GO TEAM MIB THE OFFICIAL PUBLICATION OF THE MONTANA INDEPENDENT BANKERS ASSOCIATION FALL 2024 CAT-GRIZ TAILGATE PHOTOS INSIDE MIB MEMBERSHIP RENEWALS DUE JAN. 31, 2025
22 2024 MIB EXECUTIVE OFFICERS Loren Brown, President Ascent Bank, Helena lbrown@ascentbank.com Amber Brown, Vice President Peoples Bank of Deer Lodge abrown@pbdl.net Clinton Gerst, Secretary Bank of Bozeman cgerst@bankofbozeman.com Laura Clark, Treasurer Opportunity Bank lclark@oppbank.com Tim Schreiber, Immediate Past President Farmers State Bank tims@farmersebank.com Kenny Martin, ICBA State Director First Montana Bank, Helena kmartin@firstmontanabank.com 2024 MIB BOARD OF DIRECTORS Tom Christnacht First Security Bank of Deer Lodge Bill Coffee Stockman Bank, Miles City Daniel Day Bank of Montana, Missoula Shawn Dutton First Security Bank of Roundup Logan Hensley Valley Bank of Kalispell Brice Kluth First State Bank of Shelby Scott Mizner American Bank, Bozeman Mike Moore Stockmens Bank, Cascade Joel Rosenberg Three Rivers Bank of Montana, Kalispell Andrew West Eagle Bank, Polson Phil Willett Pioneer Federal Savings and Loan, Dillon ASSOCIATE BOARD MEMBER Ryan Fritz Citizens Alliance Bank rfritz@citizensalliancebank.com MIB STAFF Jim Brown, Esq., Executive Director Montana Independent Bankers jbrown@mibonline.org ©2024 Montana Independent Bankers | The newsLINK Group LLC. All rights reserved. Community Banker is published four times each year by The newsLINK Group LLC for the Montana Independent Bankers 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 the Montana Independent Bankers, 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. Community Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Montana Independent Bankers. While Community Banker encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. Montana Independent Bankers 1812 11th Ave. PO Box 4893 Helena, MT 59604 (406) 449-7444 jbrown@mibonline.org mibonline.org 12 4 PRESIDENT’S MESSAGE 4 Thankful for Our Montana Community Bankers By Loren Brown, President, MIB EXECUTIVE DIRECTOR’S MESSAGE 6 Finishing the Year Strong By James E. Brown, Esq., Executive Director, MIB FLOURISH 8 Communication Is Key To Mitigating Fraud By Rebeca Romero Rainey, President and CEO, ICBA FROM THE TOP 10 Conquering Check Fraud One Check at a Time By Lucas White, Chairman, ICBA 12 October, Effectively How Have the Financial Markets Performed in the Tenth Month? By Jim Reber, President and CEO, ICBA Securities 14 Women in Banking Conference Recap FEATURED ASSOCIATE MEMBER 16 Collection Professionals Inc. Serving the Banking Industry By Collection Professionals Inc. 18 Managing Customer Complaints Is Important to an Effective CMS By William J. Showalter, CRCM, Senior Consultant, Young & Associates Inc. 21 MIB Upcoming Events 22 University of Montana Tailgate Cosponsored by MIB and Bell Bank 23 Montana State University Tailgate Cosponsored By MIB and UBB 24 2024 MIB Membership Directory 25 MIB Associate Member Resource Guide 26 MIB Associate Member Banks 27 Bank Training Webinars Contents FALL 2024
II believe in making an impact in almost everything I set out to do. I have a feeling that I am not alone in that personal goal when I am surrounded by community bankers and the folks that support us. All of us seem to share a lot of values and beliefs when it comes to how we take care of people and the way we interact with others. I have been focused on trying to make a positive difference for all Montana community banks since I joined the Montana Independent Bankers Board of Directors. Now, in my role as president, I want to do even more to help all of you and your banks. All of the board members are here to help make community banks stronger and more vibrant not only in Montana, but throughout the country. Our 2024 MIB Convention and Trade Show was a huge success. I enjoy attending the convention every year as I get to see and spend time with many of my banking friends! And every year I make new friends from our member banks and from our associate member organizations. I love the impact that we get to make on each other as we share banking knowledge. We get to learn about new products and services and changes in our environment, whether it is from an economic, regulatory or other aspect. Every single attendee, whether they are a newer up-and-coming banker, a seasoned bank executive, a director from one of our member banks, an MIB board member, a regulator, a vendor, an MIB staff member, a presenter or a family member, is equally important to the impact the convention is able to make on all of us. A huge shout out goes to our MIB staff, as they are the ones that put in countless hours getting everything ready right up to the last second for all of us to get to experience the best convention and trade show in the country! If you are reading this and have never attended one of the MIB conventions, you need to. I promise it will be a positive experience that you will come out of energized and ready to make a difference. In order to make sure that the MIB continues to be impactful for all of you, I am asking for your help. I want PRESIDENT’S MESSAGE THANKFUL FOR OUR MONTANA COMMUNITY BANKERS BY LOREN BROWN, PRESIDENT, MIB 4 Community Banker
