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The Time for Asset Recycling is at Hand!

Submitted content by Tom Evans, CFA, Senior Consultant with HUB | Taylor Advisors, a Division of HUB Financial Services, a WBA Associate Member.

Liabilities have dominated the Net Interest Margin (NIM) equation since the Fed started the most aggressive hiking cycle in a generation. Traditional interest rate risk simulations broadly understated the repricing nature of funding and liability sensitivity within balance sheets. As short-term rates escalated, liability repricing broadly outpaced longer-duration assets. A shifting Fed policy with rate cuts to close out 2024 has provided welcomed reprieve on the short end of the yield curve. Rationality has largely returned to deposit competition and funding costs are coming under control, with many banks seeing interest expense stabilize and start to decline. This article will break down the NIM for each side of the balance sheet and emphasize why bankers need to shift their focus to assets in order to sustain and expand NIM through the coming quarters.

The Liability Story
Since the onset of the hiking cycle, funding costs escalated by ~200bps within the first six quarters of the cycle (Figure 1). Old and new competition emerged to challenge the traditional bank deposit market, including money market mutual funds, US Treasuries, brokered deposits and other FinTech alternatives. Technology and the ease of transferring balances did no favors for bankers, with liquid, safe, high-yield alternatives just a few clicks away. Customers willfully exercised deposit optionality in their favor as rates increased to the detriment of bankers’ NIMs.

 

Source: S&P Capital IQ

The good news is that 100bps of rate cuts helped to bend funding cost curves. The bad news remains multifaceted: rates are still elevated, many deposits remain at-risk earning well below market-rate alternatives, and many banks are slow to invest in deposit technology and products to meet evolving customer needs. Over a long enough time horizon, cost of funds should converge with Fed funds. Further funding cost pressure is a lingering risk for NIMs, albeit less pressing than in prior years.

The Asset Story

To keep pace with 200bps of higher funding costs within 6 quarters, banks would need ~40% of assets to reprice in a similar time period. The truth is that many bank assets were tucked away into longer duration loans and investments to achieve some semblance of a return during the zero-interest rate environment. As rates escalated, customers within these loans and investments willfully ignored their optionality, preferring to savor the benefits of below-market coupons and foregoing any prepayments. Asset duration and repricing extended beyond initial expectations.

The good news is that time is the ultimate remedy for interest rate risk, and time is beginning to tilt in bankers’ favor. Figure 2 details the 5-year US Treasury over the last 5.5 years. Historically, the 5-year tenor on the Treasury curve is a widely used benchmark for the majority of asset pricing, with the most common loan being a 5-year fixed rate loan priced at a spread of 250-300bps, broadly speaking.

 

Source: Bloomberg

Using that spread as a benchmark, 5-year fixed rate loans refinanced/originated in 2020 and 2021 likely priced off of a 70bps 5-year Treasury. Odds are these assets can be recycled at maturity/repricing from coupons in the 3.25-3.75% range (+/-) to current market rates ranging from 6.5-7% (+/-). Similar duration investments made during that same time range were purchased at even tighter spreads, with roll-off yields potentially ranging from 70bps to 2.5%. The next six quarters of asset cash flow recycling will likely be THE key determinant of NIM performance, similar to the first six quarters of liability recycling to start the rising rate cycle.

Opportunity to Optimize the Asset Mix
As bankers eye a potential wave of asset recycling, now can be the ideal time to optimize the asset mix. At HUB Financial Services, we talk a lot about asset mix, selection and pricing, with mix being the primary driver of earning asset yield performance. Bankers should be planning a roadmap for asset recycling, understanding the unique cash flows within their loans/investments and targeting the optimal asset mix and selection allocations. Additionally, key risk positions must be considered, including:

  • Liquidity:
    If investment cash flows are recycled into the loan portfolio, how will this impact the level of on-balance sheet liquidity in the future? What strategies can be evaluated to free up investment collateral for lending and liquidity?
    How will this asset recycling opportunity impact future secured borrowing capacity at the FHLB and the FRB? Are banks being strategic about pledge-ability within lending?
  • Capital:
    How will concentration risk be managed if the bulk of lending opportunities continue to be in sectors with higher regulatory scrutiny (i.e. C&D and CRE)?
    How will shifts within assets impact risk-based capital metrics (i.e. low risk-weighted investments recycled into higher risk-weighted loans)?
  • Interest Rate Risk:
    Given lessons learned from 2022-2024, how can asset duration be managed better moving forward? What types of loans might complement the interest rate risk profile?
    What other tools can be implemented to manage interest rate risk within new loan production or for the entire balance sheet?

