COMMUNITY BANKS AND CRYPTO-ASSETS Is It Time To Start Exploring? 2026 • Issue 2 Accountability: The Key to Compliance Success
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6 ©2026 Nebraska Independent Community Bankers (NICB) | MBR Connect™, formerly The newsLINK Group LLC. All rights reserved. The Nebraska Independent Banker is published six times per year 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. 2026 • Issue 2 Take a Look INSIDE 12 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 What’s at Stake With Stablecoins for Community Banking By Dexter Schrodt, President and CEO, NICB FLOURISH 6 Community Banking Strategy for Growth By Rebeca Romero Rainey, President and CEO, ICBA PORTFOLIO MANAGEMENT 8 Staying Power Fed’s Balance Sheet Has Some Duration, for Better or Worse By Jim Reber, CPA, CFA, President and CEO, ICBA Securities 10 The Future of AI in Banking Preparing for CECL Automation By Kate Randazzo, Content Marketing Manager, Abrigo 12 Community Banks and Crypto-Assets Is It Time To Start Exploring? By Ian F. McDowell, CPA, Principal, Audit and Assurance, S.R. Snodgrass PC 16 2026 Industry Outlook Community Bankers’ Top Challenges, Investments and Opportunities By Jason Young, Vice President of Product Management, CSI 18 Accountability: The Key to Compliance Success By William J. Showalter, CRCM, CRP, Senior Consultant, Young & Associates Inc. 20 Have You Covered Fair Lending Considerations in the Debt Collection Process? By Tara Booth, Virtual Compliance Officer, Compliance Alliance 22 NICB Endorsed Partners 22 Associate Members 2026 NEBRASKA INDEPENDENT BANKER 3
PRESIDENT’S MESSAGE What’s at Stake With Stablecoins for Community Banking By DEXTER SCHRODT President and CEO, NICB One of the most consequential policy debates playing out in Washington right now centers on stablecoins, and its outcome will have real implications for how community banks operate in the years ahead. I want to take a few minutes to walk you through where things stand, what the data tells us and what we can do about it. The GENIUS Act, signed into law last July, was a meaningful first step. It requires stablecoin issuers to maintain one-to-one reserves and prohibits them from paying interest or yield to holders, a recognition that stablecoins should function as payment tools, not as substitutes for bank deposits. Those provisions reflected a principle we have long advocated for: The rules of the road should be the same for everyone competing for the same customers. However, gaps remain. While issuers themselves are barred from offering interest, affiliated exchanges and digital platforms have introduced “rewards” and yield programs tied to stablecoin holdings that function much like interest-bearing accounts. What Congress prohibited directly is now happening indirectly through intermediaries. The scale of this trend deserves our attention. The stablecoin market grew 49% in 2025, reaching over $312 billion, and the U.S. Treasury estimates stablecoins could displace up to $6.6 trillion in deposits if yield incentives continue to expand. ICBA’s analysis suggests that allowing crypto intermediaries to pay interest on payment stablecoins could reduce community bank lending by $850 billion due to a $1.3 trillion reduction in industry deposits. A recent study of 92 community banks found that nine out of 10 already have customers transacting with platforms like Coinbase, and for every dollar that came back, $2.77 left. These are not abstract projections. They reflect the movement of real dollars out of our communities. 4 NEBRASKA INDEPENDENT BANKER
For Nebraska, the implications are especially significant. Community banks make 80% of agricultural loans within the banking sector and 60% of small business loans under $1 million. Our banks are the primary source of credit for the farmers, ranchers and small business owners who drive this state’s economy. When deposits migrate to digital platforms, those dollars are far less likely to return as loans for Nebraska families, farmers and businesses. The relationship between local deposits and local lending is the foundation of what we do, and it is exactly what is at risk. The conversation has now shifted to the CLARITY Act, which passed the House last July with a 294-134 vote and moved toward a Senate Banking Committee markup in April. A key question is whether Congress will close the yield loophole the GENIUS Act left open. A reported compromise would prohibit passive yields for simply holding stablecoins while permitting incentives tied to actual payment activity. That’s a step in the right direction, but the final language will matter enormously. We have seen before how well-intentioned legislation can be undermined by vague definitions and narrow enforcement mechanisms. It is also worth noting that the FDIC has issued proposed rulemaking under the GENIUS Act to establish a prudential framework for stablecoin issuers, with comments due by June 9. I would encourage any bank with the capacity to review and weigh in on this proposal. Regulatory comment periods are one of the most direct ways we can shape how these rules are implemented on the ground. I want to be clear: Innovation is essential to our industry’s long-term competitiveness, and there may be legitimate opportunities for community banks in the digital assets space, particularly through fintech partnerships and modernized payment infrastructure. But fair competition requires fair regulation. Community banks should not be placed at a structural disadvantage against entities that are not subject to the same supervisory standards we operate under every day. What matters most right now is that Congress ensures stablecoin companies and big tech firms cannot draw deposits away from community banks by offering interest, rewards or rebates, whether directly or through affiliates. Without deposits, community banks simply cannot offer the volume of agriculture, small business and mortgage loans that sustain Nebraska’s economy. It is that straightforward. NICB will continue working alongside ICBA and our Nebraska delegation to ensure community banks have a seat at the table as these rules take shape. This is a moment that calls for engagement, not from a place of fear, but from a position of confidence in the value we provide to our communities. I encourage you to make your voice heard. NEBRASKA INDEPENDENT BANKER 5
