbajal, Capital One; Diane Carr, Johnson & Blanton; Matt Curtis, SmartBank; Mike Dameron, TD Bank; Jim Daughton, Metz, Husband & Daughton; Dan Donohoe, Comerica Bank; Jason Isbell, Regions Financial; Nita Kuhner, Hancock Whitney; Tom Lamb, PNC Bank; Jim Nikolai, Synchrony Financial; Sean Stafford, McGuireWoods Consulting; Tom Ruebel, U.S. Bank; Joan Saenz, Fifth Third Bank; Clark Smith & Monte Stevens, The Southern Group; Erin Smith, TD Bank; Tim Sweeney & Jesse Villarreal, Banco Santander; and Alan West, Citibank, N.A.

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BANCSERV ENDORSED PARTNER: NCONTRACTS

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HOW COMMUNITY BANKS CAN MAXIMIZE FINTECH PARTNERSHIPS

BY MICHAEL BERMAN, FOUNDER AND CEO OF NCONTRACTS

F intech isn’t just about finding new ways to innovate new products and services. In many cases, its goal is improving and automating internal processes and technologies. The result is a more efficient and effective process. Just consider the areas of risk management and compliance, often called RiskTech and RegTech. Automating risk management and compliance can introduce huge advancements in efficiency at financial institutions. These result in greater insights into risk and compliance, improved collaboration, access to expertise unavailable in-house, and a more responsive, proactive program — often with substantial cost and resource savings. Don’t just take my word for it. The Federal Reserve’s 2021 Consumer Compliance Outlook ’s top story addresses how technology and innovation are critical to keeping community banks — and by extension other community financial institutions — competitive. It says fintech partnerships can be highly beneficial in reaching this goal. “The fintech partnership model is particularly important for smaller banks, which may have limited resources to develop or implement technology solutions on their own. By obtaining needed technology resources from a third party, community banks can meet their innovation needs and continue to focus on relationships with their customers and communities,” the Fed’s Outlook says. While many of these technologies are customer facing, the Fed makes a point of highlighting “operational technology partnerships that improve a bank’s back-end operations, including partnerships that enhance the efficiency and effectiveness of the

challenges. The key to success is developing partnerships where contributions to the effectiveness and efficiency of an institution aren’t thwarted by the accompanying challenges. 1. Set a fintech strategy that aligns with your overall strategic plan. It’s important to begin at the beginning. When it comes to your financial institution, that means your strategic plan (which is informed by your mission, vision, and values). Does your institution value efficiency? Speed? Innovation? Constant improvement? Staying the course? Simplicity? When considering operational technology partnerships, make sure they align with the goals set for the institution. An institution that values innovation will have a different approach than one that values steady improvement. Consider the risks of entering a fintech partnership — and how much effort it will take to mitigate them. If an activity poses a significant risk, mitigating that risk may wipe out any efficiency gains. Assessing these risks and regularly updating them is an ongoing effort, making risk management one area that can be made more efficient through fintech partnerships. 2. Find the right technology partner. There are many fintech partners out there, but not every fintech partner will be right for your financial institution. When seeking out a fintech partner to improve operational efficiency, make sure you have a clearly defined vision of what efficiency means. Does it mean being able to accomplish the same amount of work with fewer employees? More work? Improved communication and collaboration? Spending less? Making it easier to employ remote employees? Reducing the number of meetings? Eliminating unneeded products or processes? Your FI should also have a solid grasp of the products and services it currently uses to help determine whether a vendor’s technology will be compatible with those you rely on now (or plan to use in the future). It’s a

compliance and regulatory functions.” Maximizing fintech efficiency

Operational technology partnerships with fintechs bring many benefits, they also bring numerous

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major waste to sign on a vendor if it won’t work with the systems you use or plan to use in the future. 3. Vendor due diligence. Being efficient means choosing a stable vendor that regularly performs as expected. It also requires having a fintech partner that complements your institution’s strategy and risk appetite. Some financial institutions are open to start-ups while others only want vendors that are tried and true. Vendor due diligence makes it possible to understand the risks of working with a specific fintech partner and monitor their ongoing performance. This includes financial condition, experience, business approach, internal controls, resiliency, and compliance, among others. Your financial institution needs the resources to conduct adequate vendor management and due diligence. Vendor management can be a heavy lift, which is why it’s one of the areas that can benefit from gains in operational efficiency when automated with the help of a fintech. Deploying a fintech solution for vendor management can set the stage for expanding your FI’s vendor portfolio and building greater institutional efficiency. It’s also helpful when evaluating and managing fintech partners to provide digital banking products to consumers and small businesses. While fintech solutions that dazzle consumers may get the headlines, it’s the fintech journeymen — the seemingly invisible partners who help improve efficiency — that will wow the board, investors and customers. From risk, compliance and vendor management to business continuity and cybersecurity, take the time to investigate