HUB Financial Services’ Take:
The time for asset recycling is at hand! Those institutions that have strategically planned for asset optimization and addressed their risk positions will be best suited to capitalize on this opportunity. Stable to growing loan portfolios should see outsized NIM benefits for the coming quarters. Customer optionality should not be ignored. Those risks that cannot be controlled within the balance sheet should be evaluated for off-balance sheet management. Derivates can be a tool for bankers to buy back optionality and protect the NIM for the next interest rate risk stress test.

An Associate Member of WBA, HUB Financial Services provides consulting and advisory services in the areas of ALCO, capital, liquidity, interest rate risk and investments to community-based financial institutions throughout the country. To learn more, visit www.tayloradvisor.com or contact Tom Evans at tom.evans@hubinternational.com and Brett Walburn at brett.walburn@hubinternational.com.

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What Cybersecurity Framework Is Right for You?

Sponsored content by Wipfli LLP, a WBA Silver Associate Member.

By Pedro J. Pinto, CISA, Manager

Cybersecurity is vital to any organization that deals with sensitive data, especially financial institutions. Cyberattacks cause significant losses, reputational damage, regulatory fines and legal liabilities for financial institutions.

Therefore, it is essential to have a robust and comprehensive cybersecurity strategy that aligns with the organization’s business objectives, risk appetite and regulatory requirements.

One way to achieve this is to adopt a cybersecurity framework that provides a structured and consistent approach to managing cybersecurity risks, implementing best practices and measuring performance. Common benefits of implementing these frameworks include:

  • Enhancing the security and resilience of information systems and assets.
  • Reducing the likelihood and impact of cyber incidents.
  • Establishing a common language and understanding of cybersecurity risks and controls.
  • Improving the communication and collaboration among stakeholders, including regulators, auditors, partners and even customers.
  • Facilitating the continuous improvement and adaptation of cybersecurity practices.

Common cybersecurity frameworks

Several cybersecurity frameworks are available today, each with its own scope, objectives and methodology. This table lists some details about the most common frameworks used by financial institutions:

Organization  Framework  Benefits  Features 
National Institute of Standards and Technology (NIST)  Cybersecurity Framework (CSF)  Provides a common language for understanding, managing and expressing cybersecurity risk.  Consists of five core functions: identify, protect, detect, respond and recover. 
Federal Financial Institutions Examination Council (FFIEC)  Cybersecurity Assessment Tool (CAT) 

  

 Helps banks assess their cybersecurity preparedness.  Consists of a series of assessment statements to determine an institution’s inherent risk and cybersecurity maturity. 
National Credit Union Administration (NCUA)  Automated Cybersecurity Evaluation Toolbox (ACET)  Helps credit unions assess their cybersecurity preparedness. 
Center for Internet Security (CIS)  Critical Security Controls (CSC)  Provides a prioritized set of actions for improving cybersecurity posture.  Consists of 20 critical security controls for effective cyberdefense. 
Financial Services Sector Coordinating Council (FSSCC)  Cybersecurity Profile  Provides a scalable and efficient approach for financial institutions to assess and manage cybersecurity risk.  Consists of diagnostic statements to determine an institution’s cybersecurity risk and maturity level. 

Which cybersecurity framework works best for your institution?

Any of these frameworks would do the job, but the question remains: Which one is best for your institution? Here are some considerations to help you choose:

1. Regulators

As regulators are the ones who ultimately have the final say on the adequacy of your institution’s cybersecurity preparedness, it is important to understand their expectations. The FFIEC CAT has been the standard used by banks and credit unions. In 2019 the NCUA published an updated assessment tool (ACET) specific to credit unions, though CAT and ACET are very similar.

