Florida Banking October 2022

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION WWW.FLORIDABANKERS.COM SEPTEMBER 2020 Gulf Coast Business Bank Focused On Fulfilling Dreams and Goals INE OF THE FLORIDA BANKERS ASSOCIATION W.FLORID BANKERS.COM OCTOBER 2022

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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 9

OCTOBER 2022

ON THE COVER 8 ������������������������������������� Gulf Coast

Business Bank: Focused On Fulfilling Dreams and Goals CONTENTS

4 �������������������������� Chair’s Message 6 ������������������ Straight Talk from the President’s Desk 12 ������������� Government Relations: Please Reach Out to These Newly Elected Legislators 14 �������� Proposed Changes to the Community Reinvestment Act 18 ����� BancServ Endorsed Partner: Cadence Bank Combats ATM 20 ��������� Trust Banking: Advancing Florida’s Trust Industry: A Review Of Trust Legislation From The 2022 Legislative Session 22 ��������� College Is An Investment That Never Loses Value 24 ���������������������������� FBEF Donors 25 ��������������� Personal Transactions 27 ���������������������������������������Kudos 30 ��������������������� Upcoming Events 31 ������������������������� Did You Know? 31 ����������������Advertising Directory Fraud and Theft With The Help of STS Group

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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: The Gulf Coast Business Bank leadership, from left: Stacy Suddeth, Tom Robinson, Bill Blevins, and Guy Harris. Photos by Daniese Betito, Images for Business, Orlando, Fla.

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

Images ©istock.com: Nuthawut Somsuk; Berezko; nirat

CHAIR’S MESSAGE

WHAT IS IN FLORIDA’S FUTURE: CREDIT UNIONS OR COMMUNITY BANKS?

BY BILL PENNEY, FBA CHAIR

D oes Oregon foretell the future of Florida? I recently had the opportunity to ride my bike down the Oregon coast. For seven days, I cycled over 300 miles with my buddies, enjoying both the physical challenge and the beautiful scenery. Climbing the massive hills was most difficult (much bigger than Sugarloaf Mountain near Mt. Dora!) and while coasting down I held on for dear life! While riding on flat ground, I observed these three“Cs” and couldn’t help but wonder if this is in Florida’s future: 1. C o f f e e — T h e r e

the mom-and-pop credit unions operating locally in their traditional scope. The smaller, niche credit unions serving a targeted audience are not our competition. The mega credit unions, however — those greater than $1 billion in asset size — walk and talk like banks, and therefore should be taxed like banks. We need a level playing field if we are to compete. Why shouldn’t these mega credit unions pay taxes to contribute to the defense of our country and

the care of our seniors and veterans? Your guess is as good as mine. It is estimated that some $3 billion to $5 billion in annual tax revenue is lost due to this corporate welfare. I realize I’m preaching to the choir here. Our industry’s efforts to close the credit union tax loophole have felt like one long, perpetually uphill bike ride. But as in anything in life, it’s all about timing. I feel that the timing has never been better to close these corporate tax loopholes. As our national debt grows, these loopholes become harder for our government to ignore. In the meantime, how do we show our strength in the

were cof fee shops e v e r y w h e r e , par t i cular ly smal l , k i o s k - s t y l e d r i v e - throughs in parking lots. If more coffee is in Florida’s future, I’m all for it. 2. Cannabis — I noticed

t h e r e we r e ma n y cannabis shops; each of us must form our own opinions on this topic. Even still, this is on our radar as bankers because we advocate for the SAFE Banking Act and our ability to provide banking services to legal cannabis-related businesses. I was not happy with this third “C”: 3. Credit unions — I saw an abundance of credit unions in these small communities and very few community banks. (In fact, there are less than 15 community banks headquartered in the entire state.) I sure hope that this imbalance is not in our future here in Florida. The credit unions’ tax-exempt status creates unfair competition for all our banks.We’re not talking about

Bill Penney cycled over 300 miles down the Oregon coast.

face of pressure from mega credit unions? We need to support our state’s de novos and continue to open new community banks. With the influx of new residents we’ve seen in the past couple of years, it’s clear that our communities need more local decision-makers. Please continue to support our efforts. Get involved and stay up-to-date by staying close to your local congressional representatives, attending events, reading our emails and social media updates, and by answering timely Calls-to-Action.

4 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

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STRAIGHT TALK FROM THE PRESIDENT’S DESK

BANKS AND BANKERS SHOULD NOT BECOME

‘CLIMATE POLICE’ TO SATISFY OUTRAGEOUS ESG DEMANDS

BY ALEJANDRO “ALEX” SANCHEZ, FBA PRESIDENT AND CHIEF EXECUTIVE OFFICER ORIGINALLY PUBLISHED BY FOX BUSINESS.

