Community Bankers Association of Illinois
Community Bankers Association of Illinois    Community Bankers Association of Illinois CBAI E-Newsletter Sponsor - SHAZAM
     A Bi-Weekly News Bulletin for CBAI Members                           August 8, 2012 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • Regulators Give Community Banks More Time on Basel III Plan
  • Sign ICBA Petition Urging Basel III Exemption for Community Banks
  • CBAI Offering 24 Hot-Topic Break-Out Sessions at 38th Annual Convention
  • Mega Banks Formed 10,000 Subs Worldwide to Cut Taxes
  • USDA Expands Disaster Designations and Announces New Assistance
  • Drought Effects Stable Across Illinois Last Week
  • Staff Visit to Washington Reinforces Support for Community Bank Initiatives
  • ICBA Credit Union Petition Tops 13,000
  • CBAI and ICBA Reiterate Concerns over RESPA-TILA Reform Proposals
  • CBAI FedPac Fundraiser "A Grand Slam!"
  • Bank Trends Q2 Call Report Data Now Available
  • Baker Market Update
  • Lender Liability Allegations Trending from Loan-Participation Partners
  • Annual Loan-to-Deposit Ratios Issued
  • Deadline to Request Independent Foreclosure Review Extended to 12/31/12
  • 8th Annual Community Bankers Symposium Set for November 9
  • Tax Return Analysis Webinar: "When the Numbers say 'No' but Good Judgment says 'Yes'"
  • IRA Institute to be Held August 21 & 22
  • Credit-Risk Management Institute Set for August 29 & 30
  • Auditing IT for Financial Auditors Scheduled for September 12

  • Regulators Give Community Banks More Time on Basel III Plan

    Bowing to pressure from CBAI members and community bankers across the nation, regulators today extended the comment period on a set of proposals that would raise banks' minimum capital requirements to 7%. The Federal Reserve Board, FDIC, and OCC said they would provide an additional 45 days for public comment on their June proposal, with a new deadline of October 22.

    Regulators said they offered the extension to "allow interested persons more time to understand, evaluate, and prepare comments on the proposal," which would revise and replace current capital rules, as well as establish a leverage ratio and countercyclical buffer. The proposal released by U.S. regulators effectively adopts international capital standards set by the Basel Committee on Banking Supervision, which are designed to prevent a repeat of the financial crisis. Community bankers have been infuriated by the Fed's plan to revamp the way banks must measure risk on certain assets because it will unnecessarily raise capital requirements on smaller institutions, increase compliance costs, and curb lending. The proposal upped the ante for community banks by changing the risk-weighting calculation for certain assets, including U.S. government securities, corporate exposures and residential mortgages. Community banks had expected to be allowed to stay with an earlier edition of the Basel accord, which was initially adopted in the late 1980s. Regulators mandated the changes in part because they wanted to update risk weights to make them more risk-sensitive. But they also had to comply with a provision of Dodd-Frank which required banks to remove any reliance on external credit ratings for capital requirements. As a result, the agencies had to come up with a new way of calculating risk weights both for debt securities in the trading book and for loans in the banking book.

    CBAI argued that such a requirement would be a large challenge for smaller institutions which would have to prove how they can meet the new standards, at great expense to the bank.
    See FDIC Release.

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    Sign ICBA Petition Urging Basel III Exemption for Community Banks

    CBAI urges all community bankers (officers, directors, employees, and stockholders) to sign an ICBA petition that asks federal bank regulators to exempt community banks from proposed Basel III capital rules. It also advocates allowing community banks to continue to operate under Basel I capital regulations. The proposal does not exempt any banks from the rules. CBAI and ICBA believes the proposed Basel III capital standard regulations should only apply to the largest global institutions. The current proposal would markedly increase minimum capital standards and impose complex risk-weighting rules that would have a significant negative effect on community bank lending.
    Sign the Petition Now. ICBA Launches Basel III Information Resource Webpage ICBA has developed a comprehensive webpage that includes summaries of the Basel III proposal as well as talking points. See ICBA Basel III Webpage. See Basel III Summary. See Basel III Talking Points.

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    CBAI Offering 24 Hot-Topic Break-Out Sessions at 38th Annual Convention

    Register Now for Showcase Event for Illinois Community Bankers!

    You won’t want to miss the 24 break-out sessions offered at CBAI’s 38th Annual Convention & Expo. Selected by a committee of your community banking peers, these educational break-out sessions represent the most timely, relevant issues that are currently keeping you up at night. Topics covered include seizing opportunity in your investment portfolio; strategic legal and regulatory hurdles and opportunities facing community banks; how to improve recoveries on troubled loans, reduce risk of loss, and manage loans better; mortgage loan compliance in the Dodd-Frank world; regulator discussion of the most up-to-date issues in supervision; mortgage expansion opportunities; and how the Durbin Amendment will impact electronic payments and your bottom line, just to name a few.

