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     A Bi-Weekly News Bulletin for CBAI Members                            April 1, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • ACTION ALERT: Urge Congress to Support Meaningful Regulatory Relief
  • CBAI's 33rd Annual Call on Washington Scheduled for April 28 - May 1
  • ICBA Plan for Prosperity Bills Advance in Committee Markup
  • Federal Reserve Supports Certain Tiered Regulatory Relief
  • Register Now to Attend CBAI's 31st Annual Capital Conference on April 15
  • CBAI Comments on CFPB’s Proposed QM Amendments
  • Only Two Weeks Left to Complete CBAI Officer Compensation Survey!!
  • Why Start a New Bank Today? Ask Bank of Bird-in-Hand
  • Big Banks Employ Heavy-handed Threat Against Break-up Advocates
  • Group Meeting Registration Now Open for Groups 5, 6, 10, 11, 12, & 13!
  • Investment News From THE BAKER GROUP
  • Illinois Farmland Values Show Minor Drop in 2014
  • New Affordable Civil-Money Penalties Insurance Protects Officers and Directors
  • How Prepared Is Your Bank for a Business Interruption?
  • Consistent Security Standards are Essential to Cyber Reform
  • Debit Card EMV Readiness: Almost Clear as Mud
  • CBAI Legal: E-payments Credited Upon “Submit Payment”
  • What Do Consumers Want from Debit? Perks & Security
  • Illinois Appellate Court Voids “Void After 90 Days” Restriction
  • Take This Week's CBAI Quick Poll
  • Register Today for Early-Bird Pricing at CBAI’s 41st Annual Convention & Expo!
  • Create a Culture of Compliance
  • 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
  • Compliance Institute - Lending Session Set for April 20-23


  • ACTION ALERT: Urge Congress to Support Meaningful Regulatory Relief

    CBAI calls on Illinois community bankers to urge their members of Congress to support meaningful regulatory relief. The letters ask their elected representatives to cosponsor bills reflecting the Independent Community Bankers of America’s Plan for Prosperity.

    The 114th Congress has made early progress in advancing regulatory relief legislation.Your response to this Action Alert provides critical support for Illinois community bankers when they visit our nation’s capital later this month for CBAI’s 33rd Annual Call on Washington. Respond to Action Alert Now!

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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 Plan for Prosperity Bills Advance in Committee Markup


    The House Financial Services Committee last week advanced several bills with provisions from ICBA’s Plan for Prosperity regulatory relief platform. ICBA thanked the panel for marking up legislation to help relieve community banks from excessive regulation. Among the ICBA-advocated measures are:

    • the Eliminate Privacy Notice Confusion Act (H.R. 601), to eliminate a provision requiring financial institutions to provide annual privacy notices to customers even when their policies have not changed,
    • the Bureau of Consumer Financial Protection Advisory Boards Act (H.R. 1195), to statutorily establish community bank and small business advisory boards at the Consumer Financial Protection Bureau,
    • the Helping Expand Lending Practices in Rural Communities Act (H.R. 1259), to allow individuals to petition the CFPB to reassess the rural status of counties,
    • the Mortgage Servicing Asset Capital Requirements Act of 2015 (H.R. 1408), to delay and study Basel III rules on mortgage-servicing assets, and
    • the Community Institution Mortgage Relief Act of 2015 (H.R. 1529), to exempt from escrow requirements any mortgage loan held in portfolio by financial institutions with $10 billion or less in assets and to increase exemptions for small servicers from 5,000 loans to 20,000 loans.
    The markup is the committee’s first round of advancing community bank regulatory relief in the 114th Congress and follows recent ICBA testimony on the consumer impact of excessive regulation. See ICBA Plan for Prosperity. Read Testimony. Read Release.

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    Federal Reserve Supports Certain Tiered Regulatory Relief

    On March 19, 2015, Fed Governor Daniel Tarullo testified before the Senate Banking Committee and espoused raising the asset threshold to $10 billion for institution compliance with the Volcker rule and the incentive compensation provisions. CBAI and ICBA are outspoken supporters of tiered regulations based on size and complexity. Read More.

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    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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    CBAI Comments on CFPB’s Proposed QM Amendments

    This week CBAI submitted comment letters to the Consumer Financial Protection Bureau (CFPB) regarding proposed amendments to revise the definitions of “small creditor” and “rural” and “undeserved” areas which provide exemptions to the ability to repay (ATR) Qualified Mortgage (QM) underwriting requirements and escrow requirements for higher priced mortgage loans (HPML).

