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Archive for category: Resources

Compliance, News, Resources

Regulation CC Threshold Adjustments

By Scott Birrenkott

Every five years, the agencies amend Regulation CC to adjust for inflation dollar amounts relating to availability of funds. In May of 2024, FRB and CFPB issued a final rule amending Regulation CC with new adjustments. The effective date for the threshold adjustments is July 1, 2025. However, banks are permitted to implement those changes sooner if so desired.

To summarize the inflation adjustments:
• The first $225 becomes $275.
• Reg CC requires the first $100 of a deposit made by check be made available on the next business day. This “first $100” rule was adjusted to $200 in 2011, to $225 in 2020, and becomes $275 in 2025.
•  The $450 for non-next day items becomes $550.
• Reg CC provides that cash withdrawals from local and non-local checks need not be available for cash withdrawal until 5:00 p.m. on the day specified in the schedule, but at least $450 of the deposit must be made available for cash withdrawal before 5:00 p.m. This amount becomes $550.
• Note that this $550 is in addition to the $275 available pursuant to the requirements above.
•  The $5,525 of the “large deposit” exception hold, “new account” amount, and the repeatedly overdrawn threshold becomes $6,725.
• Reg CC permits an exception hold on large deposits in excess of $5,525 which becomes $6,725.
• Reg CC permits funds to be held for new accounts in excess of $5,525, which becomes $6,725.
• Reg CC permits when an account is repeatedly overdrawn for funds to be held in excess of $5,525 which becomes $6,725.
•  As of July 1, 2025, the amounts for civil liability in an individual action shall not be greater than $1,350 and $672,950 for class action.

Change in terms notification to customers will be required as well. Reg CC requires notice to customers at least 30 days before implementing a change to the bank’s availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation. Because the threshold adjustments mean that more funds are available to the customer sooner, the change will expedite availability. Thus, customers must be notified of

Birrenkott is the WBA director – legal

May 19, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Dark-Blue-on-Light-Blue.jpg 972 1921 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-05-19 07:27:462025-05-19 07:27:46Regulation CC Threshold Adjustments
Member News, News, Resources

Association Update: New Fraud Summit in June to Address Evolving Threats

By Daryll Lund

Fraud in the financial services industry is constantly evolving, becoming more sophisticated and harder to detect. As fraud risks continue to grow, Wisconsin banks have made it clear that they need more tools, insights, and strategies to stay ahead. In response to these concerns, the Wisconsin Bankers Association (WBA) is introducing a new, one-day Fraud Summit on June 3, 2025, where banking professionals will gather to tackle fraud — one of the most pressing challenges in the industry. This one-day event will explore the latest fraud trends, emerging threats, and innovative strategies to protect financial institutions and their customers.

This event is the result of direct conversations with our members, who have shared their increasing challenges in protecting customers, accounts, and internal systems from fraud. Through this summit, bankers will hear from industry experts on emerging fraud trends, regulatory developments, and best practices for safeguarding their institutions.

WBA remains committed to providing meaningful education and resources that help banks navigate the complexities of today’s financial landscape. The WBA Fraud Summit is just one way we continue to respond to our member’s needs — ensuring Wisconsin banks have access to the latest knowledge and tools to combat fraud effectively.

Other support for members comes from Midwest Bankers Insurance Services (MBIS). MBIS provides assistance and full review of FI Bond and Cyber Liability applications to confirm and discuss internal controls to prevent fraud. MBIS VP of Sales, Jeff Otteson, recommends that banks work closely with their FI Bond and Cyber Liability broker to thoroughly understand the current vulnerabilities and how they can be eliminated with strong internal controls, best practices, and employee training.

More details on the Fraud Summit, including the agenda and speakers, will be shared with members soon. We look forward to offering this new opportunity to help banks stay ahead in the fight against fraud.

For help strengthening your fraud prevention efforts and assessing fraud risk contact Jeff Otteson, MBIS VP of Sales via email at jeffo@mbisllc.com or call 608.217.5219

Lund is WBA executive vice president – chief of staff and president of EBC and MBIS.

