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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 16, 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 Set for April 20!
  • Register for CBAI's 34th Annual Call on Washington Scheduled for April 24-27
  • FDIC Approves DIF Plan with Offset for Smaller Banks
  • Research: Economic Effect of Bank Supervision Underestimated
  • Overwhelming Majority of U.S. House Calls on CFPB to Exempt Small Banks
  • Senator Kirk Urges Meaningful Regulatory Relief for Community Banks
  • OCC Proposes Changes to Reduce Regulatory Burden
  • Fed Survey Finds Small Businesses Prefer Small Banks
  • St. Louis Fed’s Bullard: “Break Up Big Banks Like Ma Bell”
  • Author Urges Downsizing the Big Banks by Separating Functions
  • New ICBA Chair Rebecca Romero Rainey Delivers Inspiring Message
  • St. Louis Fed Announces Advisory Council Members
  • Opinion: “Don’t Be Fooled by Overly Rosy Loan Growth Numbers”
  • Investment News From THE BAKER GROUP
  • Career Development Division Spring Meeting Schedule and Agenda Announced
  • CBIS Nicoud: Risk Management and Your Bank’s Professional Lines
  • Exclusive CBAI Member Promotion from Midwest Office
  • Tell Us What’s Special About Your Bank!
  • 2015 Q4 Financial Email Benchmarks
  • Register Today for Early-Bird Pricing at CBAI’s Convention & Expo
  • 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 Set for April 20!

    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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    Register for CBAI's 34th Annual Call on Washington Scheduled for April 24-27

    Call on Washington is an annual lobbying trip organized by the Community Bankers Association of Illinois. For 33 years, community bankers from across Illinois have been traveling to Washington, D.C. to express their position on issues to federal regulators and their Members of Congress.

    The up-to-the-minute briefings by expert staff from Washington and face-to-face meetings with regulators and legislators provide first-hand knowledge of the pressing issues facing community banking. We cannot make a difference sitting idly by and allowing change to take place without providing input! Let your voice be heard by those who can affect the process.

    This year’s Call on Washington will be in conjunction with ICBA’s 2016 Washington Policy Summit. Along with CBAI coordinated events, Illinois’ entire delegation is also invited to attend ICBA’s meetings and events. Register Here!

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    FDIC Approves DIF Plan with Offset for Smaller Banks

    The FDIC board of directors approved a final rule to increase the Deposit Insurance Fund reserve ratio to the statutorily required minimum level of 1.35 percent. Because the FDIC is required to offset the effect of the reserve ratio increase on institutions under $10 billion in assets, it will provide these institutions with assessment credits.

    Banks with $10 billion or more in assets will be responsible for increasing the DIF ratio from 1.15 percent to 1.35 percent. The final rule, which takes effect July 1, will impose on these banks a 4.5-basis-point surcharge over eight quarters. CBAI and ICBA actively lobbied for a shorter period of one year. However, large banks and the ABA supported a five-year plan which would have delayed the credits to community banks. The two-year period in the final rule was apparently a compromise.

    Institutions under $10 billion in assets will be able to redeem their credits once the DIF reserve ratio reaches 1.38 percent. Unlike the proposed rule, these banks will be able to offset the entire quarterly insurance assessment with the credits. The original proposal limited the credit use to an annual rate of 2 basis points.

    Under a previous rule approved in 2011, regular assessment rates for all banks will decline when the reserve ratio reaches 1.15 percent, which the FDIC expects will occur in the first half of this year. Banks with total assets of less than $10 billion will have substantially lower assessment rates under the 2011 rule. Read More from FDIC.

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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!



    Research: Economic Effect of Bank Supervision Underestimated

    Bank supervisory rating downgrades lead to a pronounced decline in economic activity, while upgrades do not result in an increase, according to a research paper recently issued by the FDIC Center for Financial Research. The working paper questions studies suggesting that changing supervisory stringency has a limited and temporary effect on economic activity. In fact, the authors argue, supervisory “shocks” indeed affect the gross domestic product and unemployment, with the effect stronger for downgrades than for upgrades. Read FDIC Working Paper.

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    Overwhelming Majority of U.S. House Calls on CFPB to Exempt Small Banks

    An overwhelming majority of the United States House of Representatives (329 members) have called on the Consumer Financial Protection Bureau (CFPB) to exempt small community banks from CFPB rules. House members said in a letter to CFPB that the Bureau needs to routinely distinguish between community banks and the very large financial institutions/nonbank lenders, and account for the burden associated with compliance particularly for small institutions.

    The letter notes that the Dodd-Frank Act specifically recognizes the need to tailor regulations to fit the diversity of the marketplace and gives the CFPB authority to adapt regulations by allowing it to exempt “any class” of entity from its rulemaking. The letter concluded by urging the Bureau to ensure that regulations do not have the unintended consequences of limiting services and increasing costs. Read House Letter.

    CBAI thanks the following Illinois members of the U.S. House for signing the letter to the CFPB:

    Mike Bost (R-12)
    Cheri Bustos (D-17)
    Rodney Davis (R-13)
    Robert Dold (R-10)
    Bill Foster (D-11) - Member of House Financial Services Committee
    Randy Hultgren (R-14) - Member of House Financial Services Committee
    Adam Kinzinger (R-16)
    Robin Kelly (D-02)
    Darin LaHood (R-18)
    Daniel Lipinski (D-03)
    Mike Quigley (D-05)
    Peter Roskam (R-06)
    Bobby Rush (D-01)
    John Shimkus (R-15)

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    Senator Kirk Urges Meaningful Regulatory Relief for Community Banks

    Illinois’ Mark Kirk joined a group of bipartisan Senators in signing a member letter to regulators urging meaningful regulatory relief for community banks as part of the review process mandated by the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). The member letter highlighted the “ever increasing regulatory burden” on community banks, and notes that the nation is “losing small banks” and the “regulatory framework is discouraging the creation of new ones.” The letter also highlighted the criticisms leveled at the regulators during the 2006 EGRPRA review “because the regulators subsequently failed to repeal or eliminate many substantive regulations.” Read More.

