Florida Banking July 2024

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION WWW.FLORIDABANKERS.COM SEPTEMBER 2020 FBA President and CEO Kathy Kraninger: Shaping the Future THETHMEAMGAZGINAZEINOEF TOHFETFHLEOFRLIDOARIBDANBKAENRSKAERSSOACSISAOTICOIANTIONWWW.FLORIDABANKERS.COM SEPTEMBER 2020 WWW.FLORIDABANKERS.COM JULY 2024

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Editorial & Executive Offices 1001 Thomasville Road, Suite 201 Tallahassee, FL 32303 850-224-2265 www.floridabankers.com Advertising & Production Offices 250 Prairie Center Dr., Ste. 300 Eden Prairie, MN 55344 952-835-2275 www.nfrcom.com For advertising information, contact Erica Nelson Advertising Sales Executive 763-497-1778 Erica@NFRcom.com For reprints or single issues, contact 800-336-1120 Statements of fact and opinion are made on the responsibility of the authors alone and do not imply an opinion or endorsement on the part of the officers or members of FBA. Florida Banking is published 11 times annually with a combined issue in December/January. Subscription price is $50 per year for nonmembers. Postmaster, send address changes to Florida Bankers Association, P.O. Box 1360, Tallahassee, FL 32302. Copyright 2024 Kathy Kraninger President and Chief Executive Officer Florida Bankers Association kkraninger@floridabankers.com Pamela Ricco Executive Vice President and Chief Operating Officer A

THE MAGAZINE OF THE FLORIDA BANKERS ASSOCIATION

VOLUME 39

NUMBER 6 JULY 2024

ON THE COVER 8 - - FBA President and CEO Kathy Kraninger: Shaping the Future CONTENTS 4 - - - - - - - - - Chair’s Message: Excited for the Year Ahead: Our Goals and Priorities 6 ----- President's Perspective: Countering Fraud and Protecting Customers Requires All Hands on Deck 12 - - - - - - - - Trust and Wealth Management: Addressing the Nightmare of Check Fraud in the Trust Industry 14 - - BancServ Endorsed Partner: 16 - - Milestones in Florida Banking 18 ----- Government Relations: How the FBA is Working to Stop Fraud 19 - - - FBA’s 2024 Annual Meeting 26 - - - - - - Personal Transactions 28 - - - - - - - - - - - - - - Kudos 30 - - - - - - - - Upcoming Events 31 - - - - - - Advertising Directory 31 - - - - - - - - - -Did You Know? Data analytics: a foundation of growth for community banks

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Florida Bankers Association pricco@floridabankers.com

Brooke Harrison Publications Director Florida Bankers Association bharrison@floridabankers.com

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Derek Jones Chair

Keith Costello Chair-Elect

Jose Cueto Immediate Past Chair

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On the Cover: FBA President and CEO Kathy Kraninger

Florida Bankers Association: The voice of Florida banking since 1888.

Photos by Colin Hackley Photography, Tallahassee, FL

©istock.com: Butsaya

CHAIR’S MESSAGE

EXCITED FOR THE YEAR AHEAD: OUR GOALS AND PRIORITIES

BY DEREK JONES, FBA CHAIR

I feel honored and excited to begin my year as your FBA Chair. I am grateful for this opportunity to serve our industry and represent my fellow Florida bankers. Thank you to Past Chair Jose Cueto for his leadership and friendship; it is so helpful to shadow former Chairs and to create a network with fellow leaders in preparation for this role. We learn a lot from one another and it is a pleasure to serve together. I have been a banker for nearly 30 years. I started my career with Wells Fargo out in California and then

The FBA is committed to improving its advocacy, education, and engagement efforts. We had the opportunity to learn more about the 2024-27 strategic plan at the recent Annual Meeting, and you can read more about it in this issue of the magazine. This plan outlines goals for streamlining communications, engaging the next generation of banking leaders, and amplifying bankers’ stories and the positive impact banks make in our local communities (among other efforts!). As members, we play a role in the implementation of this strategic plan. The FBA needs our support, and most importantly, our participation. There are many ways to get involved. For example, you could start small by sharing your thoughts through one of the FBA’s mechanisms for collecting feedback. Continue to build and nurture relationships with your local leaders and policymakers. Consider joining a committee to vocalize your ideas and inform the FBA’s plans. When you can, join us for leadership events hosted in your local area. I look forward to all this year will bring for our association and for the Florida banking industry. I am excited to serve alongside Chair-Elect Keith Costello as well as the experienced FBA team. Thanks also to my dedicated team at Wells Fargo for supporting me as I step into this service role. Bankers, mark your calendars for upcoming education events and our joint D.C. fly-in with the California Bankers Association. I hope to see you soon!

