CREATING CHANGE WITH GRASSTOPS ADVOCACY The Nebraska Independent Banker 2025 • Issue 4
our Cle mibanc.com MEMBER FDIC OUR LOANS TEAM is Ready to Serve with EXPERIENCE & KNOWLEDGE Joe Kollmeyer Rusty Clark Tom Maassen Doug Pfeifer Suzan Witt mibanc.com MEMBER FDIC Give us a call 888-818-7200
6 ©2025 Nebraska Independent Community Bankers (NICB) | The newsLINK Group LLC. All rights reserved. The Nebraska Independent Banker is published six times per year by The newsLINK Group LLC for NICB 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 NICB, 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. The Nebraska Independent Banker is a collective work, and as such, some articles are submitted by authors who are independent of NICB. 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. Nebraska Independent Community Bankers 1201 Lincoln Mall, Ste. 103 Lincoln, NE 68508 (402) 474-4662 nicbonline.com The Nebraska Independent Banker is a publication of The Nebraska Independent Community Bankers Association. 2025 • Issue 4 Take a Look INSIDE 14 16 NICB Executive Committee CHAIRMAN Jim Niemeier Citizens State Bank Friend PRESIDENT/CEO Dexter Schrodt SECRETARY Kelly Lenners First State Bank Nebraska Pickrell TREASURER Arnold Lowell CerescoBank Ceresco IMMEDIATE PAST CHAIRMAN Rick Heckenlively Points West Community Bank Sidney PRESIDENT’S MESSAGE 4 A Season for Community Why Summer Is the Heart of Local Life By Dexter Schrodt, President and CEO, NICB FLOURISH 6 Empowering Our Nation’s Small Businesses By Rebeca Romero Rainey, President and CEO, ICBA PORTFOLIO MANAGEMENT 8 High Plains Drifter Floaters Could Be the Answer to a Flat Curve By Jim Reber, CPA, CFA, President and CEO, ICBA Securities 10 Creating Change With Grasstops Advocacy 14 Generative AI in Credit Risk Management A Game Changer for Loan Review By Kent Kirby, Senior Consultant, Portfolio Risk, Abrigo 16 Is It Time to Realign Your Legacy Consumer Liquidity Strategy? Yes — Now More Than Ever By Tim Barrett, Executive DDA Strategies, CSI 18 New Survey: Fraud May Be Down, But the Stakes for Financial Institutions Remain High By Terri Luttrell, CAMS-Audit, CFCS, Abrigo 22 NICB Endorsed Partners 22 Associate Members 2025 23 Banker Showcase We Want to Feature You in Our Next Issue of The Nebraska Independent Banker!
A Season for Community By DEXTER SCHRODT President and CEO, NICB PRESIDENT’S MESSAGE 4 NEBRASKA INDEPENDENT BANKER
I encourage all of us — bankers, customers and neighbors alike — to slow down, show up and invest in the people and places right around us. At their core, community banks are about relationships. We know our customers by name. We live and work in the same neighborhoods. And in the summer months, those relationships come to life outside the walls of our institutions. We’re sponsoring Fourth of July parades, supporting youth sports leagues, hosting financial literacy booths at county fairs, and cheering alongside you at community celebrations. Our commitment to local isn’t just a business strategy; it’s who we are. But summer is more than just a time of activity; it’s also a time of opportunity. Local economies flourish when residents choose to shop small and support locally owned businesses. That’s why community banks remain steadfast in our support of local entrepreneurs, family farmers and main street merchants. We see firsthand how a small loan can spark big dreams, and how strong financial partnerships can help businesses not only survive but thrive, especially in the busy summer season. Summer also offers a chance to reflect on what makes our communities resilient. From disaster recovery efforts to planning for long-term growth, community banks play a central role in helping towns adapt, improve and prepare for the future. It’s during these sunny months that many families plan for home purchases, educational investments and business expansions, and we are honored to walk alongside them through those milestones. As we enjoy this season, let’s remember that community doesn’t happen by accident. It takes effort, intention and presence. I encourage all of us — bankers, customers and neighbors alike — to slow down, show up and invest in the people and places right around us. Visit the farmers’ market. Donate to the local food pantry. Celebrate a neighbor’s success. Show community members that when they choose to bank locally, their money does more than grow; it gives back. In this season of warmth and light, may we each find new ways to connect, support and grow. Our communities are the heartbeat of everything we do, and summer is the perfect time to let that heartbeat be heard. Summer in Nebraska is more than just a change in weather; it’s a season of reconnection, reflection and renewed community spirit. As the days stretch longer and the pace of life eases just a bit, we’re given the chance to engage more fully with the people and places that make our towns so special. Whether it’s a Friday night ballgame under the lights, a weekend art walk downtown, or a warm conversation over coffee at the local gas station, these are the moments that build the fabric of strong communities — and community banks are proud to be part of every thread. NEBRASKA INDEPENDENT BANKER 5
