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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                     March 5, 2014

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • FDIC-Insured Institutions Earned $40.3B in Fourth Quarter
  • Register Now for CBAI’s 30th Annual Capital Conference!
  • Career Development Division (CDD) Spring Meeting Coming March 18-19
  • Join CBAI’s Career Development Division!
  • Hoenig: Too-Big-To-Fail Remains Economic Threat
  • Big Banks Equal Big Fees
  • Most Americans Still Angry with Big Banks
  • CBAI Compensation Survey Now Online (Results Free to Participants!)
  • Register Now! CBAI's 32nd Annual Call on Washington April 29 - May 2
  • Baker Market Update
  • Rural Mainstreet Economy Slightly Weakens in February
  • Chart of the Day: Median ROAA Drops Slightly Year-Over-Year
  • CBAI Announces 2014 Group Meeting After-Dinner Topic and Speakers
  • Strategic Planning: What Questions Should Your Board Be Answering?
  • Online Loan Exchanges Expand Lending Options for Community Banks
  • Consumer Tips on How To Avoid Seven Mobile Banking Threats
  • Secrets to “Very Profitable” Debit Card Programs
  • New SBA Changes and the Lender Credit Memo
  • Five Ways To Prove You’re a Trustworthy Bank
  • Unclear Whether President’s Minimum Wage Executive Order Will Apply to Banks
  • Sageworks: Collateral Valuation and Documentation
  • Webcast: Account Holder Insights that Unlock Greater Profit Potential
  • Directors’ Workshop To Be Held March 17, 18 & 20
  • Loan Estimate and Closing Disclosures Scheduled for March 24 & 28
  • Residential Real Estate Lending Institute Set for March 25-27
  • CBAI Reveals 2014 Convention Golf Outing Location

  • FDIC-Insured Institutions Earned $40.3B in Fourth Quarter

    FDIC-insured banks and thrifts reported aggregate net income of $40.3 billion in the fourth quarter of 2013, a 16.9 percent increase from the previous year, according to the agency’s Quarterly Banking Profile. The improvement in earnings was mainly due to an $8.1 billion decline in loan-loss provisions.

    Community banks reported increased loan balances across all loan categories. Net interest margins increased for all but the largest banks, and community bank NIMs were 37 basis points higher than the overall industry average.

    More than half of the 6,812 insured institutions reporting (53 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable fell to 12.2 percent from 15 percent a year ago. Lower income stemming from reduced mortgage activity and a drop in trading revenue contributed to a year-over-year decline in net operating revenue.

    The number of banks on the “Problem List” fell for the 11th consecutive quarter, declining from 515 to 467. Two FDIC-insured institutions failed in the fourth quarter, and there were 24 failures in 2013, down from 51 in 2012. The Deposit Insurance Fund balance continued to increase, rising to $47.2 billion as of Dec. 31 from $40.8 billion the previous quarter. Estimated insured deposits increased 0.7 percent, and the DIF reserve ratio rose to 0.79 percent from 0.68 percent the previous quarter and from 0.44 percent a year ago. By law, the DIF must achieve a minimum reserve ratio of 1.35 percent by 2020.

    The average return on assets rose to 1.10 percent from 0.96 percent a year ago, and the average return on equity increased from 8.53 percent to 9.87 percent. Nevertheless, FDIC Chairman Martin J. Gruenberg said that challenges remain in the industry, such as narrow margins, modest loan growth and a decline in mortgage refinancing activity.
    See FDIC Release. See FDIC Quarterly Banking Profile. See Illinois Banking Performance Summary.

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    Register Now for CBAI’s 30th Annual Capital Conference!

    Your Participation Important in This Election Year

    On April 9 at the Hilton Hotel in downtown Springfield, community bankers from across the state will meet to address key banking issues and visit with elected officials during CBAI’s 30th Annual Capital Conference.

    Your bank’s participation is important to show strength in numbers and impress upon legislators that community bankers are paying attention to what happens in Springfield and prepared to stand up for what’s in our best interests.

    We’ve made the event very affordable. For just $100 (until March 26), you can register all of your officers, directors, and employees for this annual one-day event. The fee covers lunch, transportation to and from the Capitol, and a reception with heavy hors d’oeuvres!
    More Details Here. Registration Form Here.

