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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                            June 25, 2014

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Register for CBAI’s 40th Annual Convention & Expo by June 30 for Early-Bird Pricing and Prize Drawings!
  • Support Builds for New Glass-Steagall Act
  • ICBA Highlights Differentiation Between Bank Models in Future Regulation
  • Community Banks Are Most Trusted Financial Institutions
  • Fiduciary Responsibility Is Not a Community Bank Board Problem
  • FREE Investments Seminar Scheduled by THE BAKER GROUP
  • Baker Market Update
  • U.S. Economy Just Stumbling Along
  • Rural Mainstreet Economic Index Remains Above Growth Neutral
  • Recommendations for Determining Appropriate ALLL Qualitative Adjustments
  • Have Banks Learned a Lesson on Easy Credit?
  • Video Teller Machines: The Future of Community Banking?
  • OCC Releases Semiannual Risk Report
  • Nine Things Examiners Expect in a Compliance-Management System
  • The Benefits and Requirements of ESOPs
  • Insight into ATM Security
  • News from the Bench: When Borrowers Cannot Afford TILA Rescission
  • Community Bankers School Registration Deadline Is July 1
  • Compliance for Loan Processors Scheduled for July 15, 16, and August 18
  • Training the Credit Analyst Scheduled for July 30 & 31


  • Register for CBAI’s 40th Annual Convention & Expo by June 30 for Early-Bird Pricing and Prize Drawings!

    Register today for CBAI’s 40th Annual Convention & Expo, scheduled for September 18-20, 2014, at the Marriott Downtown in Chicago to receive the lowest pricing available! Expert speakers on the hottest community banking topics fill an education agenda featuring 20 break-out sessions. Dynamic and highly sought after speaker and leadership expert Tom Flick takes the stage for the Opening Breakfast and shares his passion for raising more effective leaders through his unique gift to connect with the listeners’ hearts as well as their heads. Golfers are treated to a beautiful, classic-style course with an amazing history of championship golf in Flossmoor Country Club. Also on the agenda is the Welcoming Reception with BancPac Live and Silent Auction, a jam-packed exhibit hall with 100 booths, fun partner’s programs exploring the exciting city of Chicago, a Closing General Session, and much more. Our annual showcase event closes with the unforgettable music of the seventies, including Hollie Vest as Tina Turner, Quentin Flagg and Bill Downey as The Blues Brothers, and Stayin’ Alive, the number-one Bee Gees tribute band in the world. Don’t miss CBAI’s 40th anniversary celebration, “Looking to the Past to Plan for the Future.”
    Register now for early-bird pricing through June 30. Click here, for more information on the prize drawings. Please click here to add a reminder to your Outlook calendar for CBAI's showcase event!

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    Support Builds for New Glass-Steagall Act

    Measure Would Separate Commercial and Investment Banking Functions

    Last week, on the 81st anniversary of the signing of the Glass-Steagall Act of 1933, a group of consumer advocacy groups urged senators to co-sponsor the 21st Century Glass-Steagall Act (S. 1282), a bill introduced last year by a bipartisan group including John McCain (R-Az.) and Elizabeth Warren (D-Mass.).

    The bill would require banks to separate their commercial lending operations from their investment banking operations with the intent of preventing banks that act irresponsibly from receiving public bailouts. CBAI has long-supported the restoration of these provisions.
    See Consumer Reports Article. See S.1282.

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    ICBA Highlights Differentiation Between Bank Models in Future Regulation

    Chris Cole, ICBA executive vice president and senior regulatory counsel, emphasized the importance of a tiered approach to regulation in a Bloomberg Brief on Financial Regulation published last week. Cole summarizes that some of the most significant post-crisis rules facing community banks have been mortgage regulation, specifically the new qualified mortgage requirements, the ability to repay rule, new Truth in Lending rule changes, and requirements on escrows.

