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COVER STORYBattling Lies & DeceitBanks continuously protectcustomers from scamsALSO IN THIS ISSUEOpen BankingBanks Win Big With VendorPRO2023 MBA Highlightsbimonthy magazine of the Missouri Bankers AssociationNovember/December 2023 Vol. 04, No. 06The Missouri
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contents573-636-8151Jackson HatawayPublisherLori BruceEditorThe Missouri Banker (USPS Number 000044, ISSN Number 0893-5637) is published six times a year by the Missouri Bankers Association, 207 E. Capitol Ave., Jefferson City, MO 65101. Second-class postage is paid at Jefferson City, Mo. Copyright© 1998 by the Missouri Bankers Association. All rights reserved. POSTMASTER: Send address changes to The Missouri Banker, P.O. Box 57, Jefferson City, MO 65102. Opinions expressed in any signed article in The Missouri Banker are those of the author and should not be construed as the viewpoint of the editors or of the Missouri Bankers Association. Neither should information provided in The Missouri Banker be construed as legal advice. The Missouri Banker does not provide legal advice, nor does it take the place of legal counsel hired by nancial institutions. While this publication makes a reasonable effort to establish the integrity of advertisers, it does not endorse advertised products or services, unless otherwise so stated. This issue may contain legislative advertising. Advertising copy is generally segregated from news and other information.Address ChangesSubmit address changes for The Missouri Banker to database@mobankers.com.The MissouriFrom our ChairmanBe Present. Be Loud. Be Heard. ........................................................ 2From our President and CEOFederal Reserve Board Loses Sight of Its Mission, Values ................................... 5American Bankers Association Perspectivee High Cost of Too Much Capital ...................................................... 6Department NewsGovernment Relations: Staying on the Sideline Poses Risks for Your Bank .................... 8Legal: A Voice of Reason ................................................................ . 9Compliance: Regulation B: Providing a Copy of an Appraisal .............................. 10MBA VEBA: What Type of Disability Insurance Does Your Bank Oer? ..................... 11Next Generation in Banking: Building the Ideal Banking Leader .......................... 25 Views from Washington, D.C.Fighting the Misguided Credit Card Competition Act ........................................ 12Discussions With Missouri Delegation, Regulators Highlight Washington Visit ............. 24Cover StoryBattling Lies & Deceit ................................... 14Banks continuously protect customers from scamsGuest Commentary Unmaking the Myths: Fact Checking Banking ....................................... 18 Open Banking: When You Build It, Will ey Come?. ............................ 20Unprotability Potentially Looms for uarter of Missouri-based Banks ............ 22 Around the StateGot Referrals? Missouri Banks Win Big With VendorPRO! ................. 26 Achievements ......................................................... 282023 MBA Highlights .............................................. 29Connect with MBA!facebook.com/mobankersfacebook.com/monextgenbankers@mobankers@mobankersMissouri Bankers Association THE MISSOURI BANKER 1
Be Present. Be Loud. Be Heard. From our ChairmanAdrian Breen, MBA Chairman The Bank of Missouri, PerryvilleWhen it comes to New Year’s resolutions, people fall into two camps — you either love them or loathe them. is time of the year prompts people to reect on the past year and ponder the possibilities for the New Year.at’s where I nd myself as 2023 draws to a close. is year has presented challenges for the banking industry nationwide, but it’s also been a year that showcased the strength and commitment of the Missouri banking community. Day in and day out, we show up for our customers in numerous ways — from the operations in our banks to the halls of the Missouri Capitol and the U.S. Capitol — because they trust us with their nances. It is an honor to have that trust, and it is our responsibility to earn that trust every single day.It’s also the reason why our banking community must adhere to this resolution for 2024 — Be Present. Be Loud. Be Heard.Our October trip to Washington, D.C., proves what can happen when we show up and voice our concerns. Missouri Congressman Sam Graves and Congresswoman Ann Wagner have signed on as co-sponsors of the Access to Credit for our Rural Economy Act, which would give community banks the same tax-exempt status on certain earned interest that applies to farm credit institutions, allowing farm real estate borrowers and rural homeowners access to lower interest rates. Bankers met with the representatives to discuss the importance of this bill, and every call, text, email and visit from our members played a vital role in their decision to sponsor ACRE — they heard us!We let our voice be known to the Consumer Financial Protection Bureau during our Washington visit. In our meeting with CFPB Director Rohit Chopra, we adamantly expressed how made-up terms like “junk fees” completely misrepresent our industry. A community banker in our group pointedly asked Chopra if he realized how much confusion he caused for her customers every time he used “junk fees” — he had no answer for this. e director still had no answer for the “junk fees” when Congressman Blaine Luetkemeyer questioned Chopra on his attempts to expand powers as a regulator, emphasizing that “regulation is running downhill and choking small institutions.”2 mobankers.com
Be Present. Be Loud. Be Heard. Our Two Cents with MBAMBA’s podcast explores topics relevant and interesting to bankers. Our fun, engaging conversations help you stay ahead of what’s happening in banking. Our Two Cents with MBA is on MBA’s website, iTunes, Apple Podcasts, Google Podcasts and Spotify.ese cases demonstrate that our banking community is heard when we are present and we are loud. at same commitment is vital if we want to continue to be heard in 2024.As you nalize your bank’s budgets and goals for 2024, I ask that you also make it a priority to put advocacy at the top of your list. Our voices need to be heard, both at home and in Washington.New legislative sessions for both the Missouri General Assembly and U.S. Congress begin in January. Make certain you and your teams know the members of your delegation and their stance on banking proposals that come before them. Now is the time to reach out directly to your lawmakers and their sta to discuss bills and their potential outcomes for your customers — their constituents and communities. Make it a priority to touch base weekly; those conversations are key to developing relationships so that when there’s a question about a banking bill, your lawmaker knows where to turn. No one is better positioned to speak about banking than you.e same holds true for regulations. Our industry is one of the most regulated in our country, and regulatory agencies continue to mount additional rules on us while it’s a free-for-all for other nonbank entities that have become fruitful conduits for international fraud — with zero accountability. As agencies issue proposed regulations, be ready to submit comment letters with specic details explaining how the proposal harms customers. uestion their interpretations and reasoning for the proposal — what is the actual purpose? Do the agencies understand what the rule actually does? Again, no one is better positioned to speak about banking than you.Many of us are bankers because we want to help people, and being a banker today also means you are an advocate for your customers and communities. Your voice inspires action in your communities, and your voice powers the strength and stability of our communities. Be the voice that rises above the noise. Be Present. Be Loud. Be Heard. Best wishes to you, your families and your teams for a healthy, happy New Year! Live Well. Stay Well. Bank Well! THE MISSOURI BANKER 3
Joyce KennedyManager, InsuranceServicesjkennedy@mobankers.comLesley WeaverDirector, BusinessDevelopmentlweaver@mobankers.comTina WoehrEmployee Benefi tsAccount Executivetwoehr@mobankers.comMedicalDentalVisionLife & Additional LifeLong-Term &Short-Term DisabilityFelonious AssaultGroup AccidentWorksite Products800-234-4939mobankers.com
