JANUARY/FEBRUARY 2025 A PUBLICATION OF THE INDEPENDENT COMMUNITY BANKERS OF COLORADO Striking Balance in 2025 The Future of Community Banking Beyond Our Line of Sight, But Not Our Imagination BUILDING ON THE PAST, BANKING ON THE FUTURE.
©2025 The Independent Community Bankers of Colorado (ICBC) | The newsLINK Group LLC. All rights reserved. Independent Report is published six times per year by The newsLINK Group LLC for ICBC and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of ICBC, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. Independent Report is a collective work, and as such, some articles are submitted by authors who are independent of ICBC. While a first-print policy is encouraged, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. 6732 W. Coal Mine Ave., #640 • Littleton, CO 80123 • (303) 832-2000 2024-2025 OFFICERS ICBC CHAIRMAN Tom Ogaard President & CEO Native American Bank ICBC PRESIDENT Mike Hurst President Del Norte Bank ICBC PRESIDENT-ELECT Joe Martinez President & CLO San Luis Valley Federal Bank ICBC ICBA STATE DIRECTOR PJ Wharton President & CEO Yampa Valley Bank ICBC STAFF EXECUTIVE DIRECTOR Mike Van Norstrand mvannorstrand@icbcolo.org ADMINISTRATION DIRECTOR/ TREASURER Maelynn Lewis mlewis@icbcolo.org LEGAL COUNSEL Christian Otteson Partner Otteson Shapiro LLP LOBBYIST Mary Marchun Founding Partner The Capstone Group 2024-2025 DISTRICT DIRECTORS DISTRICT A Dan Ebert, Vice President, Evergreen National Bank Mark Sheeley, President/CEO, RNB State Bank/Front Range State Bank Robert Holt, Senior Vice President, North Valley Bank Jeff Walker, Senior Vice President & CCO, Redstone Bank DISTRICT B Mark Brase, President, Points West Community Bank Tim Croissant, Market President, Bank of Colorado Travis Goeglein, Senior Vice President, First FarmBank Scott Applegate, President and CEO, Bank of Estes Park DISTRICT C Ben Johnson, President, First National Bank Colorado Sean Lening, President, GN Bank Miles McClure, CEO, Rocky Mountain Bank & Trust Kathryn Perry, Senior Vice President, Park State Bank & Trust DISTRICT D Wade Gebhardt, Corporate President, Mountain Valley Bank John Stelzriede, Market President — Colorado River Region, Alpine Bank Jeris Romeo, Community Bank President — Avon & Eagle, ANB Bank Chad Zummach, Executive Vice President, Gunnison Bank & Trust ICBC ADVISORY BOARD MEMBERS Eric Budreau Partner Eide Bailly Jim Hall Managing Director Bond & Specialty Insurance — Financial Institutions, Travelers Bill Mitchell President & CEO Bankers’ Bank of the West Christian Otteson Partner Otteson Shapiro LLP 2 | INDEPENDENT REPORT
22 CONTENTS 12 16 CONNECT Email us mlewis@icbcolo.org Like us on Facebook ICBColo Connect with us ICBColo Follow us on X ICBColo Give us a call (303) 832-2000 Follow us on Instagram ICBColo 2025 PUB. 4 ISSUE 1 4 Support the ICBC’s Associate Members! 6 ICBC Preferred Providers FLOURISH 7 Striking Balance in 2025 By Rebeca Romero Rainey, President and CEO, ICBA FROM THE TOP 8 Why Advocacy Should Be a Top Priority in 2025 By Lucas White, Chairman of ICBA, President of The Foundation Trust Company 9 ICBA LIVE 10 Tapping Into SBA Refinancing Lower Rates, More Opportunities By Jessica Stutz, Lending Director, B:Side Capital, ICBC Associate Member 12 Too Many Vendors? Consolidate to One Trusted Partner! By Cook Solutions Group, ICBC Associate Member 16 How Community Banks Can Attract Millennials and Gen Z By Gerald Leveritt, Director of Enterprise Solutions, FileInvite, ICBC Associate Member 20 Yield Enhancer or Gimmick? Callable Securities Present Risk and Reward By Jim Reber, President and CEO, ICBA Securities, ICBC Preferred Provider and ICBC Associate Member 22 The Future of Community Banking Beyond Our Line of Sight, But Not Our Imagination By Michael L. Stevens, President & CEO, Graduate School of Banking at Colorado, ICBC Associate Member 26 2025 Marketing Trends By Jennie Brady, Director of Creative Solutions, Spry Inc., ICBC Associate Member 28 Fraud and Financial Crime By BHG Financial Institutional Network, ICBC Preferred Provider and ICBC Gold Associate Member 30 Setting the Stage for Success in 2025 A Call to Community Bankers By Connie West, Gallup Certified Strengths Coach, Regional Vice President, The James Paul Group, ICBC Associate Member INDEPENDENT REPORT | 3
SUPPORT THE ICBC’S ASSOCIATE MEMBERS! ACCOUNTING | COMPLIANCE CroweLLP. . . . . . . . . . . . . . . . . . ........... (303) 831‑5023 EideBaillyLLP..........................(303)770‑5700 Fortner Bayens PC . . . . . . . . . . . . . . . ......... (303) 296‑6033 Forvis Mazars . . . . . . . . . . . . . . . . . .........(303) 861‑4545 MossAdamsLLP.........................(503)471‑1277 Plante Moran** . . . . . . . . . . . . . . . . ........ (303) 740‑9400 ADVERTISING | EQUIPMENT | PRINTING | SUPPLIES Kristopher James Company . . . . . . . . . . . . . . . . . (800) 274‑9212 Spry.. .. .. .. .. .. .. .. .. .. ............. (303) 323‑4341 CAREER ADVANCEMENT Graduate School of Banking at Colorado . . . . . . . . (800) 272‑5138 CONSULTING | HUMAN RESOURCES AND MANAGEMENT | MARKETING | STRATEGIC PLANNING BankStrategiesLLC . . . . . . . . . . . . . . . . . . . . . . (303)291‑3700 (A Bankers’ Bank of the West Bancorp Inc. Subsidiary) Blendification. . . . . . . . . . . . . . . . . . . . . . . . . . .(970)274‑1723 CD Construction Consulting . . . . . . . . . . . ....... (720) 701‑2122 Expert Business Development . . . . . . . . . . . ...... (610) 771‑2121 *ICBA CRA Solutions .. .. .. .. .. .. ......... (877) 232-0859 *ICI Consulting Inc. .. .. .. .. .. .. .. ......... (316) 201‑8590 TheJamesPaulGroup . . . . . . . . . . . . . . . . . . . . (877)584‑6468 MJCPartners . . . . . . . . . . . . . . . . . .......... (213) 278‑0429 The NaviTrust Group . . . . . . . . . . . . . . ........ (801) 438-1842 Piper Sandler & Co. . . . . . . . . . . . . . . . ........ (415) 978‑5057 *S&P Global .. .. .. .. .. .. .. .. ........... (434) 951‑6948 CORRESPONDENT BANKING SERVICE *Bankers’ Bank of the West .. .. .. .. .. ....... (303) 291‑3700 BellBank.. .. .. .. .. .. .. .. .. ............. (701) 371‑3355 Citizens Bank Farmington . . . . . . . . . . . . ....... (505) 599‑0100 INTRUSTBank . . . . . . . . . . . . . . . . . ......... (800) 732‑5120 PCBB.. .. .. .. .. .. .. .. .. .. ............ (888) 399‑1930 TIB — The Independent BankersBank . . . . . . . . . . . (972) 650‑6000 CYBERSECURITY | IT CONSULTING AND SERVICES | COMPUTER PRODUCTS Alogent.............................. (719)583‑8004 Botdoc.. .. .. .. .. .. .. .. .. .. ........... (719) 960-4475 CivITas Bank Solutions . . . . . . . . . . . . . . ....... (303) 291‑3700 (A Bankers’ Bank of the West Bancorp Inc. Subsidiary) Cook Solutions Group . . . . . . . . . . . . . ........ (503) 260‑8562 Federal Protection Inc. . . . . . . . . . . . . . ....... (800) 299‑5400 FileInvite. . . . . . . . . . . . . . . . . . . ............ (719) 771-3586 *SBS CyberSecurity .. .. .. .. .. .. .. ........ (785) 594‑0503 DATA PROCESSING | EFT | ATM | CARD PROCESSING | MERCHANT SERVICES *Bankers’ Bank of the West .. .. .. .. .. ....... (303) 291‑3700 *BluePoint ATM Solutions LLC .. .. .. .. ........ (540) 335‑2848 Computer Services Inc. . . . . . . . . . . . . . . . . . . . . . (970) 212‑7104 FPSGOLD.. .. .. .. .. .. .. .. .. ............ (801) 201‑2525 *IBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (512) 606‑1100 *ICBA Bancard / TCM Bank .. .. .. .. .. ....... (800) 242‑4770 Jack Henry & Associates . . . . . . . . . . . . . ....... (417) 235‑6652 SHAZAM.. .. .. .. .. .. .. .. .. ............ (515) 288‑2828 VisaInc... .. .. .. .. .. .. .. .. ............ (415) 238‑3682 INSURANCE | BENEFIT SERVICES Bank Compensation Consulting . . . . . . . . . . . . . . (303) 482‑1844 First Insurance Services Inc. . . . . . . . . . . . . ...... (719) 456‑2303 *ICBA Reinsurance . . . . . . . . . . . . . . . . . . . . . . . (888) 790‑6615 NFP Executive Benefits Company . . . . . . . . . ..... (469) 252‑1037 *Travelers .. .. .. .. .. .. .. .. .. .......... (720) 200‑8416 Unitas Financial Services . . . . . . . . . . . . . . . . . . . (800) 461‑9224 INVESTMENTS | FUNDING AND LENDING PARTNERS B:SideCapital.......................... (303)657‑0010 TheBakerGroup. . . . . . . . . . . . . . . . . . . . . . . . (405)415‑7200 BancAlliance . . . . . . . . . . . . . . . . . . ......... (301) 232‑5423 *BHG Financial Institutional Network*** .. .. .... (954) 263‑6399 Citizens Bank Farmington . . . . . . . . . . . . .......(505) 599‑0145 Colorado Enterprise Fund . . . . . . . . . . . . ...... (303) 860‑0242 Colorado Housing and Finance Authority . . . . . . . . (303) 297‑7329 D.A.Davidson..........................(303)764‑6000 FHLBank Topeka — Denver Office . . . . . . . . . ..... (720) 212‑9873 First Bankers’ Banc Securities Inc. (FBBS) . . . . . . .... (720) 709‑7613 Gill Capital Partners . . . . . . . . . . . . . . . . . . . . . . (303) 296‑6260 Holman Capital . . . . . . . . . . . . . . . . ......... (949) 981‑0237 *ICBA Mortgage .. .. .. .. .. .. .. .......... (800) 253‑5356 *ICBA Securities . . . . . . . . . . . . . . . . . . . . . . . . (800) 422‑6442 IntraFi Network . . . . . . . . . . . . . . . . .......... (303) 706‑9265 Northland Securities Inc. . . . . . . . . . . . . . . . . . . . (303) 801‑3380 Olsen Palmer LLC . . . . . . . . . . . . . . . ......... (202) 803‑2620 Performance Trust Capital Partners . . . . . . . . ..... (312) 521-1000 Preferred Lending Partners . . . . . . . . . . . ....... (303) 861-4100 West Gate Bank Mortgage . . . . . . . . . . . . ...... (402) 434‑4116 LEGAL SERVICES Arnold&Porter.........................(303)863‑1000 Coan, Payton & Payne LLP . . . . . . . . . . . ....... (303) 861‑8888 Godfrey Law Group LLC . . . . . . . . . . . . ........ (303) 802‑6336 Hoffman Nies Dave & Meyer LLP** . . . . . . . . ..... (303) 860‑7140 León Cosgrove Jiménez LLP . . . . . . . . . . . ....... (720) 689‑7749 LewisRocaLLP**. . . . . . . . . . . . . . . . . . . . . . . . (303)623‑9000 Markus Williams Young & Hunsicker LLC. . . . . . . . (303) 830‑0800 Otteson Shapiro LLP** (ICBC Counsel) . . . . . . .... (720) 488‑0220 Spencer Fane LLP . . . . . . . . . . . . . . . ........ (303) 839‑3838 StinsonLLP . . . . . . . . . . . . . . . . . .......... (303) 376‑8400 LOAN REVIEW SERVICES EideBaillyLLP..........................(303)770‑5700 Fortner Bayens PC . . . . . . . . . . . . . . . ......... (303) 296‑6033 ICBC LOBBYING AND PUBLIC RELATIONS The Capstone Group (ICBC Lobbyists) . . . . . . . . . . (303) 860‑0555 *ICBC Preferred Providers **Silver Associate Member ***Gold Associate Member 4 | INDEPENDENT REPORT
| Bank Stock Loans | Loan Participations | ATM/Debit | International Services | | Cash Management | Securities Safekeeping | Merchant Services | 800-873-4722 | NE: 888-467-5544 | www.bbwest.com Where community banks bank Est. 1980 – 40+ years of service to community banks “As a service provider exclusively focused on community banks, Bankers’ Bank of the West is here to help strengthen our clients and the communities they serve.” Across the western states and Great Plains, we’re the place where community banks bank. That’s because we provide the services, technology, and expertise to help you extend your resources, deliver for your customers, and stand out in your market. 5 reasons to partner with us BBW - President and CEO - Bill Mitchell You can unlock efficiencies and cost savings. We can provide sophisticated solutions and economies of scale because we’re powered by hundreds of community banks across our region. Our priorities are aligned with yours. You can expand your capabilities. We’ll never compete for your customers. You can count on prompt, reliable service. • Independent loan review • Loan and credit administration consultation • Strategic planning facilitation • Management, staffing, & succession planning • Acquisition & expansion • BSA/AML compliance • Regulatory risk consultation President, Jim Swanson President, Anne Benigsen • Consulting • Phishing Tests • Vulnerability Management • Security Monitoring Cyber/information security, strategic planning, independent loan review, AND MORE. Consulting Services $ 8.6B assets under management $ 1.9B daily transaction value processed/settled Serving more than 60% of community banks across 7 states
