2025 ISSUE 6 PRESIDENT'S MESSAGE 2025 In Review
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INSIDE THIS ISSUE PO Box 1765 Jefferson City, MO 65102 (573) 636-2751 | miba.net Editor: MATTHEW S. RUGE Executive Director ©2025 The Missouri Independent Bankers Association (MIBA) | The newsLINK Group LLC. All rights reserved. The Show-Me Banker is published six times per year by The newsLINK Group LLC for MIBA 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 MIBA, 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 Show-Me Banker is a collective work, and as such, some articles are submitted by authors who are independent of MIBA. 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. Published for the Missouri Independent Bankers Association 4 PRESIDENT’S MESSAGE 2025 In Review 5 FROM THE TOP Digital Banking for the Modern Age 6 FLOURISH Rising Concerns Over National Bank Trust Charters 8 WHERE ARE THEY NOW Catching Up With Stephen Kroenke 10 MEET YOUR MISSOURI BANKER April Meyers AVP Compliance & Loan Operations Officer, 1st Advantage Bank 12 LEGAL EAGLE SPOTLIGHT Participations Trust and Traps 15 MIBA Lobbying Report 16 MIBA Security Conference Sept. 24-26, 2025, Jefferson City, MO 18 2025 Women in Community Banking Conference Nov. 5-6, 2025, Hermann, MO 21 2025 PAC Honor Roll November 1, 2025 22 Making a List, Checking It Twice Year-End Is Approaching. Here Are Some Seasonal Reminders. 24 The Power of Teamwork in Fighting Fraud 26 Shrink to Grow How Streamlining Can Boost Bank Efficiency 28 MARK YOUR CALENDAR! 2026 Directors & Officers Conference April 28-29, 2026 28 MIBA 2026 Upcoming Events 29 MIBA Community Bankers For Compliance Program 30 Thank You to MIBA's 2025 Endorsed Vendors 31 MIBA’s Endorsed Vendors Are Ready to Help You Go Further 32 MIBA Associate Members 34 Upcoming Webinar Schedule 36 Leadership Division Day Out at The Blues 10 5 15 18 The Show-Me Banker Magazine | 3
PRESIDENT’S MESSAGE Curt Brumley MIBA President Community Point Bank As 2025 winds down, if you are like me, it feels as though the year just started last month. As with any year, there were changes, challenges and successes that led us to where we are now. The changes and challenges we faced in 2025 prepared us, as individuals, banks and our entire industry, to handle the known and unknown events that will arise in 2026. In 2025, we had to deal with many things, some of which were positive and some not so much. President Trump took office on Jan. 20, which was shortly followed by various changes in government offices, a reduced government workforce, tariffs and deregulation. However, compliance will always be a significant part of our everyday processes. Cyber threats and various forms of fraud have increased in complexity during the past year, none of which we are immune to. Fraud will remain an ongoing battle for every bank, necessitating advanced monitoring, customer and staff education, and the utilization of technological tools. Artificial intelligence presents both new levels of benefit and risk, making it a true double-edged sword. AI can reshape banking as we know it. While forms of AI have been around for years, their usage has increased and will only continue to grow. If not addressed yet at your bank, real-time payments are advancing and will change how banks operate. Stablecoin and bitcoin are becoming more acceptable every day within the U.S., and banks will need to determine how to handle them in the future. The Federal Reserve has begun lowering interest rates due to concerns about the labor market, despite inflation not yet reaching the Fed’s target rate. The drops will impact banks’ net interest income and their strategies for managing interest income. In banking, one thing is certain: change. Challenging conditions should prompt us to adopt strategies beyond traditional banking that create greater value. It is essential that we collaborate as a collective to share knowledge and advocate for pro-bank legislation, thereby growing and strengthening both the banking industry and our organization. Throughout all the changes and challenges we have experienced in 2025, we have so much to be thankful for. The connections we share, the audits and exams that help us improve, the boards that provide insight and direction, the employees who work to provide customer service, the customers who allow our banks to serve their needs, and our families. As we reflect on 2025, the new year is just around the corner. With that, I look forward to seeing each of you next year, and I wish everyone a great and successful 2026. In Review 4 | The Show-Me Banker Magazine
larger net around the products and services that address a strategic need. To that point, our digital transformation efforts can also support the internal workings of our banks. The tech solutions my community bank has rolled out most recently are focused on helping detect fraud, which has become our biggest priority for the year. We have integrated new services to clamp down on attempted ACH and wire fraud, and we have real-time integrations that allow us to stay on top of transactions. We have also become a lot more proactive, using a new product that we found through ICBA’s ThinkTECH Accelerator (icba.org/accelerator) to scan the dark web for customer information and take precautionary steps when we see something. Fortunately, as we continue to advance our digital offerings, ICBA has programs that help, and I encourage you to explore them. Come to ICBA LIVE (icba.org/live) from March 6-9, 2026, and meet with providers. Sit in on the ThinkTECH showcases to learn about new technology offerings for community banks. Review the Solutions Directory (solutions.icba.org) for companies already vetted by ICBA. I, for one, am truly grateful to have ICBA as a partner as my bank grows its digital presence, one solution at a time. It’s with that same sense of gratitude that I say I am thankful for this community of community bankers. Wishing you and yours a wonderful holiday season! FROM THE TOP Digital Banking for the Modern Age Jack E. Hopkins Chairman, ICBA My Top 3 Things I’m grateful for: 1. My growing family — I have two new granddaughters to join my grandson! 