Tag: lending

Succession Planning – The Key to Remaining Independent

Written by admin on August 22, 2019. Posted in Management & Planning.

By: Bob Viering, Senior Consultant and Manager of Lending Services

For many community banks today, remaining independent is the number one strategic priority. There are many reasons boards believe remaining independent is important: the board believes that the shareholders’ investment will be maximized over a longer time horizon; that the bank as an independent local bank can best serve the needs of the community; that the employees as a whole will be far better served (and have jobs) by remaining independent. These are all reasonable and sincere reasons.

So, if staying independent is important, why are an increasing number of banks selling today? One of the biggest reasons that banks sell is that the board is not confident that there is anyone ready to take over management of the bank. Developing a successor internally is a multi-year process to groom a talented individual to learn enough about the day-to-day responsibilities and skills needed to manage a bank successfully. Hiring a new CEO externally sounds easy, but to find that right person that not only has the skills and background to succeed and also can fit in the community and, most importantly, the bank’s culture can be a very challenging process, especially if you are in a rural community. If something happens that the CEO role is suddenly open, or the CEO decides to retire in a year or less, all too often there is not enough time to find that right person, and the easier decision is to sell while the bank is still running smoothly.

It sounds like having a plan on how the CEO position will be filled is the answer. We’ve seen very simple plans that are a few short paragraphs that basically say, “Joe and Mary can run the bank in the interim. If one of them is not the right person, we’ll just hire someone.” Even for a very small bank, it’s almost never this easy. Even if you believe one of the top managers has the “right stuff” to be the next leader, have you thought about what skills they may need to develop to be ready? Have they had any real experience leading a group or an important project that gives you confidence they can run the place? Can you picture that person standing up in front of your shareholders? Or representing your bank to regulators? Or allowing your other key employees to operate successfully? Can they run the bank when times get tough (and they always do)? If you answered positively to these questions, do you have a plan, with timeframes, to provide the types of training and experience so that they will be ready to take over?

Even if you are confident you have the right person to take over, or you start early enough to recruit your next leader, what about the next level of management? Are they ready to step up when Joe or Mary ascends to the top spot? Do you have a plan to develop that next level of management? As you step through the layers of your organization, it often becomes clear that there are other key employees that would impact your ability to run the bank smoothly if they leave. What do you do if your head of IT leaves? Is there a replacement? Can the functions be outsourced? Every organization has those key people; they may not even be mangers that are critical to the operation. What’s your plan if they are gone one day?

If you may be facing the expected change at the CEO level and you have other key people that are in sight of retirement, selling can seem like a simple, expedient solution. The key to not being backed into a corner when retirements occur, or when a key person leaving is a threat to the successful operation of the organization, is having a well thought out succession plan. A successful plan has the following elements: it identifies those key individuals in the bank needed to run the organization successfully; it identifies the skills and training needs for those individuals that have the ability to be promoted to more responsible positons, even the CEO role; it has a written plan with timelines for preparing the individual for that next step; and it is updated at least annually to verify that the plan is still the best plan for the bank and that the individuals are progressing as expected.

If you truly want to remain independent, then you must take the time, and it will take time, to develop a meaningful succession plan. Well done, it will take months to develop and time to groom and coach that next level of talent, to review and update your plan as required.

At Young & Associates, Inc. we are committed to the idea that we are all best served by having strong, well-run community banks. If you would like help in developing your succession plan or would like a critical eye to review your existing plan, reach out to us: we’ve got community banking’s back. To contact me, give me a call at 330.422.3476 or send an email to bviering@younginc.com.

Private Flood Insurance Update

Written by admin on August 22, 2019. Posted in Compliance & Regulations.

By: Bill Elliott, CRCM, Senior Consultant and Manager of Compliance

As you are no doubt aware, the issue of flood insurance has been unsettled for the last 18 months, and the formal FEMA flood program is only approved until the fall. But, after a long wait, the regulators have published additional regulation for private flood insurance – which does not rely on Congress to do anything, and makes the presence or absence of the FEMA program less problematic for lenders.

Background

The Biggert-Waters Act (2012) amended federal flood insurance legislation to require the agencies to issue a rule directing regulated lending institutions to accept “private flood insurance,” as defined by the act. In response to subsequent legislation and comments received regarding the private flood insurance provisions of the first proposed rule (2013), and the second proposed rule (November 2016), all prudential regulatory agencies finally issued the rule, effective July 1, 2019.

It remains to be seen how effective and efficient this will be, as it is a “work in process.” But some have told me that some of their customers have found lower flood insurance rates privately (meaning these policies may become more popular). Others have told me that they have had customers declined for private flood insurance based on the riskiness of the property location.

Summary of the Rule

The rule requires regulated lending institutions to accept “private flood insurance” defined in accordance with the Biggert-Waters Act. There are essentially three categories of private flood insurance.

Category One – Private Flood Insurance with “Compliance Aid” Language

If the following language appears on the flood policy, the lender may accept the policy without any further review:
“This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”

Although it remains to be seen how well this will work, we hope that most insurance companies will include this language, which will make it quite easy for lenders, as no additional effort will be required.

Category Two – Private Flood Insurance without “Compliance Aid” Language

The rule permits regulated lending institutions to exercise discretion to accept flood insurance policies issued by private insurers that do not meet the statutory and regulatory definition of private flood insurance. The conditions for acceptance include a requirement that the policy must provide sufficient protection of a designated loan, consistent with general safety and soundness principles, and the regulated lending institution must document its conclusion regarding sufficiency of the protection of the loan in writing.

The difficulty for lenders will be to determine whether these policies really meet these (and other) requirements. And although the regulation says “discretionary,” it does not appear that the regulators will just allow lenders to summarily reject these policies.

Category Three – Mutual Aid Societies

The agencies will now allow the acceptance of plans providing flood coverage issued by mutual aid societies. The rule defines “mutual aid society” as an organization:
(1) whose members share a common religious, charitable, educational, or fraternal bond;
(2) that covers losses caused by damage to members’ property pursuant to an agreement, including damage caused by flooding, in accordance with this common bond; and
(3) that has a demonstrated history of fulfilling the terms of agreements to cover losses to members’ property caused by flooding.

A regulated lending institution may accept a plan issued by a mutual aid society, as defined above, if the regulated lending institution’s primary federal supervisory agency has determined that such plans qualify as flood insurance for purposes of the act.

