OVERDRAFT BEST PRACTICES for Nurturing Customer Relationships September/October Banker OVER A CENTURY: BUILDING BETTER BANKS — Helping Coloradans Realize Dreams
contents ©2023 The Colorado Bankers Association is proud to present Colorado Banker as a benefit of membership in the association. No member dues were used in the publishing of this news magazine. All publishing costs were borne by advertising sales. Purchase of any products or services from paid advertisements within this magazine are the sole responsibility of the consumer. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Colorado Banker or its publisher, The newsLINK Group, LLC. Any legal advice should be regarded as general information. It is strongly recommended that one contact an attorney for counsel regarding specific circumstances. Likewise, the appearance of advertisers does not constitute an endorsement of the products or services featured by The newsLINK Group, LLC. Jenifer Waller President & CEO Alison Morgan Director of State Government Relations Brandon Knudtson CFO & Director of Membership Lindsay Muniz Director of Education Patricia Wells Director of Communications Margie Mellenbruch Bookkeeper* Melanie Layton Lobbyist* Garin Vorthmann Lobbyist* Andrew Wood Lobbyist* Caroline Woodhouse Lobbyist* *Outsourced 140 East 19th Avenue, Suite 400 Denver, Colorado 80203 Office: 303.825.1575 Websites: coloradobankers.org smallbizlending.org financialinfo.org colorado-banker.thenewslinkgroup.org BUILDING BETTER BANKS — Helping Coloradans Realize Dreams 18 22 4 Message from the CEO Unmasking the Unintended Consequence: The Marshall- Durbin and Gooden-Welch Price Control Bills By Jenifer Waller, CEO, Colorado Bankers Association 6 7 Teller Cash Management and Recycler Stats Worth a Re-Look By Scott Fieber, Chief Strategy Officer, Cook Solutions Group 8 No More Working for the Weekend Colorado Statutes of Limitations No Longer Extended if Limitations Period Ends on Weekend or Court Holiday By Jacob Hollars, Spencer Fane, LLP 10 Overdraft Best Practices for Nurturing Customer Relationships By Cheryl Lawson, EVP of Compliance Review, JMFA 12 Securing Financial Transactions The Power of Digital Signing Solutions By eNotaryLog 16 CBA Centerpoint Going Beyond the Desk To Hear the Stories of Colorado Bankers 18 Is Your Loan Pricing Strategy Protecting the Bank and the Relationship? By Ben Lewis, Managing Director and Chris Ebbs, Director, Chatham Financial 20 Washington Update Partners in the Fight Against Elder Abuse By Rob Nichols, President and CEO, American Bankers Association 21 Home Equity Line of Credit (HELOC) Scams By Travelers 22 Commercial Solar Financing Tips for Lenders By Vahan Khodanian and Gwenneth O’Hara, Buchalter 25 The Benefit of Using Appraisers for Equipment Valuations By Glenda Wegener, Equipment Appraisal Liaison, Purple Wave Auction 26 Upcoming CBA Events 3 Colorado Banker
I Unmasking the Unintended Consequence THE MARSHALL-DURBIN AND GOODEN-WELCH PRICE CONTROL BILLS By Jenifer Waller, CEO, Colorado Bankers Association In an ongoing legislative battle, CBA, along with ABA and other state bankers associations, continues to oppose the introduction of the “Credit Card Competition Act” or any other legislation that would impose broad network routing requirements on credit cards and price control. In the intricate world of legislative agendas, it’s common for bills to carry hidden negative consequences. While the Marshall-Durbin Senate bill and the Gooden-Welch House bill are purported as a step toward fairness and consumer protection, the evidence suggests otherwise. An attempt to standardize card products across payment networks and restrict interchange fees has the potential to harm smaller institutions by favoring larger credit card companies with the resources to adapt to new regulatory requirements. It will reduce differentiation and competition among credit card issuers, undermining the principles of free market competition and limiting consumer choice while increasing consumer costs and eroding card benefits and rewards programs. In the U.S. economy, price should be established by the market. Our credit card processing system is the most efficient in the world, securely moving millions of dollars a second with 99.999% reliability. It also provides protections like zero-dollar fraud liability for consumers and guaranteed payments for retailers. This infrastructure is complicated and expensive, and credit card interchange is a major source of how it is financed. There are over 5,000 credit card issuers marketing directly to consumers, demonstrating there is already plenty of competition, as confirmed by metrics used by the FTC and DOJ. The role of banks extends beyond processing transactions; they bear the weight of protecting their customers from fraud, data breaches and inefficient systems. Allowing financial institutions to choose the networks aligns with their role as trusted guardians of their customers’ financial well-being. And while proponents claim that small businesses will benefit from the Marshall-Durbin and GoodenWelch bills, history tells a different tale. The Durbin Amendment, which bears similarities to this legislation, failed to deliver the expected outcomes. Instead, small banks saw a significant portion of their debit card revenue vanishing after its implementation. The one-size-fits-all regulations it imposed also hurt small retailers who saw little to no benefit and, in some cases, even paid more to accept cards. The Marshall-Durbin and GoodenWelch bills seem to echo this pattern, raising concerns that history might repeat itself with devastating consequences for those it claims to protect. It’s our duty to ensure that legislative measures genuinely serve the interests of all and expose hidden hazards that could undermine the fabric of fairness and competitiveness. Allowing financial institutions to choose the networks aligns with their role as trusted guardians of their customers’ financial well-being. MESSAGE FROM THE CEO Colorado Banker 4
Our programs have reached 1 million people — and counting. aba.com/FinEd Help us reach even more. Get involved for free.
