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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                               May 13, 2015

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI and ICBA Back Bill to Break Up Too-Big-To-Fail Megabanks
  • Yellen: Too-Big-To-Fail Key Piece of Financial Crisis
  • Fine: Community Bankers Getting Results from Washington Policy Summit
  • CBAI’s 33rd Annual Call on Washington Highlights
  • J.D. Power Study: “Branches Remain Key Delivery Channel”
  • Federal Reserve Releases Study on Managing Agricultural Credit Risk
  • Shelby Releases Draft Bill Offering Community Bank Regulatory Relief
  • Patent Board Rules Against DataTreasury
  • Measure Introduced to Increase Bank-Qualified Debt Limit
  • Toot Your Bank’s Horn!
  • New Required CFPB Mortgage Toolkit Now Available
  • Students Seeking College Loan for Fall - CBAI and iHELP Offer a Solution
  • FFIEC Releases Two Statements on Cybersecurity
  • There’s Still Time to Register for CBAI Groups 1, 2, 3, 4, 5, 7, 8, & 9 Meetings
  • Midwest Office: Tee Up Your Marketing with these Special Products
  • Investment News From THE BAKER GROUP
  • CBAI LEGAL: Fourth of July Banking Holiday on a Saturday
  • Take This Week's CBAI Quick Poll
  • The Future of the ALLL and Stress Testing Scheduled for May 19 & 20
  • Call Report Seminar To Be Offered May 19-20
  • HR Update: “Hot Topics” and Recent Employment Trends Set for June 2
  • Principles of Understanding, Managing, and Monitoring Information Systems Scheduled for June 3

  • CBAI and ICBA Back Bill to Break Up Too-Big-To-Fail Megabanks

    CBAI and ICBA have expressed support for legislation to address the problem of too-big-to-fail financial firms. The measure, introduced by Senator Bernie Sanders (I-Vt.) and Representative Brad Sherman (D-Calif.), would require regulators to identify and break up institutions whose failure would cause a catastrophic effect without a taxpayer bailout. Additionally, these entities would be barred from accessing the taxpayer-funded safety net, including Federal Reserve programs and federal capital injections. Read ICBA Release. Read More on the Bill.

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    Yellen: Too-Big-To-Fail Key Piece of Financial Crisis

    In a May 6 speech in Washington, D.C., Federal Reserve Chair Janet Yellen said market perceptions that some institutions were too big to fail encouraged excessive leverage in the run-up to the financial crisis. She also noted that large financial institutions had an incentive to move assets to undercapitalized off-balance-sheet vehicles, and their complexity also may have impeded market discipline. Read Yellen’s Speech.

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    Fine: Community Bankers Getting Results from Washington Policy Summit

    While the recent ICBA Washington Policy Summit is already showing results, ICBA President Cam Fine is urging community bankers to continue to hold their lawmakers’ feet to the fire.

    Following more than 300 meetings with policymakers, the CLEAR Relief Act regulatory relief legislation has added 22 cosponsors in the House and another eight in the Senate in the past two weeks, but to ensure success, community bankers must continue applying pressure on their lawmakers, according to Fine. Read Fine’s Blog Post. Contact Congress Today.

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    CBAI’s 33rd Annual Call on Washington Highlights

    Nearly 60 community bankers, spouses, staff and their invited guests came to Washington, D.C., for the Community Bankers Association of Illinois’ 33rd Annual Call on Washington which was held April 28 – May 1, 2015. Again this year, CBAI’s Call on Washington was held in conjunction with the Independent Community Bankers of America’s (ICBA) Washington Policy Summit, which included more than 1,000 community bankers and industry advocates.

    CBAI members shared their views and opinions on issues of importance to Illinois community banks with their federal legislators and banking regulators. The key issues included regulatory relief, exemption from Basel III, data security, and ending the highly discriminatory competitive advantages enjoyed by credit unions and Farm Credit System lenders. See Call on Washington Highlights.

