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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                                    May 23, 2018

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Community-Bank Regulatory Relief Passes the U.S. House!
  • CBAI FedPac Needs Your Support
  • House Fails to Advance Farm Bill
  • ICBA Chief Addresses Future of Community Banking at Think Tank
  • NEWS FROM THE FRONT 05/14/18
  • CBAI Co-Sponsors Annual House vs. Senate Softball Game
  • Investment News from THE BAKER GROUP
  • Rural Economic Index Showing Sustained Growth
  • Community Bank Income Rises 17.7 Percent in First Quarter
  • CSBS Chairs Discuss Priorities for Financial Regulators
  • Registration Now Open for CBAI Group Meetings
  • It’s Go Time for CDD Final Rule
  • Mixed Picture for CRE Lenders
  • Four Ways Banks Can Use Tech to Win Millennials’ Business
  • CBAI LEGAL: Deceased Customer, Outstanding Checks and Setoff
  • Deadline for CBAI Excellence Award Is Almost Here!
  • Open Your Vault for CBAI’s Banknotes!
  • Instant-Card Issuance Tips and Tricks
  • Five Things Consumers Want in a Loan
  • Gerrish: “De Novos: They’re Playing My Song”
  • CBIS: Is Your Community Bank Impacted by New European Data Regulations?
  • Register Today for Early-Bird Pricing at CBAI’s 44th Annual Convention & Expo
  • Loan Structure, Documentation and Compliance Training Set for May 30
  • 2018 Guide to HR Scheduled for June 5
  • Head Teller Seminar Slated for June 7

  • Community-Bank Regulatory Relief Passes the U.S. House!

    This week the United States House of Representatives passed legislation to bring much-needed regulatory relief to the nation’s community banks. The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) is a carefully constructed bipartisan bill that includes common-sense improvements to financial regulation that will allow community banks to better serve their customers and communities. For consumers it will open the door for more creditworthy borrowers and businesses, and will contribute to local economic growth and job creation. Read Article.

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    CBAI FedPac Needs Your Support

    Let’s Play Ball!!

    Baseball season is in full swing and our CBAI FedPac hitting streak continues. On Wednesday, September 12, 2018, CBAI Fed Pac will host its annual fundraiser at Busch Stadium in St. Louis for a 12:15 p.m. start against division rivals Pittsburgh Pirates.

    It's time to trade in your banker pinstripes for your Cardinal red! Your support for CBAI FedPac is essential in CBAI’s efforts to produce results for represent community banks on federal issues. CBAI FedPac supports those candidates who advocate for positions deemed beneficial to the community banking profession.

    Bankers can purchase tickets for $150 (personal CBAI FedPac contributions) which includes entry into a private “Redbird Row Skybox”, food, and drinks. Bring along a rookie or veteran player from your bank! Tickets are limited so act today to secure your reservations.

    In addition, associate members and CBAI member banks can help underwrite this event with their generous contributions. David Schroeder (847) 909-8341 or Jessie Schmidt (800) 736-2224 are in the dugout to answer any questions regarding sponsorships.

    To register and purchase tickets, contact Jessie Schmidt at CBAI today (800/736-2224). We hope to see you at the old ball game!

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    House Fails to Advance Farm Bill

    Will Try Again Next Month

    The House last Friday failed to pass its version of the farm bill, with the Agriculture and Nutrition Act of 2018 (H.R. 2) going down on a 198-213 vote. The bill lacked support from Freedom Caucus members seeking to include immigration reforms and all Democrats, who opposed the bill’s work requirements for food stamp recipients. The House is planning to take up its version of the farm bill for a second vote next month, according to House Majority Whip Steve Scalise (R-La.). He indicated that the vote would come on June 22 after the chamber takes up immigration legislation that helped derail the farm bill last week.

