PUB. 13 2024 ISSUE 4 OFFICIAL PUBLICATION OF THE VIRGINIA ASSOCIATION OF COMMUNITY BANKS THE 47TH ANNUAL CONVENTION COVERAGE
WE APPRECIATE OUR CONVENTION SPONSORS! as of 10/03/2024 DIAMOND BRONZE PLAT INUM GOLD SI LVER 2 The CommunityBanker
©2024 Virginia Association of Community Banks | The newsLINK Group LLC. All rights reserved. The Community Banker is published four times each year by The newsLINK Group LLC for the Virginia Association of Community Banks and is the official publication for this association. The information contained in this publication is intended to provide general information for review and consideration. 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 specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Virginia Association of Community Banks, 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 Community Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Virginia Association of Community Banks. While The Community Banker encourages a first-print policy, 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. CONTENTS 8 14 VACB Board of Directors CHAIR Tara Y. Harrison Virginia National Bank Charlottesville CHAIR-ELECT Lisa E. Kilgour MainStreet Bank Fairfax VICE CHAIR Dabney T.P. Gilliam Jr. The Bank of Charlotte County Phoenix PAST CHAIRMAN Joseph R. Witt, CPA The Old Point National Bank Hampton ICBA VIRGINIA DELEGATE Blake M. Edwards Jr. Skyline National Bank Independence PRESIDENT & CEO Corey J. Connors VACB Richmond VACB Directors LeAnne R. Emert Benchmark Community Bank Kenbridge Cetric A. Gayles Citizens Bank & Trust Blackstone Aaron Green Pendleton Community Bank Harrisonburg James E. Hendricks Village Bank Midlothian Robert J. Hobbs CornerStone Bank Lexington Paul M. Mylum National Bank Blacksburg Thomas L. Rasey Jr. The Farmers Bank of Appomattox Appomattox Mark N. Reed Pioneer Bank Stanley Matthew H. Steilberg C&F Bank Toano VACB Staff Katharine C. Garner, CMP Vice President Education & Communications Kelli C. Mallinger Member Services Administrator 2 We Appreciate Our Convention Sponsors! Chair's Message 4 The Passion Carries On! By Tara Y. Harrison, Chair, VACB, Executive Vice President, Chief Financial Officer, Virginia National Bank, Charlottesville President’s Column 6 Starting With Why By Corey Connors, President & CEO, VACB 8 VACB 47th Annual Convention Coverage October 6-8, 2024, Kingsmill Resort, Williamsburg, Virginia 12 Fraud and Financial Crime By BHG Financial Institutional Network Innovation Station 14 Driving Strategy With AI as a Tool By Charles Potts, Executive Vice President and Chief Innovation Officer, ICBA 16 Customer Retention Strategies By Tony Cole, Co-Founder, Anthony Cole Training Group Partnership Success Stories 17 Utilizing Teslar to Increase Efficiency Without Sacrificing Culture 18 Strategies to Combat Talent Shortages By David Hamrick, Senior Account Executive, Teslar Software 20 Unlock More Profitable Customer Relationships By Dennis Falk, SVP & Regional Manager, PCBB 3 The CommunityBanker
Chair's Message THE PASSION CARRIES ON! Tara Y. Harrison, Chair, VACB, Executive Vice President, Chief Financial Officer, Virginia National Bank, Charlottesville As Lucas White, chairman of the ICBA, recently commented with regard to staffing for the digital future, “We can teach technology, but we can’t teach the passion that comes with community banking. It has to be inherent.” Well, we witnessed that passion for community banking in October at our Annual Convention in Williamsburg! I would like to thank all who participated in the convention by actively listening to our motivating speakers, attending our vendor spotlights, networking over the craps table, and dancing the Charleston! I would also like to thank Katharine and Kelli for all of the work that they put into the convention to ensure it was a success. It was indeed a success! My aspirations as chair during the upcoming year are an effective executive transition, identification of new sources of revenue for the association, and relentless support of and advocacy for community banks. On the subject of executive transition, Corey Connors has jumped into his new role as president and CEO with both feet (and arms, legs and hands!). I am excited to work with Corey and to be a part of the growth that I know we can achieve. I encourage you to explore the educational offerings of the VACB. Countless hours are spent on selecting the best instructors and the most appropriate and relevant curriculum needed in the community banking space. Rely on the VACB and rest assured that your employees will be informed on the nuances of our industry. There are several important dates in 2025 that I ask to you put on your calendar and either join us, send someone from your bank or send many people from your bank: • Jan. 9: Banker Day and 2025 Financial Forecast — Richmond Convention Center • May 12-15: ICBA Capital Summit — Washington, D.C. • May 19: VACB Golf Tournament — Spring Creek Golf Club, Zions Crossroads, Virginia • Oct. 5-7: VACB 48th Annual Convention — Hotel Roanoke 4 The CommunityBanker
As we conclude a very busy year for our association, our community banks, and our nation, please take time with your families and give thanks for our many blessings. Your participation at these events is critical in our success as an association and in our support of and advocacy for community banks! Finally, I want to send out a sincere, huge THANK YOU to Steve Yeakel for his many years of service and dedication to community banks. We have all benefited from his leadership in so many ways. Steve, enjoy retirement to the fullest — you deserve it! As we conclude a very busy year for our association, our community banks, and our nation, please take time with your families and give thanks for our many blessings. Let’s carry the positive momentum, that passion, from our Annual Convention into 2025! 5 The CommunityBanker
