Balancing AI-Driven AML With Human Control The Elephant in the Lobby What Your Customers Aren’t Telling You SUMMER 2025
CHARLESTON, WV • MARTINSBURG, WV • MORGANTOWN, WV • PARKERSBURG, WV • SOUTHPOINTE, PA • WINCHESTER, VA Banks, retailers, finance companies, and other businesses offering financial services to consumers face the ever-present threat of expensive and potentially ruinous litigation. Lawsuits, based on federal and state laws prohibiting “predatory lending,” “unfair debt collection,” and “deceptive and unfair” practices, strike at the heart of marketing, sales, privacy, and debt collection practices. At Bowles Rice, our Financial Services Litigation team has experience successfully defending clients, big and small, against lending-related lawsuits and class action litigation brought by consumers and regulators. Our lawyers have experience dealing directly with federal and state regulators on behalf of our banking and lending clients. For more information, contact our firm’s Financial Services Litigation team leader Zack Rosencrance at (304) 347-1161. Financial Services Litigation bowlesrice.com Responsible Attorney: Marc Monteleone 600 Quarrier Street • Charleston, WV 25301
Contents ©2025 West Virginia Bankers Association (WVBA) | The newsLINK Group LLC. All rights reserved. West Virginia Banker is published four times per year by The newsLINK Group LLC for WVBA 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 WVBA, 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. West Virginia Banker is a collective work, and as such, some articles are submitted by authors who are independent of WVBA. 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. 12 24 PRESIDENT’S MESSAGE 6 The Demands To Adapt To Change Have Never Been Greater By Mark Mangano, President & CEO, WVBankers 8 Advocacy is Exciting and Rewarding By Bryce Himelrick, Government Affairs Strategist, WVBankers 10 New Legislation Eases the Way for Mergers Involving the Exchange of Stock By Sandy Murphy, Partner, Amy Tawney, Partner, and Jordan Maddy, Associate Attorney, Bowles Rice LLP 12 The Elephant in the Lobby What Your Customers Aren’t Telling You By Robb Rempel, Executive Vice President, Haberfeld 14 Unlocking Efficiency and Security The Importance of Electronic Lien and Title Technology for West Virginia Banks By Chris Keller, Senior Solutions Manager, CHAMP Titles 17 ATM “Jackpotting” Attacks Have Increased Courtesy of ABA Insurance Services 19 Balancing AI-Driven AML With Human Control By Jessica Tirado, Product Manager, CSI 22 FDICIA Implementation Early Planning is the Key to Success By Brendan M. Whalen, CPA, Principal, Audit and Assurance Group, S.R. Snodgrass PC 24 FDIC 2025 Risk Review Community Banking Summary By Josh Sharp, CPA, Audit and Consulting Manager, Suttle & Stalnaker PLLC 26 FASB Changes Direction on CECL Double Count Courtesy of Forvis Mazars 28 Getting Back to I&T Basics Crafting Effective IT Governance and Policies By Brad Brosig, Assurance Manager, Risk Advisory Services, YHB 4 WEST VIRGINIA BANKER
PRESIDENT’S MESSAGE MARK MANGANO President & CEO WVBankers The Demands To Adapt To Change Have Never Been Greater 6 WEST VIRGINIA BANKER
Benjamin Franklin said, “Change is the only constant in life. One’s ability to adapt to those changes will determine your success in life.” The same advice applies to banks. Bankers today are experienced in adapting to change. Bankers are called upon to adapt to two change types: slow and rapid. The slow change permits bankers the opportunity to study, plan, forecast, train, recruit, contract and adopt new policies. Adapting to rapid change demands all the responses required for adapting to slow changes without the time to comfortably complete all the required steps. Historically, rapid change events such as the Dot Com crisis, the great financial crisis, and the pandemic tended to happen infrequently. Rapid change events place great demands on management teams already task-saturated with adapting to slow change requirements. The pace and diversification of rapid change events has accelerated since the pandemic. Bankers now routinely face rapid change events across regulatory, economic, social, workforce, political and demographic environments. In the last three years we have experienced vast swings in fundamental business drivers. Consumer compliance requirements moved away from and now back toward established regulations and norms. Excess liquidity and zero-bound interest rates nearly overnight transformed into deposit scarcity and a steep yield curve complicating balance sheet management. The workforce participation rates and employee expectations have fundamentally changed. Society is changing how it accesses financial services. Technology is reshaping the very nature of how value flows through the economy. The closely divided electorate increasingly drives a fluid regulatory environment. Adapting to rapid change is particularly challenging for banks because the banking business model is based upon making long-term financial decisions with and for our customers, shareholders, employees and communities. Rapid change substantially complicates risk management. Despite these multiple challenges, members continue to adapt and thrive. The West Virginia Bankers Association recognizes and applauds our members’ resilience, imagination and hard work essential to adapting to rapid change. The Association also recognizes that it must adapt its services to ensure that it serves as a useful and relevant partner in our members’ success. The Association continues to focus on its core mission to provide education, advocacy and leadership. While our core mission will not change, we must change how we deliver on our mission to keep pace with the challenges our members face. The Association’s education services provide robust courses covering nearly every aspect of bank operation. Our education services are primarily focused on helping bankers evaluate strategy and train staff to implement sound strategies. Increasingly, we are evaluating and implementing education services that also focus on leadership development, understanding emerging issues, and creating environments for bankers to share ideas to speed successful adaptation across the industry. The Association has renewed and reimagined its role in pursuing advocacy on our members’ behalf on the state and federal levels. We continue to pursue vigorous and strategic advocacy. Also, we are developing systems