T he Environmental, Social and Governance (ESG) issue is one of the biggest issues the American banking system has faced in years. All of us are first inhabitants of this planet before anything else. As such, it is in our collective best interest to care deeply about the environment; we all want a beautiful, clean and safe place to enjoy now — and for generations to come. For instance,

My advice to the banking industry, and to individual banks: dance with neither party. Some bankers may be concerned that certain individuals at the bank, such as board members, investors or even employees, are encouraging alignment with one political party or political agenda. I would counter that argument by saying if you search hard enough, you will learn that the

our beautiful state of Florida is one of the most beautiful states in the country and we want to keep it that way. If government leaders want to adopt environmental laws and regulations, they should do so. If the government wants to ban or outlaw a particular industry or business, it should do so. As the law stands now, bankers are permitted to bank legal businesses, and only legal businesses. Bankers should not be placed in the role of the “climate police” by closing accounts or refusing bank products to industries that depend on fossil fuels. This is the bigger issue: banks should have the right to decide,

bank also has board members, investors, employees and other interested parties covering a wide spectrum of political p e r s ua s i on s and s p e c i a l interests.

“THIS IS THE BIGGER ISSUE: BANKS SHOULD HAVE THE RIGHT TO DECIDE, BASED ON THE RISK OR BUSINESS PROFILE OF THE BANK, THE TYPE OF BUSINESS THEY WANT TO BANK.”

The old saying, “you can’t please all of the people all of the time,” rings true. Bankers should invest time and money in leaders from any political party who understand and support the banking industry instead of jumping on an issue bandwagon. The nation’s bank i ng sys t em needs a reasonable and not burdensome regulatory system so our banks can do what we do best: provide the capital that makes the economy go and help more and more people achieve the American dream of home and business ownership. Kudos to Bank of America CEO Brian Moynihan, who was a guest on Maria Bartiromo’s “Mornings with Maria” show on Fox Business Network on Tuesday, August 2. When Maria asked Brian about ESG, rather than leaning to one political party or another,Moynihan answered that his bank has a $40 billion loan pipeline

based on the risk or business profile of the bank, the type of business they want to bank. What we do not want is for politicians, from the left or right, dictating to the nation’s banking industry who should be banked or not banked. That latter option becomes a stronger possibility if the banking industry dances with the progressive left or conservatives on the right just to make one political party happy.

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

to companies relying on the fossil fuel industry, but the bank also has one of the largest loan pipelines to green energy industries and companies relying on and developing green energy. That was a great answer. Bottom line, our banks, not the government, should make the decision on whom to bank.

The danger in buying into one political interest just because they are in charge at the moment is precarious because elections happen and the other party could win. Then there will be consequences, ones that will hurt the free enterprise system and cause instability.

MARCH 22 , 2023

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8 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

“Most business owners look to their bank to give them financial advice. Rather than merely pushing a product, we take the time to understand our clients’ businesses. We want to have a better understanding of what they do so that we can better advise them,” said Tom Robinson, SVP, commercial lending. “Sometimes you learn more by listening than talking; we focus on knowing our customers and being the best possible advisor to them.” Blevins and the team refer to themselves as a “connecting” bank. The bank is in the unique position to connect clients and make mutually beneficial introductions. “What better way to help both customers than to make that phone call to introduce one another?” Robinson asked. “A lot of us have been in town for so long; it’s nice to work with people you’ve worked

This article was written months before Hurricane Ian devastated Southwest Florida and other parts of our state. The FBA joins bankers and people of goodwill everywhere who are keeping the impacted people and communities in our thoughts and prayers. G ulf Coast Business Bank is Southwest Florida’s first new community bank in 12 years. The Fort Myers-based de novo is focused on the local business community and dedicated to helping its clients achieve their dreams and goals. In fact, this is made clear when one walks through the door and sees the phrase “Focused on your dreams and goals” on the lobby wall. President and CEO Bill Blevins believes that supporting his team both professionally and personally boosts engagement and allows everyone

to do their best work and thus better serve the bank’s clients. His ideology is inspired by the book “The Dream Manager” by Matthew Kelly, chronicling the journey of a fictional company (based on the collective experiences of several companies the author advised) experiencing high turnover with a desire to improve employee retention. Blevins gives each of his staff a copy of the book to promote a culture of empowerment, personal growth and accountability. “Wh i l e e v e r y b a n k focuses on financial goals

with before to make the transaction as smooth as possible.” The bank opened with a soft launch in June for emp l oy e e s and boa r d memb e r s . Th e g r a n d opening in July exceeded expectations with a crowd of nearly 200 visitors. The team received great feedback from the event about the building design; customers sit down with a “personal banker” to complete transactions rather than waiting in a teller line, and this process has been well-received.