    ICBA urged lawmakers to continue working on the bill, and House Agriculture Committee Chairman Michael Conway (R-Texas) declared that Congress would deliver legislation by the September 30 deadline. Agriculture Secretary Sonny Perdue said farmers deserve the certainty of a farm bill. In its statement, ICBA said a new farm bill is needed to support continued community bank financing of farmers, ranchers and rural communities. CBAI fully concurs. More information on ICBA’s farm bill policies are available in a new infographic and its “Focus on Farm Policy” white paper. Read ICBA Release. View Infographic. Read White Paper. Access Petition. Access Social Media Campaign.

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    ICBA Chief Addresses Future of Community Banking at Think Tank

    ICBA President and CEO Rebeca Romero Rainey recently discussed the importance of community banks to small businesses and local communities in remarks before the American Enterprise Institute.

    On a panel discussion with former FDIC Vice Chairman Thomas Hoenig and others, Romero Rainey touted the strength and resiliency of community banks’ relationship-based business model while highlighting the need for a level playing field and tiered, proportionate regulation for the nation’s community banks. Watch the AEI Video.

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    NEWS FROM THE FRONT 05/14/18

    The spring session of the 100th Illinois General Assembly is scheduled to conclude May 31, but there is still much work to be done in the interim. At the top of the list is a budget for FY 18-19 which begins on June 1. While budget negotiators from all four caucuses and the Governor’s Office have been meeting, consensus on a spending plan has not been reached. The main sticking points are identifying a revenue source for a $1.1 billion gap in the FY 17-18 budget and finding agreement on a revenue projection to base the FY 18-19 budget. Two separate state forecasting agencies are predicting flat revenue for the coming year anticipating the state will bring in around $38 billion in tax revenues. This includes an additional $4 billion from the permanent 32% increase in the income tax rate passed last year.

    The CBAI governmental-relations team, with the help of the legal team, has reviewed around 6,000 House and 3,500 Senate bills this year. This is in addition to thousands of amendments that have been filed, all to identify legislation with a potential impact on the community banking profession. We’ve identified over 200 bills that we are actively working on behalf of our members, including four CBAI legislative initiatives currently under consideration. Read More.

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    CBAI Co-Sponsors Annual House vs. Senate Softball Game

    There’s no doubt that politics at both the state and federal level continue to become more nasty, partisan and divisive. For legislators, staff and lobbyists this growing attitude can take a toll over the course of a long and grueling legislative session. One way to avoid the risks of the process turning everyone completely cynical is to find activities outside the legislative arena that remind everyone that they have more in common than the fights in committees and floor debates would lead you to believe.

    For years the annual House vs. Senate softball game has been one of those outlets. Bipartisan teams from both chambers take to the field in a game where staff and lobbyists ditch their business attire and the formality of session to enjoy some low-key softball. It’s a great time that brings everyone together for a few needed hours of détente.

    Unfortunately, similar bipartisan events have fallen by the wayside in the past few years, casualties to the growing political divide. Earlier this year it looked like the annual softball game would suffer the same fate as the event’s long-time sponsor pulled out. Seeing an opportunity, the CBAI governmental relations team suggested another détente, joining together with the Illinois Credit Union League and Illinois Bankers Association to co-sponsor the event. There is no doubt that all three groups speak with distinct voices and represent very different parts of the banking profession. However, in the true spirit of the event, it’s important to show that the leading representatives of financial institutions can also put aside their differences for the moment and find common ground in a bipartisan, bicameral event. Plus, the legislators looked pretty good wearing jerseys emblazoned with the CBAI logo. See Event Pictures.

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    Investment News from THE BAKER GROUP

    Baker Market Update

    So, what do you think Jerome Powell hears; “yanni” or “laurel”? More importantly, to whom will he listen; James Bullard or Loretta Mester? The reason that might be important is because Mr. Bullard, President of the St. Louis Fed, and Mrs. Mester, President of the Cleveland Fed, are both on the Federal Open Market Committee and, as such, will both have Chairman Powell’s ear when the FOMC meets next month. The thing is, Jim and Loretta are not on the same page. In fact, their outlooks are so disparate, Mr. Powell might wonder if these two central bankers are even looking at the same economy. See Baker Market Update.