In 2019, the FFIEC published a press release encouraging institutions to use a standardized approach to assess and improve cybersecurity preparedness and listed several frameworks that could be used for that purpose, signaling that the adoption of other standards, including industry-agnostic ones, was acceptable. In addition to the CAT/ACET, the list included the FSSCC Cybersecurity Profile, the NIST Cybersecurity Framework and the Center for Internet Security (CIS) Controls.

In 2023 the OCC published Bulletin 2023-22: Cybersecurity Supervision Work Program (CSW). They made it clear that institutions could use any framework they chose, but that the new program would more closely align with the NIST CSF.

2. Third-party providers

Another consideration is your third-party providers, especially if they play a more hands-on role in your institution’s cybersecurity. In some cases, the provider will help you complete the cybersecurity assessment, so it’s worth considering what frameworks they are familiar with so they can better help you or better understand requests you may have for improving certain controls.

3. Leadership

One consideration that sometimes gets overlooked is how the results from assessments can be reported. Depending on the level of comfort your board of directors and leadership team have with more technical information, it might be beneficial to choose a framework that provides the information in a more easily understandable format.

4. Internal teams

Lastly, it is important to consider who in your organization will be responsible for performing information security and cybersecurity assessments. This individual or team needs to be comfortable with the framework and understand its components to make it truly useful to the institution and not just a “checkbox” report to provide to regulators and auditors once a year.

Consider using one of the many risk management platforms available today. These platforms allow you to choose one or more frameworks as the basis for your information security and cybersecurity risk assessments and are automatically updated if the frameworks themselves are updated.

How Wipfli can help

Choosing and implementing a cybersecurity platform is essential to the long-term health and well-being of your financial institution, and our team of dedicated cybersecurity professionals can help put you on the path to long-term peace of mind. From selecting and refining a strategy to measuring performance, we’re with you every step of the way to help keep your data secure and your workflow safe. Learn more about our cybersecurity offerings.

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Understanding the RMD Delay: What Retirees Need to Know

Submitted content by Lisa Haberman, Ed.D., QKA, ChFC, CLU,  with Ascensus, a WBA Associate Member

The SECURE 2.0 Act has brought significant changes to retirement planning—especially for retirees aged 72 and older. One of the most significant updates is the delay for retirees to take required minimum distributions (RMDs), which now begin at age 73 (age 75 in 2033). While this offers flexibility, it also introduces new challenges that retirees should understand.

What are the Key Issues Retirees Are Facing?
Let’s take a closer look at the concerns retirees are facing when it comes to taking RMDs.

  • Distribution Confusion. RMDs must be calculated and taken separately from each employer-sponsored retirement plan (e.g., 401(k) plan). Aggregation of RMDs is allowed only for individual retirement accounts (IRAs)—not for 401(k) plans or other employer-sponsored retirement plans.
  • Tax Timing Risks. Account owners who delay taking their first RMD until April 1 of the following year (their required beginning date) will take two distributions in one calendar year, potentially pushing them into a higher tax bracket.
  • Penalty Tax Exposure. While the penalty tax for missing an RMD has dropped from 50 percent to 25 percent (and even 10 percent if corrected timely) of the amount that should have been distributed but was not, the tax consequences remain.
  • Spousal and Beneficiary Complexity. New rules affect how spouse beneficiaries and successors handle inherited assets, including the introduction of “hypothetical RMDs” and the 10-year payout rule.

Are There Certain Planning Strategies that Retirees Should Consider?
Effective management of RMDs now requires not only careful timing and adherence to distribution rules but also the integration of proactive tax strategies in order to optimize retirement income and minimize unnecessary tax burdens. Here are a few examples for participants to consider.

  • In-Plan Roth Rollovers (IRRs). An IRR allows individuals to roll over non-Roth assets in a 401(k) plan, 403(b) plan, or governmental 457(b) plan to a designated Roth account under the same plan. Although the taxable portion of the IRR will be included in the individual’s gross income for the year of the rollover, designated Roth account assets are no longer included in RMD calculations, so completing an IRR before reaching RMD age may provide more flexible tax-free income during retirement.
  • Rolling Over Assets to a Roth IRA. Similar to an IRR, rolling over assets to a Roth IRA before reaching RMD age may help individuals avoid paying taxes in retirement. Pretax assets that are rolled over from a retirement plan to a Roth IRA are taxable in the year of the distribution. Plan participants who choose to roll over pretax assets to a Roth IRA should consider their total taxable income during the year and whether it is in their best interest—tax-wise—to do so.
  • Qualified Charitable Distributions (QCDs). Although not available to plan participants, QCDs allow IRA owners age 70½ and older to satisfy RMDs without increasing their taxable income. Plan participants interested in taking a QCD may want to consider rolling over their retirement plan assets (if eligible) to a Traditional IRA before they reach RMD age.

