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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                               August 5, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI ACTION ALERT - Urge Congress and NCUA to Halt Credit Union Power Grab
  • CBAI and ICBA-Advocated Regulatory Relief Bills Advance
  • Spending Bill Includes Regulatory Relief Provisions
  • Hoenig Enhances His Regulatory Relief Proposal
  • ICBA and CBAI Back Bill Exempting Community Banks from CFPB Rules
  • Fine: Regulatory Burden Is Capturing Big Headlines
  • Use August Recess to Host Members of Congress
  • CBAI Staff Visits Washington - Urges Support for Community Bank Positions
  • President Signs into Law SBA 7(a) Cap Increase
  • SSBCI Program Generated $148.6M for Small Business Lending & Investment in 2014
  • Fed Chair Yellen Offers Thoughts on Community Banking
  • FHLB Releases Second Quarter Financials
  • Register Today for CBAI’s 41st Annual Convention & Expo
  • Investment News From THE BAKER GROUP
  • Check Out the CBAI Message Board!
  • Take the Latest CBAI Member Quick Poll
  • Basic Bank Secrecy Act Institute Scheduled for August 11 & 12
  • Ag Loan Documentation Scheduled for August 13 & 14
  • Community Bank Directors’ Workshop Scheduled for August 26 & 27


  • CBAI ACTION ALERT - Urge Congress and NCUA to Halt Credit Union Power Grab

    The National Credit Union Administration (NCUA), in an unprecedented move, recently proposed to significantly loosen constraints on member business lending for tax-exempt credit unions, completely sidestepping the statutory cap of 12.25 percent established by the United States Congress.

    CBAI urges community bankers to send a customizable letter to Congress and the NCUA to express opposition to this plan, which would expand credit union business lending authority and siphon loans from taxpaying community banks. Contact Congress and the NCUA Today.

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    CBAI and ICBA-Advocated Regulatory Relief Bills Advance

    Last week the U.S. House Financial Services Committee advanced several CBAI and ICBA-advocated bills to relieve community banks from excessive regulation. The panel approved six measures with provisions from ICBA’s Plan for Prosperity regulatory relief platform:

    • H.R. 766 to protect financial institutions and their customers from Operation Choke Point,
    • H.R. 1210 to give Qualified Mortgage treatment to loans held in portfolio by the originator,
    • H.R. 1553 to provide an 18-month exam cycle for community banks with $1 billion or less in assets,
    • H.R. 1737 to reform CFPB indirect auto financing guidance,
    • H.R. 1941 to create a workable exam appeals process and common-sense standards for classifying loans, and
    • H.R. 3192 to provide a TILA-RESPA Integrated Disclosure safe harbor.
    See List of Bills. Read ICBA Release. See Plan for Prosperity.

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    Spending Bill Includes Regulatory Relief Provisions

    A proposal to give banking regulators more discretion in reducing community bank burden was added to a spending bill that advanced in late July. Included in a funding package approved by the Senate Appropriations Committee is a provision to grant prudential regulators new powers to exempt banks with less than $10 billion in assets from unnecessary or excessively burdensome regulations. ICBA has worked closely with Sen. Susan Collins (R-Maine) to advance the legislative proposal, which has also been introduced as the Community Bank Sensible Regulation Act (S. 1799). It was included along with legislation from Senate Banking Committee Chairman Richard Shelby (R-Ala.) containing various provisions from ICBA’s Plan for Prosperity. Read Committee Markup.

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    Hoenig Enhances His Regulatory Relief Proposal

    FDIC Vice Chairman Tom Hoenig this week reiterated his plan to ease regulations for banks that stick to “traditional” banking models and maintain certain capital ratios. He also said banks that don’t engage in trading assets or liabilities, hold relatively few derivative positions, and have an equity-to-assets ratio at or above 10% should face a flexible compliance regime when it comes to the Volcker Rule. In other words, existing policies and procedures would take care of compliance requirements. The Hoenig plan also includes an exemption from Basel III requirements. CBAI commends Vice Chairman Hoenig for his interest in helping traditional banks attain regulatory relief. Read Hoenig’s Comments.

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    ICBA and CBAI Back Bill Exempting Community Banks from CFPB Rules

    ICBA and CBAI have expressed support for legislation to exempt community banks with less than $10 billion in assets from Consumer Financial Protection Bureau rules unless the CFPB makes a detailed, written finding that a specific rule should apply to community banks. Rep. Roger Williams (R-Texas) introduced the Community Financial Institution Exemption Act (H.R. 3048) to promote tiered regulation and ensure that community banks have flexibility to meet the credit needs of their local communities. Read Release.

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    Fine: Regulatory Burden Is Capturing Big Headlines

    A recent special section of The Washington Times shows how ICBA is raising public awareness of the need for community bank regulatory relief, ICBA President and CEO Cam Fine wrote in his latest blog.

    The special section—which features articles, editorials and ICBA op-eds on community bank overregulation and proposals to address the issue—complements the association’s ongoing strategies to raise awareness of the problem in Washington and nationwide. Read Fine’s Blog. See WT Special Section.

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    Use August Recess to Host Members of Congress

    With the House out for the August recess and the Senate adjourning at the end of this week, CBAI and ICBA are calling on community bankers to invite their members of Congress to join with them at their banks. ICBA’s Main Street Matters Resource Center helps community bankers with suggestions to invite and host their lawmakers so they can see firsthand the importance of regulatory relief legislation.

    The Resource Center has all the materials community bankers need to invite lawmakers to their community bank, including invitation templates, contact information, materials to prepare staff, and tips for follow-up communication. CBAI’s Vice President of Federal Governmental Relations David Schroeder is also available to work with Illinois community bankers to host their Congressmen. Get Started Today!