was given the opportunity to move to Florida during the Wells Fargo / Wachovia National Bank merger. I am proud to be a Florida banker; I’ve been fortunate to be in places where there has been an opportunity for growth. At the FBA, I have served on the Board of Directors, the Executive Committee, the Audit Committee, and the Government Relations Council. In that time, I have gained an understanding and appreciation for the FBA’s efforts on behalf of banks of all sizes. Our industry took some hard

“AS OUR ASSOCIATION BEGINS THE NEW FISCAL YEAR, WE ARE EXCITED TO IMPLEMENT THE NEW STRATEGIC PLAN, WHICH WILL GUIDE OUR EFFORTS OVER THE NEXT THREE YEARS.”

hits during the 2024 legislative session. Among other challenges, we will continue to speak up about credit union taxation, IOTA, and most importantly, the regulatory overload our industry is experiencing. Of course, advocacy is just one of the FBA’s core pillars. As our association begins the new fiscal year, we are excited to implement the new strategic plan, which will guide our efforts over the next three years. This is an important step in staying relevant in this changing environment and providing value to bank members and the communities we serve.

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PRESIDENT'S PERSPECTIVE

COUNTERING FRAUD AND PROTECTING CUSTOMERS REQUIRES ALL HANDS ON DECK

BY KATHY KRANINGER, FBA PRESIDENT AND CEO

F raud is rampant, and protecting consumers and our institutions from the resulting losses is an escalating problem. In 2023, the FBI’s Internet Crime Complaint Center (IC3) received a record 880,418 complaints with potential losses exceeding $12.5 billion. This is a nearly 10 percent increase in complaints received, and it represents a 22 percent increase in losses suffered compared to 2022. Older Americans are among the most susceptible to these fraudsters, and that means Floridians are a high target

factor authentication; implementing a culture of vigilance inside your organizations; supporting consumer education; and engaging in collaborative partnerships and information-sharing with other financial institutions and law enforcement. On that last piece, some progress has been made in improving services and information-sharing platforms. Let me name a few: • Nacha has approved a new set of rules intended to reduce the incidence of frauds, such as business

group. In 2023, total losses reported to IC3 by those over the age of 60 topped $3.4 billion, an almost 11 percent increase in reported losses from 2022. There was also a 14 percent increase in complaints filed with IC3 by elderly victims. While no reporting captures the full extent of these crimes, the data shows that the trends are heading in the wrong direction. We know all financial institutions are investing in countering this growing issue — and that it is

email compromise, that make use of credit-push payments; • Nacha members are required to submit to the ACH Contact Registry, which has check contacts as well; • ABA Check Fraud Claim Directory provides contact information for banks needing to file a check warranty breach claim with another financial institution;

“FRAUD IS RAMPANT, AND PROTECTING CONSUMERS AND OUR INSTITUTIONS FROM THE RESULTING LOSSES IS AN ESCALATING PROBLEM.”

• The Treasury Department’s Treasury Check Verification System is intended to catch canceled, duplicate or other problematic Treasury checks at the time of presentment; and • The Financial Crimes Enforcement Network’s alert on fraud schemes offers tips for filing Suspicious Activity Reports. FBA was a leader in this space more than two decades ago when we launched Fraud-Net as an information sharing platform for financial institutions and law enforcement. While it is still operating, use of Fraud-Net is down to a trickle. Yet the need for such information sharing remains.

easier for scammers and bad actors to find the vulnerabilities and gaps in our systems than it is for us to mitigate and fill them. In fact, our very human nature makes us the weakest links! Further, we know customers simultaneously expect a frictionless experience and security in their transactions. What is there to do? I wish I could give you a silver bullet here, but we all live in the real world. A multi-faceted approach is key, and everyone has a part to play. Instituting strong security measures, such as multi

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

In conjunction with the Kentucky Bankers Association (KBA), FBA is assessing the future of Fraud-Net. If you were involved in Fraud-Net or have ideas about the current gaps and bankers’ needs to counter fraud, please share your ideas with me or one of the FBA team. As a first step in this effort, FBA is supporting KBA’s second virtual live Fraud Academy, August 6-8, 2024. For more information and to register, visit fraudacademyhq.com. In conclusion, the war on fraud is ongoing, and we need all hands on deck to win. I look forward to hearing from you!

Source: FBI’s Internet Crime Complaint Center (IC3)

Let’s find a way.

