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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    January 31, 2018

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • House Panel Advances Pro-Growth Reforms
  • State Community Banking Associations Urge Senate Passage of Bipartisan Regulatory Relief Bill
  • Report on Staff’s Quarterly Visit to Washington, D.C.
  • Megabank Lobbying Threatens Community Bank Relief Bill
  • Director Mulvaney: CFPB Has Pushed Its Last Envelope
  • Community Banks Report Greater Deposit Growth Than Big Banks
  • “Small Enough to Jail” Documentary Nominated for Oscar
  • FDIC Nominee Advocates Relief as Powell Confirmed for Fed Chairmanship
  • USDA Issues 2018 Farm Bill Principles
  • CBAI's 34th Annual Capital Conference Registration is Underway
  • Investment News from THE BAKER GROUP
  • OCC's Semiannual Risk Perspective for Fall 2017
  • Community Banking Week in Illinois Is Coming!
  • The 2018 CBAI Compensation Survey Is Now Online!
  • FHLBank Chicago Declares Fourth Quarter 2017 Dividend
  • Save the Date: Federal Home Loan Bank of Chicago Member Meetings
  • VISA Beta Testing Fingerprint Authentication on Payment Cards
  • “Jackpotting” ATM Scheme Arrives in United States
  • Are You Confident Your Customers’ Data Is Safe?
  • America’s Transition to EMV – What’s the Latest?
  • CBIS: Seasonal Influenza Preparedness for Community-Bank Employees
  • More Threats and Increased Complexity: What Is Your Bank’s Answer?
  • CBAI Announces After-Dinner Presentation at 2018 Spring Group Meetings
  • IRA Institute Scheduled for February 7 & 8
  • Commercial Lending Institute Set for February 21-23
  • BSA/AML Conference to be Held March 7

  • House Panel Advances Pro-Growth Reforms

    The U.S. House Financial Services Committee recently approved several pro-growth bills that will help community banks meet the needs of their local communities. The committee passed the following bills inspired by ICBA’s Plan for Prosperity platform.

    • The Community Financial Institution Exemption Act (H.R. 1264), introduced by Representative Roger Williams (R-Texas), would exempt community banks with less than $50 billion in assets from all prospective rules and regulations issued by the Consumer Financial Protection Bureau.
    • The Federal Savings Association Charter Flexibility Act of 2017 (H.R. 1426), introduced by Representative Keith Rothfus (R-Pa.), would create a new national charter option for federal savings associations.
    • The Portfolio Lending and Mortgage Access Act (H.R. 2226), introduced by Representative Andy Barr (R-Ky.), would provide a Qualified Mortgage safe harbor for all loans held in portfolio.
    • The Comprehensive Regulatory Review Act (H.R. 4607), introduced by Representatives Barry Loudermilk (R-Ga.) and Josh Gottheimer (D-N.J.), would ensure that Economic Growth and Regulatory Paperwork Reduction Act regulatory reviews include the Consumer Financial Protection Bureau and occur every seven years rather than every 10.<
    • The Community Bank Reporting Relief Act (H.R. 4725), introduced by Representative Randy Hultgren (R-Ill.), would provide for short-form call reports in the first and third quarters for banks with assets of less than $5 billion.
    • The Small Bank Holding Company Relief Act (H.R. 4771), introduced by Representative Mia Love (R-Utah), would raise the Federal Reserve’s Small Banking Holding Company Policy Statement asset threshold from $1 billion to $3 billion.
    CBAI has worked closely with Representative Hultgren and appreciates his strong support for a viable community banking system. CBAI will continue to urge Congress to advance these important measures for the benefit of local communities. Read More. Read Plan for Prosperity.

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    State Community Banking Associations Urge Senate Passage of Bipartisan Regulatory Relief Bill

    Last week CBAI joined with more than 40 state community banking associations affiliated with the Independent Community Bankers of America® (ICBA) to call on the U.S. Senate to take up and pass bipartisan legislation to stimulate economic growth by providing much-needed community bank regulatory relief. The coalition letter urges senators to pass the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) as quickly as possible and free of any amendments that would upset its bipartisan balance. Read ICBA Release. Read Coalition Letter.