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    CBAI Staff Visits Washington - Urges Support for Community Bank Positions

    David Schroeder, CBAI vice president of federal governmental relations, visited every office of the Illinois Congressional delegation, as well as senior legislative staff at the Independent Community Bankers of America (ICBA), to discuss a variety of important issues and urge the immediate passage of legislation which is vital to Illinois’ community banks. Read More.

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    President Signs into Law SBA 7(a) Cap Increase

    President Barack Obama signed into law an CBAI- supported increase in the funding cap for the Small Business Administration’s 7(a) guaranteed loan program. The law, which allows the program to continue operating, raises the cap from $18.75 billion to $23.5 billion and ensures all 7(a) loans are funded for the rest of the fiscal year ending Sept. 30.

    The SBA last week suspended the program, which is funded solely by user fees, after it met its statutory limit. ICBA worked directly with Congress to fast-track this legislative fix, noting that community banks make up the majority of SBA lenders and that no taxpayer dollars are appropriated for the program. Read White House Statement. Read ICBA Release.

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    SSBCI Program Generated $148.6M for Small Business Lending & Investment in 2014

    In 2014, the Illinois State Small Business Credit Initiative (SSBCI) leveraged $18.8 million in federal SSBCI funds to generate $148.6 million in private loans and investment for Illinois small businesses according to the U.S. Treasury Department’s annual SSBCI report. These funds have supported loans made by financial institutions, which has led to the retention or creation of 3,300 jobs in Illinois. Additionally, President Obama’s proposed 2016 budget extends the SSBCI program by $1.5 billion. The report summarizes the past year’s aggregated national impact as well as state-by-state results. Overall, the SSBCI program is expected to stimulate $10 in new small business lending and investing for every dollar of federal support by the program’s end. See SSBCI Annual Report.

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    Fed Chair Yellen Offers Thoughts on Community Banking

    In a recent interview, Federal Reserve Chair Janet Yellen addressed issues concerning community banks. She emphasized the importance of community banks in the national economy and indicated that the Federal Reserve is reevaluating regulations that may be constraining lending. Read Q & A.

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    FHLB Releases Second Quarter Financials

    The Federal Home Loan Bank of Chicago released its financials for the second quarter last week with the following highlights: 1) declared a 2.25% dividend on Class B1 activity stock and a 0.50% dividend on Class B2 membership stock; 2) earned net income of $97 million, up from $94 million in the second quarter of 2014; and 3) remained in compliance with all regulatory capital requirements as of June 30, 2015. See FHLB Member Letter.

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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 Clu; 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 with 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 Bureau of Economic Analysis (BEA) decided to take another look at how things played out for the economy over the last few years in an attempt to rectify “seasonal biases.” It’s 2015, and there is no place in our economy for biases; seasonal or otherwise. The most salient adjustment relates to what represents the fourth counting of first quarter GDP. See Baker Market Update.

    Baker Economic Brief

    The latest release of the Fed’s preferred measure of inflation came this week, and the results continue to reflect a lack of price pressures. Year-over-year core PCE inflation is just 1.29%, continuing the trend of measures well below the Fed’s long-term target of around 2%. See Baker Economic Brief.

    MBS Market Strategies

    July's report from the Census Bureau showed that housing starts gained 9.8% in June, far more than the Bloomberg consensus forecast of +6.7%. The report also detailed a revision in the data from May, showing a -10.2% decline instead of the initially reported -11.1% drop. See MBS Market Strategies.

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    Check Out the CBAI Message Board!

    New classified ads have been recently added. Want to post something? Contact Andrea Cusick, SVP Communications, at cbaicom@cbai.com. There is no charge to CBAI members. See CBAI Message Board.

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    Take the Latest CBAI Member Quick Poll

    Take CBAI'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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    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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    Ag Loan Documentation Scheduled for August 13 & 14

    Underwriting and documenting agricultural loans are complex processes. The increasing complexity of farm operations, coupled with the increasing market volatility, has resulted in potential increases in credit risk. In addition, complex risk-management tools employed by borrowers need careful assessment. A primary focus of this workshop is to use Excel-based decision tools and farm budgets to aid in documenting agricultural loans and measuring risk exposure. The loan-documentation tools include historical statements, financial ratios, cash-flow projection tools, farmland-lease evaluation, and crop-insurance evaluation. Tools to assess farmland, machinery, and grain storage purchasing decisions are also demonstrated. Case studies and the computerized tools are used to illustrate the important concepts. All participants receive a complimentary subscription of the computerized decision tools used in the workshop. Leading this seminar is Dr. Paul Ellinger, professor at the University of Illinois, in Champaign-Urbana. Dr. Ellinger is a professor specializing in finance and accountancy at the University of Illinois.

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    Community Bank Directors’ Workshop Scheduled for August 26 & 27

    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. To meet these duties and responsibilities, a director must be knowledgeable and active. Thus, we invite you to join us at the Community Bank 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 seminar. Topics covered include “Banking Law Update for Directors,” with Jerry Cavanaugh, general counsel at CBAI, Springfield, IL; “Is Information Technology Strengthening Your Bank or Causing Strategic Weaknesses?” with Robert Mendez, executive vice president at BankOnIT, Oklahoma City, OK; and “Succession Planning” with Francis Godfrey, CPA, partner at BKD, LLP, St. Louis, MO. The workshop also includes a networking roundtable session. Modeled after CBAI's peer groups and forums, the networking roundtables are designed to encourage attendees to interact, share ideas, and learn from other directors from across the state.

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