“OUR PHILOSOPHY IS ABOUT HELPING OUR COLLEAGUES BE SUCCESSFUL… WHO WILL IN TURN SERVE OUR CLIENTS, WHOSE BUSINESS SUPPORTS OUR SHAREHOLDERS . ”

- BILL BLEVINS

It was December 2020 when Blevins had the idea to start a new community bank; he sat down with Bill Valenti, Sr., of Florida Gulf Bank to learn more about the de novo process. The two men continued to have conversations over the course of the next year. “There’s no playbook. You have to ask other people who have gone through the process before, and get guidance from them,” Blevins said. “A lot of the other bankers in town asked, ‘What can we do to help you?’ It’s all about getting good advice.” CFO Guy Harris said: “Most of the local business community recognized the need for a business bank. We’ll cater to personal accounts, too, but our primary emphasis is on business.” Blevins had known Harris for many years on the soccer field, though they had never worked together. “You can tell a lot about somebody by their behavior on the sporting field, and how they react to wins and losses,” Blevins said. Together, Blevins and Harris began putting together a team and board of directors to create a business plan Gulf Coast Business Bank, Continued on page 10

and what it takes for the company to be successful, our philosophy is about helping our colleagues be successful… who will in turn serve our clients, whose business supports our shareholders,” Blevins said. When it comes to goal setting, Blevins encourages his team to think about what they’d like to achieve across all areas of their lives — professionally, relationally, spiritually, physically — and to write it down. “Bill sits down with each of us one-on-one and shares his own personal goals, too. I’ve never before had a boss or manager ask about my personal dreams or goals. This was a big eye-opener for me; it was something I had to reflect on, because this was the first time I’d been asked to put my goals down on paper, and then take practical steps to achieve them,” said Rosie Ruano, branch manager. “If we work on ourselves, that desire to grow and improve is reflected in our interactions with customers and clients… We ask them, ‘Where do they want to see themselves?’” This is what it means to be customer-centric at Gulf Coast Business Bank.

WWW.FLORIDABANKERS.COM OCTOBER 2022 — 9

“Our goal is to take care of our colleagues, our clients, and our shareholders. In our third or fourth year, we’d like to have a second location in Collier County, and eventually a third location in Cape Coral. There’s plenty of growth in Southwest Florida,” Blevins said. “We have a great team, and our goal is to build succession management, so that folks like Tom and Stacy have an opportunity to take on leadership roles in the bank going forward.” With its focus on holistic improvement, both for clients and its internal team, Gulf Coast Business Bank plans to be around for the long haul. “If you take care of your customers, you don’t really need to worry about the competition,” Robinson said.

and raise the organizing expenses. The board raised $23.6 million in capital to start the bank. “We have a great board. They really helped us get out there and raise the capital,” Blevins said. His team, too, are shareholders. “I wanted everybody here to feel like they have skin in the game.” SVP and Senior Credit Officer Stacy Suddeth added: “This makes us more relatable to our clients, as well; a lot of the folks we deal with are entrepreneurs. They own their own businesses, and we’re business owners, too. We can apply that commonality to our clients.” Where does the team see Gulf Coast Business Bank in the next five years? Gulf Coast Business Bank, Continued from page 9

The Gulf Coast Business Bank leadership (l to r): Senior Vice President & Senior Credit Officer Stacy Suddeth, Branch Manager Rosie Ruano, Senior Vice President, Commercial Lending Tom Robinson, President and CEO Bill Blevins, Vice President, Deposit Ops/BSA AML Compliance Opal McIntosh, and CFO Guy Harris.

WILLIAM M. BLEVINS A 35-year banking veteran, William M. Blevins joined Bank of America (formerly C&S National Bank) in 1987 after obtaining commercial banking experience at BancTexas in Dallas. He graduated from West Virginia University with a Bachelor of Science degree in Management and Economics and received his MBA in Finance and Accounting from Louisiana State University. He holds a Certified Cash Management (CCM) designation from the Association for Financial Professionals and has earned his series 7 and 63 licenses. Blevins has a passion for helping others reach their dreams and goals, and he carries this through his community involvement in March of Dimes, United Way, American Red Cross, Salvation Army and more.

10 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

GUY HARRIS

Guy Harris has more than 30 years of bank accounting and management experience working mainly in Southwest Florida. Prior to joining Gulf Coast Business Bank, he was with Stonegate Bank for seven years. He started his banking career in 1987 at First National Bank of Florida in Bonita Springs; other Southwest Florida banks he has worked for include Marine National Bank of Naples, Citizens Community Bank of Florida, First Community Bank of Immokalee, and First Commercial Bank of Tampa Bay. Harris received his Bachelor of Science degree in Accounting from the University of Central Florida. He’s an avid soccer player and has run the Gulf Coast Adult Soccer League for more than 30 years.

