COMMUNITYBANKER THE OFFICIAL PUBLICATION OF THE MONTANA INDEPENDENT BANKERS ASSOCIATION FALL 2023 2023 TAILGATE PARTIES SEE INSIDE
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28 2023 MIB EXECUTIVE OFFICERS Tim Schreiber, President Farmers State Bank tims@farmersebank.com Loren Brown, Vice President Ascent Bank, Helena lbrown@ascentbank.com Amber Brown, Secretary Peoples Bank of Deer Lodge abrown@pbdl.net Clinton Gerst, Treasurer Bank of Bozeman cgerst@bankofbozeman.com Andrew West, Immediate Past President Eagle Bank, Polson awest@eaglebankmt.com Kenny Martin, ICBA State Director First Montana Bank, Helena kmartin@firstmontanabank.com 2023 MIB BOARD OF DIRECTORS Tom Christnacht First Security Bank of Deer Lodge Laura Clark Opportunity Bank, Helena Bill Coffee Stockman Bank, Miles City Daniel Day Bank of Montana, Missoula Shawn Dutton First Security Bank of Roundup Brice Kluth First State Bank of Shelby Scott Mizner American Bank, Bozeman Mike Moore Stockmens Bank, Cascade Joel Rosenberg Three Rivers Bank of Montana, Kalispell Phil Willett Pioneer Federal Savings and Loan, Dillon ASSOCIATE BOARD MEMBER Ryan Fritz Citizens Alliance Bank rfritz@citizensalliancebank.com MIB STAFF Jim Brown, Executive Director Montana Independent Bankers jbrown@mibonline.org ©2023 Montana Independent Bankers | The newsLINK Group, LLC. All rights reserved. Community Banker is published four times each year by The newsLINK Group, LLC for the Montana Independent Bankers and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Montana Independent Bankers, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. Community Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Montana Independent Bankers. While Community Banker encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. Montana Independent Bankers 1812 11th Ave. P.O. Box 4893 Helena, MT 59604-4893 406.449.7444 jbrown@mibonline.org mibonline.org 20 16 6 President’s Message Putting a Spotlight on Community Banks By Tim Schreiber, President 8 Executive Director’s Message You and Your Bank Are Valued By James E. Brown, Esq., Executive Director 10 From The Top By Derek Williams, Chairman, ICBA 11 Save the Date 2024 Convention and Trade Show 12 Flourish By Rebeca Romero Rainey, President and CEO, ICBA 13 MIB Upcoming Events 14 Featured Associate Member EmpoweringYour Institution: HowYoung & Associates Enhances Banking Brilliance 16 Remember the Munis Don’t Go To Sleep on a Profitable Bond Sector By Jim Reber, President and CEO, ICBA Securities 18 Home Equity Line of Credit Scams By Travelers 20 Quiet Quitting in the Workplace By UBB 22 SecuringYour Data Advice From an Award-Winning Cybersecurity Team By Keith Gruebele, BHG Bank Network 25 Compliance Q&A Fall 2023 By Bill Showalter, Senior Consultant, Young & Associates, Inc. 28 University of Montana Tailgate 29 Montana State University Tailgate 30 Innovation Station Put Innovative Thinking to Work in Risk Mitigation By Charles E. Potts, Executive Vice President and Chief Innovation Officer, ICBA 32 2023 MIB Membership Directory 33 MIB Associate Member Resource Guide 34 MIB Associate Member Banks 35 Bank Training Webinars Contents FALL 2023 In the previous issue of Community Banker, there was an error in the “Featured Associate Member: Citizens Alliance Bank” article. The last two paragraphs were incorrectly attributed to Kenny Martin. The article has been corrected online here: mib-community-banker.thenewslinkgroup.org. Community Banker 5
IIn our spring issue of this magazine, I mentioned that ICBA had launched their national “BankLocally.org” marketing campaign to educate the American public on the benefits of community banking and why their choice of bank matters. The timing of that launch could not have been more perfect given what was going on in the banking world with the collapse of Silicon Valley Bank, Signature Bank and, later, First Republic Bank. I also mentioned that Jim Brown and I had connected with ICBA’s VP of Marketing, Rob Birgfeld, to start the conversation on how the MIB could coordinate with their national campaign with a slight change to rebrand it as “BankLocallyMontana.org” for our organization to bring focus to our MIB member banks. The following is an update on this endeavor. From the moment we started talking with Rob Birgfeld at ICBA about our idea, he fully supported it and was very enthusiastic about a state association picking it up and running with it at the state level. Jim and I invited Carol Blodgett with Blodgett Marketing, who had helped us run our previous digital marketing campaign, to join conversations on how to get the best bang for our marketing dollar. We quickly focused on a series of 15- and 30-second video ads that ICBA had created, as they were, by all accounts, very well done. The problem was that, due to production and talent rights, the video couldn’t be changed to add our “BankLocallyMontana.org” spin on it. However, with Rob seeing that this could be something all state associations may potentially want to do, he committed to working on the production and talent rights to allow us to use it. With some considerable effort on Rob’s part, he was able to secure the right for MIB to use one of the videos known as “The Tube.” The downside is that everything costs money, and it was going to take some to get these rights extended. When Rob let us know this, he mentioned that ICBA was willing to absorb the additional cost if we, as an organization, were willing to share the market data from our state-level campaign. In addition, PUTTING A SPOTLIGHT ON COMMUNITY BANKS TIM SCHREIBER, PRESIDENT PRESIDENT’S MESSAGE 6 Community Banker