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    J.D. Power Study: “Branches Remain Key Delivery Channel”

    Recently released data from the J.D. Power Retail Banking Satisfaction Study found that, while electronic transactions continue to grow, branch usage continues to be high. In fact, 78% of retail banking customers visited a branch an average of 15 times in the past year. The Study also found that branches are a key channel for “moment of truth” transactions such as opening an account or resolving a problem.

    The after-dinner presentation of Welch Systems’ Phil Walter during CBAI’s group meetings this year addresses how to achieve peak branch performance. Read J.D. Power Release. See Group Meetings Information.

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    Federal Reserve Releases Study on Managing Agricultural Credit Risk

    Earlier this month the Federal Reserve released a study titled, “Successfully Managing Agricultural Credit Risk Regardless of Agricultural market Conditions.” The study concluded that the potential always exists in the farm sector for reduced profitability and increased borrower stress based on the unknown and uncontrollable volatility in the marketplace.

    The research noted that lessons learned from past down turns show that farm banks that pursued more conservative lending strategies and had stronger risk management practices with formalized capital and strategic planning processes were well-positioned for both the up-and-down cycles of volatile agricultural markets. Read Federal Reserve Release.

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    Federal Reserve Releases Study on Managing Agricultural Credit Risk

    Yesterday U.S. Senate Banking Committee Chairman Richard Shelby (R-Ala.) unveiled a discussion draft of legislation to reduce excessive community bank regulation. The draft bill includes several important regulatory relief provisions from ICBA’s Plan for Prosperity platform, including less restrictive mortgage regulations, relief from excessive regulatory examinations and quarterly reporting requirements, and an exemption from the Volcker Rule. A committee markup is scheduled for May 21.

    In a statement, Shelby said the discussion draft is a working document intended to initiate a conversation with all members of the committee interested in reaching a bipartisan agreement. ICBA thanked the chairman and strongly urged lawmakers to work together to take up and advance pro-community bank provisions.

    Meanwhile, with the House back in Washington this week, the House Financial Services Committee has several hearings planned. The Oversight and Investigations Subcommittee meets today for a hearing on regulatory overreach, followed by a Capital Markets and Government Sponsored Enterprises Subcommittee hearing on enhancing capital formation and reducing regulatory burdens.

    On Thursday, the full House committee will hold a hearing on consumer financial data security and its Housing and Insurance Subcommittee meets on the TILA-RESPA Integrated Disclosure rule. Read ICBA Release. Read the Draft Legislation. Read Bill Summary. See Plan for Prosperity. Read AB Article.

    Democratic Skepticism will Require Compromise

    While elements of the draft legislation are supported by both parties, democrats criticized certain provisions labeled as overreaching. Continued lobbying by community bankers will be essential to attaining regulatory relief in this session of Congress. Read WSJ Article.

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    Patent Board Rules Against DataTreasury

    Last week the Patent Trial and Appeal Board ruled to invalidate check-imaging patents held by DataTreasury Corp. Like other patent-assertion entities, DataTreasury has used dubious patent claims to threaten and extort settlements from community banks and other legitimate businesses.

    The PTAB was established by the U.S. Patent and Trademark Office as a result of the community bank-backed America Invents Act of 2012. The decision continues a string of victories in the fight against patent trolls and constitutes a victory for community banks and other businesses that have suffered from deceptive demand letters.

    Nevertheless, ICBA has called on Congress to advance legislation to:

    • provide that if a demand letter does not contain clear and detailed information about the patent, any civil action that is later brought by the troll would be dismissed,
    • make permanent the U.S. Patent and Trademark Office’s covered business method program, and
    • ensure that vendors that sell products or services to community banks provide the appropriate warranties and indemnification to protect the end users from infringement claims.

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    Measure Introduced to Increase Bank-Qualified Debt Limit

    Legislation supported by CBAI and ICBA to permanently increase issuer limitations for bank-qualified municipal bonds was introduced in the House. The Municipal Bond Market Support Act of 2015 would increase the bank-qualified annual debt limit from $10 million to $30 million, index that amount for inflation and apply it to individual borrowers.

