SUMMER 2026 Impact of Movement of State-Licensed Medical Marijuana to Schedule III Why Branding Expertise Matters in the Age of AI
Contents ©2026 West Virginia Bankers Association (WVBA) | MBR Connect™, formerly The newsLINK Group LLC. All rights reserved. West Virginia Banker is published four times per year and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of 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 (801) 676-9722. 8 12 PRESIDENT’S MESSAGE 4 Banker Cooperation Is Critical To Bank Success By Mark Mangano, President & CEO, WVBankers 6 Legislative Wins for West Virginia’s Banks By Bryce Himelrick, Government Affairs Strategist, WVBankers 8 Impact of Movement of State-Licensed Medical Marijuana to Schedule III By Jordan C. Maddy, Esq., Associate Attorney, and Amy J. Tawney, Esq., Partner, Bowles Rice 10 Three Questions Banks Should Ask About Moving Deposits Off Balance Sheet A Strategic Decision — Not a Reaction By H.D. Barkett, Senior Managing Director, IntraFi® 12 FASB Makes Refinements to CECL for Purchased Loans By Kelly L. Shafer, CPA, Member, Suttle & Stalnaker LLC 14 Why Branding Expertise Matters in the Age of AI By Steve Labecki, Director of Brand Development, Altitude 18 Bankers’ Top 5 Strategic Priorities for 2026 By Tara Schultz, Senior Vice President of Strategic Insights and Industry Relations, CSI 21 Driving Growth in a Digital-First Era Data Should Be the True North Star Guiding Your Decisions To Drive Better Results By Preston Afrank, Senior Executive Vice President, Haberfeld 2 WEST VIRGINIA BANKER
As rising health care costs drive employers toward self-insured and level-funded health plans, critical compliance responsibilities shift from insurers to employer plan sponsors. One of the most significant: compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). What Employers Need to Know • Employers with 50+ employees must ensure mental health and substance use disorder benefits are comparable to medical and surgical benefits • MHPAEA enforcement is a top U.S. Department of Labor priority, with required annual audits of group health plans • Compliance requires a detailed comparative analysis meeting complex federal regulations • Comparative analyses must be produced within 10 days of a regulator request or 30 days of a participant request • These reports cannot be created on short notice and must be prepared and maintained in advance • Penalties for noncompliance can be severe—up to $110 per day per affected participant How Bowles Rice Can Help Our employee benefits attorneys work proactively to ensure your plan’s analysis is current, compliant, and ready when needed. We assist plan sponsors with: • Obtaining and analyzing data from third-party administrators and service providers • Preparing compliant MHPAEA comparative analyses • Maintaining defensible documentation ready for audit or disclosure Contact us to ensure your self-funded health plan is protected. CHARLESTON, WV • MARTINSBURG, WV • MORGANTOWN, WV • PARKERSBURG, WV • SOUTHPOINTE, PA • WINCHESTER, VA 600 Quarrier Street • Charleston, WV 25301 Responsible Attorney: Marc Monteleone bowlesrice.com Employers Sponsoring Self-Funded Health Plans: Does Your Plan Comply with Mental Health Parity Requirements? Lesley Russo | 304.347.1717 lesley.russo@bowlesrice.com Ben Thomas | 304.347.1121 bthomas@bowlesrice.com Grant Shuman | 304.347.1150 grant.shuman@bowlesrice.com Gabriele Wohl | 304.347.1137 gwohl@bowlesrice.com
PRESIDENT’S MESSAGE Banker Cooperation Is CRITICAL To Bank Success MARK MANGANO President & CEO WVBankers Banks and bankers embrace competition. Competition sharpens focus, rewards merit and enhances shareholder and community benefits. However, the increasingly complex and fractured financial services industry requires bankers to blend competition and cooperation to ensure that their bank charters remain valuable and relevant. Banks face two fundamentally different types of competition within the larger financial services industry: interbank and interindustry. Effectively meeting each competition type requires a separate and unique approach. The first competition type is traditional interbank competition. Success in interbank competition is driven by strategy and execution related to product offerings, customer satisfaction, pricing, marketing, efficiency, talent development and culture. Interbank competition occasionally accommodates cooperation, such as loan participation arrangements among competing banks, to better serve customers and communities. But for the most part, banks compete to provide the best products and services to their customers. The second competition type is interindustry competition. There are many nonbanks focusing on traditional banking products and services. We see specialized subindustries developed around payment processing, credit cards, private lending, deposit services, investment services, mortgage lending, consumer lending and vehicle lending. We are now facing aggressive efforts by the cryptocurrency industry to create deposit-like products attached to stablecoins. Very often, these nonbank competitors exploit competitive regulatory advantages rather than actual market-based advantages. Banks cannot effectively address interindustry competition using the tools used to address interbank competition. Addressing interindustry competition requires a completely different mindset. Effectively meeting interindustry competition requires banker cooperation. There are two separate goals that cooperation must address. First, cooperation must address the rules nonbanks play by when offering products and services similar to those banks provide. Second, cooperation must work to improve bank laws and regulations. Banker cooperation is necessary to address interindustry competition that is centered around political engagement. The political engagement can relate to electing bank-friendly candidates, advocating for fair and reasonable legislation, and working with regulators to tailor administrative solutions that serve legislative intent in the most fair and efficient manner. Nearly every part of the fractured financial services industry is in competition with banks at some level. Each industry 4 WEST VIRGINIA BANKER
