President’s Message Reconnecting and Celebrating MARCH/APRIL 2024
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233 South 13th Street, Suite 700 Lincoln, NE 68508 Phone: (402) 474-1555 • Fax: (402) 474-2946 www.nebankers.org NBA BOARD OF DIRECTORS RICHARD BAIER President and CEO richard.baier@nebankers.org KARA HEIDEMAN Director of Communications and Marketing kara.heideman@nebankers.org NBA EDITORIAL STAFF LYDELL WOODBURY NBA Chair (402) 359-2281 First Nebraska Bank Valley BRADLEY KOEHN NBA Chair-Elect (402) 420-0560 Midwest Bank Norfolk/Lincoln KATHRYN BARKER (402) 333-9100 Core Bank Omaha NICHOLAS BAXTER (402) 341-0500 First National Bank of Omaha Omaha CORY BERGT (402) 875-4732 Wells Fargo Bank, N.A. Lincoln JILL DAVIS (402) 434-1690 U.S. Bank Lincoln CURTIS HEAPY (308) 367-4155 Western Nebraska Bank Curtis KRISTA HEISS (308) 534-2100 NebraskaLand Bank North Platte ZACHARY HOLOCH (402) 363-7411 Cornerstone Bank York JEFF KANGER (402) 858-1253 First State Bank Nebraska Lincoln ZAC KARPF (308) 632-7004 Platte Valley Bank Scottsbluff JOHN KOTOUC (402) 399-5088 American National Bank Omaha MARK LINVILLE (402) 337-0323 First State Bank Randolph KRISTEN MARSHALL-MASER (308) 384-5681 Five Points Bank Grand Island BRANDON MASON (402) 918-2332 BMO Omaha JEREMY MCHUGH (402) 867-2141 Corn Growers State Bank Murdock AARON OTTEN (402) 371-0722 Elkhorn Valley Bank & Trust Norfolk KEVIN POSTIER (402) 723-4441 Henderson State Bank Henderson JAY PRESTIPINO (402) 392-2616 First Interstate Bank Omaha LUKE RICKERTSEN (308) 537-7181 Flatwater Bank Gothenburg RYNE SEAMAN (402) 643-3636 Cattle Bank & Trust Seward TRAVIS SEARS (402) 323-1828 Union Bank & Trust Co. Lincoln STEPHEN STULL NBA Past Chair (402) 792-2500 Nebraska Bank Hickman/Dodge KELLY TRAMBLY (402) 756-8601 South Central State Bank Campbell NICHOLAS VRBA (402) 727-0213 RVR Bank Fremont ANDREW WITT (402) 504-4000 Dundee Bank Omaha 4 NEBRASKA BANKER
WHY ? Tim Burns with customer Jami Schmidt Bank Stock Loans — Acquisition, Capital Injection, and Shareholder Buy Back/Treasury Stock Purchase Officer/Director/Shareholder Loans ( Reg-O) Participation Loans Purchased/Sold — Commercial, Commercial Real Estate, Agricultural, and Special Purpose Loans Leases Midwest Image Exchange – MIE.net™ Electronic Check Clearing Products Information Reporting – CONTROL Electronic Funds Cash Management and Settlement Federal Funds and EBA Certificates of Deposit International Services/Foreign Exchange Safekeeping Directors’ Exams Loan Review Compliance Audits IT Audits Lending Services Operational Services Audit Services mibanc.com MEMBER FDIC Contact Tim Burns 402-480-0075 The customer service that MIB provides to our community bank is exceptional. Tim Burns, our relationship manager, listens to our needs and helps our bank meet our goals. Their website protal we use for reports is very user-friendly and easy to navigate. We appreciate the relationship we have with MIB today! Jami Schmidt/CFO Henderson State Bank Henderson, NE
EDITORIAL: Nebraska Banker seeks to provide news and information relevant to Nebraska and other news and information of direct interest to members of the Nebraska Bankers Association. Statement of fact and opinion are made on the responsibility of the authors alone and do not represent the opinion or endorsement of the NBA. Articles may be reproduced with written permission only. ADVERTISEMENTS: The publication of advertisements does not necessarily represent endorsement of those products or services by the NBA. The editor reserves the right to refuse any advertisement. SUBSCRIPTION: Subscription to the magazine, which began bimonthly publication in May 2006, is included in membership fees to the NBA. ©2024 NBA | The newsLINK Group, LLC. All rights reserved. Nebraska Banker is published six times each year by The newsLINK Group, LLC for the NBA 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 NBA, 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. Nebraska Banker is a collective work, and as such, some articles are submitted by authors who are independent of the NBA. While Nebraska 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. 8 PRESIDENT’S MESSAGE RECONNECTING AND CELEBRATING Richard J. Baier, President and CEO, Nebraska Bankers Association 10 WASHINGTON UPDATE THE REAL LOSERS IN THE REG II FIGHT Rob Nichols, President and CEO, American Bankers Association 12 COUNSELOR’S CORNER LESSONS FOR TRUST OFFICERS FROM RECENT NEBRASKA COURT DECISIONS Krista M. Eckhoff, Baird Holm LLP 18 LEGAL UPDATE 108th LEGISLATURE PRODUCES SIGNIFICANT STATUTORY CHANGES TO BANKING LAWS Lane Baker, Endacott Timmer 24 TECH TALK SMISHING TEXT MESSAGING GONE ROGUE Shane Daniel, Information Security Consultant, Team Lead, SBS CyberSecurity 30 2024 EDUCATION CALENDAR CONTENTS 12 24 6 NEBRASKA BANKER