FLOURISH EMPOWERING OUR NATION’S SMALL BUSINESSES When it comes to community banking, we are a nation unto ourselves. When I traveled to the World Savings Bank Institute Conference, attendees from other countries were shocked to hear about the number of community banks we have and how our model fuels the success of our small business economy. Globally, no other country can boast such a robust business environment, one driven by nearly 35 million small and micro-organizations, according to the U.S. Small Business Administration, and enabled by our community banking model. Small businesses are the lifeblood of our nation, but community banks are the fuel that keeps them running. This symbiotic relationship is the primary reason we advocate for regulations that allow for flexibility in serving this community. As the nation’s leading small business lenders, we know what these customers need, and we must have the ability to meet them where they are. Just think about a small seasonal business, like a ski shop, that has a really strong few months and a hard few months and that may not want or need the same terms as a grocery store that serves a community year-round. When community banks are required to treat them both the same, it hinders our ability to really serve them in a way that speaks to their cash flow and business models. So, when we advocate for repealing the small business data collection and reporting requirements under Section 1071 of the Dodd-Frank Act, we do it with our customers and communities in mind. We want to ensure that our hands aren’t tied when it comes to truly helping a customer meet the needs of the community. We need the space to be able to offer creative solutions that respond directly to customer needs. And we uniquely understand their needs because we are small businesses ourselves, ones that are invested in the local community, doing business with other small businesses in the area and providing a network of connections to help others grow. It’s why the concept of “bank locally” resonates: Community banks don’t just support small businesses financially. We are also partners in helping them excel. (See icba.org/bank-locally for resources.) So, as you read this issue, I encourage you to do so with a sense of pride. It’s because of your dedication, passion and ingenuity that small businesses thrive, and it is community banks that fuel our small business economy, paving the way for the American dream. That’s a value worth continuing to celebrate and protect. By REBECA ROMERO RAINEY President and CEO, ICBA 6 NEBRASKA INDEPENDENT BANKER
Small businesses are the lifeblood of our nation, but community banks are the fuel that keeps them running. NEBRASKA INDEPENDENT BANKER 7
PORTFOLIO MANAGEMENT HIGH PLAINS Floaters Could Be the Answer to a Flat Curve By JIM REBER, CPA, CFA, President and CEO, ICBA Securities We are suddenly mid-decade of the 2020s, and if there’s a recurring theme, it’s “anomaly.” First, record low yields and rates. (Remember the 10-year treasury note hitting 0.55% in July 2020?) Then, record rate hikes of 525 basis points concentrated in a torturous 16-month window, followed by the longest-ever inverted yield curve of well over two years that finally corrected last September. It’s been the wild, wild West in terms of portfolio management. Now, the Federal Reserve Board projects that the terminal rate for overnight borrowings in this easing cycle will be 3.0%. This would, if it plays out, be the highest floor in over three decades. Hence, this article’s oblique title reference to “drifting” along the “high plains.” Commensurate with this would be the presumption of a chronically flat yield curve, in which there is little incremental benefit to extending the durations of loans or bonds. Stated more positively, there would be less penalty for staying “short.” And the quintessential short bonds are the prime-based floaters guaranteed by the Small Business Administration (SBA) under the 7(a) program. Let’s review this product — and SBA lending in general — to reacquaint ourselves with the opportunities to drift along the high plains, a la Clint Eastwood. First, the Worst Let’s get this over with quickly: Many SBA 7(a) pools have market prices with high premiums, some over 10 points. For those securities, there is certainly built-in prepayment risk, but there are ways to manage that risk. For example, real estate-backed 7(a)s have three years of prepay penalties; while those penalties aren’t passed through to the bondholders, they have the effect of limiting early redemptions initially. In fact, newer pools in general will prepay more slowly. SBA loans are not nearly as fungible as conventional single-family mortgages, so the small business will incur much higher fees to refinance its loans compared with a typical homeowner. On to better news: The reason some pools have such high prices is that the market for guaranteed portions is quite lucrative for lenders/sellers. There’s robust demand from institutional investors for full faith and credit floating-rate securities, and 7(a)s fit the bill. A network of poolers, which include ICBA Securities’ endorsed broker Stifel, are standing bidders for the guaranteed portions of SBA loans, and that creates a stream of fee income immediately (via the premium prices) and later (through servicing revenue). 8 NEBRASKA INDEPENDENT BANKER
