News from the Division of Financial Institutions
Thoughts From Superintendent Allard
Welcome to Fall. It’s a busy time for the Banking section with our regional roundtables coming up in October and November. Be sure to check out the dates/locations and register using the link below. We always look forward to these annual meetings and the opportunity they provide for informal discussion with all of you.

One question that often comes up is, why would an institution choose to be a state charter versus a national charter? In response, we believe that being a state of Ohio charter has many benefits. For example, our regional roundtables provide stakeholders with the opportunity to learn about current hot topics, where you can enjoy open discussion with regulators without having to travel too far from home. Additionally, if at anytime you want to pick up the phone, Deputy Superintendent Ingrid White or I will gladly speak with you. 

The competitive nature of the dual chartering system forces state-chartering agencies, like the Division, to be responsive to the needs of our constituents and to update and improve examination techniques and examiner training. In addition, we must maximize efficiency and take a healthier, more positive posture on financial innovation and risk taking when there are charter alternatives. Our goal is to conduct fair, impartial and not overly burdensome examinations. Our examiners and supervisors know your banks and communities, as well as the economic conditions you are operating in. 

Furthermore, we enjoy good working relationships with our federal partners, the FRB and the FDIC. We accept each other’s examination reports as if they were our own and share examination software and training opportunities to help provide additional seamless supervision for your institution.

The dual chartering system evolved in a way not unlike our country’s colonial foundation, which established a system of government that divides powers and responsibilities between the state governments and the federal government. And here in Ohio, we believe the Ohio charter continues to hold great value for the banking industry.

If you have any questions on these or any other topics, please feel free to contact me directly at or (614) 728-2631.
Preparing an Asset Liability Model for Declining Rates
Joseph Bramer, Capital Markets Specialist
Asset liability modeling techniques is not a topic that most people enjoy talking about. But given the shift in the interest rate environment over the past year, asset liability models are more important than ever.   
Here are three quick tips to ensure declining rate forecasts are as accurate as possible.
1.) Rate floors for loans and non-maturity deposits (NMDs) need to be included. Unlike rate floors for loans, rate floors for NMDs are often overlooked because instead of being written in a contract they are implied by current market conditions. When trying to decide what floors to put in place, ask this question: what was the lowest rate your institution paid on these products during the last rate cycle? If it is above zero, then a floor should be included for that product.
2.) Deposit betas should be specific to individual product types, and those used in down-rate scenarios should be different than those used in up-rate scenarios. Keep in mind that changing rates will affect products differently, and competitive forces will not allow rates to be decreased in the same degree that they were increased.
3.) Assumptions should evolve based on current market conditions. Historical performance during the last rate cycle is a place to start, but it should not be the result. Focus instead on how market conditions are different and how you think your balance sheet will react.
While model assumptions are just that, assumptions, it is important to ensure that they are as accurate as possible. Reviewing and revising them will take some time, but more accurate forecasts will result in better long-term decision making. 
Corporate Applications and Processes
Anika Parker, Corporate Specialist

The Ohio Revised Code (ORC) and/or the Ohio Administrative Code (OAC) require banks and other entities to submit applications or notifications to the Ohio Division of Financial Institutions for a variety of corporate activities. These sections of the ORC and/or OAC provide information regarding when an application is required, who should apply, the required documentation to be submitted, determinants for the Superintendent to consider for approval, as well as the turnaround time after the application has been received by the Division.
In most cases there are two phases during the application review process – the acceptance period and the final disposition. The acceptance period begins immediately after receiving the application. The Division usually has 10 business days, based on the applicable statute or rule, to respond back to the applicant and let them know if their application is sufficiently complete. If the application is found to be sufficiently complete, then it is subject to further review when it moves to the final disposition phase. At this time, the Division has 30, 60, 90, or up to 180 days, depending on the applicable statute or rule, to determine if the application should be approved or disapproved.

The Division is aware that each application comes with its own unique set of circumstances and prides itself on working with the applicants to accommodate their timeline, should it fall outside of the timing prescribed by statute or rule.
Once an application has been accepted or approved, it is announced publicly in the “News and Reports” section of the Division’s website , under “Monthly Reports.” The following corporate activities are announced there:

  1. De Novo Charters 
  2. Reorganizations
  3. Change in Control
  4. Branch Openings, Closings, Consolidations, Relocations
  5. Name Changes
  6. Liquidations
  7. Enforcement Actions
  8. Other Merger Activities

A report of corporate activity is also presented to the Bank Commission during their quarterly meetings and is available to the public.

