Florida Banking September 2022

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION WWW.FLORIDABANKERS.COM SEPTEMBER 2020 T E I RS A SOCIATION W.FLORIDABANKERS.COM SEPTEMBER 22

OptimumBank Celebrating Growth and Evolution

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THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION

VOLUME 37

NUMBER 8

SEPTEMBER 2022

ON THE COVER OptimumBank: Celebrating Growth and Evolution

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CONTENTS 4 �������������������������� Chair’s Message 6 ������������������ Straight Talk from the President’s Desk 12 ������������� Government Relations: Three Constitutional 14 �����������������������BankPac Update 16 ��������������������������The Consumer Financial Protection Bureau's War on "Junk Fees" 17 ����� BancServ Endorsed Partner: SWOT-ing At The Crisscrossing Crypto Crackdown 20 �������Trust Banking: Tipping The Scales With Florida Community Property Trusts: Do The Rewards Outweigh The Risks? 24 ��������������� Personal Transactions 25 ���������������������������������������Kudos 30 ��������������������� Upcoming Events 31 ������������������������� Did You Know? 31 ����������������Advertising Directory Amendments You Will See on Your November Ballot

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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

25

On the Cover: The OptimumBank leadership, from left: Elliot Nunez, Tim Terry, and Moishe Gubin.

Florida Bankers Association: The voice of Florida banking since 1888. Images ©istock.com: Bill Oxford; urfinguss; DNY59

Photos by Mark Gall, Images for Business, Orlando, Fla.

CHAIR’S MESSAGE

WASHINGTON, D.C., FLY-IN: A DAY IN THE LIFE

BY BILL PENNEY, FBA CHAIR

T he FBA was in Washington, D.C., recently, and we will be returning again soon. Arguably one of the most important roles of the FBA Chair is to attend quarterly D.C. “fly-ins” and lead discussions about banking issues with key representatives. During these meetings, I am not only speaking as Bill Penney, CEO of Marine Bank & Trust, but as the voice for all our members, equally representing banks of all sizes. If you’ve ever wondered what one of these trips looks like, let me describe it for you: On our trip in July, we flew into D.C. for less than 48 hours and made the very most of our time there, scheduling 10 back-to-back meetings with members of the House and the Senate. We met with Rep. Waltz, Rep. Posey, Rep. Luetkemeyer’s staff, Rep. Cherfilus-McCormick’s staff, Rep. Cammack, Rep. Dunn, Rep. Mast, Rep. Bilirakis, Rep. Donalds, and Sen. Rubio. We sat down with the representatives or their staff for 30 minutes to an hour and described three to four key issues that are impacting our industry. For example, we discussed ESG and the burdensome compliance costs of having banks act as the “climate police” to enforce federal environmental policies. We spoke about the ILCs charter loophole as well as the tax loophole benefitting credit unions. And, when we met with Sen. Rubio, we urged him to support the

SAFE Banking Act, which would allow us to lawfully bank the cannabis industry. Why do we go to D.C. not once, not twice, but four times each year? At the FBA, we champion in-person advocacy. Though we could conduct these meetings from the comfort of our homes or offices, it wouldn’t be the same. We believe that meeting face-to-face is key to building relationships with policymakers and staying top of mind.

Each time we visit, we invite a new small group of bankers to join us. It is valuable for our representatives to hear about banking issues from the bankers who are in the trenches each and every day. While our FBA CEO Alex Sanchez is a passionate spokesperson for our industry, he understands the value of personal testimony, and he extends these invitations to give you — our members — an opportunity to participate in the important advocacy work.

“IT IS VALUABLE FOR OUR REPRESENTATIVES TO HEAR ABOUT BANKING ISSUES FROM THE BANKERS WHO ARE IN THE TRENCHES EACH AND EVERY DAY.”

If you receive an invitation to join us for a D.C. fly-in, say “yes” and come along to see what it’s all about. I can promise that you will walk away with a renewed appreciation for your peers, for our association, and for its leadership. We need everyone in our membership to support the FBA and our efforts to keep our industry strong. I hope to see you in D.C.!

4 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

FBA President and CEO Alex Sanchez (left) and FBA Chair Bill Penney with Rep. Kat Cammack.

FBA Chair Bill Penney leading a discussion with Sen. Marco Rubio.

Rep. Cammack addresses FBA bankers.

WWW.FLORIDABANKERS.COM SEPTEMBER 2022 — 5

STRAIGHT TALK FROM THE PRESIDENT’S DESK

WE DO NOT EMAIL OR FAX IT IN

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

I f I had one wish, it would be that every banker who receives my emails could walk the hallways of Congress with the FBA at least once. It is a high energy experience going from one office to another and concentrating on three to four issues that our industry cares about. We explain to each member of Congress that if these issues were approved, or sometimes defeated, it would make it easier for

Another main reason for this type of transparent communication is out of respect and gratitude to our bankers — starting with the FBA Chairman, which in our 135th year is Bill Penney. I want my emails to show you the great efforts of our Chair and the bankers who take the time to be away from their families, banks and communities to walk the hallways of Congress to fight and advocate for our industry.

the nation’s banking industry to serve our customers and our communities. Why is that important? Because the nation’s banking industry provides the capital that makes the economy go forward and helps make Americans home and business owners. The FBA engages members of Congress; we do not email or fax our advocacy points. In my communications with you, I share photographs of our meetings with key elected officials because I want you to know who we are meeting with and what we are doing. In my role as CEO of one of the most active political associations in the country, imagine if I never shared