ICBC PREFERRED PROVIDERS ICBC Preferred Providers are selected by bankers just like you, so give them special consideration when considering their proposals for your bank! To learn more about ICBC’s Preferred Providers, contact the ICBC at (303) 832-2000. Please note: ICBC endorses the listed companies but not all products offered by the company. Contact: Scott Wintenburg | swintenburg@bbwest.com | (303) 291-3700 or (800) 601-8630 Merchant services from Bankers’ Bank of the West help you grow customer relationships with mobile payments technology, competitive unbundled pricing, efficient approvals and startups, responsive support and training. Contact: Alexis Simons | simonsa@bhg-inc.com Creator of the largest community bank loan network in the country. ICBC members can access the BHG Loan Hub, a secure, state-of-art loan delivery platform and the number-one source for professional loans. Contact: Wade Zirkle | wade@bluepointatm.com | (720) 295-9142 Colorado-based BluePoint ATM Solutions provides cost-efficient, reliable, branch and off-site ATM equipment and managed services to community banks across the Mountain West. From equipment sales/leases to custom installations, CIT, and ongoing service and maintenance — BluePoint provides dependable, cost-efficient ATM programs tailored to meet your bank’s needs. Contact: Phil Layher | phil.layher@ibtapps.com | (512) 616-1188 IBT Apps® is an empowering core partner to community banks nationwide, offering end-to-end core and digital banking solutions that meet today’s customer demands. Their adaptable i2Suite banking system enables your bank to streamline operations, control costs and mitigate risks. Transform your bank with the power of one total solution. Contact: icba.org/solutions | (866) 843-4222 The ICBC supports and recommends the following products and services supplied by our national association, the ICBA: ICBA Bankcard and TCM Bank, N.A.; ICBA Compliance & Risk Management; ICBA Mortgage; ICBA Reinsurance; and ICBA Securities. Contact: Mike Hatch | mike.hatch@ici-consulting.com | (316) 201-8590 Since 1994, ICI Consulting has helped banks and credit unions to assess, cost justify, evaluate and convert core processing, digital banking, EFT, lending, document imaging, CRM and branch solutions. Contact: Brian Miller | brian.miller@sbscyber.com | (605) 923-8722 SBS is your cybersecurity partner. Our offerings include: TRACTM — Cybersecurity risk management software; Cyber-RISKTM — Automated FFIEC cybersecurity risk assessment software; IT and Network Security Audits; Consulting Services; Full Service Vendor Management; Role-Based Certifications; Vulnerability Assessments; Penetration Testing and more! Contact: Joe Valdez | joseph.valdez@spglobal.com | (213) 549-2281 S&P Global combines exclusive analysis and in-depth data in real time for the banking, financial services and insurance industries. From bank branch data and government assistance programs to executive compensation and league tables, S&P is the final word in business intelligence on financial institutions. Contact: Madeline Dickman | mdickman@travelers.com | (720) 200-8293 Offering a wide range of customized insurance protection, Travelers SelectOne+® for financial institutions is designed to respond to the most recent trends in banking. 6 | INDEPENDENT REPORT
The start of a new year brings with it opportunities, and as we enter 2025, we do so with an eye toward the potential that awaits. For years, we’ve been seeking balance across a number of areas, encouraging regulators and legislators to initiate more proportionate rulemaking, embracing innovation for our banks to become nimbler and more efficient, and engaging in education to expand our knowledge in today’s banking environment. This year, we’ll see results through focused strategy and hard work. LEADING WITH ADVOCACY Without a doubt, advocacy serves as the most critical piece of our mission in 2025. With a shift in control in Congress and the White House, our focus will be on regulatory relief and proportionate rulemaking. We want to amplify the impact of community banks at the local level and champion issues ranging from rethinking the de novo framework to seeking regulatory relief on Dodd-Frank Act sections 1071 and 1033 and beyond. Our messages this year center on both right-sizing regulation and demonstrating the community bank difference. We’re moving from a defensive position of responding to thousands of pages of new regulation to an offensive one where we can be proactive and speak to community-friendly and community bank-forward rulemaking. We have the opportunity to instigate a more balanced FLOURISH Striking Balance in 2025 WHERE I’LL BE THIS MONTH We will be hosting state association colleagues at our Innovation Center in Atlanta, and I’ll be making a trip to Minnesota to visit the ICBA team there. By Rebeca Romero Rainey, President and CEO, ICBA approach to regulation, supporting a vision that considers effects on consumers in the context of the ability to do business. This balanced approach is critical for industry viability moving forward. The moment is now to effect real change. But the reality is that there are a lot of pressing needs with policymakers as the year begins, so it’s our job to ensure that our issues are prioritized and our voices are heard. GROWING WITH INNOVATION AND EDUCATION Of course, while we are speaking up for the interests of our communities and our banks, we also need to continue growing as businesses, adapting to a changing industry. From new fintech innovations to a better understanding of the risk and compliance requirements of today’s environment, ICBA Innovation and ICBA Education stand ready to ensure you have the information you need to advance your business plans this year. It’s with that in mind that I encourage you to join us at ICBA LIVE, taking place March 11–14 in Nashville, Tennessee. There, you can explore what’s next on our advocacy agenda, how our innovation programs can support your bank, and what you and your team need to know to be the change you seek in 2025. This year is about recommitting to ICBA’s pillars of advocacy, innovation and education, and embracing the potential that awaits. I, for one, am feeling very optimistic. INDEPENDENT REPORT | 7