President’s Column STARTING WITH WHY Corey Connors, President & CEO, VACB Before diving into my first column for The Community Banker, I cannot thank you enough for the warm reception I have received since coming aboard as VACB’s new president & CEO. From bank visits alongside Steve, to attending several industry gatherings including VACB’s 47th Annual Convention, it has been a genuine pleasure to begin meeting the folks that make community banking in Virginia exceptional. I am honored to serve this wonderful industry and look forward to meeting many more of you in the coming weeks and months. At previous stops, I hadn't often had the opportunity to participate in general sessions at the annual conferences that those organizations have hosted. To do so at October’s convention was a real treat. Sam Richter’s session on generative AI was a real eye-opener if, for no other reason, I could only dream of having abdominal muscles like those Sam created in the fictional AI space. Can artificial intelligence help community banks become more efficient? Maybe. But the images that he shared of an AI-generated Corey were truly haunting. User beware, to be sure! While all the speakers were terrific (all credit due to Katharine Garner and the Convention Planning Committee for the compelling content), there was a moment during Jack Kasel’s talk that captured my attention. During his presentation “How Your Bank Can Drive More Profitable Relationships,” Mr. Kasel asked the audience if they were familiar with Simon Sinek and his writings on inspirational leadership. While I enthusiastically raised my hand in the back of the room, I was surprised that few others had joined me in doing so. Though Jack moved through the concept quickly in passing, the reference struck me as an important ingredient in the “secret sauce” that differentiates community banks from other financial service providers. The background: In 2009, at a regional TED Talk in Puget Sound, Washington, Mr. Sinek presented “Start With Why: How Great Leaders Inspire Action.” He later published a book by the same title that went on to sell over a million copies. If you are anything like me and 12+ million other people, the 18-minute TED Talk version that you can find on YouTube suffices to get the gist of his concept. “People don’t buy what you do. They buy why you do it.” 6 The CommunityBanker
Sinek began his talk by asking three questions that seem broadly relevant, but at this nascent stage of my VACB tenure, perhaps more so to Virginia’s community banks: 1. Why are some people and organizations more innovative, more influential and more profitable than others? 2. Why do some command greater loyalty from customers and employees alike? 3. Even among the successful, why are so few able to repeat their success over and over? Citing the successful examples of Apple Inc., Martin Luther King Jr. and the Wright brothers, Sinek explores how each connected with their respective audiences and found a common thread. On a plain white surface, he proceeded to draw three concentric circles and, from inside to out, wrote the words “why,” “how” and “what.” Sinek hypothesized that this “golden circle” is why some organizations and leaders inspire where others cannot. By reversing the order in which they communicated the value of what they had to offer, starting with why, innovators tap into the part of the consumer’s brain that controls gut instinct — in common day parlance, catching people “in their feels.” Boiling it all down, Sinek repeated his central thesis throughout the remainder of his talk: “People don’t buy what you do. They buy why you do it.” In recent years, the number of detractors claiming that banking is a commodity has grown. Citing market research, we are to understand that consumers view all financial services providers in one big bucket, offering features and benefits that are completely interchangeable. Thus, the theory goes that there is no difference between banking at a large bank, a community bank, a credit union or even a non-bank that provides such services. I vehemently disagree with that premise. I disagree with it as it relates to you. I disagree with it when it comes to VACB. I believe we can all benefit from starting with why. Borrowing a suggestion from Mr. Richter, I asked ChatGPT to become Simon Sinek and, using the principles found in “Start With Why,” to craft a mission statement for the Virginia Association of Community Banks. The response: “VACB believes that strong, resilient communities are the foundation of a prosperous Virginia. By empowering Virginia’s community banks, we ensure they continue to provide tailored banking solutions to our neighbors and small businesses alike — strengthening the trust and relationships that sustain local economies. Together, we build a Virginia where every individual and community has the financial tools needed to flourish for generations to come.” You will find that at the bottom of every email message I send out. You are likely to hear or read variations of that in our messaging moving forward. We (both you and VACB) are unique and provide inherent value to our customers. We are not a commodity. We are a mission-driven, member-centric organization that lifts Virginia’s communities by strengthening Virginia’s community banks. We are VACB. 7 The CommunityBanker