THOMAS ROBINSON

Thomas Robinson joined Gulf Coast Business Bank as senior vice president of Commercial Lending in May of 2022. He is responsible for commercial loan production, portfolio growth and deposit growth. Prior to joining Gulf Coast Business Bank, Robinson was senior vice president of First Florida Integrity Bank based in Naples, FL. He has more than 23 years of commercial banking experience in Southwest Florida. Robinson served as Chairman of the FGCU Naples Advisory Board, FGCU Athletic Advisory Board, Former President and Board Member of The Imaginarium Museum and History Center, and is a Greater Fort Myers Chamber of Commerce Leadership Program Graduate.

STACY SUDDETH

Stacy Suddeth brings more than 25 years of banking experience to Gulf Coast Business Bank as both a credit officer and commercial lender, having worked at various community, regional, and national banks in Alabama, Georgia, and Florida. Suddeth earned a Bachelor of Science degree in International Business from Auburn University and an MBA from the University of West Georgia. The opening of Gulf Coast Business Bank provided Suddeth the perfect opportunity to help oversee the credit quality of a de novo bank and to apply the many valuable lessons about industry and service that he has acquired in his banking career.

WWW.FLORIDABANKERS.COM OCTOBER 2022 — 11

GOVERNMENT RELATIONS

PLEASE REACH OUT TO THESE NEWLY ELECTED LEGISLATORS

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

W e now know roughly 35 percent of the members of the Florida Legislature. But how can that be with Election Day on November 8? Simple, these officials were elected either when qualifying ended and no one ran against them, or on Primary Day when they won and no one else was running for the seat. PLEASE reach out to these legislators and get to know them now. Please make sure to congratulate them on their victories. It is better to get to know them now, than when we need to ask for their help during Session. When qualifying ended at noon on June 17, there were 39 Florida House members and Senators automatically elected without opposition. No one ran against them for the seat. These officials and the counties they represent are listed below (*indicates that they are incumbents). Florida Senators: • Sen. Jennifer Bradley* (R) – Alachua, Baker, Bradford, Clay, Columbia, Gilchrist and Union counties • Sen. Debbie Mayfield* (R) – Brevard County • Sen. President-designate Kathleen Passidomo* (R) – Collier, Hendry and Lee counties • Rep. Erin Grall (R) – Glades, Highlands, Indian River, Okeechobee and St. Lucie counties • Sen. Gayle Harrell* (R) – Martin, Palm Beach and St. Lucie counties • Sen. Rosalind Osgood* (D) – Lee County • Sen. Jason Pizzo* (D) – Broward and Miami Dade counties • Rep. Bryan Avila (R) – Miami-Dade County • Sen. Ana Maria Rodriguez* (R) – Miami-Dade and Monroe counties Florida House Members: • Rep. Patt Maney* (R) – Okaloosa County • Rep. Jason Shoaf* (R) – Dixie, Franklin, Gulf, Hamilton, Jefferson, Lafayette, Leon, Liberty,

Suwannee, Taylor and Wakulla counties • Rep. Allison Tant* (D) – Jefferson, Leon and Madison counties • Rep. Chuck Brannan* (R) – Alachua, Baker, Bradford, Columbia and Union counties • Rep. Wyman Duggan* (R) – Duval County • Rep. Cyndi Stevenson* (R) – St. John’s County • Rep. Joe Harding* (R) – Marion County • Rep. Stan McClain* (R) – Lake, Marion and Volusia counties • Rep. Tyler Sirois* (R) – Brevard County • Rep. Thad Altman* (R) – Brevard County • Rep. Sam Killebrew* (R) – Polk County • Rep. Dianne Hart* (D) – Hillsborough County • Rep. Will Robinson* (R) – Manatee County • Rep. James Buchanan* (R) – Sarasota County • Rep. Michael Grant* (R) – Charlotte and Sarasota counties • Rep. Spencer Roach* (R) – Charlotte, DeSoto and Lee counties • Rep. Mike Giallombardo* (R) – Lee County • Rep. Bob Rommel* (R) – Collier County • Rep. Lauren Melo* (R) – Collier and Hendry counties • Rep. Kaylee Tuck* (R) – Glades, Hardee, Highlands and Okeechobee counties • Rep. Christine Hunschofsky* (D) – Broward County • Rep. Michael Gottlieb* (D) – Broward County • Rep. Felicia Robinson* (D) – Broward and Miami-Dade counties • Rep. Tom Fabricio* (R) – Miami-Dade County • Rep. David Borrero* (R) – Miami-Dade County • Rep. Alex Rizo* (R) – Miami-Dade County • Rep. Danny Perez* (R) – Miami-Dade County • Rep. Kevin Chambliss* (D) – Miami-Dade County • Rep. Melony Bell* (R) – Polk County • Adam Anderson (R) – Pinellas County

