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                               May 27, 2015

Graphic
Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Senate Committee Advances Key Community Bank Relief Measures
  • CBAI Implores Federal Regulators to Ease Regulatory Burden
  • Megabanks Plead Guilty, Fined for Market Manipulation
  • Fed Official: “Fed’s Emergency Lending Powers Must Be Ended”
  • The Best of Times for Community Banking
  • Small Banks Beat Big Banks on Consumer Expectations Index
  • Sageworks: Bigger Always Means Riskier
  • Fine: Target-MasterCard Settlement Shows Need for Data-Security Reform
  • Investment News From THE BAKER GROUP
  • Mainstreet Economic Index Improves in May
  • ALLL Levels Continue Their Decline
  • Not All Cyber Policies Are Created Equal
  • The SHAZAM Blog: Mobile Banking Can Raise Liquidity Risk
  • SBA to Host 2015 Lender Awards Conference
  • Six Banking Technologies Changing the Customer Experience
  • Five Signs of a Strong Compliance Culture
  • Help Customers Gain Financial Control
  • Still Time to Register for the Groups 1, 2, 3, 4, 7, 8, & 9 Meetings!
  • CBAI LEGAL: Federal Law Change Allows Previously Banned Lotteries or Raffles
  • Take This Week's CBAI Quick Poll
  • HR Update: “Hot Topics” and Recent Employment Trends Scheduled for June 2
  • Principles of Understanding, Managing, & Monitoring Info Systems Set for June 3
  • Trust Issues from A to Z To Be Held June 15
  • Relationship-Building for Universal Bankers Slated for June 16


  • Senate Committee Advances Key Community Bank Relief Measures

    Last week the U.S. Senate Banking Committee advanced legislation with key provisions that would offer regulatory relief for community banks. Committee Chairman Richard Shelby’s (R-Ala.) legislation includes ICBA’s Plan for Prosperity provisions offering less restrictive mortgage regulations, relief from excessive regulatory examinations and quarterly reporting requirements, and an exemption from the Volcker Rule. The legislation includes two CBAI and ICBA-advocated amendments offering community bank relief. The panel voted 13-9 in favor of:

    • an amendment introduced by Sen. Pat Toomey (R-Pa.) that would raise the threshold for banks exempt from direct examination and reporting requirements by the Consumer Financial Protection Bureau from $10 billion to $50 billion in assets, and
    • an amendment introduced by Sen. Mike Crapo (R-Idaho) that would address banks’ involvement with the Justice Department’s Operation Choke Point.
    A separate CBAI and ICBA-backed amendment introduced by Sen. David Vitter (R-La.) was withdrawn. That amendment would have required all bank holding companies automatically designated as systemically important financial institutions under the act to have equity capital of at least 10 percent of assets.

    The Financial Regulatory Improvement Act of 2015 passed on a 12-10 vote. In a statement, ICBA President and CEO Cam Fine continued ICBA’s call for senators to work across party lines to take up and advance important community bank provisions. Read ICBA Statement. Read ICBA Letter. Read Bill Summary.

    CBAI Urges Consensus on Senate Regulatory Relief Bill

    Leading up to last week's vote, CBAI joined a coalition of ICBA affiliate state community bank associations to urge all members of the U.S. Senate Banking Committee to reach a consensus on meaningful community bank regulatory relief ahead of Thursday's (May 21st) markup of the Financial Regulatory Improvement Act of 2015.

    CBAI also communicated separately with Senate Banking Committee member Mark Kirk and Minority Whip Richard Durbin regarding this legislation, stating it provides an important opportunity to ease the regulatory burden on Illinois community banks. CBAI urged a broad bipartisan consensus on meaningful community bank regulatory relief which can quickly be enacted into law. Such relief must not be delayed, is too long overdue, and is critical to the economic vitality of Illinois community banks and the customers and communities they serve. Read Coalition Letter.

    Shelby Bill Includes GSE Reform

    Within Shelby’s regulatory relief measure are provisions intended to reduce taxpayer risk posed by the federal conservatorship of Fannie and Freddie and enable private capital to play a bigger role in the mortgage market. Read More.

    More Details on Shelby Regulatory Relief Bill

    The Senate Banking Committee released a “Myth vs. Reality” document that addresses key provisions of the Shelby legislation. Access Document Here.