Having our bankers in Washington walking those hal lways makes the difference. In our democratic system, being out of sight and out of mind is not a good thing. Elected officials need to hear from us. They need to hear what our concerns are to help our customers achieve the American dream of home and business ownership. In this column I am sharing with you some of the photos from our recent trip, where we engaged members of Congress to discuss important issues like ESG, credit unions, closing the ILC loophole,

“IN MY COMMUNICATIONS WITH YOU, I SHARE PHOTOGRAPHS OF OUR MEETINGS WITH KEY ELECTED OFFICIALS BECAUSE I WANT YOU TO KNOW WHO WE ARE MEETING WITH AND WHAT WE ARE DOING.”

a photo with you of who the FBA meets with, or quite frankly even the name of an elected official. And, when asked who we met in Washington, imagine I responded, “…a lot of important people behind the scenes.” That answer is absolutely unacceptable. You would then have the right to question what it is the FBA does. That will never be the case. When you read my emails, my goal is to make you feel like you were on the trip. I want you to see photographs showcasing how and why we advocate for you, our industry and for our nation’s economy.

and passage of the Safe Banking Act issue. Quite frankly, this engagement with elected officials is fun. I love doing this, and you would too once you’ve done it once or twice. It is our duty as American citizens to engage elected officials in our democracy. They are not subject matter experts, and they depend on us to share with them how certain pieces of legislation can help the nation’s banking industry better serve our customers to enhance their economic vitality. Together we can make a difference.

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

WWW.FLORIDABANKERS.COM SEPTEMBER 2022 — 7

The OptimumBank leadership, from left: Elliot Nunez, Moishe Gubin, and Tim Terry.

Celebrating Growth and Evolution OptimumBank O ptimumBank has experienced record growth in the last several years; in 2020 and 2021, the bank grew organically “I APPROACH PEOPLE AS THEIR PEER. THE

177 percent, largely thanks to its lending within the local community. Following a challenging season post the Great Recession in 2007-08, bank leadership buckled down to transform its culture, its team, and its processes, and has since steadily built a reputation for consistency and stellar service within the local community. The Fort Lauderdale-based bank was founded in November 2000 by a group of local Broward County businessmen with a focus on traditional in-person banking for businesses and consumers in South

CONNECTION IS ALREADY A WARM LEAD, THANKS TO PERSONAL RELATIONSHIPS, MY RELIGIOUS NETWORK, AND WORD OF MOUTH.”

- MOISHE GUBIN

8 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

Florida. The investors, directors, and employees believe that a combination of digital and traditional community banking is the “optimum” way to bank. The bank is led by President and CEO Tim Terry, CFO Elliot Nunez, and Chairman Moishe Gubin. Today, OptimumBank has $450 million in assets and is preparing to open a new branch in North Miami Beach. Nunez noted that according to Independent Banker magazine, OptimumBank is ranked No. 11 in the nation for commercial lending in the category of banks $300 million to $1 billion in assets. Gubin has served as chairman of the board since 2010. His open, friendly nature and vast network has helped attract new customers to the bank. Well respected within his Jewish community, Gubin takes every opportunity to speak with friends and new acquaintances to understand their needs and share

When Terry joined the bank in 2013, it was buckling under the pressure of a regulatory consent order. “There were incoming missiles every day in one form or another. You just take it one day at a time,” Terry said. “When the consent order was lifted in 2018, we took off and never looked back.” Even during the most challenging days, neither Terry nor Gubin doubted the bank’s future. What did it take to turn things around? “We worked on our culture, the practical application and operations of the bank, and getting past the stigma with regulators. It was an evolution,” Gubin said. “There are no specific points to be made on how we went from ‘here’ to ‘there,’ because there was no one person who made it happen. We brought in people with knowledge and experience. But it

how the bank might be of service. He shares his personal cell number on his business card. “ I wa n t t o b e

was more than that; we were looking for people with a desire to improve and a desire to serve.” Gubin and Terry s a y i t ’s e a s y t o spot the difference between those who are engaged and those who are simply going through the motions. Te r ry be l i eve s i n giving prospect ive e m p l o y e e s a behavioral assessment to learn more about t he i r pe r sona l i t y, s t r e n g t h s , a n d we akn e s s e s . Th i s assessment helps him plug people into the right roles.

“WE TREAT PEOPLE WITH THE HIGHEST

RESPECT FROM DAY ONE. WHETHER WE’RE TALKING ABOUT OUR CUSTOMERS, REGULATORS, OR OTHERS IN THE INDUSTRY… OUR CONSISTENT SERVICE IS AT THE CORE OF HOW WE DO BUSINESS. ”

your end-all-be-all for banking. Cal l me, I want to help you,” Gubin said. When it comes to g ene r a t i ng l e ad s , Gubin and the team a t Op t imumBank believe in the power of referrals rather than cold cal l ing. “I approach people as their peer. The c o n n e c t i o n i s already a warm lead, thanks to personal r e l a t i onsh i ps , my rel igious network, and word of mouth,” Gubin said.