to hear from all of you how the MIB helps you as a banker or bank vendor. I want to know how we help your bank or business be more successful. Let me know why your bank or company is an MIB member. If there are things that we are doing as an association that you do not find helpful or beneficial, let me know those things as well! We want to focus our time, energy and money where we can have the greatest impact on you and your organization. You might be wondering about all of the things we do outside of things you have experienced with MIB. I would encourage you to check out our website at mibonline.org to explore the benefits and features that our association provides to the membership. Finally, if there are things that the Montana Independent Bankers is not doing, and you believe we should start doing, speak up! I love hearing about new ideas that help make community banking better! You can email me at lbrown@ascentbank.com. I sincerely hope that all of you enjoyed the beautiful fall that we experienced in Montana. I know that for me to continue to make an impact in all of the things that I do, I have to recharge and take time for myself. As I mentioned in my introductory letter, I love spending time in the outdoors! I have a feeling many of you share my love of the outdoors, just as you share my love of taking care of your customers and our communities! Regardless of whether you enjoy spending time in the outdoors, comfortably inside, surrounded by friends or family, or in solitude while relaxing, I want to remind you how important it is to keep your “personal tanks” full. When you are personally fulfilled, you make the greatest impact on those things you are most passionate about and the people around you. We have an amazing state filled with wonderful human beings, many of whom are community bankers or supporters, that we can be thankful for! I am thankful for all of you and your support and membership in the MIB. When you are personally fulfilled, you make the greatest impact on those things you are most passionate about and the people around you. Community Banker 5
WWelcome to our final 2024 edition of the Community Banker. Another year is on its way out, and another Montana Legislative session is on its way in. Given that I am writing this column just a few days short of Halloween, it is appropriate to label that last fact as “spooky” for, as Gideon Tucker famously wrote, “No man’s life, liberty or property are safe while the Legislature is in session.” The 2025 Montana Legislature will convene a little later this session, with a start date of Monday, Jan. 6, 2025. In turn, the Legislature is slated to finish a bit later than usual with a sine die date of May 9, 2025. This last day is significant because it indicates that the Legislative Session will not be butting up against the ICBA Washington Policy Summit, which is set for May 12 to May 15, 2025. By way of a reminder, the annual D.C. fly-in is MIB’s best opportunity to speak directly with all members of Montana’s congressional delegation about federal issues and policies that impact the community banking industry. As such, the Association always encourages any and all of its members to join us in Washington, D.C., to meet with our two senators and two members of the House of Representatives. But, just because the annual trip to our nation’s capital does not yet happen for a few months, MIB’s legislative advocacy services continue year-round on behalf of the membership. Turning back to Montana, the 2025 Legislative Session will be another active one for the Association, but perhaps not as active as usual. This is because Banking Commissioner Melanie Hall has indicated that the Banking Division does not plan to carry any agency legislative bills this coming session for the first time in years. The upcoming Legislature will likely be a tough one for legislators. If you have picked up a newspaper or turned on a news broadcast over the last several months, you have heard that property tax is a hot button issue in Montana right now. What’s more, the Medicaid coverage expansion bill enacted by the 2019 Legislature is up for renewal this coming session. Medicaid expansion is always a controversial topic. And, with the state experiencing record budget surpluses, you can bet there will be a lot of political posturing and a lot of wheeling-and-dealing to get the constitutionally required House Bill 2 state spending bill passed. Speaking of the legislature, the Association is pleased to announce the dates when they will be hosting the bi-annual state legislative advocacy meeting. MIB has scheduled for Jan. 7-8, 2025, as the dates for the membership to come to Helena to meet with their legislators and their banking colleagues to advocate on behalf of Montana’s community banking industry. As we get closer to that date, the Association will provide more detail on the legislative dinner and associated advocacy activities. In the meantime, make sure to mark those January dates on your calendar and make your plans now to meet us in Helena at the Great Northern Best Western Hotel. As discussed above, strong legislative advocacy and good public policy are two of the major benefits the Association EXECUTIVE DIRECTOR’S MESSAGE FINISHING THE YEAR STRONG BY JAMES E. BROWN, ESQ., EXECUTIVE DIRECTOR, MIB 6 Community Banker
provides to its membership. For the last several years, the Association and the MIB Board of Directors have stepped up its public profile and are doing even more outreach to our elected officials and to the public about the benefits of community banking both nationally and in Montana. However, to maximize our efforts, the Association needs your input as to the legislative and regulatory issues most important to your banking operation, and as to what the Association can be doing better to maximize your membership dues. So, let us hear from you before the session starts in January. And we look forward to seeing you in Helena and in Washington, D.C., in 2025. Speaking of member benefits, the Association successfully hosted its annual member Cat and Griz tailgate parties earlier this fall. The Griz tailgate was held on an absolutely beautiful bluebird Montana day and was capped off by a decisive win over Morehead State. The Cats also prevailed over their gridiron opponent, Northern Colorado, on another beautiful fall day. The MIB tailgate was held in conjunction with MSU’s homecoming celebration and, as a result, tailgate party saw record attendance. We thank our tailgate sponsors UBB and Bell Bank for their generous contribution