FALL 2025 MIB Women in Banking Conference RECAP
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20 14 8 4 PRESIDENT’S MESSAGE Wins Worth Celebrating By Loren Brown, President, MIB 6 EXECUTIVE DIRECTOR’S MESSAGE New Partnerships and Opportunities By Shane Scanlon, Executive Director, MIB 8 FLOURISH Battling the Many Faces of Fraud, Together By Rebeca Romero Rainey, President and CEO, ICBA 10 Compliance Q&A By Bill Showalter, Senior Consultant, Young & Associates Inc. 14 MIB FEATURED ASSOCIATE MEMBER BankOnITUSA 16 PORTFOLIO MANAGEMENT The Rule of Three Bond Portfolio Yields Are at Multiyear Highs By Jim Reber, President and CEO, ICBA Securities 18 What Community Bankers Need To Know About the End of Penny Production By Lance Noggle, Senior Vice President, Operations and Senior Regulatory Counsel, ICBA 20 University of Montana Tailgate Round Up Cosponsored by MIB and Bell Bank 23 2026 MIB Associate Membership Renewal 24 MIB Women in Banking Conference Recap 27 Pioneer Federal Savings and Loan Association Adopts Plan of Conversion 28 2025 MIB Membership Directory 28 MIB Associate Member Banks 29 MIB Associate Member Resource Guide 30 Bank Training Webinars Contents FALL 2025 2025 MIB EXECUTIVE OFFICERS Loren Brown, President Ascent Bank, Helena lbrown@ascentbank.com Amber Brown, Vice President Peoples Bank of Deer Lodge abrown@pbdl.net Clinton Gerst, Secretary Bank of Bozeman cgerst@bankofbozeman.com Laura Clark, Treasurer Opportunity Bank lclark@oppbank.com Tim Schreiber, Immediate Past President Farmers State Bank tims@farmersebank.com Kenny Martin, ICBA State Director Independence Bank, Helena kennym@ibyourbank.com 2025 MIB BOARD OF DIRECTORS Amanda Burgess Madison Valley Bank, Ennis Tom Christnacht First Security Bank of Deer Lodge Bill Coffee Stockman Bank, Miles City Daniel Day Bank of Montana, Missoula Shawn Dutton First Security Bank of Roundup Mike Hawthorne First Montana Bank, Missoula Logan Hensley Valley Bank of Kalispell Brice Kluth First State Bank of Shelby Scott Mizner American Bank, Bozeman Joel Rosenberg Three Rivers Bank of Montana, Kalispell Andrew West Eagle Bank, Polson Phil Willett Pioneer Federal Savings and Loan, Dillon ASSOCIATE BOARD MEMBER Ryan Fritz Citizens Alliance Bank rfritz@citizensalliancebank.com MIB STAFF Shane Scanlon, Executive Director Montana Independent Bankers shane.d.scanlon@gmail.com ©2025 The Montana Independent Bankers Association (MIB) | The newsLINK Group LLC. All rights reserved. Community Banker is published four times per year by The newsLINK Group LLC for MIB 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 MIB, 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. Community Banker is a collective work, and as such, some articles are submitted by authors who are independent of MIB. 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. MONTANA INDEPENDENT BANKERS 1812 11th Ave. PO Box 4893 Helena, MT 59604 (406) 449-7444 shane.d.scanlon@gmail.com mibonline.org On the Cover: Members of the MIB Board of Directors (Laura Clark, Opportunity Bank; Amber Brown, Peoples Bank of Deer Lodge; and Amanda Burgess, Madison Valley Bank) attend the 4th annual Women in Banking Conference. Community Banker 3
PRESIDENT’S MESSAGE WINS WORTH CELEBRATING BY LOREN BROWN PRESIDENT, MIB Hello my friends, As I look back on 2025 for the MIB, I pause to reflect on this past summer in Montana, and I’m struck by how fortunate we were to experience one of the mildest fire seasons in recent memory. After several years of smoky skies and active fire maps being a daily reality, 2025 brought a refreshing change. According to the Montana Department of Natural Resources and Conservation, the state experienced less than one-third of the average acreage burned over the last decade, thanks in part to cooler temperatures and wetter conditions. That moisture not only helped keep fires at bay but also produced one of the greenest summers I can remember. Across the state — from the high plains to the mountain valleys — pastures stayed lush well into August, rivers ran strong, and wildflowers held their colors longer than usual. For those of us who spend as much time as possible outside, whether on a trail, a river or even in our backyards, it was a summer to savor. Speaking of savoring, our 2025 Montana Independent Bankers Convention and Trade Show at Big Sky Resort in July was nothing short of amazing. While we didn’t quite set a record for attendance, we came very close. The weather during the convention couldn’t have been more perfect — bright blue skies, warm afternoons and cool evenings. The energy at Big Sky this year was outstanding. Our rafting and golf events were well-attended, and many folks took the opportunity to hike and explore the stunning surroundings. Earlier in the year, a Montana contingent traveled to Washington, D.C., for the ICBA Capital Summit, and it was an experience I won’t soon forget. We met with our congressional delegation and their staffs to share the importance of community banking in our state. It’s one thing to talk about issues here at home; it’s another to sit across the table from federal policymakers and make sure Montana’s voice is heard loud and clear. One of the major legislative victories that emerged from these efforts was the passage of a law prohibiting the use of “trigger leads” to solicit bank customers based on mortgage application credit checks. This issue has been a thorn in the side of community banks for years, allowing third parties to target borrowers mid-transaction. Thanks 4 Community Banker