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8 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

FBA President and CEO Kathy Kraninger: Shaping the Future

A new day has dawned for the 136-year-old Florida Bankers Association. In November 2023, the FBA welcomed Kathy Kraninger as its fourth CEO, following the retirement of leader Alex Sanchez who’d served the organization for 30 years. Under Kraninger’s leadership, the association has embarked on a new strategic planning process to guide its efforts for the next three years (2024-27). Kraninger was drawn to the association for its engaged membership and the opportunity to work with peers and partners, including the business community, professional service providers and fellow state banking associations. “Throughout the hiring process, I could tell the executive committee and the bankers were very

economic future and opportunity for all?” Kraninger believes her career in public service prepared her for the role. Not only is she accustomed to public scrutiny, having experienced firsthand periods of major upheaval in government history, but she is adept at educating and communicating with stakeholders and constituents. “We have some pretty big challenges with respect to how people perceive banks. There is a lot of opportunity to promote the role bankers play in their communities,” Kraninger said. “We can absolutely make an impact on the public’s perception of the industry if we collectively work on a strategy of communication with the business community, partners and policymakers.”

engaged,” Kraninger said. “Of course, we want an engaged membership that is passionate about advancing the banking industry. I was excited about the opportunity to learn, to leverage the different aspects of this association, and to take it to the next level.” Appointed by four U.S. Presidents to government posts and confirmed by the U.S. Senate, Kraninger has been a trusted counselor and advisor to cabinet members and members of Congress of both parties for decades – focused on problem solving over politics and

The strategic planning process has involved ongoing discussion with the FBA Board, Executive Committee and staff. “Defining and outlining the vision for the FBA’s future has been a rewarding experience. Our team has always worked very well together, but collaborating on how to execute the plan over time has sparked new ideas and creative thinking,” said FBA COO Pam Ricco. The plan outlines three strategic pillars summarizing the FBA’s efforts, which are reflected in the association’s updated mission statement:

“BANKING IS EVOLVING JUST LIKE EVERYTHING ELSE. HOW DO WE ADVANCE FLORIDA’S ECONOMIC FUTURE AND OPPORTUNITY FOR ALL?” — KATHY KRANINGER

outcomes over credit. Her last post in government was as Director of the Consumer Financial Protection Bureau. Prior to joining FBA, Kraninger served as VP of Regulatory Affairs for Solidus Labs, Inc., where she built the fintech startup’s global policy and engagement strategy. Kraninger’s public-policy expertise, management acumen and stakeholder-engagement experience with government, industry and community leaders at the local, state and federal levels made her an attractive candidate. In Kraninger, the FBA Executive Committee found a self-starter with the knowledge and experience to tackle the challenges of the ever-evolving banking landscape and to embrace innovative opportunities. “Banking is evolving just like everything else,” Kraninger said. “How do we advance Florida’s

Through advocacy, education and engagement, the FBA supports Florida bankers in better serving their customers and communities. “We owe our membership insight into the key strategies under our mission and pillars, which are advocacy, education and engagement,” Kraninger said. ADVOCATE The FBA is the voice for Florida bankers, standing for free enterprise and economic vitality. The association’s continued focus on advocacy is about building and maintaining strong relationships with policymakers, regulators and a coalition of allies; defining and promoting positions and policy; involving members and their networks in government Kathy Kraninger, Continued on page 10

WWW.FLORIDABANKERS.COM JULY 2024 — 9

Kathy Kraninger, Continued from page 9

and retention are a big priority for many banks. In response to this input from members, the FBA looks forward to creating new opportunities for rising leaders or “horizon bankers.” It is important for the association to engage the next generation of banking leaders. “We know the value this association brings to our bankers, and so too do our members at the CEO level. We’ve got to invoke the same participation and appreciation in the next generation,” Kraninger said. ENGAGE The FBA strengthens connections for banking professionals with each other and with partners, providing exclusive opportunities for networking as well as leadership and partnership development. Kraninger and the FBA team recognize members’ desire to connect with peers across the state and to discuss challenges faced by institutions of a similar size. The FBA is researching tools that will aid in this connectivity, and has plans to launch an online community platform to allow members to engage in positive, productive discourse. In addition, the FBA communications team is actively working to optimize FBA communications and content tailored to its audiences. “I’m really looking forward to leading the communications team as we facilitate the redesign of the FBA website. As the hub of all things FBA, the refreshed site will provide a dynamic, user-friendly way for members to connect with the association and with each other,” said FBA Director of Communications Suellen Wilkins. “I also look forward to learning more about the many positive changes our members are making in their communities, and to sharing those stories with FBA members, policymakers and the public.” In all things, the FBA team strives to cultivate deeper relationships with its member banks. Kraninger believes it is key for the association to measure and continue to enhance the value of membership. She wants to understand where the association stands with each of its members, recognizing not every institution’s engagement looks the same. Even so, the FBA’s efforts and the success of the strategic plan hinge on the robust support and active engagement of members. “Implementing the strategic plan requires your participation and feedback. As we launch new initiatives and programs, we will be regularly seeking your input so we can move forward together,” Kraninger said.“Join an FBA committee…these groups are ground zero for new ideas and open discussions. We have a need and an interest in hearing from every member who has ideas and perspectives on the FBA’s direction.” Guided by its codified mission, values and strategic pillars, the FBA looks forward to a productive year ahead. “The values of service, integrity and teamwork are all important parts of FBA’s culture, as well as our commitment to doing more and being better every day. We hope we can achieve great things on behalf of Florida’s bankers because we know our members deserve our best,” said Florida Bankers Educational