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    Rural Economic Index Showing Sustained Growth

    Creighton University’s index of the rural economy rose in May to its highest level since July 2013. The Rural Mainstreet Index climbed to 56.3 from 53.5 in April. It was the index’s fourth consecutive month over growth-neutral, the first time that has happened since July 2015. The survey cited positive economic growth and improvements to agriculture commodity prices.

    The May RMI for Illinois advanced to 57.2 from 52.2 in April. The farmland-price index sank to 42.5 from 43.5 in April. The state’s new-hiring index fell to 57.7 from last month’s 70.3. Michael Flahaven, president of Wenona State Bank in Wenona said, “The continuous regulations, from the State of Illinois on cities and schools, are a major drag on our rural communities.” Illinois’ Rural Mainstreet job growth over the last 12 months was 0.4 percent. Read More.

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    Community Bank Income Rises 17.7 Percent in First Quarter

    Community banks reported $6.1 billion in net income during the first quarter of 2018, a 17.7 percent increase from the previous year, according to the FDIC’s Quarterly Banking Profile. An 8.3 percent increase in community bank net operating revenue and a lower effective tax rate boosted first quarter net income, while loan-loss provisions increased by 23.7 percent.

    Overall, FDIC-insured institutions reported a 27.5 percent annual gain. More than 70 percent reported annual earnings growth, with the percent of unprofitable banks declining to 3.9 percent from 4.3 percent a year ago.

    The FDIC’s Problem Bank List declined from 95 to 92 during the quarter, merger transactions absorbed 65 institutions, three new charters were added, and there were no failures. The Deposit Insurance Fund balance rose by $2.3 billion to $95.1 billion, and its reserve ratio was unchanged at 1.30 percent.

    Illinois institutions experienced increases in return on assets, return on equity, and net interest margins compared to the previous year. Read More. See Illinois Results.

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    CSBS Chairs Discuss Priorities for Financial Regulators

    Last week, the incoming and outgoing chairs of CSBS underscored the broad and vital role that state regulators perform in the U.S. financial system. A broad scope of authority, direct impact on consumers and small businesses, and the need for collaboration among state and federal regulators were key themes from new CSBS Chair Charlotte Corley, commissioner of the Mississippi Department of Banking and Consumer Finance, and immediate past Chair Albert Forkner, commissioner of the Wyoming Division of Banking. The two addressed state and federal regulators at the at the 2018 CSBS State-Federal Supervisory Forum. CBAI is a strong advocate of the dual regulatory system.

    During his year as chair, Forkner focused CSBS on several important areas:

    • Help community banks strengthen their business
    • Work with Congress to reform bank regulation laws
    • Provide federal counterparts with information, insight and expertise
    • Make multistate regulation a more seamless experience
    • Modernize state banking agencies
    Read Speeches Here.

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    Registration Now Open for CBAI Group Meetings

    CBAI leaders and executive staff are visiting 11 locations on the 2018 Group Meetings Tour this spring. Bankers from nearly 200 banks participate in these enjoyable and informative events each year. For this year’s after-dinner presentation, Sara Nielsen, senior vice president of technology and compliance at BankOnIT, discusses managing technology risk. The opening portion of each Group Meeting focuses on critical legislative and association issues. CBAI President Kraig Lounsberry provides updates on Association projects and community banking in general, and Senior Vice President of Governmental Relations Jerry Peck offers an up-to-the-minute report of banking-related legislative activities.

    Consisting of an optional golf outing and a dinner meeting, each Group Meeting provides an excellent opportunity to get the latest information on key banking issues and catch up with friends and peers. (Note: The Groups 1 & 2 meeting follows a different format.) Make plans now to attend!

    As a reminder, at the CBAI Annual Convention in September, the membership voted for changes in the structure of CBAI Groups. For efficiency, the former Groups 2 and 3 were combined, which occasioned changes in the numbering of all CBAI Groups with the exceptions of 1 and 2. See Group Meeting Schedule. See After-Dinner Presentation and Agenda. See New Group Configuration.