Requirement to Purchase Flood Insurance

There is nothing in the rule that changes the amounts of insurance required, or anything else. This simply allows more options and hopefully, over time, will make everyone’s life – lenders and borrowers – easier.

If you need any assistance in this area, especially private flood policies without the “compliance aid” language, please give us a call at 330.422.3450 or send an email to bille@younginc.com. We are always happy to help.

Avoid Getting Swept Away in the Flood of Enforcement Actions

Written by admin on August 20, 2019. Posted in Compliance & Regulations.

By: William J. Showalter, CRCM, CRP, Senior Consultant

We seem to be in a bit of a lull in flood insurance rule enforcement by the financial institution regulators. There were only 15 enforcement actions with civil money penalties (CMP) totaling $523,961 in 2018. So far this year, we have had only two such enforcement actions, with total CMPs of $10,550. But, we probably should not expect this trend to continue, especially with all the flooding events we have seen recently, including our unfortunate neighbors along the Missouri River. These events tend to get the attention of Congress and the supervisory agencies.

Keep in mind that enforcement of many rules, including those involving flood insurance, seem to run in cycles. After another apparent lull in flood insurance enforcement actions a couple years ago, the Federal Reserve Board (FRB) issued an Order for a Civil Money Penalty in late May 2017 against SunTrust Bank for $1,501,000 to enforce requirements of the regulations implementing the National Flood Insurance Act. This is thought to be the largest CMP for flood insurance shortcomings. Coupled with 11 other much smaller enforcement actions by the FRB, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC), the total civil money penalties assessed for flood insurance rule violations by mid-year 2017 totaled nearly $1.8 million – and by the end of that year, we had seen 29 enforcement actions with a total of nearly $2.8 million in CMPs.

Background
The original National Flood Insurance Act was passed in 1968, and established the National Flood Insurance Program (NFIP). The Flood Disaster Protection Act of 1974 (FDPA) was enacted to strengthen the NFIP by involving lending institutions in the insurance process.

The NFIP was developed as a way to reduce federal expenditures related to disasters caused by flooding. The program consists of floodplain management plans that affected communities must implement and a flood insurance program to protect properties in flood hazard areas. The intent of the NFIP is to reduce federal outlays for disaster assistance by making those who choose to develop properties in flood-prone areas bear some cost to protect against the flood risks involved, rather than allowing them to rely solely on federal aid.

Part of the NFIP is a system of requirements and restrictions on federal assistance of all kinds to flood-prone areas. This assistance ranges from direct federal lending to loan guarantees, to insurance for deposit accounts. The latter is the connection for many mortgage lenders with the NFIP.

The National Flood Insurance Reform Act of 1994 (NFIRA) comprehensively revised the two federal flood statutes – the NFIA and FDPA – and required federal supervisory agencies to revise their flood insurance regulations. The objective of the changes was to increase compliance with flood insurance requirements and participation in the NFIP, and to decrease the financial burden on the federal government, taxpayers, and flood victims.

The NFIRA authorizes the regulators to impose civil money penalties when a pattern or practice of violations under the NFIA is found. The act requires that civil money penalties be imposed of up to $350 for each violation in such cases. The civil money penalty cap was increased significantly by the Biggert-Waters Flood Insurance Reform Act of 2012, enacted July 6, 2012. The former $350 per violation maximum was raised to $2,000 per violation. Lenders should remember that there can be multiple violations for each covered loan.

Consent Orders
The regulators charged that the financial institutions targeted by the 15 enforcement actions last year were engaged in patterns or practices of violations of various provisions of the flood insurance regulations. Most of the orders give us at least some picture of the violations found by regulatory personnel. These violations of flood insurance rules include failures to:

Provide notice about availability of and requirement for flood insurance
Provide timely notice about availability of and requirement for flood insurance
Require flood insurance coverage
Require adequate flood insurance coverage
Maintain flood insurance (allowing it to lapse)
Escrow premiums (when other property costs are escrowed)
Comply with force placement requirements
Provide notice regarding lapse and force-placed coverage
Provide timely notice regarding lapse and force-placed coverage
Obtain force-placed coverage

Avoiding Problems
What can you do to keep your bank or thrift off the ever-growing list of financial institutions being hit with flood insurance enforcement actions? One important way is to establish an effective flood insurance compliance program and make sure that lending staff follows it. Hold them accountable for failures.

At a minimum, your flood insurance compliance program should:

Ensure that there is an effective process in place for determining the flood hazard status for improved real property or mobile homes securing any loans, both consumer and commercial, whether the process be one of in-house readings of up-to-date flood maps or outsourced determinations by a professional firm that guarantees its results.
Ensure that your institution has performed appropriate due diligence in selecting its flood hazard determination vendor and monitors its performance, and that the vendor guarantees its results and uses the current Special Flood Hazard Determination Forms (SFHDF) to document its determinations.
Order or perform flood determinations early in the loan process. This can be done soon after the lender decides to approve the loan.
Ensure that loan files contain complete and current SFHDF and acknowledged customer flood notices, where applicable.
Ensure that collateral properties are insured in the proper amount before loan closing, including appropriate coverage for any senior mortgagees.
Remain current on flood map and hazard determination changes, and stay insured throughout the life of the loan.
Ensure that coverage is maintained for subsequent financings (increase, extension, renewal, refinancing) of the subject properties.
Train all affected staff in their responsibilities under the bank’s flood insurance compliance program, assign appropriate accountability, and enforce staff responsibilities.

This last point is especially important. Training is the foundation for implementing and maintaining a strong flood program. Ensure that all appropriate staff is trained in the requirements of the flood insurance laws and rules that impact their jobs and provide them with refreshers periodically.

Establishing and maintaining a strong flood insurance compliance program can help your bank or thrift stay afloat during any flood of enforcement actions. For more information on this article and/or how Young & Associates, Inc. can assist you in this area, contact Bill Showalter at 330.678.0524 or wshowalter@younginc.com.

Assessing Management Skills in Agricultural Borrowers

Written by admin on May 18, 2018. Posted in Lending & Loan Review.