M 7 It’s worth taking a moment to assess your current cash recycling technology to see if your organization has fallen behind the technology curve. one two three Many Teller Cash Recycler (TCR) brands have become obsolete with limited parts availability. Some are even at the end of life and are a security risk. With the recent changes in the TCR industry, it’s important to review your current Teller Cash Recycler fleet. When it comes to lobby teller cash recyclers, not much has changed over the last decade. The emergence of teller cash dispensers as an alternative to traditional teller cash drawers allowed for a safe, automated way to dispense cash at the teller line, avoid cash counting mistakes and make the overall branch operation flow more smoothly. When the technology advanced to full cash recycling with the ability to both dispense and accept cash, it felt like the cash journey in the branch was complete with a single piece of technology. No more need for a vault, cash drawers and timeconsuming cash audits. It’s rare to find a financial institution today that hasn’t deployed this technology. It seemed that the financial services industry was finally caught up technology-wise. Unfortunately, the technology that caught on so quickly has slowly become an afterthought. If you were to pick a black hole of technology within a financial institution, teller cash recyclers would fit that bill. Substantial planning and testing went into deploying the first units, but once branch rollouts were complete, most financial institutions haven’t really given their cash recyclers a second thought. Of course, this technology has not stopped evolving over the years. Your financial institution might not be aware of features and functionality that have changed since the introduction of TCRs. It’s worth taking a moment to assess your current cash recycling technology to see if your organization has fallen behind the technology curve. 7 Points to Consider Regarding Teller Cash Management and Recyclers 1. Rolled Storage Modules (RSM) Are Outdated: This has quickly become a technology of the past. RSMs limit your cash capacity, transaction speed and, more importantly, the ability to audit and share cash between devices. INTEROPERABILITY is critical. If you can’t share your cash from device to device without physically touching it, you’re missing out on key functionality. 2. Self-Audits Are Now Automated: Still counting cash with dual control by hand to make sure your units are in balance? STOP! Today’s technology can do it for you. 3. Capacity Has Increased: Cassette-based recyclers provide close to double the capacity compared to an RSM recycler. Odds are with a cassette-based recycler you can reduce the number of machines you need to purchase and maintain, which can net significant savings at a time when it is becoming more and more challenging to turn a profit. No one wants to run out of cash or a specific denomination. Doubling your available currency can eliminate that worry. Teller Cash Management and Recycler Stats Worth a Re-Look By Scott Fieber, Chief Strategy Officer, Cook Solutions Group Colorado Banker 6
“Over my 16-year tenure with Bankers’ Bank of the West, every minute of our work has been dedicated to bringing solid expertise, services, and products to ensure community banks sustain a competitive edge. We’ve certainly grown strong as partners, looking out for each other—and we look forward to continuing that tradition.” Bankers’ Bank of the West LOAN PARTICIPATIONS|MERCHANT SERVICES|ATM DEBIT|WIRES bbwest.com | 800-873-4722 www.bbwest.com President and CEO Bill Mitchell We Champion Community Banking Member FDIC four five six seven 4. Open Platforms for Integration: Do your recyclers run closed proprietary software that prevents software collaboration with older branch technology? New technology allows you to integrate your recyclers to AI platforms, branch surveillance systems for dispute tracking, remote resolution software that the servicer of your choice can use and so much more. Don’t compromise your consumer experience by deploying a recycler that doesn’t offer an open platform to integrate with your other existing technology. 5. Price Has Come Down: Recyclers should not be the same price as an ATM. If you haven’t shopped for upgraded technology lately, you may be overpaying for subpar technology. Couple that with reducing the number of machines you need to operate your branch, and you have a recipe for some significant savings. 6. Cash Handling Ecosystem: This is not just a teller cash recycling conversation. This should be part of a greater conversation about handling your cash distribution and the channels available to you. There are several pieces to this puzzle, so making sure they fit within your technology infrastructure is important. 7. Secure/Certified Service Provider with Remote Security Patching Capabilities: In the era of increased cyberattacks, you can’t afford to overlook this point. All this new technology is only as good as the service provider keeping it secure and stable. Make sure your service provider is SOC 2 Type II certified, does not source the maintenance out to a non-secure provider, and can provide critical remote security patches, cyber threat monitoring and maximize remote fixes. Teller cash recyclers have been around for a while now. It might be time to take another look at the technology and your deployment strategy so you can get more out of the technology you already have before adding new technology. Open platforms give you a head start. Cook Solutions Group can help you start the discussion around a vendoragnostic approach that truly fits your growing needs. TCR fleet audits and assessments are available upon request from Cook Solutions Group. To ensure your fleet is not end of life, obsolete or a security risk, visit www.cooksolutionsgroup.com. 7 Colorado Banker