the efficiencies available to your FI through fintech partnerships. The cost of ignoring these opportunities may be higher than you think. Michael Berman is the founder and CEO of Ncontracts, a leading provider of risk management solutions. His extensive background in legal and regulatory matters has afforded him unique insights into solving operational risk management challenges and drives Ncontracts’ mission to efficiently and effectively manage operational risk. During his legal career, Berman was involved in numerous regulatory, compliance and contract management challenges and assisted in the development of information systems to better manage these efforts. Prior to founding Ncontracts, he was general counsel for Goldleaf Financial Solutions, Tecniflex, Inc. and Imagic Corporation. Berman is a well-regarded speaker at financial institution conferences on risk management. He received his undergraduate degree from Cornell University and holds a juris doctorate from the University of Tennessee. Ncontracts provides comprehensive vendor, compliance, risk management, and lending compliance solutions to a rapidly expanding customer base of more than 4,000 financial institutions in the United States. It helps financial institutions achieve their compliance and risk management goals with a powerful combination of user-friendly, cloud-based software and expert services. Its solution suite encompasses the complete lifecycle of risk, including vendor management, enterprise risk management, business continuity, compliance, audit and findings management, and cybersecurity. The company was named to the Inc. magazine’s 5,000 fastest-growing private companies in America for the third consecutive year.

WWW.FLORIDABANKERS.COM MAY 2022 — 15

TRUST BANKING

WHO PAYS A TRUSTEE’S ATTORNEYS’ FEES?

BY KELLY O’KEEFE, SHAREHOLDER, STEARNS WEAVER MILLER

A t some point during trust administration, a trustee will need legal representation. Florida law recognizes that need and as a general rule allows the trustee to compensate attorneys with trust assets without a court’s pre-approval. §§736.0813(20), 736.0802(10), 736.1007(1). However, courts ultimately maintain discretion to determine whether and what amount of trust assets can be used to compensate the attorney. To discourage beneficiary objections to attorneys’ fees and avoid the tremendous time and expense associated with defending the fees in court, trustees should carefully assess what is a necessary and reasonable fee when retaining an attorney, and throughout the representation. Meticulously monitoring the attorneys’ fees, however, will not prevent all fee challenges. They are inevitable and plentiful, in part, because circumstances requiring the trustee to retain an attorney are numerous and varied. What is an appropriate expenditure of trust assets will differ in each given set of circumstances. While fee disputes must be determined on a case-by case basis, multiple sources provide guidance on when it is appropriate to compensate an attorney with trust assets. The trust itself may provide guidance. Florida’s Trust Code is also instructive and affords some protection to trustees by allowing payment of fees without initial court approval. However, prior to 2008, the Trust Code did not afford that protection where a breach of trust was alleged. The Florida Bankers Association and other organizations saw the devastating impact that had on Florida’s trustees and worked to get legislation passed which allows trustees to retain and pay counsel without court pre-approval in these situations, provided the trustee gives the required notice when a suit for breach of trust is filed. §736.0802(10). While the Trust Code offers the trustee some protection, it cannot stop all fee litigation. Compensating attorneys with trust assets, especially in breach of trust cases, will continue to be the subject of many future court decisions.

Trust Administration The Trust Code specifically recognizes the trustee’s power to hire and pay counsel when administering the trust. This power has some limitations and can be challenged. First, there are notice requirements that the trustee must meet before paying attorneys’ fees to defend a breach of trust claim during the trust administration. Those specific requirements are described below. A conflict of interest also limits this power and you may be surprised at what the courts consider a conflict. In the case of Bronstein v. Bronstein, 332 So. 2d 510 (Fla. 4th DCA 2021), the trustee thought he was pursuing an appeal for a valid unbiased reason — to prevent the beneficiaries from unjustly causing an increase in the amount of attorneys’ fees the trustee incurred. However, the fees for pursuing the appeal were deemed to have only benefited the trustee, who was also a beneficiary, and the appellate fees were assessed against the trustee’s portion of the trust. Cases like this confirm that where the trustee’s individual interests conflict with those of the beneficiary, the trustee should consider obtaining written consent or court approval before paying attorneys’ fees with trust assets. If the conflict can be viewed as self-dealing, the trustee should consider hiring an attorney at its own expense to represent it in the conflicting transaction. Objections challenging the need for an attorney’s services and the amount paid are also common. In such challenges, it is the trustee’s burden to demonstrate that the compensation was reasonably necessary, was incurred for the benefit of the trust, and was a reasonable amount. To determine the necessity of the fee, the court will look at whether the liability was incurred in good faith, and whether a reasonably prudent person would have incurred the expense. The factors courts examine in determining whether the fee amount is reasonable are too numerous to cover here.