By: Robert Viering, Senior Consultant & Lending Department Manager

In our loan review practice we have seen an overall deterioration in farm financial results. However, we have noted that there are borrowers that are still providing reasonable returns and acceptable debt service coverage ratios. Our anecdotal observations have been confirmed by data from farm financial databases from farms in the Midwest. In his blog post in the December 19, 2017 Corn + Soybean Digest, Dr. David Kohl observed, “Regardless of farm size or enterprise, the gap between the top one-third of economic performers and the bottom one-third is widening. Among the most profitable, common practices include strong production, a drive towards efficiency, and an executed marketing and risk management.” My interpretation of his comment can be simplified to: Management skills count.

In our loan review client banks, management skills may be a part of the bank’s risk rating model, but how management skills are determined varies widely. All too often most borrowers are rated as having good management skills even if their financial results put them in the bottom third of financial performance. Based on my 30+ years as a banker and now as a loan review professional, management skills are what separates the top and bottom producers. The question becomes, how do we assess the management skills of our borrowers? While there are no hard and fast rules, there are several attributes that can often help in making an assessment of management skills.

The following are items to consider when assessing management skills:

Production competency. On the production side, you will want to honestly assess how their level of production compares to others with similar operations. As an example, if they are consistently producing more bushels of corn per acre than similar farms in your market, then their skills should be rated higher than an operation with more variable results or certainly better than those that are consistently below their peers. You will want to consider if their equipment line/livestock production facilities are appropriate for the scale and sophistication of their operation.
Financial competency. Questions for you to consider to determine financial competency include: Are you provided accurate, thorough, and timely financial information? Are the cash-flow projections reasonable and based on sound assumptions (you will need to back test borrower’s cash flows to actual results to assess this attribute)? Does the producer understand the financial implications of their decisions?
Risk management. Risk management is about protecting what you have and limiting your downside. Among the items to assess include whether they are carrying adequate crop insurance. This can include whether they can cover the difference between what insurance pays and what they expected to produce. Other questions that are important to consider include: Does the borrower have a marketing plan? Do they make good use of hedging strategies? A good marketing plan can help pick up some additional income while limiting the downside of market volatility.
Intangible skills. There are a few other items that should be considered that are difficult to quantify but are important to consider. Among the items to ask are: Are they willing to make tough decisions? This is often about expenses and includes the ability to reduce family living, reduce labor costs (even if it means a family member may have to leave the operation), or any other decisions that may not be popular or easy but may be required to succeed. Do they have a long-term vision of where they want to go? Even if they are not considering doing anything different, that is still a strategy that has its risks. Are they realistic in their understanding of their operation’s strengths and weaknesses? Are they open to taking advice from outside experts to improve their operation? Do they have any trusted advisors that they use? If applicable, do they have a plan to transition to the next generation? If so, do they have an understanding of the next generation’s strengths/weaknesses and the risks in their transition plan?

Agriculture is like all other types of business: good management is critical to long-term success and especially to getting through more challenging times like today. As a bank, having a good understanding of the borrower’s management skills is an important aspect of knowing the level of risk in a borrower. We encourage banks to make a thorough assessment of a farm operator’s management skills, especially today as management skills can often be the difference between long-term success and just surviving, or even the difference between just surviving and having to quit farming.

For more information on this article, contact Bob Viering at bviering@younginc.com or 1.800.525.9775.

Capital Market Commentary – 2018 Forecast and 2017 in Review

Written by admin on February 28, 2018. Posted in Management & Planning.

By: Stephen Clinton, President, Capital Market Securities, Inc.

The stock market continued its climb to new heights in 2017. The stock market was propelled by the election of President Trump, which brought the expectation of lower taxes, less regulation, and an administration favorable to businesses. The Dow ended 2017 at 24,719.22, an increase of 25.08% for the year. The S&P 500 also improved nicely, ending up 19.42%. The market, despite a correction in early February, has increased further from 2017’s year-end values.

The Fed continued its plan to move short-term interest rates higher in 2017. The Fed moved short-term rates up 25 b.p. in March, June, and December. The three-month T-Bill ended December at 1.39%, an increase of 88 b.p. from year-end 2016. Longer-term interest rates were little changed from year-end 2016, resulting in a flatter yield curve.

Job creation continued in 2017, and the unemployment rate in December was 4.1%. The unemployment rate is at a level not seen in 17 years. The low unemployment rate would typically lead to rising wages, but wage growth was only around 2% in 2017.

As we enter 2018, there are a number of items worth monitoring:

Economic Growth. U.S. economic growth for 2017 came in at 2.5%, comparable to prior years. The slow but steady expansion that began in mid-2009 ranks as the third longest economic expansion in U.S. history. Should the recovery continue into the second half of 2019, it would become the longest recovery on record, surpassing the 1990’s economic boom.
Housing. Home prices continued to rise in 2017. The S&P/Case-Shiller National Home Price Index rose 6.2% in the 12 months ending in November. The rising price for homes has exceeded inflation and wage growth for several years. The limited housing inventory has aided the rise in prices along with historically low mortgage rates. U.S. single-family homebuilding surged to more than 10-year highs in November. Existing home sales were up 5.6% in December, while new home sales increased 17.5%.
Industrial Production. U.S. manufacturing activity remains strong. The Institute for Supply Management said its purchasing managers index rose to 59.7 in December, the second highest level since early 2011. A reading over 50 indicates expansion in the sector; below 50 suggests contraction. Boeing recently announced deliveries of 763 aircraft in 2017, a record for the company. Auto sales were down 1.8% in 2017, but with sales of 17.2 million vehicles, it marked the first time the industry has surpassed 17 million for three consecutive years.
Consumers. Consumer confidence is positive. The University of Michigan’s consumer sentiment index average level for 2017 was the highest since 2000. A sign of the strong consumer sentiment is reflected in consumer debt. In the fourth quarter, consumer debt, excluding mortgages and other home loans, rose 5.5% from a year earlier. That is the highest amount since the Federal Reserve Bank of New York began tracking the data in 1999. Moreover, consumers’ non-housing debts accounted for just over 29% of their overall debt load, also the highest amount on record.
Inflation. The Fed’s preferred measure of inflation in January was 2.1%, moving above the Fed’s target of 2% for the first time in a while. The anticipated 3% growth of the economy along with the tight labor market and rising interest rates is expected to finally push inflation upward.
Political Risks. There are a number of geo-political risks that could significantly change the outlook for 2018. Among these are the ongoing Brexit process, North Korea nuclear saber rattling, and President Trump’s plans to renegotiate NAFTA. Furthermore, the dysfunction in Washington creates uncertainty.