- TIM TERRY

“The reality is that some people are introverts and some people are extroverts. Introverts do their thinking internally, while extroverts think out loud. People can go their whole lives in the wrong role without true success, because they don’t realize that they’re not doing what they’re naturally best at,” Terry said. “If you take the time when you hire to figure it out, you place people into positions where they fit, and they thrive.” Terry says he’s got the “best lenders in South Florida.” “[Our lenders] are all programmed to find a way to do a loan that’s prudent for the bank; not only are they knowledgeable about loans, but they know how to handle people, and that creates an early bond that expedites the process,” Terry said. The bank OptimumBank, Continued on page 10

The relat ionship that Gubin forms wi th prospective customers is then nurtured by Terry’s team. Gubin understands that lead generation is “worthless” unless there is somebody on the other end to follow up on those leads. “Moishe makes the introduction — and believe me, it’s more than just an introduction — but when it’s passed from Moishe to the next person, the transition is seamless. Our people pick up on the back end with exactly the same treatment,” Terry said. “We treat people with the highest respect from Day One. That’s what has made us successful, and will make us successful in the long run. Whether we’re talking about our customers, regulators, or others in the industry… our consistent service is at the core of how we do business.”

WWW.FLORIDABANKERS.COM SEPTEMBER 2022 — 9

something to the table, and the board has a different point of view, but my role as chairman is to frame the conversation. Our discussions are healthy and friendly and we always have a positive outcome.”

OptimumBank, Continued from page 9

has expanded its lending staff in the last few years; the team processes good loans, and “lots of them”

according to Terry, averaging $20 million to $25 million in loans per month. Gubin and the board trust Terry’s management and don’t “meddle” in the operations of the bank. Like himself, all board members are businessmen, and Gubin sees this as one of the bank’s strengths. “I’ve always been a fan of gathering different opinions. I’ve found that divergent opinions give better results,” Gubin said. “I believe that

“I’VE ALWAYS BEEN A FAN OF GATHERING DIFFERENT OPINIONS. I’VE FOUND THAT DIVERGENT OPINIONS GIVE BETTER RESULTS.”

The bank has come a long way since the Great Recession, and the team is optimistic about the future. OptimumBank experienced uninterrupted growth even during the height of the Covid-19 pandemic; Terry said everything was “business as usual.”

“We ’ r e proud of our continued growth and look forward to the future,” Gubin said. “Our customers could rightfully choose any bank they want, but they chose us.”

- MOISHE GUBIN

part of our strength is having the checks and balances of both sides; bank management brings

The OptimumBank team available for photo (from l to r): Melissa Zureich, Elliot Nunez, Moishe Gubin, Mary Franco, Tim Terry, and Sherrie Himes.

10 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

MOISHE GUBIN Moishe Gubin has served as a director of OptimumBank Holdings, Inc. (Company) and OptimumBank (Bank) since March 2010. Gubin is CEO of Strawberry Fields REIT, LLC, an owner of a portfolio of healthcare properties. From 2004 to 2014, he was the chief financial officer and manager of Infinity Healthcare Management, LLC, a company engaged in managing skilled nursing facilities and other health care facilities. Gubin graduated from Touro Liberal Arts and Science College, in New York, with a Bachelor of Science degree in Accounting and Information Systems and a Minor in Jewish Studies. Gubin is the founder of the Midwest Torah Center Inc., a non-profit spiritual outreach center. He also attended Yeshiva Bais Israel where he received a Bachelor of Arts degree in Talmudic Literature. Gubin has been a licensed Certified Public Accountant in the State of New York since 2010.

TIM TERRY Tim Terry was appointed president and CEO of the bank in February 2013 and appointed as the principal executive officer for the company in 2016. Terry has been in banking for 35 years and most recently served as president/CEO of Putnam State Bank in Palatka, Fla. Prior to joining OptimumBank, he served as president, CEO and senior loan officer for Enterprise Bank of Florida in North Palm Beach, and held senior lending, branch administration and sales management positions at Palm Beach National Bank & Trust, Flagler National Bank of the Palm Beaches and Comerica Bank. Terry received his Bachelor of Business Administration degree in finance from Western Michigan University, Kalamazoo, Mich. He is also a graduate of the American Bankers Association Stonier Graduate School of Banking at the University of Delaware.

ELLIOT NUNEZ Elliot Nunez has served as chief financial officer of the bank since February 2020. In this role, he is involved in the bank’s daily and long-term operations. He closely works with executive management and board of directors to position the bank for renewed growth amid a new and altered financial landscape. He is currently serving in the following committees: Audit, BSA/ Compliance, ALCO, Operations, and IT/Security Committees. Nunez previously served as chief financial officer for Brickell Bank and Mellon United National Bank. He was responsible for the overall direction, control, and management of the finance division. Nunez previously worked at KPMG LLP as a senior manager, where he delivered assurance and advisory services to banking clients. Nunez is licensed as both a Certified Public Accountant and a Chartered Global Management Accountant.

