Connected To Community Banking!
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                                    April 13, 2016

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Success on CECL Reform Makes Headlines
  • FDIC Preparing Plan to Spur De Novo Charters
  • Hoenig: Regulatory Relief, Strategic Adaptation are Key for Community Banks
  • Registration Now Open for Groups 1, 2, 3, 5, 6, 7, 10, 11, 12, & 13 Meetings
  • ‘Not On Our Watch Video’ Showcases Bank as Community Lender
  • Fed’s Kashkari: Ending TBTF Benefits Community Banks
  • Fine Counters Dimon’s Backhanded ‘Call for Truce’
  • ABA Recycles the “Unity” Myth
  • Time Is Almost Up to Complete the CBAI Officer Compensation Survey!
  • Specialty Insurer KBS Exiting Bank Market
  • Investment News From THE BAKER GROUP
  • Regulator Releases Video for Board & Executive Management
  • Millenials’ Mobile Banking Usage Now Near 70 Percent
  • Three Ways Community Banks Can Connect with Millennials
  • It’s Time to Adapt to the Digital Payments Landscape
  • Deliverability Counts - 10 Factors That Impact Email Deliverability
  • Seven Ways Ransomware Could Invade Your Bank
  • Midwest Office Can Save Banks Up to 55% on Everyday Office Supplies!
  • CBIS Nicoud: Workers Compensation Coverage for Illinois Community Banks
  • Register Today for Early-Bird Pricing at CBAI’s Convention & Expo
  • Community Bank Cybersecurity Conference Scheduled for April 19
  • Community Bank Marketing Conference Slated for April 28
  • Auditing TRID To Be Held May 2
  • ACH for Beginners Scheduled for May 3 & 11
  • CBC: Compliance Management Systems and Risk Assessment Set for May 3 & 4

  • Success on CECL Reform Makes Headlines

    The Financial Accounting Standards Board’s CBAI and ICBA-advocated revisions to the Current Expected Credit Loss model is making news. The Wall Street Journal reported on FASB’s recently announced efforts to ensure the CECL standard won’t be as costly or complex for community banks.

    At the April 1st Transition Resource Group meeting on the accounting standards update, ICBA Vice Chairman Tim Zimmerman said FASB has clearly listened to the concerns of ICBA and community bankers. However, he noted that the regulators and auditors who will implement the standard must recognize the significant changes FASB has made.

    The revised CECL proposal will allow community banks to continue using their personal understanding of their local markets—instead of complex modeling systems—to determine their loan-loss reserves. It also would allow community banks to evaluate and adjust their loan-loss amounts using qualitative factors, historical losses, and current systems, such as spreadsheets and narratives.

    ICBA, its affiliated state associations including CBAI, and community bankers have worked relentlessly to address problems with FASB’s CECL proposal since it was introduced in 2011, including delivering a petition to FASB with nearly 5,000 signatures and meeting directly with the FASB board at a February 4 roundtable. Read ICBA Release. Read More from FASB. Read WSJ Article.

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    FDIC Preparing Plan to Spur De Novo Charters

    The FDIC is planning to update its requirements for de novo charters and launch an outreach effort to increase the formation of new banks. In an interview with American Banker, FDIC Chairman Martin Gruenberg said there’s room in the market for more community banks, and the FDIC has a role to play. “We’re going to make every effort to work with, and provide assistance to deal with the application process,” Gruenberg stated.

    In recent years CBAI and ICBA have repeatedly expressed concern about the lack of de novo bank applications and called on the FDIC to revisit its policies and practices to ensure it is not unnecessarily inhibiting the formation of de novo banks. CBAI vigorously disagreed with the FDIC’s inhibiting de novo community bank formation during the financial crisis as potential investors were directed to existing ‘problem’ banks versus new opportunities. Even in the depths of the S&L crisis (1984-1992), when 1,800 banks and savings institutions failed, an average of 196 de novos were formed annually. The FDIC approved only a handful of de novo bank charters since 2010, compared to an average of 170 new charters a year during the previous two decades.

