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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                                    March 2, 2016

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Register Now to Attend CBAI's 32nd Annual Capital Conference!
  • Community Bank Earnings Rise to $5.1 Billion in Fourth Quarter
  • CBAI and ICBA Urge Congressional Support for Priority Legislation
  • Federal Agencies Issue Interim Final Rule Extending Exam Cycle for Small Banks
  • Luetkemeyer Seeks FDIC Records on Account Terminations
  • Time to Hold Credit Unions to Their Mission
  • Investment News From THE BAKER GROUP
  • USDA Chief Economist Projects Three Percent (3%) Drop in Farm Income
  • Career Development Division Spring Meeting Schedule and Agenda Announced
  • CBAI LEGAL: Federal Authorities and the Right to Financial Privacy Act
  • Your Bank Could Win a $1,000 Scholarship to the Community Bankers School!
  • Five Ways to Boost Bank Revenue
  • CBIS Nicoud: What the Most Recent Data on Bank Robberies Tell Us
  • How Will Your IT Practices Hold Up in Court?
  • Are You Ready for the 2016 Illinois Community Banking Week?
  • Exclusive CBAI Member Promotion from Midwest Office
  • Music Video Takes Satirical Swing at “Too Big to Fail”
  • FAQs for the CBAI 401(k) Multiple Employer Plan
  • 2016 CBAI Group Meeting Schedule and After-Dinner Presentation Now Complete
  • Consumer and Commercial Loan Documentation Slated for March 21-24
  • A/L Management: Investments, Liquidity, and Interest-Rate-Risk on March 31
  • Residential Real Estate Lending Institute Scheduled for April 4-6
  • Accounting Basics/Refresher to be Held April 11


  • Register Now to Attend CBAI's 32nd Annual Capital Conference!

    CBAI's Capital Conference is scheduled for Wednesday, April 20 at the Wyndham Springfield City Centre (formerly Hilton Springfield). Make your voice heard with your local legislators and banking regulators. In addition to hands-on lobbying at the state Capitol, the agenda will include meetings with constitutional officers, legislative leaders and regulators. The day will begin with the annual luncheon and conclude with the very popular legislative reception.

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

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    Community Bank Earnings Rise to $5.1 Billion in Fourth Quarter

    Community banks reported $5.1 billion in net income in the fourth quarter, an increase of 4 percent from the fourth quarter of 2014, according to the FDIC’s Quarterly Banking Profile. Net operating revenue at the 5,735 insured institutions identified as community banks rose 7.4 percent from a year ago to $22.6 billion.

    Overall, insured institutions reported net income of $40.8 billion in the fourth quarter, an increase of 11.9 percent from a year earlier. The increase in earnings was mainly attributable to a 4 percent increase in net operating revenue to $174 billion and a $2.7 billion decline in noninterest expenses. Total loan and lease balances increased 2.3 percent, though net loan and lease charge-offs increased 7 percent, the first increase since the second quarter of 2010. There are now 183 banks on the problem list.

    The Deposit Insurance Fund increased from $70.1 billion in the third quarter to $72.6 billion in the fourth quarter, largely driven by $2.2 billion in assessment income. The DIF reserve ratio rose from 1.09 percent to 1.11 percent and is on track to meet the mandated 1.35 percent by the third quarter of 2020. Read FDIC Release.

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    CBAI and ICBA Urge Congressional Support for Priority Legislation

    ICBA recently introduced its updated Plan for Prosperity platform to Congress and laid out its top-priority regulatory relief legislation in messages to the House and Senate. ICBA also launched a customizable letter fully supported by CBAI that community bankers can use to urge Congress to support and cosponsor the bills that best represent the Plan for Prosperity:

    • the CLEAR Relief Act (H.R. 1233/S. 812) with mortgage and Sarbanes-Oxley relief,
    • the CLEAR Relief Plus Act (S. 927) to implement a short-form call report,
    • the Community Bank Access to Capital Act (H.R. 1523/S. 1816) to exempt community banks from Basel III,
    • the CFPB Examination and Reporting Threshold Act (H.R. 4099/S. 482) to expand exemptions from CFPB requirements, and
    • the community bank provisions of the multipronged Financial Regulatory Improvement Act (S. 1484). Read Plan for Prosperity. Contact Congress Today.
    ICBA’s Fine Urges Congress Not to Wait Till November for Regulatory Relief

    While presidential candidates from across the political spectrum have agreed on the need for community bank regulatory relief, there’s no need to wait until November to act, ICBA President and CEO Cam Fine wrote in a new American Banker op-ed. Fine spotlighted ICBA’s updated Plan for Prosperity, a platform of regulatory relief provisions that Congress can quickly pass to ease the burden on community banks.

