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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                     July 24, 2013 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • MUST READ: Mega Banks Get the Gold — and Copper and Aluminum
  • Federal Regulators Finalize Basel III Rules
  • ICBA Launches Basel III Resource Center
  • ICBA to Congress: Preserve Access to Secondary Mortgage Market
  • House Panel Begins PATH Act Markup
  • Glass-Steagall Bill 'Deserves Healthy Debate': FDIC's Hoenig
  • FedPac Cardinal Game Tickets Nearly Sold Out!
  • NYT Column: Proposed Leverage Ratio Harder for Megabanks to Game
  • OCC Releases New Capital Rule Quick Reference Guide for Community Banks
  • Donate Now to Community BancPac Auction!
  • Time to Register for CBAI Convention!
  • A Primer on Agency Commercial Mortgage-Backed Securities
  • The Baker Group - 3rd Quarter 2013 Conference Call
  • Baker Market Update
  • CBSC Preferred Provider Sageworks Offers Compliance and Best Practices Resource
  • KASASA Ad 10 - “Considered Switching?”
  • CBIS Powered by Nicoud Addresses State Bank Examiners
  • Senators Release Discussion Draft of FHA Solvency Bill
  • Free Diebold Seminar - Branch of the Future
  • 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 August 6 & 7

  • MUST READ: Mega Banks Get the Gold — and Copper and Aluminum

    Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other Wall-Street financial players that ultimately costs consumers billions of dollars. As Goldman has benefited from its wildly lucrative foray into the aluminum market, JPMorgan has been moving ahead with plans to establish its own profit center involving an even more crucial metal: copper, an industrial commodity that is so widely used in homes, electronics, cars and other products that many economists track it as a barometer for the global economy. Others now fear that Wall-Street banks will repeat or revise the tactics that have run up prices in the aluminum market. Such an outcome, they caution, would ripple through the economy. Consumers would end up paying more for goods as varied as home-plumbing equipment, autos, cell phones and flat-screen televisions.

    The story of how this works can be
    read here, but our point in bringing this to your attention is our members don’t operate in this market and it is anything but free. And what is worse - these market manipulators also control the same financial trade groups that are trying to convince community bankers they would be better off if only there was industry unity; if only we were all singing with the same voice in perfect harmony. It is insulting.

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    Federal Regulators Finalize Basel III Rules

    Federal banking regulators recently finalized the Basel III capital rules. An avalanche of comment letters prompted the regulators to miss their year-end 2012 deadline and reconsider their original proposal. CBAI is pleased that the strong voices of community banks have been heard.

    The Final Rule contains critically important concessions to community banks.
    See Details.

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    ICBA Launches Basel III Resource Center

    Basel III capital standards take effect 2015 for community banks. Visit the
    ICBA resource and learn how Basel III will impact your bank.

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    ICBA to Congress: Preserve Access to Secondary Mortgage Market

    ICBA testified before Congress on the need to ensure community banks continue to have robust and equitable access to the secondary mortgage market.

    Testifying before the Senate Banking Committee’s Subcommittee on Securities, Insurance and Investment, ICBA Vice Chairman Jack Hartings said provisions in the recently introduced Housing Finance Reform and Taxpayer Protection Act (S. 1217) would help provide secondary market access to community banks without requiring them to take on the additional risk and cost of securitizing loans.
    Read More.

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    House Panel Begins PATH Act Markup

    In related news, the House Financial Services Committee began marking up its
    version of legislation to reform the secondary mortgage market, the Protecting American Taxpayers and Homeowners (PATH) Act.

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    Glass-Steagall Bill 'Deserves Healthy Debate': FDIC's Hoenig

    Thomas Hoenig, the vice chairman of the Federal Deposit Insurance Corp., has
    long argued that the nation's largest banks should become smaller, simpler and less risky. Last week he threw his support behind a new bipartisan bill that would reinstate the Glass-Steagall law that once barred commercial banks from trading and other capital markets activities. The so-called 21st Century Glass-Steagall Act was introduced this month by senators including Elizabeth Warren and John McCain.

    "I'm supportive of it," Hoenig said in an interview Wednesday. "It would be very healthy for the financial industry generally and very healthy for businesses, more generally. … It has merit and deserves a healthy debate." See Article.

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    FedPac Cardinal Game Tickets Nearly Sold Out!

    Only a few tickets remain for the CBAI FedPac “Business Man’s Special” baseball fundraiser on August 15 at Busch Stadium in St. Louis. Time is running out to secure your ticket to see the 1st place St. Louis Cardinals battle the second place Pittsburgh Pirates. Click
    here for information on how to secure your tickets today!

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    NYT Column: Proposed Leverage Ratio Harder for Megabanks to Game

    A proposed rule to implement enhanced supplementary leverage ratio capital standards on the largest and riskiest financial institutions would make needed improvements to megabank capital rules, according to a
    New York Times column.

    Business columnist Gretchen Morgenson wrote that the ICBA-supported rules would be harder to game than current regulations, would put U.S. banks in a better position than their foreign peers to survive future downturns, and would give investors a truer picture of affected institutions’ financial positions.

    ICBA last week said it strongly supports the supplementary leverage ratio proposal because it would rein in the largest too-big-to-fail financial institutions, target off-balance-sheet risks, and help offset the true level of risk that the megabanks pose.

    The proposal would apply a 6-percent supplementary leverage ratio to the eight largest insured banking organizations and a 5-percent standard on their bank holding companies (institutions with $700 billion or more in assets or $10 trillion or more under custody).