and resources to better inform and involve our banks and bank employees in political engagement. Our goal is to make political engagement a rewarding experience for bankers and their institutions. The Association and the West Virginia banking industry have thrived in significant part due to generations of leadership devoted to ensuring a robust and diverse banking system in our state. Bankers continue to step up to foster collective efforts to protect the industry they passionately support. The Association will be enhancing its support for leadership committees within the Association devoted to improving the banking environment in West Virginia. The Association’s members are tasked with adapting to rapid change. The Association is committed to adapting as well. By harnessing the industry’s collective resources, we can ease individual bank burdens and strengthen our industry. Change is the only constant in life. One’s ability to adapt to those changes will determine your success in life. — Benjamin Franklin 7 WEST VIRGINIA BANKER
After several years of running political campaigns in West Virginia, I had the opportunity to represent the banking industry as part of the West Virginia Bankers Association (WVBA) advocacy team during the 2025 West Virginia Legislative Session. I found that advocating for the banking industry is exciting and rewarding, so I chose to join the WVBA as a full-time government affairs strategist. I find advocacy exciting for three primary reasons: strategy, adapting to situations and communicating with legislators with diverse interests. Before the session starts, we develop and follow a carefully defined process that identifies issues, legislative relationships and team resources. Once the session begins, issues develop and change at a fast pace. As issues develop, we must pursue and adapt our communication with legislators to help key lawmakers understand and hopefully support our views. In the 2025 legislative session, pursuing each agenda item for the WVBA required a different approach. Though we follow a defined process in tracking and monitoring the core elements of a bill’s progress, the ability to successfully advocate for its passage requires tailoring. For instance, the bill to prevent credit unions from acquiring banks required a strategy very different from our strategy to expand jurisdiction limits for magistrate courts. The requirement to develop specific strategies is likewise true in our work to defeat bills adverse to banking. Navigating legislative agenda items through different committees, sponsors and relationships requires constant communication and attention to ensure our voice is heard and understood. Our agenda cannot be successful unless fully communicated to a wide range of stakeholders by providing accurate, timely information and context on our broader legislative goals. I find advocacy rewarding because we achieve meaningful results for a critically important industry and because I have the opportunity to develop relationships with legislators and bankers. I also get to apply my grassroots experience in politics to enhance the banking and business climate in West Virginia. In the 2025 legislative session, we defeated bills that would expose banks to needless and unfounded lawsuits. We also successfully advanced six bills that enhance the banking environment in West Virginia. The key to effective WVBA advocacy efforts is building relationships. Building relationships is a constant, important and rewarding activity. Our legislators come from a wide array of backgrounds — from lawyers and coal miners to engineers and small business owners. Our success depends upon finding a common understanding with many legislators. Advocacy is Exciting and Rewarding BRYCE HIMELRICK, Government Affairs Strategist, WVBankers 8 WEST VIRGINIA BANKER
We can all play a part in building relationships. During campaign season and the “interim” period between sessions, the Association and its members remain engaged with legislators, ensuring consistency in our relationships at the Capitol. Further, during the session, legislators enjoy hearing from bankers in their district when our bills are being considered — this applies both a personal touch and a unique, expert voice to the legislative process. I am looking forward to building relationships with bankers to help support our advocacy efforts. Our ability to strategically employ bankers to engage directly with legislators is a critical component of our advocacy function. Further banker engagement in our legislative advocacy helps ensure that our legislative agenda provides the best value possible to our members. Advocacy and running a political campaign have more in common than meets the eye. Each requires a command of the facts and an ability to communicate with stakeholders, both internally and externally. Both are about relationships and bringing people into the fold to work towards a common goal. As I begin my full-time role with the association, I am excited to work with our team and members to further enhance WVBA’s advocacy and political engagement efforts. I am always available to discuss what we’re doing and how you can become more involved. Bryce Himelrick is the government affairs strategist for the West Virginia Bankers Association. He is a native of Parkersburg, West Virginia, and a graduate of West Virginia University, where he studied history and philosophy. After working on multiple state and federal political campaigns and with several PACs, he joined the Association full-time in May of 2025. Outside of work, Bryce enjoys traveling, collecting cars, skiing, reading and spending time with his family and pets. Navigating legislative agenda items through different committees, sponsors and relationships requires constant communication and attention to ensure our voice is heard and understood. 9 WEST VIRGINIA BANKER