In an opinion that is of profound importance to all litigators and clients, the Colorado Court of Appeals recently held that many, if not most, statutes of limitations are not extended if the limitations period ends on a weekend or court holiday. In Gomez v. Walker, the Court of Appeals was faced with the question of whether section 2-4-108(2), C.R.S., extends the statute of limitations found at section 13-80-101, C.R.S. to the “next business day when the limitations period ends on a Saturday, Sunday or legal holiday.” In a lengthy opinion focused largely on the text of the two statutes, the Gomez court answered that issue in the negative. The top line takeaway from the Gomez opinion is that any statute of limitations in Colorado that contains the phrase “and not thereafter” is no longer extended if the limitations period expires on a Saturday, Sunday, or legal holiday. The ramifications of this ruling cannot be understated given how many types of cases are subject to statutes of limitations that contain the phrase “and not thereafter.” Although the list of these statutes is quite lengthy, many types of claims are of particular importance for financial institutions and professionals. After Gomez, all contract claims, claims for breach of the Uniform Consumer Credit Code and most claims alleging fraud, misrepresentation, concealment or deceit do not have their statute of limitations extended, even if the last day to file would be a weekend or legal holiday. As a practical matter, many of these types of claims would traditionally be brought against financial institutions and professionals, so this outcome is potentially beneficial to them. Financial institutions and professionals and their counsel should closely scrutinize all claims brought against them in light of the holding in Gomez. However, Gomez could also have ramifications for financial institutions who may need to bring a claim against someone. Actions for the recovery of most debts are also now subject to a statute of limitations that is not extended if the limitations period falls on a weekend or legal holiday. Given that lenders will frequently try to negotiate loan workouts with their borrowers, lenders will want to be cognizant of when their statute of limitations runs out or obtain a tolling agreement from the borrower as part of the workout process. It should be noted that Gomez is a Court of Appeals decision, meaning that the Colorado Supreme Court could still reverse the decision. It is not a foregone conclusion, however, that the Supreme Court will take the case, and even if it does, it will be at least a year until the Colorado Supreme Court rules. As such, financial institutions and professionals should treat Gomez as black letter law in Colorado unless and until it is reversed. How the Court of Appeals reached its conclusion is largely a matter of statutory construction. Although the particular facts of the case are not particularly consequential to its outcome, Gomez is a personal injury case involving an auto accident that occurred on June 15, 2016. The parties agreed that three years from the date of the accident was June 15, 2019, a Saturday. Gomez waited until the following Monday, June 17, 2019, to file her complaint. The defense moved to dismiss on the basis of the statute of limitations and Gomez argued that section 2-4108(2), C.R.S., extended her statute of limitations to June 17. The district court initially denied the motion but later granted the defense’s “renewed motion to dismiss” after the Court of Appeals released its opinion in Morin v. ISS Facility Services, Inc. The district court found the Morin decision obligated it to dismiss the complaint as untimely. On appeal, although the Court of Appeals disagreed that Morin was on point, it ultimately affirmed the conclusion that Gomez’s complaint was filed too late based on the Court of Appeals’ reading of the two statutes at issue. The statute of limitations that was in dispute in Gomez (section 13-80-101, C.R.S.) states No More Working for the Weekend COLORADO STATUTES OF LIMITATIONS NO LONGER EXTENDED IF LIMITATIONS PERIOD ENDS ON WEEKEND OR COURT HOLIDAY By Jacob Hollars, Spencer Fane, LLP Colorado Banker 8
that certain actions, including personal injury actions “arising out of the use or operation of a motor vehicle,” “shall be commenced within three years after the cause of action accrues, and not thereafter.” Gomez contended that section 2-4-108(2) applied to extend her statute of limitations to June 17 because it states: “If the last day of any period is a Saturday, Sunday or legal holiday, the period is extended to include the next day which is not a Saturday, Sunday or legal holiday.” While the Gomez court noted that it is “tempting to give effect to both statutes by simply applying the language of section 2-4-108(2) to extend Gomez’s three-year limitations period — which ended on a Saturday — to the next date that was not a Saturday, Sunday, or legal holiday,” it resisted that temptation. The Court of Appeals found that “plain meaning” of the phrase “and not thereafter” in section 13-80-101 “is that the action cannot be filed after the three-year anniversary of the date the cause of action accrued.” In addition, the Gomez panel found that to read section 2-4-108(2) to extend this statute of limitations would either make the phrase “and not thereafter” redundant or read it out of section 13-80-101 completely. So, the Court of Appeals found that the statutes could not be harmonized and, because section 13-80-101 is more specific and enacted later, section 13-80-101 controls. In sum, lawyers and their clients now cannot wait until the next business day if their limitations period ends on a weekend or legal holiday. Instead, they must now either file on the weekend or holiday or file their case before the weekend or holiday. Otherwise, they risk having their case dismissed as untimely. Jacob Hollars, a partner in the Spencer Fane Denver office, is a litigator specializing in employment issues, real estate, special district and commercial matters. He can be reached at (303) 839-3707 and jhollars@spencerfane.com. In sum, lawyers and their clients now cannot wait until the next business day if their limitations period ends on a weekend or legal holiday. 9 Colorado Banker
A Overdraft Best Practices FOR NURTURING CUSTOMER RELATIONSHIPS By Cheryl Lawson, EVP of Compliance Review, JMFA An overdraft program that follows industry best practices can help build life-long loyalty. Is your bank putting its best foot forward? According to the most recent survey from Bankrate, U.S. adults, on average, have held the same checking account for 17.75 years, with adults age 55+ keeping the same account for 24.6 years, on average. Many life events can occur in that length of time, including home purchases, starting a business, building savings and investing for the long term. And these are all life events that your bank can play a part in to build long-term relationships with your customers. However, nothing happens overnight — sometimes, there are oversights along the way, like overdrafts. But you can have your customers’ backs in these times of need. When your bank offers an overdraft service that they can rely on during these bumps in the road, you’re laying a solid foundation for the future. Tips for Offering a Consumer-Friendly Overdraft Service People have more options than ever before when it comes to their banking needs — and there are likely a variety of offers