to the success of the events and for their continued strong support of the Association in other ways. The tailgate parties provide one of the best opportunities, outside of the annual state convention, for MIB’s members to socialize and interact. If you were unable to make one of the two tailgate parties this year, we look forward to seeing you at one of next year’s games. And for those who did make it to Missoula or Bozeman, see if you can spot yourself in one of the tailgate photos contained inside this issue of the Community Banker. As this will be the last edition of the Community Banker before year-end, let me take this opportunity to remind you that you will be seeing your membership renewals hit your mailbox around the middle of December. The MIB has a well-deserved reputation of being known as the “biggest, little community banking association in the West.” The MIB has one mission, and one mission only — to champion Montana community banks. Whether it’s advocacy services, member relations, community outreach or access to product vendors and providers, when you renew your membership with the MIB, your membership gives you unmatched access to a variety of benefits designed to benefit your banking institution, your customers and the communities you serve. Thanks for being a part of Team MIB. I look forward to seeing you in the new year, if not before. Sincerely, Jim Brown MIB Executive Director THANKING OUR SPONSOR, UNITED BANKERS’ BANK UBB.COM At United Bankers’ Bank, “First for Your Success” is more than just our tagline; it’s a promise and a guiding principle that establishes the success of each and every customer as our number one priority. UBB pioneered the bankers’ bank model and for more than 47 years we have placed the needs and success of our community bank customers first and above all else. You can count on UBB to be a dedicated ally for community banking today, tomorrow and into the future. Your success is our success, and at UBB, we are always First for Your Success. THANKING OUR SPONSOR, BELL BANK Visit us at bell.bank With a team dedicated to correspondent banking, Bell Bank provides flexible underwriting, competitive lending terms and prices, fast decision-making and consistent communication. Having partnered with hundreds of community banks, we’ll help you enhance your customer relationships through our experience-based expertise in participation loans, bank stock, ownership loans and equipment financing. Community Banker 7
C COMMUNICATION IS KEY TO MITIGATING FRAUD BY REBECA ROMERO RAINEY, PRESIDENT AND CEO, ICBA FLOURISH Cybersecurity and fraud mitigation remain significant priorities for community banks as attacks get more creative and targeted. While today’s technologies assist with anomaly detection, flagging rogue transactions and spotting those that need greater scrutiny, at the end of the day, one of the main methods of mitigating this risk is to Know Your Customer (KYC). For community banks, saying this is like preaching to the choir. Our relationship-banking model ensures that we know who we are dealing with and what constitutes “normal” for those accounts. In fact, with the surge in check fraud, I’ve heard countless stories of community banks holding up transactions because they seem out of character, only to find out that they were looking at washed checks being pushed through the system. Many of these stories have one common denominator: big banks as the bank of first deposit. Fraudsters have figured this out. They can go to a big bank — where they can be anonymous and where the detailed KYC present at the community bank level doesn’t happen — to open accounts with minimal effort. Those fraudulent transactions slide through. It’s an issue that’s playing out in check fraud and other areas, and we’re talking with the heads of agencies and Congress to ensure they understand the imbalance between big banks and community banks on KYC. Because true KYC requires the personal connection and relationship that community banks maintain — one that often gets lost in a larger institution. Yet, community banks still must deal with the rise in fraud, and increasingly, communication is the best mitigation tactic. Whether it’s bankers on our check fraud task force informing our efforts, others sharing lessons learned in ICBA Community (community.icba.org) or bankers working more closely with law enforcement, communication helps us get ahead of the fraudsters. ICBA stands ready to support those efforts. We continue to encourage community bankers to share your insights on the challenge of check fraud at checkfraud@icba.org. At the end of July, we were alerted by several members about a new form of fraud: check fraud related to home equity lines of credit. Within a day, we were able to issue a warning to community bankers and offer tips for safeguarding HELOCs. Communication is vital, because knowledge is power. When we are aware of new scams or attacks, we can better protect our banks and customers. So, use ICBA as a facilitator of communication. By sharing information, we not only help one another fight back against fraud; we can also stop fraud in its tracks for the benefit of our banks, customers and the industry at large. 8 Community Banker
