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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 28, 2018

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • It’s Regulatory Relief Crunch Time!
  • Register Today for CBAI's 36th Annual Call on Washington
  • ICBA Calls for Senate Hearing on Credit Union Tax Subsidy
  • Credit Union CEO: Tax Large Credit Unions
  • CBAI's 34th Annual Capital Conference Registration is Underway
  • U.S. Chamber of Commerce Joins Reg Relief Fight
  • CNN Money: Small Banks Near Big Win on Dodd-Frank Rollback
  • FASB Finalizes Tax Law Accounting Update
  • Regulators Release 2018 HMDA Reporting Guide
  • State Regulators: Money Services Businesses Don't Deserve De-Risking
  • Community Banks Outperform Industry Hit by Q4 Tax Charges
  • Investment News from THE BAKER GROUP
  • Federal Reserve Maintains Cautious Approach in Congressional Report
  • Rural Index Highest in Nearly Four Years
  • State Supervisors Issue CECL Readiness Tool
  • The 2018 CBAI Compensation Survey Is Now Online!
  • CBIS: 2017 Insurance Marketplace Overview for Community Banks
  • Top Ten Operational Risks for 2018
  • ICBA Core Processor Resource Guide Now Available to CBAI Members
  • Alert! You Have Another Alert!
  • Midwest Select is Your Solution to Single Source Savings
  • Register Today for Early-Bird Pricing at CBAI’s 44th Annual Convention & Expo
  • BSA/AML Conference Set for March 7
  • Asset/Liability Management Seminar Slated for March 8
  • Universal Banker Skills Scheduled for March 14

  • It’s Regulatory Relief Crunch Time!

    Your Action Now Needed in the Senate as S. 2155 Nears Floor Debate

    With Congress back in session this week, ICBA President and CEO Cam Fine said the full Senate is expected to soon take up the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) which is strongly supported by CBAI and ICBA. The legislation enjoys broad bipartisan support following its passage in December by the Senate Banking Committee on a strong 16-7 vote. It now has 26 co-sponsors, including 13 Republicans, 12 Democrats and one Independent—offering a promising outlook for the upcoming Senate floor debate.

    Pending Senate legislation presents the best and most realistic opportunity for enacting much-needed regulatory relief, ICBA will tell the House Small Business Committee today. In a statement given during yesterday’s hearing on how red tape affects community banks and credit unions, ICBA reiterated its call for swift consideration of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) when it is sent over to the House from the Senate.

    This is our senators’ best opportunity to demonstrate their support for the community banking sector and the communities we serve. Senators Durbin and Duckworth are not currently co-sponsors of S. 2155, so please contact them immediately and urge their support. Read Fine’s Memo. Read Statement. Contact Senators Now!

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    Register Today for CBAI's 36th Annual Call on Washington

    CBAI's Call on Washington is to be held April 8-11, 2018, at the Grand Hyatt Washington. This is an annual lobbying trip organized by the CBAI. For 35 years, community bankers from across Illinois have been traveling to Washington, D.C. to express their position on issues to their Members of Congress.

    Call on Washington will once again be in conjunction with ICBA’s 2018 Capital Summit. Along with CBAI coordinated events, Illinois’ entire delegation is also invited to attend ICBA’s meetings and events.

    The timing of this years Call on Washington couldn't be better as legislators debate the meaningful regulatory relief prevision of S.2155. Community bankers need to continue to lobby Congress to push this bill over the finish line. See More Details and Register Here.

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    ICBA Calls for Senate Hearing on Credit Union Tax Subsidy

    On February 20, 2018, the ICBA asked Senate Finance Committee Chairman Orrin Hatch (R-Utah) to convene a hearing on the credit union industry’s tax exemption, noting in a letter that modern credit unions have failed in every aspect of their public mission and pose a threat to the American tax base.

    The request follows a letter from Senator Hatch to the National Credit Union Administration expressing concern that credit unions may be operating beyond their tax-exempt purpose. Indicating that the credit union tax exemption is valued at approximately $2.9 billion this year, Hatch cited several of the NCUA’s actions that have been long-opposed by CBAI and ICBA, including rules on field of membership, commercial lending, and alternative capital.

    “Today’s credit unions are virtually indistinguishable from taxpaying community and regional banks,” ICBA President and CEO Camden R. Fine wrote. “It is widely understood but rarely acknowledged that the tax exemption has outlived its purpose. Now is the time to have that discussion.”

    ICBA and state community banking associations across America including CBAI are united in opposition to the credit union industry’s unwarranted federal tax subsidy as well as the NCUA’s attempts to drastically increase the powers of tax-exempt credit unions beyond their statutory limits. Read Hatch Letter to NCUA. Read ICBA Letter to Senator Hatch. Read Release.