New Legislation Eases the Way for Mergers Involving the Exchange of Stock By SANDY MURPHY, Partner, AMY TAWNEY, Partner, and JORDAN MADDY, Associate Attorney, Bowles Rice LLP The West Virginia Legislature enacted a new law aimed at streamlining business combinations by creating an avenue that permits West Virginia companies to acquire another entity using stock as consideration without the burden and expense of registering the stock issued in the transaction. Stock-for-stock transactions have historically been attractive because they allow the acquiring company to preserve its cash. They also allow the shareholders of the target company to defer capital gains until they choose to sell their shares and to participate in the future growth and success of the combined entity. The new law should make stock-for-stock transactions even more appealing because the burden and expense associated with the registration of the securities to be issued in the transactions will be significantly reduced. During its 2025 session, the West Virginia Legislature passed House Bill 2889 (the “Bill”), which authorizes the State Commissioner of Securities (the “Commissioner”) to consider and conduct a fairness hearing upon any plan of reorganization, recapitalization or refinancing of a corporation or limited liability company organized under the laws of West Virginia or having its principal place of business within the state of West Virginia when the plan contains a proposal to issue securities in exchange for outstanding securities, claims or property interests. Prior to the passage of the Bill, such a transaction would have required the filing of a registration statement with the Securities and Exchange Commission (SEC) to register the securities being exchanged in the transaction pursuant to the Securities Act of 1933 (the “Securities Act”). The registration process is time-consuming and expensive. However, the adoption of a state fairness hearing procedure allows West Virginia corporations and limited liability companies, including bank holding companies, to rely on the exemption under Section 3(a)(10) of the Securities Act. The exemption provides that securities exchanged by an issuer are exempt from the SEC’s registration requirements where such exchange involves predominantly the exchange of securities and not cash and the exchange has been approved by a governmental entity following a fairness hearing. Thus, companies may use the fairness hearing process authorized by the Bill to avoid the burden and expense of registering securities being issued in the transaction with the SEC. This new fairness hearing process is important for mergers involving West Virginia companies where the issuance of stock is the predominant consideration in the transaction because it allows the acquiring company to avoid registration of its securities with the SEC. The consequences of filing a registration statement with the SEC are potentially significant for non-publicly traded companies. After filing a registration statement, the acquiring company becomes a public company and is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires the filing of annual reports on Form 10-K, quarterly 10 WEST VIRGINIA BANKER
strongly consider obtaining a third-party fairness opinion that the transaction is fair from a financial point of view. If adverse comments are received, and the acquirer believes there is a possibility that the Commissioner may not find the transaction to be fair, the acquirer may withdraw the application to avoid a determination that the transaction is not fair. The West Virginia Bankers Association and the Community Bankers of West Virginia, with the assistance of the Bowles Rice government relations team, were instrumental in the drafting, lobbying and passage of the Bill. Members of the Bowles Rice banking team are ready to assist West Virginia banks and bank holding companies that want to take advantage of the fairness hearing process in transactions that predominantly involve the issuance of stock and not cash. Sandra M. Murphy is a partner in the Charleston office of regional law firm Bowles Rice. She focuses her practice on acquisition, regulatory, enforcement, corporate governance and securities law matters for banks and other financial institutions. Contact Sandy at (304) 347-1131 or smurphy@bowlesrice.com. Amy J. Tawney is a partner in the Charleston office of regional law firm Bowles Rice. She focuses her practice on banking law, mergers and acquisitions, securities law and regulatory matters. Contact Amy at (304) 347-1123 or atawney@bowlesrice.com. Jordan C. Maddy is an associate attorney in the Morgantown office of regional law firm Bowles Rice. He focuses his practice on mergers and acquisitions, regulatory matters, securities law and consumer finance litigation. Contact Jordan at (304) 285-2519 or jmaddy@bowlesrice.com. reports on Form 10-Q and current reports on Form 8-K. These SEC filing requirements can only be terminated or suspended if the securities of the acquiring company are held by less than 1,200 persons for banks and bank holding companies or 2,000 persons for other entities. Moreover, approval of a securities exchange following a fairness hearing held by the Commissioner exempts the securities from registration at the state level in West Virginia. With respect to states other than West Virginia, the SEC has released guidance indicating that securities exempt from registration pursuant to Section 3(a)(10) are still subject to state securities law registration requirements (blue-sky laws). While many state laws include automatic registration exemptions for stock-for-stock transactions deemed to be fair by a government entity following a fairness hearing, such exemptions are not universal and require case-by-case analysis to ensure compliance with applicable state blue-sky laws. The Bill was retroactively effective beginning April 10, 2025. On May 2, 2025, the Commissioner issued Order No. 0008 (the “Order”), setting forth the application requirements and the procedures for the requisite fairness hearing. Among other things, the applicant must provide an audited balance sheet and income statement for the most recent fiscal year with respect to a merger and a pro forma balance sheet and income statement showing the effect of the transaction on the target company shareholders. Although an independent valuation or fairness opinion is not required to be obtained in the transaction, if one is obtained, it must be provided to the Commissioner as part of the application process. After filing the application, the Commissioner will notify the applicant of the date, hour and place for the fairness hearing, which must be held within 30 days of filing the application. The applicant must send notice of the hearing to all shareholders of the target company who will receive securities in connection with the transaction not less than 10 days prior to the hearing. Within 10 business days after the hearing, the Commissioner, or his designee, must issue an order determining whether or not the terms and conditions of the transaction are fair to the shareholders participating in the transaction. The applicant is responsible for all costs associated with the fairness hearing, including court reporter fees and costs and transcript costs. The application filing fees are $500, payable to the West Virginia State Auditor. Although the Bill will provide a less expensive and more expeditious means for the execution of bank acquisitions in West Virginia, the new process is not without risk. Shareholders and other third parties have the right to attend and participate in the hearing and may oppose a determination of fairness. Neither the Bill nor the Order defines how a transaction is determined to be “fair” to the shareholders, and the Commissioner has indicated that no regulations addressing this issue are being considered at this time. In the short term, parties desiring to take advantage of the new process should 11 WEST VIRGINIA BANKER