to the advocacy work of the ICBA and the personal efforts of Montana bankers in Washington, D.C., this harmful practice has finally been addressed through bipartisan legislation. The Homebuyers Privacy Protection Act was signed into law by President Trump on Sept. 5 and will take effect in March 2026. I am also excited to share that, thanks to the outstanding leadership of Laura Clark and Opportunity Bank in partnership with Helena College, the MIB helped bring a new Fundamentals of Banking Course to bankers, high school students and college students across the state that began in October. This six-week training program, offered quarterly, provides a strong foundation in core banking principles through three parts. As the year winds down and we prepare for winter, we’ll be sending out membership renewal invoices in December. I want to personally ask every bank that is currently a member of the Montana Independent Bankers Association to renew its membership for 2026. Your membership allows us to continue to advocate for community banks, provide outstanding educational opportunities and foster the professional community that makes Montana banking so unique. If, for any reason, your bank is considering not renewing, I ask that you personally reach out to me. I want to understand what we can do better and how we can make membership even more valuable for you. This organization exists to serve you, and your feedback is essential to its continued strength. The same goes for our associate members, who are a vital part of our association. Thank you for your continued support and partnership. If you ever have concerns or ideas about how we can better serve you, please don’t hesitate to reach out to me. We value your involvement deeply and want to ensure that your investment in MIB continues to be rewarding. Finally, I want to thank each and every one of you — our member banks, associate members, board members and staff — for your unwavering support of community banking and the communities where we live and work. The strength of our association comes from the dedication of community bankers across the state who believe in making a difference in their towns, neighborhoods and throughout Montana. Whether you’re preparing for the busy holiday season, planning next year’s initiatives or just taking a well-deserved moment to catch your breath, I hope you can take pride in what we’ve accomplished together this year. From legislative wins to near-record convention participation and launching a brand-new educational opportunity for new bankers and students, 2025 has been a year worth celebrating. I have loved the weather we’ve had and am now hoping for a winter filled with snow and mild temperatures. I look forward to seeing many of you in the months ahead, and I can’t wait to build on this momentum in 2026. Standing strong with my fellow community bankers, Loren Community Banker 5
EXECUTIVE DIRECTOR’S MESSAGE BY SHANE SCANLON EXECUTIVE DIRECTOR, MIB It’s hard to believe how fast the summer went by, and I hope you all had an opportunity to enjoy the last several months with family and friends. There has been no shortage of activity at the Montana Independent Bankers Association (MIB), and we’re excited about the opportunities we’ve been working on here in Montana, as well as the critical pieces of legislation advancing in the U.S. Congress. REGISTER FOR THE FUNDAMENTALS OF BANKING COURSE MIB is excited to announce a new partnership with Helena College to offer the Fundamentals of Banking Course to both member and non-member banks. While the program is designed for new employees, we strongly encourage senior employees, high school students, college students and anyone interested in pursuing a career in the banking industry to register for this course. I want to thank Laura Clark, president of Opportunity Bank, for establishing this banking course for her employees several years ago. Her successful program has garnered a great deal of positive feedback. Curriculum The Fundamentals of Banking Course is designed to give participants a clear understanding of the banking industry, from day-to-day operations to broader financial concepts. The aim is to spark long-term interest in the field, support employee retention and create opportunities for future advancement within the industry. Schedule The course will be conducted online, allowing you to access materials and complete assignments at your convenience each week. The first course started at the end of October. The same course will be offered from Jan. 26-March 6, 2026, and April 27-June 5, 2026. Cost/Registration The cost to register for the course is $250 for MIB member banks and $350 for non-member banks, high school students and college students. Scan the QR code to register or learn more about the Fundamentals of Banking Course. https://mibonline.org/bankingcourse/ NEW PARTNERSHIPS AND OPPORTUNITIES BLOCKCHAIN AND DIGITAL INNOVATION TASK FORCE On Oct. 6, the Montana Blockchain and Digital Innovation Task Force convened for its first meeting. The task force was authorized by SB 330 during the 2025 legislative session, which passed with strong bipartisan support in both chambers and was signed into law by the governor. We are pleased that Loren Brown, CEO and president of Ascent Bank and current president of MIB, was appointed to the 21-member task force. The Montana Blockchain and Digital Innovation Task Force will play a critical role in informing members about blockchain, financial and digital innovation technology, and providing context for related issues. The task force will study activity in other states and explore policy considerations that could impact the regulatory environment, consumer protections and the growth of business opportunities within our industry. All of this will lay the groundwork for potential legislation that we anticipate will be brought forward during the next session in January 2027. The task force is required to report its findings and recommendations to the Economic Affairs Interim Committee and the Legislative Council by July 1, 2026. 6 Community Banker
