MARCH/APRIL 2025 A PUBLICATION OF THE INDEPENDENT COMMUNITY BANKERS OF COLORADO AMPLIFYING the Community Bank Difference 10 Information Security Topics To Discuss in Your 2025 Review 7 Questions Banks Should Ask a Potential Fintech Partner 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
28 CONTENTS 12 24 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 2 4 Support the ICBC’s Associate Members! 6 ICBC Preferred Providers FLOURISH 7 Amplifying the Community Bank Difference By Rebeca Romero Rainey, President and CEO, ICBA FROM THE TOP 8 Translating Advocacy Into Action By Lucas White, Chairman of ICBA, President of The Foundation Trust Company 10 The Growing Need for Faster, Secure Payment Processing How Lockbox Services Are Transforming Cash Flow By Ashish Bhatia, VP Product Management, Alogent, ICBC Associate Member 12 Community Banks and ATM Ownership By Eric Hallman, Vice President — Bank Card, Bankers’ Bank of the West, ICBC Member and ICBC Preferred Provider 14 Concepts and Facts ChatGPT Gets It Mostly Right on Yield Curve Shapes By Jim Reber, President and CEO, ICBA Securities,ICBC Associate Member and ICBC Preferred Provider 16 Save the Date! 52nd Annual Convention 17 Q4 2024 Compliance Updates for Financial Institutions By Troy Snyder, Brad Birkholz, Peyton Lydigsen, Andrea Pech and Shawn McGuffin, Plante Moran, ICBC Silver Associate Member 19 ICBA Capital Summit May 12-15, 2005 | Washington, D.C. 20 10 Information Security Topics To Discuss in Your 2025 Review By Christy Thomas, IT Audit Manager, SBS CyberSecurity, ICBC Associate Member and ICBC Preferred Provider 23 How Employee Development Can Help Community Banks Grow Deposits Deposits Through Development By Connie West, Gallup Certified Strengths Coach, Regional Vice President, The James Paul Group, ICBC Associate Member 24 7 Questions Banks Should Ask a Potential Fintech Partner By BHG Financial Institutional Network, ICBC Gold Associate Member and ICBC Preferred Provider 27 The Benefits of Having an Online Company Store for Your Employees By Jennie Brady, Director of Creative Solutions, Spry Inc., ICBC Associate Member 28 Five Ways To Navigate Profitability Challenges By Matt Helsing, SVP & Northwest Regional Manager, PCBB, ICBC Associate Member 30 Strategies for Managing Liquidity in Today’s Rate Environment By H.D. Barkett, Senior Managing Director, Treasury Desk, IntraFi, 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 Apps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (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 USDA Rural Development . . . . . . . . . . . . ....... (720) 544-2916 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 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 Womble Bond Dickinson** . . . . . . . . . . . ...... (303) 623‑9000 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
FLOURISH Amplifying the Community Bank Difference By Rebeca Romero Rainey, President and CEO, ICBA ICBA’s 2025 Community Bank CEO Outlook Survey revealed that 77% of community bank executives believe their greatest business opportunity this year will be differentiating their community bank from other financial services firms. Demonstrating our unique value proposition is a growing priority for two key reasons. The first reason is today’s competitive landscape. We are living in an environment where everyone wants to be a bank, but they aren’t operating by the same rules, which is driving a need to differentiate what we do and who we are as community bankers. It’s our job to help our customers recognize the community bank difference, both to strengthen our relationships with them and protect them from potential pitfalls with other providers. The second reason is the growing demand for community connection. There’s a rising awareness of “bank local” and what that means, but we must continue emphasizing the message that we are different from the nonbank providers that are calling themselves banks, credit unions that are tax-advantaged, and megabanks that treat their customers like numbers. We need to reiterate the positive impact we have on our customers and communities. We must both acknowledge competitive headwinds and know that we have tailwinds to drive us forward when it comes to what we do at a local level. The good we do for our communities can’t be overstated. But it’s not just our customers and potential customers we need to reach with this messaging. Rulemakers and regulation writers must understand our uniqueness. They need to know that we offer a completely different risk paradigm, keep capital in our communities (their districts) and drive the local economy — and that requires our voices to tell those stories. Storytelling, marketing, differentiation: Conceptually, they all make sense, but with each comes a question of, “Now what?” The answer falls in how we apply our stories to cut through the noise of today’s financial services landscape and resonate with our audiences. That’s why ICBA has launched our ICBA Marketing Resource Center (icba.org/mrc). From search engine optimization tips and ready-to-go segments to produced materials that can be customized for your institution, the resources we’ve provided not only offer information on marketing concepts but deliver the tools to highlight what’s unique about our industry and your bank. And the work continues: We are committed to making this center evergreen, providing new resources as opportunities arise. Our unique value proposition makes us second to none, and with our collective efforts, we will drive home that message and the community bank difference. INDEPENDENT REPORT | 7