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PRESIDENT’S MESSAGE Reconnecting and Celebrating Richard J. Baier, President and CEO Nebraska Bankers Association Over the past few weeks, I have read numerous articles about the growing mental health crisis in America to try and better understand its root causes and learn strategies to help lessen the seemingly pervasive anxiety. COVID-19-related isolation clearly acted as a catalyst for many of our current challenges. The divisive political environment and aggressive social discourse in our country are also contributing factors. Two fundamental coping strategies noted by experts are to reconnect with people in person and to celebrate accomplishments. So, rather than droning on about the tsunami of regulation consuming our industry, let’s find reasons to connect and celebrate! Triumph #1: The NBA Board of Directors recently approved the creation of the Alice Dittman Trailblazer Award for Women in Banking, named in honor of the first female NBA board chair who passed away in 2023. This annual award will recognize and honor a young female banker who has made substantial contributions to her bank, community, the banking industry and the NBA. Plans call for accepting nominations in July 2024, with the inaugural award presented at the NBA Women in Banking Conference on Oct. 22, 2024. Thanks to strong philanthropic support from the banking sector, the award will be presented every year for the next 20 years. For those who knew Alice, it is fitting that this award will honor and celebrate her legacy. She began her career at Cornhusker Bank in Lincoln in 1948, where she held numerous roles, from maintenance director to president, CEO and chair of the board. She loved to see the bank’s customers succeed and its employees thrive. In addition to her work with the NBA, Alice also served as the first female chair of both the Lincoln and Nebraska Chambers of Commerce. She was inducted into the Nebraska Business Fall of Fame in 1996 and was the Lincoln Journal Star Inspire Woman of the Year in 2019. Her service extended beyond organizational leadership to include mentoring young women in business. Watch upcoming NBA publications to learn more about the award nomination process. 8 NEBRASKA BANKER
Triumph #2: On a completely different note, we should also celebrate the fact that 73 Nebraskans were willing to place their names on the May primary ballot for a chance to serve in the Nebraska Legislature. These individuals are vying for races across 25 districts. The NBA Government Relations team has gotten to know many of these candidates personally, and we are extremely impressed by their knowledge, skills, commitment and enthusiasm! Triumph #3: The NBA is cheering for long-time NBA General Counsel and lobbyist Bob Hallstrom who has placed his name on the ballot in pursuit of the District 1 seat in the Nebraska Legislature. Bob has advocated on banking and business issues for more than four decades. His background and experience would bring substantial value to the Unicameral. The NBA fully supports Bob’s candidacy and will do what we can to support his campaign, knowing that he will no longer be able to lobby on behalf of the NBA and the banking industry if he is elected. Thanks, Bob, for your willingness to further serve our fellow Nebraskans as an elected official! Triumph #4: On May 8-10, the NBA hosted the 2024 NBA Annual Convention at the Embassy Suites in La Vista. The event provided an opportunity for our industry to gather in person, reconnect with old friends, celebrate success and gain new knowledge from world-class speakers. Until next time, let’s take time for ourselves, support our family, friends and coworkers and celebrate successes, large and small. ASSURANCE / TAX / ADVISORY FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office. FORward VISion counts Our vision is helping make yours a reality. Whether you’re looking to stay compliant, manage risk, or grow strategically, our forward-thinking professionals can help you prepare for what’s next. forvis.com/financial-services FOR unmatched industry insight, VISion matters 9 NEBRASKA BANKER
WASHINGTON UPDATE The Real Losers in the Reg II Fight Rob Nichols, President and CEO American Bankers Association In 2010, the Durbin Amendment was dropped into Dodd-Frank in the dead of night, and without so much as a hearing, the government imposed restrictions and price controls on debit cards and connected checking accounts. Bankers warned that mega-retailers would not pass on any savings at the checkout and that bank customers would ultimately foot the bill in lost rewards. Both predictions have proven true, but for reasons clear only to the Federal Reserve, the government is poised to double down on this misguided policy with another 30% cut in debit interchange followed by an automatic biannual adjustment. This “one-way ratchet” will continue to hack away at debit programs every two years based on data and a formula of the Fed’s choosing without public comment. The Fed is proposing to slash the interchange rate cap from 21 cents to around 14.4 cents — and recent research estimates that this move could reduce interchange revenue for banks by $3 billion annually. That’s essentially the equivalent of the government reaching into banks’ pockets, taking money allocated to ensuring affordable, seamless, secure banking products and services, and handing it over to the very largest retailers. Retailers will claim that they intend to pass those savings on to consumers. But as we’ve seen in the 13 years since the original Durbin price caps took effect, those promises ring hollow. That means that the real losers in this fight will be American consumers. Not only will consumers not gain the advantage of lower prices in stores, but the Fed’s proposed changes to Regulation II will fundamentally affect the economics of what banks do — and that, in turn, affects the products and services they are able to offer their customers and communities. 10 NEBRASKA BANKER