May 14, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Blue-on-Lime-Green.jpg 972 1920 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-05-14 08:30:202025-05-14 08:30:20Association Update: New Fraud Summit in June to Address Evolving Threats
Member News, News, Resources

Executive Letter: Staying Ahead Together — New Member Resources on Emerging Industry Issues

From the Desk of Rose Oswald PoelsBy Rose Oswald Poels

Staying ahead of the curve is a constant priority for our industry — and it’s one the Association takes seriously. WBA is committed to evolving alongside you, offering timely programming that addresses the most pressing issues facing Wisconsin’s banks. Your input drives our work, and our latest offerings reflect both your concerns and your need for accessible, relevant resources.

On April 21st, WBA hosted Fraud Trends & Prevention Strategies, a free webinar presented by Paul Benda, Executive Vice President for Risk, Fraud, and Cybersecurity at the American Bankers Association. From the alarming rise in check fraud to the growing impact of artificial intelligence and deepfakes, Benda provided valuable insights and practical approaches to an increasingly complex threat landscape. His real-life example of the ease in which deep fake recordings can be created with the help of AI was chilling.

Not only did Benda trace the history and predict the trajectory of fraud, he shared how banks can stay one step ahead of bad actors by taking advantage of available resources and working cooperatively with other financial institutions. In addition to covering relevant data and best practices, Benda described advocacy efforts to mitigate fraud. In Wisconsin WBA saw several wins on that front in the last session and will continue to push for legislative change to protect customers.

Member feedback has been overwhelmingly positive. If you missed it — or would like your team to review the material — the recording and slides are available for members for the next 30 days. Please email wbaeducation@wisbank.com to request those resources.

Recognizing that fraud remains a top concern, WBA is expanding on this topic with a new WBA Fraud Summit, scheduled for June 3, 2025, in Wisconsin Dells. This in-person event will bring together industry experts and banking professionals to explore trends, share ideas, and identify strategies to strengthen fraud defenses. We hope members of your team will plan to attend. Click here to learn more and register.

Additionally, we are pleased to offer another no-cost educational webinar: Crypto in 2025: What You Need to Know, presented virtually on Thursday, May 8 from 10:00–11:00 a.m. CT. Brian Laverdure, ICBA’s SVP of Digital Assets and Innovation Policy, will provide a clear-eyed perspective of the regulatory outlook, the evolution of stablecoins, and emerging risks associated with crypto-related illicit finance. Click here for more details.

As always, I appreciate your engagement with WBA programs and services. Our education team is focused on delivering programming that meets your needs and supports your bank’s continued success.

April 24, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2024/12/Executive-Letter-Thumbnail.png 720 1280 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-04-24 08:09:332025-04-24 08:09:33Executive Letter: Staying Ahead Together — New Member Resources on Emerging Industry Issues
News, Resources

Navigating an Uncertain Rate Environment

Sponsored content by BOK Financial Capital Markets, a WBA Gold Associate Member

By Kent Musbach, senior vice president, and Marc Gall, senior vice president and asset/liability strategist, BOK Financial Capital Markets

Originally predicted to be a year of falling rates, rate-cut expectations have since come down considerably and some analysts are even anticipating that the Federal Reserve could hike rates at some point in 2025. Meanwhile, most financial institutions have outsized risk exposure one way or another—but this can and should change. We believe that beginning to fix the institution’s balance sheet mismatch now makes sense versus waiting for the Fed.

Rather than asking which way certain rates will move and by how much—a question that’s impossible to answer at this point—decision-makers at your financial institution instead should be asking: What can we do now that will be most impactful regardless of what the rate environment brings? The answers lie in your institution’s loan portfolio and deposit strategies.

Have an ‘all-weather’ strategy for 2025

Given that many institutions have outsized exposure to interest rate changes, it’s crucial to address these risks early in the year. The first step is determining whether your institution is adequately positioned for the current rate environment. Many community banks have faced challenges due to the rapid rise in interest rates over the past few years and are still not fully prepared for this environment. As rates are not expected to fall dramatically in the near term, unless there is a severe economic slowdown, institutions in this position should reassess their deposit pricing strategies to ensure they are competitive yet profitable.