    “The bottom line is that we don’t need to count on grandiose stump speeches and campaign pledges to make a difference for Main Street banking,” Fine wrote. “Community bankers nationwide already know what policy changes will have a practical impact on their ability to put a borrower in their first home or help someone start or expand their small business.” Read Fine’s Op-Ed.

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    There’s still time to register for SHAZAM’s 2016 Forum! We’ll be sharing great ideas you can apply to your business to increase sales, enhance operational efficiency and keep your organization secure. And this year’s extras are on fire! Enjoy networking and trivia during our welcome event, discuss industry-related topics during the peer-to-peer networking reception and experience the high-energy entertainment of Deuces Wild! dueling pianos. Don’t miss SHAZAM’s 2016 Forum, Register Today!



    Federal Agencies Issue Interim Final Rule Extending Exam Cycle for Small Banks

    The Federal Reserve, OCC, and FDIC issued last Friday an interim final rule allowing highly-rated, well-managed banks with less than $1 billion in assets to qualify for an 18-month examination cycle.

    The rule implements a statute passed by Congress in December amending the Federal Deposit Insurance Act authorizing the federal regulatory agencies to raise the threshold for 18-month exam cycles from $500 million to $1 billion for 1- and 2-rated banks. According to the Federal Reserve, the rule will allow for an additional 617 banks to qualify for the extended exam cycle, bringing the total number of qualifying banks to nearly 5,000.

    CSBS and state regulators have long supported an extended exam cycle for small, well-managed financial institutions. CSBS first proposed an 18-month exam cycle for well-managed banks under $1 billion to Congress in March 2005. In 2006, Idaho Director of Finance Gavin Gee testified to the Senate Banking Committee in support of extending the examination cycle. In February 2015, Arkansas Commissioner Candace Franks supported these changes before the Senate Banking Committee, and Commissioner of the Texas Department of Banking Charles Cooper similarly testified before a House Financial Services subcommittee in April. Read Federal Reserve Statement.

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    Luetkemeyer Seeks FDIC Records on Account Terminations

    The leading congressional critic of Operation Choke Point asked the FDIC to provide information on the number of account termination requests and orders it implemented under the initiative. Rep. Blaine Luetkemeyer (R-Mo.) said Congress should be able to review the impact of the FDIC’s January 2015 guidance that distanced the agency from the program it operated in conjunction with the Justice Department.

    The FDIC has encouraged supervised institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers. That guidance followed community banker and congressional pushback against Operation Choke Point, which targeted firms that process payments for businesses engaged in “higher-risk” activities.

    Luetkemeyer noted that the House last month passed CBAI and ICBA-supported legislation (H.R. 766) barring regulatory agencies from ordering financial institutions to terminate a banking relationship unless the agencies have material reason. CBAI and ICBA have repeatedly called for a suspension of Operation Choke Point and support Luetkemeyer’s efforts to protect financial institutions and their customers from the initiative. Read Luetkemeyer Letter to FDIC. Read FDIC Statement on Bank Customer Relationships.

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    Time to Hold Credit Unions to Their Mission

    ICBA called on Congress to oppose credit union efforts to relax business-lending and membership restrictions on the tax-exempt industry. In a message to Congress that coincides with a credit union industry Capitol Hill fly-in, ICBA noted that credit unions recently skirted Congress to expand their commercial lending powers and now are asking for even more from lawmakers.

    Credit unions are advocating legislation (H.R. 1188/S. 2028) to more than double the cap on credit union member business loans a week after the National Credit Union Administration approved a final rule that sidesteps Congress to expand member business lending powers. ICBA noted in its message to lawmakers that the NCUA rule ignores the ongoing policy debate at the same time that it is advancing a plan to dramatically expand field-of-membership rules.

    CBAI and ICBA continues to strongly oppose expanded powers for credit unions as long as they remain exempt from taxation and regulations such as the Community Reinvestment Act. Read Message to Congress.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    A recent report from the Bureau of Economic Analysis revealed that, mainly due to a change in the valuation of business inventories, the second of what will eventually be three tallies, came in at 1%. See Baker Market Update.

    Baker: Interest Rate Risk Management for Directors Webinar

    Presented by Dale Sheller Financial Strategies Group
    Wednesday, March 23, 2016
    10:30 – 11:45 a.m.

