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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                               July 22, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Keep Up Emails, Calls to Congress on Must-Pass Reg Relief Bills
  • Governor Creates Payroll Gap Loan Program
  • Fed Approves CBAI and ICBA-Backed Capital Surcharges for Megabanks
  • Presidential Candidate Calls for Mega Bank Breakup
  • California County Cuts Off Five Mega Banks
  • Sageworks Survey: Community Banks Feel Pressure to Stress Test
  • Fine: Accounting Standards Next in Long Line of Cookie-Cutter Regulations
  • CBAI Urges Congressional Outreach on New Threat to Fed Dividends
  • It's That Time of Year! Donate to the Community BancPac Auction Today!
  • Register Today for CBAI’s 41st Annual Convention & Expo
  • Investment News From THE BAKER GROUP
  • Yellen: Interest Rate Hike to Come Later This Year
  • First American Payment Systems Wins ATSI Call Center Award of Distinction
  • Marijuana Banking Bill Introduced in U.S. Senate
  • Rosenbaum: “Bring Home Loan Banks’ Housing Program into 21st Century”
  • BankOnIT: Moving IT from the Back Room to the Boardroom
  • CBAI's Premier Email Service: A Worry-Free Secure & Compliant Email Program
  • Insurance: Repo Auto Liability Not Enough - Ask About Physical Damage, Too
  • 2015 Financial Email Marketing Benchmark Report is Now Available
  • CSBS Releases a Cyber Security Resource Guide
  • Take This Week's CBAI Quick Poll
  • CBAI LEGAL: Illinois Appellate Court Revisits “Noncompete” Covenants
  • TRID: One Last Look Prior to Implementation Slated for August 3
  • The Other Reg Z & RESPA Changes & Auditing Reg B Set for August 4 & 5
  • Basic Bank Secrecy Act Institute Scheduled for August 11 & 12


  • Keep Up Emails, Calls to Congress on Must-Pass Reg Relief Bills

    CBAI urges all community bank officers and directors to ask their members of Congress to support key regulatory relief bills ahead of the August recess. Custom letters are available to send to members of Congress as well as an advocacy webpage to call lawmakers today! CBAI and ICBA sent letters to every member of the House and Senate from Illinois highlighting the top-priority bills. Email Congress Today! Call Your Lawmakers Now!

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    Governor Creates Payroll Gap Loan Program

    Governor Bruce Rauner is encouraging financial institutions to participate in Payroll Gap Assistance Loan Programs during the ongoing budget impasse. See Memo from Deputy Governor Trey Childress.

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    Fed Approves CBAI and ICBA-Backed Capital Surcharges for Megabanks

    The Federal Reserve Board approved a CBAI and ICBA-supported final rule requiring the eight largest U.S. banks to hold additional capital. The rule would implement surcharges for global systemically important bank holding companies, or GSIBs, estimated at 1.0 to 4.5 percent of each firm’s total risk-weighted assets.

    The final rule requires GSIBs to calculate their surcharges under two methods and use the higher of the two surcharges. The first method is based on the framework agreed to by the Basel Committee on Banking Supervision, and the second focuses on short-term wholesale funding. Read More from Fed. Read Release.

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    Presidential Candidate Calls for Mega Bank Breakup

    Earlier this month Democratic Presidential candidate Martin O’Malley said five mega banks control too much of the economy and should be limited in size. The former Maryland Governor is calling for breaking up the nation’s biggest bank, revamping the Federal Reserve and pursuing criminal cases against banks that break the law.

    CBAI has long advocated for downsizing the mega banks that have proven to be too big to fail, too big to manage, too big to regulate, and too big to jail. Another Presidential candidate, U.S. Senator Bernie Sanders (I-Vermont), has also urged curtailing the high risk-taking propensities of the mega banks which ignited a major economic collapse in 2008. Hillary Clinton issued harsh words for Wall Street Banks, saying that “too-big-to-fail" is still "too-big-a-problem” and promising to prosecute individual bankers guilty of fraud if she is elected president. Read Bloomberg Article. Read O’Malley Position Paper. Read More on Clinton's Address.

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    California County Cuts Off Five Mega Banks

    California’s Santa Cruz County Board of Supervisors voted to stop doing business for five years with five mega banks that recently pleaded guilty to felony conspiracy charges, and Third District Supervisor Ryan Coonerty encouraged other local governments to do the same.

