Innovation Station 2023 • Issue 1 Top 5 Innovation Trends for 2023 FIXED RATE OR FLOATING? HYBRID ARMS GIVE AN INVESTOR BOTH FEATURES The Nebraska Independent Banker
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©2023 The Nebraska Independent Community Bankers are proud to present The Nebraska Independent Banker as a benefit of membership in the association. No member dues were used in the publishing of this news magazine. All publishing costs were borne by advertising sales. Purchase of any products or services from paid advertisements within this magazine are the sole responsibility of the consumer. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Nebraska Independent Community Bankers or its publisher, The newsLINK Group, LLC. Any legal advice should be regarded as general information. It is strongly recommended that one contact an attorney for counsel regarding specific circumstances. Likewise, the appearance of advertisers does not constitute an endorsement of the products or services featured by The newsLINK Group, LLC. Nebraska Independent Community Bankers 1001 S. 70 Street, Ste 101 Lincoln, NE 68510 (402) 474-4662 nicbonline.com The Nebraska Independent Banker is a Publication of The Nebraska Independent Community Bankers Association Issue 1 • 2023 INSIDE TAKE A LOOK 8 20 24 NICB Executive Committee Chairman Rick Heckenlively Points West Community Bank Sidney Chairman Elect Dave Ochsner Commercial Bank Nelson Vice Chairman Jim Niemeier Citizens State Bank Friend President/CEO Dexter Schrodt Secretary Kelly Lenners First State Bank Nebraska Pickrell Treasurer Arnold Lowell CerescoBank Ceresco Immediate Past Chairman Corby Schweers Elkhorn Valley Bank Wayne 4 President’s Message Nebraska’s Community Banks are Well-Positioned Dexter Schrodt, President and CEO, NICB 5 ICBA Live 2023 6 Flourish By Rebeca Romero Rainey, President and CEO, ICBA 8 From The Top By Brad Bolton, Chairman, ICBA 10 Windows 11 vs. Windows 10: Should You Make the Switch? By Mike Gilmore, RESULTS Technology 12 Fixed Rate or Floating? Hybrid ARMs Give an Investor Both Features By Jim Reber, ICBA Securities 14 Innovation Station Top 5 Innovation Trends for 2023 By Charles Potts, ICBA 16 Over-Sharing in the Workplace? Why Your Company May Need a TikTok and BeReal Policy By Fisher Phillips 20 CFPB Issues Guidance About Illegal Junk Fees on Deposit Accounts By William J. Showalter, Young & Associates, Inc. 22 Upcoming Webinars 24 Navigating the Potential Impact of Recent Regulatory Guidance By Gale Simons-Poole, BHG Financial 26 NICB Endorsed Partners 26 Associate Members 2023
PRESIDENT’S MESSAGE Community bankers are in their communities every day, both in helping the community with their financial needs and through involvement in activities outside of the office. Nebraska’s Community Banks are Well-Positioned Dexter Schrodt, President and CEO, NICB As we get settled in a new year, Nebraska’s community banks are well-positioned for any uncertainty that lies ahead with the economy. While inflation is finally starting to slow down during the first part of this year, questions remain about the current rate environment and the impact it will have on key sectors. Specifically, higher rates continuing to impact home loans is one of the questions bankers around the country will be keeping an eye on this year. Conservativeness in their business and an awareness and gut instinct for future economic trends are what separates community bankers from their large-bank counterparts. Community bankers are in their communities every day, both in helping the community with their financial needs and through involvement in activities outside of the office. This constant contact with the pulse of the community is a big part of how a community banker approaches economic uncertainty; because, after all, it’s times of economic uncertainty when customers increase their need for the services and expertise of their local bank. While the national and international economic outlook is a little murky right now, Nebraska continues to enjoy record-low unemployment, and our state government has a large operating surplus thanks to consistently strong tax receipts. The Legislature is, rightfully so, considering historic tax cuts and reform in order to ensure it is not taking in an unnecessarily large surplus of tax dollars. New Governor Jim Pillen has expressed a desire to cut spending while also consistently drawing a distinction between investment and spending. In my view, this is exactly what community bankers should want to hear. Investment by our state government should include all the things our communities care about in order to thrive: roads, broadband, housing, health care, and child care. These items are critical to attracting and retaining residents in our non-Omaha or Lincoln communities, whether it be the eastern, central, or western parts of our state. It is vital that our policymakers recognize the importance of investment in these areas, just as our bankers and business leaders in these communities currently do on a daily basis. This is why I am looking forward to NICB taking a more proactive approach to economic development policies in our state; it is truly an investment in our communities and can make a difference in meeting the demands required for growth. Being a part of the discussions with groups already doing great work in these areas is how we can continue to lead and navigate our communities in a way that mirrors the way community bankers approach their businesses. One thing we do know is that when our communities thrive, so do our community banks; thus, it is imperative for our association to do all we can to support communities so that they can thrive and sustain themselves. Please do not hesitate to reach out to discuss what you see in your community or ideas you may have on how policymakers can help support your community. I am eager to see what 2023 brings for our community banks and all that we can accomplish this year. NEBRASKA INDEPENDENT BANKER 4