The start of the new year brings with it a fresh slate and a collective reset on priorities. As we develop annual objectives, we need to be mindful of what is transpiring within our banks, but also what is transforming the industry around us and how we can effect positive change. That’s why advocacy must be a priority this year. SETTING NATIONAL PRIORITIES ICBA is nonpartisan and has a long history of working with both sides of the aisle, and we have a new administration and elected officials who need to fully understand the community bank difference. Our voices need to be heard on a wide range of issues, including Section 1071 of the Dodd-Frank Act, the Secure and Fair Enforcement (SAFE) Banking Act, the Access to Credit for our Rural Economy (ACRE) Act and more. In addition, with the Tax Cuts and Jobs Act of 2017 set to expire at the end of 2025, it’s going to be a big year to discuss taxes — and with them, credit union disparities. The odds are in our favor: Following a significant election year, Congress is fired up to get new legislation on the table. This is our opportunity to drive home the importance of the high-tech, high-touch community banking model. It’s our chance to demonstrate how community banks prioritize a legislative and regulatory environment that keeps the banking system safe and sound, creates a FROM THE TOP MY TOP 3 In addition to remaining a vocal advocate for community banking, here are my three New Year’s resolutions for 2025: 1. Spend more time at home, in my bank and with my community. 2. Be more present with my kids. 3. Continue running for health. Why Advocacy Should Be a Top Priority in 2025 By Lucas White, Chairman of ICBA, President of The Foundation Trust Company level playing field in financial services and allows for the flexibility necessary to serve the distinct interests of communities across the nation. THE POWER OF THE COLLECTIVE But it takes the power of this entire community to amplify those messages and bring them to life. Members of Congress need to hear specific examples from their constituents about how community banks meet their districts’ needs. Members of Congress need more than platitudes and big-picture ideas; they need to understand how what we do every day makes a difference in their constituents’ lives and strengthens their communities. In short, they need to hear our stories. So, as you set your intentions for 2025, I hope that one of them is to attend ICBA’s Capital Summit (icba.org/capital-summit), slated for May 12-15 in Washington, D.C. Mark your calendars now to join your colleagues in raising your voice for community banking. This will be a pivotal year for us, where collectively, we will make a difference. Now’s the time to make sure advocating for community banks is among your top priorities. 8 | INDEPENDENT REPORT
RHYTHM. AMPLIFIED. Together, community bankers amplify the power and successes of our industry at the largest annual gathering of community bankers—ICBA LIVE 2025. Plug into a wide range of educational offerings to boost your knowledge and bring it back to your bank. Synchronize with fellow community bankers and industry experts on the latest industry trends and innovations. Celebrate the unique rhythm of our industry through energizing and inspiring general sessions and unparalleled networking events. Register today at icba.org/live March 11–14, 2025 Gaylord Opryland Resort & Convention Center NASHVILLE
Tapping Into SBA Refinancing Helping borrowers secure lower interest rates on their owner-occupied commercial real estate isn’t just good business — it’s a game-changer for their financial health and your lending portfolio. The SBA 504 refinance programs empower you to provide clients with long-term, fixed-rate solutions while generating new lending opportunities. It’s a win-win for everyone involved. Lower Rates, More Opportunities By Jessica Stutz, Lending Director B:Side Capital, ICBC Associate Member 10 | INDEPENDENT REPORT
WHAT IS THE SBA 504 REFINANCE PROGRAM? The SBA 504 refinance options are part of the U.S. Small Business Administration’s 504 loan program, designed to assist small businesses with fixed-rate financing for major fixed assets. The two refinance programs, 504 Refinance and 504 Refinance with Expansion, allow owners to refinance existing commercial real estate loans and realize improved cash flow as a result. Key Benefits 1. Low Interest Rates: The 504 program offers long-term fixed interest rates, typically lower than conventional loans. 2. Cash-Out Option: Borrowers can refinance eligible commercial real estate debt and get cash out for business expenses such as payroll and utilities, pay off a business line of credit or credit card, and refinance other eligible debts secured by the commercial property. 3. Extended Terms: With terms up to 25 years, monthly payments become more manageable, improving cash flow. 4. Loan-to-Value (LTV): The program allows up to 90% LTV for refinancing, helping businesses retain equity while reducing financial burdens. 5. Refinance Existing SBA Debt: The refinance options allow for the refinance of existing 504 or 7(a) debts under certain conditions. ELIGIBILITY CRITERIA The operating business does need to meet general SBA requirements. A few key requirements include ensuring it is a for-profit business located in the United States and meets SBA’s small business size standard. (The tangible net worth should not exceed $20 million and the two-year average net income should not exceed $6.5 million.) Also, each SBA 504 loan financing or refinancing commercial real estate must be 51% or more occupied by the borrowing operating business. In addition, there are some requirements specific to a 504 refinance project. Additional Refinance Requirements • At least 75% of the proceeds of the debts to be refinanced must have been used for 504 eligible purposes, such as purchasing or constructing owner-occupied commercial real estate. • 100% of the debt to be refinanced must have been for the benefit of the operating business, not any other affiliated business or individual. 