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    OCC Releases New Capital Rule Quick Reference Guide for Community Banks

    The new capital rule implements revisions to the risk-based regulatory capital framework for national banks and federal savings associations (collectively, banks). This
    quick reference tool is a high-level summary of the aspects of the new rule that are generally relevant for smaller, non-complex banks that are not subject to the market risk rule or the advanced approaches capital rule. This quick reference guide does not carry the force and effect of law. The new rule, which can be found on the OCC’s Web site along with a Community Bank Guide, sets forth the revised capital standards. Community banking organizations become subject to the new rule on January 1, 2015.

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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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    A Primer on Agency Commercial Mortgage-Backed Securities

    The recent recession left a natural void of newly originated private label commercial mortgage-backed securities (CMBS). As a result, this has spurred impressive growth rates of CMBS issuance by the Government Agencies. The Agency CMBS market provides financing for multifamily housing and healthcare facilities with either the explicit US government guarantee or by one of the Government Sponsored Entity (GSE) guarantees for the full recovery and timely payment of principal and interest.
    Read More.

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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

    This week Congressional testimony, Fed Chairman Ben Bernanke, excluded from Fifth Amendment protection, used the legislative forum to continue to downplay the perception that it is the FOMC’s intention to begin a “tapering off” of their $85B monthly bond purchases. Mr. Bernanke took the opportunity to assure market participants that monetary policy will be “highly accommodative for the foreseeable future”.
    See Baker Market Update.

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    CBSC Preferred Provider Sageworks Offers Compliance and Best Practices Resource

    Sageworks, a financial-information company, offers several free resources to help financial institutions with regulatory compliance, best practices and recent industry changes. Topics include ALLL methodology, stress testing analysis, global cash flow analysis, relationship banking and preparing for board meetings and exams. See the
    website for webinars, whitepapers and articles, calculators and worksheets related to stress testing and impairment analysis, an ALLL glossary and additional resources. Go online to learn more about Sageworks or contact Jami Princ at 678-641-4445.

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    KASASA Ad 10 - “Considered Switching?”

    Do megabank account holders have a penchant for punishment? Or do they simply not know that there’s a better way to bank? Kasasa’s “Considered Switching?” radio commercial sheds light on how low expectations can be in a traditional megabank relationship – a strange world where getting charged a slightly lower monthly service fee is somehow a good thing. Meanwhile, free Kasasa checking and savings accounts never charge a monthly service fee.

    Better yet, when your community bank offers a free Kasasa account, you reward each account holder in cash for the privilege to be his or her bank of choice. To pay for so-called “service,” or to get paid with an always-free account? Simple decision. Give your potential account holders a real reason to make the switch.

    Offer accounts that actually make switching banks worthwhile.
    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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    CBIS Powered by Nicoud Addresses State Bank Examiners

    For the second consecutive year, the professionals at CBIS powered by Nicoud addressed more than 100 state bank examiners on the topic of insurance adequacy for community banks. In particular, examiners’ questions focused on information technology (IT) and cyber coverage. Later, a separate session was held for IT examiners.

    Examiners revealed that since 2004, 1,700 data breaches have compromised approximately 1 billion data records. Globally, bank examiners will be looking for the following:

    1. Property & Casualty Insurance for physical damage exposure to equipment, data, and media.
      a. EDP Rider and/or Policy providing additional protection with separate limit from contents; including equipment breakdown.
    2. Financial Institution Bond
      a. Hacker & Virus Coverage for the duplication or restoration of computer programs. Employee sabotage of data or programs included?
    3. D&O Professional Liability and/or Separate Cyber Liability Policy
      a. Evaluate highest, single aggregate limit of liability of ANY insuring agreement and/or policy aggregate; including defense!
      b. Customer Privacy Expense as the result of unauthorized access to company customer information. Cost of notification, reissue credit/debit cards, and one-year free credit report monitoring.
    Clearly, the state bank examiners view CBIS-Nicoud as a valuable resource for information and advice on community bank insurance issues. CBIS-Nicoud has trained the examiners and they can help you too. For a free review of your bank’s insurance coverage, and to help you prepare for your next bank exam, contact Patti Tobin by telephone at 217-414-4485, or via email at

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    Senators Release Discussion Draft of FHA Solvency Bill

    Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho)
    released a discussion draft of legislation designed to improve the financial condition of the Federal Housing Administration.

    The Federal Housing Administration Solvency Act of 2013 would strengthen underwriting standards at the FHA and raise the Mutual Mortgage Insurance Fund’s minimum capital reserve ratio to 3 percent. It also would require the Department of Housing and Urban Development to consolidate lending and servicing guidelines, and it would provide new tools to combat fraudulent mortgages.

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    Free Diebold Seminar - Branch of the Future


    Join CBSC’s preferred provider Diebold for a free seminar on transforming your branch.

    Thursday, August 15, 2013
    10:00 AM - 3:00 PM

    Lunch provided

    Crowne Plaza Chicago O'Hare Hotel and Conference Center
    5440 North River Road
    Rosemont, IL 60018

    seminar will discuss how a bank can be more efficient, productive and relevant with the right balance of today’s advanced technology and human connection. Learn how to enable your financial institution to improve efficiency, mitigate risks, improve customer experience and enhance sales effectiveness. Understand what consumers want and how this will help drive change. Discover solutions to uniquely create your new branch experience. In this one-day four part educational seminar, Diebold subject matter experts will share their observations and point-of view on how to develop a successful branch transformation strategy, and more importantly, how to execute that strategy. Your branch can continue to be a profit center that delivers a relevant and personal experience.

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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 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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