Banks use interchange revenue to fund free or low-cost checking accounts and other services that consumers value. Prior to the enactment of the Durbin amendment, for example, many banks offered debit card rewards programs — but those programs were eliminated when the revenue streams funding them dried up due to government price controls. These new proposed cuts to interchange revenue will have an even more dire consequence: They will undermine banks’ efforts to foster financial inclusion by providing access to the free and low-cost transaction accounts that help unbanked Americans get their foot in the door — a first, but necessary, step to true inclusion. Our colleagues at the CFE Fund, which oversees the Bank On initiative that ABA has proudly championed, recently wrote to the Fed to emphasize what makes the national account standards work: They were designed to address the needs of low- and moderate-income consumers (bill pay, debit card access, ATM access). They were designed to knock down the barriers that keep so many consumers outside the banking system (minimum balance, credit checks, overdraft fees). And, importantly, they were designed to be economically sustainable for banks offering the accounts. Interchange fees play an important role in that sustainability equation. If banks do not have the revenue streams to support these and other low-cost accounts, they have two options: Pass the costs on to consumers or stop offering and/or marketing the product altogether. If the Fed’s Reg II proposal moves ahead, the very largest retailers will pocket that surplus to pad their bottom line — and consumers won’t see a penny of it. Bank On accounts are currently offered by a growing list of banks across the country. And to ensure we can continue that momentum, ABA has been working hard on behalf of its members to elevate these concerns to policymakers. But we can’t do it alone — we need your help. With the Fed recently extending the comment deadline to May 12, ABA is calling on all bankers to share how this change in regulation will affect their bank and their customers. You can send a letter easily through ABA’s grassroots platform, SecureAmericanOpportunity.com. Banks put interchange to work funding low-cost banking services that help consumers find their way into the regulated banking system — enabling them to take advantage of deposit insurance protections, build credit and do so many other things that can only happen with a banking relationship. If the Fed’s Reg II proposal moves ahead, the very largest retailers will pocket that surplus to pad their bottom line — and consumers won’t see a penny of it. That’s a tradeoff that leaves our country poorer. Email Rob at nichols@aba.com. LINCOLN BRUNING endacotttimmer.com 402-817-1000 Legal advice. Community banking experience. 11 NEBRASKA BANKER
Lessons for Trust Officers from Recent Nebraska Court Decisions Krista M. Eckhoff Baird Holm LLP Litigation in the trust and estate areas is not slowing down — even in Nebraska. With guidance from some recent decisions, you will hopefully avoid a fight. COUNSELOR’S CORNER 12 NEBRASKA BANKER
1. Know the Trust Document The first lesson is a classic: Know the terms of the governing trust document. In one unpublished case, the Nebraska Court of Appeals found that the corporate trustee acted properly when it refused to approve a certain proposed trust amendment. In re Hunt, Case No. A-22-499, 2023 WL 3185514 (May 2, 2023) (unpublished). The Nebraska Court of Appeals found that the corporate trustee acted properly by rejecting the proposed amendment. The corporate trustee rejected the amendment because it believed the amendment was the product of overreach protected by certain provisions of the Trust agreement itself. Specifically, those provisions provided (1) that co‑trustee consent was required for any amendment by the grantor and (2) that a primary purpose of the trust (and the corporate co-trustee) was to be sure that no family member would obtain assets from the surviving grantor without the consent and oversight of the co-trustee. In other words, the bank/corporate trustee understood that the grantors were concerned about requests for money by family members and did not want an easy amendment of the trust to allow for the taking of a surviving grantor’s assets. Lesson: Know the trust language, the purpose of the trust and the power you have (and should exercise) as a trustee. 13 NEBRASKA BANKER
2. Be Aware of Possible Influence or Capacity Issues The Hunt case also affirms the good advice to trust your instincts and to question situations that seem strange. In Hunt, the grantor came into the corporate trustee to ask for their approval of a proposed amendment. In re Hunt, Case No. A-22-499, 2023 WL 3185514 (May 2, 2023) (unpublished). Upon reviewing the amendment, the trustee understood that the proposed change benefitted one daughter over the other siblings. The trustee referred the grantor to her attorney at the time. There had been prior amendments to which the trustee had agreed, but the court emphasized that the corporate trustee had not drafted the prior trust amendments. The evidence showed that the daughter was exercising undue influence over her mother. She would not often let her mother meet with her attorney outside of her presence, provided the information that led to the drafting of the proposed amendment that benefitted her, and even submitted audio recordings that contradicted her position and demonstrated that she belittled and upset her mother. The bank/corporate