MARCH 12-16 REGISTRATION IS OPEN HAWAII HILTON HAWAIIAN VILLAGE ICBA LIVE is your destination for the latest in community bank education and innovation. Network with fellow community bankers, hear from inspiring speakers, and soak up the latest industry insights and fintech solutions. REGISTER TODAY ICBA.ORG/LIVE EVT_1266A21_2023 ICBA LIVE Hawaii Core Designs_IB Magazine Ads.indd 1 8/3/22 2:23 PM
As we enter a new chapter and start a new financial statement cycle, know that ICBA will be there to support you with tools, resources, and advocacy efforts. FLOURISH By Rebeca Romero Rainey, President and CEO, ICBA WHERE I’LL BE THIS MONTH I’ll be holding down the fort at ICBA headquarters, helping our government relations team as we welcome new members of Congress and gearing up for ICBA LIVE March 12-16. Register today at icba.org/live. The beginning of a new year feels like a fresh start, a new chapter in our stories. We have a blank page on which we can write our narrative over the course of the year, with new milestones filling the pages ahead. And with 2023, we have no shortage of adventures awaiting us. Consider industry evolution. I’m amazed at the pace of changes occurring in all areas of financial services, from instant payments to more digital solutions and beyond. This will be a pivotal year for embracing new opportunities and exploring how we can set ourselves up to succeed, even with looming challenges. Think about the uncertainty of the economic environment. It’s a challenge to be sure, but it’s one that community banks have previously faced with strength. Time and time again, you have demonstrated resiliency in the face of difficult financial conditions. In fact, this is when community banks shine, bringing stability to customers simply by being relationship bankers who see them and know them. Looking at it through a different lens, there’s opportunity in this economic climate; it's a way to double down on your strengths and unique people-first approaches to banking. Yet, amid these external influences, you may be asking, “What actions can we take to ensure we’re identifying the right next step for our bank?” That’s where ICBA can provide support. Whether it’s the information that comes in NewsWatch Today or Independent Banker, convening with other community bankers to discuss strategies at ICBA LIVE or proactive engagement with lawmakers at the Capital NEBRASKA INDEPENDENT BANKER 6
Ease into innovative payment products at icba.org/bancard Ease into modern payments with the comfort of ICBA Bancard. High quality, innovative payment products, including mobile card apps. Backup support for your community bank in negotiating with payments providers. Letting your customers sit back and use payment solutions from anywhere. A strong foundation in thought leadership in payments and ongoing personalized support. vCISO for audit coordination and more…. Penetration tests Vulnerability scans Cybersecurity tailored to community banks, because it was created by community bankers! Summit, we offer opportunities to not just react but to respond to this dynamic environment with your mission and vision at the center. We have increased our offerings to support you and to further differentiate our industry. For example, we have moved the ThinkTECH Accelerator in-house to ensure year‑round innovation programming and to find new fintech partners who are bringing market solutions that respond directly to community bank needs. We’re expanding classes and programs provided by Community Banker University, and as the government relations team prepares to welcome new members of Congress to D.C., they are ready and excited to tell your story and ensure your voices are heard. So, as we enter a new chapter and start a new financial statement cycle, know that ICBA will be there to support you with tools, resources, and advocacy efforts. Together, we will write our 2023 story, one that will set up community banks for success. Rebeca Romero Rainey is the President and CEO of ICBA. Connect with Rebeca on Twitter @romerorainey. NICBONLINE.COM 7
FROM THE TOP I’m a big proponent of the power of many in advancing community bank goals and objectives. By Brad Bolton, Chairman, ICBA Connect with Brad on Twitter @BradMBolton. I’ve always been a glass-half-full guy, and though 2023 is expected to be a challenging economic year, it also will bring opportunity. We simply need to remember what makes us special as community bankers, and with that as our foundation, we can embrace this season of change in four primary ways: 1. Demonstrating the community bank difference: One of our greatest assets is our reputation as relationship bankers. When things get tough, people want to be able to talk to their banker. They want to come into the bank and say, “We need your support to figure things out.” With community bankers by their sides, they have a real connection to someone who can help solve their problems, and we’re able to find creative solutions to work with them in trying times. That’s the community bank difference, and we should be proud to reiterate it throughout the year. 2. Gaining advocacy wins: Community bankers have been proven vocal advocates on numerous issues facing our industry, including pushing to advance a safe harbor for cannabis banking, closing the industrial loan company loophole, opposing an extension of Durbin Amendment restrictions to credit cards and shaping the debate over the regulation of crypto assets. I encourage you to join us and lend your voice to supporting these and other advocacy efforts, which will shape the policy landscape. 