FLOURISH As financial services continue to shift, community banks are positioned to be the anchors for the industry, supporting our customers and communities with a resiliency that transcends the environment. By continuing to lean into the personal relationships we build, we differentiate ourselves and bring immense value to those we serve. Doubling down on our relationship-based model means we’re supporting our customers by deploying new, efficient technology. We’re speeding up processes, enhancing our customers’ experiences and growing our connections with them, while retaining the attributes that are at the core of who we are and what we do. We simply need to fast-forward the tenets that already exist to address growing demands. Individually, community banks might need to have hard conversations to determine which solutions warrant their time and attention and which might not best serve their customers. The beauty of community banking is that it’s not one-size-fits-all, and each community bank can identify the new technologies and solutions that best support it. Community Banking STRATEGY FOR GROWTH By REBECA ROMERO RAINEY President and CEO, ICBA 6 NEBRASKA INDEPENDENT BANKER
A Personalized Community Banking Strategy for Customer Growth For instance, as we think about customer retention and acquisition, and by extension, bank marketing, the needs of the individual communities we serve are paramount in today’s environment. Agricultural banks have established different services to support their farm-based communities than banks more attuned to the construction industry. Each of these segments has unique needs, and community banks shine by addressing them. It’s about identifying the personal needs of the collective, which is what we have always done. But now, with the pace of change, community banks must scale their services to maximize potential sooner rather than later. Maybe you are launching a new solution that speaks to a particular niche you serve, or a new process that simplifies customer engagement. Perhaps you are using existing technology more or in new ways. With any new opportunity, it’s about leaning into strengths and taking them to the next level for your customers. So, I encourage you to identify incremental actions you can take to expand your prospects. Look at what your peers are doing for inspiration. Post a question to ICBA Community. Seek out colleagues at ICBA LIVE. Engage with ICBA Preferred Service Providers, corporate members and ThinkTECH Accelerator participants. Whatever direction you choose, take steps to lean into community banking and this community. Without a doubt, we will shape the future of financial services one relationship-based solution at a time. Without a doubt, we will shape the future of financial services one relationship-based solution at a time. NEBRASKA INDEPENDENT BANKER 7
PORTFOLIO MANAGEMENT By JIM REBER, CPA, CFA President and CEO, ICBA Securities STAYING POWER Fed’s Balance Sheet Has Some Duration, for Better or Worse It appears that, if the nominee for the next Federal Reserve chairman is confirmed by the Senate, he will have to roll up his sleeves to achieve some of his monetary policy priorities. Not that Kevin Warsh isn’t up to the task. He served on the Fed’s board of governors for five years, from 2006 to 2011, before returning to academia, and so has first-hand experience with the workings of the board. This is unusual, but not unprecedented; two recent Fed chairmen, Ben Bernanke and Janet Yellen, served as governors, left and returned to lead the Fed. What makes Warsh’s expected confirmation intriguing are his past words and actions regarding the development and conduct of policy, juxtaposed with the Fed’s current balance sheet position. It could make for some interesting dialogue in upcoming meetings, and subsequent statements and press conferences. Here’s some background. 8 NEBRASKA INDEPENDENT BANKER
First Lap Gov. Warsh was known as an inflation hawk during his years at the Fed, which coincided with the start of, and then proceeding through, the Great Financial Crisis (GFC). He participated in a shift of monetary policy from a restrictive stance to pop the real estate bubble in 2007, hiking fed funds all the way to 5.50% in the process, to a wholly stimulative policy in which the overnight rate dropped to 0.25% in barely over a year. The Fed under Chairman Bernanke initiated novel strategies to prevent financial markets from seizing up. Included were the first large-scale applications of the massive bond-buying scheme known as “quantitative easing” (QE). So, within 24 months of being a Fed governor, Warsh voted on tightening, easing and the purchase of over $1 trillion in government bonds. Along the way, he consented with the chairman’s recommendations 100% of the time, which wasn’t unusual, as most proposals were unanimously approved by the Federal Open Market Committee (FOMC), of which each governor is a member. Toward the end of his tenure, his speeches began to voice at least caution in the continued buildup of the balance sheet, indicating concern about overstimulating an economy that was already borrowing at effectively zero interest rates. While by no means being radical, Warsh was considered by most fed-watchers in the “hawk” category. What’s