he requested that MIB be willing to act as a model for other ICBA state associations to use. We, of course, agreed. With all the pieces in place, we launched a three-month “BankLocallyMontana.org” marketing campaign on September 15. The type of digital marketing we decided to use is known as pre-roll. These are video advertisements that appear on high-brand, high-traffic, trusted websites before a featured video. We have all experienced these after clicking on a news or sports video segment, and a video ad pops up that we must watch before we can continue. Results from the first two weeks of the campaign have been very positive. There have been roughly 86,000 completed views of the video statewide. That’s roughly It is exciting to be a part of such a new and innovative push for local community banking, and it is a tremendous privilege to be the first state association to activate a more locally centralized campaign. To watch the promotional video, scan this QR code. https://www.youtube.com/ watch?v=xjbj6Yo3tO8 5,700 views per day since the campaign launched. This has led to a significant increase in our Montana Independent Bankers website traffic, specifically the “Find a Community Bank” page, with over 1,800 views. The “Find a Community Bank” page lists several reasons why banking with an independent community bank is important and includes a listing of our member banks with website and location information. It is exciting to be a part of such a new and innovative push for local community banking, and it is a tremendous privilege to be the first state association to activate a more locally centralized campaign. I look forward to sharing the updated market data as it comes in and hope to quickly launch a larger variety of these segments into our local communities. The larger hope underlying this great effort is that all our MIB member banks see a rising interest in local banking across our beautiful state. Community Banker 7
W EXECUTIVE DIRECTOR’S MESSAGE Welcome to our Fall 2023 edition of the Community Banker. This has been one of the most beautiful stretches of fall weather I can recall. There is no substitute for living in Montana at any time of year, but particularly in the late summer and fall. The obvious being stated, I write this article on the heels of hosting both the MIB Cats and Grizzly tailgate parties. The Griz tailgate was held on a bluebird Montana day and was made even better by the Grizzlies defeating Ferris State in a tight game. The Cats also overwhelmed their opponent, Cal Poly. The Cats look poised to return to the national championship game. The Griz and Cat tailgate parties are two of MIB’s most appreciated member benefits. The events are getting more popular with each year that passes. Over 60 bankers and their family members attended this year’s Missoula event, which is a record number. The tailgates provide an excellent opportunity for Montana’s banking community to socialize at a non-banking-focused forum. So, thank you to all those who attended, and we hope to see you at one of next year’s games. See if you can spot yourself in one of the tailgate photos inside this issue on pages 28-29. Speaking of member benefits, the Association rolled out an exciting new member benefit in September. The program is explained in more detail in Tim Schreiber’s message on page 6. But, in sum, MIB is running a digital marketing campaign that seeks to (1) inform consumers of the benefits of banking at a Montana community bank and (2) drive new and potential customers to our member banks. You can learn more about the program by going to the MIB webpage and clicking on the “Find a Community Bank” link under the “About” tab. The program kicked off on September 15, and since its inception, traffic to the MIB webpage, and particularly to the “Find a Community Bank” function, has exploded. We trust that this new member benefit will be of high value to you and your institution. Speaking of Association events, the Association reminds you that the dates for next year’s annual state convention are July 17-19, 2024. The state convention will be held in Missoula next year at the Hilton Garden Inn. MIB has not hosted our annual convention in Missoula since 2018. We are excited to be returning to the “Garden City” where MIB experienced its highest-attended convention ever. MIB makes it our goal for every member and associate member who attends our convention to have the best experience possible. Attending the MIB convention not only affords the opportunity for our attendees to gain new and insightful industry knowledge, but it also affords the unparalleled opportunity to network and socialize with your colleagues in the Montana community banking industry. Attending our popular convention also provides an opportunity for you to obtain a “takeaway.” That is, the convention programs and events are designed so that you “take away” some information or knowledge that you can use in your career or personal life. This past convention, our featured speakers included Chairman of ICBA Derek Williams and Commissioner of Banking Melanie Hall. YOU AND YOUR BANK ARE VALUED JAMES E. BROWN, ESQ., EXECUTIVE DIRECTOR 8 Community Banker
If your bank had someone attend this year’s state convention at Big Sky, please take a few moments to ask them about what they took away from the state convention and ask them how they will apply that knowledge learned to help your customers, employees and bank board members. The Association will be providing more details on the 2024 convention speakers, activities and education programs in the coming months. So, be on the lookout for our 2024 convention announcements and keep in mind the “takeaways” you will garner by attending next year’s MIB convention. Starting in late December, you will find in your mailbox the MIB’s membership renewal notices. MIB understands that things are tight financially for Montana’s community banks, particularly given the burden placed on your institutions by excessive federal regulation. That is why the Association does its best to ensure that our members receive the maximum value for their dues dollars while also providing extensive support in the regulatory areas that matter. When you receive your renewal notice, we hope our efforts over the last six years to tighten the Association’s belt while expanding member services and programs will be foremost in your mind. As always, we encourage you to let us know if you have any questions. Further, if there is anything the Association, its Board, its officers or its staff can assist you with, or if there are additional member benefits MIB can add that would be of service to your business, please let us know. The Association’s goal is to help ensure that you have the resources to compete and thrive in today’s challenging business environment. Thank you for your support of the MIB. And thank you for the service you provide to Montana’s local communities. You and your bank are valued. Have a great holiday season. We look forward to seeing you in the new year. Jim Brown, MIB Executive Director The Association’s goal is to help ensure that you have the resources to compete and thrive in today’s challenging business environment. 38697 Partner with us for: • Loan participation purchases and sales* • Bank stock financing • Bank executive and employee financing *We do not reparticipate loans. Craig McCandless Call me at 406.850.3790 Based in Billings, Mont. Serving Montana, Wyoming and Idaho Our Mission Is to Help You Succeed Community Banker 9
