Pub. 11 2016-2017 Issue 4

November/December 2016 13 Extraordinary Service for Extraordinary Members. F u l l y r e g i s t e r e d D e a l e r B a n k • N o t F D I C I n s u r e d • N o B a n k G u a r a n t e e • M a y L o s e V a l u e 800 288 5489 www. c cbcm. com FROM ONE COMMUNITY BANK TO ANOTHER. We have delivered fixed income strategies and support to banks of all sizes since 1985. Operating in over 30 states, the Capital Markets Group is always ready to meet the needs of our fellow community bankers. We keep investing simple so that banks can focus on what really matters — lending to the communities who support us. We share the same DNA. C A P I T A L M A R K E T S G R O U P • Portfolio Strategy, Sales and Service • Bond and Securities Underwriting/Trading • BancPath®andFlexLoan®via Asset Management Group  Counselor’s Corner — continued on page 14 ESOP and how much stock is allocated to the employees’ accounts annually. Another financing advantage is that ESOPs can borrow money (the ESOP is the only type of qualified retirement plan that can borrow money). An ESOP can borrow money from a third party or from the bank itself to finance the purchase of the owner’s stock. This allows the owner to be compensated for all of his or her ownership interest at one time, while allowing the bank to deduct payments of both principal and interest. The availability of this option will depend on how leveraged the bank already is, as this will affect the ESOP’s ability to borrow and the bank’s capital structure. Instead of taking out a traditional loan, an ESOP could take advantage of its ability to borrow by exchanging an individual’s ownership interest for a note. Much like taking out a loan, this gives the bank the opportunity to make tax-deductible payments over time of principal and interest. This option, however, increases the owner’s personal financial risk by exposing the owner to the risk of default on the ESOP note. Typically, in addition to a reasonable rate of interest on the loan to the ESOP, owners will demand warrants or some other type of eq- uity enhancement for financing the loan to the ESOP to 800. 228. 258 1 www.MoneyHand l i ngMach i nes .com Your trusted banking equipment partner for over 60 years Over 60 years of service experience & strategically placed technicians to serve you best SERVICE Improve cash handling efficiency, reduce offages and speed up transaction time CURRENCY COUNTING Offer faster and more efficient transactions including lobby coin counting COIN COUNTING Reduce teller offages, eliminate dual control for cash, decrease drawer limits and increase security CASH RECYCLER Offer assisted video to video and/or enhanced self-service transactions anywhere ITM Offer the best ATM experience, including imaging check deposit, at an affordable price ATM