12 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

As you can see, there is power in incumbency. Only two Senators were not incumbents, but they are termed-out House members. One new House member is not an incumbent; however, his opponent did not properly qualify for the primary. The next group won their seats on Primary Day. Floridians decided 18 Florida House and Senate seats in the primaries. These races will not appear in your general ballot because no one else outside of one party qualified to run in that election. Here is a list of the winners on Primary Day: Florida Senators: • Rep. Geraldine Thompson (D) – Orange County • Sen. Jim Boyd* (R) – Hillsborough and Manatee counties • Sen. Joe Gruters*(R) – Manatee and Sarasota counties • Sen. Shev Jones *(D) – Miami-Dade County • Sen. Lauren Book*(D) – Broward County Florida House Members: • Shane Abbott (R) – Calhoun, Holmes, Jackson, Walton and Washington counties

• Griff Griffiths (R) – Bay County • Rep. Bobby Payne* (R) – Clay, Marion, Putnam and St. Johns counties • Rep. Ralph Massullo* (R) – Citrus and Marion counties • Rita Harris (D) – Orange County • Jennifer Canady (R) – Polk County • Rep. Josie Tomkow* (R) – Polk County • Brad Yeager (R) – Pasco County • Lisa Dunkley (D) – Broward County • Rep. Patricia Hawkins-Williams* (D) – Broward County • Rep. Daryl Campbell* (D) – Broward County • Rep. Dotie Joseph* (D) – Miami-Dade County • Ashley Gantt (D) – Miami-Dade County Additionally, there are 11 Florida House members and Senators, who are effectively elected because they have either a write-in, independent or third-party candidate on the general election ballot. No write-in, independent or third-party candidate has ever won an election to the Florida Legislature. I doubt this will be the year for that trend to end. Please congratulate these winners. Get to know them now before we need to ask for their help in the 2023 Session.

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WWW.FLORIDABANKERS.COM OCTOBER 2022 — 13

GOVERNMENT RELATIONS

PROPOSED CHANGES TO THE COMMUNITY REINVESTMENT ACT

WRITTEN BY FBA'S CRA RESPONSE TASK FORCE

T he Community Reinvestment Act (CRA) was enacted by the United States Congress in 1977 to encourage banks to help meet the credit needs of their communities, specifically low- and moderate-income neighborhoods and individuals. On May 5, 2022, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) jointly released a notice of proposed rulemaking (NPR) in order to modernize CRA regulations and examinations, as they had not been updated since 1995. The three regulators encouraged community input and provided a three-month comment period to solicit stakeholder feedback. In response to the NPR, the Florida Bankers Association formed a CRA Response Task Force to create and submit feedback to the three regulators. Chaired by Mindy Markwardt of Seacoast Bank, the response committee was comprised of over twenty individuals from a variety of banking backgrounds who congregated twice to collect feedback regarding the new proposal. Below is the feedback letter that was submitted by the FBA on behalf of all Florida bankers: The Florida Bankers Association respectfully submits this commentary for consideration by the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) in response to the Notice of Proposed Rulemaking for the Community Reinvestment Act (CRA) of 1977. Thank you for your leadership in soliciting stakeholder input on ways to improve and modernize the CRA regulatory and supervisory framework. Established in 1888, the Florida Bankers Association (FBA) has served as the voice of Florida’s banking industry for over 130 years and has grown to be one of the most powerful state banking associations Dear Chairmen Powell and Gruenberg, and Acting Comptroller Hsu:

in the country, advocating on behalf of members in Tallahassee, Washington, D.C., and in state, regional, and national media outlets. The FBA is committed to meeting the financial needs of our customers and their communities and appreciate the opportunity to participate and provide input on the latest joint proposal. Additionally, we would be happy to discuss the following commentary or provide additional relevant material at your convenience. CRA Examinations The existing framework for CRA examinations and how ratings are determined lacks transparency, clarity, and consistency. What is considered Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance performance is too subjective and often depends on which examiner conducts the assessment. The ratings assignment process is poorly defined, as banks have no insight on the rating process nor the reason for receiving a particular rating. Currently, 98 percent of banks pass their CRA exams on an annual basis, with 90 percent receiving a Satisfactory rating and less than 10 percent receiving an Outstanding rating, the highest classification. Neither the assessment mechanism nor the ratings themselves have any discernable metrics or thresholds and remain undefined. The FBA supports improvements to the current CRA rule that results in a more consistent, uniform structure around examinations and provides banks with public benchmarks and more transparency. Preparing for a CRA assessment is both costly and time consuming for banks, potentially deterring new market entrants. Before beginning examinations under the new framework, agencies should publish examiner’s guidance on documentation requirements and exam procedures so expectations are made known and goals can be set and measured by each bank. Additionally, guidance around expectations and target metrics for areas such as investments (percent of tier 1 capital), donations (relative to deposit market share), and branch locations (percent LMI, majority-minority) should be provided, with some flexibility based on performance context, since each bank is unique. This