Predictions for 2018

Lending Activity. We anticipate an increase in lending activity. We think the lower tax rate for businesses will encourage businesses to expand their operations.
Interest Rates. The Fed has indicated that three rate increases are probable in 2018. We think that we will get those increases.
Home Prices. We expect the growth rate in home prices to be lower than in the past several years. We think higher interest rates will come into play and make housing less affordable. We also think that the less favorable tax status of the deductibility of mortgage interest will have an impact on some home buyers.
Inflation. We do see inflation moving up in 2018. As mentioned above, we expect wage increases to heighten. The low unemployment rate and the shortage of skilled labor in many markets will put pressure on employers to increase wages to attract and retain workers. We also think the growing economy will impact commodity prices.
Jobs. We envision unemployment to remain low as businesses expand.
Regulation. We expect bankers to be disappointed about the lack of regulatory relief in 2018. It will be difficult for regulatory relief to filter down the bank regulatory bureaucracy.

Merger and Acquisition Activity
Merger activity in 2017 was slightly higher than the activity in 2016. In 2017, there were 267 announced mergers of banks and thrifts compared to 244 deals in 2016. In terms of deal size, the total assets of sellers totaled $147 billion in 2017, compared to $188 billion in 2016 and $459 billion in 2015. Pricing on 2017 bank sales improved significantly from 2016’s pricing, recording a median price to book multiple of 162% and a price to earnings multiple of 20.9 times. We believe that 2018 will see increased merger activity spurred, in part, by bank buyers’ enhanced profitability from reduced corporate taxes

Capital Market Services
Young & Associates, Inc. has a successful track record of working with our bank clients in the development and implementation of capital strategies. Through our affiliate, Capital Market Securities, Inc., we have assisted clients in a variety of capital market transactions. For more information on our capital market services, please contact Stephen Clinton at sclinton@younginc.com or 1.800.376.8662.

A Current Perspective on Concentrations of Credit

Written by admin on February 28, 2018. Posted in Lending & Loan Review.

By: Tommy Troyer, Executive Vice President

Concentrations of credit are certainly not a new risk for community banks, but for many banks they are an increasing challenge. While effective concentration risk management involves much more than we have room to discuss here, we would like to use this article to highlight a few timely considerations related to concentration risk management.

Growing Concentrations
We all know that, though we can calculate statistical averages for various measures across community banks, there is no “average community bank” in the real world. Each bank has its own unique combination of characteristics. However, concentrations of certain types of credit do seem to be increasing across community banks as average loan-to-asset ratios have been increasing and banks are, for the most part, still trying to stick to in-market lending and to loan types with which they have experience.

Continued regulatory emphasis on prudent concentration risk management practices, especially related to CRE, has been one result of these trends. One of the ways some banks have experienced this attention is to have examiners note a greater interest in measures of total CRE exposure, including owner occupied loans, as opposed to the more traditional measures of non-owner occupied concentrations described in the well-known 2006 interagency guidance on CRE concentrations. (This emphasis has been driven in part by the growing realization that the industry’s loss history on these two types of CRE loans has not been that different over the last decade.)

As a simple example of the growth in credit concentrations for community banks, I collected some data on commercial banks and savings banks in four Midwestern states (Ohio, Michigan, Indiana, and Illinois) with less than $2 billion in total assets. While we work with community banks nationwide and with some banks larger than this threshold, I thought this would be a sample of banks of interest to many of the readers of this newsletter. Of these banks, 700 met these criteria as of 2017Q3. I compared selected concentration levels for these banks to their levels five years earlier, as of 2012Q3.

The number of banks with construction and land development loans totaling 100% or more of total capital doubled, though it certainly remains low at just 2% of the sample.
The number of banks with non-owner occupied loans totaling 300% or more of total capital increased from 29 to 42.
The number of banks with total CRE loans totaling 400% or more of total capital increased from 50 to 66.

None of the figures above total even 10% of the banks in the sample, but I have also chosen to test quite significant concentration levels. Our consulting work indicates that many more banks, which have chosen to set their internal concentration limits at more conservative levels than described above, are experiencing challenges as they near internal limits. This applies for both broad categories of concentrations, such as non-owner occupied CRE, and for more narrowly defined categories, such as hotels.

In some other cases, concentrations that banks have always understood were necessary given the community they serve have become more concerning. For example, many community banks operate in markets where agriculture is a dominant industry. Such banks have always accepted the risk associated with heightened ag concentrations, but continued challenging ag conditions have made such concentrations more of a concern in recent years.

Risk Management Considerations
The fundamentals of effective management of concentration risk are well-known, and can be found in a variety of regulatory sources. I will not rehash all of them here, though I do feel obliged to emphasize that concentration risk must be factored into capital planning and must be appropriately evaluated as a qualitative factor impacting the ALLL. I would also like to highlight a couple of trends in concentration risk management we have noted recently:

Incorporating concentration considerations into strategic planning. Yes, detailed analysis of concentration risk and recommendations for concentration limits will likely be provided to the board by management. However, such limits should reflect the board’s risk appetite and desired strategic direction for the bank. It has been encouraging to me to hear in several recent strategic planning retreats thoughtful, forward-looking discussion about what the bank should look like in the future and what that means for the bank’s approach to credit concentrations.
Incorporating a proactive approach to monitoring and managing relationship levels. We have seen an increasing number of clients take what can be described as a more proactive and sophisticated approach to monitoring and actively managing concentration levels. Instead of testing concentration levels quarterly and simply “turning off the spigot” when a limit has been reached, these banks incorporate a proposed loan’s impact on their concentration profile into their underwriting analysis. They also use their pipeline and runoff projections to forecast their various concentration levels in coming quarters, and then manage prospective and existing borrowers to maximize the quality and profitability of a given portfolio. This can help prevent, for example, a couple of marginally profitable and purely transactional deals that may be easy to “win” from crowding out prospective deals that can lead to profitable long-term banking relationships.
Utilizing portfolio stress testing. Portfolio stress testing has long been a tool for evaluating concentration risk, but more community banks seem to be making efforts to implement forms of portfolio stress testing than ever before.
Utilizing collateral valuation and collateral management. One important way of ensuring that downturns in an industry in which a bank has a concentration do not cause excessive losses is to have in place effective practices for both managing the initial valuation and assessment of the collateral (especially for real estate collateral) and for monitoring collateral on an ongoing basis. The ongoing monitoring of the status and value of collateral can be especially important for banks with ag concentrations. While we see plenty of good work done by banks in both of these areas, we would also note that these seem to be some of the most common areas about which we, and also often examiners, provide recommendations for improvements in practices.