tempting them to switch. One negative experience with your overdraft service could be why a customer walks away. In order to offer the most consumer-friendly program, your bank should build its service around and for your customers. That means it should be: • Easy to understand when it’s explained by your team or in written form • Fully disclosed, clearly communicated and transparent so your customers do not encounter any surprises • Compliant with all state and federal regulations and guidance • Reasonable fees for your market • Valuable enough for your customers to make it worth using Invariably, your customers will have unintentional overdrafts, and when that occurs, they may need some support. Overdraft programs continue to be a valuable service for consumers, and your bank has the opportunity to fulfill an important need. Stay Proactive and Prioritize Your Overdraft Strategy The OCC and FDIC have both issued statements urging banks to take a closer look at their overdraft programs now if they haven’t already done so. One of the critical areas includes a bank’s practices for clear disclosures surrounding “authorize positive, settle negative” (AP/SN) transactions and re-presentment fees. Plus, you’ll want to provide other alternatives and easy-to-understand options for your customers to avoid an overdraft fee. To satisfy regulators (and consumers alike), it must be consumer-friendly, which starts with carefully reviewing your program through the lens of your customers. It’s putting Colorado Banker 10
them first. If you’re unsure whether your program meets and exceeds the expectations, take a closer look at your strategy and determine if there is a need to make changes. Evaluating, diagnosing and implementing improvements is the easiest way to get your overdraft program back on track. Keeping your goals, your market and how your customers currently utilize it in mind, ask yourself: • Are our fees reasonable? • Do we offer an overdraft threshold (de minimis) to ensure customers do not get charged a fee unreasonably? • Do we have an appropriate daily cap on fees? • Do we offer a grace period that allows customers to bring their account positive and avoid a fee? • Are our service disclosures clear, updated and readily available? • Is our communication transparent and easy to understand? • Does our staff receive the training necessary to properly explain the service? • Do we have the resources and tools in place to run an effective and responsible program? Redefining your overdraft strategy will ensure you can deliver on your mission to promote financial health and well-being for your customers. These and many other best practices can help you offer a responsible overdraft service that they can rely on. Ensure Long-Term Relationships Stay in Focus When you put overdraft best practices into motion today, you’re planting the seeds of trust that can grow into stronger customer loyalty through all stages of their financial journey. Cheryl Lawson serves as the principal liaison for regulatory requirements of overdraft services, including consumer protection issues and strategies to enhance safety and soundness. For more information and for help creating a successful overdraft strategy, visit www.jmfa.com/check-the-boxes to download the e-book, “Does Your Overdraft Program Check All the Boxes?” from JMFA. Or visit www.jmfa.com or call 800-809-2307. 11 Colorado Banker
I Securing Financial Transactions THE POWER OF DIGITAL SIGNING SOLUTIONS By eNotaryLog In today’s fast-paced and interconnected world, the financial industry faces ever-evolving challenges in safeguarding sensitive information, protecting against fraud and ensuring the integrity of financial transactions. With the growing frequency and sophistication of cyberattacks, data breaches and fraudulent activities, organizations must prioritize the establishment of robust security measures to protect their clients’ assets and maintain their reputations. Against this backdrop, digital signing solutions such as Remote Online Notarization (RON) and eSignature have emerged as significant steps forward in the fight against security risks and fraud within the financial sector. These solutions leverage advanced cryptographic technology and secure authentication mechanisms to enable the secure and legally binding electronic signing of documents and agreements. They also offer the ability to sign documents remotely, eliminating the need for physical presence and enabling businesses to conduct transactions and collaborate across geographies seamlessly. The adoption of digital signing solutions is witnessing a rapid rise, driven by advancements in technology, increased regulatory acceptance and the growing demand for secure and convenient transactions. As leaders recognize the potential of digital signing solutions to enhance security, improve operational efficiency and drive growth, they are increasingly embracing these technologies to protect their businesses and stay ahead of the curve. Understanding Security Risks 1. Identifying Common Business Transactions Vulnerable to Fraud Account Opening and Customer Onboarding Account opening and customer onboarding processes present significant security risks. Criminals may attempt to exploit these processes by using stolen identities or falsified documents to open fraudulent accounts. Without robust security measures in place, organizations can fall victim to account takeover, money laundering and identity theft. Digital signing solutions play a vital role in mitigating these risks by incorporating identity verification and authentication mechanisms. Through advanced identity verification protocols, such as knowledge-based authentication and identity document validation, businesses can ensure the authenticity of customer information and prevent unauthorized account openings. Loan Origination and Mortgage Processing Loan origination and mortgage processing involve handling vast amounts of sensitive financial information. These processes are susceptible to fraud schemes such as loan application fraud, identity theft and forged documentation. Unauthorized modifications to loan terms or misrepresentation of borrower information can lead to significant financial losses for both lenders and borrowers. Colorado Banker 12