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Term Definitions The FBA is supportive of the creation of a comprehensive list of term definitions that are applicable for examinations. For example, defining what constitutes a “retail deposit” provides greater clarity for banks preparing for the Retail Lending Test, while defining “automobile lending” eliminates uncertainty around direct versus indirect loan inclusion. Maintaining a uniform database of definitions will alleviate confusion and ensures that banks are correctly meeting the appropriate CRA benchmarks instead of having to rely solely on their own interpretations. Additionally, we are seeking clarification from the agencies on whether loan renewals are considered in the Bank Volume Metric, as exclusion of those renewals (historically considered under the old framework) could adversely affect the retail lending An important concern for community banks is whether they meet the classifications to be considered a small bank, intermediate small bank (ISB), or large bank. The FBA is supportive of raising the current asset thresholds for community banks as demonstrated in the new proposal. Considering that asset categories determine the complexity of the test that regulators use to evaluate performance, this update better reflects changes in the banking industry and the regulatory burden to which banks are already subject. Small & Intermediate Small Bank (ISB) Opt-In The FBA supports the agencies’ proposal to allow small banks and ISBs the option to either opt-in to any new CRA evaluation framework or continue to be evaluated under the current lending and community development tests. It is our stance that requiring small banks and ISBs to completely overhaul their compliance management systems and retrain staff to comply with new requirements within the regulatory timeline puts an undue burden on small financial institutions. Implementing the revised framework will be a significant financial challenge, taking away vital community bank resources that could be better used CRA Letter, Continued on page 20 and community development tests for many banks. We are also seeking to understand if call report definitions will be updated to align with the proposed rule. Asset Thresholds

will alleviate some of the uncertainty created by the proposed standards. Qualifying Activities List For years, a major flaw of the current CRA rule has been a lack of clarity in regards to which activities qualify for CRA credit. The FBA supports the agencies’ proposal to maintain a publicly available, illustrative, non-exhaustive list of eligible activities for CRA consideration as proposed, with perhaps the inclusion of startup small business funding. This approach helps illustrate loans, investments, and financial services that meet the CRA community development criteria while retaining that criteria as the determinative factor in eligibility. Additionally, providing a list of examples helps clarify the regulatory meaning of key community development

terms. Identifying that an activity previously qualified can help provide banks with certainty that similar activities are likely to receive consideration in the future. That stated, these positive outcomes are moot unless all three regulatory agencies maintain one uniform list as opposed to three separate ones. This will level the playing field and reduce subject ivi ty, whi le al so reducing the burden of proof and decreasing the time and effort spent trying to defend community development activities. Qualifying Activities Confirmation Process Similarly, the FBA supports the proposed addition of

“THE FBA SUPPORTS IMPROVEMENTS TO THE CURRENT CRA RULE THAT RESULTS IN A MORE CONSISTENT, UNIFORM STRUCTURE AROUND

EXAMINATIONS AND PROVIDES

BANKS WITH PUBLIC BENCHMARKS AND MORE TRANSPARENCY.”

a comprehensive process to confirm eligibility of qualifying community development activities that is open to bank participation. Under current CRA rule, banks are required to submit community development activities as a part of their CRA examinations without concrete assurance that these activities are eligible for credit. Allowing banks to request confirmation from their regulator promotes increased service, lending, and investment, as it reduces uncertainty and ensures specific activities qualify for credit prior to a bank’s next exam. We are seeking clarification from the agencies on what level of consideration is given to nationwide community development activities. We assume the focus will continue to be on community development activities in our Metropolitan Statistical Areas primarily, but would appreciate clarity if there is a different examination approach being considered.

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Community Development Services Test to a weight of 10 percent from 25 percent could potentially hurt relationships between banks and their community partners and regulators should consider all potentially negative consequences of this proposal before implementation. Retail Lending Assessment Area Assigning a threshold of 100 loans for retail lending is too low and may lead to loan production offices closing, inadvertently negatively affecting rural or distressed/underserved communities where banks may not have branches but instead loan production offices. Indirect lending may also be adversely affected, with less banks pursuing those partnerships if it means additional tracking and reporting. The FBA supports either increasing the consumer loan threshold to a minimum of 250 loans or just requiring the participation of non-brick and mortar institutions. We also support an increase for small businesses from 250 to 500 loans. This increase may require additional headcount and resource allocation. Community Development Financial Institution (CDFI) Ratings Community Development Financial Institution’s (CDFI) play a unique role in generating economic growth in our most disadvantaged communities. Considering that their lending is already reviewed annually by the CDFI Fund and that they are required to maintain 60 percent of their deposits and loans in defined CDFI census tracts (which closely overlap with LMI tracts), the FBA supports a separate exam structure when compared to other financial institutions. The agencies’ proposed changes would create an undue burden on these smaller community institutions and may limit resources that could otherwise be directed towards providing access to financial products and services for local residents and businesses. Transition Time Finally, considering the complexity and depth of these new regulations, the proposed applicability date of approximately 12 months after publication of a final rule for bank activities is an insufficient amount of time to implement all proposed changes. Many community banks are concerned that the proposed regulatory framework is too complex to update and align their systems by working with third party vendors to develop, test, and train staff within only a year’s time. Additional consideration should be given around the final rule and implementation date of Dodd-Frank Act section 1071, and its impact on the same resources responsible for CRA implementation, along with budgetary considerations for two significant regulatory changes in such a short period of time. Some US census data may not