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    It’s Go Time for CDD Final Rule

    Financial institutions’ 22-month anticipation of the Financial Crimes Enforcement Network’s (FinCEN) CDD Final Rule will soon be over. On May 11, they will be required to perform enhanced due diligence on new accounts for legal entity customers and to demonstrate an understanding of the nature and purpose of their customer relationships as a fifth pillar of their anti-money laundering (AML) programs. As the deadline was fast approaching, FinCEN sought to answer lingering questions about the rule with a Frequently Asked Questions (FAQ) document. Published on April 3, 2018, it was a supplement to a July 2016 FAQ—an initial set of 26 questions—shared shortly after the final rule was issued. This latest FAQ covers 37 questions that further parse through the nuances of the rule. More from CBAI associate member CSI Here.

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    Mixed Picture for CRE Lenders

    Asset values may be peaking. Riskier construction lending may rise.

    While no serious problems appear to be on the immediate horizon for commercial real estate lending, and credit performance remains strong, analysts and regulators have been noting issues to monitor in this cyclical credit category. Read More.

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    Four Ways Banks Can Use Tech to Win Millennials’ Business

    A technology consultant offers four ways community banks can attain the business of millennials. For banks competing with larger rivals and online-only financial companies, the customer segment getting most of their attention is the millennial generation. And rightly so.

    Millennials, defined roughly as those born between 1982 and 2004, are the largest generation in the history of the world — 83.1 million strong in the United States alone, according to the U.S. Census. Their market power is massive and growing. Most importantly, millennials represent the future of many industries, including financial services. Learn how to attract and retain this group of customers and you’ll find your institution thriving against deeper-pocketed competitors.

    With all this in mind, how can community banks design technology solutions to meet this generation’s demands? Read Article.

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    CBAI LEGAL: Deceased Customer, Outstanding Checks and Setoff

    A recent inquiry raised the question of whether a bank can apply a right of setoff against a deceased customer’s loan balance before paying one or more check(s) that are presented for payment after the customer’s death. Read Most Recent CBAI LEGAL.

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    Deadline for CBAI Excellence Award Is Almost Here!

    Is Your Bank in the Running?

    Nominations for 2018 Excellence & Innovation BKD Award Presented by CBAI in Illinois and the accounting firm of BKD LLP close in fewer than three weeks. The purpose of the award is to bring recognition to banks with an outstanding, innovative product/service or program. Your bank does not need to be a BKD client to enter. Nominations are due at CBAI headquarters no later than June 1, 2018. Click Here to learn more about the award. Click Here to download a Nomination Form.

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    Open Your Vault for CBAI’s Banknotes!

    Does your bank have an interesting vault – one that’s ornate, decorative or historic? Send us a photo for an upcoming Banknotes story. Send your photo to, subject line “Vault.”

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    Instant-Card Issuance Tips and Tricks

    If you're considering instant-card issuance for your bank (and if you're not, you should be!) there's an important decision to make before you select a vendor: go with a software-for-purchase solution or a cloud-based, SaaS product. Which way you choose to go could affect your bank’s bottom line — in a big way.

    CBSC preferred-provider Harland Clarke identified eight important benefits that make SaaS an ideal option for financial institutions of all sizes, including:

    • Rapid acquisition and deployment, minimal staff training and lower total cost of ownership
    • Elimination of intensive, disruptive and expensive software updates
    • Cost-effective variable pricing based on use.
    Want to know the other five reasons? Click Here to read the blog post!

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    Five Things Consumers Want in a Loan

    While the loan process went unchanged for many years, times are changing, and loans need to keep up. Here are five things borrowers expect from a loan today. How many do you offer? CBSC preferred-provider Kasasa has suggestions.

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    Gerrish: “De Novos: They’re Playing My Song”

    Bank consultant Jeff Gerrish believes that the best thing for the community banking profession would be to have more de novos. He is optimistic that although there probably will not be a flood, there will still be more than a trickle of new banks chartered in America. He offers reasons for his optimism and some tips on how to get started. Read More.