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W CONQUERING CHECK FRAUD ONE CHECK AT A TIME BY LUCAS WHITE, CHAIRMAN, ICBA FROM THE TOP We have seen check fraud ramp up over the past two years. Fraudsters have turned their attention to check rails, reintroducing older forms of attack. And check imaging drove the shift. When you’re looking at a physical check, there are clear fraud markers. But with imaging, it’s more complicated to assess the veracity of what you’re seeing — and fraudsters know it. They recognize how to game the system and have figured out it’s harder to catch it. At this stage, most of us have experienced the effects of check fraud. At my community bank, we had a business customer get hit for $30,000 at the end of 2023; the fraudster had simply altered the payee and amount. That constituted significant financial damage for the business and, ultimately, a loss for the bank when we made the decision to make them whole. Further compounding the issue is the fact that in these scenarios, the bank of first deposit is most commonly one of the nation’s largest banks. The bank of first deposit holds the liability for check washing and other major forms of check fraud because they warrant that the check is authentic. It’s their customer depositing a check on our customer’s account. Yet, when we submit a Uniform Commercial Code warranty claim, we either can’t track down the right person, get ignored or are dismissed by lawyers. ICBA continues to work to support us on this front by connecting us with industry organizations, like Nacha, that maintain directories to help us find the right contacts, offering solutions like the check fraud guide (icba.org/advocacy) to help us make our cases, and convening community bankers in a check fraud task force — which ICBA launched in March — to address these issues on behalf of the community. However, our best defense remains a good offense. We must continue to focus on helping our customers thwart fraud in the first place. Requiring solutions like Positive Pay, offering ongoing education and putting caps on the size of checks that can be deposited remotely are all strategies that can help mitigate our risk. But a word of advice: When you’re communicating details of your fraud mitigation strategies to your customers, anything you post publicly will also be seen by fraudsters. Don’t publicly share the specifics of limits and other points of your strategy unless you want to start seeing forged checks circumventing those safeguards. It boils down to this: In today’s banking landscape, we need to be ever vigilant. Fortunately, we have ICBA in our corner to help us do just that. 10 Community Banker
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A OCTOBER, EFFECTIVELY HOW HAVE THE FINANCIAL MARKETS PERFORMED IN THE TENTH MONTH? BY JIM REBER, PRESIDENT AND CEO, ICBA SECURITIES As we embark on the fourth quarter of 2024, there are a lot of wild cards in the community banking deck that could be dealt in the very near future: national elections, expiring tax cuts, commercial real estate and geopolitics, just to name a few. Let’s quickly recap just the previous nine months of 2024: • The 10-year treasury note’s yield — which ended 2023 well below 4% — quickly ran up to 4.70% before more than retracing itself by the start of August. • The bond market’s expectation of aggressive rate cutting by the Federal Reserve was quickly proven wrong. At the start of the year, fully seven rate cuts for the year were in the Fed Funds Futures numbers. It turns out there were none until September. Currently, there are a total of four cuts in the numbers for 2024. However, this can change quickly! • By and large, equity markets have done pretty well, especially considering that we were supposed to be in a recession by now. All the major indices had positive returns through August, though that too could change before year-end. RECENT HISTORY October has a reputation of a month that should be approached with extreme caution. If you have memories of the aughts, the start of the Great Recession in 2008 contained several watershed events in October of that year. The sound bite “Red October” appeared in print early and often, and in fact, the S&P 500 index lost 16.9% in that one month. Those with grey (or no) hair who were in the financial circles in 1987 still have Black Monday, Oct. 19, etched indelibly in their memories. That date remains the largest one-day meltdown in history, as the Dow Jones Industrial Average dropped 22.6% in that one trading session. There’s even a term in the lexicon of market pundits called “The October Effect,” which is the notion that equity prices tend to decline this month. But it’s worth asking if the facts support this supposed phenomenon. A look back a quarter century to 1998, reveals some surprising (to me, at least) results. Using the S&P 500 as a benchmark, the calendar month of October produced net advances in 20 months, and next retreats in only five. That is an arithmetical landslide. As the research website Investopedia concludes, “The October Effect is considered to be more of a psychological expectation than an actual phenomenon, as most statistics counter the theory.” 12 Community Banker
Using the S&P 500 as a benchmark, the calendar month of October produced net advances in 20 months, and next retreats in only five. That is an arithmetical landslide. DIRECT IMPACT Let’s turn our attention now to what is of more import to your community bank: interest rates. Again using the last quarter century as our window, what did short- and long-term rates do in October? These results may surprise you, too. First, we’ll look at Federal Open Market Committee activity. As we know, the FOMC directly controls overnight rates, and on occasion — like most of the past 16 years — has influenced longer tenors through its intervention in the open market. Since 1998, it has not raised the target rate of fed funds in October. Conversely, it has cut rates five times (in 1998, 2001, 2007, 2008 and 2019). This may seem disingenuous to Fed watchers for a couple of reasons. First, interest rates have had a secular trend toward lower levels in the last quarter century, the past three years notwithstanding. Secondly, in many years, there isn’t an FOMC meeting in October, depending on how the calendar falls. Still, it’s a bit of a statistical outlier that there has been not a single October rate hike in the past 25 years. FARTHER OUT THERE This last point is especially driven home when we look at the yield history of the 10-year treasury note. The 10-year has an outsized influence on economic activity in the U.S. because of its correlation to 30-year mortgage rates. Unlike fed funds, the 10-year note has had a variety of outcomes since 1998. Longer-term rates (using the 10-year as a proxy) have risen in fully 17 of the past 25 years, even though the Fed has not tightened even once in the previous 25 Octobers. Stated another way, an interest rate curve steepening has happened in about two-thirds of the time in recent years. What this tells me is that bond investors have considered economic vitality to be generally good as we enter the fourth quarter, equity markets aside. So, will longer-term rates rise, and the curve steepen? Stay tuned. And you equity investors: buckle up. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. Community Banker 13