Community bankers from across Virginia gathered at Kingsmill Resort in early October for VACB’s 47th Annual Convention & Trade Show. Members enjoyed quality time together while bringing VACB’s proven formula for convention success to life. The VACB annual convention focuses on trends in the banking environment, exposure to the latest solutions provided by our Associate Members, and great networking opportunities throughout our time together. The two business sessions delivered valuable insights and inspiration, perfectly aligning with the convention’s goals. The Monday session began with the annual business meeting, where officers and directors were elected. Up next was an economic overview presented by Thomas O’Neill with Equifax. O’Neill framed his session around credit trends and delinquencies, discussing the Fed’s recent rate cut and its implications for banks, consumers and the broader economy. Our next presenter and familiar friend was Alan Kaplan, who provided insight into the war for talent in banking. Alan stressed that finding and keeping talent continues to be a struggle in the financial sector. The environment in which banks address talent needs is unlike any before. Banks are stretching well outside the box to attract employees from the current labor market by offering benefits like flex time, professional development opportunities and even pet insurance. Alan shared that those implementing these innovative ideas have positioned themselves for continued success. He also reminded attendees just how critical it is to have the banks’ succession planning start early and to have both CEO and board succession plans reviewed regularly. The first business session ended with a lively and engaging discussion on generative AI and how it will affect the future of banks and customers alike. Sam Richter got attendees buzzing about the practical uses bankers can deploy to use generative AI in their bank roles to improve performance. In addition to sharing how to use these new tools, Sam cautioned attendees about the ethical considerations and decisions business leaders face with these rapidly evolving tools. Monday afternoon, attendees gathered to celebrate retiring VACB President & CEO, Steve Yeakel. A celebratory lunch allowed attendees to honor Steve’s contributions to VACB during his 12-year tenure. Virginia Bureau of Financial Institutions Commissioner Joe Face started the comments, delivering a very sincere sendoff for Steve. Commissioner Face recounted the years they had worked together for the betterment of community banking in the Commonwealth. Others followed Commissioner Face and thanked Steve for his service to community banking in Virginia and all that he had accomplished on their behalf. At the Chairman’s Celebration on Monday night, attendees dressed to the nines for a night at Joe’s Speakeasy, reliving the carefree spirit of the Roaring Twenties! Outgoing VACB Chair Joe Witt was honored for his year at the VACB 47TH ANNUAL CONVENTION COVERAGE October 6-8, 2024 Kingsmill Resort, Williamsburg, Virginia 8 The CommunityBanker
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helm of the association, then passed the gavel to our newly elected 2025 Chair Tara Harrison from Virginia National Bank. After dinner, the guests indulged in casino games, with serious action at the craps, blackjack and roulette tables. The evening was capped off with dancing and 1920s-themed crafted cocktails to celebrate the tremendous service of VACB Chairman Witt. Tuesday’s breakfast featured a legislative update from Steve Yeakel and our newly appointed VACB President & CEO, Corey Connors. Steve and Corey were joined remotely by ICBA’s Paul Merski, and the trio provided attendees with a robust roundup of advocacy efforts at the state and national levels. Following breakfast, our second business session began with ICBA’s Rebeca Romero Rainey addressing the group. In her remarks, Rebeca discussed ICBA’s continued efforts to level the playing field for community banks and ICBA’s current advocacy priorities. She also urged everyone in the room to get involved in grassroots lobbying efforts by using ICBA’s “Be Heard” campaign. Rainey’s passion for community banking and community bankers was on full display during her session. Just in case the generative AI discussion on Monday didn’t put bankers on edge enough, the next session was sure to deliver. Dr. Kevin Streff presented on building a bank’s effective data privacy management program. He provided an overview of data privacy laws, management frameworks and briefly walked attendees through a framework to share how to start tracking this information. As more states pass data privacy laws, banks will be held responsible for keeping data private, much like the information security program banks implemented to protect data as required by the Gramm-Leach-Bliley Act. In addition to being a subject matter expert on data privacy, Dr. Streff and his company can help banks build out their frameworks. Look for more information on this process from VACB in early 2025. 10 The CommunityBanker