What Can You Do Now to Help Your Clients?
Here are a few practical steps that you can recommend to clients to help secure their financial future.

  • Review retirement account balances and confirm their RMD start date.
  • Consult with a financial advisor to model their distribution strategy.
  • Stay informed through IRS updates and trusted financial education sources.
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Six Steps to Strengthen Your Financial Institution’s Call Report Preparation Process

Sponsored content by Wipfli LLP, a WBA Silver Associate Member.

By Danielle M. Damon, CIA, Manager

How much time does your financial institution spend on its call report each quarter? If yours is like most, the answer is probably a considerable amount.

Based on to data collected by the Treasury, Federal Reserve and FDIC, banks typically invest anywhere from 39 to 44 hours to complete and file a call report.

When it comes to preparing a call report, process matters. Inefficient, poorly documented or overly complex processes can hinder your work and, worse, make it difficult for regulators or auditors to understand how the reported figures were derived.

Meanwhile, a structured, transparent and well-documented approach can significantly improve both your accuracy and efficiency. Keep reading to learn how to strengthen your call report process to deliver better results.

Why structure matters

A standardized structure forms the foundation of a repeatable and reliable process. If you have a clear process to follow, you can do so again and again while usually getting a consistent outcome.

Using a standardized structure can also be a significant time-saver. Not needing to reinvent the wheel each quarter will often cut down on the amount of time you need to invest in your call report, making the underlying work less grueling for your team.

One effective approach is to integrate core-generated reports into a spreadsheet workbook that maps general ledger and other data points using basic formulas. This allows the underlying data to change each quarter while maintaining a transparent and consistent framework.

The value of transparency

Call report instructions require institutions to retain supporting workpapers for three years. Including references to core or vendor reports in your mapping enables reviewers to quickly trace data points to their sources. Retaining your calculation workbook alongside referenced reports and documents strengthens support for internal and external reviews and also serves as a valuable training tool for new staff.

Improving your call report process doesn’t have to be overwhelming. Here are several practical steps to enhance accuracy, efficiency, and transparency:

1. Assess current processes

Conduct a thorough review of your current preparation process. Identify steps that are overly complex or require multiple data sources. Look for items where manual adjustments to core reports are required.

Then ask why these complexities exist. Do you really need such an intricate approach, or are you doing things a certain way because that’s how it’s always been done?

If it’s the latter, explore alternatives. For example, if multiple reports are used to gather the same data, consider whether a consolidated report could be built to reduce manual effort.

2. Standardize templates and mapping

Develop standardized call report templates that include mapping and report references. This will require an investment upfront, but it will improve accuracy and reduce the preparation time for future call reports.

3. Balance technology with transparency

While automation tools can streamline reporting, many automation tools create a “black box” effect, where manual or other adjustments are masked by the automation. As a result, auditors or examiners may struggle to verify your call report data.

Here, you should strive to strike a balance between leveraging technology and maintaining visibility into the process. When considering automation, think about who needs to understand your call report and whether automation might hinder their ability to do so.

4. Invest in training and development

Provide regular training for staff involved in call report preparation. Stay current with changes in reporting instructions, regulatory requirements and accounting standards.

You should also be sure to incorporate any updates into your current process.

5. Commit to continuous improvement

Strengthening your call report process is not a one-and-done task. The tools you have available to work with are constantly changing, so allow your workflows to change with them.

As technology and data availability evolve, regularly evaluate your tools and processes to identify opportunities for improvement.

6. Enhance documentation practices

Create a checklist to track required documents to make sure you have everything you need to start.   Your checklist will also help ensure all referenced materials are retained with the calculation workbook.

As a result, you will be more prepared for audits and exams and more be able to effectively transfer knowledge.