From our President and CEOFederal Reserve Board Loses Sight of Its Mission, ValuesThe battle over interchange has turned toward debit, with little to no warning. On Oct. 25, the Board of Governors of the Federal Reserve voted 6-1 to propose slashing the debit interchange base cap from 21 cents to 14.4 cents and the ad valorous component from 5 basis points to 4 basis points. e fraud-prevention adjustment would increase from 1 cent to 1.3 cents. Overall, this proposal would likely reduce debit interchange by as much as 30%. Although the proposal only applies directly to institutions with more than $10 billion in assets, we have all seen how this movie ends — the entire banking industry suers while another industry prots.As much as we may want to focus on the nancial impact (make no mistake, it will be signicant for banks and for consumers), Jackson Hataway, President and CEO, Missouri Bankers Associationthe facts surrounding how this proposal came to exist should be deeply alarming to all of us. ere was no warning from anyone at the Federal Reserve that this proposal was being considered. An open meeting notice was the rst indication to banks — and even to many within the Federal Reserve system — that the board was planning to review debit interchange. e language within the proposal itself is even more disturbing. It almost directly quotes language used by merchants to advocate for limits on credit card interchange. e proposal even acknowledges that lower income Americans may be harmed by further limiting debit interchange but ignores that harm in favor of the benets that retailers will reap from lower costs. e fact that the board would attack the very industry it is intended to regulate and safeguard in favor of an industry over which it has no authority is beyond shocking. e only board member voting in dissent was Gov. Miki Bowman, and she was largely ignored by her fellow board members despite her role as the community banking representative within the system. Instead of attempting to preserve the vitality and diversity of the U.S. banking system, the Federal Reserve is placing more pressure on community banks to consolidate as operational costs increase while revenues are articially and arbitrarily limited. Simultaneously, even as credit card rates skyrocket, this proposal will force debit card providers to implement fees to oset lost revenue, driving more Americans to use credit cards or nonbank credit providers — adding to the growing concerns over consumer debt that are in every news cycle.Historically, the Federal Reserve was meant to be a system that maintained both a presence in the heart of our federal system (Washington, D.C.) and across America with regional Federal Reserve Banks. is ensured the voices of communities and the nancial institutions that the Federal Reserve regulates were never lost as major policy decisions were considered. is no longer seems to be the case as this latest proposal shows that the Federal Reserve Board has lost sight of its mission, values and responsibilities. Our industry must be as loud as we have ever been if we have any hope of reminding the board why it exists in the rst place. THE MISSOURI BANKER 5
e High Cost of Too Much CapitalABA PerspectiveRob Nichols, President and CEO American Bankers AssociationIn early October, I sat down with Federal Reserve Vice Chairman for Supervision Michael Barr at the American Bankers Association’s annual convention in Nashville. e topic of our conversation was bank capital. e failures of Silicon Valley Bank, Signature Bank and First Republic Bank have prompted regulators to begin clamoring for major capital increases at larger banks. My question to Barr: why? Why, when the spring bank failures were attributed to a combination of idiosyncratic liquidity challenges, poor risk management practices and oversight missteps, did regulators put capital in the crosshairs? Why, when policymakers — including the vice chairman himself — have stated repeatedly that the banking system is strong, resilient and well-capitalized, is a major change in capital levels suddenly warranted? While I appreciated the vice chair’s willingness to engage in the conversation, I found the answers I received unsatisfying, to say the least. He echoed a common argument among proponents of the so-called “Basel III endgame,” namely that the last set of capital changes — instituted aer the 2008 nancial crisis — did not lead to dramatic economic declines and that the banking system continued to grow, even while holding higher amounts of capital in reserve. Although these statements aren’t false, they’re a poor justication for additional capital increases now. e truth is, the post-crisis capital changes did aect economic growth, and they succeeded in driving business outside of the regulated banking sector. Just look at bank mortgage originations in the years since 2007. e share of mortgage originations by banks has declined steadily since the post-crisis rule changes, plummeting from around 80% to just under 30% in 2022. at’s just one example — there are others. Here are the facts. • We already have an eective framework in place that requires regulators to sensibly tailor rules based on a bank’s risk prole and business model. • Banks are already holding sucient capital as evidenced by the industry’s collective weathering of several signicant events in recent years, from a global pandemic to a period of rapidly rising interest rates, to resiliency in the face of the isolated bank failures in the spring. • e proposed rules on the table would return our current framework to a one-size-ts-all approach that would put U.S. 6 mobankers.com
e High Cost of Too Much Capitalbanks at a competitive disadvantage to their foreign peers. ey have the potential to drive more business away from banks and into the less regulated shadow banking sector. ey also fail to appropriately consider the potential economic consequences of forcing banks to hold even more capital in reserve. • Bankers know there is a cost to holding too much capital — and it’s paid by both consumers and businesses needing credit. To ignore these realities would be a misstep, especially because history tells us that any capital increase for larger banks will eventually aect community banks, too. at’s why ABA has been so vocal in calling on regulators to conduct a thorough quantitative impact study to determine the full extent of potential economic consequences, which they agreed to do in mid-October alongside an extension of the comment period. However, simply collecting the data is not enough. Regulators and the public need ample time to review and evaluate the data to understand the full picture. e current timeline, even with the comment deadline extension, does not allow for that. Given the wide-ranging eect this rulemaking could have, the only appropriate course of action is for regulators to withdraw and repropose the rule aer the data can be fully assessed. Changes to capital rules, even if they are only intended for the largest banks, will inevitably aect all parts of the banking system. is is too important to get wrong. Email Rob Nichols at rnichols@aba.com.Calling all photographers! The Missouri Bankers Association is accepting photo submissions for its 2025 Scenes of Missouri calendar. These photos depict the beauty of the Show-Me State — from the Bootheel to the Ozarks to the northern farmland, our great cities and all points in between — anything that features Missouri scenery, historical locations, the changing seasons, city scenes, wildlife and more. You could win $100 if your photo is chosen as “Best of Show!”MBA’s calendar features photos from MBA-member bank employees, directors and their family members. For more than a decade, dozens of Missouri photographers have had their photos featured. You could be next!Sold exclusively to banks throughout Missouri, these calendars make fantastic gifts for customers to enjoy year-round and to promote your bank. Only digital photos are being accepted until Friday, May 31. Email photos to photos@mobankers.com or submit them on a CD. For complete entry details and a photo contest entry form, visit mobankers.com. If you have questions, contact Carol Barnett at MBA at 573-636-8151 or cbarnett@mobankers.com.SHOWCASE YOUR PHOTOSIN MBA’S 2025 SCENES OF MISSOURI CALENDAR! THE MISSOURI BANKER 7
Department NewsThe MBA Government Relations Committee recently met to discuss policy proposals and approve positions on potential legislation for the upcoming 2024 state legislative session. First and foremost, we thank our chair, Curt Brumley from Community Point Bank in Russellville, for leading a great discussion on both federal and state advocacy eorts. We also thank the committee members for their input and guidance on what’s expected to be a dicult 2024 state legislative session. A few of the topics the committee discussed follow.• increasing the cap for the MoBuck$ program from $800 million to $1.2 billion• adopting 2022 amendments to the Uniform Commercial Code, which will help support pledging and custody of electronic loan and mortgage documents to facilitate bank transactions with Federal Home Loan Banks, Federal Reserve Banks and private parties• enabling banks to provide lower interest rates on ag real estate and commercial loans by reducing banks’ tax burdensA new proposal, oered by a committee member, would allow banks to recover the costs of credit reports for consumer loans. e prices of credit reports have increased signicantly throughout the last several years, and this bill will allow those costs to be borne by borrowers.As mentioned, this session may be one of the more dicult in recent memory. e prognosticators in Jeerson City expect a chaotic state legislative session for a variety of factors.e 2024 election cycle looms large and, to date, a dozen sitting lawmakers have announced a run for higher oce. GOVERNMENTAL RELATIONSStaying on the Sideline Poses Risks for Your BankBy David Kent, Senior Vice PresidentSeveral will be running against each other in primary races and may be more interested in grabbing headlines than craing policy. Sprinkle in fractures within the Republican supermajority, and it’s easy to see why next session may prove dicult for passing legislation.Regardless, MBA will approach the upcoming session with optimism and do everything we can to accomplish our goals. Session won’t be easy; none of them are. However, MBA sta will navigate the challenges and nd avenues to ensure a successful outcome for Missouri’s banks.For this to happen, we will need your help. MBA is most successful when we employ a two-prong approach. Our lobbying team works full time on your behalf. When you join us at the Missouri Capitol, you complete the picture for your elected ocials. We encourage all bankers to register as Target Bankers and travel to Jeerson City to meet with your state lawmakers.We know many of you dislike politics and may not be excited about getting involved. Trust us, we get it! But remember this — “Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you.”Simply put, political apathy does not make you or our industry immune from political consequences. Policies are passed each year that have real impacts on your ability (or inability) to provide the essential nancial services that your neighbors and communities need and expect. If you stay on the sideline, you risk the future of your institution and the industry. 8 mobankers.com8 mobankers.com