3. Embracing innovative offerings: Technology is a top focus because we have to be ready to live where our customers live: on their phones. This climbing emphasis on digital solutions is why ICBA brought all ThinkTECH programming, including the Accelerator, in-house to ensure year-round support for community banks. ThinkTECH companies help us serve our customers better, expand our footprint into a more diverse customer base and create better adoption of services through technology. 4. Uniting with other community bankers: I’m a big proponent of the power of many in advancing community bank goals and objectives. There is nothing more impactful than convening community bankers with a one-mission focus. This year, gathering for ICBA LIVE in Hawaii and bringing our collective forces to Washington in the spring to advocate for our priorities will aid in ensuring community banks continue to flourish. While no one can predict just how the year will go, I know that by staying true to who we are as community bankers, we will come out on top. And that’s why I’m looking forward to all we will collectively accomplish in 2023. MY TOP 3 PRIORITIES FOR A SUCCESSFUL 2023 1. Advocacy: Get every employee involved 2. Innovation: Implement new digital solutions 3. Education: Commit to community, bank-focused training for next-generation leaders NEBRASKA INDEPENDENT BANKER 8
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Windows 10: Windows 11 is here, and while it may seem like an enticing upgrade, it is important to consider whether or not your business should make the switch. The new Windows operating system has many similarities to Windows 10, but there have also been some significant changes with this release that could impact your workflow. Here is what you need to know about Windows 11 vs. Windows 10 so that you can make a well-informed decision about whether to switch to Windows 11 or stick with the previous system. What Features Are Included in Windows 10? Released in 2015, Windows 10 is a stable and secure operating system with many features to make computing easier. It includes a virtual assistant, Cortana, that can help you with tasks like searching for files or setting reminders. It also features the Microsoft Edge web browser and integration with cloud storage services such as OneDrive and DropBox. OTHER MAJOR WINDOWS 10 FEATURES INCLUDE: • A Start menu with customizable live tiles • An updated taskbar • A revamped Notification Center • Picture passwords and Windows Hello facial recognition Windows 11 VS. SHOULD YOU MAKE THE SWITCH? By Mike Gilmore, RESULTS Technology NEBRASKA INDEPENDENT BANKER 10
What’s New with Windows 11? Windows 11, released in 2021, is the latest version of the Microsoft operating system. In this system update, Microsoft has made a few changes that could impact how you use the system. THE INTERFACE UPDATES IN WINDOWS 11 INCLUDE: • The Start menu’s Mac-like redesigned look • Widgets for faster access to applications • Better Xbox gaming technology • Teams and Android apps integration The Benefits of Windows 11 vs. Windows 10 Windows 11 includes a number of performance improvements that aim to make this software update faster and more reliable than Windows 10. It also has improved security features and better compatibility with third-party applications. Many like this update because it’s a cleaner design overall and includes strong video updates. It also has better integration with mobile devices, so if your business works on multiple platforms, upgrading could be a great move. The Downsides of Upgrading to Windows 11 However, the main issue with upgrading to the newer software version is its incompatibility with older PCs. Some Windows 11 upgrades may not be supported by older hardware, complicating the upgrade process. It can cause applications to crash, slow down the system, and prevent access to certain features. Additionally, some existing applications may not work properly on the new operating system, which could create unexpected problems and require further customization or professional assistance to solve. Many users have reported more issues and bugs using Windows 11 vs. Windows 10. For example, some users have encountered problems with their printers and other hardware not being recognized on the system. Other users are upset that some of their favorite Windows 10 features have been removed in Windows 11. Removed Windows 10 Features In upgrading to Windows 11, some features from the previous version have been removed. For those who rely on these features, this could be a major setback. THESE REMOVED FEATURES INCLUDE: • Desktop wallpaper sync • Internet Explorer panel • Missing events in Calendar Flyout • Apps like 3D Viewer and OneNote for Windows 10 • Folders of apps and named groups Windows 11 vs. Windows 10: Which Update Is Better? As you consider Windows 11 vs. Windows 10, it’s important to understand the implications of making the switch. If your company uses older PCs, you could actually experience more problems than benefits. Additionally, the removal of certain features could require you to change how you use the system and also require you to restructure your workflow. The best way to decide whether or not Windows 11 is the right fit for your business is to consult with a professional who knows the ins and outs of both versions. They can help you evaluate which update makes the most sense for your company’s needs and what steps you should take if you choose to switch. Consult RESULTS Technology For Your IT Needs At RESULTS Technology, we can evaluate your current system and help you decide between Windows 11 vs. Windows 10. We have extensive experience working with both versions of the Microsoft operating system and understand the implications of making an upgrade. Our expert IT consultants strive to bridge the gap between business and technology and deliver the best results for our clients. Contact us today at (913) 347-6497 or scan the QR code to fill out the form to learn more about how we can help you make the right choice for your business. https://www.resultstechnology.com/get-in-touch/ NICBONLINE.COM 11