WWW.FLORIDABANKERS.COM SEPTEMBER 2022 — 11

GOVERNMENT RELATIONS

THREE CONSTITUTIONAL AMENDMENTS YOU WILL SEE ON YOUR NOVEMBER BALLOT

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

O nce again, you will see proposed amendments to the Florida Constitution on the November ballot. These follow a long list of amendments including pregnant pigs, smoking in public establishments, and medical marijuana, to name a few. Amendments to the Florida Constitution may be proposed by the Legislature, citizens’ initiative, or the Florida Constitutional Revision Commission (which meets every 20 years). Your November ballot will have three proposed amendments.The three amendments will deal with floods and ad valorem taxation, abolishing the Constitutional Revision Commission, and additional homestead tax exemption for critical public services workforce. The Florida Legislature has a constitutional required process to propose an amendment. First, the Legislature must pass a joint resolution containing the proposed amendments by a three-fifths vote of the membership of each house. Second, the proposed amendment must be on the next general election held more than 90 days after the proposal has been filed with the Secretary of State or at a special election held for that purpose. Third, the proposed amendment must be printed in clear and unambiguous language on the ballot. Fourth, the proposed amendment must be published in a newspaper of general circulation in each county where a newspaper is published once in the 10th week and again in the 6th week immediately preceding the week the election is held. As with all proposed constitutional amendments, it must be passed by 60 percent of the voters. The three proposed amendments are: Amendment 1 – Limitation on Assessment of Real Property Used for Residential Purposes. The proposed amendment will authorize the Legislature to enact a law prohibiting the consideration of any change or improvement made to residential real property to improve the property's resistance to flood damage in

determining the assessed value of such property for ad valorem taxation purposes. The amendment will seek to incentivize flood mitigation projects including sea walls, building elevations, maintenance of land for stormwater runoff, water proofing, and the like. Amendment 2 - Abolishing the Constitution Revision Commission. The 1968 Florida Constitution was rewritten and included the Constitution Revision Commission (CRC) to meet every 20 years. The CRC Chair is one of the Governor’s picks. The CRC’s proposed amendments do not have to be single subject as do the other forms of proposed amendments. The CRC last met in 2018 and proposed multiple amendments. Amendment 3 - Additional Homestead Property Tax Exemption for Specified Critical Public Services Workforce. The proposed amendment authorizes the Legislature to enact a law to grant an additional homestead tax exemption for non-school levies of up to $50,000 of the assessed value of homestead property owned by classroom teachers, law enforcement officers, correctional officers, firefighters, emergency medical technicians, paramedics, child welfare services professionals, active duty members of the United States Armed Forces, and Florida National Guard members. Also, the Legislature wished to encourage and thank these critical workers for their service during the pandemic. This piece is intended to be a short summary of the proposed amendments you will see on your November ballot. Please consider all amendments before you vote for them. These will be in the Florida Constitution until removed by a future vote. Finally, be sure to educate yourself before you vote on these proposed amendments, for federal, state, or local officials, for judges, or any other local issue you have on your ballot. Elections have long term consequences for our industry and your community. Please let us know if you have questions on these amendments or state or federal races on your ballot.

12 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

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Florida BankPac Update PAC contributions for 2022: $208,764.50 Contributions received between 1/1/2022 and 8/5/2022

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

Greg Littleton Robert A. Loftin

Susan Nasworthy Kim Nyberg Matthew Overmyer Patrick Philbin Geoffrey W. Roepstorff Robbie B. Roepstorff Richard H. Shera, Jr.

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

Vaughn H. McAshan Stephen McCullough Douglas W. McPherson William G. Middleton Shirley J. Norman Bonnie B. Parker Mark E. Schreiber J. Theron Stangry Valerie Tillmon Howard Wiggs Lori J. Wilson Patricia Jinx Wilson Citizens First Bank Joshua Biller Lindsey M. Blaise C. Dale Borrowman W. Thomas Brooks Tina M. Campbell Kristen M. Crawford Michelle Crawford Mark D. James Stephen T. Kurtz Kevin W. McDonald Mark G. Morse Steven M. Roy Danny A. Schmid Tricia M. Snodgrass

Edison National Bank First Bank, Clewiston

ePayResources Michelle Lee Federal Reserve Bank of Atlanta Diana Holshue First Bank, Clewiston FL Bryan D. Beer Mary E. Hilliard Carroll Andrew Couse Miller Couse Earle E. Edwards, III Andrew J. Higginbotham Karl E. Larsen Thomas Perry Morris E. Ridgdill Carey Soud Deborah Van Sickle First Colony Bank of Florida Ralph Betancourt Edward E. Haddock, Jr. Bruce May Donald W. McIntosh, Jr. R. Moyle Fritz Nicole Jones First National Bank Northwest Florida Angie Barger First National Bank of Pasco Steven D. Hickman First National Bank of South Miami Veronica Flores First National Bankers Bank Charlie Brinkley Linda Cook Lourdes M. Mendes Blake Tolbird First State Bank of the Florida Keys Karen M. Sharp Flagship Bank Domingo Sanchez Thomas J. Sheehan First National Bank Coastal Community

BankPac contributions: 5iron Jason Bradley American Bankers Association John Jordan Bank of America Fabiola N. Brumley Bank of Belle Glade Stephen M. Prielozny BMO Private Bank Amy L. Hale Capital City Bank Group Thomas A. Barron William F. Butler Stanley W. Connally, Jr. Cader B. Cox, III Bonnie J. Davenport J. Kimbrough Davis William L. Moor, Jr. Kenneth D. Pratt John G. Sample, Jr. William G. Smith, Jr. John J. Wahlen Carr, Riggs & Ingram Doug Mims Central Bank

Scott J. Sullivan Bradley Weber Martina Weiss Commerce National Bank & Trust Daniele Buzzerio Community Bank Jason K. Crowe Fred Leopold Linnette Wolfgram Justin Woodard Community Bank of the South Harold T. Bistline Stephen D. Crisafulli