While advocacy has always been a core ICBA pillar, the massive number of new regulations we have faced over the past year serves as a stark reminder of the importance of community bankers taking part in advocacy efforts. This community has really stepped up. For instance, we had a record number of first-time attendees at the 2024 ICBA Capital Summit, and we were able to successfully advocate for the Congressional Review Act resolution on the 1071 rule last year — with both the House and Senate voting to overturn the CFPB’s regulation. Despite its presidential veto, this was a huge victory, in large part because it has set the stage for the current Congress. It has never been clearer to me that we, the community bankers across the nation, need to use our voices. While ICBA does a stellar job of advocating on our behalf, the simple fact remains that when we tell our stories on Capitol Hill and in our state legislatures, it is more effective. Lawmakers prefer to hear from us, their constituents. They want to understand how community banks make an impact in the districts they serve, and they need to know that when regulations tie our hands, it’s their community that suffers. In short, we need them to be aware of the community bank difference. Although we are FROM THE TOP MY TOP 3 Experiences as ICBA chairman: 1. Traveling around the country and meeting community bankers. 2. Testifying before Congress on Section 1071. 3. Representing community banks at the World Savings Bank Institute Conference in Rome. Translating Advocacy Into Action By Lucas White, Chairman of ICBA, President of The Foundation Trust Company the economic engine of the country, most lawmakers don’t truly understand all we do to power their districts. We need legislators to know who we are and what we represent to protect our banks, communities and customers. Engaging them has to be a part of our day-to-day jobs. Throughout my tenure as ICBA chairman, I have made it my mission to rally community bankers to come to D.C. In fact, the proudest moment I experienced over the past year was when a few bankers told me that they came to the Capital Summit for the first time because of my speech at ICBA LIVE. It meant a lot that the message resonated. Because more than ever, we need to continue to act, advocate and ensure our legislators understand who we are. We need new, younger generations of bankers stepping up to show that what we do is in line with modern financial services’ needs. We need an amplification of our voices to demonstrate our commitment to our customers and communities. So, as I end my term as chairman, I do so with a full heart and a dedication to community banking that will continue to fuel my advocacy work and hopefully inspire yours. I look forward to seeing you on Capitol Hill. 8 | INDEPENDENT REPORT
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As businesses adapt to a fast-evolving financial landscape, the demand for faster, more efficient and secure payment processing continues to grow. Lockbox services are emerging as a key solution, helping companies of all sizes streamline receivables and optimize cash flow. For banks and credit unions, offering these services not only meets the rising needs of businesses but also provides a competitive edge in today’s market. MEETING THE DEMAND FOR SPEED AND EFFICIENCY Businesses are increasingly looking for ways to speed up payment processing, driven by the rise of digital payments and the demand for immediate access to funds. Lockbox services meet this need by automating the collection, sorting and deposit of payments, reducing manual processing time. • Accelerated Cash Flow: Lockbox services can reduce payment turnaround from a week to just 1-2 business days, improving liquidity and allowing businesses to access their funds faster. • Real-Time Reporting: With immediate visibility into payment statuses and transaction histories, businesses can make more informed financial decisions and reconcile accounts more efficiently. For financial institutions, offering lockboxes addresses the demand for reliable, fast solutions, enhancing operational efficiency and client satisfaction. ADDRESSING SECURITY AND COMPLIANCE NEEDS With growing volumes