    For more information, Click Here.

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    USDA Chief Economist Projects Three Percent (3%) Drop in Farm Income

    Net farm income is projected to drop by three percent (3%) in 2016 from last year, according to USDA Chief Economist Rob Johansson. Speaking at the USDA’s 92nd Annual Outlook Conference. Johansson said the $1.5 billion is due largely to weak global economic growth, a strong U.S. dollar and record global supplies of grains and oilseeds combined with modest demand. U.S. farm exports are projected to drop by more than 10 percent, partially due to China’s economic problems. Read Presentation. View Slides.

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    Career Development Division Spring Meeting Schedule and Agenda Announced

    Registration Now Open!

    The CDD Annual Spring Meeting, scheduled for May 24, 2016 at the Hyatt Regency at the Arch in St. Louis, is geared toward honing professional and banking skills. If you are a CDD member, then now is a great time to register for this information-packed event. If you are not yet a CDD member, now is the perfect time to join!

    In addition to the educational offerings, this year's meeting includes a fun and great networking opportunity at Busch Stadium on May 23, 2016, where the entertainment for the evening is a Cardinals/Cubs Baseball Game! For more information and to register, Click Here.

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    CBAI LEGAL: Federal Authorities and the Right to Financial Privacy Act

    An FBI agent enters your bank with a court-issued subpoena and requests bank statements of a customer whom the FBI is investigating for possible handling of drug sale proceeds. Does your bank provide the records? Not so fast, according to the federal Right to Financial Privacy Act of 1978. See Most Recent CBAI LEGAL.

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    Your Bank Could Win a $1,000 Scholarship to the Community Bankers School!

    Visit iHELP’s Booth at the ICBA Convention (#703) to Register!

    iHELP, a provider of student loans for community banks, has graciously offered a $1,000 scholarship to the Community Bankers School for an Illinois bank represented at the upcoming ICBA Convention in New Orleans. Simply stop by the iHELP booth (#i703) to register. The winning name will be drawn Monday evening at the CBAI reception for Illinois bankers.

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    Five Ways to Boost Bank Revenue

    Revenue generation is a perennial challenge for many banks, especially during this prolonged period of low interest rates. Peyton Patterson, a bank consultant with nearly three decades of banking experience, offers suggestions for community banks to enhance and diversify their revenue streams while strengthening their value proposition. Read More.

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    CBIS Nicoud: The Hidden Complexities in a Bank’s Commercial Insurance Program

    As a financial institution specialist and as a genuine risk-management partner to community banks, CBIS professionals feel that our job is to know cold every facet of our partners’ businesses. It is only by way of that process that we feel we can honestly compete for community banks’ business as a specialist, a distinction we regard with the utmost seriousness. Read More from CBIS Nicoud.

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    How Will Your IT Practices Hold Up in Court?

    A bank’s information security risks include not just regulatory risk, but also financial risk, reputation risk and business continuity risk. Most banks may not be considering that the condition of their information security systems and processes can also be a source of litigation risk. Banks could be sued by customers (and employees) for “negligence” if confidential information is stolen. Read BankOnIT Blog.

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    Are You Ready for the 2016 Illinois Community Banking Week?

    Community Banking Week in Illinois is April 3-9 to coincide with National Community Banking Week in April. Order your bank’s FREE materials by contacting Bobbi Watson, CBAI Communications administrative assistant, at 800/736-2224 or bobbiw@cbai.com.

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    Exclusive CBAI Member Promotion from Midwest Office

    Midwest Office and HP have paired up to offer all CBAI Members an exclusive promotion for the month of March! Click Here to Receive a $50 VISA Gift Card!

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    Music Video Takes Satirical Swing at “Too Big to Fail”

    The Austin Lounge Lizards, a folk/country musical band that specializes in satirical songwriting, focused its creative talents on too-big-to-fail institutions. See Video.

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    FAQs for the CBAI 401(k) Multiple Employer Plan

    Your most commonly asked questions about CBAI’s 401(k) Multiple Employer Plan are answered. Learn more about this special service designed to reduce bank liability and deliver exceptional service. View Here.

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    2016 CBAI Group Meeting Schedule and After-Dinner Presentation Now Complete

    CBAI leaders and executive staff are visiting 11 locations on the 2016 Group Meeting tour this spring. This year’s after dinner topic is “The Financial Technology Revolution,” presented by Michael Peterson, manager of financial institution sales at FiTech. The wind of change in the payments world is gaining in strength as financial technology’s “fintech” potential to alter how, where and when payments are made – as well as who it is that facilitates them. This presentation explores the growing capabilities and threats of fintech in both the consumer/retail and corporate arenas. Without a doubt, the era of fintech is upon us and banks can’t merely be mindful of this; they must also have a clear plan in place in order to adapt to and benefit from fintech-fueled changes.