    In October of 2015, CBAI’s Vice President Federal Governmental Relations, David Schroeder, attended Chicago’s Economic Growth and Recovery Paperwork Reduction Act (EGRRA) outreach meeting which was attended by senior banking regulators including FDIC Chairman Gruenberg. During the public comment period Schroeder stated the need for de novo bank formation to maintain a strong, growing, evolving and vibrant banking profession. CBAI recognizes the importance of carefully reviewing de novo charter applications, but it is inappropriate for regulators to demand that de novo banks be failure-proof, particularly while they permit mega banks to take huge risks that are backstopped by American taxpayers.

    The FDIC reduced from seven years to three years the period of heightened supervisory monitoring of newly formed, de novo banks. CBAI and ICBA look forward to working with the FDIC and other policymakers to address community bank regulatory impediments. Read Gruenberg’s Remarks. See FDIC Release. Read ICBA Release.

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    Hoenig: Regulatory Relief, Strategic Adaptation are Key for Community Banks

    While regulatory relief for community banks is important, these institutions must continue adapting to the changing financial landscape, FDIC Vice Chairman Tom Hoenig said. Speaking at the FDIC’s Community Banking Conference recently, Hoenig discussed his plan to exempt well-capitalized “traditional” banks that pass a four-part test from Basel III capital standards and other rules.

    However, Hoenig said the community banking industry must become ever more strategic and effective as it develops and delivers new products and services. “Changes in technology are just one example of how the community banking industry must work together, not only to battle the challenges of the present but also to grasp the opportunities for the future,” he said. Read More.

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    Registration Now Open for Groups 1, 2, 3, 5, 6, 10, 11, 12, & 13 Meetings

    CBAI leaders and executive staff are visiting 11 locations on the 2016 Group Meeting tour this spring. Bankers from nearly 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 provides updates on Association projects and community banking in general; and Senior Vice President of Governmental Relations Kraig Lounsberry offers an up-to-the-minute report of banking-related legislative activities. This year’s after dinner topic is “The Financial Technology Revolution,” presented by Michael Peterson, manager of financial institution sales at Fitech Payments. The wind of change in the payments world is gaining in strength as financial technology’s “fintech” potential to alter how, where and when payments are made – as well as who it is that facilitates them. Registration is now open for Groups 1, 2, 3, 5, 6, 10, 11, 12, & 13, so register today! See Meeting Schedule Here!

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    CBAI Connected to Community Banking is sponsored by The SHAZAM Network: Nothing is more important than keeping yourself, your employees and your customers safe. As the violence of robbery continues to harm financial institutions across the nation, are you prepared? SHAZAM now offers crime response training for the financial services sector with our robbery and crisis management consultant (who has over 30 years of experience in the criminal justice field). Training options include a threat assessment, a robbery course and an active shooter workshop. Help keep your organization safe. Sign up today!

    ‘Not On Our Watch Video’ Showcases Bank as Community Lender

    A video featured on ICBA’s Go Local blog speaks to the role of community banks as a funding source for America’s small businesses. Featuring the tag line, “Not on our watch,” the video stresses the benefits of banking locally and takes aim at misguided policies that protect Wall Street to the detriment of Main Street.

    The ICBA Go Local blog is featuring community bank videos throughout April in recognition of Community Banking Month and also features customizable marketing and communications resources, including a news release and op-ed, to spread the industry’s message all month long. Watch the Video. Access Go Local Site.

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    Fed’s Kashkari: Ending TBTF Benefits Community Banks

    Minneapolis Fed President Neel Kashkari said that addressing the problems posed by too-big-to-fail financial institutions could offer regulatory relief to community banks. “If we can truly address the risks posed by large banks, perhaps we can relax the burdens small banks are facing,” Kashkari said at last week’s TBTF Symposium.

    The symposium is part of the Minneapolis Fed’s new initiative taking on too-big-to-fail. The reserve bank is developing a plan to be delivered by the end of the year on how to end the threat, and Kashkari has said that breaking up the megabanks into smaller entities is on the table. Read More.

