July 20, 2022

We have all heard the political pundits and experts tell us that “post-pandemic,” the economy will perform in such-and-such a way. The past few years have not performed as any of us could have predicted ten, or even five, years
ago. Would any of us have considered the potential for $10 per gallon of gas or the increasing cost of a weekly trip to
the grocery store? These are unprecedented times, and it is at times such as this that we can rely upon CBA to provide value to the membership.

As you know, leading a bank today has never been more challenging; to borrow a phrase from an old General Motors advertisement, “It’s not your father’s bank.” You and your team work harder than ever to generate income through
traditional lending activities and a growing portfolio of services. If that isn’t difficult enough in a post-pandemic,
politically-charged, inflationary environment, you find yourself swimming in change, from climate investing and disclosures to cryptocurrencies to ever-evolving
ransomware risks.

New federal guidance has clarified steps
community financial institutions should take when contracting with a financial technology service provider. Banks that rely on fintechs, and those considering new relationships, should take time
to understand the expectations.

As if maintaining your ATM fleet didn’t come with enough headaches and expenses, the imminent sunsetting of the most widely used ATM
hardware/software in the U.S. is forcing banks to re-evaluate their fleet and ATM strategy going forward.

As COVID-19 continues to affect individuals, communities, and global economies, financial institutions must
continually adapt their credit risk monitoring strategies to effectively identify as quickly as possible those loans that have increased in risk. These strategies can help.

Class action plaintiffs have plenty of ammunition when pointing a finger at a company holding consumer data. An attack occurs, typically because of a security vulnerability and/or a novel method, and plaintiffs have a somewhat easy avenue to establish causation. For that reason, many companies and banks understandably focus their efforts
on beefing up their information security policies and procedures. Pro-active banks and other companies wisely engage cybersecurity forensic consultants, procure quality cyber liability insurance, and ramp up their
response plans to help establish reasonable precautions that can help counter causation arguments. However,
with the rising number of data breaches in recent years exposing millions of consumer data records to potential
identity thieves, the supply of consumer information – Social Security numbers, account numbers and other personal information – on the black market has exploded. That makes damages difficult to prove in data breach cases because of the high likelihood that the individual’s personal data is out there somewhere.

The end of the great deposit flood may soon be nigh. Since the pandemic, banks have been saturated with liquidity due to a flight to safety and government stimulus. In December 2019, just before the pandemic started, total commercial bank deposits were roughly $13.3 trillion. Within a few months, by May 2020, they had jumped 16% to $15.4 trillion. By April 2022, they were over $18 trillion.

When it comes to payments processing
providers, banks don’t always know they
have options outside their core processor. There are many innovative payments fintech providers that can offer more capabilities than a core processor – which means banks could be missing out on available features and benefits that could give them an edge with their cardholders.

With the ever-growing concern of rising
construction costs, it is imperative to
understand what’s happening in the market, the impact it can have on your next deal and how to mitigate the risk. According to a recent analysis by the Associated General Contractors of America, construction material costs have increased by 20% year-over-year from January 2021 to January 2022. This
is the largest recorded material cost increase since 1970. Due to recent geopolitical events, persistent demand and the continuing supply chain issues, the trend of inflation and rising construction costs are projected to continue for the foreseeable future. In this time of uncertainty, it is more important than ever to properly structure CRE transactions with a focus on industry best practices and risk mitigation to move deals forward.