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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 18, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Register Now for CBAI's 31st Annual Capital Conference on April 15
  • Fine Calls for Regulatory Relief in WSJ Op-Ed
  • Subsidy Reserve Act Introduced to Address TBTF
  • ICBA and CBAI Back Risk-Based Capital Surcharges for Megabanks
  • CBAI's 33rd Annual Call on Washington Scheduled for April 28 - May 1
  • ICBA Counters Credit Union Congressional Push
  • FDIC Quarterly Banking Profile Released
  • Loan Officers Eligible for Overtime Pay, Supreme Court Rules
  • Industry Experts Discuss Readiness for TRID
  • Investment News from THE BAKER GROUP
  • 60 CBAI Members (so far) Will Know How Their Compensation Stacks Up. Will You?
  • CBAI Member Devon Bank in Chicago Hosts Iraqi Delegation
  • Reports of Plastic Card Extinction Greatly Exaggerated
  • The SHAZAM Network Blog: 10-Year Trends in Payments
  • Earthquake Coverage for Midwestern Community Banks Along the New Madrid Fault Line
  • CBAI Legal: E-payments Credited Upon “Submit Payment”
  • Register Today for Early-Bird Pricing at CBAI’s 41st Annual Convention & Expo!
  • Take This Week's CBAI Quick Poll
  • Time Is Running Short! Community Banking Week Is the Week of April 5
  • CBAI Wants to Know What’s Special About Your Bank
  • Correction Regarding OneBeacon's Ratings
  • CBAI Member First Southern Bank in Marion Featured in Preferred Partner Video
  • Community Bank Management of Interest Rate Risk and Investments Set for April 1st
  • The Nuts and Bolts for Today’s Bank Trainer Scheduled for April 7 & 8
  • Auditing Regulation E Slated for April 8
  • Residential Real Estate Lending Institute Scheduled for April 13-15


  • Register Now for CBAI's 31st Annual Capital Conference on April 15

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

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

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    Fine Calls for Regulatory Relief in WSJ Op-Ed

    In a recent Wall Street Journal editorial, ICBA President and CEO Cam Fine detailed the regulatory burdens facing community banks and how Congress should address the problem.

    Citing recent ICBA congressional testimony and a study by Harvard researchers, Fine noted that regulatory overkill threatens community banks, their customers and local economic growth. Fine called on Congress to advance ICBA’s Plan for Prosperity regulatory relief platform to promote regulations that are tiered and proportionate to the size and complexity of regulated institutions.

    “The nation’s community banks are waiting at the crossroads,” Fine writes. “They have done their jobs very, very well. It is now time for lawmakers to do theirs.” Read Fine’s Op-Ed. See Plan for Prosperity.

    CBAI and ICBA-Backed Regulatory Relief Bill Introduced

    Legislation to relieve community banks from one-size-fits-all regulations was introduced in the House of Representatives this week. The American Jobs and Community Revitalization Act (H.R. 1389), introduced by Rep. Andy Barr (R-Ky.), would implement several provisions of ICBA’s Plan for Prosperity regulatory relief platform which CBAI fully supports.

    Among its provisions, H.R. 1389 would:

    • provide a qualified mortgage safe harbor for portfolio loans,
    • allow individuals to petition the Consumer Financial Protection Bureau to reassess the rural status of their areas,
    • provide for longer examination cycles for highly rated community banks with less than $1 billion in assets,
    • require a review and reconciliation of existing regulations that may be in conflict with or duplicative of new rules being promulgated by the banking agencies, and
    • ensure equitable treatment of Subchapter S banks.
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    Subsidy Reserve Act Introduced to Address TBTF

    According to Professor Cornelius Hurley of Boston University, a bill of just 341 words could accomplish what the unwieldy Dodd-Frank Act has failed to do: use market discipline to right-size the too-big-to-fail mega banks. The Subsidy Reserve Act (H.R. 888) would require mega banks with more than $500 billion in assets to quantify the financial benefits they receive from anticipated taxpayer support. They would then be required to identify that part of their retained earnings each year that is attributable to this added financial benefit, or subsidy.