This column addresses a speech on the Federal Deposit Insurance Corporation’s agenda given by FDIC Vice Chairman Travis Hill at the Cato Institute on Sept. 21 (fdic.gov/news/speeches/2023/spsept2123.html). Hill set the stage for his remarks as “about six months” aer the March 2023 bank failures amid the turmoil of an uncertain economy and an aggressive regulatory agenda by the banking agencies.CAPITAL STANDARDSHill views the July 2023 capital standards proposal as a substantial revamp for large banks’ risk-weighted capital that adds to an already “gold-plated” Basel standard and a completely unrelated undoing of tailoring for large banks. He hoped these choices would be revisited because the result would “be some combination of higher prices and less availability of products and services.”LARGE BANK RESOLUTIONAgency proposals presented in August included a long-term debt requirement on large regional banks. Hill generally concurred but expressed hope that the agencies would give due consideration to comments received. He opined that greater focus should be given to key areas of resolution planning to promote the likelihood of a weekend sale in the event of a regional bank failure.BANK MERGER POLICYFDIC has been considering opening the bank merger policy for several years. Hill stated that banking and nancial services are highly competitive, banks compete with thousands of institutions that perform bank-like functions and banks are not bound by geographical limits. e merger framework is outdated.LIQUIDITY RULESHill notes the banking agencies implemented the liquidity coverage ratio aer the 2008 nancial crises on the rationale that large banks needed to hold high quality liquid assets. In 2023, under a dierent stress scenario, large banks found they could not sell or access the liquidity of their least risk weighted securities without taking substantial losses.LEGALA Voice of Reason By Keith Thornburg, Vice President and General CounselHill advised against layering on more requirements or simply reacting to the most recent stress event. He said the only liquidity source that will always be available is the central bank, and yet, a bank in deteriorating condition in the U.S. can lose this access. Hill encourages regulators to think holistically about reforms that reect how banks behave in times of stress and to focus on reforms that are durable for the full spectrum of possible stress events.SUPERVISIONHill states supervisors identied substantial weaknesses in risk management programs at Silicon Valley Bank and Signature Bank “over several examination cycles” but failed to act on their ndings and require timely remediation by the banks. He said supervisors need to focus on timely completion of examinations and issuance of ndings and to prioritize core safety and soundness. Hill recognized that examiners do not and should not “manage banks or determine business strategies” and cannot prevent all bank failures.CLIMATE CHANGEHill said that in his years with the FDIC, he never once “heard a bank supervisor or FDIC sta member mention a climate event as causing stress at a particular bank.” He notes the supervisory proposals for banks concerning climate change seem to say that banks should worry more about themselves than serving their communities. is is opposed to the FDIC’s typical response to a catastrophic weather event, where the agency moves to suspend banking rules to allow banks to be a source of strength for their communities.CONCLUSIONHill opines that the banking agencies are trying to do too much all at the same time — both with respect to the aggregate number of agenda items and with individual agenda items. is combines with actions by other regulatory and supervisory agencies that also aect banking, nancial services and business. Hill states that undoing tailoring rules for banks of many dierent sizes and business models would be a mistake and that doing so would cause a loss of dierentiation and incentivize further consolidation and homogeneity. THE MISSOURI BANKER 9
Department NewsCOMPLIANCERegulation B: Proiding a Copy of an Appraisal By Gina Jolly, CRCM, Vice President of Compliance ServicesRegulation B was amended in 2013 to require creditors to notify applicants of their right to receive copies of appraisals within three business days of application and to provide applicants with copies of all appraisals and other written valuations developed in connection with an application for credit secured by a first lien on a dwelling. is requirement applies to business and consumer credit.e rule requires that creditors provide copies of the appraisals and other written valuations to the applicants promptly upon completion or no later than three business days before consummation or account opening, whichever is earlier.For purposes of the rule, “delivery” is the earlier of: • three business days aer mailing or delivering copies of the valuation to the last known address of the applicant, or • when evidence indicates actual receipt of copies of the appraisal by the applicant Unfortunately, Regulation B does not provide a denition of “business days” for purposes of providing copies of appraisals and other written valuations. As a result, you can generally apply your own reasonable denition, which may include counting Saturdays — as provided in the denition in Regulation Z, § 1026.2(a)(6).DELIVERY BY MAIL If an appraisal is to be delivered by mail, then it must be delivered no later than three business days before consummation of the transaction. For example, assume the appraisal is mailed Monday, Dec. 4. Absent evidence of earlier receipt by the applicant, delivery is deemed to have occurred ursday, Dec. 7 (i.e., three business days aer mailing the appraisal). As a result, the earliest date that consummation may occur is Tuesday, Dec. 12 (i.e., three business days aer delivery).IN-PERSON DELIVERY If the appraisal is delivered in person Tuesday, Dec. 5, with evidence of actual applicant receipt, delivery has occurred. For this example, the earliest consummation date is Friday, Dec. 8.DELIVERY BY EMAIL Assume the appraisal is emailed Monday, Dec. 4. If there is no evidence of earlier receipt of the electronic delivery, delivery is deemed to have occurred ursday, Dec. 7 (i.e., three business days aer sending the appraisal via email). e earliest date for consummation is Tuesday, Dec. 12.If there is evidence of receipt of an appraisal delivered electronically that is earlier than three business days, the earlier date would be considered as the date of delivery according to comment 14(a)(1)-4.i.Note that if appraisals are delivered via email, the creditor must comply with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act). 12 CFR § 1002.14(a)(5). is means you cannot simply email an appraisal without use of an E-Sign compliant system. Banks should ensure they have a dened process to document the timely delivery of appraisals. This article is for information purposes and does not contain or convey legal advice. The information should not be used or relied upon in regard to any particular situation without consultation with your bank attorney. MBA Compliance Services and its Compliance Force program offer various programs to aid banks with compliance needs. For more information, call 573-636-8151.10 mobankers.com10 mobankers.com
MBA VEBAWhat Type of Disability Insurance Does Your Bank Oer?By Joyce Kennedy, Manager of Insurance ServicesDisability is something that happens to other people, right? Unfortunately, it’s more common than you may think. One in four of today’s 20-year-olds can expect to be out of work for at least a year before they reach retirement age because of a disabling condition. at’s why it’s so important to help protect your workforce if they need to miss work because of an illness, injury or pregnancy. Without income protection, your employees can experience severe nancial diculties.Policies vary, but disability insurance can protect up to 70% of income for a period anywhere from three months to the time your employee reaches retirement age. Short-term disability plans provide benets on a per-disability basis and last six to 12 months. For employees who are unable to work for an extended time, long-term disability plans provide monthly benets aer a waiting period or other benets have ended. General long-term disability coverage typically provides benets under an own-occupation clause for the rst two years of disability and benets under an any-occupation clause thereaer.If you haven’t reviewed what your bank oers lately, MBA VEBA can help. Our short-term income replacement insurance pays a weekly benet to employees who have a covered disability that prevents them from working. Benets are available aer a seven-day waiting period for a maximum of 12 weeks. e benet replaces 60% of basic weekly earnings, up to a maximum weekly benet of $1,000. e insured program will help our member employers manage a clear absence policy, and the income for employees may be used at their discretion.Our long-term income replacement insurance pays a monthly benet to employees who have a covered disability and dovetails seamlessly with the short-term disability coverage. In addition, not only does MBA VEBA oer the typical any-occupation policy common in the marketplace, but it also oers a more comprehensive own-occupation policy that is hard to nd and is MBA VEBA’s most popular product. All of our long-term disability plans include an employee assistance type program and a worldwide travel assistance program at no additional cost.If you are interested to learn more about disability insurance available through MBA VEBA, please contact Lesley Weaver or Tina Woehr at 573-636-8151, or visit mobankers.com. Submit your news! Send achievements, news and announcements to Lori Bruce, MBA communications director, at lbruce@mobankers.com for posssible inclusion in The Missouri Banker. THE MISSOURI BANKER 11