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    Fine Counters Dimon’s Backhanded ‘Call for Truce’

    ICBA President and CEO Cam Fine fired back at comments from JPMorgan Chase chief executive Jamie Dimon, who last week said community banks depend on large banks like his. He told Bloomberg that Dimon’s supposed calls for a truce with community banks won’t get local bankers to fall in line behind him.

    “This is just an attempt to link the interests of megabanks to community banks in order to mitigate the political heat that is on them right now,” Fine told Bloomberg. “CEOs of all the too-big-to-fail banks are clearly worried about the political climate.”

    In a Wall Street Journal op-ed and his annual letter to shareholders, Dimon said too-big-to-fail megabanks contribute to a healthy banking system and suggested correspondent banking services offered by the largest institutions make community banking possible. He also dismissed concerns about the size of the megabanks, though he acknowledged that the financial crisis showed that mistakes by the largest banks can affect the broader financial system.

    “Community banks depend on large banks to make their service offerings possible,” Dimon wrote. “Smaller institutions would lose out if America’s large banks were hobbled.” Read Bloomberg Article. Read WSJ Article.

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    ABA Recycles the “Unity” Myth

    In a recent speech to the Conference of State Bank Supervisors, the CEO of the American Bankers Association (ABA), Rob Nichols, resurrected the myth that banks both large and small should be unified to counter the negative public image caused by the financial crisis. CBAI believes, however, that such an approach would work against the positive and unblemished image of community banks when the public outcry is focused on ABA’s largest members, the Wall Street mega banks.

    The mega banks were responsible for the damage caused by the financial crisis, and the continuing outrage against them has been fueled not only by their taxpayer-funded bailouts but also by their numerous violations of law (often criminal) as evidenced by billions of dollars in fines and settlements, and deferred prosecution agreements (conditional amnesty).

    The truth is that the ABA and their state affiliates cannot serve the interests of both the mega banks and community banks. The ABA’s largest members command the association’s attention, often to the detriment of community banks. Given the markedly different positions on such critical issues as too-big-to-fail, capital and liquidity requirements and resolution plans, the unity proposition would only subordinate and compromise what’s best for community banks.

    CBAI and ICBA exclusively represent community banks, and resources are allocated accordingly. They are not wasted on spin and finesse to justify the unity position. Main Street community banks and Wall Street mega firms have very different needs and risks. Community bankers overwhelmingly understand that and so do most Americans and policymakers. The “unity” myth should finally be given the burial it so richly deserves.

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    Time Is Almost Up to Complete the CBAI Officer Compensation Survey!

    More than 100 community banks are going to discover whether or not their compensation packages are competitive as they have completed the CBAI Officer Compensation Survey. Have you? Remember, results are free to CBAI member banks that participate! Complete the Survey today.

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

    To complete the Survey online, Click Here.

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    Specialty Insurer KBS Exiting Bank Market

    CBIS-Nicoud Offers Alternative Insurance Solutions

    Kansas Bankers Surety Co. (KBS), a Topeka, Kansas-based specialty underwriter of Financial Institution Bonds, Directors and Officers Liability Insurance, and Employment Practices Liability for community banks for more than 100 years, is exiting the market place. The news is significant and has implications for community banks throughout the Midwest.

    CBAI encourages CBAI member banks that have already received a notice of non-renewal from KBS to call CBIS-Nicoud Insurance Services, CBAI's Preferred Provider of insurance services, which has been named a KBS referral partner in Illinois. Read More.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The recent release of the FOMC March meeting minutes did little to change anyone’s perception of anything. The gist of the conclave reinforces the Fed’s gradual wait-and-see approach to future rate hikes. The Committee, though, is not without some differing viewpoints, and some members would like to see less wait. See Baker Market Update.