relations; and increasing support for BankPac. “How are we going to be part of a proactive agenda for the future of Florida?” Kraninger asked. “What we do today has an impact on how successful we are during that two-month period of the legislative session. We’ve got to consistently think about how we want to position ourselves.” FBA Executive Vice President of Government Affairs Anthony DiMarco added, “Our members drive the FBA agenda by sharing how legislation and regulation impact bank operations, communities and customers. We need your responses to calls for action and your stories. Those stories help us identify allies and strengthen our relationships with policymakers.” Kraninger emphasizes local advocacy; it’s important that the FBA tap into existing relationships and connections within its membership. Which members already have relationships with the policymakers and legislators the FBA wants to get to know? This is but one of the ways members are part of the FBA’s advocacy efforts. “If you are disgusted by what’s happening in Washington, you can take action by getting involved in local politics. We have the ability to influence the sphere we’re in. And that all starts locally,” Kraninger said.“Today’s school board member is tomorrow’s state legislator or congressman. Local relationships matter.” EDUCATE The FBA prioritizes education for the banking workforce, delivering knowledge, training and business intelligence to support members. The 2024 27 strategic plan outlines efforts to provide research and data that banks and policymakers need; to improve the public’s awareness of banking’s essential role in economic and community development; to provide signature events and platforms to train and inform banking professionals; and to draw, retain and train the future banking workforce. “The new strategic plan aligns perfectly with our mission to educate and support Florida’s banking professionals. We’re thrilled to roll out enhanced educational initiatives that will empower our members to achieve their career aspirations while better serving their communities,” said FBA Director of Education Marilyn Matherne and FBA Professional Development Coordinator Olga Williams. “Investing in professional growth underpins our commitment to advocacy and education across the state.” Kraninger and the team are looking to members to help inform future education programs. “We need our members to identify those in their institutions who would benefit from our programs, and to share with us the gaps in our training,” Kraninger said. “In what areas do our bankers need more support and opportunities for professional development? We’re also looking for bankers who are interested in teaching or presenting on a topic of expertise to come forward.” Kraninger acknowledges banks need team members with a broad range of skillsets. Personnel recruitment

10 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

FBA'S CORE VALUES

Foundation Director Letty Newton. “We want the work we do to make a difference for those we serve, and a well crafted strategic plan can significantly enhance the impact of our efforts. I look forward to FBA’s next chapter!” Kraninger added: “I am committed not only to getting results, but making sure we get results in the way that all of us want – with buy-in and transparency.”

We act for the good of FBA to deliver value for our members. SERVICE

We hold ourselves and each other to the highest ethical standards. INTEGRITY

Kathy Kraninger is president and CEO of the Florida Bankers Association. She formerly served as vice president of Regulatory Affairs at Solidus Labs, where she led the firm’s regulatory strategy and worked to advance market integrity and responsible innovation in digital asset markets. From December 2018 to January 2021, Kraninger served as director of the Consumer Financial Protection Bureau. She also has served on the Federal Deposit Insurance Corporation Board and the Financial Stability Oversight Board, and as chair of the Federal Financial Institutions Examinations Council. Kraninger’s distinguished public sector career spans senior roles at the Departments of Transportation and Homeland Security, in the Office of Management and Budget, and in the U.S. Senate and the House of Representatives. Kraninger graduated magna cum laude from Marquette University and earned a law degree from Georgetown University Law Center. She is a member of the Pennsylvania and D.C. Bars. She served as a U.S. Peace Corps Volunteer in Ukraine.

We foster true collaboration and support each other to meet FBA’s mission. TEAMWORK

We strive to make a difference for our members, our industry and our State. IMPACT

We challenge each other and ourselves to continuously improve in everything we do. EXCELLENCE

WWW.FLORIDABANKERS.COM JULY 2024 — 11

TRUST AND WEALTH MANAGEMENT

ADDRESSING THE NIGHTMARE OF CHECK FRAUD IN THE TRUST INDUSTRY

BY KENNETH D. PRATT, FBA SENIOR VICE PRESIDENT OF GOVERNMENT AFFAIRS

P icture this… Operations at your trust company are going smoothly. Your trust officers are meeting their internal goals. Your managers have set up your shop to be a well-oiled machine. Even your clients are showing their appreciation for the services you and your trust company provide. All generally seems right in your trust management part of the world…. And then the shoe drops…. [Ring!]

trustworthy to continue to do business with. This nightmare scenario [slightly adapted for dramatic purposes] and many other similar scenarios are waking up trust companies in our state and all across our country to the rising concerns surrounding checking financial fraud. The stealing and washing of checks has been steadily on the rise in the United States, causing the Financial Crimes Network (FinCEN) to issue a nationwide advisory last year, placing financial institutions on high alert regarding