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    CBIS: Is Your Community Bank Impacted by New European Data Regulations?

    If you think commerce in the United States is constricted by onerous regulation, be grateful you don’t live across the pond. But—and this is an important but— “it will also apply to organizations located outside the EU if they offer goods or services to, or monitor the behavior of, EU data subjects. It applies to all companies processing and holding personal data of data subjects residing in the European Union, regardless of the company’s location,” according to the rule. Read More from CBIS.

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    Register Today for Early-Bird Pricing at CBAI’s 44th Annual Convention & Expo

    Registration is now open for CBAI’s 44th Annual Convention & Expo, scheduled for September 27-29, 2018, at the Hyatt Regency St. Louis at The Arch. Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. This year's Opening Breakfast Speaker is Kevin Brown, whose unconventional path to business and personal success taught him that winning in business and in life requires anything but conventional thinking. His resume includes an eclectic mix of career stops that ultimately led him to the purchase of a franchise at the age of 17. After a career in franchising that spanned 30 years, Brown retired from corporate America to pursue his passion for effecting positive change for as many people and organizations as possible with his presentation, “The Hero Effect™ - Creating a Culture of Heroes at Every Level.” Also, on the agenda are the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed Exhibit Hall with nearly 90 booths, the Annual Business Meeting Luncheon, and much more. The Closing General Session speaker is Lieutenant Colonel Robert Darling. Handpicked to work for the White House Military Office, Airlift Operations Department, it was in that capacity that Lt. Col. Darling supported the President, Vice President, and National Security Advisor in the President's Emergency Operations Center (PEOC) on September 11, 2001.

    Don't wait! Register today for early-bird pricing and receive a significant discount to attend CBAI's annual showcase event! You won't want to miss it! Register Here!

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    Loan Structure, Documentation and Compliance Training Set for May 30

    Attend this proactive seminar and receive a thorough overview of commercial lending requirements from a loan structure, documentation, and compliance perspective. Basic business structure is presented along with loan structure and loan support. Additionally, commercial-lending issues relative to loan documentation will be reviewed. Loan pricing and monitoring are also covered along with a review of current compliance issues. The seminar is summarized through a comprehensive case study. Commercial lenders, credit analysts, loan documentation specialists, branch managers, assistant branch managers, private bankers and business-development officers would all benefit from attending this seminar. Leading this seminar is David Osburn, founder and managing member of David L. Osburn & Associates LLC.

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    2018 Guide to HR Scheduled for June 5

    In the building wake of the #metoo movement, employers are actively reexamining their policies, procedures, trainings, protocols and internal practices related to minimizing risk associated with inappropriate conduct in the workplace. This lively, interactive one-day program provides participants with tools to strategically and effectively approach their HR responsibilities in the era of #metoo, including theories on creative approaches to effective policies, prevention, investigation techniques and mandatory training. The panel also examines recent federal and state court rulings that continue to shape community banks' obligations with respect to employee protections, including discrimination, family leave, wage equality and reasonable accommodations. Participants enhance their understanding of evolving employment-law requirements and continue to develop resources necessary to maximize human capital while avoiding the expense and distraction of avoidable litigation. Leonard Sachs, Rob Smeltzer, and Emily Bennett with Howard & Howard are presenting this session.

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    Head Teller Seminar Slated for June 7

    No matter what the title, you play a key role. You manage a retail team that is the face – the image, the impression, the brand – of your financial institution. Your team is expected to handle the personal and business finances of your members, cross-sell, and refer appropriately, all with a smile and without mistake. This program gives the skills to improve team productivity, through coaching, motivating and accountability. Enhance your skills in reducing boredom, stopping procrastination and engaging in poor member service; supercharge branch performance that increases staff professionalism, member satisfaction and member loyalty. Jennie Sobecki is co-owner of Focused Results, a company concentrating in results-driven process consulting and training experience in community banks and financial institutions leads this program.

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    THROUGH 07/15/2018






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