    In a June 2 letter to the board, Coonerty recommended that it change the county’s investment policy to ban Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland and UBS from doing new business with the county for five years. Coonerty said the board voted unanimously to approve his proposal. Read More.

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    Sageworks Survey: Community Banks Feel Pressure to Stress Test

    Stress tests are not officially required for banks with less than $10 billion in assets, but try telling that to bank examiners.Stress testing has become part of annual regulatory exams even for banks small enough to be officially exempted from the process, according to a new survey by the consultancy Sageworks. The firm queried 180 banks and credit unions, 99% of which fall below the threshold of $10 billion in assets that the 2010 Dodd-Frank Act set for stress testing.

    Nearly a third of the survey's respondents said that in their most recent bank exams they were pressured to begin stress testing or expand the practice. Another 3% said the examiners flat-out required them to start stress testing by the next exam.That was in addition to the 43% of banks that said they already stress tested. This issue underscores the need for tiered regulations that fully exempt community banks from onerous regulations. Read American Banker Article.

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    Fine: Accounting Standards Next in Long Line of Cookie-Cutter Regulations

    You’ve heard the old line that an elephant is a mouse built to government specifications? We’re all familiar with how government spending tends to grow rather than shrink. An equally troubling tendency perhaps even more familiar to community banks is the way governments often apply a cookie-cutter approach to their policies.

    Regulations are inherently rigid and often fail to account for the unique circumstances of individuals and businesses. That often means a one-size-fits-all approach to a community banking model based on individual relationships and one-on-one service. Think Basel III—a capital framework designed for global financial institutions that nevertheless applies uniform standards on Main Street community banks. Read Cam Fine's Blog.

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    CBAI Urges Congressional Outreach on New Threat to Fed Dividends

    CBAI is calling on community bankers to urge Senators Durbin and Kirk to immediately oppose an advancing legislative proposal that would reduce dividends paid on stock that banks are required to hold as members of the Federal Reserve System.

    A customizable message to Congress is available opposing the provision, which would dramatically cut Fed dividends for a completely unrelated congressional priority—reauthorizing the Highway Trust Fund.

    In a coalition letter to lawmakers last week, ICBA noted that owning Federal Reserve Bank stock is not an investment choice but a legal mandate that requires members to pay 6 percent of their capital to their regional Reserve Bank. Contact Senators Durbin and Kirk Today. Read Coalition Letter.

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    It's That Time of Year! 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 on Thursday, September 17, 2015, in Nashville, Tennessee. 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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    Register Today for CBAI’s 41st Annual Convention & Expo

    You won’t want to miss CBAI’s 41st Annual Convention & Expo! The full convention promotional brochure is now available for “Community Bankers: Kickin’ It Country,” scheduled for September 17-19, 2015, at the Omni Hotel in Nashville, TN. The CBAI Special Events Committee, comprised of fellow community bankers, has designed a dynamic convention and exposition providing new ideas to further your relationship with your customers, shareholders, and community. It offers the perfect mix of educational programs, top-rated speakers, a quality exhibit center, and networking opportunities at numerous social events. Convention highlights include a golf outing at The Hermitage Golf Club, general sessions with Federal Reserve Bank of St. Louis President Dr. James Bullard and entrepreneur, recording artist, and acclaimed speaker Robin Crow, 20 concurrent education sessions featuring pertinent, hot topics, an exhibit center with nearly 100 booths, exciting social events, and unique partners’ programs.

    A block of rooms and suites has been reserved for CBAI convention participants at the Omni Nashville Hotel. To assure accommodation availability, reservations should be made at the hotel by September 3, 2015. Room reservations received after September 3, are confirmed on a “space-and-rate available basis.” To reserve your room, call 800/843-6664 and please indicate you are with the Community Bankers Association of Illinois or provide the following code: 091315COMMUNITY. Single and double room rates are $209 + tax.

    Don’t miss out on CBAI’s 41st annual showcase event! Register for CBAI's 41st Annual Convention & Expo!

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The events in Europe tie into the Fed testimony given to Congress this week. Fed Chair Janet Yellen said she saw continued strength in the macro economy and labor market, and therefore wants to raise rates even if just a little. See Baker Market Update.