Trust Banking Continued on page 18

16 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

party in breach of fiduciary duty cases. As a practical matter, neither award against the trustee is likely to occur unless the trustee has engaged in bad faith, egregious or willful behavior warranting sanctions, for example, by stealing trust assets. There is, however, a specific situation where bad faith is not necessary to prohibit a trustee from paying an attorney with trust assets. If the trustee pays an attorney to defend a breach claim after a pleading (i.e., a complaint) has been filed without first providing appropriate notice to the qualified beneficiaries, the trustee must reimburse those fees, with interest, pursuant to section 736.0802(10). In addition, the beneficiary seeking that relief may be awarded fees from the trustee. Compliance with this statute is critical. After a pleading asserting a breach of trust claim is filed, the trustee must give notice to all qualified beneficiaries before paying its attorney to defend the claim. The notice, among other things, must advise the qualified beneficiaries of their right to seek an order prohibiting the use of trust assets to pay the trustees attorneys’ fees. Proper notice will allow the trustee to continue paying its fees from the trust unless and until the complaining beneficiary establishes in a trial-like evidentiary hearing, that there is a reasonable basis to conclude a breach of trust occurred. Even if a reasonable basis is proven, the court can deny the beneficiary’s requested relief for “good cause.” That term is not defined, which allows the trustee to argue, and the court the discretion to identify, other grounds for approving continuing payment from trust assets. If the court orders funds to be returned and prohibits using future trust assets for attorneys’ fees, it must also direct who pays them — the attorney or the trustee. Again, the attorney cannot be ordered to pay the fees without notice and service of process. Conclusion The presumption remains that a trustee is entitled to pay reasonable attorneys’ fees incurred in the administration of the trust without court pre-approval. While the trustee is presumed to be acting in good faith, the payments can be challenged once made. When a court finds a trustee acted beyond its authority or an attorney has been overcompensated, either one may be required to reimburse the trust. Costly litigation can be mitigated by keeping the beneficiaries apprised of attorney compensation, and getting beneficiary consent or court approval when objections are anticipated. 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 vice 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 O’Keefe at kokeefe@stearnsweaver.com.

Trust Banking Continued from page 16

Fortunately for the trustee, the attorneys’ fees incurred during these proceedings will be paid from trust assets unless the court deems those fees unreasonable, and the court can direct from which part of the trust the fees for defending the fee challenge will be paid. §736.0206. If, however, the court finds that the original fee or any portion of the attorneys’ fees incurred during the fee challenge is unreasonable, it can require that the fees be reimbursed and from whom — the trustee or the attorney. The attorney must receive notice and service of process for the proceedings before the court can require it to reimburse any portion of the fee. As a result, in some cases, the trustee may be held individually responsible for reimbursing the entire amount. Trust Administration in Probate Following Settlor’s Death The trustee of a revocable trust may retain an attorney in connection with the administration of the trust during the period beginning with the settlor’s death and ending with distribution. §736.1007. What to pay the attorney can be confusing. The trustee and attorney may agree to set the attorneys’ fee according to section 736.1007(2), and that amount, 75 percent of the compensation schedule for the personal representative’s attorney, is deemed reasonable for ordinary services. Ordinary services are defined in the statute, as are extraordinary services. The attorney can obtain additional compensation for extraordinary services, such as involvement in a trust contest, adversary proceedings, or any litigation involving the trust. While the statutory schedules are deemed reasonable, failure to obtain pre-approval from the beneficiary or the court may, depending on the circumstances, result in litigation. Section 736.1007(6) sets out the procedures for challenging these fees and provides specific factors for the courts to consider, such as the promptness, efficiency and skill of the attorney, the nature and value of the assets, and the complexity of the administration. The trustee and the attorney should review these factors as well as the factors the attorney must disclose to the trustee when setting the fee, including the disclosure that the presumed reasonable statutory fee is not mandatory and may not be appropriate in all trust administrations. To decrease the risk of a fee challenge permitted by section 736.1007(6), the trustee should make similar disclosures to the beneficiaries and obtain their consent to, or court approval of, the fee arrangement. Breach of Trust When facing the prospect of litigation, the trustee should prepare for the worst and hope for the best. If a breach is found, the hope is that the trustee will not be held individually liable for its own fees or those of the beneficiary who filed suit. If the trustee is individually named in the suit, each of those outcomes is possible pursuant to section 736.1004, Florida Statutes, which provides that a court may award fees to a prevailing