David Edgar Scott Kohler Arvind Patel

Dinubhai Patel Jayesh D. Patel Jayesh K. Patel Jiten Patel Mahendra Patel Nilesh Patel Raj Patel Shilen Patel Vijay M. Patel Anand Sabapathy John Thompson CFT, International Connie Laguna Citizens Bank & Trust Wesley Barnett Brian Bracey Carlie Cosce Marianne F. George Tiffani R. Gozdur Cynthia W. Henry Sherry B. Kelley

Kevin P. Markey Kevin B. Steele William T. Taylor Carlos K. Woodward Crescent Mortgage Cammie Aucoin Edison National Bank John P. Ammons, II Elizabeth Aurensan Greg Blurton Karen M. Brazelton Lenor M. Cross Christina DePari David M. DuVall Pamela S. Edwards Lisa A. Hobson June Howard David B. Lowden

Kenneth Bailey David Brandon Ronald Hockman Mark Klein Ken Marks Robert McGivney James Nelson Joseph Oliveri Brent Sembler Robert Shaw Kelly Spica

14 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

Christopher Sprowls Paul Wikle Florida Bankers Association

Marine Bank & Trust Company Sandra Creyaufmiller Charles J. Gisler, Jr.

SHAZAM Alex Jernigan SouthState Bank Mike Sleaford STS Group

Kevin K. Metoff Tina Nicholson

Holly Banks Pete Brokaw

William J. Penney Rebekah Refford James C. Stanley Leslie Stokes Shaun E. Williams Mauldin & Jenkins, LLC Dianne Kopczynski Alison N. Wester MidSouth Bank W. Davis Malone, III MidWestOne Bank Thomas M. DiBernardo Michael Durkin Daniel Klimek Nelson Mullins LLP Rusty Melges New Edge Associates Yesenia Moreno New South Bancorp Jerry Campbell NFP Executive Benefits

Anthony DiMarco Brooke Harrison Brian Hickey Lesley Jordan Marilyn Matherne

Chris Nelson Sunstate Bank Yvonne Debesa Lloyd DeVaux David A. Lieberman TD Bank, N.A. Nick Miceli Truist Bank Thomas Pennekamp TrustCo Bank Eric Schreck Trustmark National Bank John D. Sumrall United Data Technologies Guillermo Benites Miguel Sanchez United Southern Bank Gregory L. Nelson Valley National Bank Jeffery W. Klink Wauchula State Bank Sherry A. Bohannon Pam Cobb Michael J. Coleman James W. Crews, Jr. Mark L. Delaney, II Lynetta U. Griner Misty Hughes Donna McKown Gary R. Roberts, Jr. James T. Swann Denise R. Terrell Winter Park National Bank Dell W. Avery James L. Bolen Sidney G. Cash Michael C. Crisante, Jr. David R. Dotherow James W. Ferrell Stanley T. Pietkiewicz

Kenneth Pratt Alex Sanchez

Sheri Sanderson Andrea Williams Gulfside Bank Timothy J. Clarke Jennifer B. Compton P. Compton Cramer, Jr. N. Rogan Donelly Teri A. Hansen Frank J. LaCivita Thomas A. Martin, Jr. Dennis B. Murphy Sam D. Norton Michael R. Pender, Jr. Charles W. Rush Drayton A. Saunders Jeff Saunders Heartland National Bank Andrew S. Bible James C. Clinard Jerry T. Whidden ICBA Scott Brown ICBA Preferred Services Robert Fisher

Glenn Blackwood Joseph Schaefer NXTsoft Bart Hall PCBB Bradley B. Reeves Professional Bank

Miriam Lopez Mary Usategui Raymond James Bank Steven M. Raney Retriever Payment Systems Renee Krieger Jen Swoboda Rita J. Lowman Saltmarsh, Cleaveland & Gund Kristen Stogniew SelectSource

Igler Pearlman, P.A. Richard Pearlman Jeffrey L. Oody JPMorgan Chase Michael Bennett Locality Bank Keith Costello Mainstreet Community Bank of Florida W. Ben Flowers, Jr. James H. Ford

Thomas D. Ingram Stephanie Koshiol Wendy B. Libby Randall J. Marshall Hal M. Rogers Paul B. Rountree

Jan Lamphier ServisFirst Bank

Thomas B. Carter Seven Hills Auctions Buddy Lee

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WWW.FLORIDABANKERS.COM SEPTEMBER 2022 — 15

THE CONSUMER FINANCIAL PROTECTION BUREAU’S WAR ON “JUNK FEES”

BY CONGRESSMAN BLAINE LUETKEMEYER

I n January of this year, the Consumer Financial Protection Bureau (CFPB) declared war on its newest enemy: so-called “junk fees.” The Bureau put out a press releasewithaheadline that cleverly read,“Consumer Financial Protection Bureau Launches Initiative to Save Americans Billions in Junk Fees.” The problem is that neither in the announcement nor in the months since has the Bureau been able to find a definition for the term “junk fee.” Instead, they have offered vague explanations of what could qualify, which could include nearly every One of the reasons the Bureau relies on vague descriptions and absent data in its announcement is likely the fact that data does not support its arguments. In fact, data actually shows that Americans would rather pay the associated fees to ensure easy payments and have access to their desired banking services. The “junk fee” exercise is yet another one of the Bureau’s a t t empt s to expand i t s own power and unilaterally determine what is and is not legal based purely on Director Chopra’s biases. It is a pattern we have seen repeat itself over and over. For this reason, Ranking Member Patrick McHenry and I led a letter to Director Chopra regarding this unethical practice and urging the Bureau to stop disregarding consumer sentiment in favor of political priorities. The letter focused on overdraft fees, which the Bureau has decided should be classified as predatory “junk fees.” This is despite a study from Curinos that showed American consumers see the benefit in having consumer fee. CFPB Director Chopra has even gone so far as to suggest he has authority over hotel fees — he does not.