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    Yellen: Interest Rate Hike to Come Later This Year

    During a recent speech in Cleveland, Federal Reserve Chair Janet Yellen provided an outlook for the U.S. economy. She said the economy is improving, unemployment is dropping and an interest rate hike is likely to come later this year.

    “Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said. Read Full Speech.

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    First American Payment Systems Wins ATSI Call Center Award of Distinction

    Award recognizes First American Payment Systems' commitment to customer service.

    For the third year in a row, First American Payment Systems (FAPS) has won the Association of TeleServices International’s (ATSI) coveted Call Center Award of Distinction. "We are honored to have won the Call Center Award of Distinction for the third time and we recognize our customer service team for delivering an exceptional merchant experience,” said Latiffa Sharpe, Vice President of Merchant Services for First American Payment Systems.

    CBAI recommends only First American for quality merchant card services. FAPS offers a special incentive for CBAI member banks to receive a no-obligation proposal. See News Release. See FAPS Incentive Offer.

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    Marijuana Banking Bill Introduced in U.S. Senate

    Introduced by the Senate delegations from Oregon and Colorado, two of the first states to legalize recreational marijuana, the bill would prohibit the federal government from penalizing banks that work with marijuana businesses. Senator Cory Gardner (R-Colorado) said, “If you’re an employee or a store owner you can’t put money in the bank, but if you’re a municipality collecting tax you can collect the tax, you can put it in the bank and you can spend it. This is insane.”

    Four states and the District of Columbia have legalized recreational marijuana, and several other states, including Illinois, have legalized medical marijuana. CBAI has received several inquiries from community bankers across Illinois regarding the provision of banking services to the marijuana industry. Marijuana is still illegal under federal law. Read Politico Article.

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    Rosenbaum: “Bring Home Loan Banks’ Housing Program into 21st Century”

    The Federal Home Loan Banks’ Affordable Housing Program (AHP) was established in 1989 as part of FIRREA, and the first grants were announced 25 years ago this month. The AHP has become the largest single private source of funds for affordable housing in the nation. However, the chairman of the Council of Federal Home Loan Banks Steve Rosenbaum is calling for reforms to the program to make it more user-friendly, more flexible and in sync with how affordable housing functions today.

    Rosenbaum, who is chairman of the Federal Home Loan Bank of Chicago and president and CEO of Prospect Federal Savings Bank in Worth, a long-time CBAI member, said the program needs more simplified administrative requirements, more consistent application of standards and increased transparency with respect to monitoring and determining need for subsidy. CBAI supports these recommendations. Read AB Article.

    Chicago FHLB Issues First Ginnie Mae Security

    The Federal Home Loan Bank of Chicago announced yesterday that it had issued its first security guaranteed by Ginnie Mae. Bank President Matt Feldman said, “This is an important milestone for the MPF [Mortgage Partnership Finance] program. Ginnies are among the most liquid financial instruments in the world, and this new product allows us to enable FHLBank members to offer competitive FHA, VA, and Government Guaranteed Native American and Rural Housing mortgages.” See Release.

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    BankOnIT: Moving IT from the Back Room to the Boardroom

    Increasingly occurring cyber hacks make it clear that preventative measures against today’s cyber risks need to become a priority. Attacks such as those on Target, the IRS and even the United States Office of Personnel Management illustrate the increasing severity of the cyber security problem. BankOnIT, a CBSC preferred marketing partner since 2013, offers advice for bank board members. Read BankOnITUSA Blog.

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    CBAI's Premier Email Service: A Worry-Free Secure & Compliant Email Program

    Buying, managing and maintaining the technology to run Exchange internally requires a tremendous investment of time and resources, all devoted to manage the hardware, licensing, patches, upgrades, support, maintenance, backups and future expansion of your email system.

    CBAI has partnered with Intermedia, the world’s largest independent Exchange provider, to create an easy-to-manage program that is scalable to any bank’s needs and offers exclusive CBAI member pricing. Learn More.

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    Insurance: Repo Auto Liability Not Enough - Ask About Physical Damage, Too

    In the second quarter of last year, lenders generated more than $20 billion in subprime car loans, double the amount generated in the same quarter in 2010. This trend invites the prospect of higher bank repossession rates, particularly if the economy and job market were to seize up. And, of course, that proposition raises the possibility of banks having to engage the onerous process of taking possession of and then repurposing repossessed cars for sale at auction.

    That’s not only an unenviable task, as our community-banking partners have told us at CBIS/Nicoud, it’s invariably a losing proposition for a bank. See More.