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    Credit Union CEO: Tax Large Credit Unions

    A credit union CEO is calling for large credit unions that operate like banks to be chartered and taxed like them. In a new op-ed, Idaho State University Credit Union President and CEO Rob Taylor wrote that many large credit unions—enabled by the National Credit Union Administration—are expanding to the detriment of smaller institutions that have stayed true to their original fields of membership.

    “When does ‘large enough to survive’ become too large to be considered a tax-exempt credit union, especially when they operate in the same manner as taxable banks?” Taylor wrote in American Banker and Credit Union Journal. “The largest bank headquartered in my home state of Idaho holds $1.3 billion in assets, which is less than half the size of the largest credit union based here.” Read Taylor’s Op-Ed.

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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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    Have you finalized your 2018 training plan? This is a great opportunity to prepare your organization to move out of disaster mode quickly and toward a resolution with SHAZAM Media Relations Training. Or, educate your community and invite business owners, city officials and law enforcement to participate in our Crisis Management skimming and card-cloning presentation. Spots are filling quickly, contact SHAZAM today.

    U.S. Chamber of Commerce Joins Reg Relief Fight

    The U.S. Chamber of Commerce is joining the fight for community bank regulatory relief with a new animated video espousing reforms to restore Main Street lending. As the Senate prepares to take up S. 2155, the video from the chamber’s Center for Capital Markets Competitiveness spotlights the role of community banks in spurring economic growth as well as the negative impact of one-size-fits-all regulatory burdens.

    CBAI, ICBA and the nation’s community bankers have led a comprehensive campaign to generate support for S. 2155, including meetings with key lawmakers, a multistate radio ad campaign, targeted op-eds in local newspapers, and outreach by state community banking groups. View the U.S. Chamber Video. Read More on S. 2155.

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    CNN Money: Small Banks Near Big Win on Dodd-Frank Rollback

    According to a recent CNN Money report, community banks and dozens of regional lenders may finally get much needed regulatory relief that has been pursued by CBAI and ICBA for the past several years.

    The Senate relief bill was crafted by Republican Senator Mike Crapo of Idaho, the chairman of the banking committee. It is backed by 12 mostly moderate Democrats and 12 Republicans. Majority Leader Senator Mitch McConnell is expected to bring the bill to the Senate floor as early as the last week of February. That timing could slip to as late as mid-March as senators finish their 2017 homework. What comes next will be a delicate negotiation to get a bipartisan bill across the finish line — an unusual feat in Congress these days. Read More.

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    FASB Finalizes Tax Law Accounting Update

    The Financial Accounting Standards Board recently approved a final standard to mitigate the negative impact of tax reform on deferred tax assets.

    The Tax Cuts and Jobs Act triggered the need to assess impairments of deferred tax items due to the change in the corporate tax rate and imbalances in accumulated other comprehensive income. FASB’s accounting standards update allows companies to reclassify as retained earnings tax amounts “stranded” in AOCI due to the tax law.

    The standard is effective for all banks for fiscal years beginning after Dec. 15, 2018, and interim periods within those fiscal years. Entities may reclassify the amounts and apply the guidance to their 2017 reporting results. The updates follow CBAI and ICBA comment letters that asked FASB and federal regulators to ensure tax reform doesn’t distort earnings and regulatory capital. Read More from FASB.

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    Regulators Release 2018 HMDA Reporting Guide

    The Federal Financial Institutions Examination Council released the 2018 edition of its guide to Home Mortgage Disclosure Act reporting. Developed by FFIEC agencies, the 2018 version reflects HMDA reporting updates that took effect on Jan. 1 and includes additional implementation materials in the appendices. Access the Guide.

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    State Regulators: Money Services Businesses Don't Deserve De-Risking

    State regulators reiterated their commitment to the responsible oversight of money service business (MSBs) and creating new solutions to keep pace with emerging and evolving risks that may impact the industry.

    These actions address a major concern: MSBs are too often the victim of de-risking – a practice in which MSBs are shut out of banking services, said Bryan Schneider, Secretary of the Illinois Department of Financial and Professional Regulation, at a recent hearing before the U.S. House of Representatives Subcommittee on Financial Institutions and Consumer Credit.

    Schneider, who also chairs the Conference of State Bank Supervisors (CSBS) Emerging Payments and Innovation Task Force, noted that state regulators are not just holding MSBs accountable; through CSBS they also are taking the following action:

    • Tracking MSB transactions through CSBS’s nationwide licensing system, which shows MSBs were on pace to handle over $1 trillion in transactions during 2017.
    • Providing self-assessment tools for MSBs to reduce uncertainty surrounding compliance, increase transparency and address de-risking.
    • Soliciting industry input and solutions on financial technology through an advisory panel to help state supervisors streamline and solve licensing and regulation friction points.
    • Creating a new technology platform designed to transform state examinations and help states respond to increasingly borderless financial markets.
    Also, last week several states, including Illinois, announced an agreement stating that if one of the participating states reviewed key elements of state licensing for an MSB, all them would accept the results. Read Schneider Testimony. See Agreement.

