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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    July 6, 2016

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Early-Bird Deadline Extended to July 15 for CBAI’s 42nd Annual Convention & Expo
  • Regulators Renew Pledge for Call Report Relief
  • Hensarling Offers More Details on Regulatory Relief Plan
  • Succession Planning for the Board: What to Consider
  • Bank Reputation: Leadership More Important Than Performance
  • What SBA Lending Can Do For Your Bank
  • Edging Out Big Banks with ACH Originations
  • FDIC Initiates Small-Business Lending Survey
  • CBAI Urges Improvement to the Consumer Compliance Rating System
  • FASB Revises the Current Expected Credit Loss (CECL) Model
  • Investment News From THE BAKER GROUP
  • To Work Effectively with Millennials: Don’t Waste Their Time
  • Special Offer for eBook Version of CBAI Directory of Financial Institutions
  • Analysis of Bank-Owned Life Insurance (BOLI) Trends
  • Play Like a Champion and Donate to Community BancPac Auction Today!
  • Case Study: Bank Uses Automated Compliance Solution to Stay Current
  • Using Technology to Outperform Your Peers: Higher Earnings & Improved Efficiency
  • Legal Link Library Supplemented with New Q&As
  • Community Bankers School Scheduled for July 10-15
  • CIP – DOD – TRID – Fair Lending Review Techniques Set for August 2-3
  • Auditing Flood, Appraisals, and Escrow To Be Held on August 9
  • Ag Credit Analysis Scheduled for August 10


  • Early-Bird Deadline Extended to July 15 for CBAI’s 42nd Annual Convention & Expo

    Register by Friday, July 15, 2016, for early-bird pricing at CBAI’s showcase event, entitled “Community Banking Playmakers.” Scheduled for September 15-17, 2016, CBAI’s Annual Convention & Expo makes its first ever stop in Kansas City, MO, at the Marriott Downtown. Offering a thriving creative arts scene, eclectic mix of entertainment, and die-hard sports, it's safe to say there's something for everyone in Kansas City. But you won’t want to miss the 20 timely education sessions with expert information on the hottest topics in community banking today, not to mention an opening keynote with acclaimed public speaker, consultant, and former NFL athlete, Eric Boles. Education only scratches the surface of the convention’s attributes. Nearly 90 exhibit booths featuring the latest products and services are on display in the Exhibit Hall. Countless networking opportunities and social events include the golf outing at Swope Memorial Golf Course and the Saturday dinner dance featuring the Fabulous Motown Revue. Don’t miss out! Take advantage of the significant pricing discount and register by July 15! For the early-bird registration form, please Click Here.

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    Regulators Renew Pledge for Call Report Relief

    The federal banking agencies said last week that they will propose reforms to the call report this year that will offer meaningful regulatory relief for community banks. The latest announcement on the progress toward a streamlined call report came in a Financial Institution Letter finalizing an initial proposal released last year that deletes certain data items and revises reporting thresholds. The community banking lobby, led by ICBA, has worked closely with the Federal Financial Institutions Examination Council to advance call report reforms, including a short-form report for community banks. Read More From FFIEC.

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    Hensarling Offers More Details on Regulatory Relief Plan

    The chairman of the U.S. House Financial Services Committee released a discussion draft and summary of legislation offering regulatory relief for community banks and other financial institutions. Rep. Jeb Hensarling’s (R-Texas) Financial CHOICE Act incorporates many provisions of ICBA’s Plan for Prosperity platform which CBAI supports. The Act would allow banks of all sizes to “off-ramp” from Dodd-Frank and Basel III rules if they meet certain standards, and it includes provisions to reform the Consumer Financial Protection Bureau, ease mortgage rules on portfolio loans, and require tailored banking regulations. See Financial CHOICE Act Information. Read Plan for Prosperity.