2. My ICBA family. 3. Fall football season. For community banks, digital transformation has moved from an industry colloquialism to a punch list reality. While we have always offered exceptional digital services that complement relationship banking, the emergence of artificial intelligence, the demand for integrated experiences and the 24/7 nature of banking have taken our plans to the next level. And therein lies the potential. While our tech stack has historically been a cost center, we must now think of it as an opportunity. Consider how data dashboards could deliver insights that allow your team to market to customers in ways that directly resonate with their preferences. Think about how a product like a personal finance manager may help your wealth management business by steering customers to market opportunities. Or look at small business products that integrate bookkeeping into your banking app, allowing customers to enter invoices and pay bills from one consolidated, secure location. Technology allows us to expand our services in ways that align with customer needs, and these offerings only scratch the surface of what is available. With core providers more open to fintech integrations, we can cast a The Show-Me Banker Magazine | 5
FLOURISH Over the past few years, we’ve witnessed an alarming upsurge in the number of nonbank financial technology firms applying for national bank trust charters. We can track this trend back to a shift in policy in 2021 (Interpretive Letter #1176) in which the Office of the Comptroller of the Currency (OCC) reinterpreted the trust charter to eliminate its exclusive focus on fiduciary activities and redefined it to create an opening for digital asset firms to apply. There are many fundamental issues with this interpretation, including: 1. Safety and soundness concerns. The digital asset providers applying for this charter bring unique risks that require sufficient supervisory and regulatory safeguards. Trust banks are not required to meet the same kinds of regulatory and capital standards that apply to federally insured full-service banks. Granting carte blanche to these higher-risk entities also exposes the banking system to deposit drainage and increased fraud. 2. Policy inconsistency and risk. The charter was designed for one purpose: conventional trust companies providing custodial services for trust beneficiaries. Opening up access to digital asset firms does not align with that intent or statutory parameters. That lack of policy consistency creates risks in the banking sector. Rising Concerns Over National Bank Trust Charters Rebeca Romero Rainey President and CEO, ICBA 3. Unfair competitive market. Nonbank financial technology firms are using these charters to circumvent traditional regulatory requirements. The charters allow these firms to function like banks but without the regulations that are required of banks. This creates an uneven and risky playing field. ICBA has called on the OCC to rescind Interpretive Letter #1176 and undertake a formal rulemaking on the national trust charter to clarify its scope and alignment with congressional intent. We are also continuing to comment on individual applications as they come through; engaging repeatedly with the OCC to voice concerns; and providing education through media interviews, press releases, blog posts and more to keep a focus on this alarming trend. We need your help, too. Stay engaged on this topic. Comment on applications and remain aware of emerging issues. Educate your legislators. Armed with knowledge, we’ll be better able to respond. It will take our unified voices for this issue to be addressed. Fortunately, when it comes to advocating for the safety and soundness of our banking system, community bankers always rise to the challenge. 6 | The Show-Me Banker Magazine
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WHERE ARE THEY NOW Right out of college, in 1982, Steve began working at the local community bank in Lincoln, which his father, Karl Kroenke, and others owned at the time, Farmers Bank of Lincoln. Karl started his career at the bank in 1953 and retired as president and chairman. Karl remained as chairman until 2020, when he retired from the board. Karl’s devotion to the industry and service to the community have been an inspiration to Steve throughout his career. As a second-generation banker, Steve was proud to carry on the legacy his father had started. Over the 38 years at the bank, Steve held positions ranging from loan officer, cashier and EVP. In 2000, Farmers Bank became entirely family-owned. Steve became president and CEO at that time. Together, Steve, his father and his brothers ran the bank — with two locations in Lincoln and Warsaw — always keeping a focus on serving the local community. “It’s no secret that there are many challenges that come with operating an independent community bank. However, there are many positive aspects to it, like the staff and officers I was fortunate enough to work with on a daily basis,” reflected Steve. When the opportunity for a merger came up in 2019, the family had the best interests of its employees and customers in mind. They spent considerable time in negotiation to ensure that, although they were merging with a larger bank, the two branches, to which they dedicated their lives’ work, would still operate like a small, personable, independent community bank. Steve remembers a specific moment in which he, his father and his brothers sat down to discuss the pros and cons of continuing to own their small community bank. They kept coming back to the fact that they valued the fantastic people in management positions and the autonomy this allowed them. When the merger was completed in 2020, and as Steve announced his retirement, he felt fortunate to keep part ownership of the bank and that each branch was able to maintain their autonomy. Though retired, Steve hasn’t stopped his involvement with the bank. He had spent years building up the community bank — essentially building up a family — and didn’t want them to feel like he was abandoning them when he retired. That’s how Steve operated as a Catching Up With Stephen Kroenke As part of our new series spotlighting the post-career journeys of retired bankers, we’re sitting down with some of the industry’s most respected names to learn where life has taken them after banking. In this issue, we are featuring Stephen “Steve” Kroenke, a long-time community banker and proud member of the Missouri Independent Bankers Association (MIBA). 8 | The Show-Me Banker Magazine