II’ve never been prouder to be a community banker than I have this year. As ICBA Chairman, I have had the opportunity to tour the country, meeting community bankers from all over. I have consistently heard stories of how we support those who need us: our communities. Everything I have believed about community banking is proving true this year. In fact, it has struck me that people work at community banks because they are good people, not the other way around. People who get into community banking have compassion and care in their DNA. There’s a commitment to the community that’s based on one fact: Service is not something we strive for; it’s simply a part of who we are. It’s also what makes it unnecessary to strap us with heavy-handed regulation. Compliance, at its core, is about treating people fairly, and we do that naturally. Our spirit of service gives us a huge head start on meeting the compliance and regulatory standards set for us. We are fair because that’s who we are. We are equitable because that’s who we are. We do the right thing by the right people because that’s who we are. That’s why we advocate for tiered regulation. We constantly remind regulators that our model is different and intrinsically lends itself to being fair by virtue of the way we run our banks and care for our communities. At the risk of oversimplifying it, service means everything to community banks. Just look at this month’s ICBA Community Bank Service Award winners and the ways they are going above and beyond. It’s not about just cutting a large check; it’s about investing time in helping our communities thrive. We’ve got people serving on community boards, providing great advice, helping run civic events and so much more. Community banks have There’s a commitment to the community that’s based on one fact: Service is not something we strive for; it’s simply a part of who we are. FROM THE TOP BY DEREK WILLIAMS, CHAIRMAN, ICBA QUOTE OF THE MONTH “Nobody cares how much you know until they know how much you care.” — President Theodore Roosevelt smart, talented people, and we all should be proud of the time they commit to our communities. The same stands true at the national level. I encourage you to get involved in ICBA and to help advocate on behalf of our community of community banks across this great nation. Check out ICBA’s Be Heard Grassroots Action Center (icba.org/advocacy) for the latest on issues that need your support and how to get involved. What we do matters, and we need to protect our way of doing business. We are here to serve, and collectively, we need to work to ensure that we have an environment that allows us to do just that. 10 Community Banker
Montana Independent Bankers JULY 17-19, 2024 2024 CONVENTION AND TRADE SHOW Missoula, MT mibonline.org SAVE THE DATE Closing SBA loans keeps doors open. Call 800.340.7304 to start www.holtandmon.com Your customers have never needed capital more than they do right now. Plus you need to offset narrowing margins by increasing noninterest fee income. SBA/USDA lending is the perfect answer. And ICBA recommends just one provider to make the process hassle-free: Holtmeyer & Monson. Give customers exactly what they need, at no net cost to your bank. Small businesses count on your expertise. You can count on ours. Community Banker 11
NNavigating the regulatory landscape is like getting on a roller coaster. There are ups and downs, and you’re never sure what’s around the next turn or when you’re going to get thrown for a loop. Right now, that wild ride comes courtesy of Silicon Valley Bank and other bank failures, and we’re looking at potential rule writing as a result. When a financial crisis or series of events triggers legislative and regulatory investigation, the de facto response is to deepen regulation. In fact, this reaction is the reason I got involved in ICBA in the first place: I saw the need for advocacy at the state and national levels. We were facing a new set of mortgage rules that didn’t help the customer or make things better. They didn’t allow me to support my community, and I realized that those writing the rules didn’t understand how they affect our day-today abilities to serve our customers. That’s why what we do at ICBA is so important. We focus on educating what the intended or unintended response of an action may be. We advocate for community bankers to continue to have an environment where they can help their customers, and we respond creatively to ensure our customers still have access to solutions that meet their needs. Fortunately, community bankers excel at supporting our customers despite regulatory hurdles. In fact, I was inspired by a conversation I heard on the “A Bank Culture that Works” episode of the Independent Banker podcast (icba.org/podcast). Ann Buckmiller, Director of Compliance at Reliabank Dakota in South Dakota, talked about her job in compliance as a way to help meet customer needs and, at the same time, to ensure that the bank does what it needs to do to follow the rules. Her comments struck me because I realized our job is to do precisely what Ann said: Take control of the situation by knowing what the rules are, recognizing where they fall short of meeting customer needs and innovating to solve for any challenges. It’s