Conclusion
Effectively managing concentrations of credit will remain important for as long as lending remains a primary source of income for banks (in other words, forever). Young & Associates, Inc. has assisted clients by providing portfolio stress testing services (both CRE and ag), loan reviews, and more targeted consulting focused on enhancing collateral valuation processes or credit policies. We also assist clients by facilitating strategic planning sessions that encourage the board and management to think about and plan for the future of the bank. This can result in a bank better defining its lending strategy and ensuring its lending approach is consistent with its overall strategy. To discuss this article or any of our services further, please contact Tommy Troyer at ttroyer@younginc.com or 330.422.3475.

Young & Associates, Inc. Changes Ownership on 1/31/18

Written by admin on February 28, 2018. Posted in Management & Planning.

We are pleased to announce that Young & Associates, Inc. has been sold by Gary J. Young, the company’s founder, to Jerry Sutherin, a Senior Consultant with the firm, effective January 31, 2018. While ownership has changed, the company’s name, mission, personnel, quality of services, and structure will not change in any way.

Upon the effective date of the sale, Mr. Young became Chairman of the Board, and Mr. Sutherin became President and CEO. Young will remain actively involved with the firm for one year, continuing to provide the same high quality service he has provided for the past 40 years. Mr. Young said, “I founded Young & Associates with a goal of assisting community banks while maintaining a family atmosphere that valued and respected all of the people that I work with. After 39+ years, I have accomplished that goal, and that mission will continue through Jerry’s leadership.”

Tommy Troyer, Executive Vice President, will continue to serve in that position, where he successfully uses his professional expertise, detail-oriented management style, and excellent people skills while working with both clients and employees.

Mr. Sutherin has worked at Young & Associates, Inc. for nearly four years. Mr. Sutherin said, “I look forward to making a seamless transition at Young & Associates, building upon the solid foundation that Gary has built over the past 40 years. It is my goal that our clients and employees will continue to receive the same professional, high-quality experience that they have come to expect here over the years.”

With over 30 years in the financial services industry, Sutherin has worked primarily in the company’s Lending and Loan Review Division where he provided community banks throughout the U.S. with third-party loan review, lending policies and procedures, loan portfolio due diligence, and ALLL Review services. Prior to joining Young & Associates, Inc., Sutherin worked in varying capacities ranging from overseeing an Asset Quality/Loan Review function at a large regional bank, to managing a $2.5 billion loan portfolio responsible for loan performance, credit quality, and departmental efficiency.

Young & Associates, Inc. has provided practical products and services to community financial institutions since 1978, and we look forward to serving our clients for many years to come. Please join us in congratulating both Jerry and Gary on this sale.

CFPB Amends HMDA Rule

Written by admin on November 20, 2017. Posted in Compliance & Regulations.

By: William J. Showalter, CRCM, CRP; Senior Consultant

The Consumer Financial Protection Bureau (CFPB) issued a final rule making several technical corrections and clarifications to the expanded data collection under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The regulation is also being amended to temporarily raise the threshold at which banks are required to report data on home equity lines of credit (HELOC).

These amendments take effect on January 1, 2018, along with compliance for most other provisions of the newly expanded Regulation C.

Background
Since the mid-1970s, HMDA has provided the public and public officials with information about mortgage lending activity within communities by requiring financial institutions to collect, report, and disclose certain data about their mortgage activities. The Dodd-Frank Act amended HMDA, transferring rule-writing authority to the CFPB and expanding the scope of information that must be collected, reported, and disclosed under HMDA, among other changes.

In October 2015, the CFPB issued the 2015 HMDA Final Rule implementing the Dodd-Frank Act amendments to HMDA. The 2015 HMDA Final Rule modified the types of institutions and transactions subject to Regulation C, the types of data that institutions are required to collect, and the processes for reporting and disclosing the required data. In addition, the 2015 HMDA Final Rule established transactional thresholds that determine whether financial institutions are required to collect data on open-end lines of credit or closed-end mortgage loans.

The CFPB has identified a number of areas in which implementation of the 2015 HMDA Final Rule could be facilitated through clarifications, technical corrections, or minor changes. In April 2017, the agency published a notice of proposed rulemaking that would make certain amendments to Regulation C to address those areas. In addition, since issuing the 2015 HMDA Final Rule, the agency has heard concerns that the open-end threshold at 100 transactions is too low. In July 2017, the CFPB published a proposal to address the threshold for reporting open-end lines of credit. The agency is now publishing final amendments to Regulation C pursuant to the April and July HMDA proposals.

HELOC Threshold
Under the rule as originally written, banks originating more than 100 HELOCs would have been generally required to report under HMDA, but the final rule temporarily raises that threshold to 500 HELOCS for data collection in calendar years 2018 and 2019, allowing the CFPB time to assess whether to make the adjusted threshold permanent.

In addition, the final rule corrects a drafting error by clarifying both the open-end and closed-end thresholds so that only financial institutions that meet the threshold for two years in a row are required to collect data in the following calendar years. With these amendments, financial institutions that originated between 100 and 499 open-end lines of credit in either of the two preceding calendar years will not be required to begin collecting data on their open-end lending (HELOCs) before January 1, 2020.

Technical Amendments and Clarifications
The final rule establishes transition rules for two data points – loan purpose and the unique identifier for the loan originator. The transition rules require, in the case of loan purpose, or permit, in the case of the unique identifier for the loan originator, financial institutions to report “not applicable” for these data points when reporting certain loans that they purchased and that were originated before certain regulatory requirements took effect. The final rule also makes additional amendments to clarify certain key terms, such as “multifamily dwelling,” “temporary financing,” and “automated underwriting system.” It also creates a new reporting exception for certain transactions associated with New York State consolidation, extension, and modification agreements.

In addition, the 2017 HMDA Final Rule facilitates reporting the census tract of the property securing or, in the case of an application, proposed to secure a covered loan that is required to be reported by Regulation C. The CFPB plans to make available on its website a geocoding tool that financial institutions may use to identify the census tract in which a property is located. The final rule establishes that a financial institution would not violate Regulation C by reporting an incorrect census tract for a particular property if the financial institution obtained the incorrect census tract number from the geocoding tool on the agency’s website, provided that the financial institution entered an accurate property address into the tool and the tool returned a census tract for the address entered.