How Wipfli can help

Making the investment to update your call report process will not only make it more efficient and easier on your team, it will also enhance accuracy, improve audit readiness and support knowledge transfer for new hires or successors. By investing in structure, transparency and continuous improvement, your financial institution can turn a burdensome task into one that’s more streamlined and reliable.

Wipfli helps financial institutions to improve processes, strengthen performance and stay audit-ready. Ask our team of advisors and former industry professionals how you can do more with your existing resources in order to boost your results. Learn more here.

Read more:

Back to basics: Fiduciary account reviews

The rise of the fractional COO: A strategic solution for financial institutions

4 challenges financial institutions have that can be solved with finance dashboards and financial reporting software

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Be Ready for the Fedwire Funds Service Migration to ISO 20022

Sponsored content by Wipfli LLP, a WBA Silver Associate Member

By Michelle Bader, Internal Auditor

Big changes are coming to financial messaging, and preparation is key. On July 14, 2025, the Fedwire Funds Service will officially transition to the ISO 20022 format, replacing the legacy Fedwire Application Interface Manual (FAIM). This update will put the U.S. in line with more than 70 countries that have already adopted the ISO 20022 messaging standard. To help ensure a smooth transition, financial institutions must take steps now to prepare their systems, train their teams and minimize disruptions. 

Why ISO 20022 matters 

Switching to ISO 20022 isn’t just about keeping up with global standards; it comes with distinct benefits for financial institutions, including: 

Better data quality: More structured and detailed data reduces errors and improves transparency. 

Increased efficiency: Standardized messaging simplifies payments and reconciliation. 

Improved compliance: Granular data makes it easier to meet regulatory requirements like AML and OFAC screening. 

Seamless global transactions: Aligning with international standards helps facilitate cross-border payments. 

Steps to prepare 

All financial institutions must be ready to send and receive ISO 20022 messages starting July 14, 2025. Here’s how to help ensure a successful transition: 

Staff training and education 

Your team will need to understand the new message formats, including: 

  • pacs.008 (customer credit transfers) 
  • pacs.009 (financial institution credit transfers) 

The Federal Reserve offers training sessions, quick reference guides and hands-on practice opportunities to help institutions master the updated system. Training is available through June 25, 2025, on the Federal Reserve’s website. 

System testing and validation 

Testing is essential to help ensure a smooth rollout. 

Financial institutions should use the depository institution test environment (DIT2) to: 

  • Simulate real transactions with other institutions. 
  • Verify message formats and template accuracy ahead of the deadline. 

Additionally, the MyStandards readiness portal offers sample messages and test cases to help institutions confirm compliance before the transition. 

Contingency planning 

Even with proper preparation, unexpected challenges can arise. Financial institutions should develop backup strategies, such as: 

  • Alternative transaction methods through correspondent banking arrangements. 
  • Manual wire processing as a fallback option. 

Attestation and compliance 

To keep operations running smoothly, the Federal Reserve requires institutions to submit attestations verifying their migration readiness via the FedPayments Manager – Funds application. 

Resources for a successful migration 

For updates, live drop-in sessions, FAQ, and preparation checklists, visit the Federal Reserve’s ISO 20022 Implementation Center. 

How Wipfli can help 

The transition to FedFunds Service ISO 20022 can feel overwhelming. Wipfli specialists are ready to help. Our team has extensive background and knowledge in financial system upgrades and can guide institutions through the migration with tailored solutions. These include strategic planning, training and operational support, testing and validation assistance, compliance and risk management, and contingency planning and troubleshooting. 

With Wipfli in your corner, your institution can transition to ISO 20022 smoothly and confidently, reducing risks and helping to ensure operational stability. Contact our risk advisory services team to discuss how we can help. 

Read on for more content on compliance risk and financial institutions: 

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2025 Housing Market Insights: What Financial Institutions Need to Know

Sponsored content submitted by QRL Financial Services, a WBA Associate Member.

The U.S. housing market is experiencing a significant shift that directly impacts mortgage lenders, banks, and financial institutions. Rising inventory levels, evolving buyer behavior, and increasing expired listings are reshaping how institutions approach mortgage origination, pricing strategy, and customer engagement.

At QRL Financial Services, we’re closely monitoring these trends to help our partners across the financial industry navigate the current landscape with clarity and confidence.