of sensitive payment data, security is a top concern for businesses. Lockbox services offer enhanced security by automating payments and employing advanced protocols to protect sensitive information. Additionally, as regulatory requirements become more stringent, businesses need solutions that ensure compliance. Lockboxes help meet these needs, providing secure and compliant payment processing. • Enhanced Security: Lockbox solutions leverage encryption and secure storage protocols, safeguarding sensitive data and reducing fraud risk. • Compliance: Automated systems help businesses adhere to industry standards and legal requirements, minimizing the risk of compliance issues. How Lockbox Services Are Transforming Cash Flow By Ashish Bhatia, VP Product Management Alogent, ICBC Associate Member The Growing Need for Faster, Secure Payment Processing 10 | INDEPENDENT REPORT
SCALABILITY FOR GROWING BUSINESSES AND A COMPETITIVE EDGE FOR FINANCIAL INSTITUTIONS As businesses scale, so do their payment processing needs. Lockbox services are flexible and can handle increased volumes and a variety of payment types, from large-dollar transactions to electronic bill payments. Financial institutions that provide scalable solutions can effectively support businesses through growth, ensuring long-term value and client retention. In today’s competitive financial services market, banks and credit unions that offer innovative, comprehensive lockbox solutions can differentiate themselves from the competition. These services not only help corporates and merchants improve efficiency and security, but also strengthen client relationships, positioning institutions as trusted partners in payment processing. ALOGENT LOCKBOX — A COMPREHENSIVE SOLUTION Alogent Lockbox provides a comprehensive, automated solution for managing both physical checks and digital receivables. By reducing operational costs, improving cash flow and enhancing security, it enables businesses to process payments more quickly and efficiently. For financial institutions, integrating Alogent Lockbox offers a unified, scalable platform that helps clients optimize payment processing and stay competitive in the evolving payments landscape. Adopting this advanced solution positions banks and credit unions as leaders in secure, efficient payment processing. CONTACT US TODAY TO PLACE YOUR ANNOUNCEMENT AD. SHOW-OFF. THERE'S NOTHING WRONG WITH BEING A Call (801) 676-9722 or scan the QR code to get started. Place QR Code Here ▷ Show off your employees. ▷ Show off your accomplishments. ▷ Show off a job well done. Employees are motivated when they are recognized and feel valued. This magazine is a great platform to celebrate your team’s accomplishments! Scan this QR code to learn more about Alogent Lockbox. https://www.alogent.com/payment-solutions/ lockbox?utm_campaign=ICBC&utm_ source=referral&utm_medium=newsletter&utm_ term=ICBC-mar-april&utm_content=lockbox Scan this QR code to download the Alogent Lockbox eBook. https://info.alogent.com/alogent-lockbox-ebookicbc?utm_campaign=ICBC%20Newsletter&utm_ source=ICBC%20march-april%20Newsletter&utm_ medium=email&utm_content=lockbox INDEPENDENT REPORT | 11
Community Banks and ATM Ownership By Eric Hallman, Vice President — Bank Card Bankers’ Bank of the West, ICBC Member and ICBC Preferred Provider “The only constant in life is change,” a sentiment famously attributed to the Greek philosopher Heraclitus, has never felt more relevant than in the world of community banking today. With the rapid evolution of technology, shifting regulations, changing demographics and the dynamic growth of digital payments, community banks are experiencing continual transformation. Nowhere is this change more evident than in the ATM and debit card industry. For nearly 40 years, community banks have been involved in the ATM/debit card market. Over this time, advancements and improvements have become the norm. However, many community banks still view their ATM and debit programs as a “necessary competitive evil.” 12 | INDEPENDENT REPORT
THE RISE OF DEBIT CARDS AND CHANGING CONSUMER BEHAVIOR The late 1980s and early 1990s saw the emergence of the debit card, marking the beginning of a shift in consumer spending habits. Online purchasing has accelerated that buying pattern change exponentially. What was originally designed as an income enhancement to the traditional ATM card has now morphed into a payment profit center for the overwhelming number of community banks. Transaction averages on the purchase side have exploded, while traditional ATM transactions have shrunk over the past 30 years. Statistics in an article from FSG Insights show consumers now average more than 30 point-of-sale (POS) transactions per month, spending over $1,300 each month, compared to fewer than one traditional ATM withdrawal per month. ATM OWNERSHIP: WHAT IS THE VALUE NOW? What now is the value of an ATM given the drop in