DRIFTER Short Duration Equals Stable Prices Compared with virtually any other bank-suitable securities, 7(a)s will have notably stable market prices. The pools’ yields can change every 90 days if fed funds, and therefore the prime rate, reset. These also have no rate caps, either periodic or lifetime. Thinking back to the hyperactivity of the fed in 2022-23, SBA floaters’ yields went up every bit as much as the overnight index. Hence, the stable prices. More good news for bond portfolio managers: The prepayment activity for 7(a)s is highly uncorrelated with that for mortgage-backed securities (MBS). Part of that is due to the complexity of commercial lending I mentioned earlier, but most of the difference is based on SBA floaters’ rates staying on-market. As of this writing, 7(a) yields have come down 100 basis points (1%) since last fall, with more cuts expected later this year. In this sense, the small business borrower is anticipating some further rate relief. SBA prepayments do, in fact, tend to slow down in lower rate environments. Two-Way Street Let’s look at an example of the two-sided market for 7(a) loans and pools. Recently, Stifel offered SBA 530726, a 10-year quarterly reset pool collateralized by equipment, at a price of 108.625. Assuming a prepayment speed of 15% per year, which is close to the historical rate for equipment pools, the yield will be fed funds plus 52 basis points. Here’s where the future shape of the yield curve may help the attractiveness: For the past decade, fed funds plus 0.52% has out-yielded the 10-year treasury note by an average of 15 basis points. The advantage grows geometrically if we look at just the past three years, which, of course, include the historically long inverted yield-curve era. On the sell side, the raw materials for the pool are 129 10-year equipment loans with an average guaranteed balance of $338,000 and a borrower’s rate of prime plus 1.85%. The loans were sold individually into the secondary market at an average gain on sale of $28,300. The lender/seller retains the full note rate on the unguaranteed portion, plus a 1% servicing fee on the sold balance. For many community banks, both commercial lenders and bond portfolio managers benefit from the SBA’s 7(a) program. With the prime index rate off its peak of 2024 but with projections to stay relatively elevated, sellers and investors have an opportunity to ride along the high plains to fee income, servicing income, attractive bond yields and price stability. Jim Reber, CPA, CFA (jreber@icbasecurities.com), is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. Community banks own a lot of debt securities issued by Fannie and Freddie; nearly half of all the bonds in bank portfolios are obligations of the two GSEs. NEBRASKA INDEPENDENT BANKER 9
There’s no getting around the fact that change is difficult. It’s challenging to change someone’s mind or opinion. Imagine the difficulty in getting a group of legislators to change a law or political stance. Bankers have the power to advocate for a better industry. The effects can make a huge difference to your teams, local communities, state, or even at times on a national level. In advocacy, especially when it comes to protecting and promoting the interests of bankers, two terms often come up: grassroots and grasstops advocacy. They sound similar, but they play very different roles. Grasstops vs. Grassroots Most people have likely heard of grassroots advocacy. This is a method of advocacy that involves recruiting ordinary people to combine their voices. The emphasis here is on the quantity of voices. Maybe you’ve donated to your association PAC or signed a petition to fight a bill. These efforts are significant, but sometimes, advocacy needs to go a step further. That’s where grasstops advocacy comes in. CREATING CHANGE WITH GRASSTOPS ADVOCACY 10 NEBRASKA INDEPENDENT BANKER
Grasstops advocacy involves individuals engaging directly with decision makers. This method relies on the quality of voices to bring about change. Have you ever personally picked up the phone to call a key legislator about an issue affecting our banks? Did they answer? That begs the question: How can we do better at engaging at that higher level? Grasstops advocates bring credibility, strategic influence and access — and often help open doors that grassroots advocates can walk through. A grasstops advocacy strategy isn’t just for lobbyists. In fact, as bankers, we are uniquely positioned to be grasstops advocates. We are community anchors, employers and, often, well-connected individuals. Grasstops advocacy taps into this influence to help shape policy outcomes from the top down. It’s about using your voice, your relationships and your credibility as a banker to make a direct impact. Why It Matters A multitude of regulatory or legislative issues affect bankers, such as capital requirements, consumer protection laws, anti-money laundering regulations and interest rate policies. In addition, it’s no secret that legislators have packed inboxes and receive many phone calls. Cultivating a relationship with a legislator can help your chances of having your email opened and your voice heard. Picture this: It’s the legislative session. A legislator is receiving a high volume of emails and calls. Everyone wants to talk to them, meet with them, and be heard. The legislator opens his or her email and scrolls through the names. A familiar name stands out. The legislator opens the email from the individual they know — in this case, you — thus marking the winner of the legislator’s attention. This is a classic scenario reflecting a simple truth: The attention of someone in power will be caught first by a NEBRASKA INDEPENDENT BANKER 11