CRA Letter, Continued from page 19

serving their communities. In comparison, allowing small banks and ISBs to have the ability to opt-in to the updated standards minimizes any negative economic consequences and provides flexibility for banks to meet the needs of LMI borrowers. Location of Deposits Under the proposal, large banks with assets of over $10 billion will be required to collect and maintain deposits data. The FBA opposes this change and contends that brick-and-mortar banks of any size should be exempt from tracking deposit location and delineating deposit-based assessment areas. As touched upon in the proposal, this approach could potentially result in metrics and weights that do not accurately reflect the geographic location of a bank’s deposit base, e.g. banks with foreign customers and multi-state presence. Additionally, use of depository summary reports where depositor data is grouped by branch of domicile could adversely be affected if correspondent banking relationships exist. Banks that wish to voluntarily collect and maintain deposits data for the sake of ensuring accurate metrics and weights may do so on their own accord, but it should not be a requirement for the CRA examination. This proposed change places an undue financial burden on banks who serve their communities through traditional, physical branches, and if geocoding is required of all depositor information, large banks would have to dedicate time and resources to clean up geocoding errors. Perhaps requiring this data collection from digital banks without a brick-and-mortar presence would be more appropriate, as it helps regulators understand where their depository concentrations are since they do not have physical branches. Dollar-Based Metrics Impl ement ing a dol lar-based communi ty development financing metric and benchmarks as an evaluation measure disproportionately favors large loans and investments over more numerous small dollar loans to smaller businesses that could arguably have more of a direct impact to the community. In addition, the value of certain small-dollar community development activities are routinely undervalued by a dollar-based measure. While the FBA recognizes the inclusion of qualitative assessments as a supplement to these dollar-based metrics, ultimately, we oppose this series of changes and instead recommend utilizing the number of loans and investments and considering their overall impact. Community Development Services Currently, the existing service test accounts for 25 percent of an examination score for large banks (including both retail and community development services). The FBA is concerned that lowering the

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be released until August 2023, which can affect the geocoding and determination of low- or moderate income tracts, and may inadvertently skew some of the banks’ metrics. The FBA supports extending that implementation date by at least an additional 24 months for an applicability date of at least 36 months from the effective date of the regulation. Another alternative is to adopt a phased implementation whereby each bank can elect to undergo their next scheduled exam under the old framework so exams are not partially based on the old rating scale and partially based on

the new rating scale. This would also allow time for the regulatory agencies to gather at least 24 months of aggregate benchmarking data and publish it publicly so expectations are clear and allow adequate time for economic volatility to normalize. The FBA supports the Board, FDIC, and OCC on their efforts to modernize and update CRA regulations to better reflect the changes to the banking industry that have occurred since 1995. Again, we greatly appreciate the consideration of our commentary. We look forward to continued discussion and participation in the drafting process.

LEADERSHIP LUNCHEONS HONORING FED GOVERNOR MICHELLE BOWMAN

MIAMI

Tuesday, January 10th 11:30 - 1:30 PM

AKA Hotel (formarly The Conrad) 1395 Brickell Avenue Miami, FL, 33131

TAMPA

Wednesday, January 11th 11:30 - 1:30 PM

Hilton Tampa Downtown Hotel 211 N Tampa St. Tampa, FL 33602

FBA Member Rate: $75 per person Non-Member Rate: $125 per person

FED Governor Michelle Bowman

For more information or to register for this event, visit our website: www.FloridaBankers.com.