voice is heard both here at home and in Washington. We encourage you to continue this partnership next year. And since this will be the last edition of our quarterly magazine for the year, we wish you a healthy, prosperous and safe 2026, from all of us here at your community banking association. KEY BILLS ADVANCING IN CONGRESS We also want to point out the progress being made on key advances in Congress, including a number of bills passing out of the U.S. House of Representatives’ Financial Services Committee: 1. H.R. 3234, which would increase the percentage limit of reciprocal deposits a bank can hold before they are classified as brokered deposits. 2. H.R. 5262, which would allow banking agencies to forgo requesting a competitive analysis from the Justice Department for merger or acquisition applications involving banks with assets under $10 billion. 3. H.R. 5276, which would reduce the Community Bank Leverage Ratio (CBLR) from 8-10% to 6-8% and allow the CBLR to be used by banks with up to $15 billion in assets. 4. H.R. 5291, which would amend the Bank Holding Company Act to permit merchant banking investments made through a bank holding company’s affiliate to be held for a minimum of 15 years. 5. H.R. 5317, which would allow community banks to hold custodial deposits without them being classified as brokered deposits, as long as those deposits do not exceed 20% of the bank’s total liabilities. FINAL THOUGHTS Finally, please note that 2026 membership renewal packets will be sent out in December. I want to personally thank each of you for being a member this year. You have made a significant difference and ensured that our Our Mission is to Help You Succeed Partner with us for: • Loan participation purchases and sales* • Bank stock financing • Bank executive and employee financing Craig McCandless SVP/Correspondent Banking Business Development Officer Based out of Billings, Mont. Covers: Montana, Wyoming and Idaho 406.850.3790 *We do not reparticipate loans. Community Banker 7
BATTLING THE MANY FACES OF FRAUD, TOGETHER FLOUR I SH BY REBECA ROMERO RAINEY PRESIDENT AND CEO, ICBA When it comes to fraud, we are being hit on all fronts with scams that range from the very basic to the most sophisticated. We’re at a unique point in time where a bank needs both the technological tools to thwart AI-generated digital attacks and the knowledge to combat traditional check washing and forgery schemes. Our mitigation strategies must combine advanced monitoring with good old-fashioned gut instinct to help our teams and customers protect themselves and our banks. In short, we must educate our customers, prepare our teams, shore up our digital defenses and monitor transactions, all while continuing to run the business of banking. It’s a lot to contend with in any environment. Fortunately, we are not alone. As a community of community bankers, we have strength in numbers. One of the most powerful tools in the fight against fraud is information sharing. When community bankers alert their peers to a new type of fraud or a rise in a particular form of attack, they empower the community to act. Supported by this firsthand knowledge, community bankers can prepare stronger defenses for their own organizations. By sharing these stories and experiences, we help others learn from them and prevent similar situations from happening elsewhere. That’s where ICBA Community (community.icba.org) comes into play. Created as a secure platform for member communication, ICBA Community offers a way to disseminate information on fraud scams and tips for addressing them. It is like having eyes and ears out there, delivering insights into what others are seeing and what has worked to prevent losses. It’s not just a forum for understanding current threats; it delivers the ability to learn through others’ firsthand experiences and makes fraud real. Yet, fighting fraud requires more than information alone, and ICBA’s core pillars of advocacy, education and innovation support community banks in their risk mitigation. For instance, on the advocacy side, we worked closely with the Federal Financial Institutions Examination Council to ensure that when they phased out the Cybersecurity Assessment Tool, there were alternatives available. We offered a webinar series highlighting solutions created in collaboration with regulators. Our education offerings include prevention training to teach staff the latest fraud identification and mitigation techniques. Our innovation work through our ThinkTECH program, solutions directory (solutions.icba.org) and preferred service providers also empowers community banks to identify the latest fraud mitigation tools. Fraud prevention is a continuous battle, but with ICBA, you are armed with the information, tools and knowledge you need to defend your bank. With that support bolstering your efforts, you are poised to win. 8 Community Banker
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COMPLIANCE BY BILL SHOWALTER SENIOR CONSULTANT, YOUNG & ASSOCIATES INC. BSA. Q: We filed a Suspicious Activity Report (SAR) on a customer one day. Afterward, I discovered some account activity that was not included in our report (additional transactions that would increase the amount involved that would have been included in the narrative as well). Is there an option to amend the SAR, or do we wait until filing a 90-day ongoing activity SAR? A: Yes, an SAR can be amended. It would be useful to wait until the bank gets the DCN for the initial SAR, which should come shortly. It is easier with that number since it cross-references the original filing within the database at the Financial Crimes Enforcement Network (FinCEN). FinCEN’s FAQ on correcting or amending an SAR states that this is done by filing a corrected/amended SAR via the BSA E-Filing System. The banker should check “Correct/amend prior report” and enter the previous Document Control Number (DCN)/ BSA Identifier (ID) in the appropriate field. The filer should complete the FinCEN SAR in its entirety, including the corrected/amended information and noting those corrections at the beginning of the narrative, save (and print, if desired) a copy of the filing, and submit the filing. FinCEN notes