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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                     July 10, 2013 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI Leadership Bankers and Staff Meet with Senator Durbin
  • Fed Approves Final Basel III Capital Rules
  • FDIC, OCC, and Fed Propose Hike in Leverage Ratio for Eight Largest Banks
  • House Committee Addresses Too-Big-To-Fail Remedies
  • Urge Congress to Support Thrift Holding Company Relief
  • Blocking New Bank Charters Is Bad for Banking
  • CFPB Releases Readiness Guide for Mortgage Rules
  • Donate Now to Community BancPac Auction!
  • Time to Register for CBAI Convention!
  • The Baker Group - 3rd Quarter 2013 Conference Call
  • Baker Market Update
  • Recent Economic Indicators Mixed
  • Agencies Release Public Sections of Resolution Plans for Four Institutions
  • KASASA Ad 9 - “Free Hotdogs”
  • Wolters Kluwer Users’ Summit Set for Dallas, TX
  • The Strategic Implications of Tellers Selling
  • Compliance for Loan Processors Set for July 30 & 31
  • Training the Credit Analyst Scheduled for August 1 & 2
  • Lending Update Part III: The New Rules and Their Impact on You! Set for August 6 & 7

  • CBAI Leadership Bankers and Staff Meet with Senator Durbin

    CBAI leadership bankers and staff met with Illinois Senator Richard Durbin to discuss issues of importance to Illinois community banks. Bank of Springfield hosted this roundtable discussion during the Senate’s July 4th recess. The common theme expressed by leadership bankers from CBAI’s first Chairman, Art Murray of Citizens State Bank in Milford (1974-1975), to CBAI’s current Chairman, Rick Jameson of Morton Community Bank (2012-2013), was the stifling impact of over regulation/examinations and unfair competition on the ability of community banks to serve their communities.
    Read More.

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    Fed Approves Final Basel III Capital Rules

    Key Changes Made for Community Banks

    Last week the Federal Reserve Board approved final Basel III capital rules that include significant improvements and exemptions for community banks. For example, all banks will be able to continue using the Basel I risk weights for residential mortgages; and banks with less than $250 billion in assets will not be required to include accumulated other comprehensive income (AOCI) as regulatory capital. In addition, bank holding companies with assets less than $15 billion can continue to include proceeds from trust-preferred securities as regulatory capital. CBAI and ICBA advocated strongly for these provisions. However, the capital conservation buffer and new threshold limits on mortgage-servicing rights will pose new issues for community banks that will need to be addressed.

    See ICBA Release. Read Final Rule. Read Community Bank Guide. See FRB Release.

    Comptroller Thomas Curry subsequently issued a release indicating support for the interagency capital rule, noting that he intends to approve it this week. See OCC Release.

    WBSE: “Fed Didn’t Go Far Enough to Address TBTF Banks”

    Meanwhile, the Wall Street Bank Examiner responded that, while the Fed action is a step in the right direction, it is not enough to protect the economy and taxpayers from the excesses of the mega banks by limiting their risky trading and overwhelming size and complexity. The WBSE concludes that regulation alone cannot resolve TBTF banks, and downsizing may be necessary. CBAI and ICBA have long urged Congress to break-up the mega banks so they no longer pose a threat to the economy and taxpayers. See WBSE Article.

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    FDIC, OCC, and Fed Propose Hike in Leverage Ratio for Eight Largest Banks

    Yesterday, the federal regulatory agencies proposed a rule to require higher supplementary leverage ratio capital standards on mega banks. The measure would increase the minimum ration to 5% from the present 3%, while insured subsidiaries would face a 6% ratio. The Brown-Vitter bill (S 798), which would create a tiered capital structure based on bank size, clearly influenced the actions of the regulators. Both CBAI and ICBA support S 798 and a tiered approach to regulation that distinguishes low-risk and highly-capitalized community banks from the risky Wall Street firms.
    See ICBA Release. See FDIC Release.

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    House Committee Addresses Too-Big-To-Fail Remedies

    In late June the U.S. House Financial Services Committee conducted a hearing to identify ways to prevent a taxpayer-funded bailout of mega banks deemed too-big-to-fail. Testimony and statements were provided by various financial groups, regulatory officials, and banking consultants.

    ICBA and ABA Offer Widely Divergent Positions

    ICBA stated that the greatest threat to the financial system is the dominance of a small number of too-big-to-fail megabanks, and they continue to gain market share due to their TBTF government subsidy. ICBA expressed its support for the Brown-Vitter bill (S 798) which would establish a tiered capital structure based on bank size and require mega banks to hold more leverage equity capital to avoid future taxpayer bailouts.

    Meanwhile, the ABA has cast its lot with Wall Street by expressing opposition to any proposals to downsize the mega banks, stating, “The current structure of the U.S. banking industry uniquely positions it to serve the diverse needs of our economy… Artificially altering this structure would only hamper the industry’s ability to meet our customers’ needs.” The ABA neglected to mention the taxpayer-funded bailout of the mega banks and the TBTF continuing funding subsidy.