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    Community Banks Outperform Industry Hit by Q4 Tax Charges

    Community banks reported $4.1 billion in net income in the fourth quarter, declining 14.2 percent from last year due to one-time income tax charges from the new tax law. Excluding those charges, net income would have increased by 17 percent from a year ago. Community bank net operating revenue increased 7.2 percent, while net interest income rose 9.4 percent, noninterest income decreased 0.6 percent, and loan-loss provisions declined 3.5 percent.

    Overall, FDIC-insured institutions reported a 40.9 percent decline in net income from a year ago due to the one-time tax charges. Excluding those charges, net income would have decreased 2.3 percent in the fourth quarter. For the full year, net income dropped 3.5 percent, but would have risen 7.2 percent without the tax charges.

    Also in the fourth quarter, the FDIC’s Problem Bank List declined from 104 to 95, the lowest level since the first quarter of 2008. The Deposit Insurance Fund balance increased $2.2 billion to $92.7 billion, with the DIF reserve ratio rising to 1.30 percent from 1.28 percent at the end of September. Estimated insured deposits rose 0.8 percent. Read More from FDIC.

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    Investment News from THE BAKER GROUP

    Baker Market Update

    Those pesky Russians can’t seem to stay out of the news these days. Whether they’re hacking social media, meddling with elections, or blood-doping the curling team; yes, the curling team, those rowdy Russians can’t seem to avoid notoriety, and not the good kind. With the release recently of January’s FOMC minutes, many are wondering if the report did, in fact, actually come from the FOMC. See Baker Market Update.

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    Federal Reserve Maintains Cautious Approach in Congressional Report

    The Federal Reserve reported broad improvements to the U.S. economy in its latest report to Congress and indicated that it is comfortable with recent marketplace volatility. In its semiannual monetary policy report, the Fed said it expects inflation to stay at or below its 2 percent target this year, though it didn’t indicate whether it would pursue a more aggressive approach to raising benchmark interest rates in 2018. Read Fed Report.

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    Rural Index Highest in Nearly Four Years

    Creighton University’s index of the rural economy among several midwestern states advanced above growth-neutral for the first time since July 2015 to its highest reading since May 2014. The Rural Mainstreet Index soared to 54.8 from 46.8 in January on stronger hiring and confidence. Nevertheless, less than a quarter of respondents reported economic growth in their area, with weak commodity prices continuing to weigh on the rural economy. The February RMI for Illinois climbed to 54.4 from 46.4 in January. The farmland-price index rose to 46.1 from 42.1 in January. The state’s new-hiring index advanced to 58.1 from last month’s 50.2.

    Bank CEOs were asked how their banks were dealing with weak farm income. More than four in 10, or 45.2 percent, reported increasing collateral requirements, 21.4 percent indicated rejecting a higher percent of loan applications, and 11.9 percent reported reducing the average size of farm loans. On the other hand, one third reported no change in their farm lending practices. Read More.

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    State Supervisors Issue CECL Readiness Tool

    The Conference of State Bank Supervisors recently released a readiness tool to help financial institutions prepare for changes associated with the Financial Accounting Standards Board’s Current Expected Credit Loss standard. The tool provides a framework that financial institutions can use to plan for implementation as well as a guide with information examiners might find helpful if the tool is encountered in an examination. Access CSBS Readiness Tool Here. Access Additional CECL Resources Here.

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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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    CBIS: 2017 Insurance Marketplace Overview for Community Banks

    Banking entered 2017 with cautious optimism, having experienced several quarters of sustained economic improvement in the US markets, this provided greater stability for many institutions. The number of troubled banks continued its sharp decline, now at the lowest level seen since 2009.

    2017 also saw continued pressures from a number of angles: stricter regulation vs. non-bank competitors, continued low interest rates, changing customer behaviors and perhaps above all, new technological demands.

    Intrinsically tied to economic improvement and better bank performance, the insurance market responded accordingly. Renewal premiums for banks were stable. Read More from CBIS Gallagher.

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    Top Ten Operational Risks for 2018

    In a series of interviews held in January and February of 2018, spoke to chief risk officers, heads of operational risk, and senior practitioners at financial service firms including banks, insurers, asset managers and infrastructure providers. IT disruption and data compromise were ranked at the top. See Full Report.