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BANCSERV ENDORSED PARTNER: STS GROUP

CASE STUDY: CADENCE BANK COMBATS ATM FRAUD AND THEFT WITH THE HELP OF STS GROUP

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BY ADAM STEPHENS, VICE PRESIDENT OF SALES AND MARKETING, STS GROUP

C adence Bank has more than 400 branches across the Southeast, stretching from Texas to Florida. Keeping these branches secure from ATM and ITM fraud and theft is no easy task for SVP/Director of Corporate Security, Christopher Heath. “In today’s climate, any bank security leader knows it’s only a matter of time before your branch faces ATM fraud or theft. All ATMs and ITMs, including island units, are vulnerable to this rising security threat,” said Heath. Since Covid-19 entered our global vocabulary, the world has seen a sharp rise in ATM fraud and theft, including smash-and-grabs, skimming and jackpotting. According to a recent article published by the Federal Reserve Bank of Atlanta, in Europe alone, jackpotting attacks (where criminals gain physical access to an ATM and insert a virus that instructs the ATM to dispense cash) represented a 44 percent increase in number of attacks and a 14 percent increase in losses from 2019-21. Similar trends are being seen in the United States, although the statistics are more difficult to track. “Criminals are no longer hiding in the background. They seem to be getting more bold with their attack methods,” Heath said. “We have seen this personally at Cadence Bank.” Smash-and-grabs are also on the rise in the United States. Beginning as a trend among Texas gangs, the hook and chain method has now become a national gang activity favorite. According to a July 2021 article on convenience.org highlighting the rise of ATM smash-and-grabs, police say these ATM crimes are often initiation rites for future gang members, a trend now known as Chain Gangs. The thieves strike during the early morning hours with a stolen truck or tractor; use a crowbar to pry open the ATM’s front cover and attach chains to remove the safe door, exposing the canisters of cash inside. The process takes five minutes or less.

Criminals have perfected the art and science of this new brazen crime against financial institutions. Like every other financial institution across the country, Cadence Bank has also seen a sharp rise in smash-and-grabs, jackpotting and other ATM crimes over the past few years. Last year, they recorded footage of a smash-and-grab attack that took only two minutes to execute from beginning to end. The financial loss incurred from these attacks includes not only physical cash loss, but also ATM/ITM replacement costs and increased insurance rates. The expense of replacing an ATM or ITM is often greater than the cash stolen. This often leads to skyrocketing insurance costs. According to the convenience.org article, in the 52 weeks ended June 2021, Travelers insurance saw a 257 percent increase in the number of insurance claims related to ATM smash-and-grabs. To formulate a plan to combat this escalating problem, Cadence Bank knew there was only one company to call. They called in the experts — STS Group. “STS Group has been our go-to physical security and branch automation partner for over a decade,”

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Heath said. “With their partnership, we have found solutions to many of the unprecedented security and branch challenges faced in today's complex world of threats to financial institutions.” STS Group consulted with Cadence Bank, listening intently to its unique security challenges and needs to identify the most effective solutions for this problem. Utilizing our team of security experts and our in-house research and development lab, we worked tirelessly to create a plan of attack. STS Group designed a long-term, multi-phased strategic plan that would help Cadence Bank greatly reduce revenue loss and disruption of business. Phase 1: Motion Detection Motion detection was added to ATM and ITM surveillance cameras. STS Group helped set up crucial alerts that, once triggered, go immediately to Cadence Bank’s in-house 24/7, 365-days-a-year security console. This security operations console was set up by STS Group years ago to enable in-house, live monitoring of all branches around the clock. Once alerted, Cadence security personnel now have a bird’s-eye view of any suspicious activity. Alerts are set up for various suspicious events including excessive time on site, abnormal vehicle movement, and more. Phase 2: Anti-Jackpotting Kits The second phase of the STS ATM security arsenal included adding an anti-jackpotting kit. This

solution, offered by STS Group, adds an extra layer of protection that prevents criminals from getting through the hood of the ATM and accessing valuable customer data and information. Phase 3: Swing Gates Finally, STS Group helped install a powerful deterrent —- swing gates. This high-quality steel structure adds an extra level of protection and also acts as a deterrent against future criminal activity. Now, when criminals are running surveillance and trying to determine their next easy target, they will pass by Cadence ATMs. Cadence Bank is no longer considered a soft target. “Earlier this year we implemented the 3rd and final phase of our ATM security plan created by STS Group. We could not be more pleased with the results we have seen so far. This has been a powerful investment that will deliver immeasurable cost-savings to our financial institution over the long haul,” Heath said. STS Group stands ready to help your organization secure and protect your ATMs/ITMs from fraud and theft. Ready to be taken off the bad guy’s soft target list? Adam Stephens, VP of Sales, is ready to help you determine a strategy that best fits your needs and budget. You can contact him directly to schedule an introductory consultation. He can be reached by phone at 256-957-8018, or by email at adams@stsgrp.com.

TheNational Graduate

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Session Dates: August 20 – September 1, 2023 Location: University of Washington, Seattle, WA To learnmore about PCBS or to apply to the program, call (425) 278-0250

PCBS, in partnership with the Foster School of Business at the University of Washington, offers a premier three-year graduate-level educational program focused on the financial services industry. Our full-length courses, taught by outstanding industry experts, provide responsive, practical answers to today’s most critical banking challenges.

or visit www.thePCBS.org We look forward to everyone joining us on campus next year!

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