boss; he was and is a true leader. So, when the CEO of Community National Bank & Trust, Dan Millfield, asked him to join the bank’s board, Steve was more than willing. Serving on the board of a $2.2 billion bank is a significant responsibility, and Steve has embraced the role. The growth that Steve and his family have been able to facilitate across the region has created its own challenges, but as a board member, he strives to maintain efficiency and compliance while retaining the community aspect for the bank. In his free time, Steve spends time with his wife, visiting with their nearby family. He feels lucky to have his parents and mother-in-law living at assisted living facilities close by, which makes it easy for him to stop in, check on them, and spend quality time together. And when time allows, Steve enjoys Mizzou sports and the occasional round of golf at a course near where his parents live. Steve and his wife dream of one day traveling the country in their motor home, but for now, they’re fully enjoying the present and the blessing of family. For bankers today who would like to learn from Steve and his remarkable career, he imparts the following wisdom: “The future comes at you fast … Focus on what’s right in front of you while keeping an eye out there for when you’re farther down the road. Plan on plans changing.” Steve advises bankers to be proactive, have a plan, dictate their path and adapt when needed. He went on to say, “You’re as good as the people who work for you. If you’re fortunate enough to have good people around you, that’s the key, because you can’t get anything done by yourself.” Thank you for your unwavering dedication to our industry, Steve. You’ve served your community and the industry well and set a remarkable example for bankers everywhere! The Show-Me Banker Magazine | 9
MEET YOUR MISSOURI BANKER April AVP Compliance & Loan Operations Officer, 1st Advantage Bank Where is your bank located? We are a single-branch bank located in the heart of St. Charles County. What is something unique about your bank? Our culture is truly unique. We are a $200 million bank with 25 employees, so we are busy! Every day we show up and we care about working hard and doing a great job. We care about our customers, each other and the bank, and it shows! How did you get started in the banking business? I was looking for part-time work after having my second baby and found a bank hiring a teller for 10 hours per week. It was a perfect fit, and I fell in love with banking. I quickly went from 10 to 20 to 30 to 40 hours per week, and from teller to customer service manager in two years. What prompted you to begin a career in banking and continue the family tradition? My mom worked in a bank the entire time I was growing up. She has always spoken about what a great industry banking is and how she thought it would be a great fit. I never saw myself in banking, but I fell into it by chance and fell in love with the industry! It was never my intention to be a banker; it was just always something my mom did. I Meyers 10 | The Show-Me Banker Magazine
What is the bank’s biggest challenge related to internet banking/mobile banking? Our bank leads with people and technology, the two being equally important in creating the best customer experience. In most cases, we offer the same products as our competitors. Our challenge is to show customers that while they might look different, the functionality is similar. For example, we offer P2P but not Zelle; being knowledgeable and educating customers about our products is key. This really illustrates the importance of marketing, and sometimes our greatest challenge in this area is more our marketing ability rather than differences in technology. What’s your favorite thing about your bank or banking in general? My favorite part of banking is the people. While my position in the bank has changed over the years and most of my interactions are with internal customers rather than external customers, being part of an organization that puts people first is truly unique. If you didn’t have a career in banking, what other career would you choose? I love to learn. If I weren’t in banking, I would either practice law or teach college. However, I feel like I’ve been lucky enough to combine both passions in my career today. even left banking briefly (for six months) and came back. Once a banker, always a banker. Banking just becomes part of you. What is the most important thing you have learned from this career so far? Banking is literally the heartbeat of the world, and we have the unique opportunity to guide our customers and make a difference in their businesses, lives, futures and the lives of their children. Being in banking means your job matters; it’s not just punching a card for a paycheck. What is the most interesting thing you have learned from the transition to the banking industry? I never gave much thought to banking before I worked in a bank. It has amazed me the way banking touches every aspect of life and business. The most interesting thing that I have learned from working at this bank is ... everything. Having everything under one roof has exposed me to retail, operations, deposit operations, loan operations, compliance and security. It has been a great opportunity to learn about all aspects of banking and how much it takes to make it all happen. Tell us about the bank’s community investment efforts. 1st Advantage Bank’s community outreach starts with the employees. The bank supports employee involvement in community organizations by giving time and money to employees’ chosen organizations. Many employees choose to participate in community organizations with their kids, and others participate in events around town supporting area charities. The Show-Me Banker Magazine | 11