about taking what’s required of us and making it work for our customers and communities. There’s no question that regulation makes for a bumpy ride, but it’s an uphill climb we’ve experienced countless times. The more we can keep our focus on our customers and their needs and differentiate our relationship-based business model (see our National Campaign Toolkit at icba.org/national-campaign for resources), the smoother the journey will be. So, let’s jump in the driver’s seat and advocate for community banking. We’re going to need to buckle up, but by keeping our customers as our chief priority, we may just be able to enjoy the ride. We advocate for community bankers to continue to have an environment where they can help their customers, and we respond creatively to ensure our customers still have access to solutions that meet their needs. FLOUR I SH BY REBECA ROMERO RAINEY, PRESIDENT AND CEO, ICBA 12 Community Banker
2023 NOVEMBER 1-2 Women in Banking Bozeman, MT DECEMBER Membership Renewals Mailed MIB UPCOMING EVENTS 2024 JANUARY 30 Memberships Renewals Due FEBRUARY 9 MIB Board Meeting Great Northern Hotel Helena, MT MARCH 14-17 ICBA Live Orlando, FL APRIL 10 MIB Spring Board Meeting Firebrand Hotel Whitefish, MT APRIL 28-MAY 1 Capital Summit Washington, D.C. JULY 17-19 Convention and Trade Show Hilton Garden Inn Missoula, MT • Down payment assistance • 30-year, low-interest rate mortgages • Quality in-state servicing • Ask your lender about Montana Housing loans HOUSING.MT.GOV facebook.com/montanahousing Follow Montana Housing on Facebook Community Banker 13
I EMPOWERING YOUR INSTITUTION HOW YOUNG & ASSOCIATES ENHANCES BANKING BRILLIANCE In the ever-evolving landscape of the financial industry, Young & Associates, Inc. (Y&A) has consistently stood as a beacon of expertise and guidance for banks, credit unions and financial institutions across the nation. Founded in 1978, Y&A has not only weathered the storms of change but has thrived in this dynamic arena, offering a comprehensive suite of services that redefine success for financial organizations. FINANCIAL INDUSTRY EXPERTISE — PROVEN RESULTS In a world where regulations seem to change at the speed of light and the financial landscape undergoes constant transformations, Young & Associates takes pride in being a trusted partner for institutions seeking stability and growth. With over four decades of experience, our firm possesses an unparalleled understanding of the intricacies of the financial sector. Young & Associates provides trusted guidance in this ever-changing industry and offers value-added services delivered by experts. Our team of consultants comprises former banking executives, bank regulators and seasoned finance professionals who have walked in your shoes and faced the same challenges. Their distinctive experience, forged through years of hands-on work, uniquely qualifies them to understand and resolve your institution’s most pressing issues while enhancing your team’s capabilities. COMPREHENSIVE SERVICES FOR A CHANGING WORLD The financial industry is multifaceted, and each institution faces unique challenges. Young & Associates recognizes this diversity and offers an all-in-one solution for your financial needs. Whether it’s regulatory compliance, lending, IT security, risk management or any other facet of the financial landscape, our services cover it all. Y&A is your one-stop solution provider. What sets us apart is our unwavering commitment to excellence, backed by decades of real-world experience. Quality is not just a buzzword for us; it’s the cornerstone of our culture, and it’s reflected in the level of service we provide to our clients. We take a meticulous approach, leaving no stone unturned to ensure that we deliver actionable results that drive your institution towards success. A FOCUS ON EMPOWERING FINANCIAL INSTITUTIONS At Young & Associates, our sole focus is on financial institutions. This singular dedication ensures that we possess in-depth insights into your specific challenges and opportunities. We understand that each institution is unique, and our diverse team possesses the expertise needed to address the complexities of any issue, ensuring your success. But we don’t stop at providing services; we aim to build lasting partnerships, not transactions. In a relationship-based industry, trust is paramount. We work collaboratively, side by side, to understand your goals and challenges. Your success is our success, and we’re dedicated to helping you achieve your financial aspirations and support the communities where you reside. SUPPORTING COMMUNITY BANKING THROUGH EDUCATION, IN PARTNERSHIP WITH MIB Y&A recognizes the significance of community banks in Montana’s communities and economies. We’ve forged a strong partnership with MIB and are dedicated to empowering local institutions through education and training initiatives. Our commitment to education shines through our cornerstone service, the Community Bankers for FEATURED ASSOCIATE MEMBER 14 Community Banker
Compliance (CBC) Program. This program, sponsored by MIB, equips Montana’s banks with the essential tools to effectively manage and improve their in-house compliance programs. It includes live regulatory seminars, regulatory update webinars, access to our toll-free compliance hotline, a members-only compliance portal and our monthly Compliance Update newsletter. We take immense pride in the CBC Program’s legacy as the longest-running compliance program in the country. This achievement demonstrates our unwavering dedication to supporting Montana’s community banks and ensuring their ongoing success. At Y&A, our mission is clear: to foster excellence and empower community banks in Montana. Through our partnership with MIB and the Community Bankers for Compliance Program, we’re not just committed to compliance; we’re committed to the growth, prosperity and enduring success of your institution. Together, we’re shaping the future of community banking in Montana, one educational opportunity at a time. A TRUSTED LEGACY IN A CHANGING WORLD As the financial industry continues to evolve, Young & Associates remains committed to