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by Kas Stewart, SVP & AAP ISO20022 It is difficult for me after these many months of including ISO2022 as a hot topic to continue to think that it is hot, but it is!  I open every article with more information about ISO20022, and this article is no different.  Although the targeted implementation day of March 10, 2025, has been postponed until July 14, 2025, the transition to ISO20022 continues to move forward.  We are restricted from sharing the actual format with you, but The Quick Reference Document from the Federal Reserve provides a look at some of the changes in format and terminology that you will be seeing.  The Bankers Bank continues to prepare, test and be ready for this notable change for you and your customers.  Readiness extends beyond the wire format and includes readiness of internal and external systems that support wire transfers, upstream and downstream and client facing systems that support wire transfer operations. We have previously discussed recurring wires and  your ability to copy old wires.  All wires are maintained on our system for 10 years for your reference, but you will not be able to copy those old wires as they are in the old format. Every payment made from July 14 and going forward will be a new payment.   The existing wire system will have an orderly close on the implementation date, at 7 PM, EST. Your staff  should make certain that all incoming and outgoing wires have been processed and that there are no wires “pending” prior to that close.  This new format will be faster, more efficient and will standardize the US with other global payment systems.   The Treasury Department will only accept ISO20022 structured data starting July 14, 2025. Please call us if you have questions or concerns. FASTER PAYMENTS FedNow, the first new payment rail in 50 years, is growing. This product was launched in July 2023 with thirty-five participants and has now grown to more than 1,000. Many participants are currently only receiving entries. Financial institutions are being encouraged to be innovators, increase your return on investment, provide more and better customer service and garner some revenue. The system is very efficient and automated, which ends the need for staff to be on the clock and all you need to do for those benefits is enable the send side of FedNow. If you are considering FedNow or the send capability in FedNow, begin to target users, be selective as not all customers will have a need. Look for minimal risk opportunities like your own loan disbursements, or your vendors, real estate transactions, or insurance claim distributions. Fed continues to waive their monthly fee of $25; transaction fees are $.045; and a request for payment is $.01. Please call us if we can answer other questions or can help you in any way.  CHANGES TO POSTAL MONEY ORDER The U.S. Postal Service is redesigning money orders and enhancing security features. Ink on the new money orders is red and blue with an American flag and an eagle head. There will be a watermark that is only visible when held up to the light, a vertical security thread only visible when held up to the light and a QR code that is directed to the USPS website. The USPS is not revealing all security marks, but money orders are among the most secure instruments in the world. The USPS routing number will be changed to 0000-0119-3. Be sure your system will be able to process the updated routing number. This design will be available to the public in early 2025. SAVINGS BONDS Financial institutions now have the option to not cash savings bonds for both non or new customers. Bonds can be cashed for established customers (12 months). Customers can also be referred to Treasurydirect.org for both purchase and redemption of bonds.

by Miles Pringle, EVP & General Counsel Dwight D. Eisenhower once said: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”  While banks are required to have a strategic plan, examiners are quick to note that there is no one “best” approach. Instead, regulators focus on the reasonableness of the plan’s assumptions. Their assessments consider many factors such as a bank’s personnel resources, geography, financial resources, and operating circumstances. Sound strategic planning is crucial to successful performance in the face of uncertainty and change.   According to the FDIC Examination Manual, examiners should consider the following when assessing the adequacy of the strategic planning process:  How formal is the bank’s planning process compared to the bank’s business model, risk profile, size, and complexity?  Were the right people involved? The board? Middle management?  Is the plan based on realistic assumptions regarding the bank’s present and future financial condition, market area(s), and competitive factors?  Does the bank monitor actual performance against its plan?  Does the bank consider alternative plans in response to changing conditions?   Some banks may be able to internally develop a satisfactory strategic plan. With that said, community banks need to do more with less, and comply with many other regulatory requirements, so strategic planning may be a good project for which to seek outside help. This start to a new year might be a good time to consider current strategic planning processes.  A good strategic plan will forecast internally (e.g., what people do we need?) and externally (e.g., what are our competitors going to do?). The plan should set your bank’s goals and describe how to measure those goals. Generally, a 3–5-year plan is best. Shorter plans are likely less ambitious and will not move the bank. Longer plans can delay necessary changes and will be less useful in later years because it is harder to predict the future the further out one goes.  Finally, and most importantly, strategic plans should be dynamic, not static. When assumptions prove wrong, they should be revised. When goals are accomplished, or become less important, they should be revised. A strategic plan is not a script, it is a tool to prioritize goals for success and avoid risk. As stated by the great Benjamin Franklin, “By failing to prepare, you are preparing to fail.” Make sure to talk to TBB about your strategic planning needs. We have resources that can help with your planning, including PRINGLE® Strategic Plans for Community Banks.