If your institution is well-positioned for the current rate environment, there is still work to be done. It’s time to reassess your institution’s balance sheet in light of the ongoing uncertainty, preparing for both upward and downward rate movements to mitigate risk and maximize returns. Remember that decisions made now can set the tone for the entire year, making early action essential.

Fortunately, your institution doesn’t have to recreate the wheel when approaching this “all-weather” strategy; rather it’s just a matter of optimizing what your institution is already doing. This includes:

  • Maximizing loan yields: Institutions should focus on obtaining the highest possible yields on loan renewals without losing business. This involves securing better rates and terms and not giving away revenue unnecessarily.
  • Determining the most optimal deposit pricing: Getting deposit pricing right early in the year is crucial for driving revenue and improving margins.
  • Making strategic investments: Given the significant changes to the yield curve over the past few months, institutions must evaluate their options for deploying cash and reinvesting. Investing in securities with favorable yields and durations can help institutions manage their interest rate risk and improve overall returns.
  • Staying informed of economic changes: The Fed’s focus on inflation and employment will play a crucial role in determining future rate movements. Decision-makers at your financial institution should stay informed about these trends and adjust their strategies accordingly. Similarly, it’s important to understand what drives consumer spending and government spending, as these factors can significantly impact the country’s economic outlook and influence the strategies that financial institutions should adopt.

Finally, although the uncertainty surrounding changes in presidential policies and resulting economic impacts may seem more pronounced this year, it’s important to keep in mind that your institution has handled uncertainty before. By focusing on balance sheet management, optimizing loan and deposit strategies, and staying adaptable to economic changes, institutions can position themselves for success in the coming year. This includes taking a proactive approach and leveraging the current rate environment to your advantage rather than merely reacting to the changes as they occur.

Kent Musbach is a senior vice president and Marc Gall is a senior vice president and asset/liability strategist for BOK Financial Capital Markets.

Contact BOK Financial Capital Markets at 866-440-6514 to discuss the latest economic outlook and tailored solutions. We can help guide a unique, well-conceived strategy that considers many variables and potential outcomes.

The opinions expressed herein reflect the judgment of the author(s) at this date, and are subject to change without notice. The information provided has been obtained from sources believed to be reliable, but not guaranteed. Forward‐looking statements contained herein are based on current expectations and the economy in general, and are not guarantees of future performance. Likewise, past performance is not a guarantee of future results.

BOK Financial® is a trademark of BOKF, NA. Member FDIC. Bank dealer services offered through BOK Financial Capital Markets, which operates as a separately identifiable department of BOKF, NA. BOKF, NA is the bank subsidiary of BOK Financial Corporation. Investment products are:  NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

April 23, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Dark-Blue-on-Light-Blue.jpg 972 1921 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-04-23 08:02:502025-04-23 08:02:50Navigating an Uncertain Rate Environment
Compliance, News, Resources

Executive Letter: New Section 1071 Proposed Rule Expected Soon

From the Desk of Rose Oswald PoelsBy Rose Oswald Poels

In court filings last week involving the Bureau of Consumer Financial Protection’s (CFPB) Section 1071 rule, the CFPB stated that staff have been instructed to initiate new rulemaking to possibly replace or change the current rule. While I do not know yet what specific changes CFPB has planned for its new rulemaking, I am very pleased to have learned of this news as WBA has been vocal in our objections and concerns of Section 1071 since it was first proposed in the fall of 2021. In addition, last week the House Financial Services Committee voted on April 2 to approve H.R. 976, which would repeal Section 1071 in its entirety.

The Dodd-Frank Act directed CFPB to adopt a regulation to require banks to collect certain lending data from small businesses. This provision of the Act, Section 1071, was first implemented in March 2023 through amendments to Regulation B which implements the Equal Credit Opportunity Act (ECOA). The original effective date of the 2023 final rule was August 29, 2023, with rolling mandatory compliance dates ranging from October 1, 2024, to January 1, 2026, based upon loan origination activity.

