The community bank way of doing business, true for all small businesses, requires that we treat our customers well or we will not have customers.  It’s that simple, though our legislators and regulators sometimes fail to understand that this is the way the real free market is supposed to work.

There is no need to saddle us with a community reinvestment act.  There is no need to subject us to a consumer protection bureau.  There is no need to scrutinize us for fair lending.  If we fail to reinvest in our communities, or act in a way that harms our consumer/customers, or if we are not fair (and by fair I mean in the common sense definition of fair, not the Pharisaical definition of “fair”), we are punished by the marketplace.

For community banks, there is no Too Big to Fail government backstop.  We will either satisfy the marketplace or we will disappear.

Furthermore, as a private business not dependent on a government safety net or a government tax subsidy, we must conduct our business in a way that provides a reasonable return to the owners of the business – our shareholders.  No, shareholder is not a dirty word! These are the people who have risked their personal capital (not the public’s) in the belief that the business can provide a valuable service to consumers.

The requirement that we operate profitably forces us to marshal and deploy our limited resources in an economical and efficient manner or, again, we go out of business.  There is no “not-for-profit” sham fueled by a generous public subsidy to provide a wide margin for error.

Without the requirement to pay their fair share of federal taxes to provide for the essential government services they enjoy, those advertising, marketing, salary and benefit, and branch location decisions are a lot easier at tax-subsidized credit unions

But despite these obstacles, it is community banks which are respected and trusted.  That is precisely because we understand that what is good for the community is good for our Bank.  After all, the community and the Bank of Zachary is the same thing.

By Judy Foreman

Investing in home ownership is the single largest financial transaction most of us will ever participate in. Building your next home can be both a challenging and rewarding experience. It can also be stressful and time consuming. Below are several tips to consider when preparing to build your next home:

1. Finance = Schedule a meeting with your lender early in the process and get pre-approved. Many lenders can help with both your construction loan and your permanent mortgage. Your lender works for you and should serve as a trusted advisor before, during and after your construction project.
2. Locate = Remember to consider development costs such as removing trees and stumps, running utilities and building up your elevation when comparing land options that fit your budget. Other factors to evaluate may include zoning, school districts, building restrictions and whether or not the property is in a flood zone.
3. Design = Many designers and architects have existing house plans for sale and may offer to customize to those plans for a fee. Custom house plans can be a rewarding way to influence the design of your next home. Be patient during this process and always ask for feedback when designing your plans.
4. Build = Working with a turn-key builder, partnering with a flat-fee contractor or subcontracting the project yourself are three common methods for building a new home. Consider the level of expertise and involvement required of you and do not hesitate to talk with several builders and contractors before making a final decision.

Planning and preparation are critical to your success. Expect the project to cost more and take longer than you originally estimated. Seeking advice early and often from others such as your mortgage lender and your builder can be a great best practice throughout the process.

Judy Foreman is a Senior Vice President and head of mortgage lending at the Bank of Zachary. She can be reached at (225) 654-2701.

By Preston L. Kennedy, President/CEO, Bank of Zachary

(From an address to the 116^th Annual Convention of the Louisiana Bankers Association, May 12, 2016)

Despite the constitutional guarantee of equal protection under the law, an unfair and un-American two-tiered system of justice exists in the United States, with one set of laws and punishments for community bankers and a different set of laws and punishments for those institutions that are deemed “systemically important”, more accurately Too Big to Fail, Too Big to Jail, and Too Big to Punish.

We have known for a long time that there are financial institutions that are so large, and so interconnected that a failure of one of them, let alone several of them, would cause economic calamity.  Too Big to Fail has not gone away and will not go away and we should not fall for lies that claim otherwise. 

And while it is impractical to think that Too Big to Fail will disappear, it is entirely possible that the executives and boards of directors of these large entities be subject to the same standard of justice as the executives and board members in this room. 

In 2013, HSBC admitted to aiding and abetting money laundering for many of the worst criminals and terrorist states the world over. 

Our Department of Justice extracted a large fine but failed to pursue criminal charges because to do so, in their opinion, might “destabilize the entire banking system”.  So those personally responsible were allowed to walk away from their crimes.