overdraft fees and prefer to have that service available. While the Bureau also made the blatantly false statement that banks are reliant on overdraft fees, the numbers show they only make up a tiny percentage of revenue. Again, this isn’t about consumers or facts. Unfortunately, my colleagues across the aisle in the Financial Services Committee seem to be on the same page as the CFPB. In our recent markup, Congresswoman Carolyn Maloney’s overdraft bill was passed on a purely partisan basis. This legislation builds on the Credit Card

Accountability Responsibility and Disclosure (CARD) Act that in 2009, gave the CFPB the authority to set the cap for late fees. CongresswomanMaloney’s bill would give the CFPB similar authority over overdraft fees, which builds on an already misguided practice. The CFPB should not be a price setter, yet this bill has the potential to give the Bureau even more power over our financial system than it already has, which would affect almost everyAmerican consumer. As bankers know, overdraft is an emergency liquidity product that provides consumers with a cash infusion when they need it

“ THE “JUNK FEE” EXERCISE IS YET

ANOTHER ONE OF THE BUREAU’S ATTEMPTS TO EXPAND ITS OWN POWER AND UNILATERALLY DETERMINE WHAT IS AND IS NOT LEGAL BASED PURELY ON DIRECTOR CHOPRA’S BIASES. ”

most. As our country’s inflation rates continue to make history with upsetting speed, this is no time to do away with overdraft services that help a family keep food on the table or gas in their car. The fact that the CFPB has such little regard for consumers is extremely concerning, and it's further evidence of the“government knows best” mentality in Washington. However, I truly believe that many of the Bureau’s actions are not supported by the law, and I am adamant that Congress and the private sector must hold them to account.

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BANCSERV ENDORSED PARTNER: BANKERS ALLIANCE

SWOT-ING AT THE CRISSCROSSING CRYPTO CRACKDOWN F L O R I D A B A N K E R S A S S O C I A T I O N

BY THEO KELLY, ASSOCIATE GENERAL COUNSEL, BANKERS ALLIANCE

BANKERS ALLIANCE IS THE HOLDING COMPANY OF COMPLIANCE ALLIANCE AND REVIEW ALLIANCE.

I n the 14 years since blockchain technology’s invention, banks have been left to compete with emerging business models and new stores of value, while operating in an uncertain vacuum of regulatory guidance. The resulting whiplash of lightning-fast innovation seemingly incapacitated the U.S. regulators of currencies, commodities and securities. With only crisscrossing guidance offered thus far,

Board (FRB) hasn’t released much guidance other than to say they will be releasing guidance. The FRB did examine the pros and cons of a Central Bank Digital Currency (CBDC) but “does not favor any policy outcome.” And, the U.S. Treasury has offered a risk assessment of money laundering risks in the crypto asset space. The FDIC joined the OCC and FRB in their “Crypto-Asset Policy Sprint” statement but has

it may seem impossible to make a risk-based decision on whether, and to what extent, a bank should adopt b l ockcha i n t e chno l ogy, including cryptocurrency and web3. However, using the tried-and-true SWOT analysis, banks can establish a bas e l i ne wi th wh i ch to evaluate the impact the crisscrossing crypto crackdown will have on their internal and external environment. First, a refresher on the more recent commentary and actions by banking regulators. We know that Basel will be releasing a second consultation later this

offered little else outside of requiring banks to notify the FDIC prior to engaging in crypto-related activities. The CFPB broadened its own enforcement authority in this space last year, formalized in March by Executive Order. And f ina l l y, l eg i s l at ion introduced in early June appears ready to assign rulemaking and enforcement authority to the Commodity Futures Trading Commission (CFTC), leaving the Securities Exchange Commission (SEC) any leftover crypto assets that are classified as securities. THE BASICS It can be di ff icul t to

“ USING THE TRIED-AND TRUE SWOT ANALYSIS, BANKS CAN ESTABLISH A BASELINE WITH WHICH TO EVALUATE THE IMPACT THE CRISSCROSSING CRYPTO CRACKDOWNWILL HAVE ON THEIR INTERNAL

AND EXTERNAL ENVIRONMENT. ”

understand and analyze the risks associated with crypto assets if you don’t have a grasp on some foundational terminology. Unfortunately, there’s a lot of so-called “gatekeeping” in the “crypto community” — e.g., folks who use overly-complicated lingo to seem more tech savvy than others. So, here are a few layperson examples to help understand the basic terms and concepts.

year with an eye on a “global minimum prudential framework” to address risks associated with crypto assets. Their first consultation offered a risk-weighting methodology. The U.S. Office of the Comptroller of the Currency (OCC) confirmed in July 2020 that national banks could offer crypto custodial services. However, Acting Comptroller Chu recently publicly remarked that it is time to “reset and recalibrate.” The Federal Reserve