At 8 a.m., you get an urgent call from one of your best clients who was just denied access to teeing off at his country club because their membership has not been paid. And the admonishment happened in front of his golf buddies! Right now, your client is NOT happy. You quickly drive to the office and find proof that the client’s check was presented to the bank and cashed. But the country club maintains they never received payment. After following up with the bank, you

the surge in check fraud mail schemes. FinCEN Alert on Nationwide Surge in Mail Theft-Related Check Fraud Schemes Targeting the U.S. Mail was issued on February 27, 2023. In its advisory, FinCEN reports that despite fewer checks being used as payment devices, SARS reported check fraud has been growing since 2021 (350,000), and that number of reports almost doubled in 2022 (680,000). For several reasons, trust companies are particularly

“THE STEALING AND WASHING OF CHECKS HAS BEEN STEADILY ON THE RISE IN THE UNITED STATES, CAUSING THE FINANCIAL CRIMES NETWORK (FINCEN) TO ISSUE A NATIONWIDE ADVISORY LAST YEAR.”

more at risk of the dangers of check stealing. Trust companies are often responsible for the financial task of delivering the payor’s payment to the authorized payee — putting them in the direct line of fire. Trust companies are also uniquely impacted because, whenever a payment problem arises, the trust company is often the client’s first call. It is often in a trust company's best interest to essentially drop everything to make sure the issue is quickly remedied. FinCEN also reported that criminals are more focused

discover that not only has this check been stolen and washed, but all of your client’s monthly bills that have been paid with checks have been stolen — from the Post Office. Working alongside the FBI for several months, you discover that your client’s checks were washed and presented by a financial “mule” who presented fake identification and cashed the checks for a fee for the real criminals. You were thankfully able to recoup all of your client’s funds and convince him that you’re still

12 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING

on stealing business checks from postal mailboxes because business checks likely come from well-funded accounts, and it would likely take longer for business owners to recognize the fraud. And even when a trust company quickly spots the fraudulent behavior, it could be months or years before the extent of the fraudulent behavior has been recognized and fully remedied by law enforcement authorities. Perhaps even more important is the fact that the trust company’s reputation in the community could be permanently damaged and may never be fully repaired after this kind of a financial breach. Fortunately, there are also many vendors and agencies who are looking to thwart these criminal schemes in various ways. Today, many banks subscribe to payment systems that are specifically designed with technological advances to help detect check fraud. The Postal Service has also increased efforts to secure mailboxes and has tested more advanced ways to prevent check stealing. FinCEN advises that in addition

to filing a SARS in such cases, financial institutions should also report fraud to the United States Postal Inspection Service at uspis.gov/report. This issue has even drawn legislative attention in Florida’s Capitol in previous years. FBA’s Government Relations team is currently looking to work with member banks and trust companies to find additional policy solutions to help curb this dangerous trend. With the legislative session still several months away, now is the time to consider working with regulatory agencies to find more solutions to check fraud. As we go about developing legislative policy measures, we will need YOU, the experts, to help guide us in drafting legislation. Always feel free to reach out to me with ideas and more information on this topic at kpratt@ floridabankers.com. We look forward to hearing from you and learning more about the challenges presented to trust companies and financial institutions, so we can lessen the number of these nightmare scenarios… and all sleep just a little bit better. ̮̭

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SEPTEMBER 19-20 RITZ CARLTON, FORT LAUDERDALE

This event serves as the annual meeting for the FBA Wealth Management Division, and the timely curriculum will cover topics currently challenging the trust and wealth management industry.

Early Bird Deadline: August 19, 2024

To Register:

www.FloridaBankers.com FBA Director of Education Marilyn Matherne, mmatherne@floridabankers.com

WWW.FLORIDABANKERS.COM JULY 2024 — 13

BANCSERV ENDORSED PARTNER: BHG FINANCIAL

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DATA ANALYTICS: A FOUNDATION OF GROWTH FOR COMMUNITY BANKS

BY MELISSA WHELAN, EVP, INSTITUTIONAL RELATIONSHIPS, BHG FINANCIAL

E very customer account at a community bank tells a story. Each data point, whether it’s a mortgage balance, small business loan, credit card transaction or even a home address, reveals valuable insights into the behaviors and needs of a bank’s clientele. This wellspring of intelligence can provide banks with the opportunity to multiply their revenues and improve the economic health of their communities. Embracing data analytics is a foundational game changer for local banks. Harnessing internal data can enhance customer engagement, improve underwriting decisions, strengthen operational efficiency and boost marketing effectiveness. An integrated approach to data analytics can also increase the competitiveness of community banks relative to larger regional and national counterparts. However, smaller banks may not have the resources to audit and interpret customer data as thoroughly as large banks. Nevertheless, as this article explains, there are several ways smaller banks can harness their customer information without overtaxing operational budgets and staff. The article also highlights examples of how local banks can use their data to effectively segment, retain and grow their current customer base. A complement to personal relationships Before discussing the benefits of conducting data analysis, the article acknowledges that there is no substitute for the personal relationships community banks have with their customers. The banks’ local roots, homegrown insights and first-name familiarity are an irreplaceable competitive advantage relative to larger banks. Still, a deeper analysis of customer data is essential for local banks to thrive in the modern financial ecosystem. Bank boards, CEOs and CIOs who