    CBAI recommended that all community bank and thrift loans held in portfolio for the life of the loan, including balloon payment loans, in all geographic areas, should receive automatic QM status and an automatic exemption from escrow requirements for HPMLs. Community banks and thrifts that hold loans in their portfolio have 100% of the credit risk and have every incentive to ensure these loans are properly underwritten, well documented, affordable to the consumers, and properly serviced throughout the life of the loans.

    If the CFPB chooses not to implement these recommendations, then CBAI supports (with qualifications) the proposed increase in the “small creditor” exemption, supports the expanded definition of “rural” areas, and again calls on the Bureau to expand the definition of “underserved” areas to include economically challenged areas. Read First Comment Letter. Read Second Comment Letter.

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    Only Two Weeks Left to Complete CBAI Officer Compensation Survey!!

    FREE results of the 26th Annual CBAI Officer Compensation Survey will be mailed to CBAI member banks that participate. Don’t be left out!

    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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    Why Start a New Bank Today? Ask Bank of Bird-in-Hand

    Last year the Bank of Bird-in-Hand opened for business in Lancaster County, Pennsylvania, the first start up bank in the nation since the Dodd-Frank Act was passed in 2010. What made Bank of Bird-in-Hand’s founders decide to become modern pioneers of banking? We’ve heard it before. The local market had lost the personal touch in banking services, and that motivated local business owners to pursue their own destiny.

    Bank of Bird-in-Hand’s early success proves there’s strong demand for local lenders. Perhaps the bank’s mission statement says it all: “To serve the needs of the community, cherish our customers and employees and reward our shareholders with a high return on equity through sound banking practices.” Read WSJ Article. Read About Bank of Bird-in-Hand.

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    Big Banks Employ Heavy-handed Threat Against Break-up Advocates

    According to a recent Reuters article, “Big Wall Street banks are so upset with U.S. Senator Elizabeth Warren’s call for them to be broken up that some have discussed withholding campaign donations to Senate Democrats in symbolic protest.”

    For her part, Warren was unfazed, describing the threat as a “warning shot … a showy way to tell Democrats across the country to be scared of speaking out, to be timid about standing up, and to stay away from fighting for what’s right.”

    Public reaction has generally perceived the big bank action not only as a threat against a few senators, or a Democratic Party faction, but also as “a naked attempt to crush public debate with campaign cash. That makes it an attack on democracy itself. If the big banks weren't unpopular already, this undertaking would certainly help turn public opinion against them. They have made the case more convincingly than their critics ever could: We need to get money out of politics -- and break up the big banks.” See Huffington Post Article. See Warren Blog.

    U.S. Senator Sanders Reacts to Threat in Public Speech

    Speaking last night at the Commonwealth Club of California, U.S. Senator Bernie Sanders (I-Vermont) said it is time to break up the mega banks. “No single financial institution should have holdings so extensive that its failure could send the world economy into another financial crisis. If an institution is too big to fail, it is too big to exist.” The threat of the mega banks to put financial pressure on Senate Democrats to muzzle criticism of the big banks compelled Senator Sanders to say, “It has become abundantly clear that Congress does not regulate Wall Street but Wall Street regulates Congress.” CBAI and ICBA have long-supported downsizing the mega banks which have proven they are too big to safely manage, regulate, or resolve without taxpayer support. See Sanders Release.

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    Group Meeting Registration Now Open for Groups 5, 6, 10, 11, 12, & 13!

    CBAI leaders and executive staff are visiting 11 locations on the 2015 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. The opening portion of each Group Meeting focuses on critical legislative and association issues. CBAI President Bob Wingert will provide updates on Association projects and community banking in general; and Senior Vice President of Governmental Relations Kraig Lounsberry will offer an up-to-the-minute report of banking-related legislative activities. Then Phil Walter, regional sales manager for Welch Systems, Inc., presents “Evolving Your Branch to Achieve Peak Performance.”

    Registration is now open for Groups 5, 6, 10, 11, 12, & 13, so register today! See the Group Meeting Schecule.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    We learned last week that the Consumer Price Index reversed last month’s .7% drop with a .2% rise month-over-month. On an annualized basis, CPI now stands at, uh, zero. If one takes out the volatile food and energy components, the annualized rate stands at a more committee-friendly 1.7%; slightly friendlier than last month’s 1.6% measure. See More.