familiar name. This is why grasstops advocacy is so effective. You want the lawmakers to know your name and your story, so your voice can be heard and your cause can be advanced. How to Build a Grasstops Strategy Knowing where to start when it comes to a grasstops approach to advocacy can be intimidating. You may feel like you don’t have the time to make a difference, or maybe you’re uncomfortable reaching out to lawmakers and afraid of pushback. The easiest approach is to view the process as actionable steps. 1. Map Your Network: Identify any relationships or connections you have with local, state or federal officials. You may have more connections than you think. 2. Grow Your Network: Put yourself in situations to create relationships with individuals in the industry. Visit lawmakers, make connections and let those connections lead to more. 3. Engage Regularly: It’s important to regularly make contact with your network of legislators. You can achieve this by calling them a few times a month, interacting on social media, hosting events or inviting them to visit your bank. 4. Tell Your Story: When talking to legislators, you want them to remember you and your story. Personalizing the relationship and showing them why you care about your bank, the industry, and what is happening on the legislative front can help them understand your point of view and, in turn, help. Conclusion Grasstops advocacy is a powerful tool that more association members need to use. By crafting personal relationships with legislators, we can effectively fight for our industry. Grassroots and grasstops advocacy strategies should be used in tandem to champion our industry effectively. Grassroots efforts provide the quantity through widespread public engagement, while grasstops deliver the quality by leveraging the power of an influential individual to shape decision-maker perspectives. Together, they create a balanced and powerful approach that combines broad support with strategic influence. Remember, it just takes one banker with the right connection to make all the difference. So, take the first step. Start a conversation, attend a legislative event or contact the association about getting involved. 12 NEBRASKA INDEPENDENT BANKER
| 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 – 45 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 1. 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. 5. Our priorities are aligned with yours. 2. You can expand your capabilities. 4. We’ll never compete for your customers. 3. 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 $ 8.45B assets under management $ 1.9B daily transaction value processed/settled Serving more than 60% of community banks across 7 states
GENERATIVE AI IN CREDIT RISK MANAGEMENT Generative AI and the New Loan Review Process The evolution of banking and risk management over the past few decades has been nothing short of remarkable. From paper-ledger loan reviews to digital spreadsheets and now to artificial intelligence, each leap has brought efficiencies that reshape how financial institutions assess credit risk. Generative AI in credit risk management is the latest step forward, offering a transformative approach to loan review. By streamlining processes, improving accuracy and providing deeper insights, AI is set to redefine risk assessment for banks and credit unions. Mitigating Risk and Increasing Consistency One of the biggest challenges in credit risk management is ensuring consistency across reviews. Traditional methods rely on individual experience and manual checks, which can introduce variability and human error, especially as individual loan reviewers’ years of experience trend downward. Generative AI in credit risk management addresses these concerns by standardizing reviews, applying consistent risk parameters and identifying patterns that might be missed by even the most experienced analysts. For new analysts, AI acts as a built-in training tool, providing real-time guidance and helping them get up to speed faster. Kirby said, “Loan Review Assistant is a wonderful training tool for newer analysts, allowing us to reduce the time needed to onboard them while maintaining high-quality risk assessments.” With AI handling repetitive tasks, loan review professionals can concentrate on complex cases that require human expertise. A New Era of Loan Review Efficiency Loan review teams have long faced challenges balancing speed, accuracy and staffing constraints. As financial institutions deal with growing portfolios, evolving regulations and a shifting workforce, maintaining consistency in credit risk assessment is more difficult than ever. This is where tools like Abrigo’s Loan Review Assistant, powered by generative AI, make a difference. As longtime banker and risk management Senior Consultant Kent Kirby explains, “Loan Review Assistant is the kind of tool that makes you wonder how you ever survived without it.” The AI-driven solution enables loan review teams to complete assessments in seconds, ensuring that documentation is accurate and that potential risks are flagged early. By reducing time spent on manual processes, generative AI in credit risk management empowers financial institutions to focus on strategic decision-making rather than data entry. By KENT KIRBY, Senior Consultant, Portfolio Risk, Abrigo A Game Changer for Loan Review 14 NEBRASKA INDEPENDENT BANKER