Views from Washington, D.C.Fighting the Misguided Credit Card Competition ActCongressman Blaine Luetkemeyer Amidst record-high inflation, global conflict and a heated presidential race, there is immense pressure on elected officials and regulators to take action and provide relief to Americans. In Congress, I’ve urged my colleagues to think about economic issues critically and avoid succumbing to dogma or the catchiest soundbites. As bankers are well aware, oering false promises to consumers while claiming to “hold banks accountable” is a hallmark of politicians chasing a headline without any regard for the practical consequences of their misguided policies. Perhaps the most notable recent example of this is the Credit Card Competition Act, the latest attempt to eliminate credit card interchange fees. Since the Durbin Amendment in the 2010 Dodd-Frank law capped interchange fees on debit cards, proponents have pushed to do the same on credit cards. What they fail to acknowledge is how not a single consumer beneted from the debit cap. In fact, it was just the opposite. Consumers who once enjoyed cash back or other rewards on their debit cards lost those benets. Free checking largely disappeared, fees increased and minimum balance requirements became more prevalent. While debating the Durbin Amendment, I was repeatedly told retailers would pass savings on to consumers, so at least the public is enjoying the savings, right? Like me, you probably knew then and you absolutely know now those benets were never going to make it to consumers. Study aer study shows customers never saw any savings — only a loss of benets. It begs the question: Aer 13 years with no evidence of benets to the economy or everyday Americans, why are these eorts still popping up? Have they learned nothing? As far as I can tell, the only lesson learned was how capping privately negotiated fees can only pass Congress when one party holds the White House, the House of Representatives and a supermajority in the Senate, as was the case in 2010. Supporters of free markets largely disagree with government caps on private negotiations. So, to win support on the Republican side of the aisle, those craing the policy (lawyers and political consultants of the nation’s largest retailers) shied from a cap to the much more palatable notion of competition. To their credit, it worked. e bill has Republican sponsors in both the House and Senate — but not nearly enough support to pass the House. Although some of the mechanics and messaging have changed, this bill would still lead to cutting services and benets without achieving savings for consumers. In fact, this time 12 mobankers.com
Fighting the Misguided Credit Card Competition Actaround, the consequences would be even more devastating for customers.What proponents of the Credit Card Competition Act apparently do not understand is that services cost money. When you eliminate the ability to pay for a service, you eliminate the service itself. Interchange is no dierent. Reports about credit card rewards disappearing are true — an account would not earn or obtain points if the charge doesn’t occur on the point provider’s network — but the loss of fraud protection would be devastating to small retailers and consumers. As everyone reading this knows far too well, when a large retailer experiences a data breach, banks must reissue thousands of credit cards and reimburse hundreds of thousands, if not millions, of dollars in fraudulent charges to consumers. anks to interchange fees, nancial institutions — not the merchant exposed to the attack — cover those costs. I can only imagine the reaction of consumers if they were to learn their coverage no longer existed and that they would have to simply accept their money has been stolen or sue the merchant and ght it out in court. It’s the reality consumers would be facing under this proposed bill. Small retailers would face a similar dilemma. While the Walmarts of the world could aord to take on some liability — make no mistake; they have no intention of doing so — the quick shop on the corner cannot. Instead of a minimal charge to use credit card services, they would be forced to buy additional insurance to protect against data breaches and fraud or face bankruptcy when things go wrong. Particularly in small communities, the added expense could spell disaster for the local economy. Some have suggested card issuers and banks should simply continue covering losses out of the goodness of their hearts. Serious people understand that is fantasy. Not only would it be a breach of a bank’s duciary duty to its customers and shareholders, but banking regulators also would quickly step in (rightfully so) for safety and soundness reasons. Again, services cost money and cannot exist without the ability to pay for them.I am not naïve to the reality of political posturing when it comes to banking policies. Again, nancial institutions have long been an advantageous target for progressives. ere are public supporters of the Credit Card Competition Act and other disingenuous bills aimed at the nancial services sector who know the economic damage their bills would cause — particularly to low-income families. ey’re content to let those of us who take these issues seriously protect them from themselves while they falsely claim to be the champion of the people their policies would hurt the most. But not everyone falls into that category. Plenty of legislators believe this is the right thing to do. Part of my job as a senior member of the House Financial Services Committee is to help my colleagues on and o the committee understand issues with which they’re not familiar — just as I lean on my colleagues with expertise in other elds to help shape our conference’s policy agenda. Ultimately, we all answer to our constituents. I know where the people of Missouri’s ird District stand on nancial fraud protection. Please make sure all your representatives know where you and your customers stand, too. THE MISSOURI BANKER 13
Cover StoryBy Lori Bruce, Director of CommunicationsIt’s a situation that bankers know all too well.An individual, usually an elderly person, visits the local bank to wire a substantial amount of money to another account outside of the bank. The person is adamant the transfer must happen immediately but offers very little details. Bank employees make every attempt to dissuade the customer from the transaction, but the customer insists that the money be transferred. Despite the bank’s persistent efforts, the customer continues to transfer money to this account because “it will change their life” … the customer does not believe that someone is scamming them. Their actions create a rift with family members, and the bank eventually closes the individual’s account.This actual event is common across Missouri and the nation. Individuals over the age of 60 lost $3.1 billion in fraudulent scams in 2022, according to the Federal Bureau of Investigation’s Elder Fraud Report. Missourians over the age of 60 lost $34.9 million.Vincent Zarcone, a supervisory special agent with Homeland Security Investigations in Kansas City, and Quentin McConkey, a certified community bank security officer for BTC Bank in Albany, share their insights on bank fraud and protecting customers from scams. Battling Lies & Deceit