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    CBAI Connected to Community Banking is sponsored by The SHAZAM Network: If you’re within a few years of a contract renewal with your core vendor, SHAZAM Core Services has some advice. With vendors offering to solve all your needs in one suite, it’s tempting to be wooed by the myth that one platform can be a magic bullet for all your diverse business needs. Look for an agile, open architecture core provider that allows you to bring together a strong foundation of partners to support what makes you unique. Plan now to ensure you’re not locked in a product that can’t quickly adapt to changing customer behavior and the changing needs of your institution. Visit SHAZAM Core Services for More Information.



    Succession Planning for the Board: What to Consider

    Boards today need to be planning for even more technology reliance, new fee-based income generators, tougher regulations, and fewer professionals interested in banking as a career. Banks should not rely solely on investors and well-connected business people to guide its direction on board selection. Going forward, banks will need board leadership with expertise in the crucial areas that aren’t directly adding to the bottom line, such as technology, risk, compliance and audits. Read More.

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    Bank Reputation: Leadership More Important Than Performance

    A recent survey conducted by The Reputation Institute for American Banker found that leadership replaced performance as one of the top three drivers of bank reputation overall. According to the firm, trust has become a valuable commodity, and resources could be better spent on efforts that cast banks in a positive light and create good will among consumers. Read More.

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    What SBA Lending Can Do For Your Bank

    A viable option for community banks to increase profitability is to add SBA lending to the mix of loan products.

    The primary SBA lending program is the SBA 7(a) loan program, which allows the bank to make small business loans and receive a 75 percent guarantee from the U.S. government. The guaranteed portions of these loans can be sold in a secondary market, with current gain on sale premiums of 13.5 percent net to the bank. Read More.

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    Edging Out Big Banks with ACH Originations

    Community banks win customers the old-fashioned way: through better, speedier customer service. Now more community banks are finding that ACH origination services can provide another edge to attract more business customers, particularly from the largest banks. See Independent Banker Article.

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    FDIC Initiates Small-Business Lending Survey

    In late June the FDIC launched a bank survey on small-business lending practices. The web-based survey of roughly 2,000 randomly selected FDIC-insured banks will be administered by the U.S. Census Bureau. Institutions chosen to participate will be contacted with directions on how to proceed. Read FDIC Release.

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    CBAI Urges Improvement to the Consumer Compliance Rating System

    In a June 30, 2016 comment letter to the Federal Financial Institutions Examination Council (Agencies), CBAI urged the Agencies to make certain changes to its revision of the Uniform Interagency Consumer Compliance Rating System (CC Rating System) prior to final implementation.

    CBAI took exception to the Agencies' statements regarding no higher supervisory expectations or additional regulatory burden. To suggest that a comprehensive revision of the CC Rating System and examination process will not set new or higher supervisory expectations or will not create an additional regulatory burden, has not been proven in the first instance and is completely untrue in the second. Read More.

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    FASB Revises Current Expected Credit Loss (CECL) Model

    On June 16, 2016 the Financial Accounting Standards Board (FASB) released its long-awaited Current Expected Credit Loss (CECL) model. The final version of CECL is more workable for community banks as a result of the consistent advocacy efforts of the Independent Community Bankers of America (ICBA) and CBAI. While community bank advocacy efforts began a number of years ago, it was not until very recently that FASB responded to our concerns.

    On the heels of the release of FASB’s CECL model the banking regulators published their Joint Statement on the New Standard on Financial Instruments – Credit Losses. In this seven page document CBAI identified 12 separate statements that are clear concessions or accommodations to community banks – actually very transparent nods to our aggressive advocacy on this important matter. Read More.

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    Investment News From THE BAKER GROUP

    BAKER INVESTMENT SEMINAR AND GOLF OUTING SET FOR AUGUST 1

    The annual Baker Group Investment Seminar and Golf Outing is set for August 1, 2016, at Illini Country Club in Springfield. ALL CBAI member banks are invited to send representatives to attend a day of portfolio management education while having fun in the process, all compliments of The Baker Group. For more information and to register, please Click Here.