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    Report on Staff’s Quarterly Visit to Washington, D.C.

    During the week of January 15, CBAI Senior Vice President of Federal Governmental Relations David Schroeder visited the offices of every member of the Illinois Congressional Delegation, met with the Federal Reserve System, the Conference of State Bank Supervisors, and conferred with senior legislative staff at the Independent Community Bankers of America (ICBA).

    The primary purpose of Schroeder’s quarterly visits is to inform the Illinois Congressional Delegation about issues of importance to Illinois community banks. The CBAI priorities highlighted during these meetings included: meaningful regulatory relief for community banks as contained in the Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155), community-bank access to the payment systems, sound principals for GSE reform, support for agricultural and rural America, and credit union/Farm Credit System taxation and containing their expansion of powers. Read Article.

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    Megabank Lobbying Threatens Community Bank Relief Bill

    Megabank lobbyists are jeopardizing CBAI and ICBA-advocated legislation providing regulatory relief for community banks. As reported by Reuters last week, Wall Street advocates are trying to expand the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) after it passes through the Senate.

    The report illustrates the key remaining challenge facing the bipartisan legislation—keeping it focused on community banks to avoid allowing large banks to sour the strong bipartisan support it enjoys. As a coalition of 43 ICBA-affiliated state community banking associations including CBAI noted in a letter to the Senate last week, the bill’s original cosponsors include 11 Republicans, 11 Democrats and one Independent.

    CBAI’s David Schroeder is reaching out to his contacts in Washington again this week with a copy of the letter and urging their support for community bank regulatory relief. This is the best opportunity in more than a decade to attain our long sought-after goal, and community bankers must be relentless in urging the support for this bill by the entire Illinois delegation.

    To avoid last-minute changes to the Plan for Prosperity-inspired bill that would threaten its passage, CBAI and ICBA urge all community bankers to reach out to their senators in support of the legislation. Email Durbin and Duckworth Today. Read Article. Read Letter.

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    Strong security deters attacks, protects your staff and reduces risk to your reputation. SHAZAM’s experienced crisis management consultants will travel to your location and train your team to decrease vulnerabilities and put protective measures in place before a crisis. Schedule training with your client executive and stay safe!

    Director Mulvaney: CFPB Has Pushed Its Last Envelope

    In a recent WSJ article, new CFPB Director Mick Mulvaney set the tone for his administration when he wrote, “The CFPB has a new mission: We will exercise, with humility and prudence, the almost unparalleled power Congress has bestowed on us to enforce the law faithfully in furtherance of our mandate. But we go no further. The days of aggressively “pushing the envelope” are over.”

    That’s welcome news indeed for all community banks that are burdened with cumbersome, counterproductive, and unwarranted rules promulgated by the CFPB. Read Article.

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    Community Banks Report Greater Deposit Growth Than Big Banks

    Community banks reversed a long-standing trend and reported greater deposit growth in 2017 than larger banks, based on the most recent issue of the FDIC Quarterly. Reviewing figures from the latest FDIC Summary of Deposits, deposits in community banks rose 6.4 percent, while non-community banks experienced a deposit growth rate of 4.9 percent.

    From June 2016 to June 2017, all insured deposits nationwide rose by $570 billion, or 5.1 percent. Community banks slightly increased their numbers of branches in 2017 and over the previous five years, despite an ongoing trend in reduced branch numbers since 2008. Community bank offices grew by 0.1 percent in 2017, while branches of non-community banks fell by 3.3 percent — an accelerated pace from previous years. Since 2012, the number of non-community bank branch offices have declined by 11.5 percent.

    In rural areas, community banks hold more than two-thirds of all deposits and have a higher per-capita banking office penetration with 4.7 offices per 10,000 people compared with 2.5 in urban areas. The rate of office closures was also faster in metropolitan and micropolitan areas, where branch closures have less of an effect on the availability of financial services in those communities, and was driven by higher expenses, charter consolidation and technological improvements. Read Report.