Effectively meeting interindustry competition requires banker cooperation. segment is fighting to improve its regulatory advantage relative to other industry segments and fighting to improve the rules they play by. If banks do not constantly cooperate and participate in political engagement to protect and improve their competitive niche in the financial services industry, others will gain an advantage at bankers’ expense. The good news is that the banking industry and specifically the West Virginia banking industry have — and continue to — cooperate successfully. Through state and national political action donations, the industry has helped elect leaders who are addressing legislative and regulatory overreach. Through banker-guided advocacy at the state and federal level, the banking industry is successfully pushing back against aggressive moves by the crypto industry to drain community bank deposits by paying interest on stablecoin holdings. Banking advocacy directed to banking regulators is leading to substantial improvements in how our regulators interpret and enforce administrative rules. In West Virginia, we are seeing the fruits of an ambitious and successful banker cooperation effort with the launch of the Security for Public Deposits Program by the West Virginia State Treasurer. In 2022, at the banking industry’s urging, the West Virginia legislature enacted the Security for Public Deposits Act to modernize and improve the process whereby banks collateralize the deposits they hold for public entities in West Virginia. With assistance from the state’s banking associations, dozens of bank leaders embarked on a multi-year project to work with the West Virginia State Treasurer to create a program that realizes the industry’s hopes for improved liquidity and efficiency in meeting the needs of their governmental depositors. The entire banking industry should applaud the cooperation of so many committed bank leaders. Bankers are competitive by nature. But it is their enlightened commitment to cooperation that will ensure that their banks remain competitive and relevant in the future. 5 WEST VIRGINIA BANKER
Legislative Wins for West Virginia’s Banks BRYCE HIMELRICK Government Affairs Strategist, WVBankers The 2026 West Virginia Legislative Session delivered several important wins for West Virginia’s banks and their customers. The West Virginia Bankers Association’s agenda focused primarily on protecting our banks’ most vulnerable customers. We also participated in the passage of several bills focused on economic development with implications for banks. Most importantly, no bill passed this session adverse to the banking industry. CONSUMER PROTECTION On the consumer protection front, we secured passage of Senate Bill 617. This bill allows West Virginia depository institutions to make certain disclosures to designated third parties and investigative agencies in the event that an elderly or disabled customer may be facing financial exploitation. SB 617 allows banks, in the event of a potentially exploitative transaction, to make disclosures to 1) a third-party contact designated on the account and 2) either the West Virginia Attorney General or the West Virginia Department of Human Services Bureau for Social Services. It also provides banks with good-faith immunity for acting under its provisions, ensuring they can protect their customers without fear of frivolous litigation. SB 617 is an important step in allowing our institutions to protect their customers. After similar legislation failed to advance in 2025 due to adverse changes to the immunities section, we were able to work with a broad array of stakeholders to negotiate acceptable language. We are thankful to those who worked with us to pass this key legislation. HB 5353 pertains to the regulation of virtual currency kiosks (or crypto kiosks). These kiosks, of which West Virginia had the most per capita in the United States, are a conduit for financial exploitation and other illicit activities. Prior to the passage of this law, they were essentially acting as unlicensed money transmitters, with no licensure requirements, limits on transaction amounts or any consumer protection requirements. HB 5353 sets a transaction limit of $1,000 for new customers and $10,000 for returning customers (users registered for over 10 days). It also requires that these machines must be registered with the West Virginia Division of Financial Institutions, must offer enhanced customer service and consumer protection procedures, and must display fraud warnings to customers. This legislation limits the harm that these machines can cause to the elderly and other vulnerable populations. OTHER LEGISLATION Beyond the association’s direct agenda, we participated in and supported the passage of HB 4009, the Portable Benefit Account Act. It authorizes Portable Benefit Accounts, which allow contract workers to maintain accounts holding their 401 (k), Roth IRA; and Life, Health, and Disability Insurance — to which a contracting entity may contribute without triggering employer obligations. Banks may offer these accounts, but are not required to do so; likewise for a bank’s wealth management arm. Lastly, no legislation adverse to the banking sector was passed during the 2026 Session. Though such legislation, such as debanking and ESG mandates, was proposed, none passed. Through the work of both the association and our broader coalition, we were able to work with legislators to defeat some adverse legislation, while others failed to advance due to overall legislative conditions. The 2026 Legislative Session proved productive for the banking sector. While we were disappointed that several jobs-focused legislative items — like the TEAM West Virginia Act, which would have created a private, nonprofit economic development corporation to encourage job growth — failed to pass, we are hopeful for such legislation in the coming years. We were able to strengthen the protections afforded to our customers while ensuring adverse legislation does not weaken West Virginia’s banking environment. Our successes would not be possible without the input, support and participation of our bankers; for this, we are thankful. We look forward to continuing our track record of delivering successful legislative wins for West Virginia’s banks. 6 WEST VIRGINIA BANKER