You already know what your vocal customers think. Those who love you tell their friends about you. Those who are frustrated with you tell you so, giving you the chance to fix the problem. The customers you should be concerned about are the silent majority. They are the most vulnerable to the marketing messages of your competitors. So, how can you change the narrative and turn those customers into raving fans? Customers switch financial institutions for a variety of reasons; some we can control, others we cannot. As bankers, we often do not see things through the lens of the customer, a thing we can control. When you are closing more accounts than you are opening or are at net zero, it is time to reevaluate three key areas: fees, culture and service. NUMBERS THAT MATTER First, move beyond a narrow focus on fees themselves. The metric we need to drive is total profitability. The profitability formula is simple: Total Profitability = Average Profits per Household × Number of Households. When it comes to maximizing a bank’s overall profitability, the focus is often on profits per household alone. The problem with this approach is that averages only tell you so much. What banks should focus on is the other half of the equation: the number of households. Rather than charging current customers more, you should increase the number of households. In doing so, your total profitability will soar. Most FIs can handle many more customers with little impact on operating costs. With a strategic approach to growth, community banks can double their number of new-customer acquisitions and sustain that growth for as long as they like. The Elephant in the Lobby What Your Customers Aren’t Telling You By ROBB REMPEL, Executive Vice President, Haberfeld 12 WEST VIRGINIA BANKER
CONSUMER-FRIENDLY APPROACH TO NII For almost a decade, “free” accounts were almost universal. Fast-forward to today, and banks have reversed course by implementing a wide range of fees. What we have found is that not all fees are created equal. In fact, fees rank as one of the most common reasons people switch financial institutions. We are all familiar with the fees that anger customers, from monthly service charges to minimum balance fees. These you can and should avoid. Instead, focus on fees that drive profitability. The three big fees in retail banking are overdrafts, interchange and value-added products. While some uncertainty remains over the future of overdraft fees, too many institutions simply stopped providing this valuable service rather than implementing customer-friendly practices. Over the last three years, interchange income has outpaced overdraft income and will continue to be a significant profit driver. Interchange is not directly paid by customers, so there isn’t the sensitivity about it. Banks should prioritize increasing debit card adoption and ensuring customers are using cards frequently. Simple targeted campaigns can increase usage with remarkable ROI. Furthermore, the instant issuance of debit cards has a direct correlation with both usage and spending. Perhaps it’s time to reevaluate that opportunity. Gaining popularity, value-added products afford another way for us to provide extra benefits for a reasonable fee. Our data suggests 10-15% of new customers will opt for that product when offered as an option. Too many institutions have attempted to maximize this kind of fee by force-migrating customers or pushing the product onto those who do not want it. The result is a short-term burst of income but long-term damage in the form of high attrition rates and unhappy customers. The strategic implementation of this product is key to its success. BUILDING A CUSTOMER‑CENTRIC CULTURE Bankers believe we are great at meeting the needs of our customers. The reality is that consumer expectations are being driven by retailers like Chick-fil-A, Amazon, Zappos, Disney, Starbucks and others. What sets them apart? They have built a culture that empowers their employees to delight customers by anticipating and then meeting their needs. Empowered employees create extraordinary experiences that drive customer loyalty, referrals and sustainable growth. So, what does it take to bridge the expectation gap? First, it starts with training — equipping employees with product knowledge and simple sales tools. When employees feel fully confident in what they are offering, they naturally become stronger advocates for the products. Second, it requires a cultural shift — reframing sales as an extension of exceptional customer service. By actively identifying customer needs and offering solutions, banks can not only enhance customer relationships but also foster long-term loyalty and trust. The elephant in the lobby is that our self-perceptions are at odds with customer feelings. Rather than expecting customers to understand our banker ways, let’s view the world through their eyes. It will result in happier and more loyal customers — and more profitability, too. Robb Rempel is executive vice president at Haberfeld, a data-driven consulting firm specializing in core relationships and profitability growth for community-based financial institutions. Robb can be reached at (402) 770-7519 or rrempel@haberfeld.com. Rather than expecting customers to understand our banker ways, let’s view the world through their eyes.. 13 WEST VIRGINIA BANKER