that the corrected/amended FinCEN SAR will be assigned a new BSA ID. TILA. Q: We have an individual customer who is looking to purchase 56.4 acres of undeveloped/ unimproved land. The purpose is consumer (personal, family or household). He plans on either hunting on the land or building a house at some point in the future. We have not done a recreational land loan in a while. This is still considered TRID, correct? A: Yes, you are correct, the TRID rules apply. So, you need to issue a Loan Estimate (LE), and then a Closing Disclosure (CD), within the appropriate time limits. Since it is undeveloped/unimproved land, there will be no need for a flood hazard determination (assuming there are no insurable structures on the property). Check 21. Q: We are getting ready to implement mobile deposit. Is there a regulatory requirement for how long the customer must retain the physical check before it can be destroyed? A: The federal consumer protection rules have no provision related to the retention of original checks. You should consult with the bank’s legal counsel regarding any requirements in, or best practices based on, your state’s recordkeeping laws and court cases. In addition, be sure to follow any state requirements regarding notifying customers of this requirement (perhaps by including it in deposit account agreements or similar documents). TISA. Q: The bank wants to start a savings program for students (K-6th grade). The program requires Q & A 10 Community Banker
students to make 18 deposits of $1.00 or more per week for 20 weeks (allowing two missed weeks). If the student makes all 18 deposits, they will receive a trophy at the end of the program. I have some questions after reviewing the proposed flyers/advertising and disclosures: • If we are giving a $2.00 voucher to open the “Champion Savers” savings account, and they may earn (if they complete all 18 deposits in 20 weeks) a prize equal to $50 (a trophy), does that mean they will have earned $52.00 in bonuses? • We are also giving each student a piggy bank when they open the account. Does that count as a bonus as well? o If so, how should we disclose the APY? Currently, we say that the “bonus does not earn an Annual Percentage Yield,” but the $2.00 voucher (deposited into the account) will earn interest. The trophy cannot earn interest, though, obviously. • Even though the child is receiving a voucher to open the account, do we still need to list that there is a requirement of $2.00 minimum to open a “Champion Savers” account? • Since the program is supposed to be teaching students how to save, one of the requirements is that the student must be present at each deposit. Can we do this? Parents can make deposits whenever they want, but we will only count the deposits made by the child towards the 18-deposit minimum. A: There is clearly a “bonus” with the voucher, piggy bank and trophy — their values must be aggregated because they are all related to the same promotion. This does not impact the APY because the APY is based solely on interest earned, not on any bonus payments, promotional items, etc. The disclosure of any bonus is pretty straightforward, as spelled out in Regulation DD, 12 CFR 1030.4(b)(7). The bank must disclose the amount or type of any bonus, when the bonus will be provided, and any minimum balance and time requirements to obtain the bonus. Your bonus disclosure gets a little longer since there are three elements to the total bonus, but you just need to disclose each. For example, “The bank provides a piggy bank at account opening, as well as a $2.00 voucher (which counts toward the required minimum opening deposit). Then, if at least 18 weekly deposits (of at least the required minimum amount) are made within the first 20 weeks, the bank will give the student a trophy.” Or similar language. It might be best to drop the sentence about the bonus not earning interest since it is not a required disclosure and is not true for part of the bonus (the voucher amount). Since there is a required minimum opening deposit (even though it is covered by the bank’s voucher), the minimum opening deposit of $2.00 should be disclosed. Community Banker 11
The issue of whether the bank can require that the student be present for a deposit to count toward the needed 18 deposits within 20 weeks is not addressed by the Truth in Savings Act or the other federal consumer rules we cover on the hotline. You should consult with the bank’s attorney regarding what state law may provide in this instance. TILA. Q: If we offer a preferred rate for using an automatic payment on a consumer installment loan, is that information required to be in the Truth in Lending (TIL) Disclosure or is having it listed in the note sufficient? We’re changing to a new LOS, and the preferred rate verbiage that prints on the disclosure is calculating differently than what we typically use. I have the option to add custom verbiage to the note to rectify this; however, there isn’t a way for me to customize the disclosure. A: The general rule is that the TIL disclosures must reflect the terms of the underlying note. So, if there is a preferred rate offered for agreeing to set up automatic repayment, and the customer opts for the auto-pay, then the disclosures (payment schedule, APR, finance charge, etc.) will be based on that preferred rate. In addition, if the note provides that, should the customer cancel the auto-pay or not maintain enough deposit balance to accommodate the auto-pay or whatever, then the interest rate reverts to the full indexed/“un-discounted” rate in the note (presuming that this rate is in the note, otherwise it probably cannot be enforced), then that fact also must be disclosed in the TIL disclosure. TISA/EFTA. Q: If a bank is converting its accounts due to a merger, would it just give the old TISA/EFTA disclosures and the TISA/EFTA disclosures that would go into effect after the conversion at the time a new account is opened