    What’s more, CBAI has brought in speakers from around the country who are experts on their given topics. Take advantage of this opportunity to see dozens of community banking experts all in one place, and find solutions to your most pertinent questions at “Building for Tomorrow,” CBAI’s 38th Annual Convention & Expo, scheduled for September 20-22, 2012, at the Hyatt Regency at The Arch in St. Louis, MO.

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    Mega Banks Formed 10,000 Subs Worldwide to Cut Taxes

    The U.S. mega banks formed more than 10,000 subsidiaries worldwide in the past two decades to pay lower taxes and avoid tighter regulation, according to a recent
    Federal Reserve Study. JPMorgan Chase has nearly 3,400 units while Goldman Sachs, Morgan Stanley, and Bank of America have more than 2,000 each.

    Tom Hoenig, an FDIC board member who advocates breaking up the mega banks, said the mega banks are too complicated to manage. Hoenig called for the restoration of Glass-Steagall to again separate commercial from investment banking activities. Since that barrier was removed in 1999 the assets of the largest banks have tripled to $15 trillion. CBAI and ICBA also support reinstating the Glass-Steagall provisions. See Bloomberg Article.

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    USDA Expands Disaster Designations and Announces New Assistance

    Last week the U.S. Department of Agriculture added 218 counties in 12 states as primary natural disaster areas, including 66 Illinois counties, due to losses caused by drought and excessive heat. In addition, the USDA announced that crop insurance companies have agreed to provide a short grace period for farmers on insurance premiums in 2012. Now farmers have an extra 30 days to make payments without incurring interest penalties on unpaid premiums.
    See USDA Release.

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    Drought Effects Stable Across Illinois Last Week

    The Drought Monitor for Illinois last week showed little expansion in the major drought categories, but little relief is forecast as concerns now turn to soybeans.
    See Drought Monitor.

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    Staff Visit to Washington Reinforces Support for Community Bank Initiatives

    CBAI's David Schroeder, Vice President Federal Governmental Relations, visited Washington D.C. in mid- July to reinforce community bankers' grass-roots support for several very important legislative initiatives.

    CBAI’s 2012 Federal Policy Priorities include addressing excessive bank regulation and harsh regulatory examinations as well as supporting legislation that enables community banks to better serve their customers and communities. Several beneficial bills have been introduced and are moving through the U.S. House of Representatives and the Senate, and Schroeder encouraged every member of the Illinois Congressional delegation to support and co-sponsor these measures.
    Read More.

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    ICBA Credit Union Petition Tops 13,000

    ICBA announced that a petition opposing the tax-exempt credit union legislation to expand their member business lending authority has garnered more than 13,000 signatures. In a
    national news release, ICBA said that if credit unions are to be allowed to expand into commercial lending, they should be taxed and required to comply with the Communities Reinvestment Act.

    “ICBA and more than 13,000 constituents vigorously oppose legislation to expand the commercial lending powers of tax-exempt credit unions,” said ICBA President and CEO Cam Fine. “Expanding the business-lending authority for taxpayer-subsidized credit unions—at the expense of taxpayers—would widen budget deficits at the federal, state and local levels.” Sign the Petition. Contact Congress Today.

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    CBAI and ICBA Reiterate Concerns over RESPA-TILA Reform Proposals

    CBAI and ICBA are calling on the nation’s community bankers to urge their members of Congress to sign a letter urging the Consumer Financial Protection Bureau to delay implementing rules on remittances.

    In a written statement before a House Small Business Committee hearing on the impact of Consumer Financial Protection Bureau actions on small businesses, ICBA expressed deep concern that the CFPB did not adopt changes suggested by community banks as well as other small-business representatives to the bureau’s recently-published proposal to streamline RESPA-TILA disclosures. ICBA told Congress that the RESPA-TILA rule and proposed rules on mortgage servicing and mortgage loan origination, as they now stand, “have the potential to make mortgage lending and servicing impractical for community banks and lead to further consolidation of the mortgage industry.”

    Last month, the CFPB released its proposal to consolidate, streamline and clarify RESPA-TILA consumer disclosure requirements. However, almost all of the recommendations presented by ICBA and other small-business groups in comment letters were included in the bureau’s disclosure-reform proposal. ICBA member Larry Winum, CEO of Glenview State Bank in Glenview, Iowa, testified before the bureau’s hearings. ICBA will be filing formal comments on the bureau’s RESPA-TILA proposal, most of which are due Nov. 6, although comments on some portions, including its high-cost-mortgage proposal, are due September 7.
    Read ICBA Congressional Statement. View ICBA Recommendations to CFPB.

    CFPB Slightly Expands Safe Harbor on Remittance Transfers

    Yesterday (August 7), the CFPB announced that it has updated its remittance rule to modestly expand the safe harbor for smaller banks to 100 or fewer remittance transfers per year, up from 25. The final rules become effective on February 7, 2013, and require remittance transfer providers to offer consumer disclosures and written receipts. CBAI and ICBA advocated a safe harbor of 50 remittance transfers per month or 600 per year.

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    CBAI FedPac Fundraiser "A Grand Slam!"