📊 Inventory Growth Signals a Market Shift

For the first time since late 2019, active listings have surpassed one million homes nationwide. After several years of historically low supply, the residential market is showing meaningful signs of rebalancing:

– Inventory is growing year-over-year across most regions.
– The South and West are now above pre-pandemic inventory levels, while the Midwest and Northeast remain below.

This influx of supply creates expanded opportunities for lenders but also introduces new challenges for pricing models, underwriting, and borrower expectations.

🏦 Impacts on Lending: Affordability Meets Supply

While elevated mortgage rates continue to weigh on demand, the increase in supply introduces a silver lining—a more balanced market with greater negotiating power for buyers.

However, affordability remains a persistent headwind:

– The long-standing housing supply deficit persists despite recent inventory growth.
– At the current rate of absorption, it would take over seven years to fully close the housing gap (Realtor.com estimate).

For financial institutions, this dynamic means borrowers remain price-sensitive, rate-conscious, and increasingly focused on flexible loan products that help overcome affordability barriers.

💰 Seller Psychology & Pricing Disconnects

A widening gap between seller expectations and buyer realities is impacting transaction velocity:

– 80% of sellers believe they’ll receive their asking price or more.
– Yet, 40% of homes sold for less than the asking price.
– Roughly one-third of sellers had to reduce their asking price.

This growing disconnect has operational implications for lenders and servicers, including longer origination cycles, increased appraisal challenges, and the need for refined borrower education.

🔍 The Expired Listings Surge: A Market Stress Indicator

One of the clearest signals of today’s transitional market is the surge in expired listings:

– Expired listings are up 17.6% year-over-year.
– Projections suggest this could approach 20% growth by year-end.
– Homes sitting longer and failing to sell are triggering higher cancellation rates.

For lenders, this dynamic signals potential volatility in pipeline management, with loans falling out mid-process or requiring extended rate lock management.

🔑 Key Takeaways for Financial Institutions

– Prepare for Extended Cycles: Rising days on market mean longer timelines from application to closing, requiring adjustments to rate lock policies and pipeline forecasting.
– Recalibrate Borrower Expectations: With sellers still pricing on outdated comps, borrowers need coaching on realistic purchase prices, concessions, and negotiation strategies.
– Focus on Solution-Oriented Lending: Creative financing solutions, adjustable-rate products, and down payment assistance programs may be more critical than ever in combating affordability concerns.
– Revisit Risk Models: The uptick in expired listings, combined with broader inventory shifts, calls for a reassessment of pricing risk, valuation models, and market exposure.

🤝 QRL Financial Services: Your Secondary Market Partner

At QRL Financial Services, we specialize in providing correspondent banks with the tools, insights, and liquidity solutions needed to thrive in complex mortgage markets. Our focus remains on helping partners adapt, scale, and serve their customers effectively—no matter the market cycle.

Let’s Connect. If your institution is looking to navigate the challenges and opportunities of today’s market, QRL Financial Services is ready to collaborate.

Advertisement for credit. Restrictions may apply. Not all applicants will qualify. Terms and conditions apply. Nothing herein is or should be interpreted as an obligation to lend. Loans are subject to credit and property approval. Equal Housing Lender. First Federal Bank NMLS: 408902, 4705 W US Highway 90, Lake City, FL 32055

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Phishing, But Make It AI: Why You’re More Likely to Click — And What to Do About It

Submitted content by Errica Padgett,  Operations Manager / vCISO Senior Advisor, Bedel Security, A WBA Associate Member

Remember the phishing emails of yesteryear? Misspelled words, weird formatting, maybe a Nigerian prince or two?

Those days are over.

Today’s phishing scams are being written by AI — and they’re dangerously convincing. They’re grammatically perfect. Emotionally persuasive. Tailored to your industry, your role, maybe even your recent LinkedIn post.

In short: you’re more likely to click, download, or reply — and that’s exactly the problem.

What makes AI phishing so effective?

  • Flawless writing: No typos, no weird phrasing — just polished, professional-sounding emails.
  • Personalization at scale: AI can generate custom messages that match your tone, industry lingo, and typical requests.
  • Speed: Attackers can generate hundreds of unique phishing emails in seconds, each tailored to trick a specific type of user.