trustee had no specific knowledge of the audio recordings prior to being asked to approve the proposed trust amendment but, due to its thorough review, was able to avoid approving an amendment that the Court found was the result of undue influence. The bank even received an attorneys’ fees award against the daughter and her attorney, given that the accusations against the trustee were found to be frivolous. The Hunt case is a great reminder to be diligent, meet with individuals in person and refer grantors to counsel if there are questions about capacity, undue influence or otherwise. Lesson: Question requests if there is a hint of undue influence or capacity issues (Are requested changes benefitting one person? How close is that person to the grantor? Does the grantor have an uninterested third party advising them (i.e., an attorney that is not a beneficiary)?) 14 NEBRASKA BANKER
3. Settlement Can Be a Good Way To Resolve Issues if the Pertinent Parties Are Included In an unpublished case from the Nebraska Court of Appeals, the appellate court affirmed the trial court’s finding that parties’ signatures on a family settlement agreement concerning their parents’ trusts was also a resolution regarding amendments made to a sibling’s special needs trust. In re Trust of Wegener, Case. No. A-22-012, 2023 WL 192804 (Jan. 17, 2023) (unpublished). Specifically, the father changed the named trustee for one son’s special needs trust through some amendments, which all of the interested persons (namely, the other siblings who were successor trustees) did not sign. However, those siblings did sign a family settlement agreement approved by the court in 2016, which referenced the amendments previously made to the special needs trust. Ultimately, the court found that these later signatures served to ratify the earlier amendments to the special needs trust. The court rejected the objecting siblings’ arguments that the 2016 family settlement agreement was about their parents’ trust and not their sibling’s special needs trust. Therefore, a family settlement agreement could be used to resolve possible issues regarding a trust and even other related matters — depending on the terms of that agreement. The Probate Code has a similar provision regarding court approval of compromises in estate disputes. The Nebraska Supreme Court decided in April 2023 that the trial court improperly approved a compromise between all siblings, except one. In re Estate of Ryan, 313 Neb. 970 (2023). The court explained that, even after taking evidence and presumably considering the objections of the sibling, the objecting sibling was “not protected” in the proceeding and so the dismissal based upon the compromise between the other siblings was improper. Id. This was even though the objecting sibling was not a beneficiary of the will initially sought to be probated. Although the forgoing case concerns the probate code, and not the trust code, the lessons still apply — namely, to ensure that all parties’ interests are protected and that all agree to the resolution reached. Lesson: Settlement can be an excellent way to resolve matters (even without significant litigation), but be sure that all parties are represented and the language of the proposed agreement is clear. 15 NEBRASKA BANKER
4. Corporations and Farms/Ranches Can Be Complicated In August 2023, the Nebraska Court of Appeals (in an unpublished case) addressed a trial court decision addressing years of litigation between family members concerning both a trust and a corporation that handled a farming operation. Hohenstein v. Hohenstein, Case No. A-22-108, 2023 WL 5217713 (Neb. Ct. App. Aug. 15, 2023) (unpublished). The case is a cautionary tale for those involved in matters concerning the ownership of shares within a trust. The court affirmed the trial court’s decision that the surviving spouse (although subject to undue influence by her son) and trustee of the relevant trust breached her fiduciary duties as trustee in multiple ways, including (1) failing to inform beneficiaries of the establishment of the trust and funding of the trust with the corporation stock; (2) failing to provide beneficiaries with a copy of the trust and reports or accountings of the trust; (3) failing to inform beneficiaries of agreements relating to the trust; (4) distributing assets of the trust to one son with necessity for health, education, support or maintenance (per the trust terms); (5) prematurely distributing son’s remainder interest in the trust; (6) selling assets of the trust for significantly less than fair market value and failing to inform beneficiaries of the sale; (7) failing to administer the trust in good faith, in accordance with its terms; and (8) failing to keep beneficiaries reasonably informed about the administration of the trust. The interplay of the corporation farm and the trust added to the issues the trustee faced. Lesson: Understand the interplay of the Trust Code and the corporation-related statutes in Nebraska, and be mindful of the fiduciary duties owed to trust beneficiaries and those duties owed to shareholders in a corporation. Those fiduciary duties include providing information, staying true to the terms of a trust, keeping beneficiaries reasonably informed and more. 16 NEBRASKA BANKER