recognize the practical use of their data and devote the necessary analytical resources can better position their banks and communities for growth. Practical applications of data analytics Data analytics extract insights that can inform decision making, drive product development, identify new markets and deliver a more personalized customer experience. Here are some of the more prevalent use cases. Lending Incorporating data analysis into loan underwriting models can tell community banks more about an applicant’s creditworthiness than FICO and credit scores alone. For example, analyzing behaviors that traditional metrics don’t capture — such as bank deposit history, property ownership and rent and utility payments — often provides clues about the stability of an applicant's financial situation and ability to manage debt. Data of this nature can also supplement or replace traditional measurements of credit risk. This is especially useful when determining the creditworthiness of individuals with short credit histories or who recently moved to the U.S. These borrowers often have weak bureau scores or no scores at all. In fact, about one in 10 U.S. adults have no credit record at the nationwide credit bureaus, according to the Consumer Financial Protection Bureau (CFPB). Another 19 million consumers have too little information to be evaluated by a widely used credit scoring model. 1 In these cases, using alternative data analysis is an indispensable way to evaluate an applicant’s propensity to repay a loan. Fraud and cybersecurity Data analytics play a crucial role in the fight against fraud and cyber intrusions. According to IBM, the

1 Source: ICBA, Artificial Intelligence: Hype vs. Reality and What it Means for Community Banks. https://www.icba.org/newsroom/ blogs/main-street-matters/2023/10/26/artificial-intelligence-hype-vs.-reality- and-what-it-means-for-community-banks 2 Source: IBM, Cost of a Data Breach Report 2023. https://www.ibm.com/reports/data-breach

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Artificial intelligence AI can analyze and synthesize large sets of internal data more quickly than human resources. It can also recognize inconsistencies and identify non-obvious patterns, making it an ideal tool for data-intensive functions such as loan underwriting and fraud mitigation. There are a growing number of open source AI platforms available for lower-resourced banks. Third-party specialists Many smaller banks may not have the technical acumen, employee capacity or adequate time to manage their data analysis needs. It may make sense for these institutions to partner with specialized providers that have the appropriate expertise. This can still be a cost-effective strategy for banks compared to building out the technology infrastructure themselves and training employees in its use. Starting small and other considerations Most experts agree community banks should begin their data analytics journey with small steps. Start slowly and learn from it: what worked, what didn’t, did it achieve the intended result? Let one success lead to another and use those victories to fund larger, future efforts. Along the way, take the time to ponder the following: • Consider hiring a data analyst or data scientist to start reading and analyzing data • Decide whether to keep data analytics in house or outsource it •Consider data aggregation tools that can combine data from different systems • Talk to technology partners about their ability to aggregating and analyze data •Map out current data sources and systems to understand gaps and opportunities • Consider roles like Chief Data Officer or Chief Data Scientist to oversee data strategy and execution. Closing thoughts Community banks have an opportunity to thrive by combining their local expertise and personalized service with data-driven insights and automation. This combination can help a community bank level the playing field against larger competitors while still maintaining its traditional values of personal service and community support. Melissa Whelan is EVP, Institutional Relationships, for BHG Financial. Whelan has been with the company for 18 years, joining in 2006 as a member of the credit team. She later managed the closing department and held other leadership roles within the company, then continued her career in Institutional Sales. Whelan grew up in Syracuse, NY, before moving to Louisiana. She studied exercise physiology from Louisiana State University (LSU), before returning to New York. She enjoys traveling around the country to attend her three children’s sporting events.

