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Community Bankers Association of Illinois
Community Bankers Association of Illinois    Community Bankers Association of Illinois CBAI E-Newsletter Sponsor - SHAZAM
 
     A Bi-Weekly News Bulletin for CBAI Members                            February 18, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI Among 34 State Associations Endorsing ICBA Plan for Prosperity
  • Fine: Community Banks Gaining More Ground in Washington
  • ICBA to Congress: Unchecked Regulation Will Kill Community Banking
  • Harvard Study: Expand Community Bank Regulatory Exemptions
  • CBAI 2015 Officer Compensation Survey Now Underway
  • Rauner Outlines Budget to End "Financial Recklessness"
  • Register Now for CBAI's 31st Annual Capital Conference - April 15, 2015
  • CBAI and ICBA Back Bill Addressing Too-Big-To-Fail Subsidy
  • Investment News From THE BAKER GROUP
  • CBAI Files Amicus Curiae Brief to Protect Lender Interests
  • FHLB Chicago Announces 2014 Financial Results
  • 2014 Farm Bill Reaches One-Year Anniversary
  • Greg Ohlendorf Nominated to ICBA’s Board of Directors
  • CBAI Announces Opening Breakfast Speaker at 41st Annual Convention & Expo
  • BankTrends: 89% of Illinois Community Banks Profitable in Q4 2014
  • ICBA Files Amicus Brief in Director's Liability Case
  • SHAZAM Adds Person-to-Person Payments to Its BOLT$ Mobile App
  • Take This Week's CBAI Quick Poll
  • Blanket Lenders’ Single Interest (LSI) Protects Banks
  • CBAI Legal: Illinois Court Says TILA applies to Refinancing, Not Modification
  • Help Us Celebrate! Community Banking Week Is the Week of April 5th
  • Three Ways to Avoid the Compliance Crackdown
  • Rewards-based Checking for Rising Rates
  • National Ag Day Is March 18. How Is Your Bank Observing It?
  • What’s Behind the Slow Fuse for Apple Pay Adoption?
  • Deposit Documentation Scheduled for February 23-26
  • Loan Documentation for Support Staff to be Held March 2-5
  • 2015 CDD Spring Meeting Slated for March 17-18 in Bloomington-Normal
  • Global Cash Flow Scheduled for March 19-20


  • CBAI Among 34 State Associations Endorsing ICBA Plan for Prosperity

    Ahead of last week’s Senate Banking Committee hearing, ICBA delivered to Congress a list of 34 state banking associations that have endorsed ICBA’s Plan for Prosperity. The Plan for Prosperity includes a variety of provisions that can be quickly advanced as legislation to reduce excessive and unnecessary community bank regulation while supporting greater regulatory accountability. Read the List. See Plan for Prosperity.

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    Fine: Community Banks Gaining More Ground in Washington

    While the year is young, community bankers have already gained ground in Washington in 2015, ICBA President and CEO Cam Fine wrote in a message to community bankers.

    Fine cited several recent community bank advocacy successes, including the Consumer Financial Protection Bureau’s proposed revisions to its mortgage rules that would expand exceptions for small and rural creditors. He also noted recently enacted laws that will ease the Federal Reserve’s capital rules on bank holding companies and require community bank representation on the Federal Reserve Board.

    Citing a Wall Street Journal report showcasing community bank clout in Washington, Fine said ICBA will never stop working for community banks and the communities they serve. Read the Message from Fine.

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    ICBA to Congress: Unchecked Regulation Will Kill Community Banking

    ICBA Chairman John Buhrmaster told Congress last week that regulatory overkill is putting community banking and economic growth at risk. Testifying before the Senate Banking Committee, Buhrmaster said American communities will be deprived of essential banking services unless Washington rolls back excessive, one-size-fits-all banking regulation.

    Buhrmaster urged Congress to continue advancing legislation with provisions of ICBA’s Plan for Prosperity regulatory relief platform. The Plan for Prosperity, which CBAI supports, includes provisions that would offer community banks relief from certain mortgage regulations, improve access to capital, and reform regulators’ oversight and examination practices. See Plan for Prosperity. Read Buhrmaster Testimony. See ICBA Release.

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    Harvard Study: Expand Community Bank Regulatory Exemptions

    Harvard researchers recently released a study on the impact of new regulations on community banks. The working paper found that community banks serve a disproportionately large amount of key segments of the U.S. commercial bank lending market. However, the research concluded that their market share has declined, particularly since the passage of the Dodd-Frank Act. The paper recommended reforms to expand community bank regulatory exemptions, improve existing regulations, and reform the regulatory process to mitigate unintended consequences. The study includes recommendations from ICBA’s Plan for Prosperity regulatory relief platform which is supported by CBAI and used research from Continuity Control, a CBAI-recommended service partner. Read the Study.