Finally, the final rule also makes certain technical corrections. These technical corrections include, for example, a change to the calculation of the check digit and replacement of the word “income” with the correct word “age” in one comment.

The HMDA final rule is available at www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/regulation-c-home-mortgage-disclosure-act/.

Updated HMDA Resources
The CFPB also has updated its website to include resources for financial institutions required to file HMDA data. The updated resources include filing instruction guides for HMDA data collected in 2017 and 2018, and HMDA loan scenarios. They are available at www.consumerfinance.gov/data-research/hmda/for-filers.

For More Information
For more information on this article, contact Bill Showalter at 330-422-3473 or
wshowalter@younginc.com.

For information about Young & Associates, Inc.’s newly updated HMDA Reporting
policy, click here. In addition, we are currently updating our HMDA Toolkit.

To be notified when the HMDA Toolkit is available for purchase, contact Bryan
Fetty at bfetty@younginc.com.

Capital Market Commentary – May 2017

Written by admin on May 17, 2017. Posted in Management & Planning.

By: Stephen Clinton, President, Capital Market Securities, Inc.

Market Update – The Trump Effect
The election of President Donald Trump was followed by a strong upward movement in the market. Hopes related to lower taxes, less regulation, and economic stimulus led the market to new highs. Since the election, the Dow Jones Industrial Average moved up 14.22% through April 30th. Banks moved upward even more, increasing 21.29% (as measured by the Nasdaq Bank Index). Much has been made of the first 100 days of the new administration, with many Executive Orders being issued but no real legislative actions accomplished. The March failure to pass legislation to repeal the Affordable Care Act was a stark reminder that enacting legislation is a difficult process. However, the market appears to remain optimistic that President Trump’s initiatives will be delivered.

Economic Developments of Note

April marks the 94th month for the current economic expansion, the third longest in U.S. history (1960’s and 1990’s were the two longest).
The U.S. economy grew at its weakest pace in three years in the first quarter as consumer spending barely increased and businesses invested less on inventories. Gross domestic product increased at a 0.7% annual rate, the weakest performance since the first quarter of 2014. The economy grew at a 2.1% pace in the fourth quarter of 2016.
The latest annual inflation rate for the United States is 2.1%, exceeding the Fed’s target of 2% for the first time in nearly five years. The increase in inflation may provide support for the Fed to continue its plans to move interest rates up in 2017.
In March, it was reported that employers slowed their pace of hiring. However, unemployment was reported at 4.5%. The March unemployment rate was the lowest in almost a decade. It was also reported that private-sector workers saw average earnings rise 2.7% in March compared to the previous year. This is a sign that we are nearing “full employment” and competition is heating up to attract and retain employees.
Activity in the manufacturing sector remained solid in April marking the eighth consecutive month of industrial expansion. One concern for the future, however, is the auto industry. After seven straight years of sales gains, including two consecutive record performances, auto demand has cooled in 2017 despite soaring discounts. Overall, auto makers sold 1.43 million vehicles in the U.S. in April, down 4.7% from a year earlier. A record 17.55 million vehicles were sold in 2016.
Exports were reported to be higher by 7.2% this year. This is a positive sign to future economic growth.
Home prices have continued their impressive climb upward. The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 7% in the 12 months ending in February. We anticipate that these gains will continue, perhaps at a slower rate, due to high demand, low inventories, as well as the overall positive financial condition of home buyers.

We expect that the economy will remain on a positive trend this year. We project GNP to be at 2% for the year as a whole. Job growth should remain positive this year. We expect home building and home sales to be positive. We think that the Fed will increase rates, but anticipate them to be cautious in how quickly they raise rates and reduce their holdings of securities.

Interesting Tid Bits

It has been reported that several large auto lenders have decreased their emphasis on auto lending due to concerns about credit quality issues and auto resale values. A portion of this concern is related to the length of new car loans being made. Loans with original terms of between 73 and 84 months accounted for 18.2% of the market. It was further reported that 31% of consumers who traded in a car in 2016 did so in a negative equity position.
China’s banking system was reported as the largest by assets, reaching $33 trillion at the end of 2016. This compares to $16 trillion for the U.S. banking market.
U.S. household net worth was reported at a record $92.8 trillion at year-end 2016. U.S. households lost approximately $13 trillion during the 2007-2009 recession. The eight-year rally since has added $38 trillion in net worth principally from rising stock prices and climbing real estate values.
The Farm Credit System (a government sponsored enterprise) has over $314 billion in assets which would place it as one of the country’s ten largest banks.
A bankruptcy judge recently issued a $45 million fine against Bank of America. The action was in connection with a $590,000 residential mortgage loan and servicing issues related to its delinquency.
We have been led to believe that small businesses employ the majority of Americans. This is no longer the case. Large companies (10,000 employees or more) employ over 25% of the workforce. Employers with more than 2,500 workers employ 65% of total employees.
Nonbank lenders (i.e., Quicken Loans) were responsible for 51.4% of the consumer mortgage loans originated in the third quarter of 2016. This is up from 9% in 2009.
People in the United States ages 65 to 74 hold more than five times the debt Americans held two decades ago.

Short-term interest rates ended April 30 up 29 b.p. from year-end with the 3-Month T-Bill at 0.80%. The 10-Year T-Note ended April at 2.29%. This is lower than December 31, 2016, when they were at 2.45%. This reflects a flattening of the yield curve.

The general stock market continued to climb to record levels in the first four months of 2017. The Dow Jones Industrial Index ended April up 5.96% for the year. Banks, after their spectacular rise after the election, retreated somewhat in the first four months of 2017. The broad Nasdaq Bank Index fell 4.05%. Larger banks were more fortunate (as measured by the KBW Bank Index) falling only 0.60%. Banks appear to have been more impacted by the uncertainty surrounding proposed tax cuts and less regulation than other companies.

Merger and Acquisition Activity
For the first four months of 2017, there were 77 bank and thrift announced merger transactions. This compares to 83 deals in the same period of 2016. The median price to tangible book for transactions involving bank sellers was 159% compared to the 133% median value for all of 2016.

Capital Market Commentary – November 2016

Written by admin on November 10, 2016. Posted in Management & Planning.