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    Career Development Division (CDD) Spring Meeting Coming March 18-19

    The CDD Annual Spring Meeting is scheduled for March 18-19, at the Hilton Hotel in Springfield. This conference combines motivational, energetic, and informative general sessions with important messages for today’s banker, as well as six breakout sessions with practical solutions and ideas that can be immediately implemented at the bank and a fun-filled social event. Additional conference highlights include:

      David Kemp, president of Bankers Management Inc., is conducting two general sessions at the conference entitled, “The Next Two – Three Years in Community Banking,” and “Leadership That Gets Results!”
      Two networking sessions and the Business Meeting Luncheon, featuring a legislative update, elections of officers, and the Career Banker and Economic Educator of the year awards, are conducted at the conference.
      Social Event – Join us on March 18 from 7 – 9:30 p.m. for an evening of networking fun at the Hilton Hotel where Coole 2 Duel will take the stage. Back by popular demand, Coole 2 Duel will have a dueling piano show. Make sure you bring you requests! This event includes an appetizer buffet, cash bar, and of course, music. This event is included in your registration fee.

    Register Now!

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    Join CBAI’s Career Development Division!

    Are you or someone at your bank a rising star? Are you looking to become more involved not only in your bank, but also your community? If so, the CBAI Career Development Division is the place to start! The future of community banking depends upon a new generation of bankers and community bank supporters — progressive, energetic, community-minded, and well-informed. The purpose of CBAI's Career Development Division (CDD) is to keep members on the cutting edge of community banking through:

      • Quality Educational Programs
      • Professional Publications
      • Leadership Training
      • Networking Opportunities

    Make an investment in the future of community banking today. CBAI's Career Development Division, the only one of its kind in Illinois, is dedicated to advancing the principles of community banking. Register by March 15, 2014, to obtain the special offer of $105 for the first member, $95 for a subsequent membership from the same bank/firm. To register, please complete the
    attached form or contact Melinda McClelland at

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    Hoenig: Too-Big-To-Fail Remains Economic Threat

    The nation’s too-big-to-fail problem remains a threat to economic stability which is antithetical to capitalism, FDIC Vice Chairman Tom Hoenig stated last week. He outlined potential responses to the too-big-to-fail problem, such as simplifying the corporate structure of megabanks and requiring global banking companies to establish separate operating subsidiaries within each country.

    “It is fundamental to capitalism that markets be allowed to clear in an open, fair manner and that all participants play by the same rules. A situation whereby oligopolies that evolve into institutions that are too big to fail, and are so significant and complex that should they fail the economy fails, is not market economics. To ignore these circumstances is to invite crisis.” CBAI fully concurs with Hoenig's concerns.
    See Hoenig Speech.

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    Big Banks Equal Big Fees

    Recent research conducted by found that bank fees increased in the second half of 2013, and the mega banks were the primary reason. The survey revealed that no-fee checking accounts are continuing to decline. Richard Barrington, senior financial analyst for, said the trend toward higher rates at large banks may be especially harmful to consumers due to the mega banks' market share. These findings underscore the importance of maintaining a vibrant community banking system for the benefit of Main Street America and its consumers.
    See Article.

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    Most Americans Still Angry with Big Banks

    Nearly Half Say It’s Important To Bank Locally

    According to the first Consumer Banking Insights Study, conducted by Harris Poll in December of 2013, nearly 8 in 10 Americans feel the big banks are to blame for the financial crisis of 2008, and more than five years later, 66 percent remain angry at the big banks for the crisis.

    The study, which surveyed more than 1,000 U.S. adults, was commissioned by more than 200 community banks and credit unions in partnership with Kasasa. “Following the financial crisis, people really want to support local banks that create jobs and boost local communities,” said Gabe Krajicek, CEO of Kasasa. Almost half of the survey respondents said it’s important to bank locally, while 78 percent said it’s at least somewhat important to bank locally.

    CBSC is a marketing partner with Kasasa, a national brand of rewards checking and savings accounts exclusively available to community banks.
    See BankNews Article.

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    CBAI Compensation Survey Now Online (Results Free to Participants!)

    How does your bank compensation stack up? CBAI’s 24th Annual Officer Compensation Survey registers officer salary, incentives, benefits, total compensation and more. It also tabulates support personnel benefits and compensation, plus compensation to bank directors. Peer results will include information based on bank asset size and geographical location. Participating CBAI members receive the Survey results free-of-charge.

    For a .pdf of the Survey to use as a worksheet,
    Click Here.

    To complete the actual Survey, Click Here.

    For questions, contact Andrea Cusick, CBAI Senior Vice President Communications.

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    Register Now! CBAI's 32nd Annual Call on Washington April 29 - May 2

    Please join us for CBAI's 32nd Annual Call on Washington which will be held at the Omni Shoreham Hotel, Washington, D.C.