a provision to my participation agreements that required the other party to be trustworthy. All joking aside, that was the right answer, but trust can’t be properly drafted into an agreement. Here, I outline a few key provisions to strengthen the trust factor between a lead and a participant. With lending limits under pressure and with the rising cost of money and other market uncertainties, participations have been an ever-popular tool among lenders (and the factoring industry). They help smaller banks retain clients that require more capital, and they help lenders hedge their bets when deals are riskier on paper. They are also useful in helping private commercial financiers pair up with banks or other non-bank lenders when licensing issues or other regulatory limitations present themselves. Unfortunately, I have observed wide variations in participation agreements and have encountered many that lack some of the critical provisions they should contain. I have seen many participants or leads gloss over certain issues that should be addressed upfront, and which could later become devastating to the parties. Here are some potential traps to be mindful of in these agreements. True Sale A participation must be structured as a true sale. If not, that means the money provided by the participant to the lead could be viewed as a disguised loan. I’ve had to defend true sale in front of many judges, and it is an unfamiliar concept to most of them. If a participation agreement were reclassified as a loan by a court, that would create several problems. It imparts usury limitations and lending/borrowing limits. It also threatens the participant’s ability to have derivative lien rights Participations Trust and Traps LEGAL EAGLE SPOTLIGHT When leading a panel presentation on participation agreements for the International Factoring Association a few years ago, I asked the panelists what they considered the most important element of a participation agreement; they unanimously answered “trust.” I can draft the tightest participation agreement, but ultimately, having the right partner in the deal is what determines its success. (Well, that and whether the borrower pays.) Therefore, I started adding Jason Medley Partner Spencer Fane LLP 12 | The Show-Me Banker Magazine
on the collateral in the event the underlying borrower defaults. The participant would have no security interest in the collateral because it did not “buy” a participation interest therein; it simply loaned money to the lead. Lastly, if it were reclassified as a loan to the lead, that loan would be unsecured. If the lead were to file bankruptcy, the participant would have little to no ability to get repaid (the underlying borrower’s payments would belong to the lead’s bankruptcy estate). To avoid this, many participation agreements will include self-serving clauses that confirm the relationship between the lead and participant is that of a buyer and seller of an interest in the transaction, rather than a lender and borrower. But many participation agreements will have guaranteed ROIs to the participants, and the ability of the lead to unilaterally repurchase the participant’s interest (mandatory puts) at any time, or conversely, the ability of the participant to require the lead to repurchase the participant’s interest (mandatory call). These features can threaten true sale classification. These features can be permissible as default cures or upon termination, to a degree. Still, if they are not drafted carefully, they can be indicative of lending features and therefore threaten a true sale classification. You should make certain your participation agreement is true-sale compliant. The Lead’s Lender and Its Security Interest in Your Deal You would rarely lend against accounts receivable (or purchase them in factoring deals) unless they were free and clear of liens. Because participations are true sales, if the lead has a secured lender, then the sale of the participation interest is subject to the lead’s lender’s lien. It’s no different than if the lead were selling any other asset and had a lender with a lien on those assets. Most participations require that the underlying borrower or account debtors make payments to the lead, which in turn are often mandated to be directed to the lead’s lender’s lockbox or controlled bank account. If the lead were to default on its loan to its own lender, then the lead’s lender could seize all the payments from the underlying borrower and apply them to the lead’s loan balance and not release them to the participant. The same is true, but worse, if the lead were to file for bankruptcy. To mitigate against this, participants should get a simple consent (and a type of limited subordination) from the lead’s lender, which recognizes and respects the participant’s percentage interest as being sold free and clear to the participant. Shadow Due Diligence Trust your lead but verify its due diligence. Most participation agreements will state that the participant has conducted its own investigation into the underlying borrower. Yet, many participants fail to do anything other than trust their lead. Not only should participants obtain the underwriting file from the lead, but they should also conduct a simple lien, standing and litigation search regarding the underlying borrower. You do not need approval from anyone, lead or borrower, to search for this publicly available information (although credit checks and specific background checks are a different matter). Prior to entering into a participation deal, I once discovered that the lead had not secured a subordination from the