serving our clients and helping them navigate the complexities of this dynamic sector. With more than 45 years of experience, we have been a trusted partner for numerous institutions, adapting and evolving to meet their changing needs. Our longevity in the industry attests to our unwavering dedication to our clients and our ability to evolve with the changing financial landscape. In a world of constant change, financial institutions need a partner they can rely on. Young & Associates is that partner — a steadfast beacon of expertise and guidance that empowers institutions to thrive, overcome challenges, and achieve financial excellence. With us, you’re not just a client; you’re a valued partner on the path to success. Discover the Y&A advantage and allow us to be your trusted companion in navigating the dynamic financial landscape. To learn more or to contact Young & Associates, visit www.younginc.com. Together, we’re shaping the future of community banking in Montana, one educational opportunity at a time. Community Banker 15
A REMEMBER THE MUNIS DON’T GO TO SLEEP ON A PROFITABLE BOND SECTOR BY JIM REBER, PRESIDENT AND CEO, ICBA SECURITIES “As you get older, three things happen: the memory goes, and I forget the other two.” — Erma Bombeck Being one who can empathize with the late, great humorist Ms. Bombeck, I thought it might be interesting to discuss a segment of the fixed-income universe that has served community banking well over the decades. It’s been many months since I’ve covered it for two practical reasons. The first is that it doesn’t present relative value in the current cycle, and the second is that, because of the first, portfolio managers haven’t been buying many of them recently. I’m speaking of the municipal bond market. It is a maxim of community banking that the more munis a bank owns, the higher performing the portfolio will be. This has been true for decades and in whatever part of the rate cycle we’re currently residing. But since we haven’t visited muni-land for a while, now is a perfect time for a sector update, complete with reminders about nuances and opportunities with state and local government bonds. VALUE MEASURES Tell me if you’ve heard this: The interest rate curve is inverted. It’s now been 16 months and counting since we’ve had a positively sloped curve and that includes the muni sector. A buyer has to invest in a 12-year or longer muni to get a higher yield than a one-year bond. Also, the retail sector continues to gobble up the majority of supply, which is barely running in place. A number of governmental borrowers in 2023 have delayed issuance, probably hoping for some relief on rates. Mom-and-pop investors will typically have higher marginal tax brackets than corporations, and that translates into higher tax-equivalent yields — hence the retail demand. The current impact is such that on the short end of the curve (i.e., 10 years and in), munis produce lower tax-equivalent yields than comparable maturity treasuries. In bond-speak, this is known as “trading through the curve.” Although this is an anomaly, it has persisted for most of 2023. Hence, the relative value, or lack thereof. STILL THE FAVORITE Notwithstanding the preceding paragraph, a hallmark of a high-performing bond portfolio remains a high allocation of munis, although that’s changing some. According to Stifel, top-quartile portfolios had 31% of their dollars in munis in June 2023, compared to 42% a year earlier. Interestingly, the top quartile also had a dramatic drop in its effective duration year-over-year from 5.3 years to 4.2. GUEST ARTICLE 16 Community Banker
The shape of the curve again has played a role, as the dollars reallocated out of the munis space went into shortduration taxables such as treasuries, agencies and Small Business Administration (SBA) floaters. Still, in spite of the conundrums facing portfolio managers in 2023, the muni market remains fundamentally attractive. The curve will one day regain its positive slope. It’s expected that muni supply will again begin to increase as COVID stimulus money is spent and populations grow. And credit quality remains solid; there have been far more credit rating upgrades than downgrades, and even perennial whipping boys New Jersey and Illinois have been awarded upticks by the ratings agencies. BUY CHEAP, SELL DEAR I wouldn’t be doing my job if I didn’t offer some suggestions. If you agree that the municipal bond market is indeed expensive, then perhaps you may consider a sale of some of your holdings. The three- to five-year sector may actually produce lower take-out yields than shorter maturities. It’s also becoming more evident that the banking industry is having a solid earnings year in spite of margin compression, so a loss-earnback extension swap may have some interest. Recall, too, that the TEFRA penalty (remember that little acronym?) will start to take a bigger bite out of your taxequivalent yields as your cost of funds continues to rise. This is especially true for your General Market bonds, which have a much higher TEFRA hit than Bank Qualified munis. It’s déjà vu all over again and could be more reasons to at least temporarily allocate out of some taxfree bonds. On the other hand, 6%+ tax-equivalent yields are available now for those S Corps willing to invest for 20 years or so. Ultimately, the message of this column is that “munis matter.” If you’ve put that sector on autopilot because of perceived lack of value in the new issue market, take a look at your portfolio and ask your brokers for some bids on shorter maturities. You may find an inexpensive source of liquidity. Now that we’re refreshed on some of the finer points of municipal bonds, I’m thinking of Mark Twain’s observation: “A clear conscience is a sure sign of a bad memory.” Jim Reber (jreber@icbasecurities.com) is President and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. Community Banker 17
