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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                            April 15, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • House Taking Up Regulatory Relief Bills This Week
  • How Wall Street Captured Washington's Efforts to Reign in Banks
  • ICBA Punches Back Against Megabank, Retailer Chutzpah
  • Use Tiered Regulation to Preserve Small Banks, Keep Big Ones in Line
  • CBAI's 33rd Annual Call on Washington Scheduled for April 28 - May 1
  • Basel III - AOCI Regulatory Capital Opt-Out Due with March 31st Call Report
  • Fed Issues Guidelines for Small Bank Holding Companies
  • WSJ: Good Banks Come in Small Packages
  • Group Meeting Registration Now Open for Groups 5, 6, 8, 9, 10, 11, 12, & 13!
  • Only Two Weeks Left to Complete CBAI Officer Compensation Survey!!
  • Investment News From THE BAKER GROUP
  • Consumers Prefer Community Banks - But They Won’t Switch
  • Protecting Electronic Data Is a Shared Responsibility
  • Terrorism Risk Insurance Act Renewed by Congress
  • CBAI Legal: Illinois Court Decision Likely Undercuts 2014 “Void Mortgage” Case
  • Sageworks Blog: What Data is Needed for Top Down Stress Testing?
  • Take This Week's CBAI Quick Poll
  • Midwest Office: Stock Up On Breakroom Supplies
  • Register Now for Early-Bird Pricing at CBAI’s 41st Annual Convention & Expo!
  • Compliance Institute - Lending Session Set for April 20-23
  • Advanced Commercial Lending Institute Will Be Held April 28-30
  • Don’t Miss the Community Bank Marketing Conference on April 30


  • House Taking Up Regulatory Relief Bills This Week

    The House of Representatives has begun taking up CBAI and ICBA-advocated regulatory relief legislation this week after returning from its Easter recess.

    This week the House of Representatives approved regulatory relief legislation inspired by the ICBA’s Plan for Prosperity. The Helping Expand Lending Practices in Rural Communities Act (H.R. 1259) would allow individuals to petition the Consumer Financial Protection Bureau to reassess the rural status of counties to ensure the mortgage needs of individuals in those communities can be met. The bipartisan legislation introduced by Rep. Andy Barr (R-Ky.) advanced on a 401-1 vote.

    The House also approved the Eliminate Privacy Notice Confusion Act (H.R. 601), which would eliminate a provision requiring financial institutions to provide annual privacy notices to customers even when their policies have not changed.

    The full House plans to take up another bill inspired by the Plan for Prosperity platform called the Bureau of Consumer Financial Protection Advisory Boards Act (H.R. 1195) which would statutorily establish community bank and small business advisory boards at the Consumer Financial Protection Bureau.

    Committees Also Reviewing Regulatory Burden

    Also this week, key Congressional committees will continue to examine the impact of financial regulations. The House Subcommittee on Financial Institutions and Consumer Credit is scheduled to meet today (Wednesday) on regulatory burdens on non-depository financial institutions. On Thursday, the Senate Banking Committee is scheduled to meet on regulatory burdens to obtaining mortgage credit. See House Schedule. See Senate Schedule.

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    How Wall Street Captured Washington's Efforts to Reign in Banks

    While toxic assets held in off-balance-sheet conduits played a key role in undermining too-big-to-fail financial institutions during 2007 and 2008, these institutions have succeeded in greatly weakening securitization rules issued by FASB and the SEC. The "big six" too-big-to-fail banks hold nearly $3.3 trillion of securitized loans in off-balance-sheet entities that do not have to be fully disclosed, due to the weaknesses in the recent FASB rules. By excluding those assets from the books of the big six banks, the weak FASB rules enable them to securitize trillions of dollars of loans without holding capital against those loans. Read Article.