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    OCC Proposes Changes to Reduce Regulatory Burden

    The Office of the Comptroller of the Currency proposed to remove outdated or unnecessary provisions of certain rules to reduce regulatory burden on national banks and thrifts. The OCC proposal includes removing notice and approval requirements for certain changes in permanent capital, simplifying certain licensing rules for business combinations involving mutuals, revising certain fiduciary activity requirements, and more.

    The proposal was issued under the agency’s Economic Growth and Regulatory Paperwork Reduction Act review. The federal banking regulators continue to conduct their joint EGRPRA review, which they are expected to complete by the end of the year. Read OCC News Release.

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    Fed Survey Finds Small Businesses Prefer Small Banks

    According to a new report from seven regional Federal Reserve Banks, small businesses have more success and satisfaction with small banks when it comes to financing. Read More.

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    St. Louis Fed’s Bullard: “Break Up Big Banks Like Ma Bell”

    During a recent interview on CNBC’s Squawk Box, St. Louis Federal Reserve Bank President James Bullard said the nation’s megabanks need to be split up like the old AT&T monopoly in order to foster innovation. A longtime advocate of smaller banks, Bullard also noted that tighter regulations after the financial crisis have not solved the too-big-to-fail problem.

    CBAI applauds President Bullard for his outspoken position on this important issue. Last month Minneapolis Federal Reserve President Neel Kaskari also advocated breaking up the mega banks. CBAI has emphatically and persistently recommended downsizing the mega banks to reduce the risk of another financial crisis that harms the American economy and our nation’s banking system. See CNBC Article.

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    Author Urges Downsizing the Big Banks by Separating Functions

    David Shirreff, a former reporter for The Economist and author of the forthcoming book Break Up the Big Banks!, supports separating the high-risk investment banking functions from the more traditional deposit-taking and lending functions. Read More.

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    New ICBA Chair Rebecca Romero Rainey Delivers Inspiring Message

    Last week Rebecca Romero Rainey, chairman and CEO of Centinel Bank in Taos, New Mexico, became ICBA’s new chairman. Her message serves as an inspiration for all community bankers. See Romero Rainey’s Presentation.

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    St. Louis Fed Announces Advisory Council Members

    CBAI Chairman Kevin Beckemeyer Among Appointees

    The Federal Reserve Bank of St. Louis last week appointed five new members to its Community Depository Institutions Advisory Council (CDIAC) which meets twice a year to advise President James Bullard on credit, banking, and economic conditions.

    Among the appointees is current CBAI Chairman Kevin Beckemeyer, president and CEO of Legence Bank, Eldorado, who will serve a three-year term. Read St. Louis Fed Release.

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    Opinion: “Don’t Be Fooled by Overly Rosy Loan Growth Numbers”

    Banking analyst and author Richard Parsons believes that loan growth across the U.S. is too good to be true. He contends that many banks, once again, are defying the laws of gross domestic product (GDP). He notes that banks can get into trouble when they grow much faster than the economy by booking poorly underwritten loans. Historically, when loan balances grow more than twice as fast as GDP, eventually there is a reversion. He recommends that bankers should consider curbing their risk appetites. Read Bank Think Article.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    Information received since the Federal Open Market Committee met in January suggests that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft. 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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    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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    CBIS Nicoud: Risk Management and Your Bank’s Professional Lines

    (Part 2 in a Series of 3)

    No area of a community bank’s risk-management strategy benefits more from the services of a financial-institution insurance specialist than Director and Officer Management Liability and Financial Institution Bond policies. Each line is, of course, critical to a bank’s operations. In the simplest terms, D&O policies are to bankers what malpractice insurance is to physicians. Read More from CBIS Nicoud.

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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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    Tell Us What’s Special About Your Bank!

    Nominations Now Open for 2016 Excellence & Innovation Awards

    The Excellence and Innovation BKD Award Presented by CBAI spotlights exemplary community banks and is sponsored by BKD LLP (YOU DO NOT NEED TO BE A CLIENT TO ENTER). Past winners have been recognized for outstanding philanthropic efforts, innovative products and services, and civic initiatives. An independent panel of judges selects a bank to honor at the CBAI Annual Convention. Learn More About BKD Award. Download Nomination Form.

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    2015 Q4 Financial Email Benchmarks

    See how your results compare to financial-industry standards with Harland Clarke's 2015 Q4 Financial Email Marketing Benchmark Presentation. View Presentation.

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

    Registration is now open for CBAI’s 42nd Annual Convention & Expo, scheduled for September 15-17, 2016, at the Marriott Downtown Kansas City. Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. Eric Boles, president of The Game Changers Inc., a company dedicated to maximizing employee commitment and performance, takes the stage for this year’s Opening Breakfast. A highly acclaimed keynote speaker and consultant, Boles learned many principles of team dynamics and leadership from his experience playing in the National Football League (NFL) with the New York Jets and the Green Bay Packers. Also on the agenda is the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed exhibit hall with nearly 90 booths, fun partner’s programs exploring the exciting city of Kansas City, a Closing General Session, and much more. Our annual showcase event closes with the only group dedicated to recreating the Motown experience in both music and dance, The Fabulous Motown Revue. Performing together for more than 25 years, members of The Fabulous Motown Revue have played with The Four Tops, Martha Reeves, Natalie Cole, Aretha Franklin, Ray Charles, Mary Wilson, The Temptations, and many other Motown favorites. Early-bird Registration 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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