average cardholder ATM transactions? Banks historically have placed ATMs for a variety of reasons: to satisfy customer service expectations, to enhance the bank’s public image, as a defensive measure to lock a competitor out, or as a profit center given the machine’s high traffic location. Over time, however, the cost of purchasing, upgrading, maintaining, servicing and providing security to ATM locations has increased while overall ATM transaction activity has decreased. Customers have reluctantly come to accept the cost of an ATM withdrawal from an “out-of-network” machine. According to the personal finance website Bankrate, the average fee charged to a cardholder for a foreign ATM withdrawal is $4.77. (On average, $1.58 from the card-issuing bank and $3.19 from the ATM-owning entity in the form of a surcharge.) In the end, the cardholder pays 6% for an ATM withdrawal amount of around $80, which is today’s average ATM withdrawal amount and a significantly higher percentage for lesser withdrawal amounts. Banks walk a fine line between customer expectations of having to pay for access to their money and the actual hard cost of the ATM. How best to manage this dilemma? STRATEGIES TO BALANCE COSTS AND CUSTOMER EXPECTATIONS To strike a balance between customer satisfaction and cost management, community banks have employed a variety of strategies: 1. Surcharge-Free Networks: Surcharge-free networks have been a viable option for several decades. There are two national surcharge-free networks — MoneyPass and Allpoint — which offer cardholders access to thousands of ATMs without incurring a surcharge. These networks come with monthly and transaction fees that card-issuing banks pay to enable their cardholders access to free ATM transactions. 2. Surcharge Reimbursement Programs: Some community banks have gone a different route and provided their cardholders with a surcharge reimbursement program to cover the cost of a cardholder’s surcharge, most with a monthly cap of $10 to $15. This approach allows banks to save on the capital costs of placing and maintaining ATMs while still meeting customer needs. To be fair, some community bankers have found an issue with either of these customer service strategies because it pushes the cardholder to a competitor’s machine. Doing so exposes the issuing bank’s cardholders to the competitive marketing strategies of the ATM owner, which can be competitively troublesome. 3. Merchant Cash Back: Another alternative is the concept of merchant cash back at point-of-sale terminals, a feature already available at many big retailers. While it provides cardholders with quick access to cash, there are drawbacks. The maximum amount of cash available is often limited to $40 or less, and this method uses PIN-based transactions, which can reduce the bank’s earnings from the transaction. 4. ATM Managed Service Programs: In recent years, another interesting option has presented itself, and that is the idea of a community bank outsourcing ATM locations and placements through an ATM Managed Service program. There are several companies that offer this outsourcing opportunity with varying tiers or levels of service. Banks have the option to purchase or lease ATM machines and have the outsourcing service handle everything related to cash replenishment, software upgrades, balancing and general servicing. In many instances, the Managed Service program enables a community bank to have an economically efficient way to rid themselves of the day-to-day hassles and headaches that ATM ownership can present while still providing customer service access to cash that the customers expect. THE PATH FORWARD Ultimately, the best solution for each community bank will depend on several factors, including customer needs, cost efficiency and brand image. This is by no means one size fits all and there are no magic solutions. The good news is that community banks have been in the ATM/debit business for several decades and, through their EFT processors and/or their correspondent bank, have a wealth of data and material to make an educated decision on the best path to employ. By reviewing transaction data and understanding their market, banks can make informed choices about strategies that will best meet their goals and ensure they remain competitive in a rapidly changing industry. INDEPENDENT REPORT | 13