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    "CBAI Connected to Community Banking"
    Is Sponsored
    by The SHAZAM Network

    Why trust your core and platform services to anyone else? With SHAZAM Core Services you have the choice and flexibility to work with whatever technology you want. SHAZAM efficiently integrates with non-core applications and our openness to working with third-party vendors delivers unlimited possibilities for your success. Learn More.


    CBAI Compensation Survey Now Online

    Want to know how your bank stacks up? The CBAI Officer Compensation Survey measures only Illinois community banks and reports the findings by geographical area and asset size. Benefits, directors’ fees, support personnel pay, holidays, and more are measured. Participating members get the results free!

    Nearly 250 Illinois community banks share vital compensation, bonus, and perquisite information with their counterparts on a confidential basis. The CBAI Officer Compensation Survey also encompasses asset-size changes, the pay of support personnel, directors' fees, and vacation and holiday policies.

    The results are categorized by geographical area (Chicago area, downstate urban, and downstate rural), and by five different asset sizes which gives banks the best peer review possible. And remember, your responses are kept confidential and are sent directly to the accounting firm of Eck, Schafer & Punke, LLP, Springfield, which compiles the results.

    Results (published mid-summer) are FREE to CBAI member banks which participate in the survey. Others may purchase results as follows:

    CBAI member banks not participating in the survey - $300
    Non-member banks participating in the survey - $300
    Non-member banks not participating in the survey - $500
    CBAI associate member firms - $300
    Non-member firms - $500

    For more information, contact Andrea Cusick, CBAI Senior Vice President Communications, at 217-529-2265 or 800-736-2224 or via email at cbaicom@cbai.com.

    To complete the CBAI Officer Compensation Survey, Click Here.

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    Rauner Outlines Budget to End "Financial Recklessness"

    Illinois Governor Bruce Rauner, in his first budget address, proposed a $31.5 billion budget for the fiscal year commencing July 1, 2015, down from the $35.6 billion budget for the current year. He recommended cuts in medicaid and aid to cities and mass transit, and to begin a plan to put state workers into a new lower-benefit pension plan.

    Rauner said, “This is our last, best chance to get our house in order.” Amid the cuts, he proposed increasing state aid to schools by $300 million. As expected, democratic leaders in the democratic-controlled House and Senate raised concerns about the cuts in spending and voiced the need for increasing revenues through higher taxes. See Tribune Article.

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    Register Now for CBAI's 31st Annual Capital Conference - April 15, 2015

    Capital Conference is slated for Wednesday, April 15. Headquarters for the event will be at the Hilton Hotel in downtown Springfield. This is your opportunity to make your voice heard with your local legislators and banking regulators!

    Registration is only $100 per institution (after April 1, $150) and covers the cost for ALL, so please bring as many officers, directors, and employees as you wish. Register Here.

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    CBAI and ICBA Back Bill Addressing Too-Big-To-Fail Subsidy

    CBAI and ICBA have expressed support for legislation to address the problem of too-big-to-fail subsidies. The Subsidy Reserve Act (H.R. 888), introduced by Rep. Michael Capuano (D-Mass.), would require the largest institutions to establish and maintain a reserve to be funded annually in the amount of their subsidy.

    In a letter to Capuano, ICBA wrote that too-big-to-fail subsidies have been confirmed by numerous reputable and independent studies, and community bankers support any and all serious and practical approaches to the subsidy problem, especially those that do not require complex rules and regulations. Read ICBA Letter.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    For some, the arrival of Friday the 13th brought with it ominous fears of misfortune and malady. Those suffering from such misgivings need to remember one thing; it’s bad luck to be superstitious. We learned this morning that some consumers may have run into some bad luck as the University of Michigan’s Index of Consumer Sentiment fell from its 11 year high of 98.1 to 93.6. A big surprise, and not a good one. Maybe, however, it should not have been a surprise since earlier in the week a harbinger of falling spirits arrived in the form of the National Federation of Independent Businesses (NFIB) Optimism Index. That measure of commercial hopefulness darkened significantly to 97.9 from 100.4. Are these the results of a perception at odds with rhetorical expectations or a reflection of a feared relapse into the gloaming? See More.


    Baker Economic Brief
    Jobs Report - First Blush

    The January jobs report shows continued strong gains as payrolls rose by 257K for the month, bringing the three-month average pace up to 336K, a level not seen since the late 1990s. Read More.