    The subsidy reserve would then accumulate indefinitely year over year and may be returned to shareholders only in connection with the rightsizing of the TBTF bank via divestiture, sale of assets, spin-off or other market-driven M&A event. Read AB Article.

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    ICBA and CBAI Back Risk-Based Capital Surcharges for Megabanks

    ICBA and CBAI have expressed support for a Federal Reserve proposal to establish risk-based capital surcharges on the largest too-big-to-fail megabanks to ensure they maintain sufficient levels of high-quality capital. In a comment letter to the Fed, ICBA said targeting the capital conservation buffer will prevent the megabanks from distributing capital when it is most urgently needed.

    ICBA said the agency has properly sourced the key metrics needed to identify financial institutions that are globally systemically important and vulnerable to a systemic bank failure. The association also applauded the Fed for not limiting the amount of any capital surcharge to be applied to one financial institution. Read ICBA Comment Letter.

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    CBAI's 33rd Annual Call on Washington Scheduled for April 28 - May 1

    Call on Washington is an annual lobbying trip organized by the Community Bankers Association of Illinois. For 32 years, community bankers from across Illinois have been traveling to Washington, D.C. to express their positions on issues to federal regulators and their members of Congress.

    This year’s Call on Washington will be held in conjunction with ICBA’s 2015 Washington Policy Summit. Along with CBAI coordinated events, Illinois’ entire delegation is also invited to attend ICBA’s meetings and events. See More.

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    ICBA Counters Credit Union Congressional Push

    Register Now for CBAI’s Annual Call on Washington

    ICBA countered the current grassroots push from tax-exempt credit unions with a message to Congress on the community bank perspective and called on lawmakers to reexamine the credit union tax exemption and oppose the industry’s expansionist positions on business lending and supplemental capital. Meanwhile, ICBA outlined areas of common ground, including the need for regulatory relief and strong data security.

    Credit union members were in Washington last week to press their legislative agenda. The credit union push gives renewed impetus to next month’s ICBA Washington Policy Summit and CBAI’s Call on Washington which will allow community bankers to hear firsthand from top public officials, engage policymakers and influence public policy. See ICBA Statement on Credit Unions. Register for CBAI’s Annual Call on Washington.

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

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


    FDIC Quarterly Banking Profile Released

    Performance of Community Banks Leads the Way

    Community banks nationwide reported net income of $4.8 billion in the fourth quarter of 2014, a 28% increase over the previous year. Higher net operating revenue and lower loan loss provisions lifted earnings. The full-year earnings for community banks increased 9%, and 74% of all community banks reported higher net interest income from 2013.

    In addition, nearly 77% of community banks increased loans from the year before, led by small loans to businesses. Community banks continued to hold 45% of small loans to businesses. See FDIC Community Bank Performance Report. See Illinois Banking Performance Summary.

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    Loan Officers Eligible for Overtime Pay, Supreme Court Rules

    The U.S. Supreme Court upheld Obama administration rules making mortgage loan officers eligible for overtime pay under federal law.

    In a unanimous decision in Perez v. Mortgage Bankers Association, the court ruled that federal agencies are exempt from notice-and-comment requirements when amending or repealing certain rules. In 2010, the Labor Department, without following the notice-and-comment procedure, withdrew a 2006 opinion letter that held that loan officers are exempt from overtime pay standards.

    Last week's Supreme Court decision upholds the Labor Department’s reversal and overturns a lower court ruling that said the department could not change overtime rules without following procedure. Read the Court Opinion. Read Godfrey & Kahn Synopsis.

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    Industry Experts Discuss Readiness for TRID

    Wolters Kluwer Financial Services is ready with solutions that will ensure bankers can offer-and document-compliant mortgages after August," explained Kris Stewart, the company's principal regulatory consultant. "We are helping hundreds of banks prepare to implement the new TILA-RESPA Integrated Disclosure (TRID) requirements. By this point, banks should have confidence in their software providers' capabilities in order to have processes and systems in place for testing by May 1, 2015. This has been our priority all along, and the benchmark we have set to ensure all our customers will be compliant as of August 1." Read More.

