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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                            April 30, 2014

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI’s Annual Spring Group Meetings Begin May 5!
  • CBAI Banker Delegation in Washington This Week
  • Register Today for Early-Bird Pricing at CBAI’s 40th Annual Convention!
  • Editorial: Stop Too-Big-To-Fail by Reducing Chance of Crisis
  • ICBA Urges FDIC to Review De Novo Policies
  • CBAI Launching New On-Line Registration System!
  • FHLB Chicago Expects Strong First Quarter Performance
  • SBA Implements Revised 7(a) and 504 Program Rules
  • CBAI Founding Member Bob Walton Passes Away
  • Baker Market Update
  • Interest-Rate Risk Must Be Actively Managed by a Risk-Management Plan
  • Complimentary Seminar on Managing the ALLL and Credit Risk
  • 30th Annual CBAI Capital Conference Highlights
  • CFPB Releases TILA-RESPA Disclosure Guide
  • CFPB Report Cites Pain, Complexity in Mortgage-Closing Process
  • Introducing Legal Link’s News from the Bench
  • 2014 ID Fraud Handbooks Now Available
  • Flood Rules Scheduled for May 6 & 7
  • Compliance for Lenders Scheduled for May 8, 20, & 21
  • Advanced Commercial Lending Institute Scheduled for May 13-15
  • Auditing Flood, Appraisals, and Escrow to be Held May 14
  • Community Bank Marketing Conference Set for May 1

  • CBAI’s Annual Spring Group Meetings Begin May 5!

    CBAI leaders and executive staff are visiting 11 locations on the 2014 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, a representative from SHAZAM® Network will present “Changing Trends in Electronic Funds Transfer.” Meetings for Groups 11, 12, & 13 are less than a week away, so register today! For a Group Meeting schedule and to register,
    Click Here.

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    CBAI Banker Delegation in Washington This Week

    A record delegation of nearly 60 CBAI member community bankers, allies, and staff are in our nation’s Capital this week to participate in CBAI’s annual Call on Washington. The event is being held in conjunction with ICBA’s Washington Policy Summit which has attracted more than 1,000 community bankers from across America.

    Private meetings with all members of the Illinois congressional delegations are scheduled for today and tomorrow. General session speakers on Thursday include FDIC Chairman Martin Gruenberg and Federal Reserve Chairwoman Janet Yellen.

    Key priorities include passing 1) regulatory relief measures including the CLEAR Relief Act; 2) housing finance reform that preserves community bank access; 3) Farm Credit System taxation and halting the FCS non-farm lending agenda; and 4) repeal of the credit union tax subsidy and opposing expanded commercial lending powers for tax-subsidized credit unions.

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    Register Today for Early-Bird Pricing at CBAI’s 40th Annual Convention!

    Registration is now open for CBAI’s 40th Annual Convention & Expo, scheduled for September 18-20, 2014, at the Marriott Downtown in Chicago. Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. Dynamic and highly sought after speaker and leadership expert Tom Flick takes the stage for the Opening Breakfast and shares his passion for raising more effective leaders through his unique gift to connect with the listeners’ hearts as well as their heads. Golfers are treated to a beautiful, classic-style course with an amazing history of championship golf in Flossmoor Country Club. Also on the agenda is the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed exhibit hall with 100 booths, fun partner’s programs exploring the exciting city of Chicago, a Closing General Session, and much more. Our annual showcase event closes with the unforgettable music of the seventies, including Hollie Vest as Tina Turner, Quentin Flagg and Bill Downey as The Blues Brothers, and Stayin’ Alive, the number-one Bee Gees tribute band in the world. Don’t miss CBAI’s 40th anniversary celebration, “Looking to the Past to Plan for the Future.”
    Register now for early-bird pricing through June. Please click here to add a reminder to your Outlook calendar for CBAI's showcase event!

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    Editorial: Stop Too-Big-To-Fail by Reducing Chance of Crisis

    The nation’s too-big-to-fail problem is unlikely to have diminished, as evidenced by the increasingly concentrated banking system and continued subsidies for the largest banks, Financial Times columnist Martin Wolf wrote. He emphasized that the best approach to addressing too-big-to-fail is reducing the likelihood of a crisis by raising capital requirements on the largest banks and ensuring maximum transparency of their balance sheets.
    Read FT Article.