    Nearly 50 FedPac supporters enjoyed the St. Louis Cardinals vs. L.A. Dodgers baseball game on July 26 at Busch Stadium. It was a great opportunity to take off the banker pin-stripes, get comfortable, and have some fun. Many brought “teammates” which provided a great mix of veteran players and rookies that made this FedPac fundraiser "A Grand Slam!"
    See Highlights.

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    Bank Trends Q2 Call Report Data Now Available

    Bank Trends is the easiest way to analyze Call Report data. Use the FREE reports below to check out Q2 numbers today and get a jump on the competition! CBAI Members receive a 15% Discount!
    See Report.

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    Baker Market Update

    Those zany quants at the Bureau of Labor Statistics released their monthly set of job related statistics this morning. As always, these numbers are long awaited and closely watched by market participants and innocent bystanders alike.
    Read More.

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    Lender Liability Allegations Trending from Loan-Participation Partners

    Whether on the sale or purchase side of the loan-participation transaction, there is an ever-increasing incident of lender liability allegations involving one financial institution with another. Even if no wrong-doing can be proven, it must be defended which can be expensive.

    Every community bank should assess their FI Bond Agreement E Securities and Signature Guarantees.
    Read More.

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    Annual Loan-to-Deposit Ratios Issued

    The Comptroller of the Currency, the Federal Reserve System Board, and the Federal Deposit Insurance Corporation (collectively, the agencies) recently issued updated host state loan-to-deposit ratios that the agencies use to determine compliance with Section 109 of the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Act).
    See Section 109 Host State Loan-to-Deposit Ratios.

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    Deadline to Request Independent Foreclosure Review Extended to 12/31/12

    Borrowers seeking a review of their mortgage foreclosures under the federal banking agencies' Independent Foreclosure Review now have until December 31, 2012, to submit their requests.
    More information.

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    8th Annual Community Bankers Symposium Set for November 9

    This year’s Symposium theme is “Paving the Road Forward: Regulators and Community Banks Working Together”. While the agenda is still being finalized at this time, confirmed speakers include Charles L. Evans, President and CEO, Federal Reserve Bank of Chicago, Thomas J. Curry, Comptroller, Office of the Comptroller of the Currency, Carl R. Tannenbaum, Chief Economist, The Northern Trust Company, and we are very pleased to have Governor Elizabeth A. Duke, Federal Reserve System, join this year’s event as a key note speaker. As in prior years, senior policy makers from the FDIC and CFPB have been invited to participate at this event.

    The conference will consist of presentations on current industry developments and key bank supervision issues. The conference will provide an opportunity for attendees to have a dialogue on areas of supervisory focus, the banking environment and regulatory updates.
    Register Now!

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    Tax Return Analysis Webinar: "When the Numbers say 'No' but Good Judgment says 'Yes'"

    Sageworks, the leader in financial analysis of privately-held companies and a CBSC Preferred Provider, is hosting a FREE webinar on Tuesday, August 28, 2012, that will teach community bank lenders to look beyond the numbers when analyzing a business borrower’s tax return. Attendees will learn to identify compensating factors that may help lenders spot more lending opportunities. Leading this seminar is Linda Keith, CPA.
    Click here for more information and to register.

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    IRA Institute to be Held August 21 & 22

    two-day institute is presented by instructors with combined experience of more than 50 years in the industry. Between them, they have done thousands of presentations and answered tens of thousands of IRA questions. This approach to doing presentations allows you to feel completely comfortable asking any and every question that you've ever had about IRAs, even those that you were too embarrassed to ask anyone else! This institute is conducted by Randy J. Heidmann and Robert D. Skomars, consultants at Wolters Kluwer Financial Services.

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    Credit-Risk Management Institute Set for August 29 & 30

    Many banks which historically enjoyed good credit performance are now confronted with significant credit problems. The impact of the economic downturn and other external factors has been dramatic. This
    two-day program provides tools and best practices to help predict future credit performance while minimizing loan portfolio risk. Topics covered on day one include effective credit administration; well-defined credit culture; importance of credit policy; hiring and training the right people; credit underwriting and risk assessment; characteristics of an effective credit committee; and utilizing credit risk management to identify risk in the credit portfolio. Day two addresses effective loan-portfolio management; calculating and maintaining the ALLL; determining when a loan should be a TDR; prudent workout strategies in today’s environment; and review of regulatory guidance in the appraisal management process. Leading this institute are Jeffery Johnson, president and founder, and David Sawyer, both of Bankers Insight Group, Atlanta, Georgia.

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    Auditing IT for Financial Auditors Scheduled for September 12

    Using a risk-based IT audit approach, this
    program provides guidance for financial institution auditors by identifying threats to their information systems. This process leads into the development of the audit programs using the FFIEC IT Examination Handbook as the foundation for the scope. Provided are guidance, references, and samples for appropriate work programs. Easy-to-use audit tools that can allow auditors to monitor Microsoft user-account information, system security settings, and patch management will be demonstrated. This seminar is conducted by Mark Scholl, partner, at Wipfli LLP, Sterling.

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    ACT Appraisal




    Community BancPac Silent & Live Auction

    CBAIs 38th Annual Convention & Expo

    Finer Points Blog





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