504 REFINANCE This program provides a business with the opportunity to refinance existing commercial real estate debt meeting the 75% test, as well as cash out on some of the equity existing in the property. This can include refinancing existing SBA 504 or 7(a) debt as long as a lowered payment will be achieved. The total LTV can now go up to 90%, without any cap on the amount of cash out for eligible business expenses (EBE). The cash out for EBE can include funds for business operating expenses such as employee salaries, utilities and marketing expenses, as well as pay off existing business credit cards or lines of credit. A recent improvement is that the EBE can also include the payoff of debts secured by the commercial property, but used for business operating expenses and not meeting the 75% test. Key Points • Debt refinance with cash out, up to 90% LTV. • The operating business needs to have been operating and generating revenue for two or more years and project debt service coverage. • Commercial real estate debt being refinanced needs to be on permanent terms and in place for at least six months. • Cash out can’t fund any equipment purchase, property renovation/construction or fund any business acquisition. It’s limited to funding business-operating expenses or debts used for business-operating expenses. • Generally, on-time payments for debts proposed for refinancing 504. 504 REFINANCE WITH EXPANSION This program provides a business the opportunity to refinance existing commercial real estate debt meeting the 75% test, and utilize the existing equity to help fund a planned expansion. The total loan to value can go up to 90% but may be lower if the business has less than two years of operating history or the property has limited use. The refinance amount is capped at the amount equal to the expansion dollars. For example, if a business needs $1 million to fund an addition to its existing commercial property, it can refinance up to $1 million in existing commercial real estate debt. A lowered payment on the refinanced portion must be achieved as a result of the refinance if the existing debt isn’t structured with a demand or balloon feature. Key Points • Expansion funding with the ability to refinance existing debt, up to 90% LTV. • There isn’t any minimum length of time the operating business has generated revenue, but it needs to demonstrate the ability to expand and project debt service coverage. • No cash-out option available. • Debts proposed for refinancing must have 12 months or more of on-time payments. WHY BANKERS SHOULD LEVERAGE THE SBA 504 REFINANCE PROGRAM This program isn’t just a refinancing tool — it’s an opportunity to strengthen client relationships and grow your portfolio: • Deliver Tangible Value: Help your borrowers secure lower rates, reduce monthly payments and unlock cash flow for reinvestment, demonstrating your commitment to their success. • Enhance Client Retention: Providing solutions like SBA 504 refinancing sets you apart as a trusted advisor, fostering long-term loyalty. • Boost Portfolio Performance: Offering fixed-rate, long-term financing benefits not only your borrowers, but also your institution’s stability and growth. The SBA 504 refinance program is a powerful tool for small businesses to reduce costs and fuel growth. If you’re seeking a pathway to financial stability and expansion, consider exploring this option with a Certified Development Company. INDEPENDENT REPORT | 11
By Cook Solutions Group ICBC Associate Member Discover how too many vendors impact your financial institution or business. Boost efficiency by partnering with a single trusted vendor for streamlined risk management and simplified processes. Here are three main reasons to consolidate to one secure service partner: 1. Efficiency: One quality vendor for everything means one phone number, one email address and one secure online interface to manage all your equipment and services. 2. Security Integration: When your security can integrate with your ATM Fleet, the solutions are endless. 3. Savings: Bundling typically saves time and money, which can translate to thousands of dollars over time. HOW MANY VENDORS DO YOU MANAGE, AND DOES YOUR BANK FEEL THE PAIN? Having too many vendors impacts profits and budgets and prevents efficiency. Plus, managing an overload of different vendors can be exhausting, labor intensive and a time suck. Having too many vendors can lead to several operational, financial and strategic challenges for an organization, including: 1. Increased Complexity: Managing multiple vendors means coordinating with various contracts, performance metrics and communication channels. This can complicate procurement, logistics and operations, leading to inefficiencies. 2. Higher Administrative Costs: Each vendor relationship requires time and resources for management, including contract negotiation, invoicing and vendor performance tracking. More vendors means more resources are needed to handle these processes, which can drive up administrative costs. 3. Fragmented Communication: With many vendors involved, there’s a greater risk of communication breakdowns, especially if information is siloed across different vendors. This can result in delays, misunderstandings and inconsistent service quality. 4. Security and Compliance Risks: Every vendor relationship can potentially expose the organization to security and compliance risks. Each additional vendor increases the number of access points to sensitive data and operations, heightening the risk of breaches or regulatory noncompliance. 5. Loss of Bargaining Power: With spending spread across many vendors, the organization may lose the leverage that comes from consolidating purchases with fewer providers. This can lead to less favorable pricing and terms. 6. Reduced Strategic Focus: A multitude of vendors may distract from the organization’s core goals. Decision-makers might spend more time managing vendors rather than focusing on strategic growth initiatives or customer needs. 7. Quality Control Challenges: Ensuring consistent quality becomes harder with more vendors, as they may vary in standards, reliability and expertise. Inconsistent quality can lead to customer dissatisfaction or disruptions in service delivery. Organizations often benefit from finding an optimal balance of vendors and offerings. This approach allows for better control, streamlined processes and often more strategic partnerships. WHY SHOULD YOUR BANK CONSIDER CONSOLIDATING TO ONE VENDOR? Using a single vendor can bring several key advantages to an organization, especially in terms of simplicity, cost-effectiveness and strategic alignment. Here are some of the main benefits: 1. Simplified Management: Working with one vendor streamlines communication, billing, performance tracking and contract management. This reduces administrative workload, saving time and resources. 