The final session was the perfect high note to end the business sessions. Jack Kasel from Anthony Cole Training Group discussed the importance of relationship banking and the attributes of successful relationship bankers. Kasel outlined several of the characteristics of these successful bankers. He shared that they have a strong will to sell and ask good questions, and can uncover compelling reasons to buy. These relationship bankers also have a process, can build strong relationships and, most importantly, have the drive to close business. He urged all attendees to think about who these people were at their banks and how to leverage their knowledge with other staff to help everyone be better relationship managers. The convention concluded with the YHB Grand Prize Drawing. This year, Luke Gore with YHB was on hand to draw a lucky banker’s name for one of several prize choices shipped to their home. Our grand prize winner at this convention was Tammy Hamilton from The Bank of Southside Virginia. Concluding her first official day as chair, Tara Harrison wrapped up the 47th Annual Convention by wishing everyone a safe journey home. She also urged everyone to make plans to join VACB at Hotel Roanoke for the 48th Annual Convention & Trade Show in 2025. (L-R) Luke Gore from YHB presenting the Grand Prize gift to Tammy Hamilton 11 The CommunityBanker
FRAUD AND FINANCIAL CRIME In the world of financial lending, institutions need to have multiple checks and balances in place to protect their assets, their customers and the future of their organization. Sadly, some individuals try to use our fair nature against us for deceptive gain. Efforts to obtain funding through fraudulent means can often be recognized during the initial application review or customer interaction. Outlined here are several methods to support your institution in recognizing fraudulent activities. DUE DILIGENCE IN FRAUD PREVENTION According to the Federal Trade Commission, nearly $8.8 billion was lost to fraud in 2022, representing an increase of over 30% from 2021.1 More than ever, due diligence must be conducted to confirm that applicants who come to you for financing are forthright in their intentions. The following are several fraud indicators your credit team should look for in applications that may reveal a bad actor’s true intentions: • Inconsistent Information: If the applicant provides loan information that does not align with or contradicts other documentation, it could be a sign of fraud. Advise your team to pay particular attention to discrepancies in income details, address history and employment history. ○ Prevention Tips: While typos or small mistakes can happen, these errors can be quickly fixed in a conversation with your applicant. If the applicant is evasive when responding to these inconsistencies or disappears from the process, your suspicions of fraudulent activities were most likely correct. • Unverifiable Information: Applicants who provide information that cannot be easily verified may be attempting to deceive a lender. Examples of unverifiable information include nonexistent references, fake employment details and degrees earned from defunct institutions. ○ Prevention Tips: You can ask for new references and confirm employment and degrees via your own independent searches. You can also confirm whether the employer still exists and is still active by visiting a business entity search website where the company is located. Educational degrees can be verified via the National Student Clearinghouse or Department of Education websites within the institution’s state. • Abnormal Behavior: Applicants who display overly aggressive, evasive or unwilling behavior when asked to provide additional information may likely be trying to hide something. ○ Prevention Tips: Knowing the difference between someone having a bad day versus someone attempting to deceive us is not easy to judge. Here are some helpful tips to consider. During in-person engagements, watch closely for individuals who avoid eye contact or turn their bodies away during one-on-one conversations. In emails or on the phone, fraudulent cues can be more difficult to detect, but if someone suddenly gets defensive when asked a question or becomes noticeably quiet, there may be a hidden reason behind it. By BHG Financial Institutional Network 12 The CommunityBanker
In the world of financial lending, institutions need to have multiple checks and balances in place to protect their assets, their customers and the future of their organization. • Unusually High Income: While a high income does not indicate fraud, it is well worth looking into further if an applicant’s income seems excessively high relative to their stated profession, or if there is a sudden, large shift relative to the income they earned compared to the previous year. ○ Prevention Tips: Third-party vendors, such as Inscribe, can be instrumental in finding inconsistencies in an applicant’s income. These third-party automated systems can provide insight into which documents may or may not be fraudulent, such as pay stubs, W-2s and bank statements. • Rushed Application Process: Often, fraudsters will want to rush the application process to minimize the chances of being caught. Be extra cautious if an applicant pressures you or your team for quick approval. ○ Prevention Tips: Slow it down. Take your time and review the application carefully. The applicant could innocently want to expedite the process to get the desired result sooner. Regardless, never allow their need for speed to accelerate the process to the point of negligence. • Use of Stolen Identity: Stolen or fabricated identity documents may be used by bad actors