Impact of Movement of State-Licensed Medical Marijuana to Schedule III By JORDAN C. MADDY, ESQ., Associate Attorney, and AMY J. TAWNEY, ESQ., Partner, Bowles Rice The movement of state-licensed medical marijuana from Schedule I to Schedule III under the federal Controlled Substances Act (CSA) enhances the ability of banks to provide traditional deposit, cash management and lending services to the licensed growers, processors and dispensaries in West Virginia who complete the new federal registration process by reducing banks’ legal and regulatory concerns and by increasing the creditworthiness of medical marijuana businesses through reduced tax burdens. Indeed, the West Virginia medical marijuana market is ideally situated for the introduction of banking services because the CSA scheduling change strictly applies only to medical marijuana, and West Virginia has not legalized recreational adult-use marijuana. Diligence and compliance issues that result from dual-use operations in other states should be less applicable in West Virginia. FEDERAL LAW IMPEDIMENTS TO PROVIDING BANKING SERVICES Financial institutions have been functionally unable to provide banking products and services to marijuana businesses because marijuana has been classified as a Schedule I drug under the CSA. Even though 40 states, including West Virginia, have legalized the sale and use of marijuana for medical purposes and have established systems to regulate such activity, the CSA criminalizes the manufacture, sale, possession and distribution of Schedule I substances. The federal anti-money laundering laws (AML) criminalize the handling of proceeds derived from marijuana manufacturing and sales in violation of the CSA. Federal authorities may also confiscate, through civil or criminal asset forfeiture proceedings, all proceeds derived from any real or personal property involved in or traceable to marijuana sales in violation of the CSA. In addition, the Bank Secrecy Act (BSA) requires financial institutions to adopt certain policies and procedures, to file suspicious activity reports (SARs) with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) regarding transactions suspected to be derived from marijuana sales, and to establish and maintain AML programs designed to prevent institutions from facilitating money laundering and financing terrorist activity. In February 2014, FinCEN issued guidance to clarify BSA expectations for financial institutions seeking to provide services to marijuana-related businesses. The guidance addresses the customer due diligence that should be performed and requires financial institutions to file one of three types of SARs (marijuana limited, marijuana priority and marijuana termination) on activity involving a marijuana-related business. The FinCEN guidance also lists examples of “red flags” that may indicate that a marijuana priority SAR is appropriate, such as if a business fails to sufficiently document state law compliance. 8 WEST VIRGINIA BANKER
TIMELINE FOR MOVEMENT OF MEDICAL MARIJUANA TO SCHEDULE III On Dec. 18, 2025, President Trump issued an executive order directing the U.S. Attorney General to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner in accordance with Federal law.” On April 23, 2026, the U.S. Department of Justice and DEA issued a final order (Order) that placed both FDA-approved products containing marijuana and marijuana products regulated by a state medical marijuana license in Schedule III of the CSA, effective April 28, 2026. The Order also provides for an expedited administrative hearing process to consider the broader rescheduling of marijuana from Schedule I to Schedule III that began on June 29, 2026. State-licensed medical marijuana businesses are now subject to CSA requirements, including registration, recordkeeping, reporting and security obligations. Most importantly, the Order provides that holders of state medical marijuana licenses will no longer be subject to the deduction disallowance imposed by Section 280E of the Internal Revenue Code. REGISTRATION REQUIREMENTS FOR STATE LICENSEES The Order amends the DEA regulations to provide a new registration pathway for state-licensed medical marijuana entities seeking federal DEA registration as manufacturers, distributors and/or dispensers. The regulation creates an expedited review process under which applicants may submit their existing state credentials. Applications submitted before June 27, 2026, must be processed within six months, and these early applicants may lawfully operate under their state-issued licenses during the pendency of review. If a state medical marijuana license is suspended, revoked or expires, the DEA registration is automatically suspended. The Order and regulation allow state-law records, security, labeling, packaging, sealing and disposal requirements to satisfy most of the federal framework for state-licensed medical marijuana businesses. REDUCED TAX BURDEN Because Section 280E of the Internal Revenue Code applies only to Schedule I and II substances, state-licensed medical marijuana businesses should be able to deduct ordinary and necessary business expenses, thus reducing their tax burden. The U.S. Department of the Treasury and Internal Revenue Service have indicated that guidance is forthcoming. The removal of the 280E tax burden will cause medical marijuana businesses to become more financially stable and creditworthy, thus allowing financial institutions to better analyze credit risk and provide access to traditional lending products to these entities. IMPACT OF RESCHEDULING ON BANKING SERVICES West Virginia banks may be comparatively well-positioned to evaluate medical marijuana opportunities because West Virginia currently has a medical-only program. Unlike the many states that authorize both medical and recreational adult-use marijuana sales, West Virginia’s licensed growers, processors and dispensaries may operate only within the state medical marijuana framework erected by the West Virginia Medical Cannabis Act. West Virginia has issued a total of nine grower licenses, nine processor licenses and 75 dispensary licenses to businesses that are