Endorsed Partner, Continued on page 18

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to review the risks and opportunities associated with the emerging crypto regulatory scheme. Strengths and Weaknesses • Management. The Board and senior managers of the bank have a clear understanding of the existing regulatory parameters surrounding crypto assets, are knowledgeable about the applicable of those rules to bank offerings, maintain an awareness of emerging changes, and have a system in place to update the bank’s operations quickly and efficiently to comply. • Internal Controls. The bank’s internal controls are built-out and appropriately monitored and tested to manage the increased credit, liquidity, and transaction risks associated with crypto asset custody, transactions, loans, issuance, and holdings. The bank stress tests contagion risks and enhances areas of identified deficiencies. The bank has consistent margin call triggers, procedures, and communication channels, where applicable. Evaluations of crypto assets as collateral are reviewed for fair lending purposes. • Personnel. Bank personnel are properly trained to understand and communicate the products and services offered to customers, are aware of and can appropriately mitigate the related risks, the number of assigned personnel is appropriate for the associated risks, and enough redundancy is built into roles to prevent any system failures that may result from termination of key personnel. Vendors undergo a risk-based due diligence review before business begins, and periodically thereafter. • Technology. The hardware and software used to transact, secure, and maintain crypto assets are well-maintained and secure. External auditors are used to test and verify. The bank has a consistent and safe procedure for securing crypto collateral. • Insurance. The bank maintains appropriate levels of insurance related to all facets of crypto asset products and services. • Products. The bank can market and advertise crypto asset products and services in a manner consistent with existing laws and regulations, and an eye for fair lending and UDAAP risks. It has reviewed existing non-crypto products and services, identified the potential impacts, and updated those growth strategies to account for the internally driven competition. Opportunities and Threats • Management. The Board and senior managers of the bank can readily identify risks and

Endorsed Partner, Continued from page 17

What is blockchain? Have you ever worked on a document at the same time as another person or team? You can see others’ initials moving about on the page followed by their edits to the collaborative document. And the revision history is saved so everyone can see who made what changes. Well, this is a great analogy for “distributed ledger technology” (DLT). But the key difference between DLT and blockchain is that there is no single authority that maintains the data (e.g. OneDrive, Google, AWS).With blockchain, there is no centralized authority holding the data, and the data is not valid unless “approved” by a program that runs on many different devices around the world. What is a crypto asset? Crypto assets are much like your everyday tangible assets: cash, contracts, artwork, investments, information, etc. However, crypto assets are entirely digital. Here, everyone knows that your unique address (known as a wallet address) owns those assets because of the transaction information stored on the blockchain. A dollar bill may be compared to a Bitcoin. A contract may be compared to a “Smart Contract.”A non-fungible token may be compared to your property Deed. Nearly every transaction made in your everyday life can be hosted on a blockchain. What makes a crypto asset a security versus a commodity versus fiat currency? A “security” represents an investment in a common enterprise with the expectation of profit solely on the efforts of others (“solely” is removed in actual practice). A crypto asset that is offered to raise capital for a start-up would likely be classified as a “security.” Crypto assets generally fall into the classification of a commodity. A commodity is a resource that is nearly identical in all its instances and has a commonly known value, such as wheat. Financial commodities include identical (or nearly identical) futures and options contracts that have commonly known values. For the purposes of classifying crypto assets, “fiat” is defined as the “lawful money” of the United States. In other words, a currency that represents the debts of the government. You can’t pay your taxes in wheat, for example, but you can use U.S. dollars. A Central Bank Digital Currency would be classified as fiat currency. THE SWOT A SWOT analysis considers your internal strengths and weaknesses and external opportunities and threats. This template offers baseline considerations

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opportunities presented by the lack of crypto asset laws and regulations. • Personnel. Personnel are excited to join a bank that offers roles in the crypto asset space; however, this area may also come with increased competition for bank personnel who maintain desirable skills in a new field. • Technology. Rapid advances in technology offer opportunities to quickly adopt and roll out new product offerings and services; however, the maintenance and security of aging software and hardware suffer, and investments in new technology depreciate quickly. • Competition. The bank is an early adopter of crypto products and services but may now lack resources to act upon new trends, technology, and opportunities. • Reputation. The bank is well-posed to trigger crisis management plans, maintains open channels of communication with relevant stakeholders, and has identified and mitigated risks associated with crypto asset environmental risk factors. • Legal & Compliance. The bank’s compliance management system and risk management program appropriately identify and control crypto asset risks, including the emerging

regulatory scheme, and potential for increased litigation. CONCLUSION Given what little we know about the future legal and regulatory landscape of cryptocurrency, a comprehensive and bank-specific SWOT analysis may offer some comfort in the uncertainty. Take some time to discuss your bank’s crypto posture with your internal and external stakeholders and analyze the relevant strengths, weaknesses, opportunities, and threats for your bank. Continue getting involved in the discussions surrounding the proposed laws and regulations. And take this opportunity to enhance your risk management program and Compliance Management System to monitor and respond to the crypto regulatory crackdown we all know is coming. Theodore Kelly serves as Associate General Counsel for Bankers Alliance. Kelly’s professional pursuits include competently guiding business leaders in all matters of regulatory compliance, learning and sharing ways in which blockchain technology can positively impact business operations, and writing publications related to emerging technologies in the legal, risk, and compliance spaces. For B/A, he will be writing monthly for Bankers Alliance's various publications, including ACCESS magazine.

