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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                               June 24, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Submit Letters Today Opposing Farm Credit Administration Proposal
  • Register by June 30 for Early-Bird Pricing & Prizes at CBAI’s 41st Convention
  • CBAI and ICBA Oppose NCUA Proposal to Expand CU Lending Powers
  • Community Bankers School To Be Held July 12-17; Still Time to Register!
  • Fine: Common Sense Prevails with Defeat of Tax Proposal
  • CFPB to Delay TRID Implementation Until October
  • Potential Civil Money Penalties on Horizon for Non-Compliance with TRID
  • FDIC’s Hoenig Offers “Safe Way” to Provide Regulatory Relief
  • Flood Insurance Final Rule Includes Exemption for Banks Under $1 Billion
  • Investment News From THE BAKER GROUP
  • Rural Economy Improves to Growth Neutral
  • CBAI Financial Institutions Directory Available on Multiple Platforms
  • Special $2500 Offer for CBAI Members Only
  • iHELP Celebrates More Than $75 Million in Student Loans
  • USDA Opens Enrollment for Main Farm Bill Programs
  • Top Ten List of Questions About the .BANK Domain Name Extension
  • Take This Week's CBAI Quick Poll
  • Sageworks Releases Credit Analysis for Ag Lending
  • SBA Updated Lenders Performance List Now Available
  • Free White Paper: Guide to Building Exam-Proof Vendor Management Program
  • FDIC Consumer News Offers Tips for Students
  • Free Webinar: “Interagency Statement on Diversity Policies & Practices"
  • It's That Time of Year Again! Donate to the Community BancPac Auction Today!
  • CBAI LEGAL: Rule Separates “Unidentified” IOLTA Funds from “Unclaimed” Funds
  • Training the Credit Analyst Scheduled for July 8-10


  • Submit Letters Today Opposing Farm Credit Administration Proposal

    CBAI and ICBA are urging community bankers to submit letters to the Farm Credit Administration today opposing a proposed rule that would require Farmer Mac board members to have a substantial and visible connection with a voting stockholder. ICBA has prepared a suggested sample letter that community bankers can customize and then email to the FCA.

    This provision is an attempt by the Farm Credit System to require Farmer Mac’s directors to be subject to outside influences and control. It would allow large financial institutions to be paid by those institutions while serving on Farmer Mac’s board. The 15-member Farmer Mac board is made up of five Class A members representing banks, insurance companies and other financial institutions; five Class B members representing FCS entities; and five members appointed by the president. Access Sample Letter. Email the FCA.

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    Register by June 30 for Early-Bird Pricing & Prizes at CBAI’s 41st Convention

    Register today for CBAI’s 41st Annual Convention & Expo, scheduled for September 17-19, 2015, at the Omni Hotel in Nashville, TN, to receive the lowest pricing available! Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. RCA recording artist, successful entrepreneur, and acclaimed public speaker Robin Crow takes the stage for the Opening Breakfast and shares solid examples of how companies have successfully reinvented themselves by adapting to change. Golfers are treated to a round at the Hermitage Golf Club, named the number one public golf course in Tennessee by Golf Digest and PGA.com. Also on the agenda is the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed exhibit hall with 98 booths, fun partner’s programs exploring the exciting city of Nashville, a Closing General Session featuring Dr. James Bullard, president and CEO of the Federal Reserve Bank of St. Louis, and much more. Our annual showcase event closes with country music superstars Diamond Rio. Named Vocal Group of the Year by Country Music Association (CMA) four times and twice by the Academy of Country Music (ACM), Diamond Rio has sold more than 10 million albums.

    Don’t forget to register by June 30, 2015 to receive early-bird pricing and to be eligible to win prizes! You could win overnight stays in four-star hotels in cities including Chicago, Kansas City, Nashville, and more! Register for CBAI's Convention and Exposition. See List of Prizes.

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    CBAI and ICBA Oppose NCUA Proposal to Expand CU Lending Powers

    CBAI and ICBA responded this week in strong opposition to the National Credit Union Administration’s (NCUA) proposal to relax business lending rules for credit unions. Among its provisions, the proposed rule would eliminate a requirement that borrowers personally guarantee loans, remove explicit loan-to-value limits and allow loans to a single borrower to total up to 25 percent of the lender's net worth. It also would lift limits on construction and development loans and clarify that non-member loan participations will not count against the statutory member-business-lending cap. Comments on the proposal are due in 60 days.

    The NCUA is attempting via regulation to allow more business lending under the current cap of 12.25 percent of total assets. However, Credit Union National Association President and CEO Jim Nussle indicated that the industry will continue working to increase the statutory cap. He said more than 1,000 credit unions are currently at or near their statutory lending limit.