    Baker MBS Market Strategies
    MBA Mortgage Applications Down 9% - FHA Applications Continue to Increase

    According to the Mortgage Bankers Association (MBA), mortgage applications fell for the first week since January 23rd, led by a 10.3% decline in refis and a 6.5% drop in purchases. The MBA’s government refi index also fell, down 5.5%. However, both conventional and government applications remain near the highest levels since June 2013. Read More.

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    CBAI Files Amicus Curiae Brief to Protect Lender Interests

    The Community Bankers Association of Illinois (CBAI) filed an Amicus Curiae brief with the United States Supreme Court urging a reversal of an Eleventh Circuit Court of Appeals’ decision to permit wholly underwater junior liens to be stripped-off or voided in bankruptcy. This matter was brought to our attention by CBAI’s Associate Member SmithAmundsen LLC. Attorney John Collen of that firm drafted and submitted the brief on behalf of CBAI. CBAI’s Board of Directors unanimously approved the filing of this brief to protect the lender interests of Illinois community banks. Read More.

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    FHLB Chicago Announces 2014 Financial Results

    The Federal Home Loan Bank of Chicago last week announced its 2014 financial results highlighted by net income of $392 million compared to $343 million in 2013. Total assets increased to $71.8 billion at year-end 2014 compared to $68.8 billion at year-end 2013.

    During the year the Bank expanded products, increased the dividend on B1 activity stock, reduced membership investment requirements. Year over year growth in advances was outstanding in 2014. Read FHLB Chicago Member Letter.

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    2014 Farm Bill Reaches One-Year Anniversary

    The USDA recently acknowledged the first anniversary of the current Farm Bill which was signed into law on February 7, 2014. In a news release, the USDA praised the achievements of the legislation and its contributions to employment and economic growth. A Factsheet citing the progress of implementation of the Farm Bill’s provisions was also included. See USDA Release. See Farm Bill Factsheet.

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    Greg Ohlendorf Nominated to ICBA’s Board of Directors

    Greg Ohlendorf, president and CEO of First Community Bank and Trust in Beecher, has been nominated to ICBA’s new board of directors for 2015-2016. His term will commence during the 2015 ICBA National Convention which will be held March 1-5 in Orlando. CBAI congratulates Ohlendorf on his nomination and looks forward to working with him to represent the interests of Illinois community banks. Read More.

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    CBAI Announces Opening Breakfast Speaker at 41st Annual Convention & Expo

    The Opening Breakfast speaker at CBAI’s 41st Annual Convention & Expo, entitled “Community Bankers: Kickin’ It Country,” is Robin Crow. Crow has forged a remarkable career on his journey from RCA recording artist to successful entrepreneur, and has built several world-class businesses from scratch. He is an acclaimed public speaker with a client list that is a who's who of blue-chip corporations and forward-thinking organizations. His company, Dark Horse Recording, a four-studio complex and resort, has set the gold standard for customer service and excellence in the recording industry. It is home to Faith Hill, Neil Diamond, Taylor Swift, Matchbox 20, Tim McGraw, Michael W. Smith, Jewel, Alison Krauss and many others. In his presentation, Evolve or Die: Seven Steps to Rethink the Way You Do Business, Crow shares solid examples of companies that have successfully reinvented themselves by adapting to ongoing events as they occur.

    Make plans now to attend CBAI’s 41st Annual Convention & Expo on September 17-19, 2015, at the Omni Hotel in Nashville, TN. Early-bird registration information will be available in March.

    For additional information on the Opening Breakfast speaker, please Click Here.

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    BankTrends: 89% of Illinois Community Banks Profitable in Q4 2014

    According to a recent BankTrends analysis, 89% of Illinois community banks (< $10 billion in assets) were profitable in the fourth quarter of 2014, and nine out of 10 of the most profitable community banks had less than $1 billion in assets.

    BankTrends is a specialist in Call Report data analysis and a preferred service provider of Community BancService Corporation (CBSC), a CBAI affiliate. See BankTrends Report.

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    ICBA Files Amicus Brief in Director's Liability Case

    ICBA, together with The Clearing House Association and the American Association of Bank Directors, filed an amicus brief on behalf of the defendant directors in the case of FDIC, as Receiver for Cooperative Bank v. Rippy, et al. After being appointed receiver of Cooperative Bank, the FDIC sued the directors of that bank claiming that the directors violated the standard of conduct under North Carolina law for bank officers and directors. The trial court dismissed the FDIC's claims and the FDIC has appealed to the U.S. Court of Appeals for the Fourth Circuit.

