David K. Goodwin has joined Clare-more, OK-based RCB Bank as senior

vice president, market president of its new lending office in Yukon, ac-cording to Roger Mosier, president/CEO. Goodwin has 30 years of bank-ing industry ex-

perience, includ-ing lending positions and serving as a chief lending officer. He comes from Yukon National Bank, where he served 20 years, most recently as executive

Volume 146, No. 20May 25, 2015 www.bankersdigest.com

Published weekly on Mondays except fifth Mondays

Jeffrey M. Harp, president/CEO of Trin-ity Bank, N. A., Fort Worth, TX, has an-

nounced that Mike Barber has joined the bank as an ex-ecutive vice president. He comes to Trin-ity after eight years with Capital One Bank, where he served as Fort Worth Area President.

Born and raised in Fort Worth, Bar-ber earned a BBA degree in finance from TCU in 1996. He is a career com-mercial banker who has also served in commercial lending positions at Wells Fargo Bank and Guaranty Fed-eral Bank. Active in both civic and commu-nity organizations, he serves on the boards of directors for the Fort Worth Chamber of Commerce and the Boys and Girls Clubs of Greater Fort Worth, and is a current member of the Hous-ing Committee at Catholic Charities Fort Worth. Trinity Bank, N. A., is a Fort Worth-based commercial bank founded on May 28, 2003. The $215 million-asset bank was recently selected the top-performing bank in TX by the nation-ally-known rating service Bankers Caddy Q

Jena Banker Tweedy Installed as 2015-2016 Louisiana Bankers Association Chairman

Goodwin

Barber Named EVP, Trinity in Fort Worth

Barber

W. Paul Tweedy

Balancing Effectiveness and Efficiency in Internal ControlsFeature..............................................3

In This Issue...

W. Paul Tweedy, senior vice president and chief operating officer of Catahou-la-Lasalle Bank in Jena, was installed as the 2015-2016 chairman of the Louisiana Bankers Association during the 115th Annual LBA Con-vention & Exposition, held May 13-15 at the Ritz-Carlton, Naples, FL. Tweedy has served on the LBA executive team as treasurer and chairman-elect. He joined Catahoula-La-salle Bank after its 2014 acquisition of Bank of Jena, where he served as president/CEO. Tweedy succeeds Paul Durand, president/CEO of St. Martin Bank and Trust in St. Martinville, who will con-tinue to serve for one year as immedi-

ate past chairman on the LBA board of directors.

The other 2015-2016 LBA officers installed include: chairman-elect, Thomas L. Martin, president/CEO officer of Gibsland Bank & Trust, Gibsland; and treasur-er, Ken Hale, president/CEO of Bank of Mont-gomery, Montgomery. Delegates to the LBA convention elected the following new directors:• Northwest Region Representative: Jim

Barlow, president/CEO of Home Fed-eral Bank in Shreveport• Northeast Region Representative: Brian Woodard, president/CEO of First National Bank in Ruston.(continued on Page 6)

Goodwin Joins RCB Bank As Senior Vice President, Market President for Yukon, OK

vice president. Goodwin earned a BS, business administration degree from Oklahoma State University and is a graduate of the Southwestern Gradu-ate School of Banking at SMU. He has been active in the Yukon community, including the Yukon Chamber of Com-merce, Canadian Valley Technology Center, and other organizations. RCB Bank reports the Yukon lending office will open later this year. The new office will serve as a lending office only, offering consumer and commercial lending services for individuals and businesses. The bank has been aggres-sively expanding into the Oklahoma City market over the past few years Q

May 25, 2015 BANKERS DIGEST Page 3

will require more than one employee. However, to enable separation of du-ties to be as efficient as possible, the minimal number of employees should be deployed to retain appropriate segregation. For example, a bank may properly utilize loan checklists to as-sure the accuracy of loan information and completeness of loan documenta-tion. Rather than having two or three employees review different checklist and loan documentation items, a bank can establish one checklist covering all aspects of the loan cycle and have