    Baker Market Strategies

    April 2016 - Agency MBS Prepayments

    The biggest month-over-month increase in the coupon stack came from 30yr 3.5s with Fannies increasing 84% to 14.4 and Freddies up 96% to 14.6. This was followed by 20yr 3s which showed a 60% increase for Fannies to 10 CPR and a 72% increase for Freddies to 9.3 CPR. See Baker Market Strategies.

    Baker Economic Brief

    March Jobs Report

    The employment report for March was largely positive, with the economy adding 215K jobs vs the addition of 205K in the survey and a revised 245K payrolls increase for February. The unemployment rate ticked up to 5%, a result of 396K more people entering the labor force. See Baker Economic Brief.

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    Regulator Releases Video for Board & Executive Management

    Your bank's board has responsibility for vendor management. The FDIC has released a video designed to assist community bank directors and executive management in developing a comprehensive risk-assessment program for vendor management. CBSC preferred provider BankOnIT has produced a related blog. Read BankOnIT Blog.

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    Millenials’ Mobile Banking Usage Now Near 70 Percent

    About 67% of Millennials now use mobile banking, according to a study released recently by the Federal Reserve. This compares to 18% for those consumers aged 60 or over. And the usage gap is widening. Interestingly, the Fed data shows that mobile banking is not necessarily dampening the use of other banking channels.

    Respondents were asked about their use of five banking channels (branch, ATM, telephone, online, and mobile), and the answers provide a fuller picture of how smartphone users interact with their bank or credit union. In the prior 12 months, 83 percent of smartphone owners with bank accounts visited a branch and spoke with a teller, 82 percent used an ATM, 82 percent used online banking, 53 percent used mobile banking, and 29 percent used telephone banking. See Article. See Fed Study.

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    Three Ways Community Banks Can Connect with Millennials

    As millennials become the prime living generation, community banks are looking for fresh and innovative ways to gain their business. Millennials have grown up with technology and the Internet, thus having everything they need right at their fingertips. In order to cater to the millennial generation, community banks need to transform their marketing strategies to speak to this audience. Read Fitech Payments Article.

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    It’s Time to Adapt to the Digital Payments Landscape

    From Apple Pay to Walmart Pay, the bankers have been inundated with alternative payment options. While some are more popular than others, digital payment offerings present both growth opportunities and new challenges for community banks. And ready or not, it’s time to take notice. Read More from CSI.

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    Deliverability Counts - 10 Factors That Impact Email Deliverability

    While some individuals feel that email is on its ninth life, that is far from the case. The white paper spotlights ten factors that impact email deliverability to help you make the most out of your email marketing strategy. Taking these factors into account can help you achieve a healthy ROI and improve customer engagement. Read More.

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    Seven Ways Ransomware Could Invade Your Bank

    If you ask the Washington-based Institute for Critical Infrastructure Technology, this is the year when ransomware will wreak havoc on America’s critical infrastructure community, including financial services. Ransomware basically locks the data on a computer — or the computer itself, or even an entire system or network — so that users cannot gain access to data or processes; it then holds the system and its data hostage, or even threatens destruction of the data, until the system’s owner pays a ransom for its release.

    Why should you care about ransomware? Simple: ICIT said that financial institutions are likely the next major sector to be targeted by ransomware, if their systems have not been infected already. In fact, if infected by ransomware, law enforcement itself often pays the ransom simply to regain control over its own computer systems. If the good guys are reduced to paying ransom, what’s a financial services company to do — particularly since the cost of being locked out of customer data can be far higher than paying ransom? Read More.

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    Midwest Office Can Save Banks Up to 55% on Everyday Office Supplies!

    Call your local sales representative today at 866-978-5555 to get a free price analysis. See Midwest Office Specials!

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    CBIS Nicoud: Workers Compensation Coverage for Illinois Community Banks

    What is Workers Compensation in Illinois? It is a system of benefits provided by law to most employees. They are generally covered as soon as they start work for the employer. Benefits are paid for injuries or disease which occurred while at work or is a result of employment. Read More from CBIS Nicoud.