H HOME EQUITY LINE OF CREDIT SCAMS BY TRAVELERS Home Equity Line of Credit (HELOC) scams continue to be a costly and challenging issue for financial institutions. Wire transfer fraud can easily reach millions of dollars, and with advancements in technology such as online databases for county clerk records, online banking and online title searching, data commonly used by financial institutions to verify customer identity for wire transactions is routinely and easily compromised. Several financial institutions have fallen victim to losses arising out of wire transfer and check forgery schemes targeting HELOC accounts and have taken action to mitigate the risk of future loss experience. Institutions that place a high value on their customer service and customer confidence in the institution’s security against wire transfer fraud have implemented risk mitigation upgrades to their operations to help solidify customer confidence. According to Travelers, the following steps are initiatives that can help to avoid, or at least significantly reduce, losses arising out of HELOC fraud scams: • Place greater emphasis on getting full account numbers from callers; • Phrase verification questions so that the caller is providing the information, rather than simply confirming what the financial institution has on file; • Remove items from the list of authentication options (such as mother’s maiden name and date of birth) that have become “public information” through social media websites and venues; • Train employees who field calls to verify authentication items in a specific order and not skip to other items if the caller cannot verify the requested information; • Train personnel with an updated full fraud-awareness module to help employees identify warning signs of fraud; GUEST ARTICLE 18 Community Banker
• Encourage customers to set up PIN numbers if the automated phone system allows it; • Update customer account files with driver’s license numbers, if not copies of the entire driver’s license (or other government-issued ID if there is no driver’s license); • Utilize a mandatory callback procedure for all customer-not-present wire transfer requests; • Use a password to authenticate customers rather than commonly compromised information and only allow in-person modification of passwords and key account information; • Consider requiring full balance transfers (or transfers up to a certain percentage of the available funds) to be made in person while placing a reasonable monetary limit (or percentage limit) on customer-notpresent wire transfer requests; • Establish a reporting procedure that refers all suspicious wire transfer requests to a higher level of authority for confirmation/processing; • Require a dual telephone confirmation procedure where the financial institution calls the home phone of the customer as well as an alternate number, such as a mobile phone or work phone; • Establish an automatic two-day holding pattern anytime a request is made to initiate a wire transfer from a HELOC account to a foreign bank account within which time the financial institution ensures accurate verification and deters fraudsters seeking immediate processing; Institutions that place a high value on their customer service and customer confidence in the institution’s security against wire transfer fraud have implemented risk mitigation upgrades to their operations to help solidify customer confidence. • Verify change of address or phone number requests with a call to the customer’s phone number on file; • Customize specific and unique verification questions and procedures with an account holder/customer that can only be modified in person; and • Consider performing a verification call back when a purported customer calls the bank to set up online banking for the first time. Technology has made it easier than ever for bad actors to obtain data that is commonly used by financial institutions to verify the identity of their customers. That’s why financial institutions must utilize robust authentication procedures to protect their customers — and themselves — from wire transfer fraud. This includes greater awareness, updated and vigilant policies, procedures and training, and implementing imaginative and unique verification procedures to help reduce the risk of loss arising out of wire transfer fraud targeting HELOC accounts. Travelers is committed to managing and mitigating risks and exposures and does so backed by financial stability and a dedicated team — from underwriters to claim professionals — whose mission is to insure and protect a company’s assets. For more information, visit travelers.com. Community Banker 19
H QUIET QUITTING IN THE WORKPLACE BY UBB The phenomenon of “quiet quitting” in the workplace is growing in recognition. It often refers to workers fulfilling their job description duties while refusing to go above and beyond or invest emotionally in their work. Over 50% of workers surveyed by Gallup in June 2022 said they feel this way about their current positions. Other quiet quitters take it to another (lower) level as a ResumeBuilder.com survey in August 2022 indicated that 21% of employees are only doing the bare minimum required. We’ve all heard the phrase “phoning it in” at the office, but why is it happening and what, if anything, can an employer do about it? The factors behind this trend vary, but many survey respondents indicated they are burned out and desire to re-focus their lives. In essence, quiet quitting refers to the personal decision to cease putting in too much effort at work. Some do this because they recognize that, despite their effort, working long hours or overachieving doesn’t do them any good. These individuals may think more about what they are missing out on than what they gain by going above and beyond. They yearn for a better worklife balance and might become satisfied being average employees who set healthy boundaries for the work aspect of life, even saying no to extra responsibilities outside their role or when faced with unreasonable expectations. The problem of quiet quitting parallels the Great Resignation in which people started reflecting more about their workplaces, how they wanted to spend their time and what’s most important to them. Some were forced into this by the unfortunate layoffs, while others experienced new stress levels. Many concluded that it was not