eligible for expedited DEA registration. Rescheduling state-licensed medical marijuana from Schedule I to Schedule III enhances the ability of banks to provide banking services to these entities by reducing significant legal and regulatory concerns and by reducing the current tax burden on these entities, thus improving their profitability and creditworthiness. Because West Virginia has only legalized medical marijuana, financial institutions considering services for a West Virginia medical marijuana business may have a more straightforward diligence obligation than a bank serving operators in dual-use states because half or more of such dual-use operators’ business remains on Schedule I and is therefore ineligible for the regulatory and tax benefits discussed herein. However, banks should still evaluate ownership, affiliated entities, source of funds, collateral, repayment sources and ongoing BSA/AML obligations, particularly where a West Virginia licensee is affiliated with businesses engaged in recreational adult-use marijuana activity in other states. Although the risk has not been entirely eliminated, the provision of deposit, cash management and loan products to a state-licensed medical marijuana business that is DEA registered is less likely to be treated as a federal criminal act, and the proceeds are less likely to be subject to forfeiture. Until FinCEN revises its framework, financial institutions will still be required to follow existing FinCEN guidance by maintaining a system of monitoring and compliance controls for medical marijuana businesses, performing additional customer due diligence (including evidence of state and federal licensing), and filing the required SARs. Instead of asking whether the medical marijuana business is federally illegal, banks should be asking whether the proposed activity operates within the covered medical and registration parameters. Jordan C. Maddy is an associate attorney in the Morgantown, West Virginia, office of Bowles Rice LLP. A member of the firm’s Banking & Financial Services team, he focuses his practice on transactional and regulatory matters. Email Jordan at jmaddy@bowlesrice.com. Amy J. Tawney is a partner in the Charleston office of Bowles Rice LLP. She leads the Banking & Financial Services team and focuses her practice on banking law, mergers and acquisitions, securities law, and regulatory matters. Email Amy at atawney@bowlesrice.com. 9 WEST VIRGINIA BANKER
Three Questions Banks Should Ask About Moving Deposits Off Balance Sheet A Strategic Decision — Not a Reaction By H.D. BARKETT, Senior Managing Director, IntraFi® Deposit networks are often described as funding tools, enabling banks to access funds and depositors to access FDIC insurance on large amounts. But they are far more than that. Deposit networks can also be balance sheet levers — mechanisms that allow banks to manage timing, risk and optionality without sacrificing customer relationships. One crucial benefit offered by deposit networks is flexible liquidity management — including the opportunity to move deposits off balance sheet by selling them to network banks in exchange for fee income while retaining the customer relationship. There are several reasons why your bank might consider moving deposits off balance sheet: • Liquidity surges that outpace near-term loan demand • Timing mismatches between asset growth and deposit inflows • Heightened scrutiny of uninsured deposits and concentration risk following banking stress events • Regulatory attention to large depositors and funding stability When facing these circumstances, partnering with a large-capacity, established bank network to move deposits off balance sheet can give your bank a competitive advantage by creating flexible liquidity. By treating moving deposits off balance sheet as a strategic decision, rather than as a reactive outlet for excess balances, your bank can profitably retain control over future growth. The question is not whether your bank should move deposits off balance sheet — but when, why, and under what constraints. That starts with three core questions. QUESTION #1: WHAT OPPORTUNITIES CAN BE CREATED BY MOVING DEPOSITS OFF BALANCE SHEET? Your bank can profitably move deposits off balance sheet for a number of reasons, including: • Managing deposit concentration limits, especially tied to large commercial or municipal accounts • Smoothing out seasonal or event-driven liquidity surges • Controlling where the bank stands relative to key asset, reporting or regulatory thresholds • Compensating for temporary mismatches between deposit inflows and loan demand Federal banking regulators have made clear that large depositors and uninsured balances warrant prudent management.1
Selling deposits to other banks in a deposit network allows your bank to retain the customer relationship while addressing balance-sheet, liquidity and regulatory pressures — moving the funding, not the depositor relationship. QUESTION #2: WHAT ECONOMIC AND PRICING GUARDRAILS SHOULD BE CONSIDERED? Are you getting paid appropriately to move deposits off balance sheet? At its core, the economics hinge on three variables: 1. The rate paid to the customer 2. The applicable deposit sell rate 3. The resulting spread and fee income Defining these up front, alongside the amount of deposits to be sold, helps ensure profitability. ESTABLISHING PRICING GUARDRAILS Effective programs define clear guardrails, including minimum acceptable spread thresholds, and establish competitive monitoring to ensure pricing and market rate changes do not undermine the relationship. Market volatility makes static assumptions dangerous. As interest rates change, economics that once worked can quietly deteriorate unless actively reviewed. GOVERNANCE AND ACCOUNTABILITY Strong governance can position your bank to make strategic, rather than reactive, decisions to move deposits off balance sheet. A best practice is to establish clear ownership of pricing decisions — your bank’s asset-liability committee is one possible owner — and a defined approval path for exceptions to ensure that your deposits are priced intentionally, not deployed reflexively. QUESTION #3: ARE YOU OPERATIONALLY READY — AND ABLE TO PIVOT BACK? Regulators