A recent report showed click rates on AI-generated phishing emails were much higher than traditional phishing. That’s not a typo — and those clicks? They lead to malware downloads, credential theft, and full-blown breaches.

How to protect yourself (and your institution)

  1. Don’t trust the tone — verify the sender
    AI can mimic your colleague’s writing style. Always double-check the actual email address or contact info.
  2. Slow your scroll
    Scammers count on you being busy or distracted. Hover over links. Ask: Does this make sense?
  3. Treat attachments like they’re radioactive
    Even if the file name looks familiar, confirm it’s real before opening. Especially Word, Excel, or ZIP files.
  4. Train regularly — and make it real
    Simulate AI-style phishing in training exercises. People need to see what modern scams look like to build that mental muscle.

Bottom Line
AI didn’t invent phishing — it just made it faster, smarter, and harder to spot. But the solution isn’t panic — it’s preparation.

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Safe Internet Browsing Tips to Keep Your Bank Secure Online

By Alex Hinsch, Technical Account Manager, Locknet Managed IT, A WBA Associate Member

Community banks in the Midwest are increasingly targeted by cybercriminals due to their limited IT resources, making them vulnerable to phishing attacks, malware, and data breaches. Implementing secure web browsing practices across the workforce can be one effective tool to help protect your organization. Below are essential tips to safeguard your organization from cyber threats.

Understanding Secure Web Browsing

Secure web browsing involves practices that protect corporate information, privacy, and data from cyber threats like phishing scams, malware, and data breaches. By adopting these strategies, community banks can mitigate risks and ensure a safer online environment for their operations.

Top Ten Safe Internet Browsing Tips for Community Banks

1.  Implement a secure web gateway: Secure web gateways filter malicious websites, prevent access to dangerous content, and block malware, serving as the first line of defense against online threats.
2.  Educate employees on phishing and social engineering: Regular cybersecurity awareness training can help employees identify suspicious emails, avoid clicking on unknown links, and verify website authenticity before entering credentials.
3.  Enforce strong password policies and Multi-Factor Authentication (MFA): Use strong, unique passwords for each online account and enable multi-factor authentication (MFA) for all business accounts to add an extra layer of security.
4.  Use secure and updated browsers: Ensure that all company devices use the most secure internet browsers with automatic updates enabled. Opt for browsers with built-in security features and options to block suspicious websites.
5.  Restrict access to risky websites: Implement content filtering policies that restrict employee access to high-risk websites, including those associated with gambling, adult content, and pirated software.
6.  Deploy endpoint security and antivirus software: Equip all company devices with reputable antivirus software that includes real-time scanning, web protection, and automatic updates to detect and block cyber threats.
7.  Encourage the use of Virtual Private Networks (VPNs): For remote employees or those working from public Wi-Fi networks, use a company-approved VPN to encrypt internet traffic and prevent hackers from intercepting sensitive data.
8.  Limit administrative privileges: Grant administrative access only to essential personnel to minimize the risk of malware installation and unauthorized changes to security settings.
9.  Monitor and log web activity: Regularly monitoring employee web activity can help identify potential security risks. Use web filtering solutions and endpoint security platforms to track internet usage and detect suspicious behavior.
10.  Establish a clear internet usage policy: A well-defined internet usage policy sets expectations for employees regarding safe web browsing habits, outlining guidelines on acceptable website usage, prohibited activities, and consequences of violating security protocols.

Final Thoughts on Secure Web Browsing

Implementing these safe internet browsing tips can significantly reduce the risk of cyberattacks. Prioritizing secure web browsing protocols, employee education, and proactive security measures can go a long way in protecting your bank. Foster a culture of cybersecurity awareness to create a safer digital environment for employees and customers alike.

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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

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Should I Be Reinvesting in My Bond Portfolio?

By Todd Taylor, CFA, CPA and Sasha Antskaitis, CFA managing partners with HUB Financial Services, a WBA associate member.

With investment yields currently well-above their 5- and 10-year averages, many financial institution executives are asking this question. In this article we discuss important considerations that can help provide clarity relating to investment strategies in the current environment:

Spread to Cash. For all of 2023 and 2024, the average spread between the Fed effective rate (cash yield) and the 5-year Treasury (investment proxy) was negative 99 basis points. It was more difficult to find additional income in investments vs. cash without taking on some level of risk. Today, the spread is straddling zero +/- 10 basis points. With various investment options trading at +30 to +120 bps spread to Treasuries, investors can now find meaningful income pick up vs. cash to help widen overall margins. Similarly, with lower short term funding rates, it is no longer punitive to temporarily utilize non-core sources to fund reinvestment activity.