In addition to being Board Chairman for The Bankers Bank, Clayton Lodes is CEO at First National Bank & Trust of Ardmore, OK. He is a CPA, and practiced public accounting for over 20 years before joining 1NB in 2002. Clayton has served on the TBB Board since 2018, and also serves on the REI Oklahoma Board of Directors in Durant. He and his wife, Bebe, enjoy volunteering for several civic and charitable organizations and especially enjoy spending time with their three children and five grandchildren. Q: How has your term as Chairman been? A: My time as Chairman has been very rewarding.  Communication between the Board and Management Team is excellent, and I could not be more pleased with the progress we have made this year.  Our strategic planning meeting was effective and initiatives from that meeting are well underway.  Operations are running smoothly, and we are on track for another record earnings year.   Q: What do you value most about TBB? A: TBB has been a strategic partner of First National Bank & Trust Company of Ardmore for many years.  Our bank uses a significant number of products and services offered by TBB and have found them to be of very high quality, competitively priced with outstanding customer service.  The management team and staff work closely with many banks and a variety of vendors, so they are a valuable resource for us as we navigate a changing environment. Q: What do you see for TBB in the future? A: TBB is highly respected by the banking community in our market area and is also considered an innovative leader among correspondent banks across the country.   We are constantly developing and enhancing products and services needed in the industry.  Our innovative team continues to cultivate relationships and provide solutions for other correspondent banks.   As a result, our market area and client base are expanding.  With a clear vision and this high performing team, I believe TBB is well positioned for continued growth in the future Q: Do you have any advice for fellow bankers? A: If you are not familiar with all the new products and services offered by TBB and its subsidiaries, (TBS) The Bankers Solution and (FIT) Forward in Technology, you should give them a call.  You will be glad you did. Q: What activities do you enjoy outside of banking? A: Enjoying quality time with family and friends is on the top of my list of favorite activities. I also enjoy almost any outdoor activity including fishing, hunting, shooting sports and an occasional sky-diving excursion with other old bankers. Q: Any other message for TBB customers and shareholders? A: TBB has not only been a tremendous financial investment for our bank, but it has also been an invaluable resource for our management team!  If you are looking for a solution, make TBB your first call!

by Miles Pringle, EVP & General Counsel You may have seen news in early September that social media videos (largely on TikTok) were showing people exploiting a “glitch” in Chase Bank’s ATM system. The error allowed customers of Chase Bank to write a check for more money than they had available, deposit the check via ATM, and then withdraw the funds in cash. Not long thereafter, Fidelity Investments reduced mobile deposit limits for certain customers, citing a similar scheme. These are examples of new forms of check kiting.   There have been other concerns regarding check fraud as well. Earlier this year the American Bankers Association and the U.S. Postal Inspection Service announced a joint effort “to combat the rapid rise in check fraud, which has increased nationwide by 385% since the pandemic, according to the U.S. Treasury Department. Check fraud schemes commonly target the U.S. mail to steal checks, alter or wash them to change the payee and dollar amount, and ultimately steal money from victims’ accounts.” It appears that criminals are replicating keys to mailboxes (such as the blue drop-off boxes) or even creating fake ones in highly trafficked areas.  Checks are a significant form of fraud for a few reasons. One, checks have a slower settlement schedule allowing bad actors to exploit the time lag. Another reason is that they are physical instruments until scanned, so they can be stolen and altered fairly easily. While every payment method can be involved in a fraud, according to NACHA: “Checks continued to be the most problematic payment method.” The reports regarding the demise of checks have been greatly exaggerated, and checks will be an important form of payment for the foreseeable future. While the number of checks written has been declining since 2000, the value of money transmitted via checks has stayed relatively flat since 2012. Thus, as noted by the Federal Reserve in its most recent Payments Study, the average value of every check written is actually increasing (for example from $1,908 in 2018 to $2,430 in 2021).  So, what can banks do? Unfortunately, there is no silver bullet. Instead, banks should take a layered approach. Banks can invest in technology solutions and implement programs for riskier customers like Positive Pay. Knowing your customers, and putting transaction limits around riskier customers, is an important tool as well. Perhaps the best tool is customer education. Banks can make sure their customers know of common fraud schemes in order to avoid them in the first place!