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    ICBA Urges FDIC to Review De Novo Policies

    Last week the ICBA and the American Association of Bank Directors urged the FDIC to revisit its policies and practices to ensure it is not unnecessarily inhibiting the formation of de novo banks. Following a January meeting on the lack of new bank charters, ICBA and the AABD wrote to confirm the FDIC’s revised policy on de novo banks.

    The letter seeks to confirm that the FDIC does not require de novos to have at their inception enough capital to maintain a capital leverage ratio of at least 8 percent for seven years—instead, that the requirement is for three years. Additionally, the associations sought to clarify that de novo bank applicants are not required to submit seven-year pro forma financial statements as part of the application process.

    ICBA and AABD told the FDIC that they continue to hear that FDIC policies and practices are inhibiting the formation of de novo institutions. The associations urged the agency to review its policies on business plans and financial statements and to issue a Financial Institution Letter to dispel misconceptions about its de novo policies.

    CBAI applauds both groups for their efforts to unshackle the de novo process and encourage new bank formations. History demonstrates that opportunities arise for community bank entry, and qualified investor groups should not be unduly inhibited from forming a new bank. In a joint letter last December, ICBA and AABD wrote that the FDIC’s policy on de novo banks adopted in 2009 makes forming new banks prohibitive. Yesterday’s letter follows a January 23rd meeting between the associations and the agency addressing de novo policies.
    See April Joint Letter. See December Joint Letter.

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    CBAI Launching New On-Line Registration System!

    On May 1, CBAI is launching a new on-line registration system for its education and special events programs. This easy-to-use registration option allows community bankers to go to CBAI’s website and quickly sign up for education events, live or webinar, as well as CBAI’s Annual Group Meetings. After completing the on-line form, the registration is confirmed via e-mail, including program details, directions to the event, and a printable invoice or credit card receipt. Other registration options, including faxing or mailing a registration form and calling in a registration are still available; however, an e-mail address is required to complete all registrations. As with registering on-line, you will now receive an e-mail confirmation and payment invoice or receipt regardless of the registration option you choose.
    See More.

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    Chicago FHLB Expects Strong First Quarter Performance

    The Federal Home Loan Bank of Chicago announced last week that it expects to report net income of $81 million for the first quarter of 2014 when it files with the SEC next month. As a result, the bank’s retained earnings grew to more than $2.1 billion as of march 31, 2014, and the board has declared a cash dividend for both Class B1 and Class B2 capital stock.
    See FHLB Letter to Members.

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    SBA Implements Revised 7(a) and 504 Program Rules

    The Small Business Administration last week implemented a final rule that eliminates or revises several requirements for its two main loan programs, 7(a) and 504. The rule is designed to expand eligibility, make it easier for small businesses to secure SBA-backed financing, and encourage job creation. The rule eliminates a personal resource test and revises collateral and corporate governance requirements.
    See SBA Final Rule.

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    CBAI Founding Member Bob Walton Passes Away

    On April 7, 2014, Robert L. Walton, former president and CEO of Farmers & Merchants State Bank in Bushnell, died at age 90. Bob was an outspoken and effective advocate for community banks throughout the 1960’s and 1970’s and helped found the Independent Community Banks in Illinois (now CBAI) in 1974.
    See Walton Obituary.

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    Baker Market Update

    Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement.
    See Baker Market Update.

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    Interest-Rate Risk Must Be Actively Managed by a Bank’s Risk-Management Plan

    A bank’s board of directors has ultimate responsibility for setting risk appetite parameters and overseeing the appropriate controls. Many board members bring little familiarity with interest-rate risk management from their expertise outside of banking. The tools for education do exist. The Federal Reserve offers a Bank Director’s Desktop, a good primer for the proactive steps directors can take to ensure the right questions are asked, and that the decisions on risk appetite are properly decentralized throughout a bank’s internal and external leadership.
    See Article.