M WOMEN IN BANKING CONFERENCE RECAP MIB hosted its third annual Women in Banking Conference on Oct. 2-3 in Bozeman. MIB opened the event with a paint-and-sip reception featuring Bozeman artist, LeAnne Ramey. On Thursday, the event hosted an excellent lineup of speakers, which included Montana Secretary of State Christi Jacobson, ICBA Senior Vice President of Congressional Relations Susan Sullivan, ICBA Senior Vice President of Member Relations Brandy Smallbrock, an extraordinary guest who joined by Zoom — ICBA President/CEO Rebeca Romero Rainey, and other fantastic speakers. The event closed with an eye-opening presentation by the Montana Attorney General’s office on human trafficking. Thank you to all of the women bankers who attended. Please contact Terri James at assistant@thunderdomelaw.com if you have any suggestions about upcoming speakers for 2025. THANK YOU TO THE FOLLOWING BANKS FOR SUPPORTING THE WOMEN IN BANKING CONFERENCE: • Ascent Bank • American Bank • Bank of Commerce • Citizens Alliance Bank • Eagle Bank • First Montana Bank • Opportunity Bank • Peoples Bank of Deer Lodge • Stockman Bank • Valley Bank of Kalispell • Valley Bank of Ronan THANK YOU TO THE FOLLOWING SPONSORS: • Prospera • First Call • Opportunity Bank • Citizens Alliance Bank • ICBA • Bankers’ Bank of the West 14 Community Banker
Community Banker 15
C COLLECTION PROFESSIONALS INC. SERVING THE BANKING INDUSTRY BY COLLECTION PROFESSIONALS INC. FEATURED ASSOCIATE MEMBER Collection Professionals Inc. (CPI) is one of the largest collection agencies in the Rocky Mountain region. With corporate headquarters in Sandy, Utah, CPI has three additional offices in Wyoming, one in Montana and three in Colorado. Our offices utilize the same software and technology. This gives CPI greater flexibility and compatibility, allowing our offices to assist one another with collection assignments seamlessly when required. All of our account executives are trained and educated in the Fair Debt Credit Practice Act (FDCPA) rules and regulations, and they adhere to the same collection process throughout the company to ensure continuity, effectiveness and professionalism. CPI account executives are required to participate in monitored quarterly training sessions, thus ensuring that they are familiar with any new regulations or changes in the collection process or credit reporting. Additionally, all phone conversations between account executives and debtors are monitored and recorded. These recordings offer training opportunities for account executives to learn how to better communicate with debtors. Clients also have the ability to review conversations with their assigned debtors in the event a conflict or dispute occurs. CPI uses a number of methods to contact debtors. These methods include phone calls, letters, emails and text messages. Use of skip tracing software, public and priority databases, services and social media allows our account executives to locate updated consumer-specific information, including DOB, address, place of employment, SSN, neighbors, relatives, etc., to obtain debtor information in the quickest and most accurate way possible. Our clients are assigned a secure website to enter new assignments, access numerous standard and client-specific reports and send encrypted messages to our account executives. Client administrators have the authority to add as many users as needed for workflow. CPI account executives and management have been with CPI for an average of 14 years. Others have extensive experience in collections as well. This experience and longevity are a large part of the success CPI has had with collections. CPI constantly outperforms the national recovery rate by double or more — an accomplishment that has helped retain staff and grow the company internally. CPI has a legal team to initiate, at its expense, any legal actions against debtors as a last resort. 16 Community Banker
In addition, Collection Professionals Inc. offers many reasons why using a collection agency is advantageous for financial institutions. Among these are: 1. Legal Protection There are numerous laws, some differing by state, that govern the debt collection industry, and well-informed debtors won’t hesitate to sue if they know a law has been broken. CPI is well-versed in these laws and rules for each individual state, as well as federal laws. Hiring CPI will mitigate the legal risks involved in trying to collect the debt on your own. 2. Documentation CPI keeps detailed records and documents on all interactions with debtors. Clients have access via a Client Access Website (CAW) to enter assignments, review the status of all assignments, run reports, observe collection history and trends, and send encrypted messages to CPI. 3. Skip Tracing CPI uses an advanced tactic called “skip tracing.” Skip tracing is the process of locating a debtor who has “skipped” or left town, hence the name “skip tracing.” This is especially helpful for cases in which the debtor hasn’t answered or returned repeated calls, emails and letters. 