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    ICBA Punches Back Against Megabank, Retailer Chutzpah

    ICBA President and CEO Cam Fine pushed back against JPMorgan Chase CEO Jamie Dimon’s comments to investors about how many community banks failed to navigate the Wall Street financial crisis. In an editorial last week, Fine wrote that Dimon’s remarks were not only inaccurate and tone deaf, but also dangerous. In a separate editorial, Fine responded to misleading retailer claims regarding debit card interchange. Responding to a National Association of Convenience Stores op-ed, Fine noted that NACS is really asking for an even bigger government handout through congressionally approved price controls. Read Megabank Editorial. Read Retailer Editorial.

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    Use Tiered Regulation to Preserve Small Banks, Keep Big Ones in Line

    A two-tiered tiered system of regulation could restore a more balanced, diverse and resilient banking industry, accordng to George Washington University Law School professor Arthur Wilmarth.

    Wilmarth proposed separate regulatory systems for “relationship” community banks and “nontraditional” megabanks designed to maintain the community bank model and to reduce too-big-to-fail subsidies. CBAI and ICBA strongly support tiered regulations, as advocated in the Plan for Prosperity regulatory relief platform. Wilmarth, a long-time friend of CBAI and community banking advocate, will attend a dinner event during CBAI's Call on Washington later this month. See American Banker Op-Ed. See ICBA Plan for Prosperity.

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    SHAZAM® BOLT$™, the mobile app that alerts cardholders to potential fraud has gotten even better! Now your cardholders can make person-to-person (P2P) payments and use GPS technology to locate nearby ATMs! This is just one more way SHAZAM continually works help you succeed. Learn More.



    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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    Basel III - AOCI Regulatory Capital Opt-Out Due with March 31st Call Report

    Community banks will need to make a one-time, irrevocable election regarding the inclusion of accumulated other comprehensive income (AOCI) in common equity tier 1 capital when they file their first quarter 2015 Call Report in April. Read More.

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    Fed Issues Guidelines for Small Bank Holding Companies

    Revises SBHC Policy Statement by Increasing Asset Limit to $1 Billion
    And Including Savings & Loan Holding Companies

    According to a Summary prepared by Hinshaw on December 19, 2014, President Obama signed legislation which instructed the FRB to revise the Policy Statement to provide that it shall apply to BHCs and savings and loan holding companies (“SLHCs”) with consolidated assets of less than $1 billion.

    As directed by the legislation, the Fed adopted these revisions on April 9, 2015. The new rules should be effective by the middle of May. Under the Policy Statement, a BHC or SLHC (that meets the Qualitative Requirements discussed below)
    • is exempt from the FRB’s risk-based capital and leverage rules (Appendixes A and D of Regulation Y) and, as a consequence, is exempt from complying with Basel III; and
    • may use debt to finance up to 75% of the purchase price of an acquisition allowing a BHC or SLHC (in theory) to have a debt-to-equity ratio of up to 3:1.
    The Policy Statement also applies to transactions involving dividends, stock redemptions, and other transactions. See Hinshaw Memorandum.

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    WSJ: Good Banks Come in Small Packages

    While several megabanks release first-quarter earnings this week, smaller banks may have the best news this earnings season, The Wall Street Journal reported. The report notes smaller bank commercial real estate lending, steady net interest margins and lending growth. See WSJ Article.

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    Group Meeting Registration Now Open for Groups 5, 6, 8, 9, 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 after dinner Phil Walter, regional sales manager for Welch Systems, Inc., will present “Evolving Your Branch to Achieve Peak Performance.” Registration is now open for Groups 5, 6, 8, 9, 10, 11, 12, & 13, so register today! See the Group Meeting Schedule.

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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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    Investment News From THE BAKER GROUP

    Baker Market Update

    A metaphor for the last week’s market news might best be found in a description of Spring’s capricious weather. Hailstones and twisters one day; cloudless skies and sunshine the next. Last week brought us the first dark clouds in the form of more bad news for the jobs picture. See More.

    MBS Market Strategies

    Speeds for Agency MBS pools came in with very few surprises in March, up 15-30% after posting similar gains in February. After a 75bp rally since January of this year, 30yr mortgage rates are near 3.75%, the lowest level since May 2013 (bankrate.com). Accordingly, prepayment speeds have climbed to 2yr highs with aggregate Fannie Mae 30yrs at 19.2 CPR. The difference between now and 2013 is that refinance activity is less than half of the volume from 2yrs ago. The reason for this could be explained by an increase in purchase activity. Read More.