By: Stephen Clinton, President, Capital Market Securities, Inc.

Market Update
The current expansion began in June 2009 and has now continued for 88 months, making it the fourth longest period of growth since the data has been recorded. The third quarter growth in the U.S. economy was 2.9%. A tight job market, increasing wages, and low oil prices are aiding the economic growth. Additionally, stronger export growth added to the GNP. Corporate profits are expected to grow and businesses are showing interest in business expansion after sitting on the sidelines for some time.

The following summarize certain issues we think are worth watching:

Retail sales in September were up 2.7% from the prior year. Consumer spending, the primary driver for the U.S. economy, accounts for two-thirds of GDP.
The number of Americans applying for first-time unemployment benefits was reported at a four-decade low in early October. Initial jobless claims have now remained below 300,000 for seven years, the longest streak since 1970. Job growth has been spurred by a hiring streak that surpassed its previous record in March and is now at 70 straight months. Unemployment is now at 5%.
Median household incomes have risen, increasing 5% in the last year. This has led to the consumer confidence reading hitting its highest point in nine years.
The Fed continues to remain cautious. Despite fueling expectations for rising interest rates, the Fed has boosted rates only once since the last recession.
Home-price growth accelerated in August, as a lack of inventory and low interest rates helped push prices to near record levels. The S&P CoreLogic Case-Shiller Indices covering the entire nation rose 5.3% in the 12 months ending in August.
Inflation has remained below the Fed’s 2% annual target for more than four years, but has shown signs of firming recently. Now expectations are building that inflation may move above the Fed’s target.
Mr. Trump’s November election will usher in a new President who will have party majorities in both the House and Senate. This should help the new Administration enact programs and policies more readily.

Short-term interest rates remain historically low with the 3-month T-Bill ending September at 0.26%. The 10-year T-Note ended September at 1.56%, down 71 basis points from year-end 2015. This has led to a significant reduction in the slope of the yield curve.

The stock market performance in 2016 has been positive. The Dow Jones Industrial Index closed September up 5.07% for the year. The Nasdaq Index closed up 6.08%. The Nasdaq Bank index ended September up 5.15%. Larger U.S. bank pricing struggled, ending the first three quarters of 2016 down 3.05%.

The dichotomy between big bank pricing and smaller bank pricing can be seen by comparing pricing multiples for each. Since 1995, banks in the S&P Bank Index averaged a price-to-earnings multiple of 14.1. Currently they average 12.0. Conversely, smaller banks had a historical average of 15.9 and are now trading at a multiple of 17.8.

Interesting Tid Bits

New Competition. Goldman Sachs, the Wall Street giant, recently began offering consumer loans. An online consumer lending platform was rolled out offering personal loans up to $30,000.
CFPB. Thanks to a lawsuit brought by nonbank mortgage lender PHH Mortgage, a three-judge panel recently ruled that the single director structure of the CFPB was unconstitutional and limited the CFPB’s ability to ignore statute of limitations governing administrative enforcement actions.
The Big Get Bigger. It was recently reported that since Dodd-Frank was passed in 2010, large banks have grown by 30%. The six largest U.S. banks now hold assets of approximately $10 trillion. There are now at least 1,500 fewer banks with assets under $1 billion than prior to the financial crisis.
Boom in Global Trade. The S&P 500 is up nearly nine-fold since October 1986. Among factors cited to explain this dramatic growth is the acceleration of global trade spurred by various trade agreements.
Merger and Acquisition Activity. In the first nine months of the year, there were 185 bank and thrift announced merger transactions. This compares to 195 deals in the first three quarters of 2015. The median price to tangible book for transactions involving bank sellers was 129% which is down from the 141% median recorded in 2015.

Ag Lending in 2017

Written by admin on November 10, 2016. Posted in Lending & Loan Review.

By: Bob Viering, Senior Consultant

In our loan review practice, we have an opportunity to work with ag banks throughout the Midwest. In general, our findings are similar to what you may have read from many ag economists. Working capital is dwindling quickly, and the debt to asset ratio is increasing as is short-term debt. Many banks have been refinancing intermediate- and long-term assets to fix working capital declines and carryover debt. Some borrowers have sold land to reduce debt. We have seen many instances where borrowers have been able to reduce input costs and, most importantly, cash rents to bring them back to the point where they are either producing positive debt service coverage or are coming much closer to positive debt service coverage than they were in 2014. But overall, balance sheets are weakening and repayment is a continuing challenge. Credits that were barely a pass credit in better times have, in many cases, dropped to Special Mention or Substandard. Solid pass credits from a couple of years ago are now one weak year from a criticized level.

For many bankers, having struggling ag borrowers is a relatively new experience. I have more recently been through the experience in working with struggling ag borrowers while working at a western bank that had many cattle ranches that were severely impacted by low cattle prices and drought conditions. Many of the lessons learned there are just as applicable to the situation many of us face here in the Midwest.

As you head into renewal season, here are a few items to consider:

1. Complete information is critical. There is an old Russian proverb, “Trust but verify.” This is good to keep in mind when analyzing your borrower. As things get tougher, there is a temptation by some borrowers to not include every liability or to see some liabilities as something not worth mentioning. When short-term borrowing gets tougher, some borrowers will turn to using the local co-op for some inputs, borrowing from family and friends, or using online lenders (FinTech has hit agriculture too) or credit cards. At renewal time at our bank, we would send out a renewal package that had not only financial statement requests but a complete debt schedule form and inquiry about other loans or bills from any source, including family. We ran a new credit bureau report and compared it to prior ones to see if any new credit card or other type of debt was taken out since the last renewal and looked for any significant increases in balances, especially on credit cards. We completed a new UCC search for the same reason. In the end, we wanted to be sure that all debts were accounted for and had a source of repayment.

2. Restructure only if it helps. Often we see banks terming out any carryover debt or being quick to term out short-term debt to improve working capital. Before you restructure debt, make sure the underlying problem is fixed. Carryover debt usually occurs because the farmer didn’t make enough from crop/livestock sales to pay all term debt, operating lines, and living expenses. Given that revenue isn’t likely to grow in the next few years, improving cash flow is about expense control. Has the operation cut input costs, cash rents (this is the big one), and living costs to a level they can produce enough profits to cover their debt payments and family living? If so, then they are a perfect candidate for a restructure. If those tough choices have not been made and the operation won’t operate profitably, then you are likely to find yourself with even more carryover, more debt, and far fewer options not far down the road.