As West Virginia continues its digital modernization across many public and private sectors, financial institutions have an essential role in driving forward efficiencies and improvements that benefit both banks, credit unions and customers. One such area that holds substantial promise for the West Virginia lending community is the adoption of electronic lien and title (ELT) technology. Unlocking Efficiency and Security The Importance of Electronic Lien and Title Technology for West Virginia Banks By CHRIS KELLER, Senior Solutions Manager, CHAMP Titles 14 WEST VIRGINIA BANKER
West Virginia House Bill 3089 (HB 3089) was enacted and mandates the use of the state’s ELT system starting July 1, 2025, for certain entities. Specifically, financial institutions recording five or more liens in a calendar year are required to utilize the Division of Motor Vehicles’ ELT system for all motor vehicle lien actions. The bill was approved by the governor on April 25, 2025, and is set to take effect on July 1, 2025. This transition from paper-based processes to an electronic system is far more than a procedural upgrade — it’s a game-changer that enhances speed, security and compliance in lien management. ELT technology fully supports the needs of lenders in an ever-changing regulatory environment, ensuring a streamlined, secure and cost-effective approach and more robust financial processes that improve customer experience. THE CASE FOR ELT IN WEST VIRGINIA: MOVING BEYOND PAPER-BASED SYSTEMS Historically, the lien and title process has been heavily reliant on paper documentation and manual workflows, which often lead to delays, errors and security risks. In the traditional system, financial institutions must store, retrieve and transfer physical titles — a process that consumes significant time and resources. This also presents opportunities for error and fraud, as paper records can be lost, tampered with or misfiled. For West Virginia, implementing ELT offers an opportunity to step away from these antiquated methods, transitioning to a streamlined, digital-first process. ELT enables banks and credit unions to manage liens electronically, making data accessible in real time and reducing dependence on cumbersome paper files. For many banks, the shift represents not only a reduction in operational complexity but also a clear path toward improved customer satisfaction and risk management. ENHANCING EFFICIENCY AND SPEED IN LIEN RELEASE AND TRANSFERS One of the most significant benefits of ELT is the acceleration of lien release and transfer processes. In the traditional paper system, releasing a lien can take days or even weeks, requiring back-and-forth communications, physical document shipments and manual record updates. With ELT, banks can release liens instantaneously upon loan payoff, as everything is managed in an integrated digital environment. This leads to faster title releases, which directly impacts customer satisfaction — particularly in cases where the title release enables vehicle sales, trades or re-financing. For West Virginia bankers, ELT’s efficiency translates to greater operational flexibility. Not only can liens be processed faster, but banks also gain the capability to handle higher transaction volumes without increasing resources. This level of operational efficiency is especially important for banks looking to optimize their resource allocation and reduce overhead in lien management. STRENGTHENING SECURITY AND COMPLIANCE Security and regulatory compliance are fundamental concerns for West Virginia financial institutions, and ELT technology directly addresses both. Paper-based titles are prone to security risks, including loss, misplacement and forgery. ELT eliminates these vulnerabilities by digitizing titles and securing data within a robust, controlled electronic system. Advanced ELT platforms like the one in West Virginia provide encryption and secure access protocols, ensuring that only authorized parties have access to title information. For the lending community in West Virginia, ELT can ease the burden of compliance, as digital systems streamline record-keeping and provide clear audit trails. Regulatory agencies increasingly favor digital records for their accessibility, accuracy and ability to meet compliance standards. In the case of any discrepancies, digital records make it easier for banks to validate lien information, protect their interests and avoid penalties. REDUCING COSTS AND STREAMLINING WORKFLOWS Implementing ELT can significantly reduce costs. In the paper-based system, lien and title management involves not only the printing, handling and shipping of documents but also storage and retrieval. Physical storage alone can be costly for institutions handling high volumes of titles. Additionally, errors in manual entry or processing can lead to costly delays and re-work. ELT reduces these expenses by minimizing manual intervention, thereby cutting down on administrative costs. Since all data is stored electronically, there’s no need for physical storage, and banks can manage lien documentation with a much smaller physical footprint. ELT also reduces the frequency of errors, as it automates data entry and enables digital validation, making each lien release or title transfer faster and more accurate. 15 WEST VIRGINIA BANKER
IMPROVING CUSTOMER EXPERIENCE IN A DIGITAL ERA Today’s customers have grown accustomed to digital solutions that deliver speed, convenience and transparency. In banking, this demand is particularly strong, as clients increasingly expect seamless digital interactions across all services. For West Virginia banks, ELT technology aligns with these expectations, offering a modernized approach to lien and title management. With ELT, customers experience faster turnaround times when releasing or transferring vehicle titles, improving their overall satisfaction with the bank’s services. This can be especially beneficial in competitive markets, where customers have choices and prefer institutions that deliver fast, reliable service. Moreover, as banks adopt more digital solutions, customers gain confidence in the institution’s commitment to innovation and data security. ENVIRONMENTAL AND SOCIAL RESPONSIBILITY Embracing ELT isn’t only a financial and operational improvement; it also supports environmental sustainability. By reducing the need for physical documents, ELT contributes to lower paper consumption, reducing the banking sector’s environmental footprint. For West Virginia banks, this shift aligns with broader goals around corporate responsibility and sustainability. Many financial