Meeting Compliance and Regulatory Expectations Compliance remains a top priority for financial institutions, and regulators are increasingly focused on credit risk oversight. Generative AI in credit risk management helps institutions stay compliant by maintaining detailed audit trails, ensuring transparency and aligning with regulatory standards. Data security is also a major concern. Addressing bankers’ worries about utilizing AI-powered tools, Kirby reassures, “Yes, it’s secure. Abrigo knows better than to mess around with data privacy in banking. These tools are built with data encryption, robust access controls and compliance baked in from the start.” AI doesn’t just help loan review teams work faster, it helps them provide regulators with clear, consistent documentation, reducing the risk of compliance issues and improving overall governance. Better Risk Insights, Better Decisions Ultimately, the goal of generative AI in credit risk management is to help financial institutions make better lending decisions. By improving efficiency, accuracy and consistency, AI-driven solutions like Loan Review Assistant not only reduce workload but also enhance risk assessment capabilities. Just as technology has transformed banking over the decades, AI is now changing the way financial institutions manage credit risk. Kirby advises loan reviewers to embrace the process. “When something new comes out, there is always the concern of its sustainability. Twenty-five years ago, there was a fear that all automated systems were flashy, overhyped tech gimmicks, but today they are the differentiators between adaptable community banks and their competition,” he said. “This is a practical, well-designed solution that makes life easier for those of us in the trenches of risk management. It helps us work faster, more accurately and without the headache of manual documentation. It’s the kind of tool that pays for itself in saved time and improved portfolio insights.” Kent Kirby is a retired banker with over 39 years of experience in all aspects of commercial banking: lending, loan review, back-room operations, credit administration, portfolio management, and analytics and credit policy. As senior consultant in the Portfolio Risk practice, Kirby assists institutions in the review and enhancement of commercial. NEBRASKA INDEPENDENT BANKER 15
With rising consumer expectations, growing competition and ongoing economic uncertainty, banks can no longer rely on outdated, one-size-fits-all overdraft programs or legacy small-dollar loan offerings. Yet many institutions are still using ad hoc or legacy systems that lack transparency, adaptability and actionable insight. If your overdraft system assigns limits or manages old-school loan risk without your team understanding the logic behind those decisions — it is time to ask the tough questions. Today’s Landscape Demands More Regulatory agencies like the CFPB, FDIC, OCC, state regulators and others are sharpening their focus on fairness, transparency and consistency in overdraft and liquidity practices. At the same time, customers expect financial institutions to deliver personalized and equitable service. Ask yourself: • Do we have a strategy to attract profitable consumers who seek new forms of liquidity? • Can we explain, defend and adjust our overdraft decisions in real time? • Is our approach helping customers stay banked — not driving them away? • Do we offer loan options underwritten by deposit behavior? • Do we understand who is recovering from overdraft use — and who is not? IS IT TIME TO REALIGN YOUR LEGACY CONSUMER LIQUIDITY STRATEGY? If your answer is “no,” you are not alone — but now’s the time to act. Data Is Only Powerful When It is Actionable Banks sit on enormous amounts of valuable data — deposit trends, transaction behaviors, fees and recovery rates. But if your system does not adapt to risk, only provides canned reports, charges for peer benchmarking or hides key logic behind “proprietary” algorithms, you are flying blind. Worse, if you are applying the same limit to all accounts, you’re missing critical indicators of risk — and opportunity. A modern Consumer Liquidity small-dollar loan and overdraft program should: • React to individual account behavior daily. • Adjust limits automatically based on real activity. • Identify high-risk accounts before losses occur. • Offset risk from either the loan or overdraft use. This is not just about efficiency; it is about control, visibility and long-term customer relationships. Transparency Is Not Optional Anymore Can you explain how a customer’s overdraft limit was set this month versus last month? Do you know when their deposit patterns changed and what you did in response? Is your front-line staff comfortable with explaining options for informed decision-making? If not, your institution may be exposed to compliance and operational risk. By TIM BARRETT, Executive DDA Strategies, CSI Yes — Now More Than Ever 16 NEBRASKA INDEPENDENT BANKER