Transpired Since Fast forward a decade to 2021. We had navigated past the GFC, only to face the COVID-19 pandemic. The Fed, now under the chairmanship of Jay Powell, once again cut overnight borrowing costs to near zero and, more pertinently, launched another QE phase that made all previous bond-buying escapades look timid. From March 2020 to August 2022, the Fed added more than $4 trillion in bonds to its balance sheet, for the expressed purpose of lowering the cost of borrowing for all of us. As it continued to buy at ever lower yields, the Fed’s escape route once the pandemic played out was always going to be fraught with peril. Since the balance sheet peaked at nearly $9 trillion in August 2022, the Fed has run off over 25% of its holdings. By “run off,” I mean they’ve let short-term Treasury bonds simply mature, without replacing them. The Fed’s bond collection has had a “barbell” structure: lots of short Treasuries and lots of very long mortgage-backed securities (MBS). As the shortest bonds have gone away, and the very longest bonds are now more highly weighted, the average maturities have correspondingly increased. Also, the MBS portfolio, which is nearly one-third of its holdings, is dominated by very low coupons. Currently, 93% of its MBS have stated interest rates of 3.5% or lower. Work To Do Why this matters: Warsh has written about his expectations to further shrink the balance sheet, even though the organic cash flows have decreased. He has been quoted as saying, “By draining as much as $2.5 trillion in excess reserves, the Fed would mitigate inflation …” So, it seems relevant to investigate how quickly (or slowly) it will take for $2.5 trillion to roll off. Here’s the tall task: The Treasury portfolio will shed about $2 trillion by 2031, and the MBS portfolio, depending on prepayments, will shrink by about $200 billion per year. So, if the Fed simply sits on its current holdings, we’re looking at a multiyear proposition to get the balance sheet to roughly $4 trillion. The alternative is to sell some of its holdings, which can be easily accomplished as the portfolio consists of high-quality, highly liquid bonds. The rub is that interest rates are likely to be under at least temporary pressure to rise, as the supply would need to be digested. That, of course, would be a means of ultimately keeping inflation under wraps, but it’s hard to see how the FOMC could be in a rate-cutting cycle during this wind-down; it would mean the Fed would be injecting and removing stimulus simultaneously. Conundrum indeed. Stay tuned! Chairman Warsh’s Fed promises to deliver some headlines in 2026 and beyond. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities. NEBRASKA INDEPENDENT BANKER 9
By KATE RANDAZZO Content Marketing Manager, Abrigo AI Assistance for the CECL Calculation Is Moving from Theoretical to Practical For community financial institutions, the conversation around the future of AI in banking is no longer theoretical. Leaders are asking practical questions about how AI helps banks operate more efficiently, where it delivers measurable value and how it can be applied while maintaining transparency and trust. Nowhere is transparency more important than in a community financial institution’s CECL calculation. Strengthening CECL Processes with AI Advances in automation and AI are creating new opportunities for teams to strengthen their CECL processes while maintaining the governance the standard requires. Now that the initial CECL implementation period is behind us, banks and credit unions are entering a new phase of figuring out how to manage their calculations most efficiently. The impact of AI on CECL processes will be most visible through enhancements that make complex processes easier to execute, explain and defend. The Evolving Role of AI in Banking and Why It Matters for CECL Across the industry, AI is helping banks reduce manual effort, improve consistency and find insights more efficiently. In areas like CECL, where accuracy, governance and documentation carry significant weight, these benefits are especially meaningful. Most community financial institutions (CFIs) have already made the foundational CECL decisions: • Which methodologies are appropriate for a portfolio • How reasonable and supportable forecasts should be applied • What governance framework supports consistent qualitative adjustments But making those decisions was only the beginning. Many institutions are discovering that CECL’s real challenge lies in execution. Manual workflows, disconnected systems and spreadsheet-driven processes can limit an institution’s ability to fully leverage the insight CECL is meant to provide. As portfolios grow and regulatory expectations mature, execution becomes the primary challenge. This is where many of the advantages of AI in banking begin to take shape, especially when paired with purpose-built CECL solutions. Using Automation and AI to Strengthen CECL Execution One of the most immediate benefits of AI in banking is its ability to reduce friction in operationally intensive processes. When it comes to CECL, automation streamlines data ingestion, accelerates calculations and standardizes workflows across portfolios and reporting periods. These capabilities help support more reliable reporting cycles The Future of AI in Banking Preparing for CECL Automation 10 NEBRASKA INDEPENDENT BANKER