    Register for the Baker Group Webinar: Investment Strategies for 3rd Quarter 2016

    Scheduled for Thursday, July 14, 2016, beginning at 10:30 a.m. CDT, this FREE 75 minute webinar will cover: The Post-"Brexit" Market Environment and Impact on the US; Interest Rate Risk: Yellen's Low Level Yield Curve Flattening; Mid-Year Prepayment Update: Will Record Low Treasury Yields Trigger a New Refi Wave?; Market Opportunities Selling Into the Strength of TBA to Lower Takeout Yields; and Relative Value Pickup in Municipals vs. MBS has Shifted – Is it Time to Reallocate? Register Here.

    Baker Market Update

    Just when you thought things couldn’t get any worse, they didn’t. Kind of. The dreary second estimate of a Q1 GDP growth rate of 0.8% was revised for what should be the final time. We all learned last week that the economy actually grew at an annualized rate of 1.1% in the first three months of 2016. See Baker Market Update.

    Baker Economic Brief

    Treasury yields are hitting historic lows as pre-holiday position squaring is all about risk aversion. After a couple of days of respite, currencies are gravitating back to the immediate post-“Brexit” levels, and bonds are rallying again. See Baker Economic Brief.

    Baker Municipal Credit Brief

    When analyzing the credit of a municipal bond, the main focus is usually on the municipality’s financial health. For instance, it is important to ensure that the municipality has sufficient revenue to pay the debt service, the economy in the area is favorable, and there aren’t significant issues that could cause financial deterioration over the life of the bond. See Baker Municipal Credit Brief.

    Baker Regulatory Update

    The new accounting standard applies to all banks, savings associations, and credit unions regardless of asset size. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. Institutions will now use forward-looking information to better estimate their credit losses. See Baker Regulatory Update.

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    To Work Effectively with Millennials: Don’t Waste Their Time

    Many surveys have found that millennials don’t prefer to talk on the phone or respond to emails. Instead, they respond to quick texts, and banks will need to invest in mobile messaging technology. Read More.

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    Special Offer for eBook Version of CBAI Directory of Financial Institutions

    The CBAI Directory of Illinois Financial Institutions contains vital information on banks, thrifts, credit unions and holding companies in Illinois, as well as information on CBAI. Get yours now at a one-time discount! Would you rather have an additional paper copy? Contact the CBAI Department of Communications at 800/736-2224 or cbaicom@cbai.com. See Special Offer.

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    Analysis of Bank-Owned Life Insurance (BOLI) Trends

    To monitor and assess trends in the bank-owned life insurance (BOLI) market, Equias Alliance, together with Michael White Associates, produces a quarterly study. The study analyzes BOLI holdings from a number of different perspectives including by type of institution, size of institution, type of BOLI asset and amount of cash surrender value held by banks. A detailed analysis has been conducted of the findings of the study as of March 31, 2016 in comparison to a similar period last year. The findings were based on a review of FDIC data from 6,122 banks operating on that date. See Analysis.

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    Play Like a Champion and Donate to Community BancPac Auction!

    CBAI is excited to begin preparing for Community BancPac’s 25th Annual Silent Auction and 9th Annual Live Auction. Thanks to many of you, this night is always a fun-filled event and remains 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! CBAI deeply appreciates the PAC donations many of you make each year. Be a PLAYMAKER and please make a contribution to the auction! See Donation Form.

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    Case Study: Bank Uses Automated Compliance Solution to Stay Current

    CBAI Preferred Provider Continuity recently released a case study on Security Bank, s.b., Springfield, which began using an automated compliance solution after its compliance officer took on accounting duties. Since implementing RegAdvisor Pro, Security Bank has been able to quickly assign responsibilities, manage workflows, and ensure full compliance with confidence. Read Continuity's Case Study.

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    Using Technology to Outperform Your Peers: Higher Earnings & Improved Efficiency

    Do you see your bank’s technology as a “negative”— something that creates a drag on earnings and eats up management’s time in dealing with constantly occurring issues? Instead, what if your bank’s technology could be a source of strength, helping your bank achieve its strategic objectives while at the same time reducing risk, reducing regulatory burden, adding capabilities and allowing management to spend more time on other, more important goals? CBAI Preferred Provider BankOnIT discusses these issues in its recent blog. See BankOnIT Blog.