Due to litigation by lenders challenging the rule, the mandatory compliance dates for the Section 1071 rule were extended by CFPB on June 25, 2024, through the issuance of an interim final rule. In February, the Fifth Circuit granted a stay in the ongoing litigation which further tolled the compliance dates for financial institutions that are also members of the trade associations involved in the lawsuit.

In the past, when I have been asked by members whether the bank should work to implement the requirements of Section 1071 despite the ongoing litigation and our industry efforts to rollback or eliminate the rule, my recommendation has been for banks to continue their efforts to meet the revised mandatory compliance dates for the rule. However, given the change in the Administration, the litigation status, last week’s movement of repeal legislation and news of a new proposed Section 1071 rule, I believe banks should take a temporary pause pending the outcome in one or more of these actions.

The industry has challenged the Section 1071 rule on all fronts over the years – through legislation, regulation, and judicial action. While a new proposed rule is not yet published, WBA will advocate for the elimination of a requirement to collect any data beyond that expressly provided for under the Dodd-Frant Act. WBA will also advocate for CFPB to revise the definitions of “covered financial institutions” and “small business” to raise both thresholds within. WBA is also continuing its legislative advocacy this week while we are in Washington D.C. with a banker delegation as part of ABA’s Washington Summit for the full repeal of Section 1071, encouraging continued support of H.R. 976.

WBA will continue to keep members apprised of these various changes regarding Section 1071 as they occur. If you have any questions regarding Section 1071, be sure to reach out to WBA Legal at wbalegal@wisbank.com

April 10, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2024/12/Executive-Letter-Thumbnail.png 720 1280 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-04-10 06:24:312025-04-10 06:24:31Executive Letter: New Section 1071 Proposed Rule Expected Soon
Community, Education, Resources

Executive Letter: Strengthening Financial Literacy in Our Communities

From the Desk of Rose Oswald PoelsBy Rose Oswald Poels

For banks, promoting financial literacy has always been a focus and a year-round responsibility. Every April, during Financial Literacy Month, these efforts take center stage as our industry highlights its role in supporting the financial well-being of individuals and businesses in our communities.

Promoting financial literacy and capability to the public is the mission of the Wisconsin Bankers Foundation (WBF), and WBF proudly partners with banks statewide to expand financial education to people of all ages and increase consumer empowerment in the financial services industry. WBF’s annual scholarships for Wisconsin students and the valuable research on Banconomics.com are just a few of WBF’s impactful programs.

To underscore WBF’s commitment to education and equipping individuals with the knowledge needed to make informed financial decisions, a curated collection of digital financial education resources are available on the WBF website for bankers to leverage in their efforts to assist customers and community members. These digital resources are available for use not only in April, but year-round.

Another key financial education resource, produced as a collaboration by WBF and WBA, is the extensive library of downloadable consumer content PDFs with engaging infographics and timely tips. Member banks are encouraged to share this content with customers on topics ranging from smart shopping ideas to avoiding mail-related check fraud.

WBF also provides banks with complimentary Reading Raises Interest Kits, which include a book along with supporting documents and a reference to additional resources available online to use as part of Teach Children to Save Day (April 24). This year’s book, “Rock, Brock, and the Savings Shock” written by former FDIC Chair Sheila Barr, is geared toward elementary school classrooms.

Both ABA and ICBA also offer online resources to support your bank’s financial literacy efforts.

As your team engages in financial literacy initiatives—whether through classroom visits, community outreach, or participation in WBA’s Power of Community Week (April 21–26)—I encourage you to document these efforts by completing the 2024–2025 Financial Education Summary Forms (due May 31, 2025). While many bankers contribute their time and expertise without seeking recognition, compiling this information helps WBA and WBF advocate on behalf of the industry, demonstrating to policymakers and the public the essential role banks play in financial education.