during the 30-day period before the merger effective date? Regulation DD requires 30 days’ advance notice for changes in terms, while Regulation E requires at least 21 days’ notice. However, for accounts opened within 30 days of the effective change due to the merger conversion, I would assume giving both the old and the new disclosures at account opening would suffice, as this would then not technically be a change in terms from the forms given at account opening, as they received both. The bank would just need to ensure the customer was informed of when the new disclosures go into effect, correct? A: From your description, these accounts are being opened by the bank being acquired/merged into another before the actual merger effective date. Yes, the bank could give two full sets of TISA and EFTA disclosures: one that will be effective for less than 30 days and one that goes into effect on the merger effective date. It would be prudent to clearly label the second set with an effective date so there will be no question in customers’ minds when they go into effect. An oral disclosure of that effective date may not comply, and would definitely be inferior to having the effective date printed on the disclosures. ECOA. Q: We have recently implemented an online consumer secured loan application. We received an application from someone who lives in Pennsylvania, but we are located in Illinois. We are in the process of putting a hard stop on our online application program to prevent online applications for applicants from beyond our bordering states. We tried to reach this applicant by phone and email to confirm that they intended to apply with our bank, but have not received a response. We do not want to send a notice of incomplete application (no income documentation provided) when we know that we would not approve a loan outside of our lending area, even if additional information is provided. None of the standard denial reasons seem to fit this scenario. We have not used “other” in the past, but would it be acceptable to choose “other” and enter “applicant resides outside of lender’s lending area?” A: Yes, that seems perfectly acceptable. You have probably heard the general “rule” to stay away from the “other” reason — unless nothing else fits. Well, in this case, none of the other reasons fit (though I believe some lenders will use the “we do not make that type of credit” — outside our area — reason). Your approach seems more informative to the applicant than the “we do not … ” approach, which is the point of the adverse action notice process. Young & Associates provides banks and thrifts with support for their compliance programs, independent reviews and in-bank training, as well as a full menu of management consulting, loan review, IT consulting and policy systems. 12 Community Banker
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MIB FEATURED ASSOCIATE MEMBER Please tell us about the Bankers Private Cloud®. The Bankers Private Cloud is our flagship product designed specifically for financial institutions. It’s more than just network technology; it’s a comprehensive platform built and managed by our professionals, providing community bankers with the resources they need to better serve their customers. What makes the Bankers Private Cloud unique? The Bankers Private Cloud is 100% designed, hosted and supported in the USA. Our company-owned data centers in Oklahoma City, Oklahoma, and Lenexa, Kansas, provide an exceptional technology foundation that allows banks to do more, such as: • Launch bank-tailored innovative products. • Achieve uncapped growth. • Deliver a differentiated experience to their customers, unlike anyone else. BankOnIT has made one priority clear: to provide prompt, friendly and helpful service in every interaction we have. Our live, U.S.-based support technicians are available 24/7, ready to quickly address any issue our clients may face. Whether through our dedicated support line or via email, problems are resolved efficiently and professionally. BankOnIT’s pricing structure is an added bonus that differentiates us from the rest. Our flat rate, transparent pricing model incentivizes excellence in delivery and allows for predictability in IT budgeting. What benefits does the Bankers Private Cloud bring to community banks? With the Bankers Private Cloud, you can enjoy peace of mind knowing your bank’s IT is secure, efficient, reliable and regulatory-compliant, giving you the space to focus on the business of banking. Every BankOnIT partner becomes part of something greater, a nationwide network built on the spirit of community banking. Our clients gain access to a collaborative ecosystem that serves hundreds of community banks nationwide. These institutions understand the power of shared resources, and so do we. BankOnIT is dedicated to expanding this network by integrating top-tier Past MIB President Tim Schriber visiting BankOnIt. 14 Community Banker
IT professionals, project managers, cutting-edge infrastructure and security solutions. This model empowers our partner banks with capabilities typically reserved for large, in-house IT departments, delivering enterprise-level benefits without the enterprise-level cost. Please tell us about BankOnIT. BankOnITUSA, founded in 2003, is a technology partner that sets itself apart by providing a truly all-inclusive solution for your IT needs. Whether it’s our project management team guiding initiatives, our audit team helping you succeed through exams or our 100% domestically staffed, 24/7/365 support center, the BankOnIT team is with you every step of the way. We value our unique position in the community banking space and continue to prioritize engaging, educating and advancing the community banking industry. We operate offices in Oklahoma City, Tulsa, Lenexa, Phoenix, Costa Mesa and Fort Lauderdale. BankOnIT currently employs over 270 people, servicing more than 250 clients across 27 states. What do employees like about working at BankOnIT? BankOnIT rewards growth and dedication with certification reimbursements, salary increases and recognition through trips and events. Employees enjoy comprehensive benefits, including flexible PTO, health and retirement plans and a strong community culture, complete with daily catered lunches. At BankOnIT, we have an incredible team working together to build strong, reliable foundations for our clients — and we’re proud to be part of it. To learn more about BankOnIT, visit www.bankonitusa.com, call (800) 498-8877 or email marketing@bankonitusa.com. PEOPLE. TEAMWORK. PASSION. OPPORTUNITY BANK BILLINGS SHILOH 406.443.2340 cwg-architects.com 650 Power St. Helena, MT Strong foundations for your future. Trusted by Montana financial institutions for over 60 years. Community Banker 15