A modern approach: • Trains front-line staff by experienced professionals. • Audits every account relationship daily. • Manages exception items automatically. • Documents decisions clearly for examiners. More importantly, it aligns with proven best practices and gives you the confidence to stand behind your program — regardless of who is asking. Consistency Builds Trust — Especially With Fee Refunds One of the most common struggles in overdraft programs is inconsistency in fee refund decisions. Without a structured approach, decisions often vary by branch, location or staff discretion — raising red flags and exposing your bank to bias claims or unfair treatment accusations. A data-driven, rules-based approach ensures refunds are handled fairly, consistently and with clear documentation. That protects both your institution and your customers. Returns and Debit Card Declines Cost More Than Revenue Every time a debit card transaction is declined or ACH/Check is returned, two things happen: 1. Your customer gets frustrated. 2. You lose income by discouraging consumption behaviors. Often, a minimal limit or Reg. E opt-out are the root causes that could be addressed with automated communication, expanded purchasing power and staff empowerment. A smart overdraft platform does more than record declines. It takes action: • Sends alerts or letters. • Flags trends by branch or region to help staff with messaging. • Triggers follow-up contact or educational outreach. Proactive tools turn service disruptions into relationship-strengthening opportunities. Reporting Should Empower, Not Exhaust If your team needs IT support to run basic overdraft reports, your system is holding you back. Your executives, managers and frontline staff should be able to access the insights they need — on demand. That includes: • Fee consumption of deposits. • Reasons for declined transactions. • Service level and liquidity exposure tracking. • Charge-off trends by customer type, location or relationship. • Knowledge of what your peers are doing. When compliance, operations and marketing teams all have fast access to actionable data, your institution makes better, faster decisions — without relying on back-end bottlenecks. Take Back Control of Your Program Your overdraft and consumer loan strategy should be an actively managed, strategically aligned part of your bank’s liquidity offerings — not a set-it-and-forget-it product. A modern solution helps you: • Be competitive with new fintech approaches. • Align risk with opportunity. • Provide transparent, fair services. • Stay agile in a shifting economic and regulatory environment. Ask yourself: Is your consumer liquidity approach helping build trust and resilience or keeping you anchored in the past? If it is the latter, it is time to realign. NEBRASKA INDEPENDENT BANKER 17
NEW SURVEY: FRAUD MAY BE DOWN, BUT THE STAKES FOR FINANCIAL INSTITUTIONS REMAIN HIGH By TERRI LUTTRELL, CAMS-Audit, CFCS, Abrigo Fraud isn’t only a risk to manage within financial institutions; it’s quickly becoming one of the most critical tests of trust between banks and their clients. As fraud continues to be a climbing concern at reported losses of $12.5 billion in 2024, consumer expectations for their financial institutions remain high. Abrigo recently conducted its second annual fraud survey to understand how fraud affects U.S. consumers and small businesses and what they expect from their financial institutions. The 2024 Abrigo State of Fraud report uncovered how prevalent fraud had become. Fast forward to 2025, and the picture has changed, but in ways that are just as concerning. According to the Abrigo State of Fraud report 2025, fewer people have experienced fraud this year, but the anxiety around it has grown, and so has the emotional fallout when it does happen. Here’s a closer look at how the numbers have changed and what those shifts might mean for your bank. Fraud Is Less Frequent, But the Pressure Is Rising In 2024, nearly half of the participants told us they had experienced financial fraud at some point. In 2025, the percentage of people who had experienced fraud dropped to 38%. That’s encouraging on the surface, but it doesn’t tell the whole story. Concern about fraud hasn’t dropped. In fact, it’s rising, particularly regarding new threats like AI-driven scams and identity theft. Even with fewer incidents, 56% of fraud victims still reported stress or anxiety, and more than 60% said they would reduce their relationship with their bank or credit union if they were defrauded. Customer attrition rates held steady, with about one in five respondents reporting they had left a financial institution due to fraud, regardless of fault. This underscores the growing pressure on institutions to respond swiftly and effectively to protect both reputation and retention. Customers Are Worried About — and Open To — AI Artificial intelligence has quickly become both a red flag and a green light for consumers. In 2024, 74% of respondents feared AI would increase successful fraud. In 2025, that number jumped to over 83%. But here’s the twist: While concern about AI is rising, so is trust in how it can be used to prevent fraud. This year, 44% of consumers and an impressive 69% of small business owners state that they would feel safer if their institution used AI-powered fraud detection. People are beginning to accept that fraudsters are using advanced tools, and they want their banks to fight back with equally sophisticated defenses. Transparency is key. Clients want to know what tools are being used to protect them and how those tools make a difference. 18 NEBRASKA INDEPENDENT BANKER