Last year, five of the largest banks in the world admitted to criminal wrongdoing in what was described as a currency manipulation cartel.  It was the banks that admitted to being criminal – not the individuals. 

The shareholders of these banks coughed up huge fines but no one at those banks faced the prospect of jail time.  The criminal activity was blamed on rogue employees no longer employed by the banks.  That may work for a Too Big to Fail executive, but no community banker could get away with that dodge – we are held responsible for everything that happens under our roof on Main Street.

Now, I’m sure JP Morgan Chase CEO Jamie Dimon was very contrite when he said:  "The conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm”.

“Significant ramifications” means one thing for Jamie Dimon, but something entirely different for community bankers. 

For Jamie Dimon it is a vapid statement of remorse to the financial press.  “Significant ramifications” to the officers and directors of community banks include financial ruin; a lifetime of achievement destroyed; loss of a valued hometown institution; and the wearing an orange jumpsuit for several years.

A few weeks ago, the Wall Street Journal printed an an op-ed from Mr. Dimon offering unsolicited advice to community bankers to “stop inventing conflicts where none exist”.  

In my response, printed a few days letter, I pointed out that from Mr. Dimon’s lofty Wall Street vantage point, having attained the blessed assurance of immortality of Too Big to Fail/Too Big to Jail status, it must be difficult to recognize the strife inherent in a system that guarantees an unlevel playing field.

Mr. Dimon concluded his condescending exposition with breathtaking understatement, admitting that “The crisis of the past decade has taught us that mistakes by the largest banks can affect the broader financial system.”  Yes! - and water is wet and the Grand Canyon is just a hole in Arizona! 

Jamie Dimon’s “mistakes” are covered by his shareholders as a cost of doing business.  But our mistakes result in criminal referrals and open the prisons to community bankers.

A few weeks later, I received a letter from Heys McMath III, former President and CEO of First National Bank of Savannah (Georgia).  His return address is Mobile B Federal Prison Camp, Maxwell Air Force Base, Alabama.

Mr. McMath admitted to filing false reports in a loan scheme, which resulted in criminal indictments against seven officials and the ultimate failure of the First National Bank.

I am not defending Mr. McMath – our industry is better off when illegal behavior is uncovered and punished.  He did the crime, and now he is doing the time.  In fact, the example of Mr. McMath in prison is a strong deterrent to any community banker who may consider risky behavior.

But why is it that Mobile B Federal Prison Camp is open only for the likes of Heys McMath III?  Why is it that only community banker scalps get nailed to the wall?  

No one from the Justice Department euphemistically called Mr. McMath’s behavior a “mistake” – they called it a crime and they prosecuted it as a crime.

J P Morgan Chase alone has made enough “mistakes” to pay $23 billion in fines, and has admitted to criminal activity, but Jamie Dimon still collects his $20 million dollar salary.  

But Heys McMath III wrote to me from federal prison.

It was in an historic jailhouse letter that Martin Luther King wrote “Injustice anywhere is a threat to justice everywhere.”  A system that so blatantly favors the huge and powerful is certainly unjust.

Preston L. Kennedy (@BankPres) is President and Chief Executive Officer of Bank of Zachary, a $225 million community bank in southeast Louisiana.

Borrowing For Your Small Business
by Josh Prejean, Vice President

Small business owners often find themselves with an opportunity to grow their business. This growth typically creates a need for capital, whether it be to expand to a new location or purchase additional equipment. Applying for a bank loan could be the solution, however many business owners view this process as stressful and time consuming.

Consider the following tips when borrowing for your small business:

1. Preparation is key. Be prepared to talk about how much money you need, why you need it and how you plan to pay it back. Most lenders will review several years of tax returns, current financial statements and the credit history of the business owner.
   
   
2. Keep it simple. When writing your loan request consider the strengths, weaknesses and opportunities associated with your business and industry. Remember to use conservative estimates when creating a budget and be prepared to explain any assumptions.
   