by Kas Stewart, SVP & AAP NUMBER 1: FDIC Signage The FDIC has amended Part 328, Subsection A and B governing the use of the FDIC signage. Compliance with subsection B is required by January 1, 2025. This section, FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status and Misuse of the FDIC’s Name or Logo was approved by the FDIC Board in December 2023.  Compliance with Part 328, Subsection A has been extended to May 1, 2025. This section applies to the provisions requiring (1) the use of the FDIC official sign, official digital sign, and other signs differentiating deposits and non-deposit products across all banking channels, including physical premises, ATMs and digital channels, and (2) the establishment and maintenance of written policies and procedures to achieve compliance. The final rule also establishes a new black and navy-blue FDIC official digital sign. Banks will be required to display the official digital sign near the name of the bank on all bank websites and mobile applications and certain Automated Teller Machines. Details of this change are available on the FDIC website as well as in the Federal Register Notice. NUMBER 2: ISO20022 What is this? The new language of payments. This change will be efficient, fast and will standardize the US with other global payment systems. When is this effective? The Federal Reserve has selected a single day implementation system with all financial institutions converting on March 10, 2025. The existing wire system will have an orderly close on March 7, 2025, at 7 PM EST. The Fed will sunset the current wire format (FAIM) and it will no longer be available. Is Bankers Bank ready? The Bankers Bank has been working diligently on this change, has been certified and is working on other components that lead to full readiness. Getting The Bankers Bank ready for our customers is a key piece of this change, but we cannot do it all. What do I need to do? Act Today! Please inventory upstream and downstream systems that support your wire operations including client facing systems, Office of Foreign Asset Control (OFAC), anti-money laundering, fraud monitoring, accounting, billing, or cash management and Treasury operations. Reach out to those vendors to ensure their readiness.  Where can I get more information?  The Federal Reserve has many resources in the ISO20022 Implementation Center.  Google: Fedline Advantage users get ready for ISO20022 and you will find information on training, the next drop-in online seminar - December 4 (must register), the next testing date - January 25, 2025, and the format.  There are On Demand webinars available on YouTube, A Preparedness Checklist, and an offer to subscribe to On the Wire ISO20022 Newsletter, and of course FAQs.  Most impactful for you! Existing wire templates cannot be copied into this format. Every wire will be a new payment. This applies to wire templates as well as import/upload of files.  NUMBER 3:  Faster Payments This product from the Federal Reserve has now been available for more than a year. The Federal Reserve recently hit another milestone with one thousand banks taking part in FedNow. Oklahoma has 40 financial institutions that have implemented the service. Most users are in the Receive Only category, so adding send capabilities will be a target and goal for you, your service provider, and the Federal Reserve in 2025. The Federal Reserve waived fees for 2024. Most service providers have implemented a fee structure, but many are starting to think about fees for the send side of the transaction. Have you considered what you would charge for a FedNow transaction? Have you discussed this with your core or service provider to see what their plans are? Because FedNow is like a wire: final and irrevocable, should the fee mirror what you charge for a wire? What will your customers expect? Do you have a marketing plan for this product? Is your service provider prepared to offer send capabilities or is that still in development? Have you considered how you will manage the balance in your account if you begin to send? The Bankers Bank is prepared to help with that process by offering a Liquidity Management Tool. Please reach out to your account representative for more details.  The Banker Bank is also a funding agent for Real Time Payments (RTP), and we would be glad to discuss that product with you. RTP has been processing faster payments for five years and can be an added service or an alternative to FedNow.  NUMBER 4 : Multi-Factor Authentication Several years ago, The Bankers Bank stepped away from the ID and password access to our on line product, iWeb, and offered a fingerprint scanner. Time has passed, our industry has changed, and data security and multi-factor authentication has become an industry standard. Use of the fingerprint scanner does not have a sunset date; however please consider moving to an alternate access method. We are reviewing other options, but we currently recommend and support the following two methods: Username/password/IPRestriction/YubiKey Username/password/IPRestriction/Google Authenticator Is Biometric not MFA? Biometric authentication verifies user identity using a piece of “who they are” and would require sophisticated technology to replicate, unfortunately it only compares one authentication factor. The Bankers Bank recommends banks follow the guidance in the FFIEC Statement on Authentication and Access to Financial Institution Services and Systems to perform a risk assessment.  Can I use both Google Authenticator and YubiKey? Absolutely. This decision may be made on a per user level. We want to give banks the flexibility to perform their own risk assessment and choose the best approach for them. How do I set/register my preferred method?  Contact TBB Operations NUMBER 5 : Brokered Deposits On July 30, 2024, the FDIC proposed some changes to Brokered Deposits that would reverse many of the provisions made in 2020 and require changes to relationships established during the past four years. The proposal is intended to strengthen the restrictions to reflect the FDIC’s experience since 2020, narrow the definition of brokered deposits, eliminate “exclusive deposit placement arrangement” and amend the interpretation of the primary purpose exception. If you have not commented on these changes, there is still time as the proposal deadline was moved from October 22 to November 21.