3. Income taxes may become an issue. Section 179 deductions were very helpful to reduce/eliminate income taxes in the past. But with far fewer pieces of equipment being purchased, those deductions have decreased significantly. Prepaying expenses and holding over grain sales can put off taxes for a while but, at some point, the timing can get tougher and some operations will now show taxable income when their accrual earnings may be negative. Those tax payments are often not planned for and can create a significant cash outflow at exactly the wrong time. It’s important that you encourage your borrowers to work with their tax professionals to plan as far ahead as possible to minimize any tax consequences.

4. Be empathetic and be realistic. Many of your borrowers were on top of the world a few short years ago. Everything they did went well and equipment dealers (and friendly bankers) made expansion with few tax consequences a reality. With today’s reality of weak (if any) earnings and less ability to add debt, it has become a very stressful time for many farmers and their families. It’s a lot tougher to be a banker too. Good bankers help their customers succeed. It’s not always easy and it’s often stressful, but letting customers operate unprofitably and not trying to help them make tough decisions usually only makes the problem get worse. It’s so important to be empathetic with your borrowers and to have a thick skin when they get mad. They may seem like they’re mad at you when they are really frustrated about their current situation. However difficult the conversation may seem today, it’s a far easier conversation than to have to tell someone that they have to quit farming and start over.

Ag lending is a key part of many banks’ loan portfolios and is important to their local market. Even in these tough times, it’s critical to work with your customers and do all you can to help them succeed. At Young & Associates, Inc., we work with many banks with ag portfolios. If we can help you with your loan review, policy reviews, process/underwriting reviews, and improvement plans, give us a call at 1.800.525.9775 or send an email to bviering@younginc.com.

New Prepaid Rule

Written by admin on November 10, 2016. Posted in Compliance & Regulations.

By: Bill Elliott, CRCM, Senior Consultant and Manager of Compliance

On October 5, 2016, the CFPB issued a final rule amending Regulations E and Z to create comprehensive consumer protections for prepaid financial products. The result of this rule is that many of you may not continue to offer these accounts, and those of you who do not currently offer the accounts may not want to start. The purpose of this article is not to talk you into or out of these products, but to give you the basic facts so that you can make the best decision for your institution.

The Prepaid Rule runs 1,501 pages, so we can only do an overview in this article. You may also want to look at the following: http://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/prepaid

Another site worth your time might be: http://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/prepaid-accounts-under-electronic-fund-transfer-act-regulation-e-and-truth-lending-act-regulation-z/

Prepaid Accounts
The Prepaid Rule adds the term “prepaid account” to the definition of “account” in Regulation E. Payroll card accounts and government benefit accounts are prepaid accounts under the Prepaid Rule’s definition. Additionally, a prepaid account includes a product that is either of the following, unless a specific exclusion in the Prepaid Rule applies:

An account that is marketed or labeled as “prepaid” and is redeemable upon presentation at multiple, unaffiliated merchants for goods and services or usable at automated teller machines (ATMs); or
An account that meets all of the following:
1. Is issued on a prepaid basis in a specified amount or is capable of being loaded with funds after issuance
2. Whose primary function is to conduct transactions with multiple, unaffiliated merchants for goods or services, to conduct transactions at ATMs, or to conduct person-to-person (P2P) transfers
3. Is not a checking account, a share draft account, or a negotiable order of withdrawal (NOW) account

There are exceptions to the rule. Under the existing definition of account in Regulation E, an account is subject to Regulation E if it is established primarily for a personal, household, or family purpose. Therefore, an account established for a commercial purpose is not a prepaid account.

Pre-Acquisition Disclosures
The Prepaid Rule contains pre-acquisition disclosure requirements for prepaid accounts. The requirements are detailed. However, there often will be a reseller of these products, meaning that the seller must prepare this disclosure for you. This “short form” disclosure includes general information about the account.

Outside but in close proximity to the short form disclosure, a financial institution must disclose its name, the name of the prepaid account program, any purchase price for the prepaid account, and any fee for activating the prepaid account.

There is also a long form disclosure which sets forth comprehensive fee information as well as certain other key information about the prepaid account.

The Prepaid Rule includes a sample form for the long form disclosure. The long form disclosure must include a long laundry list of items that details every nook and cranny of the account’s use. The Prepaid Rule also requires financial institutions to make disclosures on the access device for the prepaid account, such as a card. If the financial institution
does not provide a physical access device for the prepaid account, it must include these disclosures on the website, mobile application, or other entry point the consumer uses to electronically access the prepaid account.

All these disclosures are in addition to your standard Regulation E initial disclosure. The initial disclosures must include all of the information required to be disclosed in the pre-acquisition long form disclosure.

Error Resolution and Limitations on Liability
Prepaid accounts must comply with Regulation E’s limited liability and error resolution requirements, with some modifications. This may or may not be your problem, depending on who owns the account. But if your third-party vendor must give the customer these rights, the cost will likely go up, possibly making selling these cards a problem.

Periodic Statements and the Periodic Statement Alternative
The Prepaid Rule requires financial institutions to provide periodic statements for prepaid accounts, such as payroll accounts. However, a financial institution is not required to provide periodic statements for a prepaid account if it makes certain information available to a consumer, such as:

Account balance information by telephone
Electronic account transaction histories for the last 12 months
Written account transaction histories for the last 24 months

Overdraft Credit Features
The Prepaid Rule amends Regulations E and Z to regulate overdraft credit features that are offered in connection with prepaid accounts. It adds the term “hybrid prepaid credit card” to Regulation Z and sets forth specific requirements
that apply to hybrid prepaid-credit cards. Doing something like this will materially increase your costs. Of course, there are many more rules on the subject that we cannot include in this article.

Effective Dates
The Prepaid Rule is generally effective on October 1, 2017.

What Should You Do?
Over the next few months, you need to talk with any existing companies that you do business with for this kind of product. They may still be struggling with how they are going to approach this, so you may not get all your answers immediately. But you need to know what your role is going to be after October 1, 2017 so that you can make the best decision for your institution. And all new product offerings, whether internal or external, need to be examined carefully to make sure that you can comply with the rules.

For more information about this article, contact Bill Elliott at 1.800.525.9775
or compliance@younginc.com.

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