    The current $10 million limit was established under law passed in 1986. Bank-qualified debt allows small governments and authorities to directly place their debt with banks, particularly community banks, which can then deduct a percentage of the carrying costs for purchasing these bonds. As a result, local governments pay up to 0.5 percentage points less in borrowing costs for their debt.

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    Toot Your Bank’s Horn!

    Nominate your bank for the 2015 Excellence and Innovation BKD Award Presented by CBAI. We’re looking for innovative products or services, exciting philanthropic initiatives, and successful civic programs that your bank conducted.

    For a nomination form, Click Here.

    For the brochure, Click Here.

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    New Required CFPB Mortgage Toolkit Now Available

    Pre-Order the new required CFPB Mortgage Toolkit from Wolters Kluwer and receive a five-percent CBAI-member discount. Pre-Order Now!

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    Students Seeking College Loan for Fall - CBAI and iHELP Offer a Solution

    A bank customer turns to you for student-loan assistance for his high-school daughter. You’d like to help, and you don’t want to see the business go to a big-bank competitor. Now, you have an answer!

    iHELP has partnered with the Community Bankers Association of Illinois’ Foundation for Community Banking to offer a Referral Partner program to CBAI member banks that also helps fund the Foundation’s scholarship programs while offering affordable private student loans to Illinois residents. This program includes both in-school loans and loan consolidation. What does your bank have to do to participate? Simply put the iHelp icon on your bank’s web site. That’s it!

    The icon will direct the parent or student to There, through a simple process, loan assistance may be forthcoming for qualified students. If the loan goes through, your bank receives fee income and the CBAI Foundation for Community Banking receives a donation. Your bank does not make the loan – it simply acts as a conduit.

    For more information about the iHELP private student loan program, contact Reid Moehn,, 612-354-2837 or Wynde Walker,, 571-313-1405.

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    Whether you need help creating your next flyer or developing a complete marketing plan, SHAZAM® Marketing Services can help. We offer complete marketing agency services that will help you promote all your products and services. From strategic planning all the way through implementation, our award-winning SHAZAM Marketing Services team can help you. Learn More.

    FFIEC Releases Two Statements on Cybersecurity

    Regulators are continuing to emphasize that bank CEOs and directors must understand the risks they are undertaking with regard to cyber security, the same as understanding credit, liquidity and other risks inherent in banking. Read More.

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    There’s Still Time to Register for CBAI Groups 1, 2, 3, 4, 5, 7, 8, & 9 Meetings

    CBAI’s 2015 Group Meetings are underway, but there is still time to register for the upcoming meetings in Groups 1, 2, 3, 4, 5, 7, 8 & 9. CBAI leaders and executive staff are visiting 11 locations on the 2015 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 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.” Register today for Groups 4, 5, 7, 8 & 9, as well as for the Groups 1, 2, & 3 Meeting, which consists of a lunch, meeting, and golf outing. See the Group Meeting Schedule.

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    Midwest Office: Tee Up Your Marketing with these Special Products

    Tee Up Your Marketing with these Special Promotional Products from Midwest Office. This monthly special is guaranteed through May 31, 2015, while supplies last. 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! See Midwest Office May Specials.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The news recently can only reinforce the notion that the economy, like so many millennials, has moved back in with the parents and is now living in the basement of the Fed. To be fair, the economy would like to be independent. It would like to be self-sufficient. It would like to be able to stand on its own two feet. But it can’t; not yet anyway. See Baker Market Update.

    MBS Market Strategies

    May 2015 - Prepayment Summary

    After three months of increasing prepayments, speeds fell about 15% in April. The decline wasn’t surprising with the drop in refinance activity and a lower day count. See MBS Market Strategies.