and enable teams to manage documentation requirements more effectively. For decision-makers, this is where AI begins to deliver a tangible return on investment. Faster close cycles, fewer errors and greater confidence in results all contribute to stronger operational outcomes and better use of expert time. CECL teams no longer need to spend excessive time navigating tools or managing workarounds. Instead, they can focus on understanding results and making informed decisions. Platforms that incorporate AI will evolve from calculation engines into end-to-end systems that support analysis, documentation and review — without sacrificing human control or judgment. Maintaining Oversight and Trust as AI Adoption Grows Any discussion about the future of AI in banking must address governance and control. AI should not select methodologies, determine forecasts or apply qualitative adjustments. Those responsibilities must remain firmly within management’s purview. Where AI adds value in CECL is by supporting execution around established management decisions. One of the most resource-intensive parts of the process is documentation. Allowance results must be supported by clear, regulator-ready explanations that answer questions such as: • Why did the allowance change this period? • How were economic conditions incorporated? • Which assumptions had the most impact? AI offers a practical way to improve consistency and ensure compliance when answering these questions. Generative AI can help transform structured CECL data into complete, standardized narratives, making explanations easier to produce, review and maintain across reporting periods. The result is stronger documentation quality with fewer opportunities for omission or unfounded assertions. When used thoughtfully within well-governed systems, AI becomes a natural extension of modern CECL platforms. It reinforces process discipline, supports audit readiness and helps institutions operate more efficiently without compromising transparency or control. This approach reflects the broader future of AI in banking: responsible innovation that strengthens oversight, improves outcomes and builds confidence with regulators and stakeholders. The Broader Impact of AI on CECL and Banking Strategy Looking ahead, the future of AI in banking will be shaped by usability and integration. Institutions that combine CECL expertise with modern automation and applied AI will be better positioned to reduce risk, improve efficiency and communicate results with confidence. For CECL teams, this means seeking solutions that simplify execution, support consistent analysis and help derive greater value from the decisions they have already made. These capabilities reflect a broader shift across banking, where AI is becoming a practical tool for improving efficiency, accuracy and insight across core processes. The future of CECL closely mirrors the future of AI in banking as a whole. Progress will continue to be driven by thoughtful innovation that improves outcomes while maintaining strong governance and professional judgment. Kate Randazzo is a content marketing manager at Abrigo, where she works with industry thought leaders to create digital content that helps financial institutions better serve their customers. Before joining Abrigo, Kate managed social media and produced articles for Campbell University’s quarterly magazine and other university content initiatives. She earned her bachelor’s degree in strategic communication and professional writing from Miami University. The future of CECL closely mirrors the future of AI in banking as a whole. NEBRASKA INDEPENDENT BANKER 11
Speaking recently with our many community bank clients, we’ve seen a significant increase in questions and concerns regarding the increased presence of crypto-assets business models. The general sentiment is “I know it’s being discussed, but I’m not sure how the regulators will view this or how it will affect the current operations of my community bank.” As these questions continue to increase, this article has been prepared to provide some insights into the FDIC’s current regulatory developments, as well as some practical information on how community banks can start to explore this topic at their own organization. Let’s start with how the regulatory landscape has changed over the last few years. Between April 2022 and March 2025, the FDIC issued two brief Financial Institution Letters on this topic: FIL-16-2022 and FIL-7-2025. It doesn’t take much reading between the lines to identify an apparent shift from a precautionary, pre-notification stance on banks’ crypto-related activities (FIL-16-2022) to a permissions-based, risk-management stance that rescinds the prior notice requirement (FIL-7-2025). In the 2022 letter, the FDIC required banks to notify the agency before engaging in any crypto-related activity and emphasized evolving safety and soundness, consumer protection, and financial stability risks. Following, in the 2025 letter, the FDIC affirmed that FDIC-supervised institutions may engage in permissible crypto-related activities without prior FDIC approval, provided risks are adequately managed and activities comply with applicable law. Additionally, in February 2025, the FDIC published 25 “pause letters,” which were sent to banks between October 2018 and January 2025, discussing the FDIC’s concerns with their crypto-related activities. In the context of the release, Acting FDIC Chairman Travis Hill commented about the FDIC’s position evolving to provide a pathway forward for banks by saying, “Looking forward, we are actively reevaluating our supervisory approach to crypto-related activities. This includes replacing Financial Institution Letter (FIL) 16-2022 and providing a pathway for institutions to engage in crypto- and blockchain-related activities while still adhering to safety and soundness principles.” Taking a slightly deeper look at the remarkably brief 2025 FIL, the following highlights are noteworthy: • Risk-Based Approach: The letter reiterates that banks must conduct all activities “safely and soundly and consistent with all applicable laws and regulations.” Risk areas called out include market/liquidity, operational and cyber, consumer-protection, and AML. • How Permissibility Is Framed: FIL-7-2025 affirms that activities involving new and emerging technologies — including crypto-assets and digital assets — can be permissible if risks are managed. It references OCC interpretive letters on custody and stablecoin reserves as examples of activities that may be permissible when executed appropriately. • Forward-Looking Coordination: The FIL states the FDIC will work with other banking agencies to replace the 2023 interagency statements on crypto-asset risks and liquidity vulnerabilities with further guidance or regulations and continue engagement with the president’s Working Group on Digital Asset Markets. Community Banks and Crypto-Assets By IAN F. MCDOWELL, CPA Principal, Audit and Assurance, S.R. Snodgrass PC Is It Time To Start Exploring? 12 NEBRASKA INDEPENDENT BANKER