    Regulators Submit Solutions

    FDIC Vice Chairman Tom Hoenig recommends limiting the financial safety net to commercial banking activities and to reform the shadow banking system. Federal Reserve Bank of Dallas President Richard Fisher also urges limiting the safety net to commercial banking; he also recommends downsizing the mega banks so that their corporate entities are subject to a speedy bankruptcy process.

    See ICBA Release. See ICBA Statement. See ABA Statement. See Hoenig Testimony. See Fisher Testimony.

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    Urge Congress to Support Thrift Holding Company Relief

    CBAI and ICBA are asking community bankers to contact their members of Congress to support legislation that permits thrift holding companies (THCs) to use the new 1,200-shareholder SEC deregistration threshold. Due to an oversight in previous legislation, THCs cannot take advantage of the higher threshold. HR 801 and S 872 would correct the error.
    Contact Congress Today!

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    Blocking New Bank Charters Is Bad for Banking

    In response to a recent
    article written by a career employee of Bank of America warning of the alleged dangers of de novo banks and lack of adequate talent to manage them, Maryland’s Banking Commissioner says blocking newcomers is bad for banking and the economy. Commissioner Mark Kaufman asserts that new entrants ensure competition, spur new product development, and drive enhanced customer service. He notes that protectionism would only impede competition at a time when our nation’s 12 largest mega banks control a record 70% of banking assets. See Maryland Commissioner’s Response.

    CBAI supports and encourages the chartering of new banks in Illinois and believes there is a wealth of management talent in the community banking profession today. CBAI also publishes and regularly updates a Guide to Organizing a New Bank in Illinois.

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    CFPB Releases Readiness Guide for Mortgage Rules

    The CFPB has just released its first Mortgage Rules readiness Guide for institutions of all sizes. It provides compliance guidance and identifies areas that may be closely examined during a review.
    See CFPB Mortgage Guide.

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    Donate Now to Community BancPac Auction!

    The annual silent and live auction for Community BancPac will be held on Thursday, September 26, 2013, during the CBAI Convention at the Crowne Plaza Hotel in Springfield. Now is a great time to donate to this worthy cause. Sporting events tickets, memorabilia, and time shares are popular items and are encouraged.
    See Auction Sponsor Form.

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    Time to Register for CBAI Convention!

    Register today for CBAI’s 39th Annual Convention & Expo to be eligible for prize drawings! Scheduled for September 26-28, 2013, at the Crowne Plaza in Springfield, this year’s convention is entitled “Community Bankers: Illinois’ Treasure.” The convention features expert general session speakers, 24-breakout sessions on the hottest issues in community banking, exciting social activities, a 100-booth exhibit hall with the latest in products and services, and countless networking opportunities. Don’t hesitate!

    CBAI’s 39th Annual Convention and Exposition is organized just for you, and it’s right here in your own back yard at the Crowne Plaza in Springfield on September 26-28. Register Today! See Prize Drawings!

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    The Baker Group - Third Quarter 2013 Conference Call

    Please join The Baker Group quarterly conference call on Investment Strategies for the third Quarter 2013, Thursday, July 11th, at 11 a.m., CDT.
    Register Now!

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    Baker Market Update

    Judging by the “ooooo’s” and “ahhhh’s” being heard around trading rooms recently, one might think that market participants were still enjoying the 4th of July fireworks. Well, think again. The source for the expressions of amazement and wonder was a better - than - expected Jobs Report from the Bureau of Labor Statistics (BLS).
    See Baker Market Update.

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    Recent Economic Indicators Mixed

    Chicago Fed District Housing Markets Show Signs of Recovery While Overall Economy Slows

    The Federal Reserve Bank of Chicago this week released recent data indicating that housing markets have begun to recover in many areas of the Seventh Federal Reserve District as house prices and sales have firmed and the pace of new home construction has increased.
    See FRB Chicago Report.

    However, the Midwest Economy Index (a weighted average of 129 state and regional indicators encompassing the entire Seventh Federal Reserve District) decreased in May compared to the April measurement. The decline indicates that Midwest economic growth was moderately lower than the growth rate for the national economy. See Midwest Economy Index Report.

    Small Business Confidence Sputters in June According to NFIB Index

    Yesterday, the National Federation of Independent Businesses (NFIB) released the results of its June economic Index which found that small business optimism declined, thereby effectively ending any hope of a revival in confidence among job creators. See NFIB Release.

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    Agencies Release Public Sections of Resolution Plans for Four Institutions

    On July 2, 2013 the FDIC and Federal Reserve made available the public portions of resolution plans for four firms with U.S. nonbank assets of between $100 billion and $250 billion.