    "The Basel III capital requirements ... are the next biggest challenge," Cole states. Regulatory outlook three to five years from now will see success in a tiered regulatory approach. "Just like you saw with Volcker and Basel III, you'll see more and more of the agencies differentiating between the community bank and the large bank with rules." CBAI is an outspoken advocate of tiered regulations that either exempt community banks or at least greatly reduce compliance requirements.
    See Bloomberg Brief.

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    Community Banks Are Most Trusted Financial Institutions

    Community banks are the most trusted institutions in banking and finance across political parties, according to a new poll.

    A new
    Morning Consult Finance poll found that nearly 8 in 10 Republicans, Independents and Democrats trusted community banks in regards to banking, finance and the economy.

    The poll found that all parties trusted Wall Street the least, with 44 percent of Republicans, 35 percent of Independents and 36 percent of Democrats saying they trusted the institution.

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    "CBAI Connected to Community Banking" Is Sponsored
    by The SHAZAM Network


    Get the most out of your ATMs! The SHAZAM Network offers affordable, innovative, and competitive ATM solutions to help increase the profitability of your ATM program and give you valuable insight into your customers.

    Fiduciary Responsibility Is Not a Community Bank Board Problem

    But Regulators Might Make It One!

    In his recent blog post, ICBA’s Cam Fine pointed out that fiduciary responsibility to customers and communities is inherent in the community bank business model and warned against regulators’ suggestions that directors’ duties be broadened. He said, “Community bank directors should not be subject to a broader legal fiduciary duty. It’s one that could lead to more emphasis being put on the community bank system than the megabank system.” CBAI concurs that any broadening of fiduciary responsibility should be limited to the mega banks.
    See Fine Blog.

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    FREE Investments Seminar Scheduled by THE BAKER GROUP

    The annual Interest Rate Risk and Investment Strategies Seminar led by professionals from THE BAKER GROUP has been scheduled for Monday, August 4 at Illini Country Club, Springfield. As the economic environment transitions into a new phase, bank managers must gear up to meet new challenges and opportunities. Achieving high performance in a fast-changing environment requires powerful tools, techniques, and processes to find the optimal balance between risk and reward. It also requires a partnership with proven winners.
    See Details.

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    Baker Market Update

    Growth in economic activity has rebounded in recent months. Labor market indicators generally showed improvement; the unemployment rate, though lower, remains elevated. Household spending appears to be rising moderately and business fixed investment resumed its advance – recovery in the housing sector is still slow.
    See Baker Market Update.

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    U.S. Economy Just Stumbling Along

    Half-way through 2014, forecasts for economic growth are being slashed after first quarter results revealed an economic contraction, the deepest decline since the Great recession. While some economists believe it was a one-time blip caused by the brutal winter, the International Monetary Fund (IMF) predicts a meager 2% growth for 2014. To boost economic output, the IMF urges the U.S. to undertake a “skills-based approach” to immigration reform and to lift restrictions on U.S. oil exports.
    See CNNMoney Article.

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    Rural Mainstreet Economic Index Remains Above Growth Neutral

    According to the June survey of bank CEOs in 10 Midwestern states, the Rural Mainstreet economy has moved above the 50.0 growth neutral threshold for four straight months. However, the Index was down compared to May which signals slower growth. Meanwhile, Illinois’ Index increased.
    See June Survey Results. See Mainstreet Economy Report.

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    Recommendations for Determining Appropriate ALLL Qualitative Adjustments

    Qualitative or environmental adjustments to the ALLL are a challenge for bankers because they are inherently subjective.
    Here are five recommendations to help increase objectivity, and appropriately and consistently apply these adjustments.

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    Have Banks Learned a Lesson on Easy Credit?

    In the aftermath of a financial crisis fueled largely because too many people borrowed too much money, a recent study reported that consumer non-mortgage debt has grown for three successive quarters for the first time since the onset of the crisis in 2008. The good news is that, while credit card acceptance rates for applicants with good credit ratings have increased, so too have rejection rates for applicants with lower credit scores.
    See WSJ Article. See Study.

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    Video Teller Machines: The Future of Community Banking?