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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 growth has moderated somewhat. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources continues to diminish. See More.


    FREE Baker Webinar: Understanding and Using CMOs

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    60 CBAI Members (so far) Will Know How Their Compensation Stacks Up. Will You?

    How does your bank compensation stack up? CBAI’s 25th Annual Officer Compensation Survey is now online. It 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. DEADLINE TO PARTICIPATE IS APRIL 15! The survey is fully secure, and all the data is kept confidential and compiled by Springfield-based Eck, Schafer & Punke, LLP.

    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, SVP Communications, at cbaicom@cbai.com.

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    CBAI Member Devon Bank in Chicago Hosts Iraqi Delegation

    CBAI member Devon Bank in Chicago hosted an Iraqi delegation to discuss the legal responsibilities of American banks to detect, prevent, and report fraudulent and suspicious activity. The Iraqi delegation was visiting Chicago through the U.S. State Department’s International Visitor Leadership Program to explore best practices in government transparency and accountability and to learn strategies for addressing corruption. Read More.

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    Reports of Plastic Card Extinction Greatly Exaggerated

    Some observers are predicting the downfall of cash and plastics in the payments arena due to the emergence of Apple Pay, Google Wallet, PayPal and others. However, earlier this month the Smart Payment Association published statistics indicating that a stunning 1.5 billion smart payment cards were shipped globally in 2014. With the U.S. migration to EMV and contactless payment technology gaining momentum, the trend is on a steep upward trajectory. Mobile payments are expected to get more popular, but plastic is simpler, quicker, and more secure than any other payment method. See BankThink Article.

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    The SHAZAM Network Blog: 10-Year Trends in Payments

    Change is an inevitable part of life, and the payments industry isn’t immune to that fact. The ways consumers pay their bills, purchase their groceries and transfer funds have undergone a number of changes in the past decade, and will no doubt continue to transform into the foreseeable future. Read SHAZAM Blog.

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    Earthquake Coverage for Midwestern Community Banks Along the New Madrid Fault Line

    Seasoned community bankers in Southern Illinois and Missouri, especially the ones most involved in understanding their bank’s property and casualty policies, know all about New Madrid. Find more information HERE regarding how this zone for potential earthquakes could affect your bank’s insurance coverage.

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    CBAI Legal: E-payments Credited Upon “Submit Payment”

    On March 11, the U.S. Court of Appeals for the Seventh Circuit (the jurisdiction of which includes all of Ilinois) issued its opinion in the case of Fridman vs. NYCB Mortgage Company. The issue in the case was whether the Truth in Lending Act and its corresponding regulation, Reg Z (“TILA”) permits a lender to postpone crediting a loan payment made electronically from the lender’s website until after the lender has collected funds from the e-payment. The Court’s answer was No. Details Here.

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    Register Today for Early-Bird Pricing at CBAI’s 41st Annual Convention & Expo!

    Registration is now open for CBAI’s 41st Annual Convention & Expo, scheduled for September 17-19, 2015, at the Omni Hotel in Nashville. Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. RCA recording artist, successful entrepreneur, and acclaimed public speaker Robin Crowe will take the stage for the Opening Breakfast and share how companies can successfully reinvent themselves by adapting to ongoing events as they occur. Also on the agenda is the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed exhibit hall with nearly 100 booths, fun partner’s programs exploring the exciting city of Nashville, a Closing General Session, and much more. Our annual showcase event will close with six-time Vocal Group of the Year, Diamond Rio. This famed country music band has sold more than 10 million albums, earning three platinum records, five gold records, 13 Grammy nominations, five multi-week number one singles, and 22 Top 10 singles. Register Here.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on whether or not your bank will offer EMV compatible cards. Click Here to view results of previous polls.

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    Time Is Running Short! Community Banking Week Is the Week of April 5

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

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    CBAI Wants to Know What’s Special About Your Bank

    Nominations are being taken now for the 2015 Excellence & Innovation BKD Award presented by CBAI. In 2014, Galena State Bank was the winner for its entry of developing two banking clubs – the SuperStar Club and Teen Banking - to educate young customers about financial responsibility in a fun and rewarding way. Through the program youths received rewards for depositing and saving money. Does your bank have a special program, product, service, philanthropic effort, or civic project? Tell us about it! (Your bank need not be a BKD client to enter.)