Digital signing solutions provide enhanced security for loan origination and mortgage processing by ensuring the integrity and authenticity of loan documents. With the ability to securely sign and store loan agreements electronically, businesses can verify the identity of borrowers, track document revisions and establish a transparent audit trail to prevent fraud and disputes. Investment and Wealth Management Investment and wealth management operations involve high-value transactions and the management of clients’ assets. The potential risks in this area include unauthorized trading activities, account manipulation and unauthorized access to investment portfolios. By adopting digital signing solutions, organizations can implement secure authorization processes for investment transactions. Electronic signatures, coupled with secure authentication methods, provide assurance that investment decisions are made by authorized individuals. Moreover, digital signing solutions facilitate the efficient management of account documentation, ensuring compliance and minimizing the risk of errors or unauthorized changes. Contract and Agreement Execution Contracts and agreements are the backbone of financial transactions, making them prime targets for fraud and security breaches. Paper-based contract execution processes are susceptible to tampering, unauthorized alterations and delays, jeopardizing the integrity and legal enforceability of agreements. Digital signing solutions revolutionize contract and agreement execution by offering secure and legally binding electronic signatures. Through digital certificates and cryptographic techniques, these solutions ensure document integrity, non-repudiation and secure transmission. By leveraging digital signing, businesses can streamline contract management, reduce turnaround time and strengthen the security of their contractual relationships. 2. In-House Processes Prone to Security Breaches Document Handling and Storage In any industry, especially finance, the handling and storage of sensitive documents poses significant security risks. Traditional paper-based systems are susceptible to physical theft, unauthorized access and damage due to natural disasters. Additionally, maintaining and organizing physical documents can be labor-intensive and prone to human error. Digital signing solutions address these challenges by enabling secure electronic document management. By digitizing and securely storing documents in encrypted databases or cloud-based systems, organizations can protect sensitive information from unauthorized access, implement strict access controls and minimize the risk of physical document loss or damage. Manual Verification and Authentication Manual verification and authentication processes are error-prone and timeconsuming, leaving room for human error and fraudulent activities. Verifying signatures, matching identification documents and manually cross-referencing data can lead to inconsistencies and delays in transaction processing. Digital signing solutions automate verification and authentication processes, significantly reducing the risk of human error and enhancing operational efficiency. By incorporating advanced identification technologies and algorithms, these solutions streamline the authentication of signatures and identity verification, ensuring accuracy, consistency and a higher level of security. Compliance and Regulatory Challenges Financial institutions operate in a highly regulated environment, with stringent compliance requirements that are subject to constant change. Non-compliance can result in severe penalties, legal liabilities and reputational damage. Digital signing solutions assist businesses in maintaining compliance with evolving regulatory frameworks. These solutions offer features such as audit trails, timestamping and document version control, enabling organizations to demonstrate compliance and fulfill legal and regulatory obligations. By implementing digital signing solutions, companies can streamline compliance processes, reduce the risk of errors and adapt more effectively to regulatory changes. Leveraging Digital Signing Solutions for Enhanced Security 1. Exploring Remote Online Notarization (RON) RON is a digital signing solution that enables the notarization of documents remotely, without the need for In an era where security threats and fraud pose significant risks to the financial industry, RON and eSignature signing solutions provide a comprehensive answer to these challenges. 13 Colorado Banker
physical presence. RON leverages advanced technologies, such as video conferencing and secure authentication methods, to facilitate the notarization process in a secure and efficient manner. This technology has gained significant traction in recent years, especially in the financial sector, due to its numerous benefits. Enhancing Identity Verification and Authentication Identity verification and authentication are critical components of secure financial transactions. RON utilizes advanced verification methods, such as knowledge-based authentication questions, biometric identification and credential analysis, to ensure the identity of signers and prevent impersonation or fraudulent activities. By integrating identity verification mechanisms, RON significantly strengthens security by establishing a higher level of trust and confidence in the authenticity of the individuals involved in the signing process. This eliminates the risks associated with false identities, forgeries and unauthorized signings, making RON an invaluable tool for companies seeking to enhance their security measures. Strengthening Document Integrity and Tamper Resistance Traditional paper-based documents are susceptible to tampering, alterations and unauthorized modifications. RON addresses these vulnerabilities by leveraging cryptographic technology to ensure the integrity and tamper resistance of electronically signed documents. Digital signing certificates and cryptographic algorithms generate unique digital signatures for each document, which are embedded within the file and linked to the signer’s identity. Any modification or tampering attempt made to the document after it has been signed will be detected, as the digital signature becomes invalid. This provides an added layer of security and ensures the integrity and authenticity of the documents throughout their lifecycle. Increasing Accessibility and Convenience Another primary advantage of RON is its ability to overcome geographical barriers and facilitate notarizations regardless of the physical location of signers and notaries. This eliminates the need for in-person meetings, reduces travel costs and expedites the notarization process. Additionally, RON enhances convenience for clients and stakeholders by offering substantially greater availability, enabling them to sign documents at their own pace and from the comfort of their own locations. 