4. Experience CPI has been a premier full-service collection agency for decades, servicing clients large and small in numerous industries, including the financial industry. 5. Shifting Focus Back to What Matters Most importantly, letting CPI manage debt will allow you and your employees to focus on your core business activities instead of trying to manage debt collection efforts. 6. Communication Communication with clients is one of the cornerstones of our company’s foundation. CPI would welcome the opportunity to discuss its services and how it can assist you and your team with your collection needs. Visit cpicollects.com to get started today! 38697 Partner with us for: • Loan participation purchases and sales* • Bank stock financing • Bank executive and employee financing *We do not reparticipate loans. Craig McCandless Call me at 406.850.3790 Based in Billings, Mont. Serving Montana, Wyoming and Idaho Our Mission Is to Help You Succeed Community Banker 17
F MANAGING CUSTOMER COMPLAINTS IS IMPORTANT TO AN EFFECTIVE CMS BY WILLIAM J. SHOWALTER, CRCM, SENIOR CONSULTANT, YOUNG & ASSOCIATES INC. Financial institution supervisory agencies view a formal process for managing complaints from bank customers as an important element in an effective compliance management system (CMS). In fact, the latest issue of the Consumer Compliance Outlook publication from the Federal Reserve Board (FRB) includes three articles on this subject. The FRB is quoted in one of these articles in an unequivocal statement on this issue: “Consumer complaints are a critical component of the risk-focused supervisory program. The Federal Reserve uses data on consumer complaint activity in its supervisory processes when monitoring financial institutions, scoping and conducting examinations, and analyzing applications.” The other federal agencies agree with this viewpoint. So, banks and thrifts have found that if they do not handle customer complaints in a formal, consistent manner, their CMS will be viewed with a more critical eye. BENEFITS OF MANAGING COMPLAINTS One positive aspect of proactively managing the customer complaint process is there is no real downside. The only “downside” is that such a process shines a light on the extent of complaints and their underlying causes. But this disadvantage is actually an advantage. What you don’t know really can hurt you. The positive results from complaint management can include: • Uncovering and dealing with shortcomings in product features, bank processes, customer service and other issues at an early stage before they grow to a point that they present real threats to the institution. • Improving customer satisfaction with the bank and enhancing the bank’s efforts to serve the banking needs of its community. • Resolving fair treatment issues at an early stage. • Realigning bank products, processes and services with regulatory requirements and expectations. • Heading off potential UDAAP (unfair, deceptive or abusive acts and practices) issues. • Reducing the institution’s reputation risk. MANAGING COMPLAINTS The bank already has formal processes, with assigned responsibilities, for handling errors/disputes asserted by customers related to electronic banking (Regulation E, EFTA), open-end credit (Regulation Z, TILA), and mortgage loan GUEST ARTICLE Continued on page 20 18 Community Banker
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servicing (HUD Regulation X, RESPA). Appropriate treatment of complaints in these areas is mandated by the respective regulations. However, a formal process to address customer complaints in other areas — both those received directly from customers and those referred by the regulators — is considered an industry best practice, as well as a necessary component of an effective CMS by regulators. The structure of this program will vary depending on the culture of the bank and other internal factors. But, there are some common elements that form the basis of any sound customer complaint program, including to: • Define what is considered as a “complaint.” This is considered crucial to success in this area, so defining “complaint” broadly is usually seen as a sound practice. • Make sure everyone knows how important it is to respond promptly and accurately to any customer complaints. This is a basis for giving good customer service. • Appoint a central point (an individual or an office) to be in charge of your complaint response program, especially those referred by the regulators — and make sure that all bank staff is aware of how to handle complaints, including where to refer them. Branch managers can be charged with handling customer service issues occurring at their branches that do not involve regulatory issues (fair lending, EFTA, etc.). However, they should report on these complaints and resolutions to the central complaint point for tracking of any trends that may arise. • Establish uniform standards and time frames for investigating customer complaints. The time limits you set should be reasonable and probably not significantly longer than those set by regulations for some error resolutions (EFTA, TILA). • Ensure that the process includes determining the root cause of complaints being investigated. • Document your investigation (e.g., copies of relevant documents and reports) of each customer complaint and the bank response. • Ensure that regulators are informed promptly of the results of investigations of any complaints referred by regulatory agencies. • Maintain a database of your customer complaints, either manually or using some spreadsheet or database software. This step allows you to mine the data related to this process for information about problems with your products, customer service, potential fair treatment/lending issues and so forth. RESULTS The database discussed in the final bullet above can provide a wealth of information about how customers view your bank, your