Being most decidedly not a professional journalist, I’m all for using tricks and devices to develop themes in my columns. This month, I’m relying on the “rule of three,” a literary technique that suggests that topics with three identifiable components can produce clarity or improve the effectiveness of the piece. Personally, I’m a fan of “hook, line and sinker,” “of the people, by the people, for the people” and the ever-popular Larry, Curly and Moe. What really spurred this thought process is that community bank bond portfolios are now yielding a nice round 3% on a tax-equivalent basis. While that may not sound like much, it’s been many years since they’ve been at that level. Let’s dive PORTFOLIO MANAGEMENT THE RULE OF THREE BY JIM REBER, PRESIDENT AND CEO, ICBA SECURITIES BOND PORTFOLIO YIELDS ARE AT MULTIYEAR HIGHS into what makes up these bond collections to see how they have evolved this decade. VENI … The sample information for this column is from Stifel’s bond accounting population of more than 400 community banks, whose average portfolio size is about $208 million. To put into perspective what a grind it’s been to get back to even a 3% yield, consider that the last time it was anywhere near this close was way back in 2018. Even then, that was a chore, as overnight rates, which 16 Community Banker
averaged all of 77 basis points (0.77%) between 2010 and 2022, peaked at 2.50% in late 2018. It’s surprising to me how long rates were depressed in the aftermath of the Great Recession. Another headwind for bank profitability in the recent past is how quickly cost of fund rose relative to portfolio yields. One major cause of this deterioration was that bond durations extended dramatically in 2022-2023, and very few purchases occurred during the big run-up in market yields. The spread between portfolios and the related cost-of-carry shrank by well over 100 basis points between 2020 and 2024. VIDI … Nonetheless, portfolio income has slowly made a comeback, and it’s hoped that some staying power has been built into the current structures. Average durations remain elevated (still over four years), and mild rate shock tests (+/- 100 bps) indicate portfolio cash flows should remain reasonably stable. These are metrics that seem to be built for a slow-to-fall rate environment, which is precisely what the Federal Reserve, economists and market indicators are projecting for 2026. Another point of note is that sector weightings look pretty similar to 2018. At both measuring periods, treasuries/agencies were around 15% of the total, all mortgage-related products were around 50% and municipals were about 22%. What is interesting is that the top quartile seven years ago had a full 41% muni allocation, and today it’s only about 14%. The main culprit, as has been well-documented, is the tax relief that became law in 2018 and reduced tax-equivalent yields for many bank investors. VICI I am speaking with some conjecture here, but the near-term prospects for bond performance are pretty solid. Everyone, including the Fed, agrees that rates are somewhat restrictive, and Chairman Jerome Powell is in no particular hurry to aggressively drop them, even if one or two cuts are still in the 2025 numbers. That would give community banks some more time to layer in bonds at levels they’ll be glad to own later. More inference is that the cost of funds, even if the Fed remains patient, should continue to decline. The second quarter of 2025 was the fourth straight period of declining deposit costs for community banks, and coupled with the expected continued improvement in portfolio returns, net interest margins for the rest of the year look to be attractive. To conclude: The backdrop of 3% portfolio yields seems to bode well for “faster, higher, stronger” community bank performance. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. Community Banker 17
WHAT COMMUNITY BANKERS NEED TO KNOW ABOUT THE END OF PENNY PRODUCTION BY LANCE NOGGLE, SENIOR VICE PRESIDENT, OPERATIONS AND SENIOR REGULATORY COUNSEL, ICBA 18 Community Banker
With the federal government discontinuing new penny production, community bankers and the consumers they serve have many questions about what the change will mean for them. Here’s a breakdown of what is and is not happening with the change to the U.S. penny — and how ICBA is working to gain clarity and address disruptions from a process that has lacked any formal announcement from the Treasury Department. A LASTING DEBATE OVER THE ONE-CENT PIECE Given that the cost of minting pennies has long exceeded their face value, the United States has been discussing discontinuing production of pennies for decades. Former President Barack Obama once said in an interview that the U.S. should get rid of the penny but has bigger things to do. In 2017, Sen. John McCain’s COIN Act proposed stopping the minting of pennies for 10 years. Even Hollywood tackled the issue during a 2001 episode of “The West Wing.” The debate over the penny culminated in a February 2025 post on Truth Social from President Donald Trump, who called for an end to minting pennies given the cost. With the cost