April 3, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2024/12/Executive-Letter-Thumbnail.png 720 1280 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-04-03 07:44:202025-04-03 07:44:20Executive Letter: Strengthening Financial Literacy in Our Communities
Compliance, Resources

May a Person Use the Name, Logo, or Symbol of a Bank in Marketing Material?

By Scott Birrenkott

Not if it is deceptive. More specifically, Wisconsin law provides, in summary, that no person may use the name, logo, or symbol of a bank, or such that is deceptively similar to that of a bank, in any marketing material provided to another person in a manner that a reasonable person may believe that the marketing material originated from the bank.

From time to time, potentially deceptive letters circulate among bank customers, causing frustration and confusion. WBA is aware that such deceptive letters have recently been circulating once more. These letters often take the form of mortgage relief offers, solicited by individuals unassociated with the bank. When these letters violate Wisconsin law, such as by misrepresenting their nature as being associated with a bank, WBA recommends reporting them to the Wisconsin Department of Financial Institutions (DFI). DFI has enforcement authority over such letters, including the ability to issue cease and desist orders, and penalties. For this reason, banks that encounter such letters are encouraged to contact WBA and DFI.

Banks should also be mindful of the customer service aspect of such letters. Even when reporting letters, and even if a letter is not deceptive, banks will likely still receive complaints from their customers. In such situations, banks might consider discussing with their customers how and when it will issue correspondence. This way, customers can easily identify what originates from the bank. Additionally, banks might consider discussing this matter with their customers at time of loan closing so they can be better prepared to identify these letters as not originating from the bank. By preparing customers ahead of time, banks can potentially curb some confusion and frustration resulting from these letters. To assist with this matter, WBA’s Mortgage Lending Committee has prepared a sample letter which can be used for these purposes.

Tangential to this matter, WBA has also become aware of many Wisconsin loan applicants receiving numerous unsolicited offers for credit and insurance after submitting a loan application. The volume of offers has greatly increased during the past couple years given the overall slowdown in mortgage loan activity due to rising interest rates and the low inventory of homes for sale. Customers become upset due to the number of offers received and because some believe the bank shared their nonpublic information. The WBA Mortgage Lending Committee has also created a customer awareness letter in this regard to alert loan
applicants upfront of the effect of prescreening under FCRA.

Both letters are available through WBA’s best practices library. If you need assistance accessing the WBA best practices library, or if you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or wbalegal@wisbank.com

Birrenkott is the WBA director – legal

March 27, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Dark-Blue-on-Light-Blue.jpg 972 1921 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-03-27 07:42:182025-03-27 07:42:36May a Person Use the Name, Logo, or Symbol of a Bank in Marketing Material?
Member News, Resources

Association Update: Your Input Matters — Participate in the 2025 Wisconsin Banking Salary & Benefits Survey

By Daryll Lund

As Wisconsin banks continue to navigate workforce challenges and shifting compensation trends, having access to reliable, industry-specific salary and benefits data is more important than ever. To help our member banks stay competitive and make informed decisions, the 2025 Wisconsin Banking Salary & Benefits Survey is now open for participation. WBA is once again partnering with MRA.

In 2024, 80 banks participated in this survey resulting in comprehensive salary and benefit reporting and salary and wage information being available for 115 different jobs! Questions regarding incentives, general/merit increases, employee benefits, board members, bank turnover, and (new this year) remote work are included.

This survey is a vital benchmarking tool, providing insights into compensation structures across the state’s banking industry. By contributing data, banks help ensure an accurate and comprehensive report that reflects real-world trends in Wisconsin. In return, participating financial institutions gain access to the final report, offering valuable information to guide compensation strategies, attract top talent, and retain employees in a competitive market.

Please note, the survey data will only be available for purchase if you participate in the survey.

Survey Benefits:
• Easy-to-understand, usable and meaningful survey data critical for making compensation decisions.
• Wage and salary information for both exempt and nonexempt employees available in a wide range of bank employee positions.
• Summary data about employee benefits for different groups of employees.
• The MRA Dynamic Online Reporting Tool gives you the exact information you need when you want it

The survey is now open and we strongly encourage your bank to participate. The survey report will be available for purchase upon publication in the summer of 2025. WBA will notify survey participants via email when the survey report becomes available.