Member FDIC Traci Oliver Eric Hallman Tara Koester Bankers’ Bank of the West We champion Community Banking bbwest.com | 800-873-4722 www.bbwest.com YOUR NEBRASKA RELATIONSHIP MANAGERS As a bankers’ bank we strive to help with every level of service and expertise. That is why we service anything from loan participations, merchant services, ATM/debit and much more, because we aim to answer your questions with, “…yes, we can do that too!” 5. Co-trustees and Caution Setting up a trust with co-trustees or serving on a trust as a co-trustee can be a good check on the actions of the other trustee and to be sure actions comply with the terms of the trust and the grantor’s intent. See In re Hunt, Case No. A-22-499, 2023 WL 3185514 (May 2, 2023) (unpublished). In some instances, though, courts recognize that co-trustees can be detrimental. In a Feb. 2, 2024, decision, the Nebraska Supreme Court recognized a complicated dynamic between the siblings in the case, describing that the siblings “are incompatible as co-trustees, and the record shows that administration of the trusts was chaotic and contentious.” The appellate court ultimately affirmed the trial court’s decision of removing both co-trustees for violating their fiduciary duties but found that the “hostile relations” with the beneficiaries and “lack of cooperation” between the two would be sufficient to remove the trustees even without breach of any fiduciary duties. This dynamic would hopefully not be the case with a corporate trustee, but those family dynamics can affect even a neutral corporate trustee. Staying neutral (while true to the trust terms) but empathetic can help the corporate trustee diffuse a tense family dynamic. Lesson: Be aware of the dynamics with any co-trustees and beneficiaries, but use the role as co-trustee to protect the grantor’s intent and ensure compliance with the trust terms. There is often a reason that a corporate co‑trustee would be named (to protect assets, to provide a back‑stop against undue influence, to provide a business perspective, etc.), which should help guide the trustee. More guidance will surely be coming from Nebraska courts in the coming months, but the latest decisions emphasize the importance of understanding the trust and acting with common sense while always keeping the fiduciary duties in mind. These recent cases also emphasize that corporate trustees can be a valuable addition to a trust and in the trust administration process. 17 NEBRASKA BANKER
LEGAL UPDATE 108th Legislature Produces Significant Statutory Changes to Banking Laws Lane Baker Endacott Timmer 18 NEBRASKA BANKER
The second session of Nebraska’s 108th Legislature adjourned on April 18, drawing the 60-day session to a close. During this short session, Gov. Jim Pillen signed into law four bills that passed through the Committee on Banking, Commerce and Insurance, which will impact Nebraska banks and financial institutions. The following is a brief explanation of the legislative bills introduced and the impacts they will have on Nebraska’s statutory framework. LB94 Legislative Bill 94 (LB94) was introduced on Jan. 23, 2023, by Sen. Julie Slama to amend several sections of the Uniform Commercial Code (UCC). The bill was prepared by representatives of the Uniform Law Commission and Nebraska banks and comes on the heels of Nebraska’s passage of legislation allowing for the deposit of cryptocurrency or other digital assets into financial institutions. LB94 was carried over to the second session and signed into law by Gov. Jim Pillen on Feb. 14, 2024. The UCC governs commercial transactions in Nebraska and other adopting states and requires periodic updates to stay current with new forms of personal property and evolving markets. LB94 seeks to adopt a new Article 12 of the UCC to replace the current language and implement accompanying amendments to UCC Article 9, which would create a new category of asset, “controllable electronic records.” Controllable electronic record (CER) will be defined in the updated language of Nebraska Uniform Commercial Code § 12102(a) as “a record stored in an electronic medium that can be subjected to control.” The Committee on Banking, Commerce and Insurance noted in their LB94 Committee Statement that the definition will cover many forms of property created through the use of blockchain technology that exist today or that may exist in the future. Examples of such property would include virtual currency like Bitcoin, non-fungible tokens (NFTs) and digital assets with embedded payment rights.1 Updated language to Nebraska Uniform Commercial Code § 12-105 will now govern control of a CER. The Committee on Banking, Commerce and Insurance has summarized the definition of control found in § 12-105 to include: (1) the nonexclusive power to enjoy substantially all the benefits of the CER; (2) the exclusive power to prevent others from enjoying substantially all the benefits of the CER; (3) the exclusive power to transfer control or to cause another person to get control of the CER; and (4) the ability of the person in control to identify itself to a third-party as the person having control (can be accomplished through the use of the cryptographic key or account number).2 The updated language will also direct how a security interest attaches to CERs and how to perfect security interests. LB94 looks to replace the current language in UCC Article 12, put in place on July 1, 2022. Importantly, LB94 contains a “Special Transitional Rule” that applies the current UCC Article 12 language to any transaction involving a CER that arose on or after July 21, 2022, and before the operative date