• Tone: The tone is notably pragmatic and enabling. The accompanying press release quotes Acting Chairman Travis Hill as saying the FDIC is “turning the page on the flawed approach of the past three years.” This signals a desire to provide a clearer path for banks to engage in crypto/blockchain activities under safety-and-soundness standards. Additionally, following on the heels of the FIL in March, Congress generated additional tailwind on the topic by signing the GENIUS Act into law. While the details of the GENIUS Act aren’t being discussed in this release, the Act generally defines and regulates stablecoins that are used for payments or settlements. At the time the Act was signed into law, whitehouse.gov described the Act by saying, “This long-overdue legislation creates the first-ever Federal regulatory system for stablecoins, ensuring their stability and trust through strong reserve requirements.” The Act goes a long way to promote more widespread use of stablecoins throughout the economic system while providing regulatory guardrails that a community bank must be familiar with when considering a crypto-friendly business model. With the apparent change in tone at the regulatory level, the question we hear most frequently is “How are community banks getting involved with crypto-assets in practice?” While the short answer is that not many are, there are a few emerging topics that community banks may want to consider if they want to start preparing for a crypto-friendly environment for their customers. Although the industry is still in its infancy with crypto-assets, there have been a few potential use cases at larger players like JPMorgan and Bank of America that have shown potential to possibly “trickle down” to the community banking space: • Custody Services: Offering custody services for your customers’ crypto-assets may align with some banks’ current Trust Services or Wealth Management divisions. In the early stages, a streamlined approach to this type of service may involve a mutual partnership with a third-party service where the bank acts as the custodian for the asset broker. This approach may be appealing to banks hoping to attract or retain younger customers who already hold crypto-assets but are unsure about the safety or security of the parties safeguarding those assets. • Stablecoin Reserves: Many crypto exchanges and fintech firms (River, for example) attract customers to their platform by holding client assets in full reserve, meaning that for every dollar invested in crypto-assets, they hold a dollar in a cash reserve with a qualified institution. This provides an opportunity for banks to be that institutional partner. With the passing of the GENIUS Act, we expect to see particular interest in stablecoin activity over the coming years. • Crypto-Backed Lending: As crypto-assets continue to become a larger part of consumers’ asset portfolios, customers may have an increased need to convert those less liquid assets into spendable dollars. While lending against direct crypto-asset holdings, such as bitcoin, is likely to be well outside the risk tolerance of most community banks, other crypto-related assets, such as publicly traded crypto-ETFs, may be a viable source of loan collateral; however, robust risk mitigation policies would need to be developed and implemented to ensure the safety and soundness of the activities. Any time a bank is venturing into uncharted territory, a slow, methodical approach is critical. The following are a few actionable insights to help a community bank explore crypto-related activities consistent with FIL-7-2025: • Start with activities that have clearer supervisory lineage. Consider crypto custody, stablecoin reserve services or participation in permissioned networks/INVN for payments — areas referenced by bank regulators and consistent with FIL-7-2025’s framing of potentially permissible activities. These business models also relate directly to the more robust guidance published by the OCC in interpretive letters 1170, 1172 and 1174. • Treat crypto like any other new product — build the risk stack first. Before launch, document product-level risk assessments covering market/price volatility, liquidity risk, operational resilience and cybersecurity, BSA/AML and sanctions, consumer disclosures and third-party/vendor risks. Align with your existing Part 364 safety-and-soundness standards and risk appetite statements. • Clarify permissibility for your charter and structure. “Permissible” is not blanket approval. Confirm legal authority under state law (for state non-member banks) and Part 362, where applicable; map each proposed activity to legal authority and supervisory expectations. Keep board minutes and counsel memos current. • Engage your supervisory team proactively. FIL-7-2025 removes prior approval, not supervisory dialogue. However, a diligent product rollout will always require sharing your program design, controls, KPIs/KRIs and issues-management plan with your exam team. This preserves transparency and mitigates surprises during exams. Details of the plan NEBRASKA INDEPENDENT BANKER 13