To date in 2019, the Division has approved two de novo trust-only banks, one charter conversion from a federal bank to a state-chartered bank, one bank reorganization into a bank holding company formation, three out-of-state bank mergers into state-chartered banks, and 18 branch openings.
March 18-19, 2020
Combating Elder Fraud and Financial Exploitation in Ohio
Matt Walker, Legal Counsel
A recent report by the Consumer Financial Protection Bureau (CFPB) analyzing Suspicious Activity (SARs) Reports found that SAR filings pertaining to elder financial exploitation quadrupled from 2013 to 2017 (a designated SAR category for “elder financial exploitation” was added in 2013).  During this time period, financial institutions have reported over 180,000 suspicious activities in which older adults were the victim. With these filings, the average loss for the older adult was $34,200 and the average loss for the filing institution was $16,700.  While those are troubling statistics, what is perhaps most surprising is the report’s finding that fewer than one-third of elder financial exploitation SARs were also reported by law enforcement or adult protective services. 

While there is much work to be done to close this nationwide gap in reporting, two recent legislative changes in Ohio will go a long way in assisting our state’s financial institutions with this goal. First, effective September 2018, bank and credit union employees were added to the list of professions required by statute to report suspected elder abuse. This results in Ohio’s financial institutions have a dual reporting requirement in this regard; one being the aforementioned Bank Secrecy Act SAR filing requirement and the other being Ohio Rev. Code § 5101.63.  Ohio law now requires these employees immediately report to the county department of job and family services when there is a reasonable cause to believe that an adult is being abused, neglected, or exploited, a standard which includes financial exploitation. It’s important to note that these reports are deemed confidential and that Ohio law provides a safe harbor from civil and criminal liability for financial institution employees reporting such suspicions pursuant to the statutory requirements.  

The other recent legislative change occurred last winter with the signing of Senate Bill 158. This bill requires certain best practices and educational opportunities be developed to combat elder fraud and financial exploitation. The Department of Commerce is one of several agencies and trade associations tasked with developing these resources and ensuring that victims of elder fraud and exploitation have access to available services. This fall, the interagency group will be meeting with stakeholders, including financial institutions, to solicit feedback on best practices and standards for preventing elder financial exploitation with the ultimate goal of producing a report detailing the findings by year end. In the meantime, if your institution has best practices or other ideas on how to improve the current system of elder abuse reporting, we would love to hear from you. Community banks are uniquely positioned, along with others in the financial services industry, to be an important piece of the effort to combat elder fraud and financial exploitation.
Regional Fall Banking Roundtables
Monday, October 21
9:30 am – 12:00 pm
Findlay Inn
200 E Main Cross Street
Findlay, Ohio 45840

Thursday, October 24
9:30 am – 12:00 pm
Courtyard by Marriott
4375 Metro Circle NW
Canton, Ohio 44723

Thursday, October 31
9:30 am – 12:00 pm
Quality Hotel Cincinnati Blue Ash
5901 Pfeiffer Road
Blue Ash, Ohio 45242
Monday, November 4
9:30 am – 12:00 pm
Ohio University Inn
331 Richland Avenue
Athens, Ohio 45701

Thursday, November 7
9:30 am – 12:00 pm
State Library of Ohio
274 E 1st Avenue #100
Columbus, Ohio 43201

