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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    July 20, 2016

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Register Today for CBAI’s 42nd Annual Convention & Expo!
  • CBAI and ICBA Support Senate Push for CFPB Relief
  • Report on CBAI Staff Visit to Washington
  • ICBA Summarizes Key Provisions of House Regulatory Relief Plan
  • Investment News From THE BAKER GROUP
  • Beige Book: Economic Growth Modest Across Regions
  • FDIC Planning Steps to Support De Novo Formation: Gruenberg
  • OCC: Industry Faces Risks Despite Community Bank Performance
  • Federal Agencies Release “How to Protect Your Networks from Ransomware”
  • FDIC Announces New IT Risk Examination Program Effective July 1st
  • Reasons Why More Community Banks Are Hedging
  • FHLB Jumbo Loan Limits Raised to $2.5 Million
  • CBAI FedPac Fundraiser – Another Base-clearing Home Run!
  • Opinion: Branch of the Future Will Still Be a Branch
  • Predictive Analytics: Think Big, Start Small … Start Now!
  • Succession Planning for the Board: What to Consider
  • Are You Planning a Dress-Down Day for Bank Employees?
  • Play Like a Champion and Donate to Community BancPac Auction Today!
  • LTC Benefit Provides Needed Protections for Community-Bank Employees
  • CBAI LEGAL: Non-Debtor Joint Accountholder Not Necessarily Free from Garnishment
  • 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
  • Community Bank Directors’ Workshop Slated for August 16-17


  • Register Today for CBAI’s 42nd Annual Convention & Expo!

    Entitled “Community Banking Playmakers,” CBAI’s Annual Convention & Expo makes its first-ever stop in Kansas City, MO, at the Marriott Downtown on September 15-17, 2016. 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! Register Today!

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    CBAI and ICBA Support Senate Push for CFPB Relief

    CBAI and ICBA expressed support for a letter from 70 U.S. Senators urging the Consumer Financial Protection Bureau to tailor its regulations to match the unique nature of community banks. The letter, led by Senators Joe Donnelly (D-Indiana) and Ben Sasse (R-Nebraska), calls on the CFPB to consider the impact of its rules on community banks.

    During his quarterly visit to our nation’s Capital last week, CBAI’s David Schroeder addressed this issue with the Illinois congressional delegation and expressed appreciation to Senator Mark Kirk (R-Illinois) for signing the letter. ICBA’s Plan for Prosperity legislative platform includes several provisions to lessen the burden of CFPB regulations on community banks. Read Senate Letter. Read ICBA Release.

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    Report on CBAI Staff Visit to Washington

    CBAI’s Vice President of Federal Governmental Relations, David Schroeder, recently visited the office of each member of the Illinois Congressional delegation. The purpose of Schroeder’s quarterly visits to D.C. is to discuss a variety of issues of importance to Illinois community bankers and urge support for our positions. Read Report on Staff Visit.

    A highlight of this visit was a meeting at Congressman Mike Bost’s (R-12) office where Schroeder discussed legislation to amend the Agricultural Act of 1961 to modify the limitations applicable to qualified conservation loan guarantees. The legislation was formally introduced later in the week by Congressman Bost. CBAI reviewed this proposal earlier in the year and brought in the ICBA to help evaluate the bill. Schroeder thanked Congressman Bost, his Chief of Staff and Legislative Director for introducing this important legislation. CBAI will be encouraging the entire Illinois House delegation to cosponsor.

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    A crisis can hit your financial institution at any time. A key component to every business continuity plan is having a procedure to deal with the media during a crisis. When a disruptive event occurs that affects your financial institution’s ability to continue operations, the public must be informed. Strengthen your business-continuity plan with Media Relations Training from SHAZAM.



    ICBA Summarizes Key Provisions of House Regulatory Relief Plan

    ICBA released a summary of House Financial Services Committee Chairman Jeb Hensarling’s (R-Texas) draft legislation offering regulatory relief for community banks and other financial institutions. ICBA is working closely with the committee to provide input on the Financial CHOICE Act proposal, which incorporates many provisions of ICBA’s Plan for Prosperity platform. CBAI’s vice president of federal governmental relations, David Schroeder, was in Washington last week , and will continue to weigh in on the draft.