Concepts and Facts ChatGPT Gets It Mostly Right on Yield Curve Shapes THE IMPACT OF THE TREASURY YIELD CURVE ON COMMUNITY BANKS The Treasury yield curve is a critical financial indicator that depicts the relationship between interest rates and the maturity dates of U.S. government debt. Typically, the yield curve slopes upward, reflecting higher yields for long-term securities compared to short-term ones. This essay explores how the shape of the Treasury yield curve affects community banks, focusing on their lending practices, interest rate risk management and overall financial health. UNDERSTANDING THE YIELD CURVE The yield curve can take on various shapes, primarily categorized as normal, inverted or flat. A normal yield curve indicates that longer-term bonds have higher yields, suggesting economic growth; an inverted yield curve occurs when short-term yields exceed long-term yields, often seen as a predictor of recession; and a flat yield curve signifies uncertainty in the economy, where there is little difference between short-term and long-term rates. Each of these shapes presents unique challenges and opportunities for community banks. LENDING PRACTICES Community banks primarily generate revenue through lending, and the yield curve significantly influences their lending practices. In a normal yield curve environment, community banks can borrow at lower short-term interest rates and lend at higher long-term rates, which supports their profitability. For example, if a bank can secure funding at a 1% interest rate for a one-year loan and lend it out at 4% for a 30-year mortgage, the spread — essentially the bank’s profit — is 3%. This difference allows community banks to support local economies, providing loans for homes, businesses and other community projects. Conversely, when the yield curve flattens or inverts, the profitability of these lending activities diminishes. In an inverted yield curve scenario, community banks may find themselves in a position where they borrow at higher short-term rates than the rates at which they can lend long-term. This situation compresses margins, potentially leading to a reduction in loan origination and, consequently, a slowdown in economic activity within the communities they serve. INTEREST RATE RISK MANAGEMENT Community banks must also navigate interest rate risk, which is the risk of financial loss due to changes in interest rates. The shape of the yield curve plays a crucial role in how banks manage this risk. In a normal yield curve scenario, banks can match the duration of their assets (loans) with their liabilities (deposits) effectively. For instance, if a community bank has long-term fixed-rate mortgages, it can rely on stable, lower-cost funding from short-term deposits. Wrong! This is the very recipe for exposure to rising rates. This alignment helps mitigate the risk of rising interest rates. However, during periods of an inverted or flat yield curve, community banks face increased interest rate risk. Not necessarily. The duration mismatch can lead to a situation where liabilities reprice before assets, exposing banks to potential losses. To manage this risk, community banks may engage in interest rate swaps or other hedging strategies, but these can be costly and complex, particularly for smaller institutions with limited resources. ASSET QUALITY AND LOAN DEMAND The shape of the yield curve also affects asset quality and loan demand, which are critical for community banks’ stability. In a normal yield curve environment, economic growth typically leads to increased demand for loans as businesses and consumers have greater confidence in their financial prospects. Community banks can capitalize on this demand, extending credit while maintaining healthy asset quality. Note: In this column, for the first time, your correspondent relied on ChatGPT, the generative artificial intelligence (AI) platform. For the record, I submitted this inquiry: “Write a 700-word essay on how the shape of the Treasury yield curve affects community banks.” The following was generated in, I guess, three seconds, and most of it appears to be correct. I’ve taken the liberty of adding some commentary in bold, and there really aren’t many changes. In the future, I will use AI only if I fully disclose its assistance. And you’ll be able to tell because there’s no snark in AI-generated documents. By Jim Reber, President and CEO ICBA Securities, ICBC Associate Member and ICBC Preferred Provider 14 | INDEPENDENT REPORT
However, when the yield curve inverts, it often signals an impending economic slowdown. As businesses and consumers become more cautious, loan demand may decline, and existing borrowers may struggle to meet their obligations, leading to increased default rates. This deterioration in asset quality can significantly impact community banks, which often have concentrated loan portfolios tied to local economies. It’s a bit of a non-sequitur to claim inverted curves cause a decline in credit quality. It’s more like the curve is reacting to that expectation. A rise in non-performing loans can strain capital reserves and lead to regulatory scrutiny. CONCLUSION The shape of the Treasury yield curve is a pivotal factor influencing the operations and financial health of community banks. A normal upward-sloping curve supports profitable lending practices and encourages economic growth, while an inverted or flat curve presents challenges related to interest rate risk, profitability and asset quality. Community banks must remain vigilant and adaptable to changes in the yield curve, employing sound risk management strategies and maintaining strong relationships with their local communities. Understanding these dynamics is essential for community banks as they strive to navigate the complexities of the financial landscape and continue to support their local economies. INDEPENDENT REPORT | 15