    Following strong community bank opposition, credit unions last week failed to advance an amendment to appropriations legislation with a backdoor increase in their member-business-lending cap. CBAI and ICBA will continue to strongly oppose the credit union industry’s expansionist agenda. See ICBA Release. Read CBAI Alert. Read NCUA Board Action. See CU Journal Article.

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    Community Bankers School To Be Held July 12-17; Still Time to Register!

    Registration deadline is July 1!

    The Community Bankers School, which consists of two, one-week sessions over a two-year period at Illinois Wesleyan University in Bloomington, will allow you to immediately contribute to the overall success of your bank, and give you the knowledge necessary to get ahead. The School features a nationally recognized faculty, an updated curriculum, and timely topics. Topics covered during this intense week for Class I participants include compliance, accounting, commercial and consumer loan documentation, collections, bank security, auditing, investments, and technology, while Class II focuses on management aspects. However, the benefits extend beyond the classroom with outside case studies, an invaluable student notebook with supplemental materials, as well as networking opportunities with peers, instructors, and senior bankers. You will gain a background and experience for broader responsibilities and greater effectiveness, as well as insight into a community bank=s overall operations responsibilities. The 2015 session opens Sunday, July 12, and concludes Friday, July 17. The deadline to enroll is July 1, 2015, so register today!

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    Fine: Common Sense Prevails with Defeat of Tax Proposal

    Common sense prevailed when the House recently removed a CBAI and ICBA-opposed amendment to drastically increase IRS reporting requirements, according to ICBA President and CEO Cam Fine. The amendment would have expanded IRS reporting on all non-interest-bearing accounts and required banks to send a 1099-INT form to any depositor who earned any amount of interest in a calendar year.

    With the Senate expected to take up the bill without the 1099 provision, CBAI, ICBA and community banks can return to rolling back excessive community bank regulation, rather than warding off new threats as they crop up. Read Fine’s Blog Post.

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    CFPB to Delay TRID Implementation Until October

    The Consumer Financial Protection Bureau said it will propose a delay in the implementation of its TILA-RESPA Integrated Disclosure rule by two months. The integrated mortgage disclosure, also known as TRID, would be implemented on October 1 instead of August 1 under the proposed amendment. The CFPB said it would delay implementation to correct an administrative error and to better accommodate consumers and providers. The bureau said it will formally issue a proposed amendment to delay implementation of the rule, which is part of its Know Before You Owe initiative.

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    Potential Civil Money Penalties on Horizon for Non-Compliance with TRID

    Do your community bank’s directors and officers carry personal protection policies against Civil Money Penalties assessed by bank regulators? Unfortunately, at Community BancInsurance Services, powered by Nicoud Insurance, we’re finding “no” is too often the answer to that question.

    The reasons for not addressing this area of exposure range from “It won’t happen to us” to a fundamental misunderstanding of D&O policies. Read More.

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    FDIC’s Hoenig Offers “Safe Way” to Provide Regulatory Relief

    Tom Hoenig, vice chairman of the FDIC, submitted this week his prescription to provide regulatory relief for traditional banks. A bank would be eligible if: a) it holds no trading assets or liabilities, b) it holds no derivative positions other than interest rate and foreign exchange derivatives, c) the total notional value of all its derivatives exposures is less than $3 billion, and d) it maintains a ratio of GAAP equity-to-assets of at least 10%. He indicated that more than 90% of all banks meet the first three criteria, and two-thirds meet the fourth criterion regarding capital.

    Hoenig outlined the relief provisions for qualifying banks as follows:

    • Exemption from all Basel capital standards and associated capital amount calculations and risk-weighted asset calculations.
    • Exemption from several entire schedules on the call report, including schedules related to trading assets and liabilities, regulatory capital requirement calculations, and derivatives.
    • Allowance for greater examiner discretion and elimination of requirements to refer "all possible or apparent fair lending violations to Justice" if judged to be minimal or inadvertent.
    • Establish further criteria that would exempt eligible banks from appraisal requirements.
    • Exemption, if applicable, from stress testing requirements.
    • Where judged appropriate, provide an 18-month examination cycle as opposed to the current required 12-month cycle for traditional banks.
    • Mortgages made by these traditional banks that remain in the banks’ portfolio would be a qualified mortgage loan for purposes of Dodd-Frank Act.
    While the capital component seems excessive, CBAI generally concurs with the concepts presented by vice chairman Hoenig. Another concern is that certain large regional banks, including a $100 billion institution, would apparently qualify for the exemptions. CBAI’s primary concern is to end too-big-to-fail banking which nearly took down the global economy and financial system in 2008 and resulted in a taxpayer bailout and favored treatment by the Federal Reserve. Read AB Article.