always about money or position, but rather the need for personal time and priorities such as being a parent or acting as a caregiver. As things began to recover, many people looked for new jobs, with those left behind questioning how much effort they should put into their work. This idea contributed to the growth of the “quiet quitting” phenomenon. Quiet quitting isn’t necessarily a new problem. There have always been individuals who intentionally don’t perform up to their full capabilities, though that was considered a performance issue. What organizations need to understand now is that employees are redefining the relationship between employers and employees. Employees are no longer buying into the mentality that success means “work always comes first.” While there are many reasons employees quietly quit, how valued the worker feels vs. how they value themselves is also vital. In the last few years, employees across various ages and income brackets have experienced higher fatigue, burnout and general dissatisfaction influenced by the pandemic, social unrest, economic concerns and more. A noticeable difference between younger generations and Gen X or baby boomers is that young people are airing their dissatisfaction publicly on social media, increasing awareness of what is happening with the workforce. Workers who felt this way in the past might have been hesitant to say anything due to the fear of burning bridges at their current workplace or alienating potential employers. However, younger generations are more determined to feel fulfilled in their jobs and personal lives. Ultimately, they expect and demand employers recognize that and promote policies encouraging work-life balance. GUEST ARTICLE 20 Community Banker
Indicators of Quiet Quitting • Missed deadlines and goals • Lack of participation in meetings • Decreased interest in sharing input • Increase in absences and sick leaves • General withdrawal from employer’s culture • Heightened cynicism HOW TO ADDRESS QUIET QUITTING The good news from the employer’s perspective is many people who could be classified as quiet quitters can be persuaded to work to their full potential. Employers need to do more than touch base with employees; they need to better understand and empathize with them. Most organizations should be taking the pulse of people on a daily or weekly basis instead of focusing on annual engagement survey results. Have frequent conversations with employees, including a development strategy to provide more personal support or personalized motivation, such as supporting their educational goals or interests. The conversations aim to better understand employees’ day-to-day assignments, make a personal connection, and improve the employee experience. Then create/ implement programs to make it happen! Be sure your employees know that flexibility is available to them as much as the workplace permits. This could include granting employees more control over timelines or deadlines, shifting away from clearly arbitrary rules or making similar allowances. Trusting employees to function this way may take a leap of faith but can pay dividends down the road. Reduce the unknown with well-defined and sustainable work practices. For example, everyone should know how communications are handled across the company, how the work performed contributes to the overall mission and how those who do highimpact work are recognized. That level of clarity and predictability can go a long way. Organizations must realize and acknowledge that employees are redefining work and will no longer play the game the same way. Employees who feel more included and valued, especially by their manager, typically have higher levels of well-being, leading to greater job engagement and a higher likelihood of putting in additional effort to help the organization and fellow workers. It is important to remember that quiet quitting by employees usually isn’t so quiet to perceptive organizations. In uncertain economic times, with recession talk a frequent occurrence and reductions in the workforce on the table, organizational management should evaluate the impact of individual employees and how they are contributing to the attainment of organizational goals. Employees should have better work/life balance and boundaries yet still perform at an achievable level for career success. The elimination of quiet quitting in the workplace can and should be a “win-win” for all. What organizations need to understand now is that employees are redefining the relationship between employers and employees. Community Banker 21
T SECURING YOUR DATA ADVICE FROM AN AWARD-WINNING CYBERSECURITY TEAM BY KEITH GRUEBELE, BHG BANK NETWORK Technology continues to insinuate itself into almost every facet of our daily lives, whether it is personal or work-related. As a result, protecting data privacy has become increasingly more relevant to every consumer and business. In 2022, 422 million people were affected by data breaches at U.S. companies with an average of 4.8 breaches per day.1 Stolen data included bank account numbers, medical histories, Social Security numbers and more. Personal data is continuously being collected, shared or sold, so it is crucial that everyone understands how to protect it. In today’s world, it is incumbent upon companies to ensure they have the information security protocols in place to protect customer data and electronic assets from the growing global threat of hackers. This requires a keen focus on increasing the adoption of new technological innovations and following industry best practices in the evolving world of cybersecurity. Companies with an established history of successfully safeguarding electronic data often share similar characteristics, such as: • A significant investment in people and technological resources • Executive leadership that has demonstrated its mission to make information security and data privacy top priorities GUEST ARTICLE • Next-generation firewall and encryption technology to protect internet connections and Wi-Fi networks • Best-in-class security software installed and updated automatically • Industry certifications