product mix, your service levels and many other facets of your business. It also provides you with an opportunity to discern trends in their infancy, allowing you to deal with negative issues early or enhance the benefits of positive developments. A proactive approach to customer complaint management derives many benefits for the bank, not the least of which is reducing conflicts with customers, enhancing the bank’s public image, improving bank relations with regulators and creating a competitive advantage for the bank. THE NEWEST SUPERVISOR For the past decade or so, there has been a more active and visible regulatory presence in this area — the Consumer Financial Protection Bureau (CFPB). The CFPB established a complaint database to which consumers can submit complaints about financial service providers, have their complaints forwarded to the providers for response, and give the public a window on this process and its outcomes. The CFPB also periodically analyzes the results of this process, usually for one or another particular financial service area — student loans one time, mortgage servicing another and yet another financial service another time. The other agencies, as noted earlier, analyze data related to consumer complaints that are handled through each of them. The agencies often view data about consumer complaints to be an indicator of a need for future regulations. This view is reinforced by provisions in the Dodd-Frank Act of 2010. The purpose of the CFPB database is to provide consumers with one central point through which they can submit complaints about financial service providers without having to search through the maze of regulatory agencies first and follow the results. Another purpose is to provide a gauge for how well financial service providers are serving their particular customer bases. While the CFPB database can be a useful tool, financial institutions should have a goal of trying to deal with their own customers’ complaints and concerns themselves, before customers become so frustrated that they feel the need to turn to supervisory agencies. William J. Showalter, CRCM, is a senior consultant with Young & Associates Inc. (www.younginc.com), with over 35 years of experience in compliance consulting, advising and assisting financial institutions on consumer compliance and compliance management issues. He authors and edits compliance publications and articles for Young & Associates. Bill can be reached at wshowalter@younginc.com. Continued from page 18 20 Community Banker
MIB UPCOMING EVENTS 2025 JAN. 7-9 MIB/MBA Bankers Day at the Capital Great Northern Hotel Helena, MT JAN. 30 Membership Renewals Due MARCH 14-17 ICBA Live Nashville, TN MAY 12-15 2025 ICBA Capital Summit Washington, D.C. JULY 16-18 2025 MIB Convention and Trade Show Big Sky Resort Big Sky, MT Expand your loan portfolio profitability Diversify with loan yields up to 8.5% BHG Financial loans provide banks with rates up to 8.5%, premier credit quality, diversification benefits, lower expenses, and more. With average borrower incomes of $275K and 748 FICOs, these loans will look great on your books. Plus, no origination cost to your bank! Talk to us today about adding strong-performing assets to your portfolio. Megan Crawford-Hamlin 315.729.9029 meghan@bhg-inc.com Contact your representative: OR Scan to learn more at BHGLoanHub.com Earn up to 8.5% Community Banker 21
UNIVERSITY OF MONTANA TAILGATE COSPONSORED BY MIB AND BELL BANK SEPTEMBER 14 Montana Grizzlies vs. Morehead State Eagles SCORE: Grizzlies 59 / Eagles 2 COOLER WINNER (Donated by Bell Bank): Mike Moore 22 Community Banker
MONTANA STATE UNIVERSITY TAILGATE COSPONSORED BY MIB AND UBB OCTOBER 5 Montana State Bobcats vs. Northern Colorado Bears SCORE: Bobcats 55 / Bears 17 UBB GAME BOARD WINNERS: Tracey Green First Security Bank of Roundup Gary Wagner Ascent Bank Lynzie Havener Peoples Bank of Deer Lodge Tim Schreiber Farmers State Bank Community Banker 23
American Bank (406) 222-8930 www.americanbankmontana.com Ascent Bank (406) 442-8870 ascentbank.com Bank of Bozeman (406) 587-5626 bankofbozeman.com Bank of Montana (406) 829-2662 bankofmontana.com Belt Valley Bank (406) 277-3314 www.beltvalleybank.com Citizens Bank & Trust Co. of Big Timber (406) 932-5311 www.ctznsbank.com Eagle Bank (406) 883-2940 www.eaglebankmt.com Farmers State Bank (406) 642-3431 www.farmersebank.com First Citizens Bank of Butte (406) 494-4400 www.fcbob.com/home/home First Montana Bank (406) 829-2668 www.firstmontanabank.com First Security Bank of Deer Lodge (406) 846-2300 1stsecuritydl.com First Security Bank of Roundup (406) 323-1100 www.1stsecurityroundup.com First State Bank of Shelby (406) 434-5567 www.fsbshelby.com Freedom Bank (406) 892-1776 www.freedombankmt.com Garfield County Bank (406) 557-2201 www.garfieldcountybank.com Opportunity Bank (406) 442-3080 www.opportunitybank.com Peoples Bank of Deer Lodge (406) 846-2400 www.pbdl.net Pioneer Federal Savings & Loan (406) 683-5191 www.pioneerfed.com Stockman Bank of Montana (406) 234-8420 www.stockmanbank.com Stockmens Bank (406) 468-2232 www.stockmens.net Three Rivers Bank of Montana (406) 755-4271 www.threeriversbankmontana.com Valley Banks (406) 676-2000 www.valleybanks.com Valley Bank of Kalispell (406) 752-7123 www.valleybankmt.com Yellowstone Bank (406) 628-7951 www.yellowstonebank.com 2024 MIB MEMBERSHIP DIRECTORY 24 Community Banker