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    Complimentary Seminar on Managing the ALLL and Credit Risk

    Sageworks, the CBSC-preferred company for credit analysis, stress testing, and ALLL, is hosting a Spring Seminar on managing the ALLL and credit risk in Chicago on May 20. This two-part event will discuss key ALLL topics like backtesting and qualitative factors over breakfast. Then, credit risk topics like global cash flow, stress testing, and portfolio administration will be discussed over lunch. Attendees will also have ample opportunity to network and discuss challenges with their peers and industry experts. Registration is now open for either event, or both. There is no cost to attend, but space is limited. To learn more, and to register, visit the
    Chicago Spring Seminar homepage.

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    30th Annual CBAI Capital Conference Highlights

    Record Banker Attendance!

    On Wednesday, April 9, 2014, nearly 100 community bankers from across Illinois gathered in Springfield to meet with state legislators on key community banking issues. This year CBAI is celebrating its 40th anniversary of service to community banks, and it was fitting to begin that celebration with CBAI’s 30th Annual Capital Conference during Community Banking Week in Illinois.
    See Highlights.

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    CFPB Releases TILA-RESPA Disclosure Guide

    The Consumer Financial Protection Bureau released a guide to completing TILA-RESPA integrated disclosure forms. The guide complements the recently released Small Entity Compliance Guide and highlights common situations that may arise when completing the forms. The TILA-RESPA rule, issued in November 2013, is effective August 1, 2015.

    The final rule applies to most closed-end consumer mortgage loans. It does not apply to home equity lines of credit, reverse mortgages, or mortgage loans secured by a mobile home or by a dwelling that is not attached to real property. The final rule also does not apply to loans made by a creditor that makes five or fewer mortgages in a year.
    Access the Guide.

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    CFPB Report Cites Pain, Complexity in Mortgage-Closing Process

    The Consumer Financial Protection Bureau
    released a report that finds that many consumers are frustrated by the short amount of time they have to review large stacks of complex closing documents when finalizing a mortgage.

    The CFPB also released guidelines for an upcoming electronic-closing pilot project to assess how electronic closings can benefit consumers as they navigate the mortgage-closing process. The bureau said eClosings can lead to more knowledgeable consumers and a more efficient closing process, though it said eClosings risk reducing the amount of time consumers spend reading their closing documents.

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    Introducing Legal Link’s News from the Bench

    Pirating from the “News From the Front” title used by CBAI’s Governmental Relations staff for legislative updates to CBAI members, CBAI General Counsel Jerry Cavanaugh will write a semi-regular case-law article for this e-newsletter titled, “News From the Bench” (“NFTB”) for the purpose of providing newsworthy reports of case law developments from Illinois or federal Appellate Courts. The first edition of NFTB describes a recent Illinois Appellate Court decision upholding the enforceability of a personal guaranty, despite arguments from the guarantor that the bank administered the line of credit in a manner that unfairly increased the liability exposure of the guarantor.
    See NFTB First Edition.

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    2014 ID Fraud Handbooks Now Available

    To view the brochure describing the features of the book,
    Click Here. The cost is $23.95 for one copy; 2-19 copies are $18.95, with $6.00 shipping and handling per order. The book can be ordered at

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    Flood Rules Scheduled for May 6 & 7

    The third quarter of the Community Bankers for Compliance (CBC)
    program entitled “The Flood Rules” is being offered in two locations this May. Flood insurance and the issues surrounding it have been a problem for a number of years, and the 2012 Biggert-Waters Flood Insurance law has not improved things much, if at all. In fact, Congress is still considering the impact of the law, and there may be an additional law to discuss by the time of the third quarter CBC presentations. One part of the Biggert-Waters law that we will probably not see change is the fines for violations -- $2,000 each. This seminar focuses on the requirements as they exist at the date of the seminar, as well as best practices to avoid mistakes. Many violations are created by bankers who are trying to “save a buck,” and while that may be a good idea in many situations, flood compliance may not be one of them. The presentation includes case studies that deal with this situation, as well as other flood related issues. Also discussed are audit procedures for new loans and existing loans to ensure that any errors are repaired (although the violation remains). All lending personnel benefit from attending this seminar. While designed primarily for the bank’s compliance officer, this seminar should be attended by internal auditors, loan operations personnel, underwriters, lenders, and, as the flood rules impact the entire bank lending operations, including commercial loans, senior lenders are encouraged to attend. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Compliance for Lenders Scheduled for May 8, 20, & 21