Scammers are so good at what they do that they really can trick anybody.What are the most prevalent types of bank fraud that you are seeing?Zarcone: I’ve been working elder fraud now for nearly 20 years and while the methods of how the fraud is perpetrated may change, the schemes are the same — enticing individuals into very confusing conversations to trap them. Whether it’s a lottery scam or romance scam, the scammers are oen trying to scare the elderly. Because older adults still use traditional ways of banking, they may be skeptical of electronic banking because of their perception of how complex they perceive banking has become. Elderly victims can become easily fooled by complex sounding terms scammers use, coupled with some pending doom scammers oen proclaim as part of their schemes. For example, an elderly victim may get a call purporting to tell them about some sort of fraud that has happened on their account. rough a complex web of lies and deceit, before the victim knows it, they are giving away their personal information, which is s exactly what the scammers needed to begin perpetrating fraud. It is no dierent with romance scams. Aer scammers gain the trust of their victim, they will begin convincing their elderly victim of some pending doom, either about “themselves,” a “family member” or some other tragedy and again, the victim will be convinced to send money. Every scam, in one form or fashion, involves convincing elderly victims that sending more money to the control of the scammers is how a crisis will be averted, and that’s how the fraud cycle begins. Cryptocurrency would be an example of something we see scammers using these days with increasing frequency, as they are able to employ confusing terms to scam their victims. If you are dealing with a customer who wants to convert retirement funds to crypto for some reason and they have a notepad lled with account numbers, confusing information, scribbles all over the place or other information they cannot explain, these are red ags. You can tell just by looking at their notes that the customer was engaged in a conversation with a scammer, and they were basically talked in circles and unable to comprehend exactly what the conversation was about. Consider these signs as evidence for you to help protect your customer and your institution. Take the time to talk with your customer about their request. Ask them questions — why they are getting involved, if it’s a new investment, etc. — and let them explain it to you. As that customer tries to talk about the very thing they’re trying to do — or more likely unable to explain what it is they are about to do — it should become clear that customer is probably in the middle of a fraud scheme. I don’t see any harm in the bank trying to assist or maybe talk somebody down from that kind of transaction. I think the most painful thing for me as an investigator has been bankers who knew the person sitting in front of them was probably the victim of fraud and either second guessed the red ags they were seeing or failed to recognize the extent of what the red ags were pointing to and then helped them with the transaction.McConkey: We’ve seen all dierent kinds — IT support, mail the, romance scams. e FBI releases a list of dierent types of elderly fraud cases, and we see ve to 10 of those regularly. e ones we see most oen are the IT scams — individuals get a pop up on their computers about a virus that leads them to contact the alleged company, and then the scammers gain access to their computers, which in turn leads to their online banking. Probably the most unique thing we’ve seen recently is people are being contacted by someone posing as an undercover bank security ocer telling them that bank employees are giving out their information and they need to wire their money to a safe location. ese scammers convince individuals that they can’t tell our actual employees why they are transferring their money because the employees don’t know that the undercover ocer exists. People voluntarily walk in and wire their own money out. ese scammers are so good at what they do that they really can trick anybody. THE MISSOURI BANKER 15
How can banks combat fraud?Zarcone: Continue to be vigilant in the bank’s suspicious activity reporting on elder fraud. Continue to report the red ags surrounding elder fraud, particularly when older adults are coming to the branch. If you have a typical customer who conducts normal banking transactions and suddenly this individual wants to engage in some sort of international transaction involving complex transfers, cash to bitcoin or some other complex nancial transaction that is outside the scope of his or her normal banking relationship, do not delay in reporting those instances because it’s usually a red ag that this person is involved in some type of fraud. When you see these red ags, don’t delay reporting.Continue to share your resources on fraud warning signs with your customers so they can be on the lookout. e most important thing banks can stress to their customers is how they communicate with customers. Send reminders oen to your customers that the bank will never call, email or text you for your personal information. When individuals do receive calls, emails or texts from scammers asking for personal information, they’ll know that’s not their bank.McConkey: e unfortunate thing about manipulation is that it’s not illegal. We’ve been very proactive at BTC Bank about educating our customers and the community on fraudulent scams. Any opportunity that we have to give presentations to educate people on this matter has been positive. Any opportunity that we can get to make one person aware of fraud is an opportunity that could potentially save them from becoming a scam victim.As for employees, we make certain our frontline sta know as much as possible about fraud scams and warning signs because they are the ones who interact with our customers day in and day out; they see what’s normal and what’s not with customer transactions. Having good customer relationships make our customers comfortable with our sta; that comfort allows them to trust us and to talk with us.FRAUD VICTIMS OVER 6088,262$3.1 Billion84%$35,1015,456VictimsTotal lossesIncreases in losses from 2021Average dollar loss per victimVictims losing more than $100KSOURCE: FBI Internet Crime Complain Centeric3.gov/Media/PDF/AnnualReport/2022_IC3ElderFraudReport.pdfas reported to the FBI in 2022
they felt for losing so much money, they did have a sense of appreciation that people care and that something was being done with the reports sent to the FBI.What would you advise bankers do to help prevent fraud?McConkey: Continuing to educate your customers and employees is the most important thing we can do to stop fraud. Look at the resources from the FBI’s Internet Crime Complaint Center at ic3.go. It has fraud statistics and breaks everything down into specic categories.Zarcone: ere must be heightened vigilance for potential fraud, and it starts with your frontline because they are the ones who really need to be aware of what’s happening. ere’s a basic principle I learned a long time ago with interrogation training — if you don’t ask a question, you won’t get an answer. It’s pretty simple advice I always reminded myself of when I’m sitting in front of someone I had to question. Sometimes it can be hard to ask dicult questions and it may be uncomfortable for a frontline worker to engage a long-time bank customer in dicult questions when they see elder fraud red ags. Although it may be intimidating to ask long-time customers with multiple accounts and large nancial proles dicult questions at the sight of these red ags, that’s the time to really dig in and ask those hard questions because ultimately, they may end up protecting the customer and the bank. What are your suggestions for completing SARs?Zarcone: e most important thing with SARS is to keep it simple — tell us the main facts and we will reach out to the reporting ocer to follow up. Sometimes you get SARS that are very simply written, very concise and very easy to follow. Sometimes the SAR can be written where it’s very complex to understand. We comb through hundreds of SARS at a time, and we look through them to see which ones rise to the highest level of priority. Although you may not always get feedback on your SAR reporting, know your reports are being read. We also encourage nancial institutions to work with law enforcement in fraud investigations, especially when you are contacted about your SAR report. HSI has broad authority in the areas of federal criminal law, customs law and immigration law. Our primary focus is to disrupt and dismantle transnational criminal organizations. As our authority stretches to the border and beyond, we have a range of resources we employ to help us combat money laundering, nancial fraud and bulk cash smuggling, just to name a few. We have several avenues from which we can start investigations. For example, we may be contacting your bank about an investigation that initially started for us as the result of a seizure related to drug smuggling, narcotics or human tracking and in the course of the investigation, we came across bank fraud committed by suspects of our larger overarching investigation. In times like these, we learn the bank has been reporting on fraud related to individuals for quite a while. at’s a strength for us, and your SAR report may be a piece of a much larger puzzle we are putting together to combat a TCO. We understand the bank may not know if their SAR is useful or how it may play into the bigger picture, but know that your diligent and accurate reporting may be useful now or down the road, and responsiveness to law enforcement inquiries are very helpful.What’s the impact you’ve experienced in ling fraud reports?McConkey: Customers have lost six gures in their money. Once they wire their money out, it’s long gone. I have sat with customers in person to complete an IC3 report. As bad as If you don’t ask a question, you won’t get an answer. Ask those hard questions because ultimately, they may end up protecting the customer and the bank. THE MISSOURI BANKER 17