    The draft legislation would allow banks of all sizes to “off-ramp” from Dodd-Frank and Basel III rules if they meet certain standards. It also includes CBAI and ICBA-advocated provisions to reform the Consumer Financial Protection Bureau, ease mortgage rules on portfolio loans, require tailored banking regulations, and more. Read Summary. Read More from Hensarling.

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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.

    Baker Market Update

    While Ben Bernanke may no longer exert the influence he once did on domestic monetary policy, that doesn’t mean he’s out of the game. Central bankers and government officials in Japan are now receiving the benefit of his counsel. See Baker Market Update.

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    Beige Book: Economic Growth Modest Across Regions

    Economic activity continued to expand at a modest pace across most regions in recent weeks, according to the Federal Reserve’s Beige Book. Real estate activity continued to strengthen, banks reported overall increases in loan demand, and consumer spending was generally positive but with some signs of softening. Additionally, agricultural and manufacturing activity generally improved, labor market conditions remained stable, and price pressures were slight. See Full Beige Book Economic Report. See St. Louis Fed Report. See Chicago Fed Report.

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    FDIC Planning Steps to Support De Novo Formation: Gruenberg

    The FDIC is preparing a practical guide for groups organizing de novo banks to apply for charters and deposit insurance, FDIC Chairman Martin Gruenberg told Congress last week. At a House Oversight Committee hearing on the FDIC application process, Gruenberg said the agency is also planning outreach meetings for organizing groups.

    ICBA has worked closely with the FDIC on the lack of de novo charters and CBAI has repeatedly addressed the issue with the Illinois Congressional delegation and federal regulatory officials. The FDIC in April reduced from seven to three years the period of heightened de novo supervisory monitoring. Just last month, ICBA and CBAI called for robust community bank regulatory relief to encourage de novo formation. See FDIC Release. Read ICBA Op-Ed.

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    OCC: Industry Faces Risks Despite Community Bank Performance

    The Office of the Comptroller of the Currency said it is closely monitoring low energy prices, the potential for rising interest rates, and marketplace lending partnerships as potential sources of system-wide risk.

    In its semiannual report, the OCC said strategic risk is a concern due to the economic cycle and evolution of the banking system. Meanwhile, credit risk is increasing as banks lend more and ease underwriting standards, and operational risks are elevated due to cybersecurity threats and increasing reliance on third-party relationships.

    The OCC noted that community bank return on equity nearly reached pre-recession levels in 2015, while profitability at larger banks remained well below pre-recession levels. The agency said average ROE at national banks and thrifts with assets less than $1 billion exceeded 10 percent on growth in residential and commercial real estate lending. Read OCC Report.

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    Federal Agencies Release “How to Protect Your Networks from Ransomware”

    The United States Treasury Department, the Department of Homeland Security, and the Central Intelligence Agency together with a group of U.S. intelligence and regulatory agencies have jointly released an interagency technical guidance document on how institutions can manage ransomware threats. The document provides an aggregate of already existing Federal government and private industry best practices and mitigation strategies focused on the prevention and response to ransomware incidents. The document outlines recommended preventive measures to protect against ransomware threats and recommended response measures if infected with ransomware. Access Document Here.

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    FDIC Announces New IT Risk Examination Program Effective July 1st

    If your primary Federal regulator is the FDIC, your bank’s IT examinations will now be conducted using a new 60-page examination form that the FDIC has just released in its FIL-43-2016. The FDIC’s new Information Technology Risk Examination (InTREx) Program could impact your CAMELS rating and increase the need for explanations on exception items. Bank executives should be aware of its use to better understand what examiners will be reviewing at the next exam. Read BankOnIT Blog.

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    Reasons Why More Community Banks Are Hedging

    Until about 10 years ago, interest rate loan hedging (using swaps) was prevalent for national and larger regional banks, but most community banks avoided loan hedging for various reasons. More recently, however, many community banks have begun to offer their borrowers some form of loan hedging option, primarily due to competitive factors, the shape of the yield curve, and other profit and risk considerations. Read More.

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    FHLB Jumbo Loan Limits Raised to $2.5 Million

    The Mortgage Partnership Finance Direct program will now accept larger jumbo mortgages and a wider variety of products including hybrid adjustable-rate mortgages, the Federal Home Loan Bank of Chicago and Redwood Trust announced earlier this week. The Program will now accept jumbos of up to $2.5 million, a boost from the previous $1.5 million limit. "We continue to broaden opportunities for FHLBank members to realize benefits from the MPF Direct product with the intention to help them — community lenders — remain competitive," said John Stocchetti, executive vice president and group head of the MPF program. Read More.