    The central issue is whether directors and officers of a bank may be held liable in damages for what a jury determines in hindsight was ordinary negligence in the approval of particular loans. ICBA argued that, under the North Carolina business judgment rule, only a finding of gross negligence should give rise to liability; i.e., loan approvals made in good faith which the board members believed were in the best interests of the bank should not give rise to liability.

    This issue is important to community banks since an ordinary negligence standard would have a chilling effect on community bank director and officer decision making and would make it very difficult for community banks to recruit competent directors and officers. The trial court judge also excoriated the FDIC for the double standard in place for directors of mega banks versus community banks and that it would be unfair to hold a community bank director liable for simple negligence when so few of the directors of mega banks have been held liable for what happened during the recent banking crisis.

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    SHAZAM Adds Person-to-Person Payments to Its BOLT$ Mobile App

    A new update to SHAZAM BOLT$, the mobile app offered by the SHAZAM Network, will give debit cardholders even greater access to their cash. New features include a person-to-person (P2P) money transfer service and an interactive ATM locator. The app offers even greater value to community banks looking to provide expanded digital services, particularly P2P features, to their customers. According to research firm Forrester, P2P activity is expected to grow to $17 billion in volume by 2019. See More.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll if your bank currently offers a personal financial management solution (PFM). Click Here to view results of previous polls.

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    Blanket Lenders’ Single Interest (LSI) Protects Banks
    Virtually Eliminates the Burden of Tracking Borrower Insurance Policies

    Lenders Single Interest (LSI) policies protect community banks’ interest in titled property including autos, RVs, boats, mobile homes, repossessed property and filed UCC collateral from uninsured damage and theft. Coverage is provided for the bank and not the borrower which may include skip or confiscation, error or omission regarding its security interest, as well as liens from other creditors. Read More.

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    CBAI Legal: Illinois Court Says TILA applies to Refinancing, Not Modification

    In its January 21 opinion in the case of CitiMortgage vs. Bukowski, the First District Illinois Appellate Court ruled that while compliance with Truth in Lending Act (“TILA”) disclosures is necessary “when the original obligation is replaced with another, as in the case of a refinancing…courts have found that TILA does not apply in the context of loan modifications.” For more details on the case, Click Here.

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    Help Us Celebrate! Community Banking Week Is the Week of April 5th

    Order your bank’s FREE materials by contacting Bobbi Watson at bobbiw@cbai.com or 800/736-2224.

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    Three Ways to Avoid the Compliance Crackdown
    Regulators are issuing costly enforcement actions at record-high rates, and institutions must take steps to protect themselves.

    Moving into 2015, regulators are making a strong enforcement push when it comes to non-compliant community banks. In 2014, for the second year in a row, regulators issued more than 600 enforcement actions (EAs) against financial institutions, according to the Banking Compliance IndexSM (BCI). As a result, financial institutions paid EA-related penalties of $4.6 billion last year.

    At the same time, it’s a continual challenge for community banks to keep up with the rate and cost of regulatory change. The average $350-million community bank needed to devote an additional $147,000 to compliance and required the equivalent of an extra 1.57 full-time employees to handle the 302 regulatory changes added last year.

    However, the escalation in enforcement doesn’t seem to be changing anytime soon. In fact, it appears to be the new normal. How can your bank avoid enforcement trouble in the New Year? Continuity Control, a CBAI preferred service partner, offers helpful tips. See Helpful Tips.

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    Rewards-based Checking for Rising Rates
    High-yield, rewards-based checking accounts can help financial institutions weather a rise in interest rates.

    The Federal Reserve has signaled that rising interest rates might be on the way, raising the risk that community banks’ margins will be squeezed in the future. Help is available, though, and it comes from a somewhat surprising source: high-yield, reward-based checking accounts.

    Whenever rates go up, financial institutions will see their interest costs rise and their margins compress. That’s where high-yield reward checking accounts come in. Rates on these products are tiered and based on qualification criteria that not every account holder will meet, which provides a COF discount that other types of deposit accounts can’t match. For example, the median promotional rate nationwide for high-yield, reward-based checking accounts was 1.98% in 2013, according to our data. The median COF, however, was 0.94%, representing a 52% discount. By comparison, a 3.70% APY CD has a COF of exactly 3.70% (the average 3-year rate prior to the 2008 economic collapse). Read More from BancVue.

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    National Ag Day Is March 18. How Is Your Bank Observing It?