   
3. Document your assets. Most lenders will need collateral to secure your loan. The property or equipment being acquired may not be sufficient. Examples of additional collateral may include savings accounts, investment accounts, real estate, equipment, vehicles, accounts receivable and inventory.
   
   
4. Have realistic expectations. Business loans can take several weeks from start to finish depending on the complexity of the transaction. Real estate loans will usually take longer. Provide your lender with the documents requested in a reasonable time frame to prevent further delays in the process.

Following these simple steps will help in developing a relationship with your lender. In a modern world where business moves at the speed of light, building strong rapport and having open communication with your lender will pay dividends throughout the life of your business.

We have heard from numerous customers this morning who have received a call that says their debit card has been blocked, and asking for a response to "re-activate".

DO NOT RESPOND TO THIS CALL. HANG UP THE PHONE.

We will close for this holiday on November 26 and November 27, 2015.

As we approach midsummer, Bank of Zachary and the Independent Community Bankers of America® (ICBA), representing the nation’s more than 6,000 community banks, are providing consumers with the information they need to help keep their money secure before they plan for their next vacation.

“Running out of money or losing your wallet is a quick way to ruin your trip,” said ICBA Chairman Jack Hartings, president and CEO of The Peoples Bank Co., Coldwater, Ohio. “Community bankers are relationship bankers who work with their customers, so in the event something unfortunate does happen, they will be ready to lend a helping hand.”

Financial professionals agree that the safest and most convenient way to travel with your money is to take a small amount of cash with you. Another good idea is to bring a debit and/or credit card as well. These cards are convenient while traveling because they are easy to carry, easy to use and often offer the lowest fees and the best exchange rates. Additionally, in the event that your debit and/or credit card is lost or stolen, you can easily have it deactivated to prevent further spending by calling your bank’s customer service number for added security as opposed to lost or stolen cash, which cannot be tracked.

ICBA offers these tips to consumers about what they need to take care of before they take off:

• Let us know when and where you will be traveling so that you will avoid any potential denials or fraud alerts when out-of-the-ordinary transactions are presented.
• Ask about daily spending and withdrawal limits to help avoid a card denial when traveling.
• Find out which ATM or debit card fees you may be subject to while traveling or at your travel destination.
• Be sure to have our contact information handy (you can find them here. Better yet, add the numbers to your mobile contacts in case you have to report the card lost or stolen.
• Have a backup card stored in a different place when you travel in case other cards get lost or stolen.
• Make sure your card brands are accepted at the locations or countries you are traveling to.
• Avoid logging onto your online or mobile banking account via public WiFi networks. Instead, use cellular data networks, or call the bank directly. If using cellular data, use virus protection to protect your accounts and phone.
• Do not give financial information to callers who contact you and claim to be from your bank or credit card company, especially if they ask you to provide them with private information. If you are concerned about your bank account, credit card information or other personal financial data, contact your local community bank directly.

Whether you and your family are traveling close to home or to a different country, it is better to be prepared for any event that comes your way. The Bank of Zachary is always there to help ensure your finances will be kept safe.

About Bank of Zachary

The Bank of Zachary takes great pride in meeting the banking needs of our customers in a professional, yet personable, manner. Read more about our commitment and how we strive to meet or exceed the expectations of our customers with innovative products and unparalleled service.

About ICBA

The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.

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In January, I had the privilege of announcing that the Bank of Zachary elected two new officers. Ruth Ann Kuhns is our new Loan Operations Officer and Renee Deshotels is now Assistant Cashier.

Mrs. Kuhns has been a member of the Loan Support Department of Bank of Zachary since 2005, after working 16 years in the financial services industry. She is a resident of Zachary, and a native of French Settlement.   Among her duties, Mrs. Kuhns is in charge of central loan processing at the Main Office.

Mrs. Deshotels joined the Bank of Zachary in July 2010 after 11 years as payroll and accounts payable manager for the Pelican Yacht Club in Fort Pierce, Florida. She is a native and resident of Baton Rouge. Mrs. Deshotels works in the Accounting Department and handles much of the human resources duties for the Bank.

We are blessed with an exceptional staff at the Bank of Zachary, and these two ladies are excellent additions to our officer corps.  