FIXED RATE OR FLOATING? Hybrid ARMs Give an Investor Both Features By Jim Reber, ICBA Securities What’s your choice for the term of the decade so far (that is, other than COVID-19)? In the last three years, a number of expressions have come into fashion, some of which have been worn out, used out of context, and deemed to be a blight on our vocabulary by linguists. I’m sorry to say these may be around for a while. Here are a few: • Virtual • Social distancing • Pivot • PPP • Zoom (which I’ve noticed has become a verb as well) • Supply chain • Hybrid Let’s stick with “hybrid” for a few minutes. This has gained popularity in several circles. Hybrid cars, powered by both fuel and electricity, now account for over 5% of new vehicle sales, and all major auto manufacturers are ramping up their capacity. Hybrid education programs, which have both inperson and virtual components, are likely to be with us for some time. And, in the investment world, hybrid bonds can offer an attractive risk/reward profile for community banks. Not a ‘20s Innovation Adjustable-rate mortgages (ARMs) have been around since the 1980s, and portfolio managers have coveted these investments that “wrap” the loans into a liquid security. ARM pools backed by Fannie Mae, Freddie Mac, and Ginnie Mae (GNMA) deliver all the normal benefits of mortgage-backed securities (MBSs) and more. In addition to the monthly cash flow, ARMs also can help control interest rate risk for banks that are exposed to rising rates. 2020 versions of ARMs are, at least initially, hybrids. This means there is a fixed rate period for between three and 10 years, after which the remaining principal will adjust frequently, either semi-annually or annually. The volume of ARMs that are true floaters right out of the box is so small that the agencies have a hard time pooling them. Also, there are periods in which hybrids are not particularly attractive for community banks, due mostly to (no surprise here) the price levels. I’m pleased to announce that 2023 is a year in which hybrid ARMs are available at market prices that an investor will probably like over the next few years. Borrower Profile Still, the vast majority of new mortgage loans are fixed-rate for the full term, whether 30, 20, 15, or 10 years. Over the last decade or so, only about 6% of new loans are adjustable, and that includes hybrids. So who are these borrowers who are statistical outliers? They really line up into two groups. The first are those who are barely on the cusp of qualifying for conventional (or FHA/VA) financing from a debtload standpoint. Hybrid ARMs will typically be offered at a lower rate than fixed, as the lender has to incentivize the borrower to accept some interest rate risk. The second group consists of homeowners who expect to be in their homes for a defined, relatively short period of time of 10 years or less. These may be NEBRASKA INDEPENDENT BANKER 12
WHERE COMMUNITY BANKS BANK Member FDIC Scan to call now Traci Oliver Eric Hallman Tara Koester As a bankers’ bank we strive to help with every level of service and expertise, covering anything from loan participations, merchant services, ATM/debit and much more. We aim to answer your questions with, “…yes, we can do that too!” www.bbwest.com Bankers’ Bank of the West soon-to-be empty nesters, or possibly expect to move for employment reasons. If the borrowers do prepay before the first reset date arrives, they’ve saved some interest costs and didn’t expose themselves to higher reset rates. Current Examples Given the profiles and behaviors of the borrowers, the cash flows that hybrids produce are substantial. The loans have fully amortizing 30-year terms, so not a lot of principal is scheduled to amortize initially, but an investor can expect some early activity. Then, as the first reset date approaches, the prepayments speed up even more, sometimes dramatically. Some models predict paydowns of 25% or more annually during the fixed rate window, and even faster in the last few years before the initial reset. For many community banks, fast prepayments are exactly what they want in 2023. Clearly, this was not the case in 2020 and 2021 when banks were drowning in liquidity and interest rates were at record lows. Another piece of good news is that current market prices for these newly-issued hybrids are near par, usually between 100 and 101. This means that significant paydowns won’t have much impact on your yields. Perhaps even better: the inverted yield curve makes the hybrids with the shortest first reset date (weighted average roll, or WAR) the highest yielding, at least until the WAR. For example, a GNMA hybrid with a 36-month roll date, that starts with a full 5% coupon, is currently available at just a slight premium. This significantly out-yields some longer MBS, at least for the next three years. There’s more to the ARMs story than we have time and space for here (e.g., rate caps), but it’s fair to say hybrids are worth a portfolio manager’s look in early 2023. You may decide they’re virtual bargains, and that your security inventory should pivot and take down a supply. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income brokerdealer for community banks. NICBONLINE.COM 13
Innovation Station Top 5 Innovation Trends for 2023 By Charles Potts, ICBA NEBRASKA INDEPENDENT BANKER 14