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    Flood Insurance Final Rule Includes Exemption for Banks Under $1 Billion

    Federal regulators approved a joint final rule modifying flood insurance regulations with an exemption from escrow requirements for institutions with less than $1 billion in assets. The final rule establishes requirements for escrowing flood insurance payments, accepting private flood insurance coverage, and the force-placement of flood insurance.

    In a December 2013 comment letter, the ICBA said the exemption would enable community banks to avoid the excessive costs and burdens involved in establishing and maintaining escrow accounts. ICBA also expressed concern about the implementation timeframe of the rule, which was previously scheduled to take effect in July 2014. Now certain provisions will take effect October 1, 2015 while others will take effect January 1, 2016. The final rule is expected to be published in the Federal Register shortly. Read Final Rule. Read ICBA Release. Read ICBA Comment Letter.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The Fed’s Open Market Committee met recently and continued to plot their path toward “normalized” monetary policy. Janet Yellen and friends scattered their dots carefully to punctuate the fact that theirs would beat or toise-like tightening (most likely) and nothing for markets to fear. Yellen said she’s pleased with the economy’s improvement since the end of an ugly first quarter, but she’s still looking for more “decisive” evidence of a durable turnaround. See Baker Market Update.

    Economic Brief

    The U.S. economy created 280K new jobs last month, according to the Labor Department. This is notably higher than the consensus estimate. See Baker Economic Brief.

    MBS Market Strategies

    Speeds fell for the second month in a row in May, but to a much less severe degree than the April drop. Fannie 30 years fell 0.6 CPR and Freddie 30 years fell 0.5 CPR. Conventional 15 years were basically flat. See MBS Market Strategies.

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    Rural Economy Improves to Growth Neutral

    Creighton University’s Rural Mainstreet Index rose in June to neutral 50.0 from 49.0 in May, the third straight monthly increase. The survey of bank CEOs in rural areas of a 10-state region found continued declines in farmland and ranchland prices and a slight decline in the loan-volume index. Approximately 12.8 percent of bankers said the Fed should immediately begin raising interest rates, while 34 percent recommended that the Fed wait until 2016. See Mainstreet Economy Report.

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    CBAI Financial Institutions Directory Available on Multiple Platforms

    The CBAI Directory of Illinois Financial Institutions has been mailed to members. Need another Directory? Would you like to view it online? What about in e-book or cd form? Here’s Your Answer!

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    Special $2500 Offer for CBAI Members Only

    Community BancService Corporation, Inc. (CBSC) and its partner First American Payment Systems (First American) are pleased to announce a new special incentive created exclusively for CBAI member banks:

    First American will provide your bank a proposal that will beat the revenue generated by your current merchant card provider or it will pay your bank $2,500.00 for your time!

    There are no gimmicks. First American will not change the terms of your current merchant services agreements. They will apply your existing discount rates and portfolio characteristics to their revenue model and produce a proposal they are confident will increase profits in your merchant program.

    For more information and a no-obligation review of your merchant services program, please contact Michael Petersen at 214-843-2108 or michael.peterson@first-american.net.

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    iHELP Celebrates More Than $75 Million in Student Loans

    iHELP, the private student loan resource for community banks recommended by CBAI and ICBA, announced that hundreds of community banks, including more than 50 in Illinois, have pledged support for iHELP by dedicating loan capital to the program or through referrals to students. Additionally, iHELP has provided more than $75 million in private student loans to students and their families through community bank participation. The iHELP private student loan program is designed to be a low-cost and transparent option to help students finance the difference between the cost of tuition and their available funding. Want to participate? Read More.

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    USDA Opens Enrollment for Main Farm Bill Programs

    The USDA announced that farmers and ranchers may now formally enroll in either of the two main programs established by the 2014 farm bill: the Agriculture Risk Coverage and Price Loss Coverage programs. The enrollment period for 2014 and 2015 runs June 17 through September 30, 2015. The new programs trigger financial protections for agricultural producers when market forces cause substantial drops in crop prices or revenue. See News Release.

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    Top Ten List of Questions About the .BANK Domain Name Extension

    EnCirca has posted its Top Ten Questions bankers have asked about .BANK domain. EnCirca, an ICBA Preferred Provider, helps community bankers understand and register for the .BANK domain. See Top Ten List of Questions. See ICBA-EnCirca Resource Page.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on whether or not your bank intends to secure a .BANK domain name. Click Here to view results of previous polls.