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    “Small Enough to Jail” Documentary Nominated for Oscar

    A documentary that tells the story of a community bank’s successful challenge to baseless mortgage-fraud charges was nominated for an Academy Award. “Abacus: Small Enough to Jail,” nominated for best feature documentary, follows the Sung family and Abacus Federal Savings Bank, which was the only U.S. bank indicted for mortgage fraud related to the 2008 financial crisis.

    Abacus President and CEO Jill Sung is chairman of ICBA’s Minority Bank Council and a member of its Policy Development Committee and Mutual Bank Council. Watch the Film.

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    FDIC Nominee Advocates Relief as Powell Confirmed for Fed Chairmanship

    President Donald Trump’s nominee to head the FDIC repeatedly advocated regulatory relief for community banks in an appearance before Congress. Testifying at a Senate Banking Committee nomination hearing, Jelena McWilliams indicated support for a community bank exemption from the Volcker Rule, simpler capital rules, and an environment more conducive to de novo charters. Separately, the Senate confirmed the nomination of Federal Reserve Governor Jerome Powell for Fed chairman. Powell, who has served on the Fed board since 2012, was approved on an 85-12 vote.

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    USDA Issues 2018 Farm Bill Principles

    The USDA released its legislative principles for the 2018 farm bill. The comprehensive principles are broken into categories such as production and conservation, trade, and food and nutrition. They call for innovative crop insurance products, consistency in rural development programs, export promotion, and more. Read USDA Principles.

    President Trump Expresses Support for Building Rural America

    Earlier this month the Trump White House released a “Fact Sheet” on rural America which cites the following points:

    RURAL AMERICA HAS BEEN LEFT BEHIND: President Donald J. Trump has charged the Rural Prosperity Task Force with examining the challenges facing rural America.

    BREAKING DOWN BARRIERS TO RURAL PROSPERITY: President Trump’s Rural Prosperity Task Force has proposed recommendations to help rural America grow and thrive.

    REBUILDING RURAL AMERICA: President Trump’s Administration will build on existing projects and efforts to support rural America. Read Fact Sheet.

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    CBAI's 34th Annual Capital Conference Registration is Underway!

    Your Advocacy Is Crucial

    For one day every year, CBAI member bankers make their voices heard face-to-face with lawmakers at the state Capitol. The 34th Annual Capital Conference will be held Wednesday, April 18, 2018 at the Wyndham Springfield City Centre (formerly the Hilton Hotel). The day begins with a legislative briefing and luncheon. After lunch, with key talking points in hand, our constituency moves to the State Capitol to meet with regulators and legislators. The day is capped off with a reception for bankers, legislators and regulators at the top of the Wyndham, which affords sweeping views of the Capital City. This is an opportunity you don't want to miss!

    The Early-bird special is ONLY $100 per institution. After April 1, 2018, the cost will be $150 per institution. REGISTER TODAY!

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    Investment News from THE BAKER GROUP

    Baker Market Update

    Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. See Baker Market Update.

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    OCC's Semiannual Risk Perspective for Fall 2017

    The Office of the Comptroller of the Currency (OCC) last week reported credit, operational, and compliance risks are key concerns for the federal banking system in its Semiannual Risk Perspective for Fall 2017. Highlights include:

    • The credit environment continues to be influenced by aggressive competition, tighter spreads, and slowing loan growth. These factors are driving incremental easing in underwriting practices and increasing concentrations in select loan portfolios—leading to heightened risk if the economy weakens or markets tighten quickly.
    • Operational risk continues to challenge banks because of increasing complexity of cybersecurity threats, use of third-party service providers, and increasing concentrations in third-party service providers for some critical operations.
    • Compliance risk remains elevated as banks continue to manage money laundering risks, as well as consumer compliance risks, particularly due to the increasing complexity in consumer compliance regulations.
    The report covers risks facing national banks and federal savings associations based on data as of June 30, 2017. The report presents data in four main areas: the operating environment, bank performance, trends in key risks, and supervisory actions. It focuses on issues that pose threats to those financial institutions regulated by the OCC and is intended as a resource to the industry, examiners, and the public. See Report.

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    Community Banking Week in Illinois Is Coming!