As we turn the page to a new year, the innovation evolution continues. ICBA is leaning into it, bringing its ThinkTECH Accelerator program and innovation efforts in-house to provide community bankers with targeted solutions tailored to their needs. Here at ICBA, we’ve been tossing around a quote from author Courtney C. Stevens’ novel, The Lies About Truth, that captures our ethos heading into 2023: “If nothing changes, nothing changes. If you keep doing what you’re doing, you’re going to keep getting what you’re getting. You want change, make some.” For ICBA and its community bankers, I believe 2023 will continue our industry’s forward momentum as our members position themselves to be the agents of change that find and champion new opportunities. Here are what I believe will be the top five trends and opportunities in the year ahead: 1. Targeting fintech initiatives focused on meeting community bankers' unique needs. Much like we saw some concentrated initiatives in 2020 with the Paycheck Protection Program (PPP) and the CARES Act, 2023 will bring a more granular focus to community banks’ lines of business. Agtech (age tech) payments and financial inclusion are top of mind for ICBA, as well as revenue-generating opportunities for community banks. 2. Momentum around faster payments, real-time payments, and FedNow. Faster and real-time payment activity and deliverables will become tangible and imperative in the year ahead. With the launch of the FedNow Service in 2023, new use cases for faster and real-time payments will continue to emerge, providing community banks with an abundance of opportunities in this space. 3. Continuing digital transformation. Digital transformation shows no signs of slowing down. In response, ICBA is expanding its digital education programming and resources to ensure community bankers have what they need to differentiate themselves from the competition and vie for market share. By bringing its innovation initiatives in-house, ICBA will continue to support these efforts, including identifying robust, cutting-edge solutions to solve community bank pain points and meet evolving customer needs. 4. Increasing embedded payments. Embedded finance is expected to increase exponentially over the next few years, opening up new markets and enhancing customer experiences. According to Plaid, a financial services company, embedded financial services will produce $320 billion in revenues in 2025 — a 10-fold increase over the $22.5 billion in 2020 revenues. Expect increased demands from business customers and new, revenue-generating opportunities for community banks. 5. Emerging chief innovation officers or digital strategists. With growing talent demands and the pace of innovation, expect to see the emergence of in-house, community bank, chief innovation officers and digital strategists. Community banks are investing in these new skill sets, bringing in top talent from other industries, so we expect to see an uptick in this trend in the year ahead. In 2023, community banks must remain agile and focused on making changes to secure their place as their customers’ preferred financial partner. As the new year unfolds, we would do well to remember Stevens’ mantra, "If nothing changes, nothing changes." Charles Potts (charles.potts@icba.org) is ICBA Executive Vice President and Chief Innovation Officer. NICBONLINE.COM 15
OVER-SHARING IN THE WORKPLACE? WHY YOUR COMPANY MAY NEED A TIKTOK AND BEREAL POLICY By now, many of us have seen a TikTok video filmed at someone’s workplace – a “day in the life” video, someone complaining about their coworkers, supervisors, or customers, or someone talking about an unrelated subject while at the office. And a relatively new platform, BeReal, goes a step further by encouraging users to provide an unfiltered view into their “real” everyday life at random moments throughout the day. Of course, such organic social media clips can be a valuable tool that helps market your brand and build stronger employee relationships – but where do you draw the line? These posts might include employees performing their duties during a meeting with co-workers or at a workstation, which raises privacy and confidentiality concerns. Moreover, employees flocking to social media to discuss their bosses and general work experiences – positive or negative – could lead to other troubles. When these videos go viral, employees may become unofficial spokespersons for your organizations, influencing the conversation about work norms and creating trends that impact employers globally. With these changing dynamics, you may want to set new guidelines for social media use while ensuring your policies don’t run afoul of employment and labor laws. Here are four tips for updating your social media policies to reflect this modern era and stay on top of the latest developments. 1. Ensure Policies Reflect Recent Trends In the early days of widespread social media use, your policies may have simply prohibited employees from using company equipment to post non-work-related content online and required work posts to be business appropriate. But social media use is rapidly evolving in new ways that you may not have anticipated when your policies were first drafted. What should you know about current trends as you consider policy changes? For one thing, TikTok has quickly grown in popularity over the past two years with more than a billion monthly active users – which means your employees are likely using the platform and are probably doing so during work hours. The app allows users to upload videos from five seconds to 10 minutes. TikTok then filters videos through their feed using an algorithm and shares them with other users. These videos may receive millions of views, comments, likes, and shares. While TikTok is popular, it’s obviously not the only platform featuring employees on the job. Unlike TikTok – where users are hoping to go viral – the BeReal app takes a less sensational approach. BeReal doesn’t have filters, hashtags, or even followers. To view someone’s BeReal, you have to request to be their friend. The app encourages users to provide an unfiltered view into their “real” everyday life. Each day at a different time, the app simultaneously notifies all users to “BeReal” and share a