and acknowledgments that appropriate security controls are in place to protect the confidentiality, integrity, and availability of all data assets BHG Financial is a noteworthy financial services provider that has earned recognition for its exceptional cybersecurity capabilities. The company boasts a team of seasoned cybersecurity professionals who have been recognized for their outstanding contributions to the industry. In this article, we will be sharing insights from BHG Financial’s cybersecurity experts on simple yet critical tasks that businesses should not overlook. In acknowledgment of its dedication to cybersecurity, BHG and its Information Security Team recently received several industry accolades. First, it was honored with a 2022 Fortress Cyber Security Award for organizational excellence.2 In addition, the company has been certified SOC 2® Type 2 compliant in accordance with standards set forth by the American Institute of Certified Public Accountants. SOC for service organizations is a compliance standard that demonstrates how BHG Financial is safeguarding customer data throughout its services and is meeting standards for strong operational effectiveness. 22 Community Banker
SECURITY TIPS TO PROTECT YOUR DATA In the spirit of driving awareness about the importance of being cyber-aware, and to help you protect the integrity of your data, here are some simple tips not to be overlooked: • Avoid uploading sensitive or confidential data (personal or customer account information, Social Security numbers, etc.). If you must, all information should only be uploaded to a trusted, secure source or database. • Be aware of any suspicious emails and do not click on unfamiliar embedded links. Be especially wary if an email contains misspelled words within the body and/or subject line of the message. Other suspicious indicators include unfamiliar email domains or enticements to act or respond immediately. Report these emails to your organization’s IT Support team right away. • Lock your screen when you are away from your desk to prevent others from accessing sensitive information. • Beware of public Wi-Fi. It can expose your data to scammers monitoring internet activity. It also greatly increases the risk of malware being transferred to your devices. If you must access a public Wi-Fi network, use a virtual private network (VPN) to add a helpful layer of security. • Find out if your personal information has been targeted in a data breach. It is quick and quite easy to do. Simply enter your email or phone number at haveibeenpwned.com. The system will respond almost immediately, detailing when and where your data was breached. • Before disposing of old IT equipment, ensure no personal data remains on the system. Consider hiring a specialist to wipe the data from the device or use deletion software such as BitRaser File Eraser or File Shredder. YOUR ROLE IN DATA PRIVACY Cybersecurity is everyone’s business. With a little discipline and practice, protecting the integrity of your data can become second nature. Nobody wants to be the person who accidentally downloads malware onto their company’s systems, or who leaves their online banking credentials vulnerable to external threats. Following and regularly repeating a few simple security protocols is well worth the time to remain cyber-safe at home and at the office. 1. https://explodingtopics.com/blog/data-privacy-stats 2. https://www.bintelligence.com/blog/2022/6/7/100-named-in-2022-fortresscyber-security-awards Personal data is continuously being collected, shared or sold, so it is crucial that everyone understands how to protect it. Community Banker 23
The U.S. cannabis market is poised for substantial growth, with New Frontier Data estimating it to reach $72 billion annually by 2030. This growth is primarily driven by the legalization of adult-use cannabis programs in 23 states, including Montana, where annual legal sales are expected to grow from $335 million in 2022, the first year of legal adult-use sales, to $560 million by 2030. Lending is part of a holistic approach to providing banking services to the cannabis industry that helps financial institutions attract the best operators, build a strong book of deposits, and unlock higher yield earning assets. It is also an opportunity for banks to go beyond serving retailers and meet the demand for banking and lending by the broader wholesale market as well. The Shield Compliance Cannabis Lending Guide helps bankers navigate the compliance, reputational, and credit risks associated with cannabis operators and cannabis-related collateral, and unlock the financial rewards of this industry. Shield Compliance: A Leader in Cannabis Banking. Since its inception, Shield has partnered with more than 65 financial institutions and monitored 7.5 million transactions including $32.6 billion in deposit volume. For the 12-month period ending June 30, 2023, Shield’s financial institution customers have earned $31.5 million in fee income. As of June 30, 2023, these financial institutions have $920.5 million in deposit balances and $166.4 million in loans outstanding from over 5,000 cannabis-related businesses representing more than 13,000 active cannabis licenses. Let Shield Compliance help your financial institution unlock the benefits of serving the legal cannabis industry. Shield Compliance transforms how financial institutions manage risk, comply with regulations, and address the operational demands of the legal cannabis industry. Compliance management for financial institution daily operations, including case management and automated reporting. Informed account application process for underwriting and onboarding cannabis business accounts. Compliant mobile payment and payroll solutions to reduce cash transaction dependency. info@shieldbanking.com (425) 276-8235 Earn the benefits of a compliant cannabis banking program with Shield Compliance. DOWNLOAD THE CANNABIS LENDING GUIDE: ShieldBanking.com/cannabis-lending-guide GET THE GUIDE TAP INTO THIS $72 BILLION DOLLAR OPPORTUNITY GAIN EARNING ASSETS WITH CANNABIS LENDING
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