are the key to successful regulatory buy-in, so reduce confusion by ensuring plain-language disclosures that distinguish insured deposits from crypto-assets and explain custody, segregation and loss scenarios. The FDIC has pivoted from a 2022 posture that required prior notification and emphasized uncertainty to a 2025 framework that permits banks to engage in permissible crypto-related activities without prior approval, anchored in safety and soundness and compliance. For community banks, the opportunity is to pilot targeted use cases with proper risk-assessment controls, proactive supervisory transparency and consumer-centric clarity, while staying nimble as interagency guidance evolves. As always, our firm is happy to answer questions or provide guidance on this or any other subject. Please feel free to reach out to me or any one of our firm leaders should you have any questions. Ian is a firm principal at S.R. Snodgrass with expertise in all aspects of audit and assurance services. He is exceptionally proficient at assisting public companies in their SEC regulatory filings under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, and navigating through business combinations as well as public and private stock offerings. He is a member of the American and Pennsylvania Institutes of Certified Public Accountants (PICPA), PICPA Financial Institutions Committee and PICPA Council, and is a frequent speaker at numerous banking and accounting conferences. Sources: https://www.fdic.gov/news/inactive-financial-institution-letters/2022/ fil22016.html https://www.fdic.gov/news/financial-institution-letters/2025/fdic-clarifiesprocess-banks-engage-crypto-related https://fdic.gov/news/press-releases/2025/fdic-releases-documents-relatedsupervision-crypto-related-activities 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 14 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 – Over 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 CEO and Vice Chair – 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
Rising competition and consumer expectations mean community financial institutions must operate more efficiently while delivering modern, personalized services. Meanwhile, advances in AI, open banking, cybersecurity and regulatory change are reshaping the industry and creating new opportunities for those who adapt. CSI recently surveyed banking leaders nationwide about how they are preparing for the year ahead. Their responses revealed cautious optimism and a focus on strengthening core capabilities while adopting new technologies. Foremost Challenge in 2026: AI Leaders increasingly view AI through a dual lens: a powerful driver of efficiency and automation across operations, but also a potential catalyst for fraud, scams and operational risk. Naturally, it remains a top concern for many in 2026. Institutions are gaining greater confidence in where AI can deliver real value, from automating routine tasks to strengthening security and supporting relationship-driven work. That confidence is most pronounced among larger community institutions, with 97% of banks holding $5 billion to $10 billion in assets saying they understand how AI can be applied in banking. As a result, the conversation has shifted from whether to adopt AI to how to integrate it responsibly. Success will depend on data readiness, governance frameworks and aligning AI use cases with existing workflows and risk management practices. Secondary Challenge in 2026: Cybersecurity and Data Privacy While the average cost of a financial services data breach declined from $6.08 million in 2024 to $5.56 million in 2025, cyberattacks still carry serious financial, reputational and regulatory consequences for institutions of all sizes. To remain secure, institutions must continue to prioritize investments in advanced monitoring and proactive threat-detection tools. Foundational practices, such as employee training and ongoing risk assessments, also remain essential to strengthening overall cyber resilience. Bankers’ Top Technology Investments The report shows that 2026 technology investments will be spread across multiple 2026 INDUSTRY OUTLOOK Community Bankers’ Top Challenges, Investments and Opportunities By JASON YOUNG Vice President of Product Management, CSI 16 NEBRASKA INDEPENDENT BANKER
modernization efforts, signaling a balanced and diversified approach. Leading Investment in 2026: Efficiency Drivers Like Automation or AI Efficiency technologies remain the top investment priority, with 37% of bankers citing automation or AI as critical to improving operations, especially in improving back-office processes. As community banks face increased competition from all sides, they look to AI and automation to do more with less. Conversational AI is gaining momentum, but many institutions are still searching for its most valuable use cases. The real differentiator ahead will be how prepared institutions are to use their data, both to support AI initiatives and strengthen decision-making. Secondary Investment in 2026: Data Analytics/ Actionable Insights & Digital Account Opening Many institutions recognize the value of analytics but are still working through data silos and integration challenges that limit the insights that can be gained. AI and clear analytics dashboards can be useful tools for turning data into action. Smart use of data helps institutions understand account holder behavior and identify areas to better serve them, including customizing offerings and promoting them digitally. Interpreting data to create a personalized experience also helps institutions solidify relationships and decrease attrition. Continued focus on digital account opening suggests that even institutions with established solutions see opportunities to