photo within two minutes, regardless of their location. The camera on the app will then take a photo of the user with the front-facing camera while also taking a photo on the back camera, creating a BeReal snapshot to share with friends. This app can be potentially problematic for employers. Many times, BeReal alerts occur during work hours, so users end up taking pictures of their workplace or work area. Because BeReal is shared among friends, the app may create a sense of safety, and users might forget to censor confidential information. Moreover, while BeReal doesn’t have the same “viral” nature as TikTok, that doesn’t stop users from sharing their posts beyond the app on other platforms. This trend illustrates that the new generation of workers values the transparency these apps provide, with many not considering that their candid photos may also reveal company information. 2. Strike a Balance Before you decide to curb all TikTok and BeReal posts from the workplace, you should recognize that such posts can pay dividends. Employees who are active on social media may be more equipped to understand the social pulse of the company’s customer base. Additionally, allowing employees to contribute to company-sponsored social media posts shows that the company trusts them, which can increase confidence and make employees feel valued. By Fisher Phillips NEBRASKA INDEPENDENT BANKER 16
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Furthermore, social media networking may help employees collaborate, share ideas, and solve problems. This can lead to better employee engagement and retention. Moreover, utilizing social media in the workplace can make the company more desirable to potential applicants, particularly Gen Z and Millennial job seekers. Social media is here to stay, and employers should recognize that policies barring all forms of social media use in the workplace may be unrealistic. In fact, about 72% of respondents to a 2021 Pew Research Center survey said they use some form of social media and 77% of respondents to an earlier survey reported using social media regardless of whether their employer had a policy in place. While not every company can allow on-the-job posts, those with flexibility might want to dedicate resources to creating a mutually beneficial, collaborative policy around social media use in the workplace. For example, allowing employees to share their experiences with your company through social media may promote transparency and provide job seekers with credible information on what it’s really like to work for your business. 3. Address the Potential Pitfalls While employers may benefit from employees’ on-the-job social media posts, you should address potential dangers, including legal and business concerns. Of the many legal concerns, the most glaring are privacy protections and confidentiality. As employees capture authentic moments during the workday for BeReal or post TikTok “day in the life” videos, they frequently walk around the workplace, recording offices, conference rooms, common spaces, the cafeteria, and more. The videos may inadvertently capture confidential information, such as audio of an internal meeting, the image of a client’s name, or a trade secret. Confidentiality issues also arise with employees who work remotely. For example, employees may take a video of their innovative at-home workspace while a Zoom meeting is in progress or while their computer screen displays proprietary information. You should also be cognizant of how allowing employees to post on the job can potentially harm your organization’s reputation. TikTok and BeReal attract users who want to be authentic rather than staged, heavily filtered, or otherwise unauthentic. Thus, employees who choose to post on these platforms do not shy away from capturing the “realness” of their job. This, in turn, can lead to your employees sharing information that negatively affects the company, such as human resources concerns (including allegations of unprofessional comments made by colleagues), complaints about working conditions, and products liability issues. All of these discussions raise reputational and legal concerns that you should consider. 4. Set Realistic Parameters With these benefits, risks, and (pop) cultural considerations in mind, what should your modern social media policy include? If you already have a solid employee handbook, a good place to start is by reminding employees that your existing policies still apply when using social media platforms. For example, an equal employment and harassment-prevention policy would cover discriminatory or bullying behavior towards colleagues whether online or in person. You should remind employees whom they should contact when they have a workplace concern. Additionally, let employees know that confidentiality policies apply when sharing content, so their computer screens and documents should not be visible in the background. However, depending on the nature of your business and your employees’ roles, you may want to create a more targeted policy on social media use. For instance, you may have different risks to manage if you encourage employees to engage with your brand, employ a younger workforce, or otherwise have a strong social media presence. As you likely know, your policy should be in writing and followed consistently. Where to go from there is more complicated. The explosion in social media use has only highlighted how regulating employee speech is difficult, nuanced, and occasionally backfires. But, of course, there are still some best practices: • Develop policies in collaboration with legal counsel, HR, technology, communications, and diversity, equity, and inclusion (DEI) teams. Be sure the policy matches the company’s voice and recognize that this is not a onetemplate-fits-all exercise. • Use plain language and examples. “Do not share client information, even if their name is covered” is more helpful than “Posting client information will subject employees to discipline up to and including termination.”