increasingly expect deposit programs to be repeatable and auditable. To ensure you can start moving deposits off balance sheet without issue, ensure your bank has assembled and codified the following: • Customer consent and disclosures • Documentation and reporting accuracy • Settlement and reconciliation workflows • Clear ownership across treasury, operations and relationship teams DEFINE THE TRIGGER TO MOVE DEPOSITS OFF BALANCE SHEET — BEFORE YOU NEED IT Before moving deposits off balance sheet, clearly define the dollar magnitude of a given sell trigger, the consequences of keeping deposits on balance sheet and the expected duration of funds moved off balance sheet — weeks, quarters or a defined strategic window. PLAN YOUR EXIT BEFORE ENTRY The most disciplined institutions define exit triggers in advance. These could include increasing loan demand, on-balance-sheet funding regaining strategic value or other changes in liquidity or capital needs. MOVING DEPOSITS OFF BALANCE SHEET IS A POWERFUL OPTION When your bank needs more liquidity, it’s much easier to redeploy deposits from existing customers than it is to source new relationship deposits. Deposit networks make that flexibility possible. Other cash management offerings for customers, such as money market mutual funds and wholesale funding, are less flexible and more expensive. Ultimately, deposit networks (and using them to move deposits off balance sheet) are about control and timing. Banks that successfully use their deposit network as a liquidity management tool consistently ask: 1. What issue are we solving? 2. Are the economics disciplined and defensible? 3. Can we execute cleanly — and exit deliberately? Used well, an off-balance-sheet strategy can allow your bank to win relationships and manage risk today and preserve the option to fund growth tomorrow. That optionality is the true value of a deposit network. H.D. Barkett is senior managing director of treasury desk and program management at IntraFi. He has been involved in banking and financial services for more than 30 years, working with financial institutions on issues involving asset/liability management, liquidity management, risk assessment and management, and portfolio hedging. IntraFi operates a deposit network of 3,000+ members and offers the highest per-depositor and per-bank capacity in the industry. For more than 23 years, banks have relied on IntraFi’s on-balance-sheet (reciprocal deposits and wholesale funding) and off-balance-sheet (One-Way Sell®) solutions to strategically manage liquidity, grow customer relationships and increase profitability. Deposit placement through IntraFi Services is subject to the terms, conditions and disclosures in applicable agreements. IntraFi is not an FDIC-insured bank, and deposit insurance covers the failure of an insured bank. A list identifying IntraFi network banks appears at intrafi.com/network-banks. Certain conditions must be satisfied for “pass-through” FDIC deposit insurance coverage to apply. 1. Federal Deposit Insurance Corporation, “Section 6.1: Liquidity and Funds Management,” in Risk Management Manual of Examination Policies, https://www.fdic.gov/risk-management-manual-examination-policies/section-61-liquidity-and-funds-management.pdf; “RISK MANAGEMENT— Interagency Policy Statement on Funding and Liquidity Risk Management,” https://www.federalreserve.gov/frrs/guidance/interagency-policystatement-on-funding-and-liquidity-risk-management.htm#ANCHOR1. 11 WEST VIRGINIA BANKER
FASB Makes Refinements to CECL for Purchased Loans By KELLY L. SHAFER, CPA, Member, Suttle & Stalnaker LLC In November 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-08, Financial Instruments — Credit Losses (Topic 326): Purchased Loans. The standard represents one of the most significant modifications to CECL accounting since the adoption of ASC 326, Current Expected Credit Losses and is expected to impact banks that acquire loans through mergers, branch acquisitions or portfolio purchases. For banks, this new guidance changes how certain purchased loan portfolios are accounted for under CECL, with the goal of reducing front-loaded “Day 1” loss recognition. WHY IS “DAY 1” LOSS RECOGNITION AN ISSUE? Under the original CECL framework, acquired loans were separated into two categories: Purchased Credit Deteriorated (PCD) loans and Non-PCD acquired loans. PCD loans used the “gross-up” approach, where expected credit losses were added to the loan’s amortized cost basis rather than immediately recognized through earnings. Non-PCD loans, however, required banks to record an allowance for credit losses immediately through provision expense at acquisition. This treatment can create an artificial “Day 1” earnings impact because expected credit losses are effectively recognized twice: • Through the fair value discount embedded in the purchase price; and • Again, through the allowance for credit losses recorded upon acquisition. This issue is particularly important for banks engaged in acquisition activity. WHAT DOES ASU 2025-08 CHANGE? ASU 2025-08 expands the “gross-up” approach to a broader category called Purchased Seasoned Loans (PSLs). Under the new guidance, acquired loans that are more than 90 days old and were not originated by the acquiring institution will now receive treatment similar to PCD assets. The update applies to: • Loans acquired in business combinations • Loans acquired in asset purchases • Loans obtained through the consolidation of certain variable interest entities • Loans purchased more than 90 days after origination, where the buyer had no substantive involvement in underwriting or origination The ASU eliminates the immediate provision expense for many acquired non-PCD loans. Instead, banks add an allowance to the purchase price at acquisition to determine the initial amortized cost basis. For loans acquired in pools, the allowance and any premium or discount are allocated to the individual loans. After acquisition, changes in expected credit losses on PSLs are recognized through the allowance and recorded in earnings. WHY DOES THE STANDARD MATTER TO BANKS? 1. Simplification of CECL Accounting Community banks have consistently expressed concerns regarding the operational complexity of CECL, particularly in distinguishing between PCD and non-PCD acquired loans. ASU 2025-08 simplifies the framework by broadening the use of a single accounting methodology for acquired seasoned loans. As a result of adopting the ASU, benefits may include easier loan accounting integration after acquisitions, fewer classification judgments, and lower compliance and audit burden. This simplification could be especially 12 WEST VIRGINIA BANKER