    Consisting of an optional golf outing and a dinner meeting, each Group Meeting also provides an excellent opportunity to get the latest information on key banking issues and catch up with friends and peers. (Note: The Groups 1, 2 & 3 meeting will include a lunch, meeting, and golf outing.) Make plans now to attend!

    For more information on the 2016 Group Meetings after-dinner presentation and schedule, please Click Here.

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    Consumer and Commercial Loan Documentation Slated for March 21-24

    Loan Documentation is a critical component in 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 officers and loan administrators. 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. Consumer Loan Documentation is scheduled for March 21 in Springfield and March 23 in Lisle. Commercial Loan Documentation is scheduled for March 22 in Springfield and March 24 in Lisle. Participants can attend either seminar, or choose to attend both at a discounted fee. The purpose of these workshops is to provide participants with a good understanding of the consumer and commercial loan documentation process. Participants are exposed to the five steps in loan documentation, which include identifying the borrower, identifying and documenting the collateral, evidencing the debt, attaching the collateral, and perfecting the security interest. Leading these seminars is Jeffery Johnson, president of Bankers Insight Group, Atlanta, GA, who has more than 25 years’ experience in banking. Details Here.

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    A/L Management: Investments, Liquidity, and Interest-Rate-Risk on March 31

    With the Federal Reserve's first tightening cycle in more than a decade finally upon us, interest-rate risk is no longer a future possibility but is now a current reality. What should banks do now to manage through this period of volatile interest rates? This seminar discusses optimal strategies, necessary reporting tools, and recommended processes for management of community-bank investments and interest-rate risk. It begins with a review of current national and local economic conditions and the outlook for monetary policy in 2016. Then it discusses a range of interest-rate-risk related issues you may face in the next rate cycle and provide specific examples of the types of analysis that are necessary to comply with heightened regulatory scrutiny on IRR. Finally, the seminar turns your attention to the bond portfolio and discusses specific strategies to manage risk and maximize performance using the one part of the balance sheet that does not talk back. Directors, CEOs, CFOs, investment officers, portfolio managers, and anyone involved in the financial management of community banks would benefit from attending this seminar. Leading this seminar is Ryan W. Hayhurst, managing director and member of the board of directors, and Dale Sheller, financial strategist, both of The Baker Group, Oklahoma City, OK.

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    Residential Real Estate Lending Institute Scheduled for April 4-6

    This three-day mini-institute provides the real-estate lending professional with a solid foundation for managing and producing a quality mortgage portfolio. This hands-on institute includes exercises in buying and selling mortgages in the secondary markets, a visit to a construction site, and analysis of the tax return of a self-employed borrower. The institute’s objective is to assist the participants in three areas: improved customer service, more efficient processing and servicing, and stronger underwriting. All of these should result in increased earnings from the mortgage portfolio. The “new” underwriting findings are also discussed. Topics covered on day one include secondary mortgage market, loan applications and interviewing, lending to self-employed borrowers, and underwriting. Day two discusses regulatory compliance, loan origination, and construction financing and site visit. Day three concludes the institute with how to analyze appraisals and loan processing. David Kemp, founder and president of Bankers Management, Inc., a financial management consulting and training firm in College Park, GA, heads the distinguished faculty. Joining Kemp on the faculty is Bill Elliott, CRCM, senior consultant and manager of compliance with Young & Associates, Inc., in Kent, OH.

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    Accounting Basics/Refresher to be Held for April 11

    This seminar provides participants with a refresher on the basics of accounting. It demonstrates the 10-step cycle, leading up to the creation of the income statement, statement of owner’s equity, balance sheet, and statement of cash flows and how these financial statements connected to one another. Numerous “hands-on” examples are included to reinforce the accounting concepts. Anyone who is in need of a refresher on the basics of accounting would benefit from attending this seminar. Topics covered include the four major financial statements; rules of credits and debits; accrual versus cash-basis accounting; adjusting entries; accounting for inventories and receivables; long-term disabilities and depreciation; analysis of notes to the financial statements; and types of financial statements and the CPA opinion. Leading this seminar is Jeffery Johnson, president of Bankers Insight Group, Atlanta, GA, who has more than 25 years’ experience in banking.

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