* • Keep up with guidance from the National Labor Relations Board (NLRB) – which is subject to change. Note that blanket bans on discussing wages or complaining about supervisors or working conditions are not permissible under federal labor law. The Trump administration issued an employer-friendly rule to evaluate whether a policy interferes with employees’ rights to organize and engage in protected concerted activity. However, that ruling is potentially on the chopping block in a pending NLRB case. If the NLRB reverts to the prior, more restrictive evaluation, policies currently compliant could suddenly run afoul of the National Labor Relations Act (even in non-unionized work settings). This includes seemingly benign provisions about “respectful” content and limits on who is authorized to speak to the media. • Confirm applicable state laws. There is a legislative trend to prohibit employers from requiring employees to engage with social media as a condition of NEBRASKA INDEPENDENT BANKER 18
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 100 South Phillips Avenue, Sioux Falls (605) 335-5112 advantage-network.com MORE OPTIONS FOR YOUR CARDHOLDERS Why source your debit card production with The Advantage Network? So you can receive access to cutting-edge technology, quick turnaround, and personal assistance — because your cardholders deserve the best, and so do you. • Instant Issuance • Contactless cards • Customize Your Card program • Surcharge-free ATMs worldwide employment or even to ask for their social media usernames as part of a job application. • Develop a plan for consistently responding to policy violations. Two employees violating the same rule, in the same way, should not be treated differently based on whether they tripped the algorithm and went viral. Relatedly, consider the reputational risk of a too-harsh response – someone fired for social media content may likely use the same platforms to discuss their termination. Conclusion If you have questions regarding your social media policy, contact your Fisher Phillips attorney, the authors of this Insight, or any attorney on our Data Security and Workplace Privacy Team. We will continue to monitor developments in this area, so ensure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information. The authors wish to thank Law Clerks Taric Mansour and Jazmin Luna for their work co-authoring this Insight. * This section has been edited to reflect the automotive industry. To see the original post, please visit: https://www.fisherphillips.com/news-insights/over-sharingiworkplace-company-may-need-tiktok-bereal-policy.html NICBONLINE.COM 19
The Consumer Financial Protection Bureau (CFPB) has issued guidance about two junk fee practices that are likely unfair and unlawful under existing law. The first is surprise overdraft fees, including overdraft fees charged when consumers had enough money in their account to cover a debit charge at the time the bank authorizes it. The second is the practice of indiscriminately charging depositor fees to every person who deposits a check that bounces. The penalty is an unexpected shock to depositors who thought they were increasing their funds. The CFPB states that these overdraft and depositor fees likely violate the Consumer Financial Protection Act prohibition on unfair practices when consumers cannot reasonably avoid them. This Consumer Financial Protection Circular on surprise overdraft fees and the CFPB’s compliance bulletin on surprise depositor fees lay out when a financial institution’s back-end penalties likely break the law. Surprise Overdraft Fees An overdraft fee can become a surprise fee, according to the CFPB, when the customer does not reasonably expect their actions to incur an overdraft fee. For instance, even if a person closely monitors their account balances and carefully manages their spending to avoid overdraft fees, they can easily incur penalties when financial institutions employ processes that are unintelligible or manipulative. This latest Consumer Financial Protection Circular explains that when financial institutions charge surprise overdraft fees, sometimes as much as $36, they may be breaking the law. The circular provides some examples of potentially unlawful surprise overdraft fees, including charging penalties on purchases made with a positive balance. These overdraft fees occur when a bank displays that a customer has sufficient available funds to complete a debit card purchase at the time of the transaction, but the consumer is later charged an overdraft fee. Often, the financial institution relies on complex back-office practices to justify charging the fee. For instance, after the bank allows one debit card transaction when there is sufficient money in the account, it nonetheless charges a fee on that transaction later because of intervening transactions that depleted account funds. CFPB ISSUES GUIDANCE ABOUT ILLEGAL JUNK FEES ON DEPOSIT ACCOUNTS By William J. Showalter, Young & Associates, Inc. NEBRASKA INDEPENDENT BANKER 20