2. Harnessing the Power of eSignature Solutions eSignature has revolutionized document signing. By eliminating the need for physical ink signatures, these solutions offer a secure and efficient method for signing documents electronically. With eSign, both enterprise-level institutions and small businesses can enhance security, improve operational efficiency and ensure compliance in today’s digital landscape. Key Features and Advantages of eSignature Firstly, eSignature employs encryption technology to protect the integrity and confidentiality of signed documents during transmission and storage. This ensures that only authorized individuals can access and view the content, reducing the risk of unauthorized access or data breaches. Secondly, eSignature solutions offer built-in authentication mechanisms, such as password protection, two-factor authentication or biometric authentication. These methods ensure that only authorized signers can apply their electronic signatures, preventing unauthorized individuals from tampering with or falsifying documents. Streamlining Document Workflow and Approval Processes Financial institutions deal with a vast amount of paperwork and document-intensive processes. eSignature solutions streamline these workflows by eliminating the need for manual handling, printing, scanning and physical storage of documents. This not only improves operational efficiency but also reduces the risk of human error and document loss. With eSignature, documents can be digitally routed, reviewed and signed in a collaborative manner, expediting the approval processes and enabling faster decisionmaking. This streamlined workflow not only enhances productivity but also reduces the time and effort required to complete transactions, improving customer satisfaction and enabling companies, big and small, to stay ahead in today’s fast-paced business environment. Reducing Human Error and Improving Auditability Manual processes are prone to human errors, such as signing the wrong document, missing signatures or initials or omitting critical information. eSignature eliminates these errors by guiding signers through the signing process, ensuring that all necessary fields are completed and all required signatures are obtained. This reduces the risk of incomplete or inaccurate documentation, which can lead to legal disputes or compliance issues. Furthermore, eSignature solutions provide audit trails that track the entire signing process, including timestamps, signatory information and any changes made to the document. This comprehensive auditability enhances transparency, facilitates regulatory compliance and simplifies the process of retrieving and validating signed documents when needed. Additional Benefits of Digital Signatures By leveraging RON and eSignature solutions, businesses can fortify their security measures, reduce fraud risks, streamline document workflows, improve compliance and Colorado Banker 14
WE'VE GOT YOU COVERED WWW.CP2LAW.COM DENVER | FORT COLLINS | GREELEY Coan, Payton & Payne, LLC provides a full range of legal services to the banking industry. WE MAKE IT EASY LET OUR TEAM HELP YOU SECURE THE DEAL AND LOWER YOUR RISK • UP TO 90% OVERALL FINANCING • UP TO 25 YEAR TERM • FIXED-RATE PREFERREDLENDINGPARTNERS.COM | 303.861.4100 Leveraged financing and refinancing of owner occupied real estate and long-term equipment. Most for-profit small businesses eligible. SBA defines businesses with net profit after tax <$5.0 Million and tangible net worth <$15.0 Million as small. drive operational efficiency. These digital signing solutions not only provide enhanced security but also offer a range of additional benefits: • Enhanced Compliance: RON and eSignature solutions help financial institutions comply with industry-specific regulations, such as Know Your Customer (KYC), AntiMoney Laundering (AML) and data protection laws. By maintaining a digital record of the signing process, businesses can easily demonstrate compliance during audits and regulatory inspections. • Cost Savings: Adopting digital signing eliminates the need for paper, printing and physical storage of documents. Organizations can reduce administrative costs associated with manual handling, transportation, and storage of paperwork. Additionally, digital signing reduces the time and effort required to process transactions, improving overall operational efficiency and cost-effectiveness. • Improved Customer Experience: Digital signing solutions offer a convenient and seamless experience for clients. Customers can sign documents from anywhere, at any time, using their preferred devices. This eliminates the need for in-person meetings, reducing roadblocks and delays. The faster turnaround time and simplified procedures lead to increased customer satisfaction and loyalty. • Scalability and Flexibility: Digital signing solutions can easily scale to accommodate growing transaction volumes, making them suitable for companies of all sizes. The flexible nature of these solutions allows operations to adapt to changing business needs, such as incorporating new product offerings or expanding into new markets, without compromising security or compliance. • Integration and Compatibility: RON and eSignature solutions can seamlessly integrate with existing technology infrastructure, including customer relationship management (CRM) systems, document management systems, and workflow automation tools. This compatibility enables a smooth transition to digital processes without disrupting existing operations, allowing companies to leverage their current investments in technology. In an era where security threats and fraud pose significant risks to the financial industry, RON and eSignature signing solutions provide a comprehensive answer to these challenges. By leveraging advanced encryption, robust identity verification, tamper-proof documents and secure storage, these technologies enhance security, reduce fraud and ensure compliance with regulatory standards. Companies benefit from streamlined processes, enhanced customer experiences, improved operational efficiency and increased competitive advantage. As digital transformation continues to reshape the financial industry, eNotaryLog empowers businesses to embrace secure, efficient and growth-oriented digital signing solutions that are tailored to their specific needs. To learn more about eNotaryLog’s RON and eSignature solutions, contact Colorado representative Diana Jansen at diana.jansen@enotarylog.com or 720-868-5830. 15 Colorado Banker
