ABA Banking Journal - June 2008 - (Page 26B)

COMMUNITY BANKING DIGITAL EDITION BONUS FEATURE Klebba, president and CEO of Legends Bank, Linn, Mo., says the Missouri Bankers Association’s “VEBA” program has been helpful. A VEBA—Voluntary Employees’ Beneficiary Association— can offer members, dependents, and beneficiaries health insurance as well as some other insurance coverages. Employers make tax-deductible contributions to the program and earnings on the contributions build over time on a tax-deferred basis. Klebba, who has sat on the MBA’s VEBA board, says more than 100 association-member banks participate in the program. He notes that in the last two years member banks have seen two cuts to program costs. His $220 million-assets bank effectively pays most of the cost of employee coverage, and about 50% of dependent coverage. The VEBA program was restructured to be “claims based,” that is, health insurance premiums reflect usage at each institution. As a result of the cost-sharing and the new claims-based pricing, Klebba says there is a bit more control on hard-tolasso costs. “We tell our employees, ‘You have a share in this now’,” says Klebba. “‘And that’s because, a. you are now paying a portion of your premium, and, b. because the less the bank has to pay, the greater your profit-sharing payment’.” The bank has launched some wellness programs, and employees have bought in. Klebba is convinced that’s because “now it’s their dollars that are at stake.” Not all bankers have found association plans a good idea. One roundtable member who formerly used an association program said it didn’t work out, due to mismanagement. their 401(k) plan.” Bank Midwest has assets of $450 million. United Bank’s Robert Jones took a similar step a couple of years ago. “We started offering our employees an ‘opt-out’ provision,” explains Jones, president and CEO of the Atmore, Ala.-based bank. He says this was prompted by the bank’s discovery that many employees, especially women, were already covered by spouses’ companies’ plans. “We were paying for duplicate coverage,” says Jones, “so we decided to give them the opportunity to opt out and put the money into their Section 125 Cafeteria plan accounts.” Reducing the number of plan participants brought down costs for the $470 million bank, according to Jones, and the employees get the benefit of a supplement to their own 125 plan contributions. Letting employees manage bucks While approaches like Klebba’s give employees a reason to control medical spending, other banks give them greater flexibility and control over where the company’s benefit dollars go. Pat Glotzbach is quite concerned about serving the needs of everyone from young entry-level employees to veterans, so his bank, New Washington State Bank, New Washington, Ind., offers four different plans. “Every plan just doesn’t fit everybody’s needs,” says Glotzbach, president and CEO. “Older employees may need the bells and whistles; some younger people don’t need the bells and whistles. If you’ve got several plans, they can pick and choose and decide how much they want to pay.” Employees can select from among not only the usual types of plans, but also such programs as eye care, dental care, and disability insurance. At Bank Midwest, Minnesota Iowa, N.A., based in Okoboji, Iowa, employees are given choices, as well. “We give them a pot of money that they can decide how to spend,” explains President Stephen Goodenow. “They can spend it on health insurance, dental, eye care, life insurance, for instance, and if they don’t use it all, they can put a portion of it into Deciding to spend on prime As the bankers’ comments reflect, all have tinkered with their plans at one point or another. Louisiana’s Ken Hughes says about 12 years back, his bank tried self-insurance. “It worked well for three years,” says Hughes. “And then it became a disaster.” At that point, he says, Merchants & Farmers Bank & Trust, Leesville, La., decided to go back to a regular insurance plan. Indeed, Hughes, president and CEO of the $200 million bank, says the decision was to adopt a premium plan with low deductibles, no referrals to go to specialists, and more. Hughes says he recently heard a former Disney executive lecture on “the ‘nonnegotiables’ that build your company’s culture. And health insurance is something that we made a decision not to negotiate about.” The bank pays 100% of employees’ plan costs. “We decided,” says Hughes, “that we are going to have excellent health care for our people.” Home-grown wellness programs. Two roundtable members’ banks offer their own efforts to ensure employee wellness. Copiah Bank, for instance, has been gutting two underutilized rooms to create an employee fitness center. While the plan was to open it solely to officers and staff, George Marx says consideration will be given to admitting spouses as well. “We think it will help us down the road, with our insurance costs,” says Marx. At Frank Carson’s $80 million Mulvane State Bank, Mulvane, Kans., one of the directors is a physician. Annually he comes to the bank with flu vaccine and employees can be treated on the bank’s time. “Now, I tell them that they don’t have to take the shot,” says Carson, president and CEO. “However, I also tell them that if they don’t, and that if they get the flu, after it is over they will have an ‘up-close-and personal’ visit from me. We don’t want the flu going around the bank.” BJ 26b JUNE 2008 /ABA BANKING JOURNAL www.ababj.com/subscribe.html http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - June 2008

ABA Banking Journal - June 2008 Contents Editor’s Column Do Fee-based Services Have an Edge? Snapshot: Net Interest Margins Vary Sharply with Size 100th Anniversary: Then & Now Letters ABA Resources ABA Chairman’s Position "What? No Annual Surprise Bonus?" Pass the Aspirin Cover Story: Top Community Banks: How They Did... ...And How They Did It Charter Bank First East Side Savings Bank Mackinac Financial Corp. The Peoples Bank Managing the E-mail Monster In Brief Handling PEPs in the Age of "L'affaire Spitzer" Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - June 2008

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