18 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

Join us for an evening of fun at the BankPac Silent Auction during the 2022 FBA Annual Meeting | Tuesday, June 7 Ritz-Carlton Grande Lakes | Orlando, Florida

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For more info, visit: www.FloridaBanker.com/AnnualMeeting

Z FLORIDA BANKERS EDUCATIONAL FOUNDATION (FBEF) DONORS CONTRIBUTIONS RECEIVED FOR THE 2021-2022 FISCAL YEAR THROUGH APRIL 1, 2022 COMPANY AND CONTACT NAMES ARE LISTED AS THEY WERE AT TIME THE DONATION WAS MADE Thank you to all FBEF donors! Your annual contributions help support the FBEF's mission to help Florida bankers advance their careers through education We appreciate your support of the FBEF.

ICI Consulting, Inc. Keith Hagen Independent Community Bankers of America Scott Brown Intercredit Bank, N.A. Simon Cruz Intracoastal Bank Bruce E. Page Madison County Community Bank Edward Meggs Mainstreet Community Bank of Florida Janelle Flowers W. Ben Flowers Thomas D. Ingram Marine Bank & Trust Company William J. Penney Shaun E. Williams MidWestOne Bank Michael Durkin New York Community Bancorp, Inc. Mark D. Watson One Florida Bank Frederick G. Pullum Popular Bank Israel Velasco Prime Meridian Bank Sammie D. Dixon, Jr. Monté L. Ward Professional Bank Abel Iglesias QSI, Inc. Christy McMurry Raymond James Bank, N.A. Steven M. Raney Renasant Bank Adam J. Lombardo Saltmarsh, Cleaveland & Gund Paul Allen Kristen Stogniew Josh Strickland Seacoast Bank

Crews Banking Corporation James W. Crews, Jr. Rob Roberts Dixon Hughes Goodman LLP Adam Thomas Dorsey Consulting, LLC Joseph Dorsey Finemark National Bank & Trust Harlan Parrish FirstBank Florida Calixto Garcia-Velez First Bank, Clewiston Miller Couse Earle Edwards Morris Ridgdill First Bank & Trust Gary Blossman First Citrus Bank Jack M. Barrett First Florida Integrity Bank Gary L. Tice First Horizon Bank Mario Trueba First National Bank Brad E. Barber First National Bank Coastal Community R. Moyle Fritz First National Bank of South Miami Veronica Flores First National Bankers Bank Charlie W. Brinkley, Jr. Delvan Irwin Michael Malone Lourdes M. Mendes Jeff Neale Jeff Sands Blake Tolbird Robert L. Trott First State Bank of the Florida Keys Karen M. Sharp Five Iron, LLC Jason Bradley Flagship Bank Robert B. McGivney Florida Bankers Association Pamela Ricco Florida Business Bank William R. Norris Florida Capital Bank Mark Johnson Grove Bank & Trust Sheldon Anderson Heartland National Bank James C. Clinard

Amerant Bank, N.A. Jerry Plush Amerifactors Financial Group, LLC Chris Davis Ameris Bank Palmer Proctor, Jr. Anchor Bank Nelson Hinojosa Apollo Bank Eddy Arriola Banc Card of America

Tyler Dutton Tyler Martin

Banesco

Mario Oliva

Bank Leumi Jeff Watts BankFlorida

James S. Stalnaker, Jr.

Beach Bank

Charles Reeves

BKD, LLP

Meagan Clark BMO Harris Bank, N.A. Chad Campbell Caldwell Trust Company Kelly Caldwell, Jr. Capital City Bank Group Edward Canup Bethany H. Corum Connie Davis

J. Kimbrough Davis Brantley Henderson Daniel Petronio Capital City Trust Company William L. Moor, Jr. Central Bank John M. Thompson Citizens Bank & Trust Greg Littleton City National Bank of Florida Jorge Gonzalez College Ave Student Loans Bill Ayers Commerce National Bank & Trust Guy D. Colado Ray D. Colado Eric Ravndal Community Bank Fred Leopold Community Bank of the South William T. Taylor CRA Partners David Lenoir

Susan Blackburn Cathy P. Swanson Karen G. Nolan Seacoast National Bank Todd Feintuch SelectSource Cheryl Chapman Angie O’Reilly ServisFirst Bank Rex McKinney SHAZAM Bryan Kain

20 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING