2019 Journal of Community Bank Case Studies

2019 COMMUNITY BANK CASE STUDY COMPETITION

(McConnell 2018). This statement is reflected in Kentucky Bank’s personalized service to local communities and through lending to local businesses and donations to organizations that target local needs. Through prioritizing customer engagement, Kentucky Bank is able to evaluate local community needs and reinvest in ways that most significantly impact the region. This type of outreach toward quality of life categories like health and educational services could have a profound and lasting impact on the region. Further exploring the topic of taxation, Kentucky Bank spoke about credit unions and their market influence. Upon inception, credit unions allowed people sharing a common bond—either occupational, community or associational—to become members. This limited participation characteristic and member owned, not-for-profit business model granted special allowances from the Federal Government. The most significant allowance gave credit unions a Federal income tax exemption, which has allowed them to offer better rates, providing an attractive alternative to traditional banks (NAFCU). A 2017 NAFCU study explored credit union tax exemption and its impact on the economy. The study reported “Removing the credit union tax exemption would actually cost the federal government $38 billion in lost income tax revenue over the next 10 years. GDP would be reduced by $142 billion, and nearly 900,000 jobs would be lost over the course of next decade as well” (Feinberg and Meade 1).

Through prioritizing customer engagement, Kentucky Bank is able to evaluate local community needs and reinvest in ways that most significantly impact the region.

on merchants and card processors. Under current regulations, community banks may face unwarranted culpability regarding data breaches originating at the point of sale or afterward, potentially leading to small banks being hesitant to issue cards. Another topic Kentucky Bank discussed was the Tax Cuts and Jobs Act of 2017. This $1.5 trillion- dollar reform will provide impactful tax cuts to corporations and banks reducing corporate income tax from 34% to 21% (Tankersley and Peters). As a direct result of this reform, Kentucky Bank increased wages for over 35% of non-executive employees and increased community donations by 177%. During his March 2018 U.S. Senate address, Senate Majority Leader Mitch McConnell stated “In this era of online banking and multinational corporations, smaller institutions remain uniquely able to build community connections. Community bankers get to know their residents and business owners on a personal level”

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