Please contact Miranda Gustafson at mgustafson@wisbank.com with questions about the survey.

Lund is WBA executive vice president – chief of staff and president of EBC and MBIS.

March 25, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Blue-on-Lime-Green.jpg 972 1920 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-03-25 08:17:042025-03-25 08:48:48Association Update: Your Input Matters — Participate in the 2025 Wisconsin Banking Salary & Benefits Survey
Member News, News, Resources

Navigating an Uncertain Rate Environment

Sponsored content by BOK Financial Capital Markets, a WBA Gold Associate Member

By Kent Musbach, senior vice president, and Marc Gall, senior vice president and asset/liability strategist, BOK Financial Capital Markets

Originally predicted to be a year of falling rates, rate-cut expectations have since come down considerably and some analysts are even anticipating that the Federal Reserve could hike rates at some point in 2025. Meanwhile, most financial institutions have outsized risk exposure one way or another—but this can and should change. We believe that beginning to fix the institution’s balance sheet mismatch now makes sense versus waiting for the Fed.

Rather than asking which way certain rates will move and by how much—a question that’s impossible to answer at this point—decision-makers at your financial institution instead should be asking: What can we do now that will be most impactful regardless of what the rate environment brings? The answers lie in your institution’s loan portfolio and deposit strategies.

Have an ‘all-weather’ strategy for 2025

Given that many institutions have outsized exposure to interest rate changes, it’s crucial to address these risks early in the year. The first step is determining whether your institution is adequately positioned for the current rate environment. Many community banks have faced challenges due to the rapid rise in interest rates over the past few years and are still not fully prepared for this environment. As rates are not expected to fall dramatically in the near term, unless there is a severe economic slowdown, institutions in this position should reassess their deposit pricing strategies to ensure they are competitive yet profitable.

If your institution is well-positioned for the current rate environment, there is still work to be done. It’s time to reassess your institution’s balance sheet in light of the ongoing uncertainty, preparing for both upward and downward rate movements to mitigate risk and maximize returns. Remember that decisions made now can set the tone for the entire year, making early action essential.

Fortunately, your institution doesn’t have to recreate the wheel when approaching this “all-weather” strategy; rather it’s just a matter of optimizing what your institution is already doing. This includes:

Maximizing loan yields: Institutions should focus on obtaining the highest possible yields on loan renewals without losing business. This involves securing better rates and terms and not giving away revenue unnecessarily.

Determining the most optimal deposit pricing: Getting deposit pricing right early in the year is crucial for driving revenue and improving margins.

Making strategic investments: Given the significant changes to the yield curve over the past few months, institutions must evaluate their options for deploying cash and reinvesting. Investing in securities with favorable yields and durations can help institutions manage their interest rate risk and improve overall returns.

Staying informed of economic changes: The Fed’s focus on inflation and employment will play a crucial role in determining future rate movements. Decision-makers at your financial institution should stay informed about these trends and adjust their strategies accordingly. Similarly, it’s important to understand what drives consumer spending and government spending, as these factors can significantly impact the country’s economic outlook and influence the strategies that financial institutions should adopt.

Finally, although the uncertainty surrounding changes in presidential policies and resulting economic impacts may seem more pronounced this year, it’s important to keep in mind that your institution has handled uncertainty before. By focusing on balance sheet management, optimizing loan and deposit strategies, and staying adaptable to economic changes, institutions can position themselves for success in the coming year. This includes taking a proactive approach and leveraging the current rate environment to your advantage rather than merely reacting to the changes as they occur.

Contact Information

Contact BOK Financial Capital Markets at 866-440-6514 to discuss the latest economic outlook and timely considerations. We can help guide a unique, well-conceived strategy that considers many variables and potential outcomes.

bokfinancial.com/institutions

Disclosure

The opinions expressed herein reflect the judgment of the author(s) at this date, and are subject to change without notice. The information provided has been obtained from sources believed to be reliable, but not guaranteed. Forward‐looking statements contained herein are based on current expectations and the economy in general, and are not guarantees of future performance. Likewise, past performance is not a guarantee of future results.