to produce a penny nearing 4 cents, the government is proceeding to end production of the coin. WHAT COMMUNITY BANKERS SHOULD KNOW ABOUT THE CHANGE With roughly 240 billion pennies in circulation, the end of penny production has raised many questions for community bankers charged with managing their supply of the coin. First, the penny is not being removed from circulation, and it remains legal tender. What is changing is the ordering and supply of new pennies, which is being discontinued. Pennies are produced by the U.S. Mint — a bureau of the Treasury Department — but the Federal Reserve handles coin distribution to banks. While Treasury has not issued a formal announcement about the change, the Fed recently released frequently asked questions on anticipated changes to penny ordering and deposits. According to the FAQs, the Fed is committed to accepting deposits of pennies from banks, but it will analyze its penny inventory on a weekly basis. When inventory at a specific location is depleted, FedCash Services will cease fulfilling orders of pennies at that specific location. ICBA’S CALL FOR A COMPREHENSIVE PLAN Although there has been no formal announcement from Treasury, it has apparently already discontinued production of the penny. This has created noticeable disruptions in the availability of pennies for community banks, affecting their ability to serve consumers and small businesses. Given these disruptions and the lack of guidance from Treasury, ICBA recently called on the department to restart production of the one-cent coin and develop a formal plan to phase out the production of the penny. In the letter, ICBA: • Noted that the absence of an official statement and phaseout plan has led to a penny shortage before any strategy for managing halted production has been implemented. • Said the lack of clarity surrounding penny processes has created inventory management challenges, resulted in rounding issues and customer dissatisfaction for the retail sector and left community bankers without definitive guidance for their customers. “A phaseout plan, along with an official public statement, could help alleviate short-term issues while still fulfilling President Trump’s goal to cease penny production,” ICBA President and CEO Rebeca Romero Rainey said in the letter. ICBA REMAINS ENGAGED AS THE SHIFT PROCEEDS While the end of penny production continues to raise questions from consumers, they can rest assured that community banks will continue to keep customer ledgers down to the penny. Meanwhile, ICBA will be engaged with Treasury throughout the process to ensure community bankers have the information and educational resources needed to move ahead. Community Banker 19
UNIVERSITY OF MONTANA TAILGATE ROUND UP COSPONSORED BY MIB AND BELL BANK FANTASTIC WEATHER, GREAT ATTENDANCE AND A GRIZ VICTORY! MIB and Bell Bank hosted their 2025 University of Montana Tailgate on Sept. 27, where the UM Catering Service prepared hot dogs, hamburgers and brats for the large crowd of Montana independent bankers and their families. 20 Community Banker
MONTANA GRIZZLIES VS. IDAHO VANDALS SCORE: Grizzlies 41 / Vandals 30 Community Banker 21
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2026 MIB ASSOCIATE MEMBERSHIP RENEWAL Don’t forget to renew your MIB Associate Membership for 2026! Scan the QR code to access the membership registration form or learn more about member benefits. https://mibonline.org/associatemembership-registration/ TAKE US ANYWHERE! Scan to read the most recent publication. Stay up to date from your couch, office or even the moon! Place a 1” x 1” QR Code White on Black Here to the main website Community Banker 23
MIB WOMEN IN BANKING CONFERENCE RECAP The MIB Women in Banking Conference took place at the Springhill Suites in Bozeman on Oct. 8-9, where ladies from around the state came to network, learn and enjoy the conference. Terri James, the event coordinator, said it was a joy to witness the energy and connection as the women came together to support one another. 24 Community Banker
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PIONEER FEDERAL SAVINGS AND LOAN ASSOCIATION ADOPTS PLAN OF CONVERSION Pioneer Federal Savings and Loan Association, a savings association headquartered in Deer Lodge, announced that its board of directors has adopted a plan to convert Pioneer Federal Savings and Loan Association by way of merger to a stock institution to be known as Pioneer State Bank. In accordance with the Plan of Conversion, subject to depositor member approval and the other conditions described in the following, Pioneer State Bank will be a wholly-owned subsidiary of a stock holding company, PSB Financial Inc., and the common stock of the holding company will be offered to deposit customers of the association and others, which could include members of the general public, in the manner and subject to the priorities set forth in the Plan of Conversion. The Plan of Conversion is subject to approval by the association’s depositor members as well as banking regulators at the State of Montana Division of Banking and Financial Institutions and the FDIC. A proxy statement setting forth detailed information relating to the Plan of Conversion will be sent to the depositor members for their consideration prior to a special meeting called to consider the Plan of Conversion. Pioneer has filed the requisite regulatory applications. The proposed conversion is a legal reorganization that will alter our corporate form of organization, but not our business relationships. All banking operations previously conducted by Pioneer Federal will be conducted through Pioneer State Bank. The current board of directors, management and employees will continue to serve customers from the same offices as the board, management and employees of Pioneer State Bank. Terms of deposit accounts and loans will remain unchanged at Pioneer State Bank after the proposed conversion, and deposit accounts