Click here to register. 
Division of Financial Institutions IT Advisory Group
Scott Kennedy, IT Supervisor
It seems like there's always more to learn about IT.  Fintech, A.I., machine learning, blockchain, cybercurrency – new tech in these areas offers great opportunities for community banks but also can pose risks.  In order to keep up with the pace of technology, the Division is taking a page from President Woodrow Wilson’s playbook, “I not only use all the brains that I have, but all that I can borrow.” To that end, the Division is establishing an IT Advisory Group to help us stay ahead of technological changes, and to identify pressure points and risks with these technologies. We hope to leverage the information we learn from this Advisory Group to improve our understanding of – and ultimately, improve our oversight of – the industries we regulate and examine.
The cross-industry group we intend to convene will include CIOs and executives from banks, credit unions, and our consumer finance licensees. We will also invite our federal regulatory counterparts to participate. In January 2020, we will hold a brainstorming session to help us envision the path for this IT Advisory Group, with the hope that the group will meet quarterly or at least semi-annually to share information.
The Division is soliciting for relevant topics for the Advisory Group’s review and discussion. Please feel free to send questions, discussion topics, or interest in inclusion in the group to Scott Kennedy at .    
New CSBS Community Bank Sentiment Index
Ingrid White, Deputy Superintendent of Banks
The Conference of State Bank Supervisors (CSBS) has developed a new initiative that compiles data to gauge the economic outlook of community banks across the nation. Referred to as the Community Bank Sentiment Index (CBSI), this data collection survey was released to community banks last spring and will be updated every quarter going forward. The initial results of the Index are available at . CSBS collected a round of bank responses in September.

The Index collects bank views on seven dimensions that are predominantly forward looking and combines them into the Index. A detailed distribution of each question is reported in the Appendix. There are 15 questions total and the survey takes about four minutes to complete, with no preparation necessary. Some of the questions are:

  1. How do you expect business conditions in your market to change over the next 12 months? 
  2. Where to you anticipate Federal Reserve monetary policy will be in 12 months from now? 
  3. How do you expect the regulatory burden on your bank to change over the next 12 months? 
  4. Is the current period a good time to expand your operations? 
  5. How do you expect your bank’s capital expenditures on facilities or operations to change over the next 12 months? 
  6. How do you expect your profitability to change over the next 12 months? 
  7. How do you expect the franchise value of your bank to change over the next 12 months?

Ultimately, the index will provide policymakers and the market with an important indicator of economic activity from those closest to the economy, but it will only be valuable if bankers are willing to participate in the data collection.  The Division will forward the Sentiment Index survey links on a quarterly basis to Ohio bankers, and asks that you please participate in this initiative each quarter. Your insight is meaningful to the community banking system. 
Goodbye Ruth

On September 30th, the Division of Financial Institutions said farewell to a longtime cherished employee, Ruth Young. After 35 years with the State of Ohio, Ruth has decided to retire and slow down, and is looking forward to spending time with her daughters and grandchildren in the central Ohio area.  Ruth began her career with the Legislative Service Commission. In 1991, she became the Administrative Assistant to the Superintendent of Savings and Loan Associations and Savings Banks. She served as the Executive Secretary for the Banks and Savings Institutions section, and also worked in the Division’s training and human resources sections. She finished out her career as the Administrative Assistant to the Superintendent, working with Scott O’Donnell, John Reardon, Carolyn Bradford, Charles Dolezal and finally Kevin Allard. She will certainly be missed around the office.

We reached out to some former Banking and Savings Institution Commission members for their reflections on Ruth and her career: 

I will always remember Ruth’s passion for the Commission and her commitment to the Board. It was evident she was proud to be a part of the organization and wanted others to share in that pride.
-   John Brown, President, Security National Bank, Springfield Ohio
During my time on the Commission, we saw many changes to the people gathered around the table. In addition, even those who remained experienced a shifting of individual responsibilities within the Department of Financial Institutions. Reflecting back on those years, the one constant was Ruth Young and she was the right person for the job. Why? She was diligent in fulfilling her responsibilities, respectful of her DFI colleagues and we bankers, compassionate about potentially sensitive personnel changes, and committed to providing the communications and information we needed to be able to do our jobs competently. In summary, she was the consummate professional and will undoubtedly be missed. It was a great pleasure to work with Ruth.
-    Deborah M. Schenk, Retired President & CEO, Mechanics Bank, Mansfield, Ohio
For me, Ruth has been more of an attitude and a presence than a deliverer of individual memories. In my experience she is always pleasant, always kind, always a positive force. She invariably meets people with a smile while at the same time exuding confidence, competence and “How can I help you?” She has been a model of what, I believe, ODFI wants to project as who and what you are and do. Ruth is a slight woman who will leave behind some very large shoes to fill. ODFI is better for the career she spent in our behalf.   
-    Benedict (Bick) Weissenrieder, CEO, Hocking Valley Bank, Athens, Ohio
Pictured: Ruth with her two daughters, Holly and Heather, at her retirement party.