    The compliance officer is responsible for administering your bank’s compliance program including policies and procedures. Each employee of the bank has a duty to have a working knowledge of the compliance issues that pertain to his or her assigned position description. And this year is a major challenge, as the regulators have added a mere 3,500 pages of material regarding the Dodd-Frank Act changes to lending which makes the lender’s job even more difficult. The challenge is to ensure that lending personnel have the right information at the right time. This
    one-day program, Compliance for Lenders, provides an overview of the current “hot-button” changes that are part of the lender’s responsibilities; up-to-date information on other compliance issues and other developments in bank regulations that relate to lending; and a brief review of the new Loan Estimate (combination GFE and Early TIL) and the new Closing Disclosure (combination of the Final TIL and HUD-1) that will be the big issue for 2015. Leading this seminar is Bill Elliott, CRCM, of Young & Associates, Inc..

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    Advanced Commercial Lending Institute Scheduled for May 13-15

    Risk assets typically comprise 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. This
    school is designed to provide the more experienced lenders 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. Topics covered on day one include a review of key economic indicators, analyzing industry, business, and management risks, advanced ratio analysis, and loan structuring for short-term and long-term credits. Day two discusses analyzing borrowing causes, cash-flow analysis for commercial and industrial loans and commercial real estate, financial forecasting and sensitivity analysis, calculating sustainable growth and break-even points, and credit-risk management. Analyzing specialized credits, managing the commercial lending relationship, loan documentation, and a review of major credit administration topics are covered on the third day. Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, Georgia, leads this institute.

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    Auditing Flood, Appraisals, and Escrow to be Held May 14

    There is a lot going on in the mortgage lending world including new disclosures, new underwriting, and new acronyms. Trying to keep track of it all is a daunting task for the mortgage-lending department and in many ways more daunting for auditors. Biggert-Waters has changed the complexity of flood insurance premiums, coverage levels, force placement, and escrowing. There are new requirements for appraisals, internal inspections for certain dwelling-related loans, and the “old” standards from December 2010 are still applicable though often overlooked or misunderstood. What does USPAP mean, and does it always apply? What can and does go wrong with escrows, voluntary or obligatory, HPML or ATR, with flood or without flood, on the GFE, on the settlement statement, on the projections, and on the annual analyses? In this full-day session we look at the requirements for each of these three issues, explain the background and applicability to different lenders, loan types and circumstances, discuss audit approaches, and share some sample work programs and resources to help auditors. While this class is focused on auditing, those involved in the mortgage operations area also benefit from attending. Tim Tedrick, CRCM, CRP, and executive officer at Wipfli LLP in Sterling, Illinois, leads this

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    Community Bank Marketing Conference Set for May 1

    CBAI is pleased to offer the eighth annual
    Community Bank Marketing Conference, scheduled for May 1, 2014, at the Crowne Plaza in Springfield. The keynote speaker is Tom Hershberger, president and founder of Cross Financial Group, a sales and marketing consulting firm based in Lincoln, NE. Hershberger opens the conference with “Money-Making, Money-Saving Marketing Ideas,” which provides attendees with highly effective marketing solutions on a very low budget. Hershberger’s closing session, “Compelling Advertising for Community Banks,” shows participants how to develop effective advertising using a few basic principles that improve newspaper, radio, and direct-mail communications. Other hot topics on the agenda include “Developing a Social Media Content Strategy” with Sid Haas, vice president of business development at LKCS in Peru, IL; “Co-opetition: Break Through the Clutter to Compete and Win” with Lori Peterson, senior vice president of corporate marketing at BancVue in Austin, TX; and “20-80% Response Rates” with Brett Jackson, CEO of Systemax Corporation, Springfield, IL. New this year, a roundtable discussion session has been added to allow participants to learn from each other. Each roundtable is dedicated to a specific marketing topic. A mini-exposition featuring the latest products and services benefitting the community bank marketing also highlights the day.

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    THROUGH 5/30/2014






    Finer Points Blog

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