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    ICBA Core Processor Resource Guide Now Available to CBAI Members

    Last month, ICBA released its Core Processor Resource Guide and related best practices for community banks and their core processors. The resources are aimed at helping community banks understand important aspects of managing the core processor relationship to maximize the return on their technology investments.

    Included in the ICBA Core Processor Resource Guide are recommended steps that community banks should take to manage their core processor, including assessing their business needs, determining whether to change core processors, conducting due diligence, and evaluating alternatives.

    The resources, which are now available to both ICBA and CBAI members, also offer community bankers insights into negotiating contracts as well as information about core conversion project management for those that decide to switch systems. See Core Processor Resource Guide (this is for CBAI Members Only and will require a username and password).

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    Alert! You Have Another Alert!

    More and more banks are trying to convince regulators, and themselves, that they have the capabilities to monitor, manage and respond to the endless cycle of alerts while successfully running their bank and taking care of their clients. Some would call that insanity. Read More from BankOnIT.

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    Midwest Select is Your Solution to Single Source Savings

    Midwest Select is a program recommended by CBSC that optimizes your profitability by consolidating your orders into a single source and simplifying your procurement in the process. Please visit or contact Kevin Gaffney at 217-303-5511 or for details. Learn More.

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    Register Today for Early-Bird Pricing at CBAI’s 44th Annual Convention & Expo

    Registration is now open for CBAI’s 44th Annual Convention & Expo, scheduled for September 27-29, 2018, at the Hyatt Regency St. Louis at The Arch. Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. This year's Opening Breakfast Speaker is Kevin Brown, whose unconventional path to business and personal success taught him that winning in business and in life requires anything but conventional thinking. His resume includes an eclectic mix of career stops that ultimately led him to the purchase of a franchise at the age of 17. After a career in franchising that spanned 30 years, Brown retired from corporate America to pursue his passion for effecting positive change for as many people and organizations as possible with his presentation, “The Hero Effect™ - Creating a Culture of Heroes at Every Level.” Also, on the agenda are the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed Exhibit Hall with nearly 90 booths, the Annual Business Meeting Luncheon, and much more. The Closing General Session speaker is Lieutenant Colonel Robert Darling. Handpicked to work for the White House Military Office, Airlift Operations Department, it was in that capacity that Lt. Col. Darling supported the President, Vice President, and National Security Advisor in the President's Emergency Operations Center (PEOC) on September 11, 2001.

    Don't wait! Register today for early-bird pricing and receive a significant discount to attend CBAI's annual showcase event! You won't want to miss it! Register Here!

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    BSA/AML Conference Set 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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    Asset/Liability Management Seminar Slated for March 8

    With the Federal Reserve amid its first tightening cycle in more than a decade, finding a balance between interest-rate risk, liquidity and performance has never been more critical. You can improve your liquidity position by holding a lot of cash, but performance suffers. You can increase performance with long-term fixed rate assets but may have to take on significant IRR to get there. Managing any one of these issues in isolation is easy but managing all three simultaneously is a challenge that all community banks must face. This program explores the unique relationship between IRR, liquidity and performance and give you specific ideas about how to manage all three simultaneously. It begins with a discussion of the current economic environment and the outlook for Federal Reserve monetary policy before looking at recent banking industry trends including a high-performance banking analysis. Discussions include topical regulatory and reporting issues related to interest-rate risk, liquidity and investments. Case studies are used to develop a Dynamic Liquidity Risk Management process and to present recommendations about how to improve investment portfolio performance while also managing IRR. It also examines the impact of recently passed tax reform on municipal bond valuations and whether banks should change their investment-portfolio management decisions as a result. Attendees see bank-specific data and analysis that include a peer group comparison, non-maturity deposit analysis, surge balance study and a Liquidity Stress Test. These analyses can be provided to each attendee after the session takes place. Ryan W. Hayhurst, managing director and member of the board of directors, and Matt Harris, CFA, senior vice president, at The Baker Group, Oklahoma City, lead this program.

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    Universal Banker Skills Scheduled for March 14

    The role of the personal/universal banker has been enhanced with the advancement of technology, but the customer emphasis has changed to relationship from transactions. Universal bankers used to enjoy a steady stream of customers at our branches. Now, most banks have peak periods when customers crowd their lobbies, but there are very real lulls during the business day that need to be filled with meaningful activity. The level of professionalism and commitment for universal bankers has never been as high. This lesson highlights the journey of continued skills development as bankers serve their customers and grow their banks. Jennie Sobecki, co-owner of Focused Results, a company concentrating in results-driven process consulting and training experience in community banks and financial institutions, leads this program.

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    THROUGH 04/30/2018






    Finer Points Blog

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