SBA, which had a prior lien. I once discovered that the lead had wrongly assumed a prior lien only secured a minimal balance that would soon be paid off; however, the creditor advanced additional sums (and its documents had a dragnet clause), eroding the equity in the collateral. I once discovered that the lead in a factoring deal had not delivered notices of assignment (UCC Section 9.406). Lastly, I once discovered that the borrower had its corporate charter revoked over three years prior. When it comes to due diligence, don’t be afraid to tell the lead, “Show me.” Other Small but Important Points Participant’s Own Separate UCC-1 Filing The lead will be in charge of filing a UCC-1 against the borrower, but participants should consider filing a “protective” lien against the lead (subject to the consent of the lead and the lead’s secured lender, if applicable), to protect the participant in the odd event that the participation transaction is reclassified as a disguised loan. If the lender files for bankruptcy, a trustee, creditor or, ironically, the lead itself (on the advice of counsel) could assert this argument, and if successful, the participant would be viewed as a lender, and an unsecured one at that. The underlying participation agreement needs to address this as well, ensuring that the protective UCC-1 is not viewed as worthless, unapproved or evidence of a loan between the participant and the lead. If your deal is reclassified as a loan, at least it will be a secured loan. Audit Rights/Payment Many participation agreements will omit the right of a participant to audit the records of the lead regarding the transaction history. Even if they do provide for one, they may omit the right to force the lead to pay for the audit in the event of a sizeable error. Lead’s Standard of Care I have seen in about 10% of my deals a participation agreement that omits the important clause requiring the lead to treat this particular deal in the same manner and with the same degree of care as they treat all of their other deals in which they are the sole owner. Conversely, I have seen several participation agreements omit the disclosure that the participant is a sophisticated commercial enterprise and is fully capable of understanding the risks associated with participating in a commercial finance deal. Suspending Distributions Upon Default; Catch-up Payments? Watch this provision carefully. The lead should be able to suspend distributions to the participant during a borrower default, but once the default is cured, or once it is written off, there should be a true-up The Show-Me Banker Magazine | 13
and a reconciliation of whatever amounts were received during the default (e.g., from account debtors making payments), net of lawyer fees and expenses. Ability to Modify Underlying Agreement I have seen participation agreements negate the lead’s autonomy, and I have seen them fail to address this issue completely (meaning, I suppose, that the lead could conceivably release collateral, or release a guarantor, or reduce the interest rate or whatever else it wanted to do) without consent of the participant. Make sure to pay close attention to this important provision. Inviting Additional Participants? Keeping Skin in the Game Some participants are jealous lovers, and they don’t want other participants in the deal. Some participants want to ensure that the lead retains a sizeable percentage interest (typically, at least 51%) in the agreement so that they retain some skin in the game. Some leads simply want to be servicing agents, or they want the ability to syndicate the deal. Regardless, make sure that the participation agreement addresses this properly. There are a myriad of other boilerplate provisions and “standard” provisions in a participation agreement, and this article cannot address all of them. The trick is not to get lulled to sleep because the participation agreement proposed by the counterparty looks like the hundreds you’ve seen before. Review it carefully, and have your attorney do the same. Spencer Fane partner Jason Medley represents banks and other financial institutions in all aspects of contract negotiations, workouts, intercreditor relations and secured party collections. He is also designated as a Preferred Attorney with the International Factoring Association and a board member of the Houston Chapter of SFNet. Jason can be reached at jmedley@spencerfane.com and (281) 352-6032. End-to-End Security, Missouri-Ready Compliance. Get end-to-end security plus hands-on exam support designed for Missouri community banks. Gain access to JMARK's award-winning security platform FORTIFY and clean compatability with core environments. Clients report 11% fewer remediation tasks on average and 19.72% average asset growth over two years.* All managed by JMARK—so you can get back to banking. COMPREHENSIVE IT SOLUTIONS See how MO banks cut remediation with JMARK: JMARK.com/banking 844-44-JMARK JMARK.com *Figures represent client-reported outcomes across JMARK banking clients (2023-2025), on average. Results vary. 14 | The Show-Me Banker Magazine
MIBA Lobbying Report As I previously reported, there were two special sessions this summer, and three bills advanced by the legislature currently have litigation pending. The ballot issue to change the threshold for passing a constitutional change is being opposed by the Missouri Realtors Association and organized labor; the new congressional redistricting map is proving contentious, with a petition campaign underway to have the map put on the ballot; and the stadium funding bill that contained the property tax rate freeze is being litigated. The courts’ ruling on these lawsuits could dictate the success of the 2026 session. There is already a tremendous amount of animosity in the Senate. The issues being litigated, as well as contested House and Senate seats and leadership races in both chambers, will add additional pressure. As we enter the holiday season, jockeying for open State House and Senate seats is in full swing. House members in