BOK Financial® is a trademark of BOKF, NA. Member FDIC. Bank dealer services offered through BOK Financial Capital Markets, which operates as a separately identifiable department of BOKF, NA. BOKF, NA is the bank subsidiary of BOK Financial Corporation. Investment products are: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

March 10, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Dark-Blue-on-Light-Blue.jpg 972 1921 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-03-10 08:49:162025-03-10 08:49:16Navigating an Uncertain Rate Environment
Compliance, Resources

Contents Coverage for Purposes of Flood Insurance

By Scott Birrenkott

While there are no new requirements regarding flood insurance, examiners have been looking closely at portfolios for flood compliance lately. Specifically, WBA has become aware of some questions arising regarding contents coverage. This article will discuss what the flood rules require for purposes of insuring contents, as well as some important concepts to be aware of.

The requirement of “contents coverage” starts with the general requirement to purchase flood insurance for designated loans. That requirement being that a bank shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan are covered by flood insurance for the term of the loan. “Personal property” in this context will be referred to as “contents” for the rest of this article. Meaning, a bank making a designated loan in a special flood hazard area (SFHA) must also ensure that any contents securing that loan are covered by flood insurance. The rule, in this context, leaves some unanswered questions. Fortunately, the agencies have provided clarification in the form of questions and answers.

In 2022, the agencies issued the revised Interagency Questions and Answers Regarding Flood Insurance (Q&As). The Q&As clarify that when a building and its contents both secure a loan, and the building is located in a SFHA in which flood insurance is available, flood insurance is required for the building and any contents securing the loan. They also clarify that if contents securing the loan are stored in a building which does not secure the loan, then flood insurance is not required on those contents, regardless of whether the building is in a SFHA. The agencies also clarify that both contents and the building will be considered to have a sufficient amount of flood insurance coverage for regulatory purposes so long as some reasonable amount of insurance is allocated to each category. The Q&As provide an example which is helpful in this regard:

Lender A makes a loan for $200,000 that is secured by a warehouse with an insurable value of $150,000 and inventory in the warehouse worth $100,000. The Act and Regulation require that flood insurance coverage be obtained for the lesser of the outstanding principal balance of the loan or the maximum amount of flood insurance that is available. The maximum amount of insurance that is available for both building and contents is $500,000 for each category. In this situation, Federal flood insurance requirements could be satisfied by placing $150,000 worth of flood insurance coverage on the warehouse, thus insuring it to its insurable value, and $50,000 worth of contents flood insurance coverage on the inventory, thus providing total coverage in the amount of the outstanding principal balance of the loan. Note that this holds true even though the inventory is worth $100,000.

It is important to note that when contents coverage is required, a bank must always assign a “reasonable amount” to the contents. This is true even if the building’s value meets or exceeds the minimum flood insurance required. For example, if the facts of the above example were changed so that the insurable value of the warehouse was $200,000, the bank couldn’t assign $200,000 to the warehouse alone and leave the contents uninsured. It would need to be divided in a reasonable amount among both the warehouse and the contents.

In the commercial and agricultural setting, it is common within the industry for banks to take a security interest in property which includes contents. Because of this, it’s important to be aware of the language within a bank’s security agreements, and what it covers, so that the bank is able to meet flood insurance requirements. If a bank does not wish to take contents as collateral to avoid flood insurance implications, it could consider disclaiming the collateral. In this case, the bank should also consider the implications of disclaiming collateral from a loan policy standpoint, understanding that such decisions have broader implications on the security of the loan beyond just flood insurance rules. The Q&As can be found here: https://www.fdic.gov/sites/default/files/2024-03/fil22020a.pdf

Birrenkott is the WBA director – legal

January 15, 2025/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Dark-Blue-on-Light-Blue.jpg 972 1921 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2025-01-15 08:00:082025-01-15 08:00:08Contents Coverage for Purposes of Flood Insurance
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