applying for loans. Be vigilant about verifying the authenticity of the provided documents. ○ Prevention Tips: Leverage third-party vendors to help identify stolen or faked identities. Companies such as Vouched can review identification and provide accurate, real-time insights into the authenticity of the documents. Alternatively, your team should be looking for any missing holograms, cheap lamination or identification that does not have images under ultraviolet light. CLOSING THOUGHTS As financial institutions navigate the lending landscape, it is important to adopt a stance of informed prudence. The battle against fraud and deceit requires unwavering commitment, steadfast due diligence and a keen awareness of the red flags that hint at ulterior motives. By employing a multifaceted approach that blends human discernment with cutting-edge technology, institutions can safeguard their assets, their reputation and the trust placed in them by their customers. 1. New FTC Data Show Consumers Reported Losing Nearly $8.8 B to Scams in 2022 Procedures for Checking IDs: How to Tell if an ID is Fake 13 The CommunityBanker
Innovation Station DRIVING STRATEGY WITH AI AS A TOOL By Charles Potts, Executive Vice President and Chief Innovation Officer, ICBA Artificial intelligence has become the buzzword for financial services, but it’s moved beyond just hype. Today, community bankers and their partners are experimenting with AI-like tools in the predictive and generative space to support business objectives, including chatbots to offer 24/7 customer support, monitoring transaction data to spot suspicious activity, underwriting loans and more. Therein lies the key to AI success: aligning it with overall bank strategy. As exciting of an offering as it is, AI is a utility. For community bankers to use it effectively, we need to assess how it helps us solve a problem for our banks. IDENTIFYING COMMUNITY BANK AI SOLUTIONS At ICBA Innovation, we’ve been watching AI’s evolution closely and are struck by three important observations: 1. There’s still a great deal of confusion in the industry — from solution providers to bankers to regulatory agencies — as to what AI actually is. As an industry, we have allowed external forces, including people with financial interests in these technologies, to form the narrative. This, in turn, creates uncertainty. 2. However, there’s true technological evolution in this space. Established fintech companies are offering improved solutions using AI-based tools, and new companies are entering the pipeline. 3. We’re witnessing AI-based tools that can help our banks, and we’re finding ways to shine a light on those solutions. Check out the ICBA ThinkTECH Solutions Forum: Putting AI to Work Our recent ThinkTECH Solutions Forum session answers the question of how to effectively use this AI at your community bank. Scan the QR code to access the recording. https://tinyurl.com/putAI2work 14 The CommunityBanker
As exciting of an offering as it is, AI is a utility. SUPPORTING AI STRATEGY These developments led us to host our AI Solutions Forum. We identified AI solution providers that were already doing work with community bankers and asked those bankers to share how AI addressed problems, where they are seeing successes and where these solutions fit into their strategies. The resulting AI Solutions Forum provides a firm base on which community bankers can learn and grow. It’s a chance for both C-suite and up-and-coming leaders to expose themselves to something new in a safe, trusted environment. It’s our goal not to just dive into the shiny new thing but to create a place for substantive, peer-to-peer dialogue and strategic exploration. AI may be the technology du jour, but it has real potential to solve community bank problems. So, we want to ensure you have the information you need to make informed decisions and drive your strategy forward — one new tool at a time. 15 The CommunityBanker
If your goal is to retain and expand relationships, it is important to create a consistent and remarkable experience for your customers, clients and potential clients. If you are not providing a superior experience, your clients might start asking, “Then who will?” Here are several questions to consider as you reflect on your customer retention strategies: • What are you doing to keep your clients happy and satisfied? • Are they telling others about your business? • Is your bank providing an excellent consumer experience for your clients? • Are you getting to know the wants, needs and pain points of your customers each and every single day? • Are you under-promising and over-delivering results? Now, can you think of a place where you go and wait in a long line, spend a lot of money, and can’t wait to tell others how great your experience was? That could describe a number of places, but one example that has lasted for decades is the Disney experience. Disney has been successful for many years by building advocates for their brand. In recent years, Disney has consistently ranked in the top 10 brands overall. No one would argue with the success that they have in exceeding expectations and creating loyal advocates. In his book, “Inside the Magic Kingdom,” author Tom Connellan explains the seven keys to Disney’s success and how they work to create a dazzling experience for all their guests. If you read the book, you will learn what has gone into building and sustaining that kind of relationship with their customers. These are principles that you