both parties are declaring their intentions to run for open Senate seats. Term-limited representatives who are not running for Senate are considering county offices, while term-limited senators are examining the newly drawn congressional lines to assess their chances. It’s truly a game of musical chairs. The current Republican leadership in the Senate, Pro Tem Cindy O’Laughlin and Majority Leader Tony Luetkemeyer, are term-limited; therefore, jockeying for those two leadership positions has also begun. There is a little more certainty in the House, as the Republican majority has already tapped current Majority Leader Alex Riley as the speaker-elect. However, there is a real horse race for Riley’s position between Representatives Jeff Myers, Brad Christ and Wendy Hausman. The majority floor leader will be elected in late 2026 after the primaries. Stay tuned: According to the Chinese zodiac calendar, next year is the Year of the Horse. The horse is characterized as “confident, agreeable and responsible, although they tend to dislike being reined in by others and often lose interest due to boredom.” Andy Arnold Arnold & Associates The Show-Me Banker Magazine | 15
MIBA Security Conference Sept. 24-26, 2025, Jefferson City, MO 16 | The Show-Me Banker Magazine
Thank You, Exhibitors! Thank You, Sponsors! The Show-Me Banker Magazine | 17
2025 Women in Community Banking Conference Nov. 5-6, 2025, Hermann, MO 18 | The Show-Me Banker Magazine
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Thank You to Our Sponsors! 20 | The Show-Me Banker Magazine
Contributors to the MIBA Political Action Committee are recognized for their generosity on the Association’s website and at the MIBA Annual Convention and Exhibition. Different levels of contribution have been set to recognize supporters of our Political Action Committee fund and to make the Association’s membership more aware of this important facet of our work on behalf of the political agenda of community banks across Missouri. PAC HONOR ROLL 2025 November 1, 2025 NOTE: PERSONAL or CORPORATE CAMPAIGN CONTRIBUTIONS TO ANY PAC ARE NOT DEDUCTIBLE IN ANY AMOUNT FOR FEDERAL TAX PURPOSES. President’s Fair Share Level $10 per Mil in Deposits and up Adrian Bank Bank of Advance Bank of Old Monroe Bank of Salem Blue Ridge Bank and Trust Co., Independence BTC Bank, Bethany Community Bank of Pleasant Hill Community Bank of Raymore Community State Bank of Missouri, Bowling Green Exchange Bank of Missouri, Fayette Exchange Bank of Northeast Missouri, Kahoka Farmers & Merchants Bank, St. Clair FCNB Bank, Steelville First Bank of the Lake First Independent Bank, Auroa First State Community Bank, Farmington Jonesburg State Bank Metz Banking Company, Nevada Mid America Bank, Wardsville Midwest Independent BankersBank, Jefferson City Midwest Regional Bank, Clayton New Frontier Bank, St. Charles Northeast Missouri State Bank, Kirksville Peoples Bank & Trust Co., Troy Peoples Bank of Altenburg Peoples Bank of Wyaconda, Kahoka Peoples Savings Bank, Hermann Preferred Bank, Rothville Regional Missouri Bank, Marceline Security Bank of the Ozarks, Eminence Sherwood Community Bank, Creighton The Missouri Bank, Warrenton Tipton Latham Bank, NA Town & Country Bank, Salem United State Bank, Lewistown Verimore Bank, Brookfield Platinum Level $750 and up Citizens Bank, New Haven F&C Bank, Holden Gold Level $400- $749 1st Advantage Bank, St. Peters Community Point Bank, Russellville Farmers State Bank, Cameron Legends Bank, Linn Silver Level $200- $399 Bank of Crocker Chillicothe State Bank Silex Banking Company State Bank of Missouri, Concordia Individual Donations John Allee, Tipton Don & Lisa Becker, Tipton Calen Bestgen, Tipton H.E. Blankenship, California Carl Blochberger, Tipton David Johansen, Syracuse Sue Ann Loesch, Jefferson City Karen Messerli, California Bobby Schatzer, Latham Lori Woratzeck, California
Making a List, Checking It Twice Year-End Is Approaching. Here Are Some Seasonal Reminders. Jim Reber President and CEO ICBA Securities MIBA Endorsed Vendor Since we started seeing Halloween decorations in August, I felt it was high time we started thinking about the holiday season. More specifically, as it relates to community banking. And still more specifically, about a checklist for the balance sheet. There are some seasonal items that bear attention prior to, and immediately after, year-end. So let’s take a look at what may be on the radar. Gain/Loss Harvesting I have the same access to industry-wide bank performance reports that any of you do, and I also make it a point to ask bankers how their years are going while traveling the country. The numbers and the commentary have been in sync this year, which isn’t always the case. It sure looks like 2025 is going to conclude favorably for community banks in general. By extension, that means a lot of you are going to be ahead of budget. 22 | The Show-Me Banker Magazine
While you’re getting your board of directors to sign off on updated policies, management should ensure these items are fully documented: • Approved broker-dealers • Full list of vendors (with SOC-2 audits if applicable) • Director onboarding and continuing education • Minutes of committee and full board meetings • Execution of risk management strategies, such as interest rate swaps or loan sales • Rationale for, and economics of, bond swaps, with back testing if appropriate There you have an end-of-year checklist, just in case you’ve forgotten or run out of to-dos. Again, thanks to the favorable economic backdrop for most regions of the country this year and the careful stewardship by most community bank management teams, there don’t seem to be any dumpster fires to fight this year. I will update this column with some ideas on how to launch a successful 2026 as soon as I start seeing Easter decorations. Happy holidays! Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. BANCMAC COMMUNITY BANC MORTGAGE CORP. YOUR COMMUNITY BANK MORTGAGE PARTNER bancmac.com mortgages@bancmac.com 888.821.7729 | NMLS# 571147 BancMac provides correspondent and wholesale lending and is your Community Bank Mortgage Partner to help your financial institution originate fixed-rate secondary market loans including: PROGRAMS • Conventional Loans • USDA Rural Development Loans • Rural Living (Hobby Farm) Loans • VA Loans • Jumbo Loans • FHA Loans OUR PARTNERS RECEIVE: • Superior Service & Competitive Pricing • No Minimum Volumes • Significant, Non-Interest Fee Income • Non-Solicit Protections & More That happy dynamic will naturally lead management teams to consider options for fine-tuning their earnings. There are some current variables that give bankers a lot of flexibility in timing their income recognition. For example, the average bond portfolio has a market loss of about 5%, which is the lowest percentage since March 2022. This means that some individual positions have gains, and some have losses. So there are probably some combinations of sale candidates that can produce the desired amount of realized income/loss. A friendly reminder: If your bank is looking for gains, make sure they are not from tax-free bonds. This brings up a related activity … SBA Secondary Market The Small Business Administration’s flagship 7(a) program set a record of $37 billion of closed loans in fiscal 2025. This means more banks have more SBA products in their loan portfolios than ever, and the guaranteed portions (usually 75%) are probably the most liquid loans on a bank’s balance sheet. They can quickly be sold to one of the consortium of SBA poolers at substantial gains. Because the guarantees are always going to demand a premium in the secondary market (due to their full-faith-and-credit status and floating rate structure), many sellers will wait until the fourth quarter to sell, when the bank’s annual earnings are coming into focus. Inside scoop: The poolers are usually besieged with bid lists as the last quarter progresses, so most reduce their bids to smooth out their purchase commitments. Some years, it takes until February for market indigestion to subside. So the suggestion here is to sell your 7(a) loans as they’re closed to more efficiently capture the gains. Risk Management Bankers know intuitively that best practices for risk management include regular assessment of projected cash flows, collateral positions, alternative funding sources and contingency funding plans. What may have changed in the last six months is the increased possibility of a lower interest rate environment for next year. Depending on a given bank’s asset/liability posture and its bond holdings, it could mean additional, and perhaps unwelcome, cash flows. A silver lining is that the average bank now owns its bonds at an average price slightly below par (99.86), so prepayments and calls should have little immediate impact on yields. There have been times in this decade when the average book price was nearly 103.00. Housekeeping Also, the ever-popular policy reviews are coming up on the tickler file. Examiners are wont to ask how recently your troika of policies (i.e., investment, interest rate risk and liquidity) has been updated. Lately, the liquidity policy has gotten a lot of scrutiny, as community bankers have told me. The good news is that there has been no significant literature from the regulators this year that would require a major rewrite. Your brokers and/or A/L modelers should be able to provide some templates, guidance and assistance if necessary. The Show-Me Banker Magazine | 23
As a teenager standing under the bright lights of my hometown football games in Albany, Missouri, I learned the meaning and value of teamwork. That lesson stuck with me. After high school, it was reinforced during high-stress training at the Missouri State Highway Patrol Academy, where I trained to become a trooper. But in the corporate world — especially in banking — why isn’t teamwork more prevalent? I get it: Banks must compete with other financial institutions for loan and deposit customers. That’s how we keep the lights on and the doors open. But what we face daily is bigger than any one bank. It’s something that impacts the entire industry, regardless of size, assets or location. That thing I’m talking about? You guessed it — fraud. Community banks are feeling the sting of fraud most acutely because every dollar lost to fraud can have a direct impact on our bottom line. While larger banks may absorb The Power of Teamwork in Fighting Fraud Quentin McConkey Security & Loan Officer BTC Bank those losses more easily, for us, they’re not just drops in the bucket — they’re waves. To me, it doesn’t matter who your customers are or where you’re located. You could be across the street from a BTC Bank branch or in another state entirely. What matters is that your customers are being affected by fraud, and I care about that. So why can’t we work together? Earlier this year, I pitched the idea of forming a fraud committee to Matthew Ruge, executive director of MIBA. The concept was simple: Any bank could join at no cost, creating a space for us to connect and collaborate to slow the spread of fraud. Matthew saw the value immediately and gave me the green light. Fast forward a few months — I was in Des Moines speaking with Michael Gathman, CEO of Community Bankers of Iowa, and shared what we were starting in Missouri. Michael was eager to join the effort and has been instrumental in helping to expand it. I’m now seeing firsthand the power of teamwork between banks and state associations. Let me explain how the committee works. Michelle Lawson, who manages our member roster and email communications, has played a key role in organizing the Financial Fraud Advisory Committee. We meet virtually every two months for one hour. 24 | The Show-Me Banker Magazine