average cost of a data breach in 2023 was $4.45 million. 2 Fortunately, today’s advanced analytics like Machine Learning and Artificial Intelligence (AI) can scrutinize data in real time and flag suspicious patterns and irregularities. Banks can leverage these insights to identify questionable transactions and thwart attempts to gain unauthorized system access. Risk management By integrating market, economic and internal customer data, community banks can detect changes to underlying conditions and develop more-timely response strategies. Armed with these insights, banks can address and predict what risk factors may affect such functions as information security, operations and Through data analytics, community banks can attain a more holistic view of their customers. This can lay the groundwork for more relevant marketing messages, enhance acquisition strategies and improve engagement by allowing a bank to personalize its offerings in alignment with customers’ specific needs. Operational efficiency From enhancing a bank’s ability to make faster and more confident loan decisions to automating internal reporting processes, data analytics can help banks lower costs, streamline or replace manual processes and increase revenue. Making operational functions simpler and less time consuming also allows bank employees to devote more personal attention to Community banks can take multiple approaches to analyzing their internal data. They vary in cost and sophistication level and can be conducted internally or by an external third party. Here is a look at several examples: Surveys By posting a simple customer survey on its website, a community bank can receive immediate feedback on what it is doing well, what is not working and how to better serve its customers.“Gathering customer feedback through surveys is an efficient and cost-effective way to identify policies and practices that may need adjustment,” said Meghan Crawford-Hamlin, President, Institutional Division, for BHG Financial. “Surveys can quickly highlight low-hanging fruit for local banks to address.” Open source software “Open source” data analytics provide universal (and often free) access to a product’s design. In banking, the leveraging of open source tools can be an effective way for lower-capitalized banks to launch new products and services quickly and without a significant outlay of capital. There are many popular open source software tools available that offer data analysis applications for banks. compliance, among others. Target marketing and customer segmentation customers and enhance their loyalty. Technologies and techniques

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Milestones in Florida Banking Scott Sullivan, Citizens First Bank Robyn L. Wallace, Capital City Bank Barbara J. Whigham-Eutsay, Capital City Bank 30 Years Richard P. Barnitt, Popular Bank Andres B. Cabrero Chastre, Popular Bank Beverly A. Chance, Capital City Bank Sherry Grant, Mainstreet Community Bank of Florida Sandi Nelson, First National Bank of Mount Dora Sandy Pepper, Mainstreet Community Bank of Florida 25 Years Wanda Bomar, ServisFirst Bank Andria Clark, Winter Park National Bank Michelle Crawford, Citizens First Bank Daniel Diaz, FirstBank Florida Kristi L. Dorman, Capital City Bank Crystal Eury, Citizens First Bank Susan A. Frazier, Capital City Bank Pamela E. Gay, Capital City Bank Ginger R. Griffin, Capital City Bank Barbara L. Hawkins, Capital City Bank Georgia Jones, First Federal Bank Kurt Koshiol, Mainstreet Community Bank of Florida Carey Lee, First Federal Bank Eric McGinnis, Raymond James Bank John Pease IV, First National Bank of Mount Dora Norma A. Quijada, Capital City Bank Michelle R. Rodriguez, Capital City Bank Shawna Sherman, First National Bank of Mount Dora Suzie Swailes, First National Bank of Pasco Teresa A. Swartz, Capital City Bank Barbara Thompson, ServisFirst Bank Tori Williamson, Mainstreet Community Bank of Florida Coswellyn L. Wood, Capital City Bank Sonia Cruz Rivera, Popular Bank Jill Y. Roberts, Capital City Bank Deborah Van Sickle, FirstBank Clewiston Debra Stitt, First Federal Bank Christine L. Sugars, Capital City Bank

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35 Years Melissa Anderson, Mainstreet Community Bank of Florida Terri Ciroline, Mainstreet Community Bank of Florida Lisa Conley, FirstBank Clewiston Ruby Davis, First Federal Bank Daphne A. Jones, Capital City Bank J. Kurt Petersen, F irst National Bank of Pasco Lori Rolla, First National Bank of Pasco Mark W. Strickland, Capital City Bank Tammie Woodard, Community State Bank 40 Years Lenore Amoroso, Mainstreet Community Bank of Florida Karen Battle, Capital City Bank Robert Gregory, First Federal Bank Lynn Hunter, Mainstreet Community Bank of Florida Fred Leopold, Community Bank Tracy F. Mahon, First National Bank of Pasco Harlan Parrish, FineMark National Bank & Trust Bob Selover, Mainstreet Community Bank of Florida 45 Years William G. Smith Jr., Capital City Bank 50 Years Jon Benn, Mainstreet Community Bank of Florida

Thomas Bo Carter, ServisFirst Bank Sid Cash, Winter Park National Bank Patricia Stroud, Ameris Bank Retired Jeannie Barnes, FirstBank Clewiston Jane Bracken, Popular Bank Deborah Bryan, Citizens First Bank Jana Chronerberry, Citizens First Bank Alice Dunbar, Citizens First Bank Kathleen Dunlavey, Citizens First Bank Pamela Falk, Citizens First Bank Diane Fogel, Citizens First Bank Susan Frazier, Capital City Bank Lisa Galloway, Citizens First Bank Molly Hime, Popular Bank Rhonda Lambert, Capital City Bank Blythe Libert, Capital City Bank Cynthia Lay, Citizens First Bank Margaret Lesiege, Citizens First Bank Margarita McCartney, F irst National Bank of Mount Dora Maria Palladino, Citizens First Bank Lisa Robison, Citizens First Bank Nicolette Roper, Popular Bank Cynthia Scovie-Brown, C itizens First Bank Susan Soper, C itizens First Bank Nilda Sparks, FirstBank Clewiston Dawn Turner, First National Bank of Mount Dora Gwenda Watkins, Citizens First Ban k Elizabeth Williams, Popular Bank Laura Williamson, Citizens First Bank Diana Wolf, Citizens First Bank