can apply to your business. In order to achieve “dazzling,” you must have a process that is consistent and predictable. People need to know what they can depend on when they trust you with their banking business. In other words, it’s not a once-in-awhile thing; it is just the way you do things every day. Keep in mind that it does not have to be the same thing for all your clients. The way you support your top 20% should be different than how you support your bottom 20%. But, at the heart of it all, everyone gets the basics. However, if you want to retain and increase relationships and stand out from the competition, you and your bank must be willing to impress, dazzle and treat your advocates like members of your family. It may sound drastic, but there is a reason that some companies truly stand out in a crowded market. It’s the little things that matter in business. Here are four strategies for retaining and creating loyal advocates for your bank: 1. You have to find out what they want. How do you do this? Ask! Give them a list of things to choose from with the option to add things that might not be on the list. 2. Prioritize critical areas. The key here is to find out what they won’t tell you. How many times have you left a restaurant after you told your server everything was fine when they asked? Some of your clients may do the same thing. 3. Identify performance levels and find out where they are setting the bar; don’t assume you know. 4. Negotiate expectations. Now is the time to deal with anything they cannot agree to. Sometimes we say “yes” because we think it’s a deal-breaker; just ask and then decide. If it is outside your ability to deliver, then you are better served to move on because, unfortunately, it will always be a struggle, and they will never become advocates anyway. These four steps will work, assuming you already have a strong knowledge base and industry acumen of the goals and challenges of the businesses and clients you work with. The only way to exceed your clients’ expectations is to know what they actually are, not what you think they are. Start by having that conversation first, and soon, you will have them coming back for more and telling their friends. This understanding of client expectations is the most powerful customer retention strategy, but it takes some focus and effort. To learn more, visit anthonycoletraining.com. CUSTOMER RETENTION STRATEGIES By Tony Cole, Co-Founder, Anthony Cole Training Group 16 The CommunityBanker
“Ultimately, Teslar saves us the most valuable commodity of all: time. It allows our highly skilled team members to apply their knowledge in their fields of specialty without tedious tasks to slow down efficiency.” Anthony Edwards Senior Credit Risk Officer Skyline National Bank Skyline National Bank partnered with Teslar to streamline internal processes, improve operational efficiency, and maintain focus on community-centered banking. Objectives $1.2 Billion Total Assets Based in Independence, VA Fiserv Premier Core Partners since 04/2020 About the Bank AT A GLANCE Enhanced Efficiency Across Departments: The time saved allows staff to focus on high-value tasks, aligning with Skyline’s community mission. Employee Buy-In and Adoption: Teslar’s ease of use and configurability have fostered organization-wide adoption, with departments across the bank incorporating Teslar tools into their processes. Time Savings: Teslar enables team members more time to focus on their skillsets and interests. C H A L L E N G E S Skyline National Bank was seeking a solution to streamline operations across departments without disrupting company culture or overwhelming staff. Their processes were hindered by email chains, paper-heavy workflows, and systems that created "an endless cycle of email doom." The goal was to improve efficiency while maintaining the familiar tools and practices central to their culture. S O L U T I O N S “Teslar is the Swiss Army knife of banking solutions,” said Skyline National Bank's President & CEO Blake Edwards. “It changed our processes entirely.” The customizable platform allowed Skyline to improve efficiency across critical lending and deposit operations, including functions like exception tracking, workflows, and loan packaging, without disrupting the bank’s deeply valued culture. Exceptions are now managed in real time within Teslar, eliminating the inefficiencies of manual document handling. “We have moved away from tracking exceptions in the core and using email chains,” Edwards explains. “We now use Teslar as a live, dynamic exception tracking tool. This has changed our process entirely for loans. We’ve even added all deposit exceptions to Teslar.” Skyline also implemented Teslar’s workflow engine to automate approvals and processes that were previously managed through email and physical documents. Now, both loan and deposit teams use Teslar’s workflows for “everything imaginable,” including automations for built-in approval steps that support FDICIA requirements and compliance checks. “Teslar has completely changed how our loan operations team works,” Edwards shared. “We save an incredible amount of time, and the ability to send loan packages straight to Director Unity Client simplifies our process immensely.” B E N E F I T S Through Teslar, Skyline National Bank has seen significant improvements in time savings and team productivity. “The more efficient we are internally as an organization, the better experience our clients ultimately have,” Edwards notes.