About six weeks before each meeting, I reach out to the group to gather topics they’re interested in discussing. Based on that input, we invite a speaker to address those issues, usually for 20-30 minutes. The second half of the meeting is an open forum. Engagement has been better than I imagined; the conversations fill the entire hour, with nearly everyone participating. We all know community bankers wear many hats. Our group includes a wide range of titles, but we share a common goal: helping each other fight fraud. Another valuable resource the committee offers is real-time advice. If your bank is seeing something suspicious and you want to know if others have seen it too, you have a platform to ask. Or if you’re exploring new tools or software, you can get peer feedback before making a decision. Don’t just take my word for it — here’s what some of our members have to say: “The battle against fraud is ongoing. While the risk and market areas may be different, collaborating with our peers and industry professionals about fraud trends and mitigation techniques allows us to gain insight we can’t get by fighting these battles alone. Everyone brings a unique perspective — and sometimes that’s just the edge you need to stop the fraud.” — Peggy Lottmann, Farmers & Merchants Bank “Fraud is not static. Being part of a Fraud Committee with other bankers in my state allows us to share not only trends we’re seeing in different regions, but also resources and tips that help mitigate both customer and bank losses.” — Peggy Alexander, FCNB Bank “Fighting fraud is bigger than just one person or one financial institution. It’s amazing to see a group of community bankers come together with a common goal of fighting fraud and educating ourselves and our customers.” — Kim Kohlbusch, Citizens Bank “Being on the fraud committee has been not only informative, but helpful. It has shown that most banks combat the same fraud issues. I believe forming this committee was a positive step towards assisting banks in the fight against fraud.” — Christina Boyd, Community State Bank of Missouri If you’d like to join or learn more about the Financial Fraud Advisory Committee, please reach out to me at quentin.mcconkey@btcbank.bank. The Show-Me Banker Magazine | 25
If you could articulate one common goal shared by most businesses today, it can probably be summed up in one word: growth. But what does “growth” mean, and what does it look like in practice? What is the best way to achieve growth? It may seem counterintuitive, but sometimes an organization needs to shrink to grow. Bigger is not necessarily better, and that becomes evident when you’re talking about financial institutions and the ways in which they can achieve growth through improving efficiency. Profit Resources Inc. (PRI) Consultant Brian Boardman’s experience driving revenue growth through operational efficiency at every level of financial institutions has taught him that growth comes in many forms and looks different to different institutions. The “Shrink to Grow” Strategy: Belt-Tightening or Repositioning? When the goal is growing an institution, financial leaders typically look at several measures, including: • Financial performance (ROI, ROA) • Assets • Deposits • Net income The “shrink to grow” strategy often includes the willingness to shed unprofitable products and customers to invest in more profitable ways to grow revenue. For example, in a quest to grow deposits and provide value to the customer, the institution may decide to change their checking, savings and money market account products. In the process, established customers may decide that they cannot or don’t want to meet new requirements and may close their accounts. Technically, the bank’s customer list is “shrinking,” but if the institution is attracting new, more profitable customers or increasing existing customers’ engagement with the bank, then the net result is a win. “Eliminating or reducing costs in unprofitable or barely profitable businesses frees up capital that enables investment in higher growth opportunities such as new technology, digital banking or new branches in better markets. This is not a belt-tightening exercise but rather a repositioning,” Boardman said. Shrink to Grow How Streamlining Can Boost Bank Efficiency By Profit Resources Inc. Implementing a “Shrink to Grow” Strategy Thoughtfully looking for pockets of opportunity to shrink to grow can give valuable insights into an entire organization. Some initial steps may include: • Focus on core competencies. Accepting that a community bank cannot be all things to all customers naturally begs the question, “What do we do really well for a targeted segment of our potential customers?” By determining the institution’s niche markets and high-margin segments, banks can begin to understand their customers more deeply, design products that solve their real problems and leverage technology to remain agile and responsive to their changing needs. “Most community banks are already serving a niche, whether they know it or not. Niche banking simply means that the institution has recognized its ability to serve a particular segment of the customer base better than anyone else in the market. Taking it a step further requires a deep understanding of customer needs and the development of products and solutions designed specifically to solve their problems.” — PRI, “The Rise of Niche Banking: What Can Your Bank Learn from the Specialists?” • Consolidate and/or close branches. Another example of “shrink to grow” may involve closing physical, less profitable branches to focus resources, technology and talent on more profitable ones with a better overall return. Again, becoming more efficient in the use of institutional resources can lead to improved profitability in the long run. • Review expenses for elimination, reduction or renegotiation. Look at every major expense (and even the minor ones!) to ensure you are paying the best rates for the resources you do need and eliminating or reducing expenses that are no longer serving your strategic plans and goals. Some examples of expenses to review with a sharp eye for efficiency and ROI include: o Employee benefits o Vendor contracts o Real estate o Workforce, where appropriate and prudent 26 | The Show-Me Banker Magazine
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