ByJames Mihills, CPA

Weaver and Tidwell, LLPwww.weaver.com

INTERNAL CONTROLSBalancing Effectiveness

and Efficiency in Internal Controls

(continued on Page 8)

Developing appropriate internal con-trols is critical for banks to manage risk,

but bankers often face the compet-ing challenges of establishing con-trols needed to manage risk while also maintain-ing profitability. For example, risks such as fraud, sys-tem interruptions, posting errors,

or failure to meet strategic objectives present considerable exposure and require effective internal controls. In confronting that exposure, however, the bank’s profitability goals can be strained due to internal control costs. In managing these competing chal-lenges, a bank’s internal controls must be effective and efficient. While ev-ery bank faces specific circumstances based on its size, product offerings, and other factors, the following mea-sures can enhance the effectiveness and efficiency of any bank’s internal controls.

Establish Efficient Separation of DutiesSeparation of duties prevents one employee from performing conflict-ing or incompatible duties, meaning that no one individual can initiate, complete, review, and release a trans-action. Separation of duties serves as a key preventive control for fraud and also reduces the possibility of an error going undetected. For example, one employee should not be entering and releasing electronic fund transfer in-formation, and someone else should have transaction review and release responsibility. As separation of duties is a funda-mental element of an effective control environment, many internal processes

one independent employee second-arily review the checklist for complete-ness while reviewing loan documenta-tion and system set-up.

Increase Reliance on System ControlsA typical bank relies upon a combina-tion of system (IT-based) controls and manual (performed by an individual) controls. While system controls re-quire initial investment, they function continuously and consistently, thus often rendering these controls more

James Mihills

F E A T U R E

Page 8 BANKERS DIGEST May 25, 2015

F E A T U R E

efficient and more effective than man-ual controls. Such system controls may apply to posting access, automated bal-ancing processes, or system-enforced dual control for processing.

Focus on Crucial IssuesBanks do not have unlimited resourc-es, so it is important to determine what internal control concerns matter most. For example, an independent, next-day review of a system-generated file maintenance report is an impor-tant internal control for loans and de-posits. However, many standard file maintenance reports include changes that pose little to no risk. Therefore, management can identify file main-tenance changes deemed to be more critical, such as changes in loan pay-ment dates, address or telephone changes to deposit accounts, or pa-rameter changes for interest rates or new accounts. A daily custom report can then be created, for review purpos-es, that includes just those changes. Also, secondary review can be most effective and efficient when the re-viewer focuses on the following con-cerns: • Accuracy (verifying that the trans-action or reconciliation agrees to sup-porting documentation). • Completeness (determining if all aspects of the transaction have been properly included). • Validity (considering whether the transaction is valid for the customer or process).• Reasonableness (considering whether the transaction appears to be unusual based on typical activity within the account). With one independent employee addressing these considerations, the need for multiple reviews of transac-tions can be reduced.

Effectiveness and Efficiency Sustain BanksBanks will always face the need to find the right balance between effec-tiveness and efficiency in establishing an internal control environment. By focusing on that balance, a bank can better manage risks Q About the author: James Mihills, CPA, is a partner in financial institutions con-sulting for Weaver and Tidwell, L.L.P. He can be reached at James.Mihills@Weaver.com or 817-882-7361.E G A L P H A S E S

INTERNAL CONTROLS (continued from Page 3)

N E W S W A T C HTEXAS

Dick Evans, chairman/CEO of Frost Bank, San Antonio, squelched any concerns that Frost is not fully com-mitted to staying in San Antonio when he announced that Frost had negoti-ated a deal for a new 400,000-square-foot office tower in downtown. Evans told the San Antonio Business Journal a move out of San Antonio was never even a consideration. He said,

Frost Bank Plans New Downtown San Antonio Headquarters"San Antonio has been our home for 147 years. We have never had any in-tent of leaving." Evans said the new office building and the subsequent sale of the old building at 100 W. Houston St. to the city of San Antonio is good news for everyone. Frost Bank reported $28.2 billion in assets at March 31, 2015 Q

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