Today’s Wall Street Journal featured an article by Michael Rapoport about the difficulties faced by smaller banks in meeting a growing regulatory burden, much of it brought on in the wake of the financial crisis that began in 2008. Mr. Rapoport concludes that in this era of hyper-regulation that some banks are “too small to succeed”.

The observations on strangling regulation are correct, but...

This is “loser talk” and I’m sick of it. Too small to succeed? We may be too small to do what the largest banks can do (thank God), but the Wall Street Journal doesn’t know much about the community bankers I know if they dare to say we are “too small to succeed”.

As we have heard from leadership and said ourselves, Main Street banking is a completely different industry from Wall Street banking. For good reasons we clamor for a two-tiered system of regulation. Consequently, our definition of “success” is vastly different from the Wall Street definition.

Without a doubt, we are being forced to pay for the sins of pandering politicians who created perverse incentives (i.e. everybody should own a home) and financial institutions, mortgage lenders and Wall Street investment houses who created illusory products that exploited the fantasy vision of creating something (good loans) out of nothing (bad borrowers). But the alternative is to lose our history, and our particular mission for our particular communities, by being folded into another institution.

We will continue to fight against the injustices that are allowed to exist in what should be a free market, but we are determined to not throw in the towel. We will do all in our power to insure that our shareholders recognize the value of remaining independent. Being smart, efficient and forward-thinking, we can eliminate this insidious equivalence between size and success.

Washington, D.C. (March 18, 2013)—The Independent Community Bankers of America® (ICBA) today said that there is mounting evidence that too-big-to-fail financial institutions pose risks to the financial system, enjoy a taxpayer-funded funding advantage over smaller institutions and receive favorable treatment from regulators. To address these and other problems posed by the largest and riskiest financial firms, ICBA believes they should be downsized and split up.

“Not a day goes by without new reports on the financial and economic problems caused by too-big-to-fail financial institutions and their government guarantee against failure,” ICBA President and CEO Camden R. Fine said. “These institutions enjoy a privileged position in the financial markets because their size and interconnectedness make them systemically dangerous. Not only has their too-big-to-fail status led to riskier behavior and distorted financial markets—it has a real impact on community banks and their customers on Main Street.”

The latest strike against too-big-to-fail was a Senate Permanent Subcommittee on Investigations report that found that JPMorgan Chase used federally insured deposits to fund a portfolio of complex financial instruments used for risky trades that resulted in billions of dollars in losses. JPMorgan misinformed investors, regulators, lawmakers and taxpayers about the “London Whale” trades and hid $600 million in losses.

Megabanks’ too-big-to-fail status also provides them with a funding advantage over smaller institutions. Federal Deposit Insurance Corp. data show that the megabanks have both the lowest credit quality and the lowest cost of funds in the banking industry, and a May 2012 International Monetary Fund report quantified the funding advantage at $83 billion. Moody’s Investors Services last year said its credit downgrades of the largest financial firms would have been even more substantial if these institutions did not enjoy full government backing.

The largest financial firms also play by a different set of rules when it comes to Justice Department prosecutions. U.S. Attorney General Eric Holder recently testified that their size and interconnectedness inhibits prosecutions on Wall Street, confirming that these institutions operate above the law.

“The too-big-to-fail problem also has a tangible impact on community banks and the communities they serve,” said Bill Loving, president and CEO of Pendleton Community Bank in Franklin, W.Va. “Financial crises caused by too-big-to-fail firms lead to stricter regulations on the entire banking industry, including the Main Street institutions that did not contribute to the calamity. The result: resources that could be used to help local communities and small businesses prosper are instead directed toward regulatory mandates.”

ICBA supports proposals to break up the largest financial firms to fully address the too-big-to-fail problem. The association believes that restructuring these institutions will help restore market discipline, reduce taxpayer risk, support appropriate financial regulation, and ensure stronger economic growth throughout the nation.

Bank of Zachary is a long-time member of Independent Community Bankers of America. President/CEO Preston L. Kennedy serves as At-Large on the ICBA Board of Directors.