    Some community banks have begun to use video tellers as a way to steer customers to lower-cost delivery channels that maintain face-to-face service. SHAZAM’s Jim Ghiglieri recently penned an article that provides more information on this new technology.
    See Article.

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    OCC Releases Semiannual Risk Report

    The OCC today released its Semiannual Risk Perspective for national banks and federal savings associations. The Report showed that overall conditions improved in the second half of 2013 but noted that credit risk is building following a period of improving credit quality and problem loan clean-up. The Report cited competition for limited lending opportunities as a factor in loosening underwriting standards, and the prolonged low interest rate environment laying the foundation for future vulnerability.
    See OCC Release. See OCC Semiannual Risk Perspective.

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    Nine Things Examiners Expect in a Compliance-Management System

    According to a comprehensive review of recent enforcement actions against community financial institutions, examiners are targeting nine areas within their Compliance Management System (CMS). Continuity Control, a CBSC Preferred Provider of regulatory compliance solutions, has prepared a FREE White Paper that addresses these nine areas in greater, which that will help you better prepare for your bank’s next regulatory exam.
    See White Paper.

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    The Benefits and Requirements of ESOPs

    An ESOP is a kind of employee benefit plan, similar in some ways to a profit-sharing plan. In an ESOP, a bank sets up a trust fund, into which it contributes new shares of its own stock or cash to buy existing shares. Alternatively, the ESOP can borrow money to buy new or existing shares, with the bank making cash contributions to the plan to enable it to repay the loan. Community banks can use ESOPs for a variety of purposes. However, the plans are most commonly used to provide a market for the shares of departing owners of successful closely held banks, to motivate and reward employees, or to take advantage of incentives to borrow money for acquiring new assets in pretax dollars. ESOPs also have a number of significant tax benefits.
    Read More.

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    Insight into ATM Security

    CSI’s InFocus feature, Bracing for an “Unlimited Operations” ATM Cyberattack, examines these growing cyberthreats and explores how financial institutions can fight back against such attacks.
    See Newsletter.

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    News from the Bench: When Borrowers Cannot Afford TILA Rescission

    On May 28, the United States Court of Appeals for the Seventh Circuit (covering all of Illinois) ruled that, even when a technical violation of the Truth In Lending Act (“TILA”) gave a consumer a legitimate right of rescission under TILA, a court was within its authority to condition the lender’s release of its security interest on the tender/return of the money advanced; if the consumer could not tender the funds, rescission would be an empty statutory right that was beyond the consumer’s grasp.
    See Court Opinion Details.

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    Community Bankers School Registration Deadline Is July 1

    Do you want to advance in your career and become a leader at your bank? Your perfect opportunity to get ahead and guarantee success in your career is enrolling in the Community Bankers School. This program, 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 the 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. You gain a background and experience for broader responsibilities and greater effectiveness, as well as insight into a community bank’s overall operations responsibilities. The 2014 session opens Sunday, July 13, and concludes Friday, July 18. The deadline to enroll is July 1, 2014.
    Register Today!

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    Compliance for Loan Processors Scheduled for July 15, 16, and August 18

    Over the last few years, lending compliance has become more and more confusing, as the rules have become more and more complex. Loan processors often have dealt with changes by learning the “buttons to push”, without any understanding of the actual regulatory requirements. This
    course is designed to enhance understanding of the regulatory requirements and the “decision trees” that are important for processors to fully understand. This course focuses on the documents – the most important portion of the processor’s job. Errors in documents can cost banks thousands of dollars, and, as the Dodd-Frank rules begin to appear, the risks will certainly increase. The course discusses the existing forms and their requirements. This course does not cover items that are more the province of the lender or underwriter. It reviews potential pitfalls, the risks of errors, and the decision making process to avoid these negative outcomes. While others in the bank may benefit and are welcome, this course is designed specifically for loan processors and their management. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Training the Credit Analyst Scheduled for July 30 & 31

    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
    two-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. Leading this seminar is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, Georgia, who has more than 37 years’ experience in the banking field.

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