streamline onboarding and back-office processes, with open banking increasingly serving as an enabling layer that accelerates integration. Bankers’ Top Opportunities for 2026 Bankers are strategically engaging with consumers and embracing transformative trends that promise to redefine banking operations and customer service in the years to come. Greatest Opportunity in 2026: Harnessing the Power of AI AI is increasingly top of mind for executives as they explore ways to transform operations, drive efficiency, fight fraud and sharpen decision-making. AI-powered tools present a unique opportunity to level the playing field against big banks by offering assistance and smart automation. Generative AI applications, in particular, hold the promise of hyper-personalized, around-the-clock service, allowing banks to leapfrog their capabilities and retain a competitive edge. From virtual assistants to content creation tools, the applications of generative AI are vast, offering financial institutions newfound agility and efficiency in meeting customer needs. Secondary Opportunity in 2026: Digital Assets 20% of bankers surveyed named digital assets (including stablecoins, tokenized deposits and cryptocurrencies) as one of their top opportunities, signaling growing curiosity about how these technologies could fit into future banking models. While most institutions remain in the early stages of exploration, interest is being driven by potential use cases around payments, efficiency and new revenue streams as the market continues to evolve. While interest in these assets grows, the regulatory landscape for stablecoins and tokenization is still evolving. At the end of 2025, the FDIC released its first rule for the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. Most near-term applications remain limited, primarily in cross-border transactions, and any strategic engagement will require careful analysis and strong compliance frameworks. Navigating the Road Ahead for Community Banking Strategic focus and adaptability will be essential for community banks this year. While challenges remain, 86% of bankers report optimism about the future, signaling confidence in the industry’s direction. By strengthening foundational capabilities and embracing emerging technologies, institutions can position themselves not just to adapt, but to compete. This article only scratches the surface. For a more complete picture, scan the QR code to read the 2026 Banking Priorities Executive Report. https://www.csiweb.com/docs/bankingpriorities-2026/ Jason Young serves as vice president of product management, helping guide the development of solutions that support CSI’s vision and strategy. With extensive experience in product development and integration, he plays a key role in advancing CSI’s products and services. NEBRASKA INDEPENDENT BANKER 17
Compliance is recognized by the financial industry as a high-risk function. Failure to manage it effectively can result in high costs to an institution, as witnessed by many supervisory enforcement actions and fair lending settlements over the years. Compliance management is an important element of an institution’s overall risk management efforts. It makes sense to ensure that it is “owned” by line managers, those whose operations will generate either compliance or noncompliance, just as with all other elements of the institution’s overall risk. To make compliance management work well — effectively and efficiently — line personnel need to be given the tools to succeed at compliance and then held responsible for their results. When senior management establishes accountability and all staff believe it, and compliance performance is measured meaningfully, positive compliance results can occur. As with other aspects of compliance management, identifying and categorizing levels and types of compliance risks are critical to both efficient operations and effective outcomes in any system of enforcing accountability. Noncompliance as Risk In recent years, federal agencies have made a fundamental shift in how they examine financial institutions for compliance within their overall examination process, adopting a risk-based methodology. The agencies’ programs are designed to focus examiner attention on areas within financial institutions that may pose the most significant risks, including compliance. The agencies work to promote a sound risk-management process at each regulated financial institution, one centered on the evaluation and management of risks. The agencies try to help financial institutions implement compliance programs that focus on anticipating, evaluating, managing and communicating about key compliance risks. “Compliance risk” is defined as that risk to earnings or capital that arises from violations of or nonconformance with laws, rules, regulations, prescribed practices or ethical standards. The agencies’ examination procedures provide that compliance risk can damage an institution through any or all of the following consequences: • Regulatory or judicial fines and penalties • Payments of damages to aggrieved parties • Voiding of contracts • Diminished reputation • Reduced franchise value (due to monetary and reputation losses or penalties) • Diminished business opportunities • Lessened expansion potential (e.g., when fair lending or Community Reinvestment Act problems delay or disallow corporate changes, mergers or acquisitions) The supervisory agencies recognize that an important element in avoiding these risks and their resultant costs is an effective accountability system, in which institution staff feel they own their roles in the overall program. Establishing Accountability An effective accountability system has to be built around a solid design. A few key elements are needed to make it succeed: management commitment; appropriate training