2. Cost Savings: Concentrating purchases with one vendor often enables bulk discounts, volume-based pricing or loyalty incentives. Additionally, it reduces hidden costs related to managing multiple vendor relationships, like contract negotiations and vendor onboarding. 3. Enhanced Vendor Relationship: A single-vendor relationship allows for deeper collaboration and stronger partnership-building. The vendor may be more invested in understanding and meeting your organization’s specific needs, leading to more tailored services and support. 4. Improved Quality and Consistency: With one vendor, there’s more consistency in product or service quality, as standards don’t vary across multiple providers. This reduces the likelihood of disruptions and helps maintain a consistent brand experience for customers. Too Many Vendors? Consolidate to One Trusted Partner! 12 | INDEPENDENT REPORT
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5. Better Accountability: When one vendor is responsible for delivering services or products, it’s easier to hold them accountable. There’s no ambiguity about who’s responsible for an issue so that problems can be resolved more efficiently. 6. Streamlined Technology and Integration: Many vendors offer integrated solutions that work seamlessly within their ecosystem, eliminating compatibility issues and simplifying troubleshooting. This is particularly valuable in areas like software, where different systems need to communicate effectively. 7. Increased Agility: Decision-making and issue resolution are often faster when working with one vendor, as there are fewer dependencies and less complexity. This agility can be crucial in industries that require quick adaptations or responses to market changes. 8. Stronger Data Security and Compliance: Managing data security, privacy and compliance requirements is often simpler with one trusted vendor, reducing the risk of breaches associated with multiple access points or varying compliance practices. However, make sure the single vendor is a trusted partner. Balancing these factors carefully can maximize the benefits of single-vendor relationships while mitigating potential downsides. Vendor due diligence is extremely important, especially with today’s cybersecurity risk landscape. Many vendors are not vetted correctly, don’t comply with federal regulations and do not hold the proper licenses or security certifications. Have you performed vendor due diligence lately? The following are three primary areas to consider when performing vendor due diligence: 1. Trusted Partner Values That Match Your Institution’s • Deep understanding of the financial institution’s culture and expectations. • Provide training in technology trends and product research and development. • Knowledge of financial institution’s compliance requirements, risk landscape and industry standards. • Quarterly service level reporting and preventative maintenance tracking. • Effective management of subcontractors. • Provide equipment tracking and budgeting support and five-year technology road-map development. 2. Risk Compliance and Legal Certifications Are a Non-Negotiable • Soc 2 Type 2 certification reports are an industry standard. • Proof of insurance and liability, including a minimum of $5 million. • Laptops and devices are audited, secured and encrypted. • Employee and subcontractor background checks and drug testing. • Business continuity plan (i.e. effective work-from-home policies and pandemic protection strategies). • Industry experts with professional certifications on staff. • Compliance with all federal, state and technical industry certification requirements. 3. Innovative Automation and Secure Remote Technologies to Future-Proof Efficiency • Multiple non-proprietary solutions representing different brands. • Open architecture with integration capability and encryption. • Solution targeting customer pain points. • Platform creep reduction strategies (reducing the number of at-risk platforms/systems). • Performance and efficiency improvements. • FTE efficiency or reduction through technology or managed services. • Technology migration and conversion experts. • Guide the implementation of AI and analytics. If you find yourself with too many vendors even after performing vendor due diligence, one way to ensure you are receiving superior service but still provide an exit strategy is negotiating an all-inclusive service agreement with a 30-day out no penalty clause. This can provide the firm SLAs your institution requires for service and the flexibility to switch providers if necessary. Essentially, this is like having no contracts but still having an SLA to lay everything out. This also requires the vendor to earn your trust daily by providing extraordinary service both physically onsite and remotely, using managed services and providing a seamless, secure online interface. Vendor due diligence is extremely important, especially with today’s cybersecurity risk landscape. 14 | INDEPENDENT REPORT
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How Community Banks Can Attract Millennials and Gen Z By Gerald Leveritt, Director of Enterprise Solutions FileInvite, ICBC Associate Member 16 | INDEPENDENT REPORT
Over the last two decades, a trend of mergers and evolving customer preferences have radically altered the community banking sector in the U.S. While regional banks have expanded by 50% over the past two decades, the number of community banks has halved, declining from nearly 7,500 in 2004 to roughly 4,000 in 2023. To achieve long-term growth, community banks need to focus on attracting millennials and Gen Z, the two fastest-growing demographics with significant economic influence. Their combined spending power is estimated at $360 billion and will continue to rise as more Gen Zers enter the workforce. However, community banks face tough competition from digital-first banks that appeal to these younger consumers through convenient mobile access. In 2023, nearly half of all new checking accounts were opened with larger, digital-focused competitors. By leveraging personalization in relationships and INDEPENDENT REPORT | 17