by Kas Stewart, SVP & AAP The Federal Reserve has announced the retirement of Fedwire Funds Offline Services on December 31, 2024. If you do not have a Federal Reserve Account, this change will not affect you. If you are using this service as a contingency wire service for those occasions when a wire is misdirected to your Federal Reserve account, you will need to make alternate arrangements.   The Bankers Bank offers a Federal Reserve Service Provider arrangement that allows us to function as your wire processor and allows you to send, receive and transmit wires using your routing transit number. This does not replace the wire services at The Bankers Bank, it supplements them. When implemented, Federal Reserve wires are redirected to your account at The Bankers Bank. Current wire fees apply, but The Bankers Bank does not charge for this service.   If you would like to learn more about this possibility, please contact your Bankers Bank relationship manager for more details and the agreement that needs to be completed for the Federal Reserve.  Please start this process as soon as possible to comply with the December 31 deadline. ISO20022 You are already receiving information about the Federal Reserve plan to change the existing wire format to ISO20022 on March 10, 2025. Staff at The Bankers Bank has been involved with this project for some time to prepare for  this migration. You may want to inventory systems that support your wire operations and reach out to vendors to ensure their readiness also. Some examples could be Customer facing systems like online banking or mobile payments, cash management systems, compliance screening or fraud monitoring, or accounting and billing.

The Bankers Bank held their 35th Annual Golf Tournament at the Oak Tree Country Club on Monday, June 10th. The weather and course were absolutely perfect! It was great to see so many familiar faces and some new ones too.  A special thank you to our Sponsors as well as the TBB volunteers for their part in making this event a great success. We cannot do it without you! See you next year – June 9, 2025 C Flight: 1st:    Justin Hull, Justin Edwards, Scott Keeney, Brett Windsor 2nd:   Bill Mitchell, Rusty Royal, Gary Valentine, Ross Royals 3rd:   Deke Alexander, John Gosser, Steve McIlhaney, Dustin Bonnett B Flight: 1st:    Mark Poole, Tommy Talley, Ryan Alexander, Mark Warren 2nd:  Bruce Benbrook, Jim Peck, Terry Cook, Chris Conn 3rd:   Shanon Butler, Jason Sheperd, Jon Baggs, Nick Huxman A Flight: 1st:    Manuel Quintero, Robert Garton, Brock Walker, Heston Brown 2nd:  Joe Morgan, Andrew Patterson, Zach Simpson, Calvin Becker 3rd:   Matt Jackson, Garrett Browning, Channing Gruft, Jim Bob Browning Thank you to our Golf Classic Sponsors!

by Kas Stewart, SVP & AAP George Russell “Pat” Kelly 4/29/1933 – 5/26/2024 Pat Kelly began his  banking  career at Liberty National Bank, shortly after graduation from  high school.  He worked there  for 43 years before joining The Bankers Bank, where he continued to call on banks across the state of Oklahoma.  Pat loved his customers and was a strong advocate for all.  Errors or omissions were quickly resolved.  “Don’t follow me, I am slow.”  He hated tickets, so he left early and drove at a speed that was comfortable. Fence posts  “flew” by like telephone poles. Pat loved a good joke, whether he was playing it on someone, or they were playing one on him.  He also liked puzzles, jigsaws, crypto quip and the daily newspaper crossword, which he and his wife, Beverly, worked together – one completing the across words and the other taking the down words. Pat was a cowboy, unafraid and always active. He lived a full life.   There were  stories from the Troop Trains,  baseball and  basketball at OCU with Abe Lemons and Paul Hansen, the “rush” he felt when he decided to try bull riding and then there was racquet ball.  Pat also hosted an annual Gin tournament with some old banker friends at his cabin at Porum Landing, where he (and his partner) held the record at 28-2. Pat will not soon be forgotten as many of us are reminded daily of his words of wisdom: If you are on time, you are late! Take the stairs as long as you can. Never park directly in front of a bank, those spaces are for bank customers. Only one question remains,  if your name is George Russell Kelly, where did “Pat” come from?   Rest in Peace, dear friend.