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TRUST BANKING

BY KELLY O’KEEFE, SHAREHOLDER, AND CHRISTOPHER CLARK, ASSOCIATE, STEARNS WEAVER MILLER TIPPING THE SCALES WITH FLORIDA COMMUNITY PROPERTY TRUSTS: DO THE REWARDS OUTWEIGH THE RISKS?

M igration from high-tax states like New York and California to low-tax states like Texas and Florida is surging. Florida saw its highest surge of net migration from 2020 to 2021, and 2022 is on track to be even higher. This “great migration” has significantly impacted real estate values for single-family residences across Florida. Key indicators show average single-family homes across Florida have appreciated between 15.4 and 33.1

weigh the potential risks and rewards associated with this tool and determine whether the scales tip in favor of creating a community property trust in the couple’s given circumstances. This article addresses some of those risks and rewards. To afford a better understanding of them, we begin by explaining how community property states and non-community property states differ. What is Community Property?

percent (area dependent). In addition, consumers are facing historic levels of inflation and economists are debating whether a recession has started.

“ FLORIDA’S PASSAGE OF THE FLORIDA UNIFORM DIRECTED TRUST ACT AND THE FLORIDA COMMUNITY PROPERTY TRUST ACT HAS POSITIONED FLORIDA AS AN ATTRACTIVE DESTINATION FOR GENERATIONAL WEALTH PLANNING. ”

There are currently nine community property states, which deem all property acquired during marriage, with limited exceptions, to be owned one-half by each spouse, regardless of how the property is titled. There are many consequences of this legal designation, one of them being that a deceased spouse in a community property state may devise his or her half interest in the community property at death to someone other than the surviving spouse, regardless of how the property is titled. I n a non - c ommun i t y property state like Florida,

While the current economic outlook is unsettled, Florida cont i nue s to i nt roduce l eg i s l a t i on i nt ended to preserve wealth and minimize taxes for current and new Floridians. Florida’s passage of the Florida Uni form Directed Trust Act and the Florida Community Property Trust Act has positioned Florida as an attractive destination for generational weal th planning, which now, due to an all-time-high federal estate tax exemption, often focuses on maximizing income tax basis. We explored Florida’s Uniform Directed Trust Act in a prior article, and in this article we focus on the Florida Community Property Trust Act (FCPTA). While the FCPTA is intended to give current and new Floridians the opportunity to secure certain tax benefits afforded to married couples in community property states, it is important that each couple

how the property is titled generally will control how the spouses may convey it during life and at death. Property may be titled in multiple ways, and in Florida most married couples hold property as tenants by the entireties. Property held in this way will pass to a surviving spouse upon the death of the first spouse and during life retains protection from the individual creditors of either spouse.

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Several states — Alaska, Kentucky, South Dakota, Tennessee, and now Florida — permit a married couple to elect to treat the property they own as community property by placing it in a community property trust. How and why Florida now provides that option is discussed below. The FCPTA Rewards The FCPTA took effect on July 1, 2021, and in summary, allows a married couple in Florida to treat as community property, the assets the couple places into a community property trust. The driving force behind the FCPTA was a potential tax benefit. Under the Federal Income Tax Code (the “Code”), community property gets a “100 percent” or “double” income tax basis step-up at the death of the first spouse. While a deceased spouse’s estate in a community property state will only include one-half of a couple’s community property for federal estate tax purposes, the basis of all community property generally is adjusted to fair market value at the time of the first spouse’s death. In a non-community property state, the result differs. Only the deceased spouse’s half of the property the couple owns will receive a step-up in basis. As a result, the surviving spouse in a community property state likely will receive a larger tax benefit than the surviving spouse in a non community property state when he or she ultimately sells the property. The example below demonstrates the difference. Husband and Wife in a non-community property state own a non-homestead piece of real property as tenants by the entireties. They bought the property for $200,000 and it is now worth $700,000. When the husband dies his half of the property, $350,000, is included in his estate and passes to Wife, who receives a step-up in basis. Her adjusted basis is now

$450,000, which consists of her original one-half basis of $100,000 plus her Husband’s adjusted basis of $350,000. If Wife sells the property for $700,000, and no other deductions apply, she would pay capital gains tax on $250,000 ($700,000 minus $450,000), not $500,000. In a community property state, pursuant to the Code, Wife in this same situation would receive a “100 percent” or “double” step-up in basis, and likely would pay minimal to no capital gains tax if she sold the property for $700,000. The FCPTA permits married couples to opt in to this tax treatment if they follow the requirements of the Act, and it broadens and clarifies the rights of former community property state residents who previously were guided only by the Florida Uniform Disposition of Community Property Rights at Death Act. The provisions of that Act are beyond the scope of this article. Establishing a community property trust pursuant to the FCPTA is very similar to establishing other revocable or irrevocable trusts in Florida with a few notable exceptions. The trust must: • Include an express declaration. The trust instrument must declare the trust to be a community property trust. § 736.1503(1), Fla. Stat. • Appoint a qualified trustee. At least one trustee must be a natural person residing in Florida, or a company authorized to act as trustee in Florida. §§736.1502(6), 736.1503(2), Fla. Stat. Corporate trustees should be preparing to administer community property trusts as a result of this requirement. • Be properly executed. Both spouses must execute the trust with the requisite formalities identified in the FCPTA. § 736.1503(3), Fla. Stat. Trust Banking, Continued on page 22

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