To achieve long-term growth, community banks need to focus on attracting millennials and Gen Z, the two fastest‑growing demographics with significant economic influence. focusing on digital innovation, community banks can attract and retain younger customers who increasingly value both digital convenience and personalized service. UNDERSTANDING THE CHALLENGE Understanding the challenge of attracting younger consumers to traditional banks requires recognizing their preference for digital-first approaches. Millennials and Gen Zers increasingly gravitate toward digital banking solutions, expecting convenient, seamless interactions and instant access to a variety of financial tools. This trend has led many banks to enhance their mobile banking capabilities, with many now integrating features like credit monitoring and budgeting within their apps. Banks embracing advanced personalization strategies are seeing positive results. For instance, 77% of institutions personalizing services through data analytics and machine learning have achieved positive customer growth and retention. This approach both spurs customer acquisition among millennials and Gen Zers and also boosts cross-selling, as these customers are more likely to engage with services tailored to their specific financial needs. Adapting to these consumer preferences is critical for banks aiming to remain competitive. By prioritizing personalized, digital-first experiences, community banks can better capture the attention and loyalty of younger consumers who expect more from their banking interactions than just on-site transactions. 18 | INDEPENDENT REPORT
THE IMPORTANCE OF TECHNOLOGY To grow their customer bases in this evolving environment, community banks must prioritize modernizing their branches and using technology to enhance customer service. Digital tools enable banks to offer personalized experiences and relationships at scales not previously possible before. Advanced tools, like AI and data analytics, can tailor services to individual preferences, making every interaction meaningful. By integrating these technologies, community banks can build personal connections to ensure each customer receives timely, relevant support across all channels — whether online, on mobile or in-branch. COMMUNITY BANKS AND THE OMNICHANNEL EXPERIENCE An omnichannel experience in banking ensures that customers can interact seamlessly with their bank across multiple platforms, including: • Mobile apps • Websites • Social media • In-person branches For younger consumers — particularly millennials and Gen Zers — the omnichannel experience is a baseline expectation. These tech-savvy generations often prefer mobile and digital interactions but still value the option to speak to a live representative when necessary. THE ROLE OF APIs Behind tech-driven personalization and omnichannel user experiences is a simple but powerful bit of programming technology — application programming interfaces (APIs). APIs work by allowing different software systems to communicate and share data through a set of predefined rules, thereby enabling seamless data exchange and integration between different platforms. Here’s how it works in banking: 1. Personalization: APIs enable banks to access and leverage customer data from multiple sources, including mobile apps, CRM systems and external fintech partners. Through APIs, banks can integrate with services like credit scoring, financial advice and spending analysis platforms to create a tailored experience for each customer. For instance, an API could allow a bank’s app to pull transaction data in real time, analyze spending patterns and then offer personalized budgeting advice, or recommend products that correspond with the customer’s financial behavior. 2. Efficiency: APIs streamline processes by connecting disparate systems. For example, APIs can automate loan processing by integrating with external credit bureaus and internal risk management systems. This reduces the time required for credit checks and decision-making, as APIs enable data to flow automatically between systems. 3. Open Banking and API-Driven Ecosystems: In the practice of open banking, APIs allow third-party developers to build applications that communicate with a bank’s services. For instance, through open APIs, banks can securely share customer account information with approved fintech apps, without actually exposing any sensitive customer data to human users. GROW YOUR BANK’S CUSTOMER BASE WITH FILEINVITE FileInvite helps community banks modernize, stay competitive and meet customer demands, all within a manageable budget. Equipped with tools to attract and retain millennials and Gen Zers, FileInvite enhances satisfaction and simplifies compliance. The following are a few tools that make FileInvite a valuable resource: 1. Automated Document Requests: FileInvite saves time by automating document requests and reminders, allowing staff to focus on customer service and relationship building. 2. Secure Client Portal: A secure, user-friendly portal lets customers upload and manage documents easily from any device, enhancing their overall experience. 3. Compliance and Audit Trails: FileInvite ensures compliance by generating detailed audit trails, simplifying regulatory reviews and helping banks meet industry standards. 4. Seamless Integration with APIs: FileInvite’s robust API enables seamless integration with existing banking systems, CRMs and other platforms, streamlining workflows and ensuring secure, efficient data exchange across your organization. INDEPENDENT REPORT | 19
Yield Enhancer or Gimmick? Callable Securities Present Risk and Reward By Jim Reber, President and CEO ICBA Securities, ICBC Preferred Provider and ICBC Associate Member