Anticipated Loan Demand. If net new loan demand is expected to be robust, there may not be a lot of cash flow available for deployment in the investment portfolio. However, if loan demand is slowing or is being managed to a slower pace intentionally due to capital, concentration and/or liquidity constraints, reinvesting cash flow could be warranted.

Liquidity Profile. When evaluating the liquidity position, it is important to consider current excess cash in the overnight account, along with wholesale funding availability/dependency, large depositor makeup, and pledging needs. Institutions with elevated wholesale funding dependency and higher asset liquidity ratios may choose to reduce non-core funding levels with incoming investment cash flow, especially if capital ratios are constrained. Alternatively, institutions with ample funding capacity should evaluate reinvesting excess cash in the bond portfolio.

Interest Rate Risk. Institutions with clear asset sensitive exposures (i.e., large cash positions) could consider certain types of investments as a balance sheet hedge against a prolonged declining rate environment. Executives should be very intentional selecting investments with various degrees of call protection. It is also wise to evaluate other strategies to help reduce this risk, including derivatives.

Fed Funds Rate vs. Yield Curve. When thinking about “rates” it is important to understand that just because the Fed Funds Rate is decreasing, like it did during the second half of 2024, it does not mean yields across all points of the yield curve are also decreasing. Specifically, the Fed cut the Fed Funds rate by 100 bps between 9/18/24 and 12/31/24, but the 5-year Treasury yield increased by 90 bps during the same timeframe. For those expecting a strong correlation, this created seemingly unexpected volatility in market values.

Current Unrealized Loss and AOCI. Significant Fed Funds rate increases in 2022-23 caused Treasury yields to spike, leading to bond price declines. For financial institutions, the unrealized loss of the AFS portfolio resides in the AOCI account, which reduces book/tangible equity. This is an important consideration when evaluating additional investments that could layer in additional AOCI impact. Depending on the future shape of the yield curve, investments with some duration added today could help reduce the unrealized gain faster (if the yield curve moves lower) or could further increase the unrealized loss (should the yield curve move higher). No one can confidently predict interest rates. Therefore, if the risk of additional unrealized loss is a material balance sheet concern, institutions can consider shorter duration investments, including those with variable rate coupons.

Long Term Investment Strategy Focus. For most institutions, the investment portfolio represents a meaningful earning asset. Therefore, managers should employ a strategic approach to portfolio management. This means principles such as dollar cost-averaging, sector allocation, and yield curve positioning should be viewed from a longer-term perspective. “Chasing yields” and frequent/significant churning of the portfolio can negatively impact returns for years to come.

Utilize Portfolio Management Principles. Individual securities within a portfolio can perform differently in several rate scenarios. It is the whole portfolio performance that should be ultimately evaluated. Investments should be monitored for strategic repositioning opportunities to rebalance the portfolio given changes in market conditions.

HUB Financial Services’ Take:
Navigating the current fixed-income landscape presents a complex challenge for community banks. Prevailing yield curve dynamics and liquidity conditions offer ambiguous signals, requiring careful deliberation regarding portfolio reinvestment strategies. The considerations outlined above provide a framework for this analysis. However, each institution’s specific circumstances, including capital adequacy, liquidity requirements, and prevailing market conditions, necessitate a tailored approach. Consequently, access to robust internal or external investment and balance sheet management expertise is critical. This expertise facilitates a holistic investment strategy, aligning portfolio construction with distinct institutional objectives and needs, ultimately driving enhanced performance and mitigating the risk of suboptimal investment decisions.

An Associate Member of Wisconsin Bankers Association, HUB Financial Services provides consulting and advisory services in the areas of ALCO, capital, liquidity, interest rate risk and investments to community-based financial institutions throughout the country. To learn more, visit www.tayloradvisor.com or contact Todd Taylor at todd.taylor@hubinternational.com and Sasha Antskaitis at sasha.antskaitis@hubinternational.com.

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608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

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