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    2015 Financial Email Marketing Benchmark Report is Now Available

    Email continues to be an effective marketing channel for financial institutions, according to the latest research from Harland Clarke Digital (HCD). This benchmark report provides a visual walk-through of HCD's findings based on analysis of financially focused emails sent to more than 65 million recipients by banks and credit unions in 2014. See More.

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    CSBS Releases a Cyber Security Resource Guide

    The Conference of State Bank Supervisors (CSBS), on behalf of state regulators, recently released a cyber security resource guide. The information provided within this guide is tailored to furnish CEOs with the necessary tools to better understand the threats community banks are facing and how to prepare for them. It also provides questions to ask your staff to ensure they are proactive in identifying and addressing cybersecurity risks. Read the Resource Guide.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on how your bank secures customer information within email communications. Click Here to view results of previous polls.

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    CBAI LEGAL: Illinois Appellate Court Revisits “Noncompete” Covenants

    The common law principle in Illinois is that a restrictive covenant in an employment contract prohibiting the employee from subsequently working for a competitor is unenforceable if the employee leaves, voluntarily or involuntarily, less than two years after commencing employment. That principle was once again upheld in the First District Appellate Court’s June 25 opinion in the case of McInnis v. OAG Motorcycle Ventures, but with an additional twist. Read More.

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    TRID: One Last Look Prior to Implementation Slated for August 3

    As the mandatory implementation date has been extended to October 3, 2015, CBAI has added this seminar regarding all aspects of the new Integrated Disclosure forms. The Integrated Disclosures, including the Loan Estimate (combination of early TIL and GFE) and the Closing Disclosure (combination of final TIL and HUD) have unique issues, including the rules regarding the timing of delivery, and of course, the completion of the forms. The new forms are complex, and require a significant skill set to do so successfully. There are over 150 separate instructions regarding the completion of these forms. This, combined with the new rules regarding delivery, will make this process more difficult for the bank. There will need to be decisions made prior to the delayed mandatory October 3, 2015, start date. For instance – since the Closing Disclosure is now one document, who completes it? Will the bank complete the HUD, or will the title company complete the TIL? And what information needs to be collected when, as the Closing Disclosure must be delivered as early as a week before closing? This course is designed specifically for lenders and processors. However, senior management, auditors, and others involved in the mortgage loan origination process of the bank will gain useful knowledge from this presentation. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Kent, OH.

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    The Other Reg Z & RESPA Changes & Auditing Reg B Set for August 4 & 5

    The fourth quarterly Community Bankers for Compliance (CBC) seminar focuses on the other issues and changes that are taking place on August 1, 2015. In addition, we discuss Regulation B, the latest fair lending information available, and address the regulation in terms of a Regulation B audit designed to protect your bank from Regulation B and fair lending violations. Although the vast majority of the August 1 changes can be found in the Loan Estimate and Closing Disclosure, there were additional items that were included as of August 1 that need to be discussed. While these items are minor when compared to the Integrated Disclosures, they still will play an important role in your compliance program. The presentation includes any model forms that accompany these changes. The balance of the session focuses on both the “nuts and bolts” of Regulation B and the audit steps that you might take to assure that your bank is in compliance with the letter and spirit of the law. We discuss the requirements of the regulation, and provide appropriate techniques to assure that all aspects of the regulation are addressed in the audit. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Kent, OH.

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    Basic Bank Secrecy Act Institute Scheduled for August 11 & 12

    It certainly is no secret that the Bank Secrecy Act (BSA) remains an important topic for banks. The Basic Bank Secrecy Act training is a one and one-half day program designed to provide a thorough grounding in the basics of the BSA. The course assumes that the attendee has a limited knowledge of BSA requirements. Although the Board of Directors is ultimately responsible for BSA, each bank must have a BSA officer who is in charge of the day-to-day BSA program. Attendees leave the program with a basic understanding of the four key elements of an effective BSA compliance program, as well as an understanding of all appropriate reporting standards for the program. We include a brief discussion of the BSA/AML (Anti-Money Laundering) risk assessment. The primary focus of the institute is to assure that all attendees understand the basic requirements for a sound compliance program based on the regulation and core examination procedures. Adam Witmer, CRCM, is a compliance consultant with Young & Associates, Inc., serving client banks in the Midwest.

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