Q4 2024 Compliance Updates for Financial Institutions By Troy Snyder, Brad Birkholz, Peyton Lydigsen, Andrea Pech and Shawn McGuffin Plante Moran, ICBC Silver Associate Member Each quarter, our financial institution’s experts bring you the top headlines to keep you updated on regulatory compliance matters impacting banks and credit unions. Here’s the latest roundup of information you need to know. LENDING COMPLIANCE Agencies announce dollar thresholds for applicability of truth in lending and consumer leasing rules for consumer credit and lease transactions: The Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC) and Consumer Financial Protection Bureau (CFPB) announced new dollar thresholds for consumer credit and lease transactions. These thresholds determine whether certain consumer credit and lease transactions are subject to the protections of Regulation Z (truth in lending) and Regulation M (consumer leasing). The threshold rose from $69,500 to $71,900, effective Jan. 1, 2025. Private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z regardless of the loan amount. Agencies announce dollar thresholds for smaller loan exemption from appraisal requirements for higher-priced mortgage loans: The FRB, OCC and CFPB announced new dollar thresholds for smaller loan exemptions from appraisal requirements for higher-priced mortgage loans. The 2025 threshold for higher-priced mortgage loans that are subject to special appraisal requirements increased from $31,000 to $32,400, effective Jan. 1, 2025. This adjustment is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as of June 1, 2024. CFPB published adjustments to thresholds under TILA and FCRA: The CFPB announced two threshold adjustments for 2025. The first, under the Truth in Lending Act (TILA), keeps the minimum interest charge disclosure threshold at $1.00 and sets the high-cost mortgage threshold at $26,968. The second adjustment maintains the maximum charge for consumer file disclosures under the Fair Credit Reporting Act (FCRA) at $15.50. Both adjustments took effect on Jan. 1, 2025. CFPB published Supervisory Highlights describing illegal practices in auto lending: The CFPB’s latest Supervisory Highlights report uncovers illegal practices in auto finance, such as wrongful repossessions and inaccurate disclosures. Lenders were found repossessing cars despite timely payments or loan extensions, misapplying payments and providing incorrect credit report information. The report also highlights issues with add-on products, where consumers were charged for unwanted products and denied refunds upon early loan termination. The CFPB has directed INDEPENDENT REPORT | 17
auto-finance companies to stop these practices and ensure add-on products are optional and properly refunded. Additionally, lenders misled borrowers about qualifying for low interest rates and placed inaccurate loan information on thousands of consumers’ credit reports. CFPB issues final rule on overdraft lending: The CFPB issued a final rule limiting banks with at least $10 billion in assets from charging overdraft fees of more than $5 unless they voluntarily set a cap that covers their actual costs and losses or treat overdraft protection as a loan covered by the TILA. The final rule was published on Dec. 12, 2024; the effective date is Oct. 1, 2025. On Dec. 12, 2024, the American Bankers Association joined the Mississippi Bankers Association in filing a lawsuit challenging the CFPB’s effective cap on overdraft fees. The lawsuit argues that overdraft fees can’t be regulated under the TILA as they’re not credit products and that the CFPB acted arbitrarily and capriciously by failing to consider the costs and benefits of the rule. DEPOSIT COMPLIANCE CFPB finalizes rule on federal oversight of popular digital payment apps to protect personal data, reduce fraud, and stop illegal “debanking”: The CFPB finalized a new rule on Nov. 21, 2024, to supervise large nonbank companies offering digital funds transfer and payment wallet apps. This rule aims to ensure that these companies, which handle more than 50 million transactions per year, follow federal laws similar to those that large banks, credit unions and other financial institutions must adhere to. The rule will help protect consumer privacy, guard against fraud and prevent illegal account closures, often referred to as “debanking.” The rule was effective 30 days after publication in the Federal Register. OTHER COMPLIANCE FDIC announces extension of comment period for deposit insurance