institutions are already seeking ways to lower their impact on the environment, and ELT offers a practical, meaningful step in that direction. As consumers and stakeholders become more environmentally conscious, demonstrating a commitment to sustainable practices can enhance a bank’s brand image and strengthen customer loyalty. ELT showcases a bank’s proactive approach to sustainability, resonating with customers and partners who value green initiatives. ACCESSING ELT THROUGH TRUSTED PARTNERS Adopting new technology requires commitment and confidence, especially for banks transitioning to digital title management. Partnering with a trusted ELT service provider — such as PDP, DDI or Secure Title Administration, familiar names to West Virginia bankers — can simplify this shift by delivering technology designed for ease of use, security and regulatory compliance. For West Virginia banks, working directly with experienced ELT providers — the key points of contact for ELT services in the state — is essential to streamline lien and title management while ensuring operational efficiency. Through an ELT service provider, West Virginia banks can access advanced solutions that handle everything from lien placement to title release with minimal administrative burden. THE FUTURE OF BANKING IN WEST VIRGINIA: EMBRACING DIGITAL INNOVATION As West Virginia banks navigate a rapidly evolving landscape, digital transformation remains a top priority. ELT technology is an essential part of that evolution, empowering banks to improve their operational efficiency, enhance security and deliver an outstanding customer experience. For West Virginia financial institutions, this represents a meaningful opportunity to lead the way in digital banking practices, staying competitive in a marketplace that increasingly values innovation and adaptability. West Virginia banks have an exciting path ahead as they move away from paper-based systems toward a digital future. With ELT, banks can serve customers better, meet regulatory demands with ease and reduce operational costs — all while positioning themselves as leaders in the financial industry. There is great anticipation in supporting West Virginia banks as they unlock the benefits of electronic lien and title technology. Working with the West Virginia banking community to implement ELT solutions will drive value, enhance efficiency and help secure West Virginia’s role in the future of digital finance. Chris Keller is a senior solutions manager specializing in statewide implementation and adoption of electronic lien and title management programs. With a proven ability to integrate innovative technologies into complex regulatory environments, she has driven the modernization of legacy lien and title workflows, delivering substantial efficiency gains. Through strategic, collaborative leadership, Chris has spearheaded digital transformation initiatives that empower institutions to deploy advanced lien and title solutions. 16 WEST VIRGINIA BANKER
ATM “Jackpotting” Attacks Have Increased Courtesy of ABA INSURANCE SERVICES ATM attacks have been rampant since 2018 and are showing no signs of letting up. For several years, “hook and chain” attacks were the most common method of ATM theft. To mitigate this type of theft risk, many banks erected physical barriers. More recent incidents, however, involve individuals using generic or master keys to unlock a machine’s exterior chassis or endoscopes to get inside an ATM — no trucks required. Shockingly, these can easily be purchased on the internet. The criminals then tamper with the machine’s hard drives to install malware, ultimately resulting in the disbursement of cash. This is known as “jackpotting.” The U.S. Secret Service has reported an increase in ATM jackpotting over the last six months. The attacks are believed to be the work of organized criminal groups and target multiple ATM manufacturers. With generic or master keys, criminals access an ATM’s chassis and remove and/or install malware using various methods such as a USB port device which then allows them to reboot the onboard PC using the compromised media and issue dispense commands, allowing them to deplete the ATM of cash. These commands can be sent remotely using either a laptop or cell phone, allowing them to avoid engaging directly with the ATM machine. In some cases, magnets are also used in conjunction to unlock an ATM’s exterior. 17 WEST VIRGINIA BANKER
In one such case, security video captured images of several people repeatedly accessing an ATM and removing large amounts of cash. The individuals were staged in a nearby parking lot and made a total of 48 trips to the ATM. It is suspected that the thieves had a master key, a small gold key with a rounded base and teeth on both sides, that allowed them easy access to the machine. Police ultimately apprehended the individuals and found a mobile Wi-Fi device, laptop and USB cables in their vehicle. Thieves may also use an endoscope (similar to the slim, flexible instrument used in medical procedures) to reach the internal mechanism of the machine, where they can attach a cord that allows them to sync their laptop with the ATM’s computer. After installing malware, the perpetrators will contact co‑conspirators, who can remotely control the ATMs and force the machines to dispense cash. Such mechanisms can dispense a hundred bills in about a minute. Endoscopes are very easy to obtain. The image above is one of many examples that we found available to buy online through a very popular shopping site. To mitigate risk of loss, financial institutions should proactively work with their ATM manufacturers to ensure that all machines in use are up to date on current security protocols. This should include: • Limiting physical access to ATMs. • Installing machine-specific keys to avoid easy access through master keys. • Implementing additional access controls for service technicians. • Ensuring ATM hard drives are encrypted. • Ensuring network communications use TLS encryption. • Ensuring that all components (operating system, firmware, software, etc.) include the latest updates. • Installing an ATM alarm to help detect an attack and ward off criminals. • Ensuring alerts are triggered when an ATM goes offline with a more immediate response time. • Neutralizing cash to make it unusable to attackers through the use of cassettes with ink-staining solutions. ABA Insurance Services, a member of Great American Insurance Group, is