    The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council to submit resolution plans to the FDIC and Federal Reserve. Each plan must describe the company’s strategy for rapid and orderly resolution in the event of material financial distress or failure of the company.

    Firms are required to file their initial resolution plans on a staggered schedule. The firms whose resolution plans were due on July 1, 2013 are BNP Paribas SA, HSBC Holdings plc, Royal Bank of Scotland Group plc, and Wells Fargo & Company. Larger firms with $250 billion or more in total U.S. nonbank assets first submitted plans last year and must submit their second plans by October 1, 2013. Firms with more than $50 billion but less than $100 billion in total U.S. nonbank assets must submit their initial resolution plans by December 31, 2013.

    By regulation, resolution plans must be divided into a public section and a confidential section. The public sections of the plans are available on the FDIC and Federal Reserve websites.

    Following submission of the resolution plans, the FDIC and Federal Reserve will preliminarily review the plan for informational completeness within 60 days and then review each plan for its compliance with the requirements of the rule.

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    KASASA Ad 9 - “Free Hotdogs”

    Introductory offers can be a great way to greet new customers. Of course, what happens once that favorable first impression is long forgotten? Kasasa’s “Free Hotdogs” radio spot illustrates how free Kasasa checking and savings accounts break the mold with rewards that matter – not just at sign-up, but month after month. Because a hotdog may hit the spot today, but monthly rewards as good as cash never fade.

    Don’t let your most loyal account holders feel underappreciated with each “new customer” promotion. Offer free accounts that thank new and longtime account holders the same – and thank them where it counts, their wallets.

    Reward your account holders with a sincere “thanks” each month.
    See Ad.

    Want Kasasa to take your community bank to the next level? Contact Steve Prost via email at steve.prost@bancvue .com, or phone at 847.341.8003. Kasasa is one of the many fine products of BancVue, a CBSC Preferred Marketing Partner.

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    Wolters Kluwer Users’ Summit Set for Dallas, TX

    Wolter Kluwer FS will hold its annual three-day summit on September 9-11, 2013, at the Sheraton Hotel, Dallas, Texas.
    Read More.

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    The Strategic Implications of Tellers Selling

    As banks increasingly reorient their tellers from transactions to sales, executives must also think through the strategic implications of this shift. If you’re coming to that conclusion at your bank, you are not alone and you have good reason. Tellers see more customers than anybody else in the bank. The transactions they handle often give off obvious indicators of sales opportunities. With branch volumes declining and facilities smaller, it’s no longer feasible to have specialized roles such as managers, lenders, new accounts reps, tellers, teller supervisors, etc. In banking, as in every other industry making do with fewer people, those staff remaining will have to make a greater contribution to revenue.
    Learn More.

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    Compliance for Loan Processors Set for July 30 & 31

    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
    brand new course is designed to enhance understanding of the regulatory requirements and the “decision trees” that are important for processors to fully understand. Topics covered include the initial documents: Good Faith Estimate; Early Truth in Lending; ARM Disclosures and Booklets; Servicing Disclosure; Right to Appraisal Disclosure; Credit Score/Notice to Home Loan Applicant; Affiliated Business Arrangement Disclosure; and flood documents. The seminar also covers the closing documents: Final Truth in Lending; determining HPML Status; rescission; the HUD-1 and HUD-1A; Escrow Disclosure; PMI Disclosure; Servicing Transfer Disclosure; and Negative Information Disclosure. 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 August 1 & 2

    Designed for credit officers with little or no experience, this
    two-day seminar teaches participants how to write effective and comprehensive credit analyses which highlight the important trends shown on the financial spread sheet. Topics include identifying financial statement components, recognizing latent notes, and performing ratio analysis and cash-flow analysis. Preparing financial projections by utilizing sensitivity analysis, identifying factors which may impact the ability to repay debt obligations, and understanding how to grade a loan after analysis is completed are also covered. Leading this seminar is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, Georgia.

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    Lending Update Part III: The New Rules and Their Impact on You! Scheduled for August 6 & 7

    The fourth quarter Community Bankers for Compliance Program (CBC), this
    session continues the process of discussing the new 2014 regulations. CFPB has issued major changes to two of the rules that have already been discussed during this series. Therefore, a portion of our time will be used to “back up” and review what all of these changes mean to you. Also, a part of the day will be devoted to discuss the Servicing Rule, which is the last of the “new rules” that have not been a part of the program previously. This quarter’s presentation will be nearly all lending-related, and feature all-new material. The listing of subjects is subject to change, as CBAI plans to offer you the most up-to-date information in the fast-changing world of compliance. Topics planned for the agenda include TILA Ability to Repay & Qualified Mortgages (Regulation Z); Loan Originator Compensation Requirements (Regulation Z); and Mortgage Servicing Rules under RESPA (Regulation X) Leading this seminar is Bill Elliott of Young & Associates, Inc.

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