of and communication to all staff; regular, independent testing of performance; and consistent enforcement of responsibility. Management Commitment Solid support from both the board of directors and senior management is vital to the success of any compliance (or other) management function. It should also be seen as in their best interests since the risks and penalties for noncompliance are tremendous, and the board and management are ultimately responsible for the institution’s compliance (and other) performance. Management and the board need to understand the true importance of compliance — it is not a job to be relegated to one person, or a small group, and ignored by everyone else. “Everyone else” includes those who drive the institution’s compliance performance, and they must be given the tools to succeed and held accountable for their results. Training and Communication Training is the foundation for effective compliance and accountability, since employees cannot be expected to comply with the plethora of laws and regulations that govern banking today Accountability: The Key to Compliance Success By WILLIAM J. SHOWALTER, CRCM, CRP Senior Consultant, Young & Associates Inc. 18 NEBRASKA INDEPENDENT BANKER
if they have not been given appropriate instruction on what is required of them. In structuring a compliance training program, the first step is a needs assessment — the types of products and services offered, current level of staff knowledge, problems identified in audits and examinations, and so forth. The goal of the compliance training is to provide line officers and other staff with the information they need to produce positive compliance results in their particular area or job. It is not to be an exercise in information overload. Therefore, the person in charge of training (whether classroom, online, etc.) needs to scope out the relevant laws and regulations to be covered, determine how to tie the rules into the institution’s functions, decide which media and tools to use, and so forth. Regular communication of compliance information is an important complement to regular training. It helps keep staff aware of changes in the compliance rules and expectations, as well as keeping compliance issues on their “radar screens.” Testing A robust internal compliance review program, including both periodic audits and ongoing monitoring, can serve several purposes. These include giving early warning of problems, providing a defense against litigation, meeting regulatory expectations, and furnishing measurements of department/area or individual performance. Enforcement Without consistent enforcement of accountability for compliance performance, all the other elements are pretty much for naught. If individual line managers and other personnel are “let off the hook” for poor compliance performance because, for example, of high loan production volume, the system is likely to fail. Making It Work Human nature being what it is, there needs to be incentives for good compliance performance and, perhaps more importantly, disincentives for poor results. In addition, if all staff are not held to the same standards, then any exhortations for good results and performance will ring hollow to everyone. Those that the institution tries to hold to proper standards will begin to resist, since they are expected to meet standards that others are not. Such a “program” is not fair and cannot succeed. Compliance performance elements should be factored into job descriptions, performance evaluations, and incentive pay. It needs to be clear that line managers are ultimately responsible and accountable for compliance performance in their areas, and that compliance is an explicit part of everyone’s job. If there are line managers who cannot or will not take responsibility for their own or their area’s compliance performance and, therefore, expose the institution to risk, the institution should send them packing and replace them with managers who are positive about compliance issues and willing to take on this important obligation. Otherwise, the institution has to pay for expensive, redundant processes to check the work of that person(s) or area and fix their errors. Running such a “fix-it” shop is not an efficient way to manage compliance. Establishing and enforcing accountability can produce the lowest-cost compliance — compliance that is embedded in the institution’s normal operations rather than added on, with everyone working to get it right the first time. A useful tool for running an accountability system is an accountability matrix, which can be customized to fit an institution’s particular situation, structure and needs. It can help assure management that someone or an area has been designated as responsible for each compliance rule or issue that impacts its lines of business. The matrix should outline the rules or issues, who is responsible for them, which areas they affect, and so forth. Conclusion As discussed, accountability for compliance performance — good or bad — is essential for an institution’s success in effectively managing its compliance function. Properly structured and enforced, a strong accountability program helps ensure cost-effective, positive compliance results. William J. Showalter, CRCM, CRP, is a senior consultant with Young & Associates Inc. (www.younginc.com), with over 30 years of experience in compliance consulting, advising and assisting financial institutions on consumer compliance and compliance management issues. He also develops and conducts compliance training programs for individual banks and their trade associations, and has authored or co-authored numerous compliance publications and articles. Bill can be reached at (330) 678-0524 or wshowalter@younginc.com. NEBRASKA INDEPENDENT BANKER 19
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