Guest CommentaryBy Achim Griesel and Sean Payant, Ph.D., HaberfeldBanking is essential to the overall health of our country. By design, it serves as the backbone for our nancial system and communities while playing a crucial role in helping individuals, businesses and governments thrive.Banks must continuously adapt to the changing landscape in this highly competitive environment. e key to success is to shatter the traditional banking myths that have been prevalent for years. Let’s explore why these myths need to be shattered.THE EFFICIENCY RATIOMyth: Managing expenses is the best way to improe overall eciency.Fact: Increasing overall revenue is much more impactful.e eciency ratio is an important metric for nancial institutions to track as it measures how eciently FIs are using resources to generate revenue. It is oen thought the best way to improve the eciency ratio is to manage expenses by embracing technology, controlling costs and determining appropriate stang levels, but managing expenses is a very nite opportunity. e unlimited opportunity for FIs to improve their eciency ratio is not Unmaking the Myths: Fact Checking Bankingon the expense side. It is on the revenue side, as illustrated in the table below comparing high performing banks to others. FIs should focus on growing revenue because this will have a much bigger impact on protability. ere are two ways to accomplish this eectively: growing core customers and growing share of wallet. e bigger, more strategic option is in growing core customers because this also enables your FI to exponentially grow share of wallet.Metric Eagles Other % VarianceReturn on Assets 3.24% 1.01% 220%Return on Equity 32.78% 11.09% 196%Net Interest Margin 3.7% 3.22% 15 %Cost of Funds 0.3% 0.29% 3%Yield on Loans 5.44% 4.77% 14 %Loan/Deposit Ratio 71.62% 69.95% 2%Noninterest Income to Assets ($000 per $1M in assets)$18.07 $4.60 293%Noninterest Expense to Assets ($000 per $1M in assets)$26.81 $23.55 14 %Equity Capital to Assets 10.09% 8.83% 14 %Note: data through 9/30/22 (annualized)18 mobankers.com
GROWING CORE DEPOSITSMyth: A rising rate enironment is the time when FIs need to focus on core deposits and relationships.Fact: Growing core deposits and relationships should be an always-on, strategic initiative.With the recent rate increases and the decline in deposits since mid-2022, bankers are once again focusing on core deposits and core relationship growth. Large banks are promoting cash rewards that triple prior oers, and they are marketing at a frequency that is three to four times that of prior years because large FIs see the current environment as a prime time to grow low-cost core funding. However, this is far from the truth. e truth is, it is always a good time to focus on growing core relationships and core deposits, regardless of the economic environment. By doing so, FIs position themselves well for any rate and non-interest income environment.DEPOSIT MARKET SHAREMyth: Deposit growth is a function of deposit market share.Fact: Deposit growth is a function of household and business market share.FIs oen focus on deposit market share as a measure of growth, but this is not always the best indicator. Instead, it’s important to focus on household and business market share. Essentially, what percentage of the FI’s footprint are they serving? Deposit market share is very much driven by larger deposits that oen come at a higher cost. It also is distorted by branch locations, or lack thereof, for digital banks. Household and business market share is a much better indicator of the ability to attract and retain consumers and businesses, and it provides a clearer picture of overall growth and success.STAFFING CHALLENGESMyth: It isn’t possible to hire or retain employees in the current enironment.Fact: Retention and recruitment is a function of an FI’s inestment in and focus on developing better leaders and coaches.Stang and human capital challenges have been one of the most prominent issues for FIs since the pandemic. Finding talented employees continues to be dicult, and retaining talented employees is a must. Although the combination of these factors results in stang challenges, the solution lies in an FI’s approach to its leadership and coaching strategy. By investing in the development of leaders and creating a strong coaching culture, FIs can ensure their sta is well-equipped to manage industry challenges while also feeling valued by the institution. e result is a decrease in turnover, improved knowledge and stronger alignment with the brand that ultimately creates improvements in customer satisfaction and improved overall performance.SALES CULTUREMyth: Having a “sales culture” is the only way to drive results.Fact: Aspiring to have an escalated service culture will result in increased product and service usage.FIs oen aspire to have a “sales culture,” but this is generally not the best approach. e key to success is to have an escalated service culture, where the focus is on providing products and services to make people’s lives better. By focusing on providing excellent customer service, FIs can build stronger relationships with consumers, increase overall satisfaction and create a positive image for the institution. A result will be increased sales and improved overall performance.By challenging and shattering these traditional myths or approaches to banking, FIs can create a more ecient and eective approach to their operations, which will lead to increased protability, meaningful growth and measurable success. By focusing on the right metrics, investing in the development of leaders and creating a strong service culture, FIs can ensure that they are well-positioned to succeed in this highly competitive industry. Achim Griesel is president and Sean Payant, Ph.D., is chief strategy ofcer at Haberfeld, a data-driven consulting rm specializing in core relationships and protability growth for community nancial institutions. For more information, visit haberfeld.com. Haberfeld is an MBA associate member. THE MISSOURI BANKER 19
Guest CommentaryBy Stanton (Stan) R. Koppel and Barry Hester, Bryan Cave Leighton PaisnerOpen Banking: When You Build It, Will They Come?A proposed rule from the Consumer Financial Protection Bureau would give consumers greater control over access to their personal financial information held by financial institutions. e CFPB’s stated goal is to increase competition in consumer banking by making it easier, less costly and safer for consumers to move their banking relationships to competing nancial institutions and ntechs. e rule comes 13 years aer it was expressly mandated in the Dodd-Frank Act under Section 1033. WHAT THE PROPOSED OPEN BANKING RULE DOESUnder the proposed regulations, banks must share a consumer customer’s data with third parties when directed by the consumer. e proposed Personal Financial Data Rights rule (the Open Banking Rule) covers checking, prepaid accounts, credit card accounts and digital wallets. e rule would not apply initially to mortgages, car loans and student loans. Banks must make data available through APIs and may not charge for such access. e consumer’s opt-in authorization of access for a third-party provider would expire aer each year, unless the consumer renews the authorization. Recipients of the data may use the data only for purposes reasonably necessary to provide the specic products for which the consumer authorized access. Consumers may revoke permission at any time, and the data recipients must delete the consumer’s data. Recipients would be prohibited from using covered data for other commercial purposes without the consumer’s consent, such as for targeted marketing, behavioral advertising or sale of the consumer’s data. Large banks must comply within six months of publication of the nal rule while smaller depository 20 mobankers.com
institutions are given from one to four years to comply, depending on size. Banks that do not provide online consumer interfaces are exempt from compliance. Comments on the proposed rule must be submitted by Dec. 29, 2023.e most substantial obstacle to timely implementation and realization of the CFPB’s goals may be the designed ambiguity as to a specic technical standard for data access, as described below. Although the proposed permission to use existing recognized standards may hasten deployment by data providers, the lack of specication in the rule may give rise to prolonged market uncertainty as to which standard should be used and force potential data users to accommodate multiple “standardized” formats.WHAT THE PROPOSED RULE DOES NOT DOAlthough the proposed rule includes measures to discourage access to consumers’ data pursuant to current credential-based screen-scraping practices, it does not clearly prohibit such practices. e statutory authorization for the proposed rule also does not prohibit continued usage of current methodologies. Instead, the CFPB’s proposes to make available a more reliable and secure pathway to provide consumers access to their data and convenient usage via third parties who oer competitive and innovative services. e Open Banking Rule requires covered data providers to make certain data available through APIs and establishes elaborate requirements to qualify third parties to access the data on behalf of a consumer. It does not prohibit third parties from accessing that data through current practices without meeting the elaborate requirements for access by using the newly mandated API. e result is that while the institutions that currently hold a consumer’s data are required to make costly investments to facilitate secure, comprehensive and timely access to the data without charge, the Open Banking Rule does not appear to require current data users to make the corresponding investments to migrate to the mode of access that data providers