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    Sageworks Releases Credit Analysis for Ag Lending

    Sageworks, a financial information company that provides credit risk management solutions to financial institutions and a CBSC Preferred Provider of allowance for loan and lease loss (ALLL), stress testing and credit analysis software to CBAI member banks, recently announced the addition of Sageworks Credit Analysis for Agricultural Lending to the suite of Sageworks solutions available to banks. Since Sageworks is a CBSC Preferred Provider, CBAI member banks are exclusively eligible for preferred pricing on Sageworks Credit Analysis for Agricultural Lending, as well as on Sageworks ALLL, Sageworks Stress Testing and Sageworks Credit Analysis. Read More.

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    SBA Updated Lenders Performance List Now Available

    The updated SBA Lenders Performance list for Fiscal Year 2015, starting from 10/01/14 to 5/31/15, is now available from the Illinois District Office of the Small Business Administration (SBA). The District Office continues a positive trend for FY 2015, with the number of 7(a) loans up by 23.4%. Last year at this same time, 1,022 7(a) loans were approved compared to 1,261 loans for this year.

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    Free White Paper: Guide to Building Exam-Proof Vendor Management Program

    Download a free copy of this white paper from CBSC-preferred provider Continuity: “The Ultimate Guide to Building an Exam-Proof Vendor Management Program.” This white paper reviews guidance on vendor information gathering, assessing vendor contracts and effective monitoring and mitigation of vendor risk. Additionally, the white paper covers Vendor Management checklists based on FFIEC guidelines, demystifying enterprise-wide vendor management compliance and time-tested, step-by-step procedures that save time and lower risks. Download the Guide Here.

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    FDIC Consumer News Offers Tips for Students

    The latest FDIC Consumer News features tips to help children from pre-kindergarten through college learn how to be smart about their finances. The spring 2015 edition also includes a checklist of computer security tips for bank customers, an article about changes in credit reporting, and information about a new tax-advantaged savings option for families with a child with disabilities. The FDIC encourages financial institutions to help make the tips and information in FDIC Consumer News widely available. See FDIC Tips.

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    Free Webinar: “Interagency Statement on Diversity Policies & Practices"

    Continuity, a CBSC-preferred provider, is hosting a free webinar on July 1: “Interagency Statement on Diversity Policies and Practices - What Does It Mean for Community Financial Institutions?” This online session will cover the recommended standards recently released by six federal agencies (OCC, FRB, FDIC, NCUA, CFPB, and SEC) for financial institutions to assess their diversity policies and practices in the areas of employment practices and selection of third-party vendors. This webinar goes beyond the basics to provide meaningful, actionable insights into how to institute a program or improve existing practices. Register Online.

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    It's That Time of Year Again! Donate to the Community BancPac Auction Today!

    CBAI is excited to begin preparations for Community BancPac’s 24th Annual Silent Auction and 8th Annual Live Auction. Thanks to many community bankers, this night is always a fun-filled event and one of the highlights of CBAI’s Convention. We hope to make this year’s Auction a successful and memorable event, but we need your help to reach our goal! See Details.

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    CBAI LEGAL: Rule Separates “Unidentified” IOLTA Funds from “Unclaimed” Funds

    Beginning July 1, a change in the Illinois Supreme Court Rule governing the maintenance of client funds by attorneys in IOLTA accounts will allow some funds to be contributed to the Lawyers Trust Fund of Illinois after only one year, rather than being held for the State unclaimed property time frame of five years. See Details.

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    Training the Credit Analyst Scheduled for July 8-10

    As community banks grow and strive to become high-performing financial institutions, the need to cultivate and develop a portfolio of commercial borrowers increases also. Credit analysis is an essential part of this process as banks strive to develop solid commercial relationships. This is a three-day seminar designed to address the needs of beginning credit analysts and to reinforce the credit skills of current credit analysts. It teaches how to write effective and comprehensive credit analyses which highlight the important trends shown on the financial spread sheet. Other analytical tools that are covered include cash-flow analysis, break-even analysis, ratio analysis, financial projections, and sensitivity analysis. The objective of this three-day course is to provide credit analysts with analytical skills that can be put to immediate use upon their return to their banks. Participants learn to use proven analytical tools which enable them to assess the degree of risk prior to recommending approval of declination of a credit request. Another objective of this course is to improve the documentation of commercial-loan files which reduce losses and are viewed favorably by the regulatory community. Leading this seminar is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, GA, who has more than 37 years' experience in the banking field.

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