Advantage (800) 809-2307 advantage-fi.com Adversis (406) 219-5957 adversis.io AlphaGraphics Helena (406) 449-2847 www.alphagraphics.com Alliant Employee Benefits (406) 581-8343 alliantbenefits.com Bancard ATM (406) 855-2637 www.bancardatm.com Bankers’ Bank of the West (303) 291-3700 www.bbwest.com BankServices1 www.bankservices1.com Bell Bank (701) 298-1500 bell.bank Benefit and Financial Strategies (480) 688-1011 benefitandfinancial.com BHG Financial Institutional Network (954) 263-6399 bhgfinancials.com Big Sky Finance (406) 869-8403 www.bigskyfinance.org Bison Mountain Financial (224) 406-1187 bisonmountain.com Capital Matrix Inc. (208) 789-2605 capitalmatrix.org Collection Professionals Inc. (406) 697-8787 cpicollects.com Community Bankers Webinar Network (406) 442-2585 financialedinc.com Cushing Terrell (406) 248-7455 cushingterrell.com CWG Architecture + Interiors (406) 443-2340 cwg-architects.com Dakota Business Lending (406) 760-1002 www.dakotabusinesslending.com/ montana DCI Data Center Inc. (620) 694-6800 www.datacenterinc.com DLS Consulting (406) 781-5288 dlsconsulting.net Eide Bailly LLP (406) 896-2435 www.eidebailly.com Federal Home Loan Bank of Des Moines (206) 434-0581 www.fhlbdm.com First Call Computer Solutions (406) 721-6462 firstsolution.com Grizzly Security Armored Express (406) 257-1636 grizzlysecurity.com Holtmeyer & Monson (901) 748-1902 www.holtandmon.com ICBA Northwest Region Office (320) 533-1467 www.icba.org/about/office-staffdirectory/member-services/ brandy-smallbrock ICBA Payments (800) 242-4770 www.icbapayments.com ICBA Securities (800) 422-6442 www.icbasecurities.com IntraFi Network (703) 292-3422 www.intrafi.com James Brown Law Office PLLC (406) 449-7444 www.thunderdomelaw.com Keenan & Partners (503) 705-6393 Marsh McLennan Agency (406) 442-5360 mmanorthwest.com Montana Board of Housing (406) 841-2840 www.housing.mt.gov Montana Board of Investments (406) 444-0001 www.investmentmt.com Mountainview Insurance (406) 683-6881 www.montanainsurance.net MSU College of Business (406) 994-4421 montana.edu NeighborWorks Montana (406) 604-4540 www.nwmt.org MIB Associate Members support your association with annual dues, sponsorships, discounted services and royalty agreements. Please use these dedicated companies to meet your banking needs. MIB ASSOCIATE MEMBER RESOURCE GUIDE Community Banker 25
NFP Executive Benefits (503) 539-8777 executivebenefits.nfp.com PCBB (888) 399-1930 www.pcbb.com Pinion (406) 442-1040 www.pinionglobal.com Prospera Business Network (406) 587-3113 prosperamt.org Select Bankcard (855) 943-5763 www.selectbankcard.com SHAZAM (763) 250-3741 www.shazam.net Small Business Administration (406) 441-1081 www.sba.gov/district/ montana TCM Bank, N.A. (866) 861-7669 tcmbank.com The Wendt Agency (406) 454-8500 thewendtagency.com TIB (The Independent Bankers’ Bank) (972) 444-3500 www.tib.bank Travelers Insurance (509) 448-2427 www.travelers.com Unitas (800) 461-9224 www.unitas360.com United Bankers’ Bank (800) 752-8140 www.ubb.com Upgrade Inc. (415) 940-7688 www.upgrade.com USDA Rural Development (406) 309-3350 www.rd.usda.gov Wipfli LLP (406) 442-5520 www.wipfli.com Young & Associates (800) 525-9775 www.younginc.com MIB ASSOCIATE MEMBER BANKS Bravera Bank (406) 294-6500 www.bravera.bank Citizens Alliance Bank (406) 403-7461 www.citizensalliancebank.com First Interstate Bank (406) 255-5000 www.firstinterstatebank.com The Bank of Commerce (406) 683-2393 www.bofc.bank Closing SBA loans keeps doors open. Call 800.340.7304 to start www.holtandmon.com Your customers have never needed capital more than they do right now. Plus you need to offset narrowing margins by increasing noninterest fee income. SBA/USDA lending is the perfect answer. And ICBA recommends just one provider to make the process hassle-free: Holtmeyer & Monson. Give customers exactly what they need, at no net cost to your bank. Small businesses count on your expertise. You can count on ours. 26 Community Banker
Wisdom Gained from the EEOC's Biggest Rulings of 2024 BSA Officer Part 1: BSA Update for BSA Officers Consumer Lending Regulatory Compliance Regulatory Update for the Credit Analyst 2024 HMDA Submission Due March 1, 2025: Updates, Challenges & Real-Life Examples Call Report Series: 2025 Call Report Update & Avoiding Costly Mistakes Frontline Series: Comprehensive Teller Training: Checks, Compliance, Security & BSA 2025 Compliance Outlook: Regulator Expectations IRA Series: Final IRA RMD Regulations, Deadlines, Calculations, Reporting & More Marijuana Update: Implications of Schedule III Change, On-Boarding, Payments & Monitoring IRA Series: IRA & HSA Update: The Latest Changes & Issues Consumer Loan Documentation: Developing a Comprehensive Checklist Simplifying the FFIEC's Architecture, Infrastructure & Operations (AIO) IT Booklet 1071 Rule FAQs: Are You IN or OUT in 2025? 6-JAN 7-JAN 8-JAN 9-JAN 13-JAN 14-JAN 15-JAN 16-JAN 21 -JAN 22-JAN 27-JAN 28-JAN 29-JAN 30-JAN Managing Loan Concentrations: CRE & More Lending Exam Targets Locked: Preparing Your TRID, Fair Lending & CRA Programs for Increased Scrutiny Form 1099 Reporting: Third-Party Vendors, Foreclosures, Debt Forgiveness & More Hottest IRA Issues: Reporting, Compliance & Required Minimum Distributions Legal Issues of Checks Consumer RE Appraisals: Ordering, Controls, Thresholds, USPAP Requirements & Compliance Beneficial Ownership Outreach Toolkit: Action Steps 10 Reg CC Myths Return to Sender: Selecting Relevant ACH Return Reason Codes When a Borrower Dies: Actions to Take, Mistakes to Avoid Corporate Tax Returns: Analysis, Limitations & Red Flags What Are the UDAAP Risks in 2025? ACH Disputes Part 2: Reg E vs. ACH Rules After 60 Days 4-NOV 6-NOV 7-NOV 12-NOV 13-NOV 14-NOV 15-NOV 18-NOV 19-NOV 20-NOV 21 -NOV 25-NOV 26-NOV In partnership to grow Montana’s community banks. BANK TRAINING WEBINARS Live & On-Demand www.fin-ed.info/mib x Head Tellers & Branch Managers: Handling the Critical Aspects No-Nonsense Notary Legal Perspective Internal Compliance Monitoring & Risk Assessment Elder & Dependent Adult Financial Abuse Opening Nonresident Alien Accounts Compliance with E-Statements, E-Disclosures & E-SIGN Game Plan for 1071 Rules ECOA & Fair Lending: Examiner Hot Buttons Overdraft Programs & Disclosures: 12 Ways to Avoid Exam Issues 3-DEC 4-DEC 5-DEC 10-DEC 1 1 -DEC 12-DEC 17-DEC 18-DEC 19-DEC
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