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    CBAI FedPac Fundraiser – Another Base-clearing Home Run!

    A capacity crowd of CBAI FedPac supporters popped-up to the Redbird Row suite to watch the St. Louis Cardinals beat the Central Division rival Pittsburgh Pirates. This was a great opportunity to take off the banker pinstripes, get comfortable, and have some fun in support of a great cause. Many brought their teammates which made for a great mix of veteran players and rookies which made this FedPac fundraiser another base-clearing home run. Read More.

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    Opinion: Branch of the Future Will Still Be a Branch

    There’s been considerable speculation recently about the future of the brick and mortar branch given the use of evolving technology to deliver banking services. However, convenient access to a physical branch remains high on most customers’ lists for selecting or staying with a bank. In addition, the total number of physical branches in America has been remarkably stable. Some observers believe the branch of the future will still be a branch. Read More.

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    Predictive Analytics: Think Big, Start Small … Start Now!

    Financial institutions are entering an era of connected experiences, where consumer banking interactions are increasing exponentially. Predictive analytics allows financial institutions to better understand consumer needs and to provide personalized and contextual experiences along the entire customer journey.

    Banks should now begin harnessing the power of predictive analytics technology to ensure competitiveness in an increasingly digital marketplace. Read More.

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    Succession Planning for the Board: What to Consider

    Benjamin Franklin is quoted as saying, “If you fail to plan, you are planning to fail.” And that old quote couldn’t be more applicable to bank board succession planning, especially nowadays when the profession is undergoing so many changes.

    Boards today need to be planning for even more technology reliance, new fee-based income generators and changing regulations. The days when a bank could rely solely on investors and well-connected business people to guide its direction are almost gone. Instead, tomorrow’s banks will need 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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    Are You Planning a Dress-Down Day for Bank Employees?

    Please make the Education Foundation your July recipient! This is the 20th anniversary year of the CBAI Foundation for Community Banking! More than $400,000 has been awarded in scholarships! EVERY CBAI MEMBER BANK CAN BENEFIT!

    Help us celebrate! GIVE THE FOUNDATION A HIGH FIVE! The Foundation’s “High Five” program is simple. Just $5 from each bank employee and $50 from each director is the aim of the program. Please participate and help the Foundation celebrate! Read More.

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    Play Like a Champion and Donate to Community BancPac Auction!

    CBAI is excited to begin preparations for Community BancPac’s 25th Annual Silent Auction and 9th Annual Live Auction. Thanks to so 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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    LTC Benefit Provides Needed Protections for Community-Bank Employees

    When the Society of Actuaries updated its so-called mortality tables in 2015, the influential group confirmed what is obvious to the average layperson: Americans are living longer. Those tables, which are used by insurance companies, the Social Security Administration, and sponsors of pension plans to estimate the cost of promised liabilities, show the average 65 year-old male can expect to live to be 86.6 years, and the average female 88.2 years. Each day, 10,000 baby boomers enter retirement. Unfortunately, most are doing so without the protections of a Long-Term Care Policy. Read More from CBIS Nicoud.

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    CBAI LEGAL: Non-Debtor Joint Accountholder Not Necessarily Free from Garnishment

    In a recent (July 15) opinion issued by the First District Illinois Appellate Court, a citation to discover assets attached to a joint deposit account, even though the judgment being enforced was against only one of the two joint accountholders. See Most Recent CBAI LEGAL.

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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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    Community Bank Directors’ Workshop Slated for August 16-17

    Being a member of a community bank's board of directors is a challenging and rewarding experience. The community bank director has duties to the institution, its stockholders, and its depositors. And, he or she has responsibilities to the public-at-large. Thus, we invite you to join us at CBAI's Directors' Workshop. CBAI gathered top banking experts to make this comprehensive, one-day conference a must-attend. Community bank board members, presidents, and CEOs would all benefit from attending this one-day seminar. Offered in two locations, topics covered include strategy development, balance-sheet analysis, and a regulatory panel. Leading this workshop is John Oliver, founder of Laurel Management Systems, Inc., Palm Springs, CA.

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