    For more information about the Excellence & Innovation BKD Award presented by CBAI, Click Here.

    For a nomination form, Click Here.

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    Correction Regarding OneBeacon's Ratings

    In an article published in a previous CBAI E-Newsletter, CBAI incorrectly indicated that Standard and Poor's and A.M. Best had downgraded OneBeacon Insurance Group's ratings when they had not. As noted in the previous article, OneBeacon did receive financial ratings downgrades from Moody's, as well as a ratings Warning from Fitch. CBAI regrets the inadvertent inaccuracy.

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    CBAI Member First Southern Bank in Marion Featured in Preferred Partner Video

    First Southern Bank, Marion has 15 branches in different towns across southern Illinois which makes managing compliance a bit tricky for this decentralized bank. The Continuity Compliance Core™ provides them technology and expertise to ensure that they are confident all their compliance needs are being met as the bank continues to grow. Watch the recent interview with Ray Altmix, CEO and Kristina Scott, CRO to learn more about their experiences with the Continuity Core. Watch the Interview Here.

    Continuity is endorsed by CBSC and ICBA as a Preferred Provider.

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    Community Bank Management of Interest Rate Risk and Investments Set for April 1st

    Banks are contending with an extended low-rate environment that has put pressure on margins, challenged bank managers, and enticed some institutions to “reach for yield” in higher-risk assets. Meanwhile, balance-sheet mix changes have raised additional concerns, and regulators are now focusing attention on interest-rate risk like never before. This Seminar discusses optimal strategies, necessary reporting tools, and recommended processes for management of community-bank investments and interest-rate risk. Trends in the rate environment and bank balance sheets are explored, and suggested strategy and tactics to meet the performance challenges while staying within prudent risk tolerance guidelines are offered. A wide range of issues related to regulatory compliance and prudent management practice are also addressed. Jeffrey Caughron and Ryan Hayhurst, both with THE BAKER GROUP, Oklahoma City, lead this seminar.

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    The Nuts and Bolts for Today’s Bank Trainer Scheduled for April 7 & 8

    Today’s bank trainers need a “real-world” foundation to survive and thrive in today’s banking world. This two-day workshop focuses on methods, tools, skills, and resources to ensure that training is valued and “results-oriented.” It is a comprehensive Training Program for those new to training and a targeted refresher for seasoned trainers. Attendees learn how to use a variety of proven training methods and approaches to make training, including regulatory and compliance training, interactive, energized, “real-world,” and enjoyable; develop an annual training plan; respond to the ever-changing regulatory environment; refine training and facilitation skills; discover how to get a return on limited training investment dollars; improve training and facilitation skills, and much more. Leading this seminar is Dianne Barton, founder and president of Performance Solutions, Inc., Kennesaw, GA, a training and consulting company that specializes in providing solutions to the key challenges facing community banks today in attracting, selling, and servicing their customers.

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    Auditing Regulation E Slated for April 8

    Coverage of Regulation E continues to expand as more and more electronic delivery channels are implemented. Which of those channels are protected by Regulation E and which are not? Who is to receive disclosures? When should they receive them and how frequently? What about VISA and MasterCard rules? Some banks offer overdraft services and opt-in features. Some banks offer international funds transfers to consumers. Some banks offer mobile bank and remote deposit capture. Most banks have debit cards and some Internet banking services. All banks receive ACH entries. To help auditors through this maze, we discuss coverage, products, delivery methods, and social media, and provide sample audit programs. Tim Tedrick, CRCM, CRP, and executive officer at Wipfli LLP in Sterling, Illinois, leads this Seminar.

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    Residential Real Estate Lending Institute Scheduled for April 13-15

    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. 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 Adam Witmer, CRCM, compliance consultant with Young & Associates, Inc., in Kent, OH, serving client banks in the Midwest.

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