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    Consumers Prefer Community Banks - But They Won’t Switch

    According to a new study, most Americans hold favorable views of community financial institutions (CFIs) and would rather do business with a community bank than a megabank. Unfortunately, those preferences alone aren’t enough to drive consumers to switch to a CFI anytime soon. See More.

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    Protecting Electronic Data Is a Shared Responsibility

    As data breaches continue to be a costly concern across the financial and payments industries, the discussion continually returns to accountability.The responsibility for protecting payment and personal financial data is ultimately a shared one. While consumers must do their part (for example, using their debit card with PIN, whenever possible), financial institutions (FIs) and merchants must also do theirs. Read SHAZAM Blog.

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    Terrorism Risk Insurance Act Renewed by Congress

    Terrorism insurance: an affordable peace of mind. In January, 2015, Congress extended TRIA with nearly uniform consent between Republicans and Democrats! Read the Ramifications Here.

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    CBAI Legal: Illinois Court Decision Likely Undercuts 2014 “Void Mortgage” Case

    In May of 2014, the Second District Illinois Appellate Court’s opinion in the case of First Mortgage Company, LLC vs. Dina concluded that a mortgage purchased from a loan originator not licensed under Illinois law was void and not enforceable by the purchasing financial institution. The impact of that decision is now in doubt after a recent Illinois Supreme Court decision. See Details.

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    Sageworks Blog: What data is needed for top down stress testing?

    The OCC defines “top down” stress testing as “applying estimated stress loss rates under one or more scenarios to pools of loans with common risk characteristics.” This method of stress testing provides deeper insight into a financial institution’s portfolio or portfolio segment during stressed scenarios. For top down stress testing to be performed properly, banks and credit unions must appropriately segment their portfolio into pools of like characteristics, to which loss rates can then be applied. Read More.

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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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    Midwest Office: Stock Up On Breakroom Supplies

    Break rooms keep employees happy and motivated! Stock up on break room supplies from Midwest Office. This monthly special is guaranteed through April 30, 2015, while supplies last. Sizes, photos, specifications and prices can be Viewed Here.

    Midwest Office is committed to offering CBAI members the lowest price on commonly-used bank office furniture and supplies. These prices are guaranteed to save your bank money compared to the cost of buying supplies from mail-order vendors and super-stores. REMEMBER: Delivery is always free for CBAI member banks!

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    Register Now 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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    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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    Advanced Commercial Lending Institute Will Be Held April 28-30

    Risk assets typically compose 50 to 80 percent of a community bank's total assets. Asset quality is viewed by the investment community to establish the bank's value, and it forms the basis of capital requirements assigned by the regulators. Therefore, managing the commercial loan portfolio is extremely important for the overall health of a financial institution. The Advanced Commercial Lending Institute is designed to provide the more experienced lender with the tools necessary to ensure a quality loan portfolio from analyzing promising prospects or customers, to loan approval, to loan documentation, and finally to credit administration. Leading this institute is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, GA.

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    Don’t Miss the Community Bank Marketing Conference April 30

    The Community Bank Marketing Conference is designed to help community-bank marketing professionals win the attention of socially engaged customers; optimize marketing for the intersection of social, local, and mobile; change banking through customer-centric banking; understand social media compliance, and more. Scheduled for April 30, 2015, at the Crowne Plaza in Springfield, the keynote speaker for the event is Jeff Korhan, MBA, a business marketing speaker, trainer, author, and coach who helps mainstream businesses adapt their traditional growth practices to a digital world. All banker registrants receive a copy of Korhan's new book, Built-In Social: Essential Social Marketing Practices for Every Small Business, which delivers proven methods for converting mainstream social marketing practices into profitable outcomes. 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. Presidents and CEOs attending with another individual from the bank receive a $100 discount off the original price!

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