valuable for smaller institutions with limited accounting and risk management resources. 2. Reduced Earnings Volatility Banks often rely on acquisitions to achieve growth, expand geographically or increase scale. Under prior CECL rules, acquisitions could produce significant upfront provision expense that negatively affected earnings immediately after closing. ASU 2025-08 reduces this volatility by allowing banks to recognize acquired loans using the “gross-up” method instead of recording a large “Day 1” provision charge. For banks, this means more stable post-acquisition earnings, less pressure on short-term profitability metrics, and improved comparability between acquired and originated loans, resulting in simplified acquisition-related financial reporting. 3. Potential Capital and Strategic Implications Because provision expense directly affects earnings and regulatory capital, eliminating large “Day 1” CECL charges can benefit capital ratios following acquisitions. Banks may gain more flexibility in structuring transactions and face less pressure on post-merger capital levels. Although the ASU does not change the underlying credit economics, it changes how they appear in financial statements, which may affect investor perception and regulatory discussions. IMPLEMENTATION CONSIDERATIONS Despite the benefits, implementation will still require planning. Banks will need to: • Update acquisition accounting policies • Modify CECL models and assumptions • Establish processes to identify “purchased seasoned loans” • Document whether the bank had involvement in loan origination • Coordinate with auditors and regulators regarding adoption The ASU also adds financial statement disclosures to improve transparency about how purchased loans affect the allowance. Specifically, the allowance roll forward must separately present the initial allowance recognized for PSLs and PCD loans by portfolio segment and major asset type. CONCLUSION ASU 2025-08 represents a meaningful shift in accounting for purchased loans. By expanding the “gross-up” approach previously reserved for only PCD loans to PSLs, the standard reduces CECL-related earnings distortions and simplifies accounting treatment. For community banks pursuing growth through mergers and loan acquisitions, the ASU could lower operational complexity and improve transaction economics. The overall effect is expected to be favorable for institutions active in acquisition strategies and portfolio expansion. The standard becomes effective for fiscal years beginning after Dec. 15, 2026, although early adoption is permitted. Kelly Shafer has over 20 years of experience in public accounting. As a member and director of the Audit and Consulting department of the firm, her primary focus has been on serving clients in the financial institution, higher education, governmental and nonprofit sectors. Suttle & Stalnaker PLLC is ready to help. If you would like more information on how this applies to you, contact Kelly Shafer, CPA, at (304) 343-4126. 13 WEST VIRGINIA BANKER
Why Branding Expertise Matters in the Age of AI By STEVE LABECKI, Director of Brand Development, Altitude There are key moments in a financial institution’s lifecycle when a brand update or complete rebrand becomes the best path forward for growth and success. Seasoned leaders recognize these times: significant geographic expansion, entry into new markets, shifts in strategic direction or leadership, increased competitive pressure or mergers and acquisitions. Change can be positive; a brand change often marks a fresh start and offers the opportunity to view banking operations through a new lens. Regardless of why change is needed, branding is rarely a quick or easy undertaking. It requires that you do some soul-searching. First, you must understand what makes your financial institution unique and how you’re perceived by customers, vendors and new prospects — identifying your story, vision for the future and community connections. You then need to translate these differentiators into a name, color palette, logo and complete visual identity. This process requires both time and a meaningful financial investment, which often means collaboration with an advertising agency or design-build firm. Beyond simple aesthetics and the importance of building a brand that conveys trust, stability and accessibility, your brand also needs to express what makes your financial institution what it is today. Whether that’s your history, primary industries, community connections or geographic location, there should be a clear alignment between the visual identity and your goals, mission and vision. UNDERSTANDING THE DIFFERENCE BETWEEN A LOGO AND A BRAND Along your design journey, it is important to understand the distinct difference between a logo and a brand. A logo is a visual symbol that represents the bank. A brand is the overall perception of how people feel about your institution. It includes your logo, but also other important elements, like your values, your history, your mission and the way you conduct business. Think of it this way: The logo is the face of your bank; the overall brand is your personality. You need a 360-degree approach to branding and creative design, one that brings all aspects of branding into play. Brand development can be quite a bit of work, and it is not as easy as many may think. These days, artificial intelligence has entered the conversation as a potential shortcut to brand development. Why? AI offers a fast, low-cost alternative to traditional design and development. But while AI presents intriguing possibilities, it also introduces meaningful risks. As we explore both approaches and the various pros and cons, it becomes clear that 14 WEST VIRGINIA BANKER