Small Businesses Are Feeling the Pressure If you’re serving small businesses, the survey’s insights into how they’re being affected by fraud matter. Last year, half of small business owners had been targeted by fraud. This year, it jumped to nearly 60%. The reported fraud is not minor. More business owners are encountering check fraud and AI-assisted scams. Many of them are facing losses of over $10,000, and they’re spending hours, sometimes days, to resolve the issue. Small businesses also reported that they are more likely to walk away from a banking relationship if they feel unprotected. In this year’s survey, 30% of small businesses said they had ended a banking relationship due to a fraud event. That’s a loud and clear signal; this segment expects tailored fraud education, proactive tools and quick response when things go wrong. Check Fraud Isn’t Going Anywhere, Even as Check Usage Decreases It might be surprising, but check fraud continues to be one of the most persistent and damaging types of fraud we see, even as fewer people write checks. Total check fraud losses for 2025 are estimated to exceed $24 billion. In 2024, 61% of people said they still wrote or received checks. In 2025, that number dipped only slightly. Yet, nearly half of all respondents weren’t aware that mail theft is a key driver of check fraud. Even fewer knew that using a gel pen could help prevent check washing. Younger consumers showed higher-than-expected rates of check fraud victimization, possibly because they didn’t realize the risks. Small business owners continue to rely on checks more than most and face even greater exposure as a result. Education and real-time check fraud detection are important ways to strengthen the relationship between a financial institution and its customers. This is a chance for banks and credit unions to be seen as trusted advisors by offering clear guidance and solid monitoring tools. For example, advising customers not to mail checks from their home mailbox and to use in-branch drop boxes or digital payments instead can go a long way in preventing fraud. Pair that with real-time alerts for suspicious check activity, and you’re not only helping protect your customers, you’re also protecting your bottom line. 800.228.2581 MHM.INC Now more than ever people want self-service options. With our core integrated ITMs we can make this a reality both in the lobby and in the drive-up of your branch. SELF-SERVICE BANKING NEBRASKA INDEPENDENT BANKER 19
Trust Still Breaks Down After Fraud One of the most consistent findings from the survey both years is this: People don’t always stay in a banking relationship, even when their financial institution resolves the fraud quickly. In 2024 and 2025 alike, nearly one in five respondents said they had switched banks or credit unions because of a fraud incident. Many more said they would reduce engagement even if they were satisfied with the resolution. It’s not just about how fast you fix the issue; it’s about how supported, informed and secure your customers feel throughout the process. That’s where communication makes all the difference. Whether it’s sending fraud alerts through the customer’s preferred channel or educating them on what to do next, consistent, clear messaging builds trust that lasts beyond the crisis. What Does All of This Mean for Your Institution What should financial institutions take from the shift in numbers between 2024 and 2025? Fraud isn’t just a technical problem; it’s a human one. People want to feel financially secure, and they want to understand how you’re helping them stay that way. They want you to be transparent about how you’re fighting fraud, especially when it comes to new technologies. When a client is a small business owner, they want tailored support that acknowledges the size of the risks they face. Institutions that respond with empathy, innovation and clear communication will not only reduce fraud losses but also strengthen client relationships. Final Thoughts: Turning Insight Into Action The year-over-year changes in Abrigo’s fraud surveys show us that while fraudsters’ tactics may evolve, your client’s expectations remain steady. They want to be protected, informed and know you have their back. For community banks and credit unions, this is more than a call to action. It is a chance to differentiate. The financial institutions that respond with smart fraud tools, transparent education and empathetic communication will not only reduce losses but also build the kind of trust that fuels long-term relationships, customer loyalty and community growth. Your fraud strategy should reflect your institution’s values, resilience and commitment to protecting what matters most. 20 NEBRASKA INDEPENDENT BANKER
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