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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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    Community Bank Cybersecurity Conference Scheduled for April 19

    The Community Bank CyberSecurity Conference is designed by operations and technology community bankers to educate community-bank operations and technology personnel on issues specific to cybersecurity concerns at your bank. Participants benefit from expert speakers, pertinent and informative topics, and peer networking. A mini-exposition featuring the latest products and services benefitting the community bank also highlights the day. Topics covered include hacking demystified, cyber insurance, incident response, building an actionable and compliant business continuity plan, and vendor management in the cybersecurity age.

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    Community Bank Marketing Conference Slated for April 28

    The 10th Annual Community Bank Marketing Conference is designed to help you maximize your reach to your community; connect with local media; understand the toughest challenges in retail banking; develop strategies to prepare for the customer of the future; and more. This conference not only benefits marketing professionals, it is also geared toward presidents, CEOs, officers, and anyone who is involved in increasing profitability for your community bank. The keynote speaker for the event is Mark Arnold, president of On the Mark Strategies, and acclaimed speaker and expert in branding, training, and strategic marketing for banks and other businesses. He speaks regularly to audiences around the country on many topics including branding, marketing, strategy, leadership, personal growth, and generational issues. You won't want to miss his sessions, “It Takes a Village: Community Charter Marketing,” and “The Customer of the Future.” Again this year, two roundtable discussion sessions are on the agenda to allow participants to learn from each other. A mini-exposition featuring the latest products and services benefitting the community bank and its marketing efforts also highlights the day.

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    Auditing TRID To Be Held May 2

    We are finally into the dreaded TRID (Integrated Disclosures) changes, and it is time to begin to focus on auditing these new portions of the regulation to assure that the bank is in compliance. The regulations have had major impacts upon every bank for every size. The focus of this seminar is to discuss your audit plan in order to measure your compliance with the new regulations. The seminar covers three specific areas of audit: timing of all the disclosures; completion of the loan estimate; and completion of the closing disclosure. Auditing these areas means an extensive review of many issues. This makes the audit process even more difficult, as the interrelationships of the various portions of the documents and their timing adds much complexity to the process. This program is designed specifically for bank auditors and others involved in the process of reviewing consumer mortgage loan files. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance, at Young & Associates, Inc., Kent, OH.

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    ACH for Beginners Scheduled for May 3 & 11

    This session explains general ACH rules in a real-world, easy-to-understand approach. Attendees learn the essentials of understanding the ACH system and daily processing as well as steps for handling some common issues. Learn to talk the “lingo” with the best of them! This class strategically allocates its objectives into education on the receiving side (RDFI) in the morning and early afternoon, followed by the origination side (ODFI) later in the afternoon. New and relatively new ACH personnel and operations staff who want a better understanding of ACH would benefit from attending. Nicole Meinhardt, CPA, AAP and senior manager at Wipfli LLP, Sterling, IL, leads this seminar.

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    CBC: Compliance Management Systems and Risk Assessment Set for May 3 & 4

    Over the last several years, compliance officers and employees have been faced with the implementation of new rules, and have been focused on trying to discern the details of what was required. This has left very little time to measure the risks that are a part of any regulatory change. The challenge is that regulators want their constituencies to focus on and manage the risks associated with compliance, as well as the details of the regulation itself. This session, the third quarter of the Community Bankers for Compliance Program, is focused on explaining the best ways to manage and assess compliance risk. The first portion of the presentation discusses Compliance Management Systems. We look at it from the perspective of the regulators and the perspective of the industry. The second portion of the presentation discusses the risk-assessment process itself. We begin with the risk-assessment process for operations in general, and then look at just one piece of the operations puzzle – Regulation E (Part A). We then continue with risk assessment for the Bank Secrecy Act (BSA). The final portion of the risk-assessment presentation is lending-risk assessment, and we look at the myriad of lending issues and then focus specifically on managing the risks created by TRID. Leading this session is Bill Elliott, CRCM, Young & Associates, Inc., Kent, OH.

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    THROUGH 06/10/2016






    Finer Points Blog

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