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    CBAI LEGAL: Fourth of July Banking Holiday on a Saturday

    Although no state or federal law automatically authorizes a bank to create a three-day weekend when the Fourth of July falls on a Saturday, as it does this year, a bank does have an option to close on Friday, July 3 or Monday, July 6, if it satisfies certain conditions. See Details.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on whether or not your bank has registered with Visa or MasterCard to allow its credit or debit cardholders to use Apple Pay. Click Here to view results of previous polls.

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    The Future of the ALLL and Stress Testing Scheduled for May 19 & 20

    The estimation of the allowance for loan and lease losses (ALLL) has been a part of a bank's accounting process for a long time, but it has taken on increased importance and attention over the last several years thanks to increased regulatory scrutiny, challenges documenting and defending the allowance, and the pending release of the FASB's CECL model. Further, stress testing isn't a new concept, but recent mandates from regulatory bodies have placed a renewed emphasis on it. This seminar is designed to provide bank executives involved in the ALLL and/or stress testing with a clearer understanding of both. The presentations are interactive so participants can not only learn from the speakers, but also their peers. In addition to the presentations, there is dedicated time for peer-group roundtable discussions. Topics covered include justifying and documenting qualitative factors; common FAS 114 / ASC 310-10-35 challenges; how to prepare for the FASB's CECL model; types of stress testing and how to use results; and more. Offered in two locations, this seminar is led by Robert Ashbaugh and Tim McPeak, senior risk management consultants at Sageworks, Inc.

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    Call Report Seminar To Be Held May 19-20

    This two-day seminar is intended for all levels of preparers, experienced and new. It validates questions that experienced preparers may have and begins a base of knowledge for the new preparers of the report. Annual training is highly recommended by bank regulators. In the ever-changing regulatory and accounting worlds, the educational requirements for Call-Report preparers is as intense as ever. Preparers must remain current on new accounting pronouncements and their implementation in addition to additional reporting requirements of the regulatory agencies as part of the Call Report. This session includes detailed discussions of each schedule as well as real-life challenges of completing an accurate Call Report. The session also includes case studies as well as sufficient time for questions and answers. Leading this seminar are Neil Falken, principal-in-charge of CliftonLarsonAllen's Banking Group, and Amanda C. Garnett, CPA, manager in the Financial Institution Group of CliftonLarsonAllen LLP, in the Peoria office.

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    HR Update: “Hot Topics” and Recent Employment Trends Set for June 2

    Managing community-bank employees requires a substantial commitment to keeping informed of rapidly evolving federal- and state-employment law. The current enforcement environment continues to expand. The push by federal and state agencies to limit employer autonomy remains limited, in certain instances, by the federal courts. The landscape is changing with regard to wage and hour issues, timekeeping requirements, concealed carry, medical marijuana, and a host of other items. Preparing your bank to defend against enforcement actions or litigation depends in large part on the quality of your preparation and documentation regarding your employment decisions. We are long past the days of true at-will employment, and more than ever, the best defense is a good offense. This program offers both a detailed review of recent changes and trends in the law as well as practical advice for managing your employees in a manner designed to foreclose negative outcomes. CEOs, human resource officers, and anyone in the bank with hiring and supervising responsibilities would benefit from attending this seminar. Leading this seminar are Leonard Sachs, partner-in-charge of the Labor and Employment Group, and Tracy Litzinger, partner, both of Howard and Howard Attorneys PLLC.

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    Principles of Understanding, Managing, and Monitoring Information Systems Slated for June 3

    All senior management, information security officers, information system administrators, operations managers, and IT auditors would benefit attending this one-day session. As financial institutions become more reliant on technology, it is important that they have a better understanding of their information systems to mitigate and monitor risks. Using basic concepts without using technical jargon, this presentation describes and demonstrates fundamental information-security strategies for protecting your information systems. The primary focus is the Microsoft Windows network. Many of the security principles presented are described in the FFIEC IT Examination Handbook and various interagency guidelines. Mark Scholl, partner for WIPFLi LLP, leads this program. He specializes in all aspects of information-security services including information-system security auditing and Internet intrusion-testing services.

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    THROUGH 06/30/2015






    Finer Points Blog

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