    April 1-7, 2018 is the 28th Anniversary of Community Banking Week in Illinois. This year’s theme is “Community Bankers Are Always Ready to Help.” Community banks like us are inviting our friends, our neighbors, to help us celebrate the independent spirit that is the hallmark of locally run banks.

    For your FREE kit, contact Bobbi Watson at

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    The 2018 CBAI Compensation Survey Is Now Online!

    Results Are FREE for Members That Participate

    And You’re Not Going to Believe How Easy It Is to Complete!
    Is your bank competing effectively with your peers to attract, reward and retain the top talent in today’s job market? What is your strategy to win the race for qualified leadership and employees?

    Complete the 2018 CBAI Compensation Survey now and receive the results at no cost. BalancedComp, a national compensation expert, is partnered with CBAI to:

    1. ease the process of participating - possible to complete in under 30 minutes
    2. increase the survey's relevance to today’s banking environment
    3. enhance the resulting data's usability

    Survey results remain confidential and free to CBAI member participants, thanks to sponsor IZALE Financial Group.

    Click Here to Begin the Survey!

    Click Here for a .pdf of the survey to use as a worksheet.

    Click Here for a .pdf of the list of Benchmark Positions.

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    FHLBank Chicago Declares Fourth Quarter 2017 Dividend

    Last week the Board of Directors of the Federal Home Loan Bank of Chicago (FHLBank Chicago) announced that they have increased the dividend declared per share on both sub-classes of capital stock. The Board determined that the earnings for the fourth quarter of 2017 coupled with recent rising market interest rates—both short term and long term—merit the increased dividends. Read More.

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    Save the Date: Federal Home Loan Bank of Chicago Member Meetings

    The 2018 FHLB-Chicago members meetings will be held on March 15th in O'Fallon, March 16th in Springfield and March 19th in Oak Brook. Agenda topics include: balance sheet strategies, 2018 economic outlook and financial results for the FHLB- Chicago. View Save the Date.

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    VISA Beta Testing Fingerprint Authentication on Payment Cards

    Visa is beta-testing a fingerprint-enabled payment card. The chip card will test whether fingerprint recognition is a viable alternative to PIN or signatures for authenticating cardholders during transactions. The pilot will begin in early 2018 to assess the cardholder experience and the technology of the biometric cards in different retail environments. Read More.

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    “Jackpotting” ATM Scheme Arrives in United States

    The U.S. Secret Service is warning financial institutions about cybercriminals who are using malicious software to get ATMs to cough up cash on demand. As reported in the KrebsOnSecurity security blog, this “jackpotting” scheme arrived in the United States last week. Long a threat to banks in Europe and Asia, scammers are now reportedly targeting Diebold units. Read More.

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    Are You Confident Your Customers’ Data Is Safe?

    This week, National Data Privacy Day was celebrated. Data Privacy Day is an international effort to create awareness about the importance of respecting privacy, safeguarding data and enabling trust. How confident are you that your YOUR bank is safe and that you're doing all you can to protect your customers' data? Read More from BankOn IT.

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    America’s Transition to EMV – What’s the Latest?

    In October 2015, the US introduced its EMV liability shift at the point of sale (POS), transferring liability for in-store counterfeit card fraud to the party – either the issuing financial institution (FI) or the merchant – that has not adopted EMV chip technology.

    In its latest market snapshot, the US Payments Forum highlighted positive trends in merchant EMV chip enablement. Almost all (96 percent) of the top 200 merchants across the country now handle EMV transactions. Furthermore, the industry group has heard reports that small and medium-sized businesses (SMBs) are steadily getting onboard, with up to 80 percent of these companies now thought to be chip-enabled. Read More. See Market Snapshot.

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    CBIS: Seasonal Influenza Preparedness for Community-Bank Employees

    Every year, seasonal influenza (i.e., the flu) affects millions of employees and consequently, our community banks for which they work. In this artcile, there are some tips and suggestions are for you to consider when planning, responding to and mitigating the impact of seasonal influenza on your community bank. Read More for CBIS Gallagher.

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    More Threats and Increased Complexity: What Is Your Bank’s Answer?