    Back to top

    CBAI Implores Federal Regulators to Ease Regulatory Burden

    The Community Bankers Association of Illinois called on federal banking regulators to address outdated, unnecessary, and unduly burdensome regulations of community banks. In a May 14, 2015 comment letter on the review required by the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA), CBAI highlighted the need for tiered regulation, urged regulators to comply with the law and equally pursue Prompt Corrective Actions (PCAs) against too-big-to-fail banks, and recommended an increase in the Community Reinvestment Act's (CRA) asset thresholds for small and intermediate-small institutions. Read CBAI Comment Letter.

    Back to top

    Megabanks Plead Guilty, Fined for Market Manipulation

    Six major banking organizations were fined nearly $6 billion for rigging foreign currency exchange markets and Libor interest rates. Citicorp, JPMorgan Chase, Barclays and The Royal Bank of Scotland agreed to plead guilty to felony charges of manipulating the price of U.S. dollars and euros, while Bank of America was included in Federal Reserve fines for the FX charges. Additionally, UBS agreed to plead guilty to and pay fines for Libor manipulation.

    The guilty pleas to felony charges, criminal fines, and Cease and Desist orders reinforce the need to downsize these financial behemoths. Too-big-to-fail is one of CBAI’s top priorities in the 2015 congressional session. The mega banks have repeatedly proven, at great cost to American taxpayers, our financial system and the economy, that they are clearly too-big-to-behave and must be downsized. Read Federal Reserve Statement. Read Justice Department Release. Read CBAI’s 2015 Federal Policy Priorities.

    Back to top

    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.



    Fed Official: “Fed’s Emergency Lending Powers Must Be Ended”

    HJeffrey Lacker, President of the Federal Reserve Bank of Richmond, said this week that the Fed’s authority to provide emergency lending to mega banks in the event of a crisis must be eliminated. He noted that creditors are relying on such powers to save the giant banks, thereby perpetuating the existence of too-big-to-fail.

    “The long-term solution is… to restore market discipline so that financial firms and their creditors have an incentive to avoid fragile funding arrangements,” Lacker said. His call to rescind the Fed’s emergency lending powers comes as Senators Elizabeth Warren (D-Mass.) and David Vitter (R-La.) co-authored legislation to curb the Fed’s emergency lending powers. CBAI supports President Lacker’s position on the issue as well as the legislation. Read Lacker’s Speech.

    Analyst: “The Heart of TBTF Issue is Over-the-Counter Derivatives and Counterparty Risk”

    Meanwhile, Christopher Whalen, head of research at Kroll Bond Rating Agency, said this week that the key driver of TBTF has not been the necessity to bail out the bondholders of large banks, but rather the need to avoid disrupting the trillions of dollars of payments and over-the-counter derivatives contracts that move among global banks every day.

    Whalen indicated that increased capital does not address the core issues behind the 2008 meltdown, including liquidity risk, lack of adequate public disclosure, and securities fraud related to off-balance sheet financing. He recommends adoption of regulations that delay the trigger on the exercise of default rights for OTC derivatives. Read AB Article.

    Back to top

    The Best of Times for Community Banking

    Joshua Siegel, CEO of StoneCastle Partners, recently cited reasons why he is more optimistic about community banking than he’s ever been before. Despite competitive headwinds, Siegel believes community banks are at a unique moment, with shifts in technology, growth opportunities and cultural changes that will create a great opportunity for all but the largest banks.

    StoneCastle Partners specializes in providing capital to community banks and is a CBAI Preferred Marketing Partner. Read StoneCastle Article.

    Back to top

    Small Banks Beat Big Banks on Consumer Expectations Index

    Community banks and credit unions do a better job than large and mid-size banks of providing quality of service and in-person experience. But smaller institutions’ performance falls short in several areas, including rewarding customers for their business and customization of products tailored to customers’ needs. Those are just some of the global findings of a new in-depth research study released by FIS, a leader in banking and payments technology as well as consulting and outsourcing solutions. Read More.