would be required to provide. Further, it appears that the rule is intended to facilitate ntech services that would access data held by the consumer’s existing depository on a transaction-by-transaction basis rather than addressing transfers of data and funds to facilitate a consumer’s transfer of its depository and payment card relationships to an alternative nancial institution. For example, a data provider is permitted to provide tokenized routing and account data to facilitate funds transfers from a Reg E account, which could eectively limit transactional services to the institution that can use the tokenized data. However, the CFPB notes in its explanatory notice that the rule is not meant to preclude a consumer’s access to historical data. ese limitations on the functionality supported by the proposed regulation do not arise from the wording of the statutory mandate, which provides that a covered institution must “make available to a consumer, upon request, information in the control or possession concerning the consumer nancial product or service that the consumer obtained from such covered person, including information relating to any transaction, series of transactions, or to the account including costs, charges and usage data.”Finally, the proposed rule only addresses access to data and does not address transfers of funds, leaving funds transfers and payments that might be executed through the authorized third party’s services to existing rules and processes. Funds transfers and payments are outside the scope of the provisions of the Dodd-Frank Act that would be implemented by the proposed Open Banking Rule. To view this article in its entirety, visit bclplaw.com/en-US/events-insights-news/open-banking-when-you-build-it-will-they-come.html. Bryan Cave Leighton Paisner was formed in 2018 but has roots dating back more than 140 years in St. Louis and London. MBA works regularly with the rm’s banking and trust attorneys in Missouri. This article was prepared under supervision of Stanton (Stan) R. Koppel in the rm’s San Fransico ofce. Barry Hester, a BCLP partner in Altanta, is an MBA contact for the rm. For more information, visit bclplaw.com. BCLP is an MBA associate member. THE MISSOURI BANKER 21
Guest CommentaryBy Brian Battle, Performance Trust Capital Earnings pressures have been mounting over the past two quarters for nearly all banks as moves from the Federal Reserve, media attention and aggressive competition have combined to push the cost of funds higher. For many, asset repricing hasn’t yet been able to keep pace with rising deposit costs.Unfortunately, the worst is very likely yet to come.Based on an ongoing study of historical rate relationships in banking, the logic of market dynamics and current trends already in evidence, an analytical screening conducted by Performance Trust strongly suggests that the cost of funds’ response to the Fed’s historically rapid tightening regime is far from complete across the industry. e majority of banks nationwide are facing signicant net interest margin declines in the coming quarters as their cost of funds continues to respond to a historical gap between deposit rates and Fed funds, and some banks are more vulnerable than others.To preserve a disciplined approach to evaluating capital allocation decisions, it is critical that two major tenets are applied. First, one must look at the value of current decisions in the future rather than in the present. Second, one must consider a range of futures, such as multiple interest rate scenarios. Unfortunately, the ALM regulatory framework that banks must adhere to and the tools created to help them do so falls woefully short of incorporating those tenets. When the Fed Funds Target hit 2.5% in summer 2022, applying those two tenets highlighted the need for a special focus: how might community banks be aected in the future across a range of possible FFT rates?Remember the context: by that point, the banking industry had experienced more than two years of massive, cheap liquidity inows. Banks had been compelled to put that liquidity to work, oen in longer-duration loans and securities. At rst, Unprotability Potentially Looms for Quarter of Missouri-based Banks22 mobankers.com
the Fed’s action seemed a blessing. With sticky deposits and initially unresponsive cost of funds for most, NIMs expanded, and many institutions enjoyed banner, even record, years in terms of return on assets and return on average equity.But remember the key tenets: value in the future and across multiple scenarios.And so in summer 2022, Performance Trust began an in-depth, forward-looking investigation of FFT scenarios not only of 2.5% but also at levels down to 0.5% and up to 4.5%. Sta had no idea which rate scenario was destined — a third tenet of the discipline — but what was projected to unfold over the next several quarters in the modeled 4.5% FFT scenario had Performance Trust sta voicing concerns by July 2022.Today, with the FFT rate at 5.5%, the same framework reveals that meaningful earnings deterioration will continue over coming quarters, even if the Fed leaves rates at 5.5%. If the Fed eases modestly toward 4.5%, the deterioration will continue.Based on these observable forces and call report data, Missouri banks, which posted a median pre-tax, pre-provision ROAA of 1.43% in third quarter 2023, could potentially be reporting a median ROAA under 0.75% in second quarter 2024 — if rates merely stay where they currently are.is may come as a surprise to many because, as previously stated, most ALM systems won’t show this. ink about it — no matter what beta you use, the base case of no rate change will return no increase in your cost of funds. However, mountains of real-world data say otherwise. ALM requirements weren’t designed for this situation.In fact, Performance Trust’s analysis suggests that if rates do not fall precipitously, and soon, the second quarter 2024 call reporting cycle will show that up to a quarter of Missouri banks could post negative or near-negative (less than 0.25%) pre-tax, pre-provision return on average assets.For decades, Performance Trust has been educating community bankers about a big-picture problem: that common, awed risk management tools and approaches can lead executive teams into unintended risks. For most periods over this history, the manifestations of this problem have been costly or painful but seldom so dire. Today however, one such tool — standard ALM requirements, approaches and interpretations — has inadvertently hidden, and continues to hide, a threat that may become the most painful experience for Missouri bankers since 2008.e beam of light is that unlike in 2008 — the last time banks faced such a prospect of materially declining ROAA then driven by credit provisioning needs — there are potential solutions to avert these unfavorable outcomes. e rst step toward pursuing such solutions is to gain clarity on where your institution’s vulnerability to a rising cost of funds really stands. Fortunately, this is a knowable thing that just takes a little time and elbow grease to uncover. Unfortunately, it is not something you are likely to nd in your ALM report. This article is intended for educational and informational purposes only and is not intended to be legal, tax, nancial or accounting advice or a recommended course of action in any given situation. This is not an offer or solicitation to purchase or sell securities. The information is subject to change without notice.Brian Battle is a principal and managing director of education at Performance Trust Capital. Performance Trust has been advising community banks for nearly 30 years and is currently sharing the results of the mentioned earnings screen with any community bank requesting it at no charge. For more information, email bbattle@performancetrust.com or visit performancetrust.com. Performance Trust Capital Partners is a registered broker/dealer, member FINRA/SIPC. Performance Trust is an MBA associate member. THE MISSOURI BANKER 23
Views from Washington, D.C.Discussions With Missouri Delegation, Regulators Highlight Washington VisitThe Missouri banking community was well-represented in Washington, D.C., as 35 bankers from throughout the state attended MBA’s annual Washington Visit in October. MBA members met with Missouri’s congressional delegation and leaders of several regulatory agencies to share their concerns. They concluded their Capitol Hill visits with a meeting with Congressman Blaine Luetkemeyer, a member of the House Financial Services Committee. MBA thanked Congressman Luetkemeyer for his commitment and leadership on critical financial services issues affecting their customers and the banking community.Front Row: Rich Weaver, Federal Home Loan Bank of Des Moines; David Kent, MBA; Jennifer Lawton, Peoples Savings Bank, HermannSecond Row: Shannon Johnson, UMB, Kansas City; Harold Miles, Bank of Advance; Paula Miles, Bank of Advance; Dianna Robb, Jonesburg State Bank; J.R. Buckner, First Federal Bank of Kansas City; Madelyn Jenkins, Bank of Billings; Luke Jenkins, Bank of Billings; Mark Jenkins, Bank of BillingsThird Row: Mike Dunbar, Security Bank of Pulaski County, Waynseville; Neil Miles, Bank of Advance; Sara Richardson, Heritage Bank of the Ozarks, Lebanon; Lance Boyer, Heritage Bank of the Ozarks, Lebanon; David Tribble, Farmers Bank of Northern Missouri, Unionville; Ted Wilson, Bank of Weston; Andrew Lee, Midwest Independent BankersBank, Jefferson City; Jackson Hataway, MBA; Congressman Blaine Luetkemeyer; Steve Korbe, West Plains Bank and Trust Company; Jacob Wilson, Bank of Weston, Kansas City; Deron Burr, Peoples Bank of Seneca; Scott Breckenkamp, First State Community Bank, Washington; Don Thompson, First State Community Bank, Potosi; Louis Eckelkamp, Bank of WashingtonFourth Row: Adrian Breen, The Bank of Missouri, Perryville; Terry Thompson, Equity Bank, Higginsville; Jordan Lampkin, Peoples Savings Bank, O’Fallon; Patrick Kussman, Regional Missouri Bank, Marceline; Jim Barnett, Peoples Bank, Cuba; Greg Omer, Armstrong Teasdale, St. Louis; Dan Robb, Jonesburg State Bank; Doug Burnett, TPNB Bank, Paris; Molly Hyland, Commerce Bank, St. Louis; Jim Limbaugh, Montgomery Bank, Cape Girardeau; Joe Cwiklinski, Federal Home Loan Bank of Des Moines 24 mobankers.com