STRATEGIES TO COMBAT TALENT SHORTAGES By David Hamrick, Senior Account Executive, Teslar Software As we continue to hear stories of businesses struggling to find and retain talent, it’s becoming clear that this is the new normal. Many long-time employees retired en masse during the pandemic, leaving banks and other businesses struggling to attract new talent to fill those gaps. Various factors have been discussed as the cause — the general shift in the workforce, systemic issues with corporate structures and younger generations rejecting the traditional corporate environments in favor of gig work, remote work and other nontraditional setups. Regardless of the reasons, banks face the challenge of making banking an attractive career choice for younger generations. Industry discussions have highlighted that one significant pain point is the banking sector’s failure to keep pace with the changing workforce dynamics. There seems to be less allegiance to any one type of industry. We continue to hear stories of people leaving banks for jobs at factories or restaurants. One startling example involved an operations employee leaving because Chipotle was offering higher wages. While the pay discrepancy is cause for concern, it highlights the broader issue of the industry’s struggle to meet the modern workforce’s demands and expectations. Positions critical to bank operations, such as credit analysts and loan assistants, remain unfilled due to a lack of interest from job seekers. This scarcity is worsened by outdated practices and technologies that fail to meet the expectations of a digitally savvy workforce. Reliance on antiquated systems not only hinders operational efficiency but also diminishes the appeal of banking as a dynamic and forward-thinking career path. So, what is the path forward? What can banks do? 1. Update Systems and Processes: Embrace technology to make jobs more meaningful, reduce unnecessary manual tasks and use talent more wisely. 2. Automate: Implement automation and technology that will enable the bank to do more with less. Reducing the amount of FTEs needed will help lighten the burden of attracting talent. 3. Reevaluate Competitive Strategies: Consider new ways to compete with modern expectations and demands, making banking a more fulfilling and worthwhile career path for younger generations. Changing compensation and other factors is not always an option. In instances like these, sometimes the best strategy is to find ways to increase efficiency without adding FTEs and to implement repeatable processes that can be taught to anyone. In community banking, the departure of an employee often results in a significant loss of institutional knowledge, a difficulty amplified by reliance on outdated processes and systems. Investing in automating and standardizing procedures will minimize this risk and aid in training new employees. Instead of only one person who’s worked at the bank for 20 years knowing how to do a certain process, like a loan file maintenance, by automating that process, anyone will be able to complete the process, and you’ll have peace of mind that it’s done consistently and accurately regardless of staff changes. Using technology to optimize these processes also allows banks to reallocate human resources to more strategic, advanced activities. By automating routine tasks, banks can free up their workforce to focus on areas that require human insight and creativity, thus improving job satisfaction and engagement. 18 The CommunityBanker
The industry’s talent shortages are challenging, but with the right approach, banks can continue to thrive despite the obstacles. www.bccadvisers.com WE VALUE BANKS. Business valuation for... ▪ Gifting and stock transfers ▪ ESOP/KSOP valuation ▪ Buy/sell agreements ▪ Estate settlement ▪ Stock offerings ▪ SBA 7(a) loans Lindy Ireland lindy@bccadvisers.com 434.333.6814 Some banks have turned to outsourcing to manage costs and access talent in lower-wage areas. While outsourcing can be a practical short-term solution, the long-term focus should be on building a solid foundation for efficient operations. Improving internal processes and adopting automated systems can alleviate the burden of limited talent and allow you to keep everything in-house. A strategy that addresses technological innovation, process optimization and a clear commitment to employee development is key. The industry’s talent shortages are challenging, but with the right approach, banks can continue to thrive despite the obstacles. 19 The CommunityBanker
UNLOCK MORE PROFITABLE CUSTOMER RELATIONSHIPS By Dennis Falk, SVP & Regional Manager, PCBB Finding the right price for a customer’s deposits or loans can be a difficult balance. Relationship pricing involves looking at your customer’s entire relationship of loans, deposits, fee income and other products to determine the customer’s overall profitability and using this information to make strategic decisions on pricing for renewals or new products. This pricing strategy can have a significant effect on both customer relationships and your bank’s overall profitability. Analyzing customer relationship profitability and using those insights for pricing decisions has become a major component of many banks’ plans to increase their profitability by attracting new customers and holding onto the most profitable of their existing ones. As community banks face rising competition from non-traditional banks, such as fintechs and neobanks, which don’t have the same overhead and are able to offer higher interest rates to customers across the board, the importance of getting pricing right is higher than ever. THE BENEFITS OF RELATIONSHIP PRICING Relationship pricing essentially gives financial institutions a tool to determine the potential