of LB94. This rule also states that transactions involving a CER arising before July 1, 2022, will be carried out under the laws existing before July 1, 2022, and the transaction may be terminated, completed, consummated or enforced under that pre-existing statute, treating the current version of UCC Article 12 as if it had not existed. LB279 Legislative Bill 279 (LB279) was introduced on Jan. 31, 2023, by Sen. Kathleen Kauth, seeking to change and eliminate provisions relating to reporting requirements of executive officers of banks at a state level, explicitly amending Neb. Rev. Stat. § 8-143.01. LB279 was carried over to the second session and signed into law by Gov. Jim Pillen on Feb. 14, 2024. LB279 amends Neb. Rev. Stat. § 8-143.01 to eliminate provisions relating to the report of loans, indebtedness and credit of executive officers of banks and to adopt federal updates MORE FACE TIME. LESS WAIT TIME. Visit NebraskaBlue.com/Telehealth to learn more. Health benefits that give you access to virtual visits with doctors and specialists, even if you’re out of state. So you can get the care you need — wherever you are, whenever you need it. An independent licensee of the Blue Cross and Blue Shield Association. 19 NEBRASKA BANKER
to the law relating to extension of credit.3 These changes are made to establish as much parity as possible between state and national banks. Because the Financial Services Regulatory Relief Act of 2006 removed the requirement of executive officers to report outside indebtedness for national banks, LB279 removes those same requirements currently found at the state level. LB628 Legislative Bill 628 (LB628) was introduced on Jan. 31, 2023, by Sen. Mike Jacobson to amend sections of the Revised Uniform Limited Liability Act (RULLCA) and the Nebraska Professional Corporation Act (NPCA). This bill was brought by the Nebraska Secretary of State, seeking to address inconsistencies in the aforementioned acts. The amended sections relate to the filing requirements for professional services organized under those acts.4 LB628 was carried over to the second session and signed into law by Gov. Jim Pillen on Feb. 14, 2024. LB628 makes the following amendments to RULLCA and NPCA: RULLCA § 21-102 Two definitional changes: 1. A certificate of registration under RULLCA would also include the verification that all members, managers, professional employees and agents who are required by law to do so are duly licensed or otherwise legally authorized to render the professional service for which the limited liability company is organized to do business or ancillary service as those which the limited 800.228.2581 MHM.INC Now more than ever people want self-service options. With our core integrated ITMs we can make this a reality both in the lobby and in the drive-up of your branch. SELF-SERVICE BANKING 20 NEBRASKA BANKER
nedcoloans.org WE PARTNER WITH BANKS TO HELP BUSINESSES THRIVE IN NEBRASKA. • Partner with NEDCO to provide your customers with down payments as low as 10%. • Lower your exposure while participating in larger projects. • Unlike SBA 7a loans, NEDCO handles all paperwork and processing with the SBA. • NEDCO’s long-term fixed rate helps you compete with other lenders only offering conventional financing. • NEDCO 504 loans provide the bank with a 1st lien at a 50% LTV. JASON CULVER Chief Credit Officer 402-483-4651 jason@nedcoloans.org WILL SAILORS Vice President Lending 402-483-4622 will@nedcoloans.org liability company renders, through the electronic accessing of the regulatory body’s licensing records or through compacts or other certifying organizations recognized by the regulatory body by the Secretary of State.5 2. The definition of professional service under RULLCA is clarified by providing an exhaustive list of professions included in the definition.6 RULLCA § 21-185 Removes the residential address filing requirement, requiring only that an address be provided. Further, amendments include the expansion of the scope to which the section applies, now including any ancillary service the professional LLC renders. The section now includes a grandfather clause for professional service LLCs that already have a certificate of registration.7 21 NEBRASKA BANKER
RULLCA § 21-186 Amended to expand the scope to which the section applies to include any ancillary service the professional LLC renders. Adds clarification on the accessibility of licensing records of regulating boards and provides a requirement to make such records automated, electronically accessible and verifiable by the Secretary of State.8 RULLCA § 21-118 Amended to expand the scope to which the section applies to include any ancillary service the professional LLC renders. NPCA § 21-2202 Changes the definition of certificate of registration to also include the verification that all directors, officers, shareholders and professional employees listed on the application filed with the Secretary of State, except for the secretary and assistant secretary, are duly licensed or otherwise legally authorized to render the professional service or an ancillary service for which the professional corporation is organized, through the electronic accessing of the regulating board’s licensing records or through compacts or other certifying organizations recognized by the regulatory body by the Secretary of State. 