How did you get started in the banking industry? Prior to starting a career in financial services, I worked long hours as a manager at a hair salon. The schedule was rough and erratic, so I started looking for something with more predictable hours (like bankers’ hours) and applied to be a teller at World Savings and Loan. Given my management background, they offered me a job as a management trainee, which I accepted. I quickly progressed to managing my own branch. I didn’t know anything about banking. I didn’t even know what a CD was. But I learned quickly and really enjoyed the opportunity to help others along their financial journey. What is the most rewarding aspect of your job? I enjoy seeing the excitement on kids’ faces when they visit the bank to open an account, dump their piggy banks in the coincounting machine, make a deposit or apply for their first credit card or personal loan. I truly enjoy helping youth develop good money habits at a young age and arming them with knowledge and strategies to avoid financial missteps in the future. What makes your bank unique? It’s the only FDIC-insured bank that caters specifically to children through age 21. We offer the same products and services as “adult” banks, but we incorporate financial education at every stage of a child’s development, starting with savings accounts for young kids, checking accounts with a debit card for children ages 10+, credit cards at age 12, and personal and auto loans for teenagers. By giving kids the opportunity to practice saving, spending, and borrowing while they’re young, we’re setting them up for long-term financial success. When you were a child, what did you want to be when you grew up? I wanted to be a teacher. I always admired teachers and thought it would be fun working with kids. Now I get to be a banker and a teacher at the same time! What is your favorite movie or book, and why? I love the movie Where the Heart Is with Natalie Portman and Ashley Judd. I cry every time I watch it. Who is one of the most influential figures in your life? My mother. Her strength of character, work ethic and selflessness inspired me to be the same kind of mother to my own children. Vicky Aragon Vice President Young Americans Bank CBA Centerpoint How did you get started in the banking industry? I began my career after college with a large regional bank. I entered the bank’s Audit Development program, which was a multi-year rotational program through the different departments and functions of a bank holding company. I felt it was a great way to see a very large, complex industry without the stress of immediately deciding what I wanted my specific career-long passion to be. After completing and reflecting on the rotations, it became very clear that Credit and Lending were the right fit for my skill set and personality. What do you enjoy about your job? What I enjoy most about my job in Commercial Banking is the relationships we have built with our customers over the years. Whether it is helping owners at the start-up level, expansion level or transition level, helping them get access to capital can be a challenging yet exciting process. My role is to work with people and form connections to help them achieve their goals. It is incredibly rewarding to look at different projects that we have completed with our customers and the different strategies we collaborated on to get to a shared goal. What makes your bank unique? I believe that Citywide Banks truly provides a great, all-around experience for our customers. The bank has the personal touch and feel of a small community bank but with the strength and technology of a large regional bank. This combination allows our customers access to state-of-the-art banking tools as well as direct local connections to help with all aspects of their business or personal needs. The bank has also invested well in its employees, which is directly connected to the customers’ experience. I am very proud of how well Citywide partners with and sponsors different organizations around the state to foster economic growth. When you were a child, what did you want to be when you grew up? That is easy, a banker. My father was an economics professor, so I had access to the Wall Street Journal and The Economist at an early age. My father tried to make economics and financial markets exciting and fun. When I was in elementary school, he bought me five shares of the Boston Celtics and showed me how to track the stock in the Journal every day. I have tried that same approach with my kids to foster financial education without it seeming too complex or intimidating. Jack Kozlowski SVP Commercial Banking Citywide Banks Colorado Banker 16
How did you get started in the banking industry? Actually, I grew up with it. My father worked for the Nebraska Bankers Association, so I was introduced to financial services early on. As a young adult, I went to work for a banking software company that supports community banks. I would help with troubleshooting and training bank employees on how to use the software. I wasn’t particularly tech-savvy, but I really enjoyed working with people, so I made the switch from software to banking by entering the management training program at FirstBank in 2007. What do you enjoy most about your job? I really enjoy building relationships with customers and coworkers. I also enjoy having a measurable impact on the community and seeing that impact firsthand. It’s rewarding to help people build their dream homes or grow their businesses. What makes your bank unique? FirstBank is committed to serving all members of our diverse community and has introduced meaningful DEI initiatives, including a multicultural banking center where customers can receive banking services in their preferred language from team members who understand their culture and concerns. In what ways do you like to give back to the community? I personally serve on the board of Bryson’s Chase Foundation, a small, non-profit organization that assists families with the expense of mental health treatment for their children. I am also on the Finance Committee of the Independence Center in Colorado Springs, which provides information, resources and support to help people with cognitive, physical or mental health disabilities. FirstBank encourages all employees to participate within the community and provides volunteer time off as an added benefit. Additionally, FirstBank helped launch and continues to be the main partner of Colorado Gives Day, Arizona Gives Day and Coachella Valley Gives Day. Since each program’s inception, over $390 million has been raised for a variety of non-profits in these areas. What do you listen to on your morning commute? Bloomberg Radio for current events and entertaining and informative podcasts like Planet Money and Smartless with Jason Bateman, Sean Hayes, & Will Arnett. Sam McKelvey Senior Vice President FirstBank – Colorado Springs GOING BEYOND THE DESK TO HEAR THE STORIES OF COLORADO BANKERS What makes