    Celebrating its 32nd year, CBAI bankers from across Illinois will travel to Washington, D.C. and call on their members of Congress and federal regulators to support issues of importance to Illinois community banks. YOUR VOICE DOES MAKE A DIFFERENCE! Now is the time to get involved.

    Again this year our Call on Washington will be held in conjunction with ICBA's Washington Policy Summit. Along with CBAI coordinated events, our entire delegation will attend ICBA's meetings and events.

    CLICK HERE for more information and to register.

    Please contact David Schroeder at 847-909-8341 or Jessie Schmidt at 800-736-2224 with any questions or comments.

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    Baker Market Update

    According to Janet Yellen, the soft patch the economy is currently experiencing is really just an icy patch. The nascent Fed Chairwoman just may know what she’s talking about since her Senate testimony last week was supposed to happen a couple of weeks ago.
    See Baker Market Update.

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    Rural Mainstreet Economy Slightly Weakens in February

    Farmland Prices Expected to Decline in 2014

    The February Rural Mainstreet Index, conducted by Creighton University, indicates a slight economic downturn with harsh weather as a factor. Community bank CEOs around the Midwest expect farmland prices to decline by 3.2 percent over the next year.
    See Midwest Economy Report.

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    Chart of the Day: Median ROAA Drops Slightly Year-Over-Year

    2013 proved to be a slightly tougher earnings year when compared to year-end 2012 as community bank median ROAAs dropped between -0.8% to -6.9% depending on the asset group. There was one outlier group; the median for Sub Chapter S banks between $500M - $1B rose 3.4% during the same period. Depending on asset size, the percentage of C Corp banks with ROAA equal to or greater than 1% ranges from 17% to 42%.
    See Chart.

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    CBAI Announces 2014 Group Meeting After-Dinner Topic and Speakers

    CBAI leaders and executive staff are visiting 11 locations on the 2014 Group Meeting tour this spring. Bankers from more than 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: Groups 1, 2 & 3 this year will include a lunch, meeting, and golf outing).

    Leading the after-dinner presentation are representatives from SHAZAM® Network, including Jim Ghiglieri, SVP of relationship development, Dan Kramer, SVP of marketing and merchant services, and Tom Miller, SVP of sales. Their presentation, “Changing Trends in Electronic Funds Transfer,” discusses how emerging trends in the payments arena put new demands on your institution. Discover current trends in EMV migration and the pros and cons of EMV deployment both at the ATM and to your cardholders. You also hear the truth about EMV and data breaches. Using data from existing products, you learn the latest in mobile commerce and alerting. The session also addresses merchant-transaction routing and the impact to your bottom line, and new ATM capabilities that can help reduce fraud and increase product marketing that will positively impact your institution. You also learn why keeping abreast of these changes maintains your reputation as a leader in your marketplace and helps meet the needs of your customers.
    See Group Meeting Schedule.

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    Strategic Planning: What Questions Should Your Board Be Answering?

    It’s important for community bank boards to invest the time necessary to develop a detailed strategy for where they want to go and how they want to get there. Here are some fundamental questions worthy of consideration for your next strategic planning session.
    See Godfrey & Kahn Article.

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    Online Loan Exchanges Expand Lending Options for Community Banks

    Community banks now have more options to participate in a commercial loan deal, shed loans to reduce concentrations, or have a specialty lender take over a credit until a borrower better fits the bank’s profile.
    See Lender Life Article.

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    Consumer Tips on How To Avoid Seven Mobile Banking Threats

    As a growing number of Americans begin using smartphones for mobile banking, experts warn that consumers should be cognizant of the dangers in using these devices to manage their finances. Several potential weak spots of mobile banking have been identified with suggestions how to overcome them from a consumer perspective.
    See BankRate Article.

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    Secrets to “Very Profitable” Debit-Card Programs

    In the recent ICBA Community Bank Payments Survey, most bankers rated their debit-card programs as “somewhat profitable” while only 17 percent said their debit-card programs were “very profitable.” Some of those bankers were interviewed to identify how they measure, and boost, profitability in their debit-card programs.
    See Payments Exchange Article.

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    New SBA Changes and the Lender Credit Memo

    According to CBAI associate member Holtmeyer & Monson, as of January 1, 2014, SBA SOP 50 10 5(7) made the Lender Credit Memo contents much more critical to the loan-application process. Nine
    key items must now be included.

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    Five Ways To Prove You’re a Trustworthy Bank

    Since 2008, consumer confidence in financial institutions has declined 46 percent in the U.S. Millennials are four times more likely than their parents to seek input beyond that of a financial advisor. … On the upside, those same young adults actively seek information about purchasing and investing and, while they are certainly technology dependent, they crave good old personal support and advice from knowledgeable people.
    Learn how your bank can better position itself as a trusted advisor.