Building the Ideal Banking LeaderThe Banking Leadership Missouri class explored leadership excellence through effective communication during their November session. In one of the exercises, Banking Leadership Missouri teams created their ideal bank leader using a Potato Head. Next Generation in BankingMelanie Riley, Country Club Bank, Kansas City; Crystal Wade, Heritage Bank of the Ozarks, Lebanon; Mindy Montgomery, Central Bank of the Ozarks, Springfield; Cory Daniel, Alliance Bank, Cape Girardeau; Alexander Brown, Equity Bank, WarrensburgKimberly Leeper, Mid-Missouri Bank, Mount Vernon; Kelly Hohe, FCNB Bank, Rolla; Collin Thompson, Country Club Bank, Kansas City; Gabe Magnuson, The Bank of Missouri, Bolivar; Cohlby Jones, BTC Bank, CarrolltonAlex Collins, West Plains Bank and Trust Company; Michael Arway, The Hamilton Bank; Mindi Montgomery, First State Community Bank, Fredericktown; Dean Mansur, Community Bank of Pleasant HillClay Johnson, West Plains Bank and Trust Company; Sherry Wideman, Bank of Washington; Ashley Combs, Mid-Missouri Bank, Republic; Cody Honse, Legends Bank, Rolla; Jase Glendenning, Heritage Bank of the Ozarks, Lebanon THE MISSOURI BANKER 25
Around the StateGot Referrals? Missouri Banks Win Big With VendorPRO!Congratulations to FCNB Bank, the winner of the October VendorPRO drawing! Accepting the $500 in MBA education credits is Scott Perkins, president and CEO, and Tommy Murphy, assistant vice president of operations.“We have had one bank reach out to us after finding the BAI referral that we listed,” Murphy said. “We think the platform is an excellent resource.”Congratulations to Ozarks Federal Savings & Loan in Farmington, the winner of the August VendorPRO drawing! Accepting the $500 in MBA education credits is Michele King, CPA, executive vice president and chief financial officer/chief operating officer, and Steve Sloup, president and CEO. King said VendorPRO is a great resource for banks and that she “received an inquiry from another banker who wanted to know about our experience with a particular vendor they were considering as a result of VendorPRO.” Congratulations to TPNB Bank in Paris, the winner of the September VendorPRO drawing! Accepting the $500 in MBA education credits is Kathryn Coon, training coordinator, and Doug Burnett, president/CEO. TPNB Bank added 10 referrals on VendorPRO to be eligible for the drawing.To celebrate the launch of VendorPRO, the Missouri Bankers Association awarded three $500 education credits to MBA members. Banks that entered 10 referrals on VendorPRO were entered into a drawing to win educuation credits. More than 300 vendors have been added to VendorPRO, and there has been 375 referrals. For more information about VendorPRO, visit mobankers.com. 26 mobankers.com
BANCMACCOMMUNITY BANC MORTGAGE CORP.YOUR COMMUNITY BANK MORTGAGE PARTNERbancmac.commortgages@bancmac.com888.821.7729|NMLS# 571147BancMac provides correspondent lending and is your Community Bank Mortgage Partner to help your financial institution originate fixed-rate secondary market loans including:PROGRAMS• Conventional Loans• USDA Rural Development Loans• Rural Living (Hobby Farm) Loans• VA Loans• Jumbo Loans• FHA LoansOUR CORRESPONDENTS RECEIVE:• Superior Service & Competitive Pricing• No Minimum Volumes• Significant, Non-Interest Fee Income• Non-Solicit Protections & MoreNot a question of if, BUT WHEN...800.982.6564 | www.MyMBIS.comCYBER CRIME, FRAUDULENT ONLINE BANKING PROTECTION & BANK TRANSFERSyour source for vendor peer referrals onlinePowered by the Missouri Bankers Association, VendorPRO creates a pipeline for peer-to-peer vendor referrals online. Search for vendors by name, category or keyword. Add referrals in seconds.Connect with fellow bankers to share vendor insights —VendorPRO makes it easy!vendorpro.mobankers.comyour source for vendor peer referrals onlinePowered by the Missouri Bankers Association, VendorPRO creates a pipeline for peer-to-peer vendor referrals online. Search for vendors by name, category or keyword. Add referrals in seconds.Connect with fellow bankers to share vendor insights —VendorPRO makes it easy!vendorpro.mobankers.com THE MISSOURI BANKER 27
AchievementsAround the StateLyndi Carnelison was promoted to marketing ocer at Branson Bank. Carnelison implements the bank’s overall strategic initiatives, oversees the daily management of the marketing department and drives marketing initiatives. She joined the bank in 2006 and held several roles within the bank before joining the marketing department in 2008.First Bank of the Lake in Osage Beach named Keith Monson its executive vice president, chief risk ocer. He is responsible for risk assessment and reporting, coordinating activities with outside auditors and bank regulators and overseeing other key components of First Bank of the Lake’s corporate compliance program. Monson has more than 30 years of banking experience.Will Cologna was promoted to rst vice president of digital banking with QCR Holdings Inc., parent company of Guaranty Bank in Springfield. His most recent role was vice president of operations and security, where he was responsible for implementing strategic initiatives for security, branch operations and facility management. A graduate of MBA’s Banking Leadership Missouri program, Cologna has been with Guaranty Bank for 23 years and in banking for 26 years. Dalton Day was promoted to commercial banking ocer. He previously worked in the credit department at Guaranty Bank as a credit analyst and has been in the banking industry since 2016. Blake Sobieralski was named a commercial banking ocer for Guaranty Bank. He has more than 18 years of banking experience. Drew Roy joined the commercial banking team as assistant vice president, commercial banking ocer. Located in Neosho, Roy focuses on business development in Joplin and the four-state area. Lyndi CarnelisonMegan Wall joined MRV Banks in Ste. Genevieve as its newest accountant. Her responsibilities include making journal entries and assisting with board reports and nancial statements. She has three years of accounting experience.Cody Hansen was promoted to executive vice president and chief credit ocer for OMB in Springfield. He joined the bank in 2019 as a senior vice president and credit review manager and was promoted in 2021 to senior vice president and chief credit ocer. Hansen, who was a bank examiner for more than 12 years with Missouri Division of Finance, has nearly two decades of banking and nance experience. Peoples Bank in Cuba promoted Kendra Livengood to teller supervisor. Livengood previously was a teller/deposit counselor. Will Cologna Dalton DayBlake SobieralskiKeith MonsonDrew RoyMegan WallCody HansenKendra LivengoodASSOCIATE MEMBERSJohn Turner joined Midwest Independent BankersBank in Jefferson City as a senior vice president/chief operations ocer. He began his career in 1987 as a bank examiner in Illinois and served in examination, audit or risk management roles within Illinois and the Federal Reserve Bank of Chicago for more than 20 years. He then spent nearly 15 years with a bankers’ bank, where he was responsible for managing the core deposit banking system. Adam Wyrick was named vice president of compliance and risk management of Midwest Independent Bancshares Inc. in Jefferson City. Wyrick has more than 20 years of experience in the nance industry. He began his professional career as a compliance auditor with the Missouri Department of Transportation before joining the banking industry in 2011, where he served as a commercial credit analyst and compliance ocer. John Turner Adam Wyrick28 mobankers.com
GOVERNMENT RELATIONSMEMBER SERVICESMBA VEBACOMPLIANCE SERVICESEDUCATIONFederalState2023 MBA HIGHLIGHTSop-eds on Credit Card Competition Act & Capping Credit Card Interest Rates Act highlighted the detrimental effects to consumersparticipants in Target Banker visits216 bankers participating in MBA’s 5 schoolsbankers participating in education & training programsbanks participating in conferences, seminars, webinars$1M+ cumulative donations to Segs4Vets since 2009launched VendorPRO website exclusively for MBA-member banks in June 2023375 referrals 308 vendorsdozens of bank reviews conducted by staffintroduced four worksite voluntary productsgroups purchase at least one MBA insurance product 38991961000+MBA’s Washington Visit attendees7 bills supported by MBA passed into law2 of those bills driven by MBA membership: new ATM penalty provision and clarification of credit card lending lawdefeated legislation to expand credit union field of membership1502,031your source for vendor peer referrals onlinecompliance bank questions answered THE MISSOURI BANKER 29
P.O. Box 57Jeerson City, MO 65102mobankers.comPERIODICALDIARYDIARYDIARYDIARY2024 School of Banking