a long-term, reliable and stable source of D&O, Bond, Cyber Liability, and P&C insurance for financial institutions, including trust companies and banks in formation. Our unique insurance program, co-endorsed by the West Virginia Bankers Association and American Bankers Association, has been committed to serving and supporting financial institutions by providing quality insurance and excellent customer service for over 35 years. Excess insurance and STAMP surety bonds are also available. For more information on risk management, please visit abais.com/Insights or contact ABA Insurance Services’ Patricia P. Williams at (410) 960-6878 or ppwilliams@abais.com. The facts of any potential claims situation which may actually arise, and the terms, conditions, exclusions, and limitations in any policy in effect at that time, are unique. Thus, no representation is made that any specific insurance coverage applies. This information provides guidance and is not intended as a legal interpretation of any federal, state or local laws, rules or regulations. ABA Insurance Services Inc. (ABAIS) does not warrant that all potential hazards or conditions have been evaluated or can be controlled. The liability of ABAIS and its affiliates is limited to the terms, limits and conditions of the insurance policies issued by ABAIS. © 2025 Great American Insurance Company. All rights reserved. ABA Insurance Services Inc. dba Cabins Insurance Services in CA (CA license #0G63200, 2G63200), ABA Insurance Services of Kentucky Inc. in KY and ABA Insurance Agency Inc. in MI. 3401 Tuttle Road, Ste. 300, Shaker Hts, OH, 44122. 18 WEST VIRGINIA BANKER
Balancing AI-Driven AML With Human Control By JESSICA TIRADO, Product Manager, CSI Artificial intelligence isn’t just for big banks anymore. One compelling use case for community financial institutions: reducing the cost, effort and headache of AML compliance. 19 WEST VIRGINIA BANKER
An AI-powered AML solution can automatically review millions of transactions overnight, surface unusual activity and even draft a suspicious activity report (SAR) while your analysts sleep. However, greater speed and scale come with a tradeoff: As system complexity increases, transparency can decrease. To manage that risk, AI-powered AML systems still need human oversight. Some aspects of your program should never be entrusted to AI. WHAT KIND OF AI SUPPORTS AML? Although generative AI has dominated headlines over the past couple of years, AI is more than just chatbots. In AML compliance, key AI technologies include: • Machine Learning (ML): Learns and adapts from transaction history to detect anomalies and adjust risk scores. • Natural Language Processing (NLP): Extracts data from unstructured analyst notes or reports. • Graph Analysis: Maps relationships among accounts, people, devices and transactions to spot hidden connections. OPPORTUNITIES FOR AI IN AML When these techniques are paired with quality data and strong governance, community banks can see powerful benefits: • False Positive Reduction: The system learns normal patterns and suppresses benign alerts, so analysts spend more time on genuine risks. • Faster Investigations: The system auto-collects KYC data, negative news and transaction history, so SARs are completed and filed faster. • Pattern Recognition: The system spots indirect or layered transactions that rules miss, increasing the detection of complex laundering typologies. • Continual Learning: The model evolves alongside criminals’ tactics. Compliance keeps pace without constantly rewriting rules. RISKS AND DOWNSIDES OF AI OPACITY Rules-based systems are easy to explain: “If X, then Y.” AI models rely on thousands of parameters, making it hard to trace decisions. Without strong explainability tools, this can become a governance risk. Hybrid models, which include AI layered on rules, help balance scalability with transparency. BIAS AND BLIND SPOTS AI reflects the biases in its training data: • Under-represented groups may be missed or unfairly targeted. • Media sources or sanctions lists can encode geopolitical bias. • Analyst behavior, like clearing alerts faster for familiar customer types, can reinforce skewed patterns. These issues are harder to spot in opaque models, making governance reviews essential. MISSED RED FLAGS AI models only know what they’ve seen before. Emerging typologies like crypto off-ramps can evade detection. Human oversight is essential for recognizing novelty and interpreting real-world context. AMPLIFIED ERRORS Faulty inputs or logic scale quickly in AI systems. A single mis-weighted variable could freeze hundreds of accounts or overlook major fraud before anyone notices. REGULATORY RESPONSIBILITY The OCC and FinCEN have made it clear: You own your AI’s outcomes. Institutions must validate, document and explain model behavior. “The algorithm did it” won’t satisfy an examiner. AML TASKS TO KEEP IN HUMAN HANDS Automation is a force multiplier for your compliance team, not a replacement plan. These critical functions should remain human-led: 1. Setting Risk Appetite: Only the board and senior leadership can define acceptable levels of residual AML risk. AI can enforce thresholds, but deciding what those thresholds should be belongs in boardroom minutes, not model settings. 20 WEST VIRGINIA BANKER
2. Designing Customer Risk Scores: AI can crunch data but can’t make value judgments. For example, should cash volume or political exposure carry more weight? That’s a question of ethics, strategy and regulatory expectations. 3. Clearing Alerts: Models can cluster alerts or assign “likely benign” scores, but a human must make the final call. Auto-closing alerts removes your ability to defend decisions in hindsight. 4. Finalizing SARs: AI can draft SARs by linking accounts and summarizing activity. But only a trained analyst can verify accuracy, add context, and craft a clear, defensible narrative. 5. Model Governance and Tuning: Vendors may build the models, but you’re on the hook. That means validating data inputs, sanity-checking the math and signing off on all changes. 