    Let CBAI know your plans. Your bank may be featured in Banknotes magazine! Send your story to Andrea Cusick, Banknotes editor. Deadline is March 31, 2015.

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    What’s Behind the Slow Fuse for Apple Pay Adoption?

    The adoption of the much-vaunted Apple Pay mobile wallet has been off to a slow start since its rollout in October. The number of consumers who used Apple Pay for their Black Friday Holiday shopping, the biggest day of the year, proved a loud and resounding dud. Read More.

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    Deposit Documentation Scheduled for February 23-26

    CBAI is pleased to offer “Deposit Documentation” in four locations this February. Each of the regulations, laws, or guidelines pertaining to deposit documentation have aspects that relate to the initial disclosures, but the emphasis of this class is on the how and why. Many things tellers and customer service representatives do are driven by these regulations, but too often circumstances can make it difficult for those employees to apply the regulations because they don't know the details. This seminar describes the requirements, explains in a straight-forward manner the basic principles, and then draws on real life experiences to explore how to apply those principles. Among the challenges covered are error resolutions, new-card issuance, replacement cards, delay of funds, honoring checks, split deposits, NSF checks, credit card checks, two-party checks, CD penalties, partial withdrawals, who can open an account, how can it be titled, who can I talk with about the account, identity theft, suspicious activity, and more. Tim Tedrick, CRCM, CRP, and partner at WIPFLi LLP in Sterling, leads this seminar. Tedrick is the head of the bank consulting practice and specializes in compliance, loan review, and internal audit.

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    Loan Documentation for Support Staff to be Held March 2-5

    Loan documentation is a critical component to lending. After the decision to make a loan has been made, the next step is the documentation-closing process. This part of the lending process is essential in order to avoid loan losses due to poor documentation. Many community banks assign this important responsibility to loan administrators with input from the sponsoring loan officer. If not performed properly, poor documentation can cause loans to be adversely classified, even if the underlying credit is sound or if the loan is performing as agreed. The purpose of this seminar is to provide participants with a good understanding of the loan documentation process. Participants are exposed to the five steps in the loan documentation process, which include identifying the borrower, identifying and documenting the collateral, evidencing the debt, attaching the collateral, and perfecting the security interest. Offered in four locations, this seminar is directed toward loan operations staff and loan administrators as the material focuses on the operational aspects of loan documentation. Leading this seminar is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, GA, who has more than 25 years’ experience in the banking field.

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    2015 CDD Spring Meeting Slated for March 17-18 in Bloomington-Normal

    The CDD Annual Spring Meeting scheduled for March 18, 2015, at the Bloomington-Normal Marriott Hotel & Conference Center, Normal, is geared toward honing professional and banking skills. In addition to the educational offerings, this year's meeting includes a fun and great networking opportunity at the hotel the evening of March 17 with a social event. The Spring Meeting begins with the popular Networking Session where bankers have an opportunity to engage in a roundtable discussion with other bankers sharing their job responsibilities. This is followed by a general session with John Wright entitled, “The Five Ups” followed by a set of breakout sessions: “The Rewards of Choosing A Career In Community Banking;” “Why the Bank Strategic Plan Matters to ALL Bank Employees;” and “Seven Habits of a Highly Effective Audit Committee.” The Business Meeting Luncheon which includes a CBSC services update by CBSC Vice President Services Mike Duke. The afternoon agenda features the following breakout sessions: “The TILA-RESPA Integrated Disclosures – Will the Integrated Loan Estimate Really Reduce Consumer Confusion?;” “The One-Minute Leader;” and “ALCO Committee Basics: Five Steps to Better Earnings & Lower Risks.” Next, the CDD Fall Meeting features a second Networking Session to allow you to participate in more roundtable discussions on a variety of topics. The Spring Meeting concludes with the general session from John Wright titled, “The River of Resistance.”

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    Global Cash Flow Scheduled for March 19-20

    During the most recent financial crisis, both federal and state regulators frequently commented that community bankers could have done better at global cash-flow analysis. Thus, to assist loan officers in sharpening their skills, CBAI has designed this one-day seminar. It utilizes the Uniform Cash Flow Analysis (UCA) method and provides guidance in calculating global cash-flow analysis for those entities that must rely on excess cash generated by their owners to service the business entity’s commercial debt. The use of several cases is provided in order to demonstrate global cash-flow analysis, including a case for the self-employed borrower with interests in several business entities. Upon completion of this course, attendees will have a good understanding of how cash flow is calculated and more importantly, how to interpret its meaning. Leading this seminar is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, GA, who has more than 25 years’ experience in the banking field.

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