Most representatives of the broker-dealer industry have been suggesting to their customers, especially community banks, that their collection of bonds could be situated to perform pretty well in 2025. You can be forgiven for rolling your eyes if you’ve heard this. And I get it: Persistently stubborn inflation forced the Federal Reserve to hike rates, and now to keep them elevated, for the foreseeable future. This, of course, has kept the market values of your portfolio depressed for what is going on three years now. While it’s true that portfolio yields are now at a multiyear high, they haven’t kept pace with your cost of funds. Some banks have a negative spread between their investments and their deposits, and that does not help net interest margins. However, there could be an unrecognized upside to your bond portfolio if you own certain securities — namely, callable bonds at a discount. THE TALK OF THE TOWN The good news is that most banks now own at least some bonds at prices below par. That was not the case prior to the Fed boarding the good ship Rate Hike in early 2022. At that point, portfolios had a dreadful makeup: low yields (well under 2% tax equivalent), long durations (well over four years) and high book prices (nearly 103.00). Thanks to the prolonged period of high rates, yields are now approaching 3%, and book prices are near par (100.00). It’s also worth noting that most bonds owned by banks have embedded call options. This gives the issuers — or borrowers — the right to pay the debt back early if they so choose. Somewhere around 80% of all the bonds in all the community bank portfolios have some kind of call features. While that sounds enormous or even egregious, consider that virtually all loans are also redeemable at the borrowers’ pleasure. That’s why management of call risk is a major focus for asset/liability committees. THE RUNDOWN This may be painfully obvious, but we’re going to review how a bond that’s redeemable early, when purchased at a price below par, has some latent upside. Although rates pretty much ran in place in 2024, there are plenty of seasoned bonds issued in 2020-21 still available at deep discounts. Two of the most common varieties are agencies and mortgage-backed securities (MBS). Agencies are callable in full, so they’re easier to analyze. If an investor buys a bond at say, 97 cents on the dollar, the worst case is for it to not get called. If it ever does, the discount price adds to the yield to the call date, and the investor reaps an income windfall. One other item to note: The worst case is still better than the yield to maturity on a non-callable “bullet” bond. MBS are similar but not identical. The principal on a mortgage bond is returned to the investor in a series of monthly payments. Investors receive a pro-rata share of all the principal repaid and prepaid, from all the loans in an MBS pool. If a security is purchased at the 97.00 price mentioned above, and some homeowners decide to cash in their chips early, the bank receives its share at 100.00, and that, too, is a yield enhancement. Unlike an agency, over time some mortgages will prepay early regardless of current market rates, as certain life events occur in any rate environment. WORTH IT? Investors are guaranteed of uncertainties regarding cash flows in a callable-heavy portfolio. It requires the manager to constantly review the upcoming call dates, as well as variables such as current versus seasoned coupons. It’s worth asking: Are callable bonds worth the trouble? I believe the investors have spoken, and their answer is “yes.” There are times when non-callable portfolios outperform those with lots of optionality, namely in falling rate scenarios. That’s why high performing portfolios in 2025 have large doses of the ultimate non-callable bonds, those being treasury notes. But in rising rate environments, callables are the winner. Here’s some free advice for those shopping for callable agencies: The yield give-up for buying a bond that’s callable one time only (“European”) versus periodically (“Bermudan” or “American”) is quite modest; in many cases less than 10 basis points (0.10%) to maturity. Add to that the current opportunity for a head start by insisting on deeply discounted bonds that were launched in the 2020-21 era, and you’ve got built-in upside. That sounds to your correspondent like a yield enhancer — and most assuredly not a gimmick. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. While it’s true that portfolio yields are now at a multiyear high, they haven’t kept pace with your cost of funds. JANUARY ECONOMIC WEBCAST ICBA Securities and its exclusive broker, Stifel, kick off their 2025 webcast calendar with the quarterly Economic Insight Live on Jan. 30, at 1 p.m. Eastern. Stifel Chief Economist Lindsey Piegza, Ph.D., will present. Up to one hour of CPE is offered. For more information and to register, contact your Stifel rep. INDEPENDENT REPORT | 21
The Future of Community Banking 22 | INDEPENDENT REPORT
Answering the question about the future of community banking has almost become a rhetorical exercise, as there are many variables but no clear answer. There are, however, several long-term trends that have been impacting this industry from which we can draw from in our attempt: • We have a dynamic economy but are operating in inflationary and rising-interest rate environments we have not experienced in over a decade. There are global issues that flow through our economy in positive and negative ways. • Technology has been changing financial services and consumer behavior for decades. This has only accelerated, increasing opportunities, altering risk profiles and changing the competitive landscape. • Banking is heavily regulated with mounting expectations and requirements. Efforts at regulatory relief have paled in comparison to new requirements and enhanced regulatory scrutiny. • A societal shift in attitudes about “work” is challenging a relationship business model and the idea of the bank as a local destination. Community banks pre-date the founding of the United States. As banks evolved to meet the needs of a changing nation, they demonstrated their resiliency and criticality to the economy. The industry has shrunk, but 4,500 is still a significant number of banks By Michael L. Stevens, President & CEO Graduate School of Banking at Colorado, ICBC Associate Member Beyond Our Line of Sight, But Not Our Imagination INDEPENDENT REPORT | 23
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