6. High-Impact Customer Actions: Freezing accounts or filing 314(b) requests affects real lives. AI can recommend — but humans must confirm and justify each step. 7. Explaining to Regulators and the Board: No algorithm can sit across from an examiner and defend itself. Your team must translate model logic into plain English, from feature weights to tuning rationales. BEST PRACTICES FOR COMMUNITY FIS To use AI safely and effectively in AML, community institutions should: • Use Explainable Models: Choose vendors that provide reason codes or variable weights so analysts can explain every decision. • Customize for Your Risk Profile: Tune models to reflect your institution’s size, market and product mix. • Keep Humans in the Loop: Let AI prioritize alerts, but reserve final decisions for trained analysts. • Validate Regularly: Conduct independent validation pre-launch, test after any material change and audit frequently. • Invest in Analyst Training: Run workshops on model interpretation and encourage staff to challenge or override model outputs when their gut says, “Dig deeper.” BRINGING IT ALL TOGETHER AI is fast becoming a standard part of AML programs, even for smaller institutions. When deployed thoughtfully, it can cut through noise, surface risk patterns and save staff hours of clerical work. But it must remain a co-pilot, not the one flying the plane. Community banks that strike the right balance will: • Adopt explainable, customizable hybrid systems. • Embed human review at all high-risk decision points. • Validate and document continuously. • Cultivate staff who understand both compliance and AI. Follow these steps, and you can get the best of both worlds: the speed of automation and the assurance of human oversight. Jessica Tirado is a product manager for CSI’s AML Solution. Working in AML is her passion, and she is excited to share what we have been working on over the past several months. Jessica has worked at CSI for three years and started her career here as a product manager for our Links Products in Meridian. Prior to coming to CSI she worked as a BSA/AML analyst for nearly six years at Commercial Bank. Automation is a force multiplier for your compliance team, not a replacement plan. 21 WEST VIRGINIA BANKER
FDICIA Implementation Early Planning is the Key to Success By BRENDAN M. WHALEN, CPA, Principal, Audit and Assurance Group, S.R. Snodgrass PC Many community financial institutions experienced substantial balance sheet growth during the pandemic as a result of economic stimulus and the corresponding growth in deposits. While banks may be back to pre-pandemic growth rates, management should be diligent in monitoring triggers for additional regulatory requirements with budgets and strategic initiatives. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) threshold under Part 363 can have significant effects on operating and reporting requirements. The FDICIA regulatory requirements go into effect for those institutions with $500 million or more in total assets. Additional requirements become effective once a bank reaches $1 billion in total assets. REQUIREMENTS BY TIER FDICIA reporting requirements follow a tiered system based on the bank’s total assets as of the beginning of your fiscal year. These requirements include a combination of financial statements, audit reports and management reports. Audited, comparative financial statements and a corresponding independent public accountant’s report on the audited financial statements are required for all banks under Part 363. Further, management is required to provide a report regarding its responsibilities and certain conclusions with respect to internal controls and compliance with designated laws and regulations. Once your bank crosses the $1 billion asset threshold, an assessment of the effectiveness of internal controls over financial reporting is also required as part of the annual reporting package submitted to the Federal Deposit Insurance Corporation (FDIC). The following elements are required based on the size of the bank. AUDIT COMMITTEE CONSIDERATIONS FDICIA requires each bank to establish an independent Audit Committee of its board of directors that is comprised of outside directors. An outside director is defined as a director who is not, and within the preceding year has not been, an officer or employee of the bank or any of its affiliates. For banks with total assets of $500 million but less than $1 billion, the majority of the Audit Committee’s members should be independent of management. For banks with total assets of $1 billion or more, all Audit Committee members should be outside directors who are independent of management. When the bank has total assets over $3 billion as of the beginning of its fiscal year, the Audit Committee should further include members with banking or related financial management expertise, should have access to its own outside counsel and should not include any large customers. When a bank’s total assets as of the beginning of its fiscal year require compliance with the aforementioned requirements, no regulatory action will be taken if the bank (1) develops and approves written plan for compliance and (2) forms or restructures its Audit Committee to comply with Part 363 by the end of that fiscal year. FDICIA READINESS It’s important to start planning 18 to 24 months in advance to ensure your bank is ready to implement the requirements of FDICIA. We recommend you consider the following. AUDITOR INDEPENDENCE AND REVIEW OF NON-AUDIT SERVICES The independent public accountant must comply with the independence standards and interpretations of the American Institute of Certified Public Accountants (AICPA), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB) for all banks, regardless of whether the bank is a public company. SEC and PCAOB standards are generally more restrictive than AICPA standards with respect to permissible non-audit services. As your bank nears the $500 million total asset threshold, it is important to keep inventory of the services performed by the independent public accountant and to determine whether those services remain permissible under the SEC and PCAOB independence standards. As a result, your independent external auditor can’t perform certain non-attest services that include: • Bookkeeping and financial statement preparation. • Designing and implementing financial information systems. • Appraisal or valuation services. • Actuarial services. • Internal audit services. • Tax return preparation for individuals who oversee financial reporting. REVIEW OVERSIGHT RESPONSIBILITIES WITH THE BOARD OF DIRECTORS As your bank approaches the applicable asset thresholds, you should consider the existing composition of the board of directors and its Audit Committee. 22 WEST VIRGINIA BANKER
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