your bank unique? Bank of the San Juans is part of a community of banks. Under the Glacier Bank umbrella, our bank offers a unique niche with a community banking philosophy spread throughout our 17 bank divisions in 144 different communities. Bank of the San Juans operates in 20 locations throughout Colorado and 14 distinct communities. The majority of all decisions are made at the local level by employees living and working in our local communities. Our motto is One Big Happy Little Bank, and we are just that. Year after year, we have been ranked in the top 20 by Forbes magazine for America’s Best Banks. What is the most rewarding aspect of your job? The most rewarding aspect of my job is watching the growth and success of our customers, our employees and our communities. It has been rewarding to see other people’s success over the years, whether it’s the young newlywed couple who became homebuyers for the first time, the small business owner that was able to purchase their own building after years of leasing, or the legacy business owner that passed their operation on to the next generation. It is fulfilling to see our employees get promoted to the next level, and our local non-profits expand operations and services due to the philanthropy of not only Bank of the San Juans but other banks in our communities. As an industry, we play an important role in our communities, and it’s been a lot of fun having either a direct or indirect role in that growth. What is the most important thing you have learned from a career in banking? Banking is built on trust. Honesty and integrity are vital in this industry. Our customers entrust us with some of the most personal and confidential pieces of their lives — their finances. With the recent bank failures, many customers turned to their bankers for advice, questions and assurance that their money is safe, sound and secure. Having that open dialogue and confidence from a customer is vital to our success. At the end of the day, it all comes down to people and relationships. I am grateful to be surrounded by some of the best in our industry. Tell us something about yourself most people don’t know. I may be the only banker that doesn’t know how to play golf. I’ve tried it a time or two, but I am terrible. Thankfully not every relationship is built on a golf course. Maybe someone will have the patience to teach me someday. Until then, you will find me enjoying all of the other outdoor activities that Colorado has to offer. We truly live in the best state around. Jennifer Landini Regional Market President Bank of the San Juans 17 Colorado Banker
TTwo noteworthy loan pricing strategies at community banks have developed in the current rate environment. While wellintentioned, they may not produce the desired outcome of protecting the bank and the relationship. The following hedging strategies protect the interests of all parties in the financing transaction. Banks improve their long-term margin and offer borrowers lower-fixed rates with hedging tools. Observed Trend 1: Fixed-Rate, On-BalanceSheet Lending = One-Way Floaters Fixed-rate commercial loan pricing is now as high as 8.5% or more. Bankers and investors are eager to take the opportunity to earn attractive yields and fix the rate long-term if they can. While high fixed rates are attractive, how fixed are these loans and for how long? Reduced credit availability incentivizes borrowers to accept the offered rate, but how long will they stay when rates fall? History shows that borrowers are likely to demand repricing when rates come down. This puts bankers in an uncomfortable situation: tell the borrower no and risk the relationship or agree to the waiver and lose the yield. Alternative Approach The best approach for the bank and the relationship is to offer a floating-rate loan with an interest-rate swap. The borrower gets a lower fixed rate: on average, five-year swaps closed in the second quarter of 2023 resulted in borrowers getting a swap rate 1.15% lower than the balance-sheet rate for the same maturity. The borrower is less likely to demand repricing with a lower fixed rate. And if they do require repricing, swaps’ market-based termination costs ensure that both parties are treated fairly. Observed Trend 2: High-Strike (Throw Away) Floors Bankers who bypass the one-way floater quandary and choose instead to offer floating-rate loans have prudently begun to add interest rate floors. Embedding floors in floating rate loans is widespread and, when used appropriately, can be good protection for a bank’s margin. However, some banks are pursuing high-strike floors, i.e., 100 basis points or less below current Prime or SOFR indices. Like a one-way floater, borrowers with high-strike floors will likely demand that the bank waive the floor when short-term rates fall. Bankers will be in the same uncomfortable position: tell the borrower no and risk losing the relationship or say yes and lose the protection. Alternative Approach Banks should consider lower-strike floors, which are less likely to be thrown away in a falling-rate environment. And as a supplement, banks whose interest income decreases in falling rates should consider buying rate protection in the form of a floor or collar (a purchased floor whose cost is offset by a sold cap). While the idea of paying for rate protection may seem illogical if the financial institution can get the floor at no cost, the value of a purchased floor is that it can’t be thrown away — the dealer bank who sold the floor is required to make payments and can’t renegotiate the agreement. Parting Thoughts If your bank is exposed to one-way floaters or throw-away floors, use hedging tools like borrower swaps and balance sheet hedges like floors or collars to protect the bank and provide better solutions to your customers. Banks with these hedging solutions have a decisive competitive advantage and an equally powerful retention tool. Ben Lewis, Managing Director, Head of Sales As Managing Director and Global Head of Sales for Chatham’s Financial Institutions practice, Ben Lewis works with depositories of all sizes, helping them manage interest rate risk using hedging strategies. Chris Ebbs, Director, SwapDesk As a member of Chatham’s Financial Institutions advisory practice, Chris Ebbs works to assist bankers in their origination efforts using interest rate derivatives. Chris previously launched the Trading and Hedging Desk for a fintech startup in Denver, Colorado. Is Your Loan Pricing Strategy Protecting the Bank and the Relationship? By Ben Lewis, Managing Director and Chris Ebbs, Director, Chatham Financial Colorado Banker 18
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