by Mike Murphy, EVP & Chief Risk Officer Bankers Bancorp’s board is excited to announce the rebranding and relaunch of its audit and consulting subsidiary. The Bankers Solutions (TBS) has been operating for 20 years as Bankers Professional Services, Inc, conducting compliance audits, internal control reviews and other similar services. We are now going to build on that foundation by adding other audit functions and consulting services. We’re also adding to our team to meet the growing needs of community banks in our markets.  In addition to the new area of consulting, we provide a wide range of audits for the lettered regulations from BSA to Reg Z, along with special audits in the areas of ACH, Vendor Management, Funding and Interest Rate Risk Independent Reviews, Internal Control Reports and Director Exams. Our consulting team can help you fill those gaps when key employees leave or you just need additional assistance. We can help you analyze the financial performance of branches or departments; conduct capital, funding or strategic planning; manage your enterprise risk; review your HR services; answer regulatory findings; and monitor and stress test for loan concentrations. The Bankers Solutions team is growing and ready to help you build a better bank. Dustin Loeffler, who has been helping community banks for more than 20 years, continues to manage the audit team and guide compliance programs. Shannon Truax has been in banking for 30 years and is one of our audit managers, specializing in independent testing of Bank Secrecy and Community Reinvestment. Hollie Baker and Christine Reynolds round out our team well – each with more than 15 years of compliance or accounting experience that they can lend to support you in your mission. Two new hires are starting in August: Shannon Tate has over 20 years of operations and compliance experience in banking and will be one of our audit managers.  Jesse Gamboa, who has six years of FI accounting experience, will be a staff auditor. TBS understands the challenges and expenses our industry faces from the burden of increasing regulation. With a deep comprehension of evolving regulatory landscapes, we offer services with experience that is bank specific. I’m excited to lead TBS and its team as we find new ways to sustain community banks while I also continue to serve as TBB’s EVP and Chief Risk Officer. For a free consultation or to visit about your bank’s needs, please contact me or visit www.thebankerssolutions.com .

by Mike Murphy, EVP & Chief Risk Officer As a long-time banker who used to be an examiner, I am sometimes conflicted like the guy with the angel and the devil arguing on each of my shoulders. This is especially true when working with regulators whether during the exam process, filing regulatory reports or even doing a branch application. You can get so frustrated, but then you ask yourself why, and try to look at it from their perspective.  From the Fed’s Commercial Bank Exam Manual, “Regulation and supervision are distinct, but complementary activities. Regulation entails establishing the rules within which banks must operate…Once (the rule is adopted), the Federal Reserve’s supervision process includes monitoring, inspecting, and examining banks to assess whether a bank is in compliance with (those rules).” How many of you have read the sections of the exam manuals that deal with your areas of responsibility at your bank? To aid in gaining that perspective, here are some tips: The bank supervision team is often made up of people who are relatively new to banking. They have not seen everything you have seen in the banking industry, and they certainly do not know your bank like you do. That is why you need to create the narrative – in your minutes, in your policies, your procedures, your credit memos, and your responses to their questions. This does not have to be TLDR (too long didn’t read), but it does need to tell the story you want to tell honestly.  Know your examiners. Each agency now uses a Central Point of Contact approach. This CPC is the one reviewing your quarterly numbers offsite and calling you with questions. If your bank’s team is choosing to try a new product or service, especially one that is out of the ordinary, then call them and walk them through your plan. Give them time to research the matter, discuss it with others and get back to you. Be proactive. Take the time to do an honest and thorough review of the CAMELS components at least annually and certainly before an examination. Know where you stand, where your strengths are and your weaknesses. This process will help you gain a plan on how to address your weaknesses and accentuate your strengths. And again, it will help you tell the story you want the regulators to hear. A final reminder: be kind and respectful to the exam team or your regulator. Follow the golden rule.   If you want to talk with someone confidentially about your exam, regulatory requirements, or something else that might impact your relationship with the regulators, I would be happy to help. Just call me at 405.613.8018 or email me at mmurphy@tbb.bank.

by Kas Stewart, SVP & AAP A breakdown of your bank’s instant payment options ... If you have questions about instant payments or would like to start utilizing FedNow and/or RTP, contact your Calling Officer to schedule an informational call with our team of experts!

On Friday, March 29th, TBB had our Annual Shareholder Meeting. Outgoing Chairman, Evans McBride, commented on the growth and success of TBB during his term on the Board. CEO and President, Troy Appling, was pleased to report that TBB had three record years in a row. Another significant dividend of $20 per share was paid with Bancorp subsidiaries Forward in Technology and Bankers Professional Services, Inc. contributing to the dividend for the second year in a row. We also welcomed new board members Adam Anderson and Mark Poole. Adam Anderson | President & CEO Bank of Commerce, Catoosa, Oklahoma