will continue to be federally insured by the FDIC up to the maximum legal limit, without interruption. This article does not constitute an offer to sell or the solicitation of an offer to buy shares of common stock of PSB Financial Inc., and these securities may not be sold nor may offers to buy be accepted prior to the time a registration statement filed with the Securities and Exchange Commission (SEC) becomes effective. A registration statement relating to the shares of common stock to be offered by PSB Financial Inc. was filed with the SEC on Sept. 23, 2025, but, as of the time of this printing, has not yet become effective. The registration statement, as is customary for all registration statements for initial public offerings filed with the SEC, is subject to SEC review. The review of the PSB Financial Inc. registration statement will likely be delayed by the ongoing federal government shutdown, which has had the effect of causing the SEC to suspend its review of all pending registration statements beginning Oct. 1, 2025. Pioneer operates two full-service banking offices in southwestern Montana. As of June 30, 2025, Pioneer had $113.1 million in total assets, $86.1 million in deposits and $18.4 million in total equity. Keefe, Bruyette & Woods Inc., a Stifel Company, is acting as marketing agent for the stock offering. When available, a copy of the final prospectus relating to the proposed offering may be obtained by contacting Pat McJoynt-Griffith at pmcjoynt@kbw.com. For further information, contact Phillip K. Willett, president and chief executive officer, at (406) 683-5191. Community Banker 27
2025 MIB MEMBERSHIP DIRECTORY American Bank (406) 222-8930 www.americanbankmontana.com Ascent Bank (406) 442-8870 ascentbank.com Bank of Bozeman (406) 587-5626 bankofbozeman.com Bank of Montana (406) 829-2662 bankofmontana.com Belt Valley Bank (406) 277-3314 www.beltvalleybank.com Citizens Bank & Trust Co. of Big Timber (406) 932-5311 www.ctznsbank.com Eagle Bank (406) 883-2940 www.eaglebankmt.com Farmers State Bank (406) 642-3431 www.farmersebank.com First Montana Bank (406) 829-2668 www.firstmontanabank.com First Security Bank of Deer Lodge (406) 846-2300 1stsecuritydl.com First Security Bank of Roundup (406) 323-1100 www.1stsecurityroundup.com First State Bank of Shelby (406) 434-5567 www.fsbshelby.com Freedom Bank (406) 892-1776 www.freedombankmt.com Garfield County Bank (406) 557-2201 www.garfieldcountybank.com Independence Bank (406) 594-4248 www.ibyourbank.com Madison Valley Bank (406) 682-4215 www.madisonvalleybank.com Opportunity Bank (406) 442-3080 www.opportunitybank.com Peoples Bank of Deer Lodge (406) 846-2400 www.pbdl.net Pioneer Federal Savings & Loan (406) 683-5191 www.pioneerfed.com Stockman Bank of Montana (406) 234-8420 www.stockmanbank.com Three Rivers Bank of Montana (406) 755-4271 www.threeriversbankmontana.com Valley Banks (406) 676-2000 www.valleybanks.com Valley Bank of Kalispell (406) 752-7123 www.valleybankmt.com Yellowstone Bank (406) 628-7951 www.yellowstonebank.com MIB ASSOCIATE MEMBER BANKS Bravera Bank (406) 294-6500 www.bravera.bank Citizens Alliance Bank (406) 403-7461 www.citizensalliancebank.com The Bank of Commerce (406) 683-2393 www.bofc.bank 28 Community Banker
Advantage (800) 809-2307 advantage-fi.com Alliant Employee Benefits (406) 581-8343 alliantbenefits.com Bancard ATM (406) 855-2637 www.bancardatm.com Bankers’ Bank of the West (303) 291-3700 www.bbwest.com BankOnITUSA (954) 263-6399 www.bankonitusa.com Bell Bank (701) 298-1500 bell.bank BHG Financial Institutional Network (954) 263-6399 bhgfinancial.com Big Sky Finance (406) 869-8403 www.bigskyfinance.org Blodgett Marketing LLC (406) 241-6138 blodgettmarketing.com Community Bankers Webinar Network (406) 442-2585 financialedinc.com Cushing Terrell (406) 248-7455 cushingterrell.com CWG Architecture + Interiors (406) 443-2340 cwg-architects.com DCI Data Center Inc. (620) 694-6800 www.datacenterinc.com DLS Consulting (406) 781-5288 dlsconsulting.net Eide Bailly LLP (406) 896-2435 www.eidebailly.com Federal Home Loan Bank of Des Moines (206) 434-0581 www.fhlbdm.com First Call Computer Solutions (406) 721-6462 firstsolution.com Grizzly Security Armored Express (406) 257-1636 grizzlysecurity.com Holtmeyer & Monson (901) 748-1902 www.holtandmon.com ICBA Northwest Region Office (320) 533-1467 www.icba.org/about/office-staff-directory/ member-services/brandy-smallbrock ICBA Payments (800) 242-4770 www.icbapayments.com ICBA Securities (800) 422-6442 www.icbasecurities.com IntraFi Network (703) 292-3422 www.intrafi.com Keenan & Partners (503) 705-6393 Marsh McLennan Agency (406) 442-5360 mmanorthwest.com Montana Board of Housing (406) 841-2840 www.housing.mt.gov Mountainview Insurance (406) 683-6881 www.montanainsurance.net MSU College of Business (406) 994-4421 montana.edu NeighborWorks Montana (406) 604-4540 www.nwmt.org NFP Executive Benefits (503) 539-8777 executivebenefits.nfp.com PCBB (888) 399-1930 www.pcbb.com Pinion (406) 442-1040 www.pinionglobal.com Prospera Business Network (406) 587-3113 prosperamt.org Rocket Pro (704) 650-0622 www.rocketpro.com SBA (406) 441-1081 www.sba.gov/district/montana Select Bankcard (855) 943-5763 www.selectbankcard.com Silverman Law Office PLLC (406) 582-8822 mttaxlaw.com The Wendt Agency (406) 454-8500 thewendtagency.com TIB (The Independent Bankers’ Bank) (903) 972-3536 www.tib.bank Travelers Insurance (509) 448-2427 www.travelers.com Unitas (800) 461-9224 www.unitas360.com United Bankers’ Bank (800) 752-8140 www.ubb.com Upgrade Inc. (415) 940-7688 www.upgrade.com Wipfli LLP (406) 442-5520 www.wipfli.com Young & Associates (800) 525-9775 www.younginc.com MIB Associate Members support your association with annual dues, sponsorships, discounted services and royalty agreements. Please use these dedicated companies to meet your banking needs. MIB ASSOCIATE MEMBER RESOURCE GUIDE Community Banker 29
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