profitability of customers by providing more attractive loan pricing and deposit rates to the individuals and small businesses that they believe will be most profitable to their bank over the long term. This approach can be beneficial because it ensures the financial institution is balancing its own profits with the customer’s needs. Competitive pricing also makes it easier for financial institutions to attract new customers and enhances the likelihood of being able to cross-sell additional products and services to customers and make their accounts with your bank stickier. At a time when a rising number of customers are gravitating to fintechs and online bank offerings, analyzing the profitability of the full customer relationship and customizing the pricing for your most important relationships is a critical component of financial institutions’ abilities to remain competitive. Loan Pricing When structuring loans for customers, it’s important to consider how the components of a loan — such as term, interest rate, fees, prepay penalties and other similar factors — impact your institution and how they can be adjusted to make the most profitable deal for your bank, while also pleasing your customers. A comprehensive profitability tool can help you strategize ways to offset Continued on page 22 20 The CommunityBanker
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the cost of originating and maintaining the loan with the potential profit from the loan. You’ll want to consider the risks associated with the loan as well, such as credit risk and interest rate risk. The pricing may also take into account the deposits a customer has with your bank or the potential deposits the customer may bring to your institution, along with their loan relationship. Deposit Pricing A profitability tool can allow your bank to preview different scenarios of how the potential profitability for a customer relationship can change as interest rates fluctuate. The value of deposits, even with today’s higher rates, can still bring profit to each customer relationship and the institution overall. A solid profitability system helps your team understand the value of the deposit for your customer relationship. Profitability tools can also provide a breakdown of how migration between non-interest-bearing deposit accounts to interest-bearing deposit accounts, such as from a checking account to a certificate of deposit (CD) or a money market, can impact the customer’s relationship profitability. THE IMPACT OF DISCOVERING YOUR MOST (AND LEAST) PROFITABLE RELATIONSHIPS Community banks interested in utilizing full customer relationship profitability need to do so intentionally. Along with this, you might find that your most profitable customers aren’t who you might have assumed. For instance, a customer who has many deposit accounts and comes to the branch often may seem to be an active customer. However, that doesn’t mean that they’re your most profitable customer. The customer who brings in the most profit for your institution could just as well be a customer who has minimal deposits but also has a single well-priced loan that generates a lot of interest income. A robust profitability tool can uncover insights to help your team understand the importance of each customer relationship. Your team can then use this data to find opportunities to increase the profitability of each customer by offering them other products they might need and pricing those products to maintain your relationship with your most profitable customers. It is equally important to measure the success of any such efforts on a regular, ongoing basis to gain learnings for increasing profitability in the future. For community banks considering relationship pricing as a way of attracting new customers and holding onto their most profitable existing customers, a comprehensive profitability tool can be a game changer. Relationship pricing is a crucial part of determining how to price loans and deposits to maximize the profitability of your current customer base while also helping you determine the best price to attract new customers that also works for your bank. To continue this discussion or for more information, please contact Dennis Falk at dfalk@pcbb.com or visit pcbb.com. Dedicated to serving the needs of community banks, PCBB’s comprehensive and robust set of solutions includes cash management services such as settlement and liquidity for the FedNow Service, international services, lending solutions and risk management advisory services. Continued from page 20 22 The CommunityBanker
Banking changes. Our commitment to you never does. Throughout our long history, we’ve stayed focused on keeping community banks on the cutting edge. We do this with industry-leading specialists, expertise and offerings – all backed with local banking knowledge. Learn more at travelers.com/business-insurance/financial-institutions travelers.com Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183 This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverages referenced in this document may depend on underwriting qualifications and state regulations. © 2024 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. CP-9620 Rev. 3-24 1890 Travelers begins to offer Financial Institutions coverage 1964 Travelers becomes one of the first domestic markets to write Directors & Officers Liability insurance 1999 Travelers brings its Identity Fraud Expense Reimbursement coverage to market 2011 Travelers CyberRisk coverage is introduced to the market 2024 Travelers and the ICBA Insurance Program’s Policyholder Safety Group Dividend plan has been paid for 22 consecutive years Dividend payouts have been over $80 million since the program began in 1983.
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