recordkeeping rule for banks’ third-party accounts: The Federal Deposit Insurance Corporation announced an extension of the comment period for deposit insurance recordkeeping rules for third-party accounts. The extension was for 45 days, moving the deadline to Jan. 16, 2025. The proposed rule aims to address risks associated with certain third-party arrangements, protection of depositors and promotion of public confidence in insured deposits. CFPB proposes rule to stop data brokers from selling sensitive personal data to scammers, stalkers, and spies: On Dec. 3, 2024, the CFPB proposed a new rule aimed at regulating data brokers who sell sensitive personal and financial information. The proposed rule seeks to limit the sale of personal identifiers like Social Security numbers and phone numbers, ensuring that financial data is only shared for legitimate purposes, such as facilitating mortgage approvals, and not sold to scammers targeting vulnerable individuals. The rule would classify data brokers selling sensitive consumer information as “consumer reporting agencies” under the Fair Credit Reporting Act (FCRA), requiring them to comply with accuracy requirements, provide consumers access to their information and maintain safeguards against misuse. Federal bank regulatory agencies seek further comment on interagency effort to reduce regulatory burden: Federal bank regulatory agencies announced the third notice requesting comments to reduce regulatory burden. This initiative is part of the Economic Growth and Regulatory Paperwork Reduction Act of 1996, which mandates that the Federal Financial Institutions Examination Council and federal bank regulatory agencies review their regulations at least once every 10 years to identify outdated or unnecessary regulatory requirements. The agencies have divided their regulations into 12 categories and are currently soliciting comments on three categories: rules of procedure, safety and soundness and securities. The public has 90 days from the publication date in the Federal Register to submit their comments. The agencies will continue to request comments on the remaining categories, aiming to identify regulations that are outdated, unnecessary or unduly burdensome. FDIC extends compliance date for official sign requirements: The FDIC has extended the compliance date for the new signage and advertising rule from Jan. 1, 2025, to May 1, 2025. This extension gives financial institutions additional time to implement new processes and systems. The extension specifically applies to Part 328, subpart A, which is part of the final rule aimed at modernizing the use of official FDIC signs and advertising statements. Third-party risk management: No updates occurring during the quarter. U.S. Department of Treasury issues Interim Final Rule on OFAC recordkeeping requirements: The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued an Interim Final Rule (IFR) to extend OFAC’s current recordkeeping requirements from five to 10 years. The IFR was published in the Federal Register on Sept. 13, 2024, with public comments due by Oct. 15, 2024. The new recordkeeping requirements took effect on March 12, 2025. Agencies issue statement on elder financial exploitation: Five federal financial regulatory agencies issued a statement on elder financial exploitation on Dec. 4, 2024. The statement highlights the significant impact of elder financial exploitation, noting that older adults who experience such exploitation can lose their life savings and financial security. A FinCEN financial trend analysis of Bank Secrecy Act reports over a one-year period ending in June 2023 found that about $27 billion in reported suspicious activity was linked to elder financial exploitation. The statement includes examples of practices that supervised institutions may use to help identify, prevent and respond to elder financial exploitation, such as developing effective governance and oversight, training employees, using transaction holds and disbursement delays, establishing a trusted contact designation process, filing suspicious activity reports, and engaging with elder fraud prevention and response networks. Scan the QR code for more insights from our trusted advisors. https://www.plantemoran.com/industries/financial-services/banks?utm_ source=qrcode&utm_medium=association&utm_campaign=PEN-FSG-2025_ICBC 18 | INDEPENDENT REPORT
ICBA.ORG/CAPITALSUMMIT REGISTER TODAY → Join community bankers from across the country in Washington, D.C., to champion the role of community banking. Connect directly with lawmakers and regulators, share the real-world stories behind your work, and influence policies that strengthen your community. This is your opportunity to create meaningful change. Registration is free for all of our Nation's community bankers. Make Your Mark. Shape the Future of Community Banking. ICBA Capital Summit May 12–15, 2025 | Washington, D.C.