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    Illinois Farmland Values Show Minor Drop in 2014

    According to the recently issued Illinois Land Values and Lease Trends Report, values for Illinois farmland experienced a 1-3 percent drop in 2014. The flattening trend which began in 2013 has come after an 80 percent increase from 2008. Local farmers still account for 66 percent of farmland purchasers with local investors coming in second at 13 percent. See News Release.

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    New Affordable Civil-Money Penalties Insurance Protects Officers and Directors

    Since the FDIC issued its October, 2013 letter clarifying that banks cannot provide or pay for insurance to protect bank officers and directors from civil-money penalties (CMP), insurance agents have advised clients to remove CMP coverage from their D&O policies, thereby exposing key executives to potential personal liability. New affordable coverage is now available. Read More.

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    How Prepared Is Your Bank for a Business Interruption?

    With spring’s official arrival comes the unofficial beginning of tornado season, perhaps the most relevant of time for community bankers to reassess their business-interruption coverage. Tornadoes are the Midwest’s hurricanes. The question isn’t will they come, but rather what pocket of the region will be most affected. Are you prepared? Read More.

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    Consistent Security Standards are Essential to Cyber Reform

    As Congress prepares to address cyber and data security reform, community bankers need to be mindful of, but undaunted by, the powerful retail industry lobby as we push to reform security standards that apply to all participants in the payments system, including merchants.

    This week ICBA President Cam Fine issued a statement urging Congress to implement national data breach notification standards that apply consistently to all payment system participants and to ensure that the cost of data breaches are borne by the breached party. Read Morning Consult Article.

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    Debit Card EMV Readiness: Almost Clear as Mud

    With all the complexity surrounding EMV® for debit cards, you may be asking whether consumers, or even bankers, are ready to move forward with the migration to chip payment cards. Bankers are working hard to meet the October 2015 liability-shift deadline. After this date, card brands will hold the party least EMV-compliant responsible for fraud. Read More.

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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 Illinois) 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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    What Do Consumers Want from Debit? Perks & Security

    Offering value-added services continues to be paramount in driving increased debit card usage. In fact, a recent Mercator Advisory Group report, “Consumers and Debit in the U.S.: Rising Demand for New Services,” concludes three in five consumers are interested in rewards and enhanced security for debit cards. See More.

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    Illinois Appellate Court Voids “Void After 90 Days” Restriction

    In the case of Aliaga Medical Center, S.C. vs. Harris Bank, N.A., the First District Illinois Appellate Court refused to enforce the restrictive term “void after 90 days” written on a check above the accountholder’s signature. For details, Click Here.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on how often you complete financial-services compensation surveys. Click Here to view results of previous polls.

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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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    Create a Culture of Compliance

    Examiners and regulators expect community banks to demonstrate that they have created a strong culture of compliance. Why? Because they believe financial institutions that have failed to ingrain compliance into their business processes are at great RISK of non-compliance.

    To be effective, culture changes must start at the top of an organization. This issue must be addressed by the CEO, board and compliance executives together. You can now Download a free white paper from Continuity, a CBSC Marketing Partner, titled “How to Create a Strong Compliance Culture”.

    Topics covered in this white paper include:

      - Five principles of a strong compliance culture
      - Moving from “mere compliance” to “effective compliance”
      - Assessing your current culture
      - Motivating change – reword or punishment?
      - The critical role your CEO and board must play
    Contact Continuity if you would like to learn more about how Continuity can help your community financial institution build a strong culture of compliance.

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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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    Compliance Institute - Lending Session Set for April 20-23

    The community bank is faced with a bewildering array of ever-changing regulations. While all banks strive to be in compliance, the regulatory requirements can seem overwhelming. Most banks do not have the time or money to build elaborate compliance systems. The problem is getting the right information at the right time and finding a cost-effective approach to managing compliance. It has become clear that there is a need for a basic, introductory class for those compliance officers who are either new to banking or new to their positions. This four-day Lending Compliance Institute is designed to provide a comprehensive understanding of the major regulatory compliance regulations that have been determined to be “must knows” for compliance officers. New compliance officers, internal auditors, compliance back-up personnel, and other bank employees who want to be comfortable with the compliance regulations should attend this informative program. Topics covered include Truth in Lending, Regulation B and the Fair Housing Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Program, and the Home Mortgage Disclosure Act. The institute also addresses compliance management, privacy of customer information, the Fair Credit Reporting Act, and BSA. Leading this institute are Bill Elliott, CRCM, senior consultant and manager of compliance, and Adam Witmer, CRCM, compliance consultant, both of Young & Associates, Inc.

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