    The speed and sophistication of cyber threats is rapidly increasing, and banks are relying more on vendors to provide critical services that the bank does not have the resources itself to provide. Cyber threats have become more severe, thereby exposing banks to vulnerabilities that many times result in fraud. Read More from BankOnIT.

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    CBAI Announces After-Dinner Presentation at 2018 Spring Group Meetings

    CBAI leaders and executive staff are visiting 11 locations on the 2018 Group Meeting tour this spring. Bankers from nearly 200 banks participate in these enjoyable and informative events each year. Consisting of an optional golf outing and a dinner meeting, Group Meetings also provide an excellent opportunity to get the latest information on key banking issues and catch up with friends and peers. (Note: The Group 1& 2 Meeting will follow a different format).

    This year’s after-dinner presentation is titled, "What You Don't Know Can Hurt You: Managing Technology Risk," with Sara Nielsen, who is senior vice president of technology and compliance at BankOnIT. Hear from a former regulator about the importance of a strong technology risk management program which will help to ensure that your bank is properly protected in this dynamic risk environment.

    The opening portion of each Group Meeting focuses on critical legislative and association issues. CBAI President Kraig Lounsberry will provide updates on Association projects and community banking in general; and Senior Vice President of Governmental Relations Jerry Peck will offer an up-to-the-minute report of banking-related legislative activities. See the schedule of Group Meetings that follows and make plans now to attend!

      Please Note: During the CBAI Annual Convention in September, the membership voted for changes in the structure of CBAI Groups. For efficiency, the former Groups 2 and 3 were combined, which occasioned changes in the numbering of all CBAI Groups with the exceptions of 1 and 2. Please refer to the document below for your bank’s current Group number.

    For the more information on the after-dinner presentation, the Group Meeting Schedule, and the new configuration of CBAI Groups, please Click Here.

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    IRA Institute Scheduled for February 7 & 8

    This program begins with the basics and builds from there to an intermediate level. Many times people are trained on IRAs but the training is brief and sketchy at best. With a two-day format, this program allows you to take the time to get comfortable with the rules, to ask questions about “How?,” “What if?,” “Why?,” and, just as importantly “Why not?” While not attempting to make you a tax advisor, this program looks at tax implications of traditional and Roth IRAs to enable you to feel very confident that you'll know when to say, “Yes, I can answer that question” and when to say, “Go see your tax advisor.” This two-day program will be presented by Randy J. Heidmann and Robert Skomars, both consultants at Wolters Kluwer Financial Services, who have a combined experience of over 75 years in the industry.

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    Commercial Lending Institute Set for February 21-23

    This three-day institute provides your commercial lenders with a solid foundation for producing and managing a quality loan portfolio. It focuses on analytical tools such as ratio, financial, cash flow analysis, as well as commercial loan structuring to enhance repayment capacity. Topics covered on day one include financial-statement review, credit and ratio analysis, asset-conversion cycle analysis, and ratio interpretation. Cash budgeting, loan structuring, commercial-loan documentation, and credit-risk management are among the topics on day two. Day three examines cash-flow analysis, financial forecasting, and writing credit memos. Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, Georgia, heads this faculty. He is joined Robert M. Swartz, manager, and Gary Genenbacher, CPA and partner, both of BKD, LLP.

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    BSA/AML Conference Scheduled for March 7

    The annual BSA/AML conference is the place to keep up-to-date with current BSA/AML activity and trends. Regulatory expectations for BSA remain high, and there continue to be subtle changes in the enforcement of the rules. This means there is a continued need to focus on the effective and meaningful elements of a BSA program. This conference will discuss many “need-to-know” issues for the BSA/AML professional. Each topic will be considered in depth, with a hands-on, interactive, and practical approach. This one-day program is designed to focus specifically on all applicable BSA activity over the last 12 months. The agenda for this annual conference changes each year and typically includes (as applicable) an overview of recent FinCEN activity such as enforcement actions and proposed regulatory changes, as well as applicable case studies, industry hot topics and an interactive round table discussion. Leading this conference is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc.

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    THROUGH 03/15/2018






    Finer Points Blog

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