the most effective financial brands are built with intention, originality, and a deep understanding of the financial institution and the communities they serve. USING AI TO GENERATE A LOGO: SPEED VS. SUBSTANCE Everyone is talking about it. It’s all over the news as we watch artificial intelligence come to life right before our eyes. AI has seemingly made some artwork and logo creation easier than ever before. There are many digitally accessible AI tools at your disposal. For the most part, they are easy to understand and use, and this only enhances the AI experience. The turnaround is fast, and the cost can be minimal. AI allows anyone, even those without an ounce of creativity, to “play” graphic designer, plugging in prompts, pressing a few buttons and generating dozens of logo concepts within minutes! If you don’t like what you see, change the prompt and see what else AI spits out. A new logo can be right at your fingertips, and on the surface, it may even appear reasonably acceptable. But just because you can create your new financial logo using AI, doesn’t mean you should. While appealing on the surface, AI-generated logos come with some inherent risks and critical drawbacks. All of these deserve your consideration if you are tempted to use AI for your next financial services branding project. Make sure you consider the various downsides and the instances where AI doesn’t quite meet your institution’s needs: YOU SHOULD OWN AND FULLY CONTROL YOUR BRAND • AI does not offer logo artwork ownership, so there are extenuating copyright concerns. • Your AI-generated logo may resemble other copyrighted logos, leaving you vulnerable to possible complications and legal ramifications. • You will also need a branding guide to help your marketing department oversee the use of your new brand. This is a document that AI cannot deliver unless it is prompted on what to prepare for. 15 WEST VIRGINIA BANKER
• AI is a digital medium; it generates images for the screen, and it can be a major limitation in reproduction in the physical world and across various media, including signage and corporate materials. • When you use AI, there is no designer relationship to support future brand evolution. If there is a new use case, working with AI may actually increase time reeducating the application to have a starting point. YOUR BRAND SHOULD INTENTIONALLY REFLECT WHO YOU ARE • AI doesn’t inherently take into consideration involvement or the impact you’ve made in the communities you serve. • Your plans for strategic growth, along with your institution’s history, purpose, culture, and long-term vision and mission, may not be meaningfully incorporated. • AI lacks market awareness and intelligence, with no knowledge of your competitive landscape or target audience, unless it is “fed” the appropriate data. YOUR BRAND SHOULD “LOOK” LIKE YOU • Brands assembled by AI can seem “templated” or visibly “AI-generated,” often lacking uniqueness and originality due to creating images off of existing examples. • Because there can be limited customization using AI, outputs are often fixed, with little ability to refine key elements without drastically changing the result. • AI delivers colors, shapes and styles randomly and without strategic intent. In other words, it is likely another professional would be needed to ensure the best outcome. • AI is limited in its ability to test your new brand and evaluate its effectiveness through research in focus groups or customer perception studies. A Q&A form is feasible, but there could be cases where the consumers or businesses answer based on “feeling” over facts, which will skew survey results. YOU SHOULD BE ABLE TO FULLY MANAGE YOUR MESSAGING • You should be able to explain your brand, including what your logo represents and why it was developed. • If your logo isn’t created considering the who, what or why that encompasses the rest of your brand, there will always be a disconnect with your overall messaging. • AI tends to lack the ability to craft visuals that connect emotionally with customers. Despite these limitations, AI can still play a role in some stages of branding. AI tools can be useful in market research or in collecting and compiling data. It may help compile information to make determinations, but it should not be the end-run solution. THE PROVEN APPROACH: BUILDING YOUR BRAND WITH PURPOSE Collaborating directly with experienced creative staff at a design-build firm or an ad agency and adopting the proven and more traditional method of branding remains the gold standard for financial institutions. A skilled designer brings more than visual talent. They bring an understanding of the overall environment, including your institution, your community, your competitors, your target market and your long-term goals. They ask the right questions, challenge your assumptions, listen to your customer service experiences and translate your story into a meaningful visual identity. They typically have a set process for brand design, and they should have a substantial design portfolio to share, with experience in financial services. Your designer will spend time with you collecting critical data; they will do their best to understand your audience, clarify your value proposition, and develop messaging and visuals that consistently communicate your identity. Customization is critical in this process because no two organizations are the same. A tailored brand reflects the unique strengths, culture and goals of your financial institution, allowing it to stand out in a crowded marketplace. Without customization, brands risk appearing generic or interchangeable, which can weaken trust and limit connection with their audience. A thoughtful, distinct approach ensures authenticity, differentiation and long-term relevance. FINDING THE RIGHT DESIGN PROFESSIONAL: LOOK FOR A DEFINED PROCESS Your designer should understand all of this, and they should be able to explain their branding process in detail. Look for designers who value a strategic, research-driven process; one that welcomes competitive research and valuable data that may be available about your marketplace. They should have good listening skills and be able to consider input from various leadership sources. They must be flexible, using creative tools like brainstorming, mood boards, thumbnails and sketches to get their point across. They should have a strong portfolio of brand development work, preferably in financial services. If you are building a new facility or retrofitting your existing branch network, it is wise to consider a designer who understands the impact of a brand in the future space. Remember, a foundational principle of great brand and logo design is simplicity and versatility; a strong logo should work in black and white, scale across all sizes and remain recognizable in any context. While more involved, this process ensures alignment across your institution and 16 WEST VIRGINIA BANKER