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    Unclear Whether President’s Minimum Wage Executive Order Will Apply to Banks

    On February 12, 2014 President Obama signed an Executive Order mandating that employers having a federal contract or “contract-like instrument” will begin paying a minimum wage of $10.10 per hour after January 1, 2015. Whether community banks will be deemed to be federal contractors subject to the new minimum-wage mandate is unknown at this time, as the U.S. Department of Labor’s regulations implementing the Executive Order (including defined terms) are not expected until October of 2014.
    Read More.

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    Sageworks: Collateral Valuation and Documentation

    An important component of a bank’s allowance calculation is identifying FAS 114 loans for impairment. One of the most widely used impairment methods is the Fair Market Value of Collateral, since many banks and credit unions must accommodate collateral-dependent loans or loans on which the borrower is not expected to make future cash payments. Sageworks a CBSC-preferred provider of credit analysis software has developed a
    White Paper to learn:
      - When to use collateral for FAS 114 analysis
      - How to gather the necessary collateral data
      - Why this method is important for a bank’s ALLL calculation

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    Webcast: Account Holder Insights that Unlock Greater Profit Potential
    Presented by Harland Clarke Marketing Services

    A high-performing marketing plan doesn’t have to be a pie-in-the-sky goal. A little additional insight into your account-holder base can help you get the same results. Join Harland Clarke for a webcast that shows you how to get the most out of your marketing investment.

    This live event, will share tips to:
      • Identify the right products for your account holders at the right time
      • Benchmark your marketing program against Harland Clarke’s proprietary National Financial Industry Database
      • Optimize your marketing investment
    Register today if you’re looking for ways to make your marketing program work more effectively. Harland is a CBSC Preferred Provider for checks and marketing products.

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    Directors’ Workshop To Be Held March 17, 18 & 20

    one-day program is designed to assist bank directors and executive management in carrying out their duties and responsibilities. Directors and management make a pledge to enhance/increase shareholder value. This commitment is at the heart of the fiduciary responsibilities. This class explores the relationship between bank directors and management, regulators, customers, employees, and shareholders. As banking is highly regulated, this seminar covers the many requirements that directors face on a day-to-day basis. The perfect director is described as knowledgeable and active. The program employs the use of lecture, case studies, and banking updates. The primary focus is on the HOW to be a good director. Regulators are increasingly holding directors responsible for the safety and soundness and performance of the bank. The safety and soundness concept is rooted in the concept of risk management (asset quality, liquidity, interest rate, and operational). Leading this seminar is David Kemp, founder and president of Bankers Management, Inc., a financial management consulting and training firm in College Park, GA.

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    Loan Estimate and Closing Disclosures Scheduled for March 24 & 28

    The second quarter of the
    Community Bankers for Compliance (CBC) program, offered in two locations, begins the training process for the new combined Early TIL and Good Faith Estimate (Loan Estimate) and the new combined Final TIL and HUD-1. The manual for this training session is designed to break each section of the form down into its component parts, and each field will be considered in the course of our training. The new forms are far superior to the existing forms, and allow your staff to give your customers a better understanding of the costs of mortgage credit. However, the forms are very different, which creates “learning curve” issues for everyone, just as we are beginning to understand the Dodd-Frank rules. The goal of our presentation is to create a framework of understanding for compliance and senior management. As has been the case recently, this quarter’s presentation will be almost all lending related. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Residential Real Estate Lending Institute Set for March 25-27

    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. David Kemp, founder and president of Bankers Management, Inc., a financial management consulting and training firm in College Park, GA, heads the distinguished faculty. Also on the faculty is Adam Witmer, CRCM, compliance consultant with Young & Associates, Inc., in Kent, OH.

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    CBAI Reveals 2014 Convention Golf Outing Location

    The annual golf outing at CBAI’s 40th Annual Convention & Expo is scheduled for Thursday, September 18, at
    Flossmoor Country Club (FCC), south of Chicago. FCC is one of the oldest clubs in the Midwest and home to a classic-style golf course with a wonderful history of championship golf including being one of the only clubs in the country to have hosted both the PGA Championship and the US Amateur. Walk on the same hallowed grounds as the legendary Bobby Jones, Francis Ouimet, and Chick Evans. Make plans now to attend CBAI’s 40th Annual Convention & Expo on September 18-20 in Chicago.

    Please click here to add a reminder to your Outlook calendar for CBAI's showcase event!

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    THROUGH 4/20/2014


    COMPLETE CBAI's 2014 Annual Compensation Survey Now!





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