    Back to top

    Sageworks: Bigger Always Means Riskier

    Sageworks Chairman and co-founder Brian Hamilton emphasized recently that big banks, by their very nature, are riskier. Responding to JPMorgan Chase’s CEO Jamie Dimon who commented that “larger does not necessarily mean more risky,” Hamilton cited examples supporting the contention that, as size increases, risk management becomes more difficult. CBAI is a long-time advocate of downsizing the mega banks that are too big to manage, regulate, or resolve. Sageworks, which specializes in financial analysis and risk management services, is a CBAI preferred marketing partner. Read Sageworks Article.

    Back to top

    Fine: Target-MasterCard Settlement Shows Need for Data-Security Reform

    If there was any question about the need for Congress to modernize U.S. data-security laws, the settlement between Target and MasterCard should put all doubts to rest, ICBA President Cam Fine wrote last week in an American Banker Op-Ed.

    Fine noted that MasterCard issuers, which last week had to choose whether to accept pennies on the dollar for the costs of reissuing cards or to continue the costly and risky road of litigation, were left with two undesirable options. “What really has to change is the law itself, which is why Congress must finish the job of reforming our data-security system,” he wrote. Read Fine’s Op-Ed.

    Back to top

    Investment News From THE BAKER GROUP

    Baker Market Update

    Positive aspects of last week’s financial news included the Index of Leading Economic Indicators up against expectations, and the Real Average Weekly Earnings soared. All of the news here. See Baker Market Update.

    Economic Brief

    Fed Funds Futures & Forward Yield Curves

    The December 2015 futures contract is now projecting a 30bps fed funds rate at the end of this year. This is the lowest implied yield seen in the contract over the last year of trading. It continues to reflect a disconnect between what the Fed is communicating (“we’re going to raise rates this year”), versus what the markets seem to believe (“umm… sorry, but the economy may not be at a point where you’re able to tighten this year). See Baker Economic Brief.

    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.

    Back to top

    Mainstreet Economic Index Improves in May

    Remains Below Growth Neutral

    The Mainstreet Index, a compilation of survey data from community bank CEOs across the Midwest, improved slightly in May but stayed below growth neutral, signaling slight pullbacks in economic activity. Farmland prices declined for the 18th straight month, and bankers identified rising regulatory costs as the greatest economic challenge to banking operations over the next five years. See Mainstreet Economy Report. See Survey Details.

    Back to top

    ALLL Levels Continue Their Decline

    Following the recent financial crisis, there has been steady improvement in asset quality. Banks are making more thorough credit decisions and, in turn, there are fewer net charge-offs and nonperforming loans than in the buildup to ’07-’08. As these indicators rise, the amount necessary to set aside for bad debts falls. As a result, there’s been a steady decline in ALLL levels since mid-2010. While that trend is continuing, the rate at which allowance levels are decreasing is slowing as of late. See Sageworks Resource Center.

    Back to top

    Not All Cyber Policies Are Created Equal

    As cyber threats have developed for financial institutions of all sizes, more community bankers are recognizing the necessity of cyber-specific policies. And litigation is emerging that underscores how vital it is to not just have a policy in place, but to know what precisely is covered and what policies exclude. Regulators and high-ranking government officials have helped underscore how vital cyber protection is to all banks. Read CBIS Nicoud Article.

    Back to top

    The SHAZAM Blog: Mobile Banking Can Raise Liquidity Risk

    In the U.K., consumers transfer nearly £1 billion per day via mobile and online banking. Along with convenience, the advent and continued adoption of mobile banking apps has ushered in a new concern for financial institutions (FIs), and some bankers’ associations are taking notice. Read the SHAZAM Blog.

    Back to top

    SBA to Host 2015 Lender Awards Conference

    The SBA will hold its Illinois Lender Summit and Awards Conference on June 24th in Chicago. This event brings together leadership from the SBA and Illinois lenders for a frank discussion on the state of SBA lending in Illinois. Read More.

    Back to top

    Six Banking Technologies Changing the Customer Experience

    How banks serve customers is changing thanks to technological innovations. Increasingly, community banks are implementing upgraded ATMs and multi-functional kiosks and creating Apple Store-style experiences for their customers. See Go Banking Rates Article.

    Back to top

    Five Signs of a Strong Compliance Culture

    How strong is your compliance culture? It’s a question that gives many community financial institution leaders pause. In the chaos of keeping up with 13,000+ regulatory requirements, the notion of “culture” often gets lost. And, like many aspects of the regulatory landscape, there is a lack of clarity and precision around how it’s defined and created (much less measured). See Continuity Article.