Randall Wood, FirstBank Clewiston Andrea Zajac, Citizens First Bank

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GOVERNMENT RELATIONS

HOW THE FBA IS WORKING TO STOP FRAUD

BY ANTHONY DIMARCO, FBA EXECUTIVE VICE PRESIDENT AND DIRECTOR OF GOVERNMENT AFFAIRS

W e have heard from many of our members and legislators concerned about the uptick in all forms of fraud. I expected the fraud involving email or the internet, but I was surprised to hear about the rise of check fraud and other low-tech fraudulent schemes. The FBA is looking at a variety of ways to help combat this in the next year, and beyond. First, we are looking at the legislative front. An example is our work on SB 556 by Sen. Rouson (D-St. Petersburg) and Rep. David Silver (D-West Palm Beach). The bill, modeled after securities industry legislation, permits a financial institution to place a hold on a transaction from an account of a specified adult or a vulnerable adult if it reasonably believes that financial exploitation of the specified adult has occurred, is occurring, has been attempted, or will be attempted in connection with the disbursement or transaction (there are other conditions as well, so please read the legislation). The hold on the transaction expires in 15 business days, and may be extended for an additional 30 business days. SB 556 also grants immunity from any administrative or civil liability that might otherwise arise from the hold for any financial institution which, in good faith and exercising reasonable care, complies with the bill’s provisions. A vulnerable adult is defined as someone who is 18 or older and whose ability to perform the normal activities of daily living, or to provide for his or her own care or protection, is impaired due to a mental, emotional, sensory, long-term physical or developmental disability or dysfunction; brain damage; or the infirmities of aging. As such, this voluntary program will only apply to those who meet this definition, but this is a start.

Unfortunately, it was harder to pass 556 than it needed to be and we want to thank Sen. Rouson, Rep. Silvers, Senate Banking & Insurance Chairman Jim Boyd and others for their help in its passage. There is a group of legislators who believed the banking industry would use the litigation protection in SB 556 to “debank” customers because of the banks’ “wokeness.” At one point in the House, the litigation liability protection was removed from the bill. We informed the legislator that our members would not use this voluntary program without the protection, and the legislator responded that he was fine with that, because he did not want to see a widow’s account frozen because the bank did not like her. Thankfully, SB 556 was passed with the liability protections and Gov. DeSantis recently signed the bill. To help in this endeavor, we are reaching out to our counterparts at other state banking associations to see what legislation is on their books that is successful and that we may want to adopt in Florida. We will be doing the same with law enforcement. SB 556 is an example of our work on the legislative front. We are also looking into ways to curtail fraud through education and messaging. The FBA is partnering with the Kentucky Bankers Association on their Fraud Academy, Aug. 6-8. This two-and-a-half day event is an immersive learning experience for our members to acquire the skills needed to detect and combat fraud. Speakers will include experts from the DEA, FBI, law enforcement and the financial industry. The event will stream live. You can register at www.fraudacademyhq.com. While we can never completely eradicate fraud, we hope our efforts will help curtail it throughout Florida. We look forward to working with you over the next year to curb this ever-growing problem.

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FBA’S 2024 ANNUAL MEETING PALM BEACH

PHOTOGRAPHS BY STEVEN MARTINE T he FBA held its 136th Annual Meeting in Palm Beach on June 16-19. Attendees enjoyed informative panels and workshops as well as networking opportunities and entertainment. FBA President and CEO Kathy Kraninger spoke about the FBA’s new strategic plan, updated mission statement, and direction over the next three years. Outgoing FBA Chair Jose Cueto passed the torch to incoming FBA Chair Derek Jones, Wells Fargo’s Central Florida region executive. FBA’s new officers and Board of Directors began their terms and celebrated the service of past officers. In keeping with tradition, the FBA presented awards to a select group of deserving bankers, recognizing their dedication and contributions to the FBA and Florida’s banking industry. The 2024 award winners were:

Lifetime Achievement Award Alex Sanchez, President and CEO, Salva Financial Group of Florida Banker of the Year Connie Nelson, EVP and CFO, United Southern Bank Chairman’s Award Corey Neil, President and CEO, The Bank of Tampa, and Dennis Murphy, President and CEO, Gulfside Bank Horizon Award Jeff Klink, EVP — President Commercial Deposits, Valley Bank

WELCOME RECEPTION

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WELCOME RECEPTION

BANKPAC SILENT AUCTION

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BANKPAC SILENT AUCTION

SESSIONS & AWARDS LUNCHEON

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SESSIONS & AWARDS LUNCHEON

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