9 NPCA § 21-2216 Removes the residential address filing requirement, requiring only that an address be provided. Amended to expand the scope to which the section applies to include any ancillary service the professional corporation renders. Adds clarification on the accessibility of licensing records of regulating boards and provides a requirement to make such records automated, electronically accessible and verifiable by the Secretary of State.10 LB1074 Legislative Bill 1074 (LB1074) was introduced on Jan. 9, 2024, by Sen. Julie Slama to adopt changes to federal law regarding banking and finance and changing provisions of the Commodity Code, the Credit Union Act and the Securities Act of Nebraska. The bill was introduced at the request of the Nebraska Department of Banking and Finance and was signed into law by Gov. Jim Pillen on April 17, 2024. LB1074 amends several Nebraska statutes and the Uniform Commercial Code by adopting updates that mirror federal law relating to banking and finance. Bills of this nature are commonly introduced to update “wildcard” statutes. State “wildcard” statutes allow state-chartered financial institutions 22 NEBRASKA BANKER
WALENTINE O’TOOLE, LLP When time is of the essence, experience counts. Walentine O’Toole blends confidence, experience and knowledge with the personal attention you can expect from a regional law firm. www.walentineotoole.com 402.330.6300 11240 Davenport St. • Omaha, NE 68154-0125 to engage in the same activities as their federally chartered counterparts. “Wildcard” statutes preserve parity with federal institutions and ensure that state financial institutions are not disadvantaged by state laws that are more restrictive than federal laws.11 LB1074 is comprised of several additional bills seeking to modernize and synchronize Nebraska and Federal banking and finance law, including the following: LB1075, which will change provisions of the Delayed Deposit Services Licensing Act, the Nebraska Installment Loan Act, the Nebraska Installment Sales Act, the Nebraska Money Transmitters Act and the Residential Mortgage Licensing Act; LB710, which will change provisions of the Credit Union Act; LB872, which will prohibit state and local governments from accepting central bank currency; LB1122, which will change enforcement provisions relating to written solicitations for financial products or services; and LB1294, which would adopt the Data Privacy Act, change provisions relating to certain certificates and information relating to vital records, and provide for certain records to be exempt from public disclosure. In sum, these new changes to Nebraska statutes take great strides in modernizing the regulation of banks and financial institutions. It is clear that through these changes, digital safety and data security are at the top of lawmaker’s minds. Implementing more efficient legislation provides a more secure banking and financial ecosystem. As the digital age continues to progress, it is reassuring to see our legislative bodies take steps to evolve along with it. Lane Baker is from Deshler, Nebraska, and attended Hastings College. As a member of the graduating class of 2016, he received a Bachelor of Arts in Sociology, minoring in Criminal Justice. Lane is a law student at the University of Nebraska College of Law, where he anticipates earning a J.D. and completing the Business Transactions Program of Concentrated Study in the spring of 2024. He has spent the last year as a law clerk for Endacott Timmer PC LLO in Lincoln, Nebraska, where he plans to return as an associate after graduation. Sources 1. Comm. on Banking, Com. & Ins., Committee Statement (Corrected), Leg. B. 94, 108th Leg., 1st Sess., at 2 (Neb. 2023). 2. Id. 3. Comm. on Banking, Com. & Ins., Committee Statement, Leg. B. 279, 108th Leg., 1st Sess., at 1 (Neb. 2023). 4. Comm. on Banking, Com. & Ins., Committee Statement, Leg. B. 628, 108th Leg., 1st Sess., at 1 (Neb. 2023). 5. Id. 6. Id. 7. Id. 8. Id., at 2. 9. Id. 10. Id. 11. Comm. on Banking, Com. & Ins., Committee Statement, Leg. B. 1074, 108th Leg., 2nd Sess., at 1 (Neb. 2024). 23 NEBRASKA BANKER
TECH TALK Smishing Text Messaging Gone Rogue Shane Daniel, Information Security Consultant, Team Lead SBS CyberSecurity A Familiar Scenario A customer service representative at a community bank answers an incoming call. The caller claims they received a text message about their account from the bank, but states they aren’t a customer of the bank. The caller is confused and demands to know how the bank got their number and why the bank is sending unsolicited texts to their personal cell phone. In reality, the bank didn’t send a text message to the caller. Criminals can obtain active cell phone lists for a particular area, then pose as a local business to indiscriminately send thousands of messages to every number on the list. The plan is to cast a wide net, hoping to snare as many victims as possible. The recipients and the impersonated organization are unfortunate victims of a growing criminal threat known as smishing (SMS phishing). What is Smishing? Smishing is a social engineering attack in which malicious text messages are sent to unsuspecting victims. The messages impersonate legitimate sources and entice targets to divulge personal information or unknowingly install malicious software on mobile devices. Over 300 million smartphone users across the U.S. send roughly 2 TRILLION text messages each year. However, smishing is still a relatively new attack method in comparison to phishing. With a lack of awareness and the sheer number of targets, it’s no surprise attackers are turning to smishing. Continued on page 26 24 NEBRASKA BANKER