    Back to top

    Help Customers Gain Financial Control

    The Great Recession officially ended six years ago, but many consumers still believe they’re on shaky financial footing. According to a new study, more than a quarter of Americans (27 percent) say they don’t feel in control of their finances.

    The 2015 Consumer Banking Insights Study, commissioned by BancVue on behalf of nearly 300 community financial institutions offering its Kasasa® brand of checking accounts, found that Americans’ financial control is lower this year than it was in 2013. The study was conducted online by Harris Poll in January 2015 among more than 1,000 U.S. adults, aged 16 and up. Read More.

    Back to top

    Still Time to Register for the Groups 1, 2, 3, 4, 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, 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, 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.

    Back to top

    CBAI LEGAL: Federal Law Change Allows Previously Banned Lotteries or Raffles

    After decades of prohibiting banks and thrifts from operating any form of lottery or raffle, federal law now permits such events as a tool to encourage savings; however, as with most promotional communications, some conditions may apply. See Details.

    Back to top

    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on whether or not your bank has considered issuing debit cards in-house with an instant issue device. Click Here to view results of previous polls.

    Back to top

    HR Update: “Hot Topics” and Recent Employment Trends Scheduled 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.

    Back to top

    Principles of Understanding, Managing, & Monitoring Info Systems Set 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.

    Back to top

    Trust Issues from A to Z To Be Held June 15

    This seminar covers a variety of topics. First, it discusses nationwide new cases on the litigation front and how those could affect your business. Next, a Regulatory Update involving areas of concern for the OCC, Fed and State are addressed. One regulatory issue in particular is the oversight required with unique (miscellaneous) assets. Also discussed are the regulatory/compliance expectations for a Reg. 9 Review. Additionally, the speakers ask the group to participate in a discussion involving the new IRS requirement of unbundling fees to give participants an idea of what is being done in Illinois. Finally, document review case studies that help pinpoint what you should be doing by showing some disasters that weren't done properly are discussed. Wealth managers, investment officers, trust officers, trust assistants, financial planners, trust tax specialists, private bankers, trust administrators, as well as audit and compliance officers would benefit from attending this seminar. Leading this seminar are Roger A. Pond and Becky T. Kelly, partners in The Fiduciary Education Center, LLC.

    Back to top

    Relationship-Building for Universal Bankers Slated for June 16

    As we have seen over the years, branch volumes continue to decline as new technologies enable customers to conduct their banking using other retail banking channels. This change has attributed to the labor cost per teller transaction to increase by 45% over the past 10 years. One of the strategies many banks have implemented is using universal tellers. A universal teller/ banker is typically defined as an employee who can do anything on the teller or customer-services side – a champion of the retail branch. What key skills does it take to become a universal teller/banker? Whether your bank is exploring using universal tellers/bankers, the same skills and tools are key for today's frontline team. This training is designed to provide our retail frontline with useful, “real-world” tools, techniques, and tips. Tellers, head tellers, the retail banking team, and those responsible for developing the retail banking team would all benefit from this seminar. Leading this seminar is Dianne Barton, founder and president of Performance Solutions, Inc., Kennesaw, GA, a training and consulting company that specializes in providing solutions to the key challenges facing community banks today in attracting, selling, and servicing their customers.

    Back to top

    CBAI




    CBAI
    PROFESSIONAL
    DEVELOPMENT PROGRAMS
    THROUGH 06/30/2015







    CBAI
    TELEPHONE/WEBCASTS THROUGH 06/30/2015









    CBAI
    RECOMMENDED SERVICES



    CBAI
    INSURANCES



    CBAI
    FOUNDATION



    CBAI
    PUBLICATIONS


    Finer Points Blog

    800.736.2224 (IL) | 217.529.2265 | www.cbai.com

    DISCLAIMER:The association is not responsible for and has no control over the subject matter, content, information, or graphics when viewing links attached to this association's site. If you do not wish to receive e-mails from Community Bankers Association of Illinois (CBAI), 901 Community Drive, Springfield, IL 62703, through CBAI in the future, please click here. - OR - If you would like to be removed from the CBAI e-mail database, please click here.

    © 2015 Community Bankers Association of Illinois. All Rights Reserved.