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    Legal Link Library Supplemented with New Q&As

    The Members Only Section of CBAI’s website contains a “Legal Services” tab from which CBAI members only can access legal information produced and maintained by CBAI’s General Counsel and Paralegal. One of the links on the Legal Services page is to a file titled Legal Link Frequently Asked Questions. Read More.

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    Community Bankers School Scheduled for July 10-15

    The highly-acclaimed Community Bankers School, consisting of two, one-week sessions over a two-year period at Illinois Wesleyan University in Bloomington, allows you to immediately contribute to the overall success of your bank, and gives 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 gain a background and experience for broader responsibilities and greater effectiveness, as well as insight into a community bank’s overall operations responsibilities. The 2016 session opens Sunday, July 10, and concludes Friday, July 15. More than a thousand individuals from throughout the nation have graduated from the Community Bankers School and have gone on to great success in the community banking profession. The deadline to enroll is July 1, 2016. Talk to your employer today and don’t look back!

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    CIP – DOD – TRID – Fair Lending Review Techniques Set for August 2-3

    CBAI is pleased to the fourth quarter of the Community Bankers for Compliance (CBC) program in Springfield and Lisle this August. We discuss a variety of subjects during this CBC presentation. Just when you thought you had the Bank Secrecy Act under control, they changed the CIP rules – at least for more closely held companies. While this will have a bigger impact on deposits than on loans, this will have some level of impact on the entire bank, and you need to get ready. We take this opportunity to review the “old” or existing CIP rule, as well discuss what new steps and procedures you need to implement in order to meet the new requirements. We also revisit the Department of Defense rule concerning military personnel. Included in the main section of the day are CFPB comments regarding construction loans. Whether you are outsourcing a fair lending review or doing it yourself, fair lending reviews can get expensive. The balance of the day is spent discussing techniques that you can use to pinpoint those areas that may need the most effort. We will not spend significant time on the fair lending regulations themselves. Understanding of the regulations will be assumed. The subjects for the regulatory update will be determined by circumstances and releases from the various agencies and questions and answers to TRID hotline questions that have been asked in the last few months. Compliance officers should attend this session. In addition, all personnel with responsibilities for lending management, operations management, senior management, auditors, and others should also consider joining us for this session. Leading this seminar is Adam Witmer, CRCM, senior consultant with Young & Associates, Inc., Kent, OH, where he focuses on regulatory compliance.

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    Auditing Flood, Appraisals, and Escrow To Be Held on August 9

    CBAI is pleased to offer Auditing Flood, Appraisals, and Escrow in Springfield this August. In this course, attendees identify and understand the key demands of the regulations and their most recent revisions; identify sources of information to understand the approach used by regulators and the details of the application of the regulations; obtain and understand checklists and tools; practice the actual completion of work papers; and discover what the present hot topics areas are for the state and federal regulators. Leading this seminar is Tim Tedrick, CRCM, CRP, and partner at Wipfli LLP in Sterling, IL. The firm has more than 650 financial institution clients and Tedrick specializes in compliance, consulting, and assistance. He supervises internal audit and compliance exams for all sizes of financial institutions in eight states.

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    Ag Credit Analysis Scheduled for August 10

    An agricultural loan officer's responsibility is to perform sound credit analyses and make loans to good customers. This requires a strong understanding of basic agricultural credit analysis, as well as, the drivers of change in the agricultural production sector. The overall objective of this program is to prepare participants to be informed and effective leaders in agricultural lending. A primary focus of the workshop is to review the basic financial statements and ratios that are important to measuring and monitoring the credit risk of agricultural borrowers. Case studies and computerized decision tools are used to illustrate the important concepts. Other contemporary issues such as farmland markets, rental agreements, crop insurance, and other risk management tools are discussed. All participants receive a complimentary copy of computerized decision tools used in the workshop. Dr. Gary Schnitkey is a professor and member of the farmdoc extension project team in the Department of Agricultural and Consumer Economics, University of Illinois and Dr. Nick Paulson is an associate professor and member of the farmdoc extension project team in the Department of Agricultural and Consumer Economics, University of Illinois lead this program.

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