10 Information Security Topics To Discuss in Your 2025 Review By Christy Thomas, IT Audit Manager SBS CyberSecurity, ICBC Associate Member and ICBC Preferred Provider 20 | INDEPENDENT REPORT
Cyberattacks no longer affect just the target — they create ripple effects that harm partners, service providers and customers. In today’s interconnected world, breaches impact many stakeholders. As data breaches continue to trend up, organizations are spending more on solutions that prevent attacks without disrupting business. This escalating threat underscores the critical role of the information security officer (ISO) in adopting proactive security measures. Their leadership is vital in ensuring organizations take every precaution to avoid becoming victims. All organizations should consider these key topics in their 2025 information security (IS) program review. 1. RANSOMWARE AWARENESS Ransomware remains a critical risk to organizations. The Ransomware Self-Assessment Tool 2.0 (R-SAT 2.0) addresses evolving threats, attacker tactics and security controls. This tool helps organizations identify security gaps, raise ransomware awareness and provide executive leadership with insights for informed decision-making and resource allocation. It also supports auditors, consultants and examiners in evaluating security practices while incorporating lessons from past ransomware incidents. Overall, R-SAT is a valuable resource for strengthening cybersecurity posture and improving security practices. 2. BOARD CYBERSECURITY TRAINING An organization’s board of directors holds ultimate fiduciary responsibility for its security. Without a strong grasp of cybersecurity, they may make decisions that weaken defenses, misallocate budgets or fail to align security strategies with business goals. A board that underestimates cybersecurity risks may fail to implement proactive measures to prevent breaches and may lack effective crisis response plans, resulting in poor risk management. Cybersecurity is a shared responsibility that extends beyond a single person or committee. A consistent training program fosters trust and reinforces the organization’s commitment to protection. 3. FIREWALL REPORTING AND MONITORING Approximately 60 to 75% of our customers outsource firewall management. While this relationship is trusted, the organization retains ultimate oversight responsibility. At a minimum, organizations should understand their network baseline to ask the right questions and identify key risk indicators. Outsourcing firewall management introduces both risks and opportunities. Relying on a third party means depending on their expertise and responsiveness. However, misconfigured firewalls can lead to vulnerabilities, and limited visibility into the vendor’s operations may hinder effective monitoring and data protection. To mitigate these risks, organizations should establish clear roles and expectations in written contracts, conduct periodic security audits of the vendor’s practices as part of their vendor management program and limit administrative access to authorized personnel with strong authentication, like multifactor authentication (MFA). Oversight should include receipt and review of comprehensive logs or read-only access, at a minimum, to monitor suspicious activities or policy violations. Vendors should be integrated into the organization’s incident response plan, including defined roles, communication channels and escalation procedures. Collaboration and transparency are key to ensuring firewall security and improving oversight and response capabilities. 4. MULTIFACTOR AUTHENTICATION Hackers increasingly use malware, ransomware and phishing to steal credentials and access networks. MFA is a key defense that adds an essential layer of security by requiring two or more verification factors. Strengthening security with MFA enhances data centers, secures remote work and minimizes cyber threats. Organizations should enforce MFA for administrative access to directory services, backups, network infrastructure, endpoints, remote employees and vendors, and firewall management. Many cybersecurity insurance vendors now require self-attestation, including MFA verification for remote and administrative users. Without adequate controls for administrative users, organizations risk unauthorized access, data breaches, financial loss, reputational damage, legal consequences and operational disruption. 5. VENDOR MANAGEMENT PROGRAM Vendor management continues to evolve and requires diligent monitoring, especially for those deemed critical to operations. Adhering to FFIEC and interagency guidance ensures comprehensive INDEPENDENT REPORT | 21
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