In September 2022, the CFPB took action against Regions Bank for charging surprise overdraft fees known as authorized positive fees. As early as 2015, the CFPB, as well as other federal regulators including the Federal Reserve, began cautioning financial institutions against charging certain types of authorized positive fees, such as the ones used by Regions to unlawfully penalize customers. Regions is required to, among other consequences, reimburse consumers all the funds it unlawfully charged since August 2018 (estimated at around $141 million) and pay a $50 million penalty. Surprise Depositor Fees When a consumer deposits a check that bounces, banks sometimes charge a fee to the depositor, usually in the range of $10 to $19. However, a person trying to deposit a check has no idea or control over whether the check will clear, and sometimes that person is the victim of check fraud. In fact, there are many reasons deposited checks can bounce, and the most common reason is that the check originator does not have enough money available in their account. Charging a fee to the depositor penalizes the person who could not anticipate the check would bounce while doing nothing to deter the originator from writing bad checks. The CFPB bulletin explains that indiscriminately charging these depositor fees, regardless of circumstances, likely violates the Consumer Financial Protection Act. Financial institutions can generally stay on the right side of the law, according to the CFPB, when they employ more tailored fee policies that charge depositor fees only in situations where a depositor could have avoided the fee, such as when a depositor repeatedly deposits bad checks from the same originator. Junk Fee Initiative The CFPB notes that this Consumer Financial Protection Circular on surprise overdraft fees and the agency’s bulletin on surprise deposited item fees are just the latest announcements as part of its junk fee initiative, one of many efforts across the federal government to increase competition and reduce unnecessary financial burdens on American families. In January 2022, the CFPB launched an initiative to scrutinize back-end junk fees that cost Americans billions of dollars. Tens of thousands of people responded to a CFPB Request for Information with their stories and complaints about unnecessary fees in banking. Since then, the CFPB has taken action to constrain “pay-to-pay” fees and has announced a rulemaking proceeding on credit card late fees. In the last year, the CFPB has also published several research reports on overdraft fees and an analysis of college banking products. The CFPB has observed that financial institutions have started to compete more when it comes to fees. Earlier this year multiple banks announced they were eliminating overdraft fees or updating their policies to be more consumer friendly. And in recent months, multiple large banks announced that they are eliminating non-sufficient fund fees on their checking accounts. The CFPB estimates that these changes mean $3 billion in savings for consumers. William J. Showalter can be reached at (330) 678-0524 or wshowalter@younginc.com. Resources Consumer Financial Protection Circular 2022-06, Unanticipated overdraft fee assessment practices, may be downloaded at https://files.consumerfinance.gov/f/documents/ cfpb_unanticipated-overdraft-fee-assessment-practices_ circular_2022-10.pdf. CFPB Bulletin 2022-06, Unfair Returned Deposited Item Fee Assessment Practices, is available at https://files.consumerfinance.gov/f/documents/cfpb_ returned-deposited-item-fee-assessment-practice_ compliance-bulletin_2022-10.pdf. More information about the CFPB’s work on junk fees may be found at https://www.consumerfinance.gov/rules-policy/ junk-fees/. The CFPB bulletin explains that indiscriminately charging these depositor fees, regardless of circumstances, likely violates the Consumer Financial Protection Act. NICBONLINE.COM 21
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NAVIGATING THE POTENTIAL IMPACT OF RECENT REGULATORY GUIDANCE Banks are facing unprecedented risk management challenges amid rapid technological and competitive changes. Federal and state authorities have recently issued guidance to address paradigmaltering shifts such as climate change, artificial intelligence (A.I.), cryptocurrency, digital and mobile banking, credit models, data security, and more. Financial institutions should understand how these changes could affect their operating model and strategy. Below are highlights of recent select regulatory guidance: Climate Risk Large financial institutions are impacted first. The Federal Reserve Board will conduct a pilot to analyze climate-related financial risk involving the six largest U.S. banks in early 2023. Small Business Lending Data Collection Most U.S. financial institutions will be impacted when it is implemented in 2023. Lenders will be required to annually report small business credit application data, including credit purpose, loan amount, business info and location, gross annual revenue, NAICS code, and more. Expansion of UDAAP Standards The expansion broadens the scope of consumer activities subject to UDAAP beyond lending to include advertising, pricing, servicing, reporting, payments, and collections. However, a lawsuit by several banking trade associations seeks to prevent the expansion of CFPB’s UDAAP role beyond its Dodd-Frank Act statutory authority. Reporting Credit Decisions Using Complex Models/Algorithms Lenders using A.I., machine learning, and/or complex credit models must disclose the precise reason(s) for Adverse Action Notices as required by the Equal Credit Opportunity Act. Enhanced Consumer Privacy Laws Five states have already enacted enhanced regulations: CA, CO, CT, VA, and UT. CA has already placed them into effect; CO, CT, VA, and UT state requirements became effective in 2023. Six other states have active legislation pending: MA, MI, NJ, NC, OH, PA. Oversight of Bank Third-Party Risk Management (TPRM) Vendor/third-party relationships are generating renewed regulatory scrutiny, especially fintech partnerships. Ineffective TPRM could be cited as unsafe or unsound practice. Banks must demonstrate TPRM through documentation of third-party relationships, conduct audit and performance reviews, and require third parties to provide data that confirms the quality and sustainability of controls to meet service agreements. By Gale Simons-Poole, BHG Financial NEBRASKA INDEPENDENT BANKER 24
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