often includes input from senior management, the sales and marketing teams, and even the board of directors. The experience will help you understand your competitive positioning better, strengthening other aspects of sales and marketing. As with most processes that are worthwhile, it takes time to develop a brand in the financial services space. This is not a task that should be done in haste, so it’s important that you recognize the time investment. You should also budget the appropriate funds, understanding that this is an important investment in your future, with a significant impact on your market growth and success. With an agency or design-build firm taking the lead, the results will be worth the cost, resulting in: • A distinctive, memorable, and trustworthy logo and brand identity • Alignment with your institution’s mission, vision and values • Consideration of your target market and future community growth • Seamless integration into branch design and physical spaces • Cohesive messaging, including tagline development • A comprehensive brand guide with multiple logo variations and use cases Most importantly, you’ll gain a brand that builds recognition, loyalty and long-term value — one that is uniquely yours. BOTTOM LINE: EFFICIENCY SHOULD NEVER REPLACE IDENTITY AI is reshaping industries across the board and branding is no exception. Whether it’s collecting data for review or summarizing large amounts of information to help give direction, it’s a powerful tool. But for growth-oriented financial institutions, where trust, credibility and community connection are paramount, the stakes are significantly higher. A financial brand is more than just a logo. It’s how your financial institution interacts with its community at many levels and touchpoints. Entrusting that responsibility solely to automation, without human insight and strategic guidance, is a risk most institutions cannot afford. Accessibility and speed are valuable, but not at the expense of originality, clarity and meaning. If your brand is meant to represent everything your financial institution stands for, it deserves a creative process that reflects that level of importance. Steve Labecki leads Altitude’s branding and rebranding initiatives as the director of brand development. In this role, he is responsible for creating comprehensive brand systems for clients, including logos, color palettes, typography, graphic elements and image guidelines. His approach is grounded in data-driven insights derived from target demographics, competitive analysis, and a deep understanding of a financial institution’s unique personality and strategic goals. With over 20 years of experience in branding and graphic design, including six years specializing in the financial industry, Steve brings a proven history of award-winning work that sets organizations apart from the competition and positions them for long-term growth and recognition. 17 WEST VIRGINIA BANKER
Bankers’ Top 5 Strategic Priorities for 2026 By TARA SCHULTZ, Senior Vice President of Strategic Insights and Industry Relations, CSI As banking leaders navigate through 2026, they are focused on five key strategic priorities, including customer support, market expansion, operational efficiency and more. These efforts are all aimed at staying competitive and meeting rising customer expectations. CSI’s 2026 Banking Priorities survey highlights how institutions are putting these priorities into action, by investing in modern platforms, stronger security and automation that enables them to do more with less. In this article, we count down the five most-cited strategic priorities from the survey, and why they’re receiving the most focus. #5: CUSTOMER SUPPORT IMPROVEMENTS Customer support improvements landed in the top five because “pretty good” service isn’t enough anymore to differentiate — competition is steep. Consumers don’t separate “digital” from “human.” They expect both to work seamlessly. They’re also quicker than ever to compare experiences across banks, fintechs and even general lifestyle apps. As expectations shift toward more personalized, real-time support, financial institutions are increasingly turning to AI to deliver faster, more intuitive experiences. In fact, 48% of banking leaders say AI will enhance customer service, while 46% believe it will improve engagement through tools like chatbots and virtual assistants. These rising expectations are directly impacting where customers choose to bank and where they choose to keep their money. With consumers increasingly holding accounts across multiple institutions, loyalty isn't what it used to be. A 2025 JD Power Financial Services Churn Data and Analytics report found that among consumers who already had a checking account, 72% were opening new checking accounts at a different bank. Delivering experiences that align with account holders’ specific needs is essential to maintaining primary relationships, driving consistent card usage and unlocking cross-sell opportunities. When support is generic, slow or disconnected from customer needs, account holders have little reason to stay. Institutions that deliver faster, more personalized experiences are better positioned to strengthen relationships and improve retention. #4: MARKET EXPANSION Market expansion remains a priority, but the focus is shifting from quantity to quality. Rather than simply adding accounts, financial institutions are working to deepen primary relationships, so customers deposit more funds, use debit cards and adopt additional services.
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