25 NEBRASKA BANKER
LET’S GET STARTED www.dbeinc.com 800-373-3000 sales@dbeinc.com EXPERIENCE THE DBE DIFFERENCE ATM | ITM | TELLER CASH AUTOMATION | COIN + CURRENCY | ATM MARKETING VIDEO + DIGITAL BANKING | SERVICE | REMOTE SERVICES + PATCHING SERVICES How Does Smishing Work? Smishing is very similar to phishing but targets cell phone numbers rather than email addresses. The messages are harmless unless acted upon. Smishing messages ask users to take additional action. By impersonating trusted senders, the requests may seem very normal and non-threatening. But beware of messages requesting these types of actions, as doing so might have devastating consequences: • Calling a Phone Number: The attacker provides a number for the victim to call, attempting to obtain more information from the victim. • Clicking a Link: The link directs the victim to a malicious website which may be used to steal login information or install malicious software on the victim’s device. Malware can spy on the victim, allowing the attacker to compromise additional accounts or information. • Resetting a Password: The attacker tricks the victim into setting a temporary password on an account, granting access to the attacker and locking out the victim. • Accepting an MFA Notification or Providing a Digital Code: The attacker may already have valid credentials but needs to bypass MFA controls. By performing these actions, the victim unknowingly grants access to the attacker. • Verifying Sensitive Information: The last four digits of SSN, security code on the back of credit cards, date of birth, email addresses, account numbers, etc. The attacker may already possess much of the victim’s information but may need additional details to fully compromise a target. Continued from page 24 26 NEBRASKA BANKER
Smishing Content Malicious actors can be creative when it comes to crafting a believable message. Though all messages should be scrutinized before taking action, certain topics have become popular for smishing. Users should take extra caution when reviewing these types of messages: • Messages about finances (banking, investments, retirement, etc.). • Messages about package deliveries (Amazon, UPS, FedEx, etc.). • Messages from tech companies (Apple, Google, Microsoft, etc.). • Messages from public authorities or government agencies (IRS, FBI, law enforcement, etc.). • Messages about newsworthy topics (emergencies, natural disaster aid, etc.). Red Flags Texting has become so prevalent in our society that it’s commonplace to receive texts from retailers, banks, healthcare providers, schools, etc. Here are some additional tips to help users tell the difference between malicious smishing messages and harmless appointment reminders: • The sending phone number is unknown to the recipient. • The sending phone number is an email address. • The message implies a sense of urgency. 27 NEBRASKA BANKER
• The message was unexpected. • The message contains poor spelling or grammar. • The message contains shortened URLs. Take a Stand While there’s no solution to eliminate smishing, users can take the following precautions to safeguard themselves from threats: • Verify the Message Sender: Do not call a number provided in the message or the number displayed as the sender. Look up the individual or organization the message claims to be from, then contact them directly to confirm the message’s authenticity. • Enable Spam Protection: Some phone manufacturers and carriers offer products or services to filter suspicious messages. Apps can also assist with preventing unwanted texts. • Do Not Respond “STOP:” This may result in increased attacks. • Report the Message: Forward suspicious messages to SPAM (7726). • Spread the Word! Stay Vigilant Social engineering is an ever-present threat in the security landscape. Criminals are increasing efforts to target mobile devices via malicious smishing text messages. Common message content, attack methods and deceptive tactics can be helpful in identifying suspicious messages before any harm is done. User awareness is a key strategy to reduce the risk associated with smishing. 28 NEBRASKA BANKER
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2024 EDUCATION CALENDAR JUNE Advanced School of Banking — Year 2 June 3-7 Manhattan, KS Annual Golf Outing June 6 Hastings, NE FDIC Directors College June 11 Lincoln, NE Preparing for your Next IT Exam Workshop June 13 Virtual Bank Compliance School June 24-28 Manhattan, KS The Active Shooter Seminar June 25 Virtual JULY Agricultural Lending School July 8-12 Kearney, NE New Account Documentation & Compliance Workshop July 16-17 Virtual Principles of Banking Workshop July 23-24 Virtual AUGUST Young Bankers of Nebraska Conference August 1-2 Omaha, NE Bank Robbery for the Frontline Seminar August 6 Ogallala, NE Bank Robbery for the Frontline Seminar August 7 Norfolk, NE Bank Robbery for the Frontline Seminar August 8 Lincoln, NE Real Estate Lending Compliance Conference August 13-14 Lincoln, NE Call Report Workshop August 20-21 Virtual Safe Deposit Box Seminar August 29 Virtual For more information about these live and online education events and training tools, contact the NBA Education Center at (402) 474-1555 or nbaeducation@nebankers.org. You may also visit the NBA website at nebankers.org/education. 30 NEBRASKA BANKER
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