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 24, 2012 Graphic
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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • Exhibit Hall Sold Out at CBAI’s 38th Annual Convention!
  • FHLB Election: CBAI Backs Ashworth and Greenbank
  • Campaign Continues to Exempt CBs from Basel III
  • TAG Extension Push Makes More Headlines
  • Court: Lenders Must Provide Notice of Secured Interest in Crops
  • FASB Issues Community Bank Exemption
  • Help Community BancPac Build a Golf-Ball Pyramid
  • Vice Presidential Candidate Paul Ryan’s Views on Banking Issues
  • New CFPB Proposed Rules to Regulate Up-Front Mortgage Loan Fees
  • Baker Market Update
  • 23rd Annual CBAI Officer Compensation Results Are Now Available
  • OCC Proposes Stress-Testing Rules for Big Banks
  • ATM, Checking And Overdraft Fees Rise In 2012
  • Agencies Propose Rules on “Higher-Risk” Mortgage Loans
  • Affinion Launches Merchant-Funded Loyalty Program for Banks
  • Bank Employers Also Need to Maintain Accurate Employment Records
  • Overcoming Challenges to Estimating ALLL
  • Diebold Webinar Series: Leveraging Recycling-ready ATMs
  • Routine Internet Inquiry Results in Malware Attack on Bank
  • Credit-Risk Management Institute Set for August 29 & 30
  • Auditing IT for Financial Auditors Scheduled for September 12
  • Global Cash-Flow Analysis Set for October 2 & 3


  • Exhibit Hall Sold Out at CBAI’s 38th Annual Convention!
    Still time to Register

    Once again, the Exhibit Hall is sold out at CBAI's 38th Annual Convention. Nearly 100 vendors will be exhibiting the latest products and services for community banks. Keep abreast of new information, products, and services; improve purchase management and business development; compare prices and products more effectively; and save time by seeing all vendors in one location. Additional attractions in the Exhibit Center include a walk-around program with three valuable prizes for bankers who visit the majority of the booths; delicious desserts during the Friday Grand Opening; a cocktail reception Friday afternoon; a Continental breakfast on Saturday; and a drawing for $1,000 cash. Don’t miss out!
    Register today for “Building for Tomorrow,” scheduled for September 20-22, 2012, at the Hyatt Regency at The Arch in St. Louis, MO.

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    FHLB Election: CBAI Backs Ashworth and Greenbank

    CBAI is proud to endorse the candidacies of Mr. James Ashworth and Mr. Arthur Greenbank for election to the Federal Home Loan Bank of Chicago Board of Directors.
    Read More.

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    Campaign Continues to Exempt CBs from Basel III

    During the comment period for the proposed Basel III capital rules, CBAI and ICBA are urging bankers to sign a petition calling on regulators to exempt community banks and allow community banks to continue operating under Basel I capital regulations. ICBA has established a
    Basel III Resource Center where the Petition can be signed. CBAI urges all officers, directors, and employees to sign the Petition.

    ICBA President Cam Fine described imposing Basel III provisions on community banks as “insane” in a recent appearance on the Fox Business Network. See Interview. Meanwhile, ICBA Chairman-elect Bill Loving told Congress that Basel III poses a grave threat to the nation’s community banks and economic recovery. He also called on Congress to extend the Transaction Account Guarantee program. Read Testimony.

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    TAG Extension Push Makes More Headlines

    The community banking industry’s push to extend full FDIC coverage of noninterest-bearing transaction accounts continued making headlines this week. ICBA Executive Vice President and Chief Economist Paul Merski discussed the program on the
    “Small Business Advocate” syndicated radio program. A Northwestern Financial Review blog post notes that community bankers will have to continue educating their elected officials on why extending the coverage is important. Additionally, a Lubbock Avalanche-Journal article discusses how Texas community banks are pushing for an extension. Community bankers can make their own headlines on transaction-account coverage with ICBA’s customizable op-ed on the issue. Also in the news this week was Senior Executive Vice President and Chief of Staff Terry Jorde, who was featured in a Northwestern Financial Review blog profile. The Community Bankers of Iowa’s inaugural Community Bankers State Fair Conference was featured in the Des Moines Register.

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    Court: Lenders Must Provide Notice of Secured Interest in Crops

    In an opinion issued earlier this year, the Appellate Court for the Third District of Illinois ruled that a lender with a secured interest in farm products must strictly comply with the notice requirements of the federal Food Security Act of 1985 when providing direct notice of its security interest in the crops to a purchaser (e.g., grain elevator). Such notice must specify the county(ies) in which the crops are grown. For more information about the case of State Bank of Cherry vs. CGB Enterprises,
    Click Here.

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    FASB Issues Community Bank Exemption

    At the urging of CBAI and ICBA the Financial Accounting Standards Board (FASB) decided that nonpublic entities will not have to disclose the fair value amounts for financial assets and liabilities measured at amortized cost.
    Read More.

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    Help Community BancPac Build a Golf-Ball Pyramid

    On September 20, the Community BancPac will host its 21st Annual Silent Auction and 5th Annual Live Auction during the CBAI Annual Convention in St. Louis. One of the auction items is a pyramid built of boxes of golf balls (a dozen to a box). You can help by donating boxes of golf balls.
    Read More.

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    Vice Presidential Candidate Paul Ryan’s Views on Banking Issues

    Until last week, many Americans may not have known about Paul Ryan. According to the American Banker, here are some of Ryan’s positions on key banking issues:

      Repeal the FDIC’s Resolution Authority. Ryan’s budget proposal would repeal Dodd-Frank provisions that would authorize the FDIC to resolve a systemically significant financial institution. Ryan views the provisions as a “bailout regime” because the FDIC could borrow money from the Treasury Department to unwind a systemically significant firm. Despite this opposition to a bailout, Ryan did vote for the original Troubled Asset Relief Program, saying if the financial system had collapsed, “we would have had a big-government agenda sweeping through this country so fast that we wouldn’t have recovered from it.”
      Eliminate the Federal Reserve’s Dual Mandate. Ryan sponsored a 2008 bill titled the Price Stability Act of 2008. The bill would amend the Federal Reserve Act to limit the Federal Reserve’s mandate to focus solely on price stability, and not employment.
      Reform FHA’s Budget Techniques. Ryan’s budget would require all federal credit programs, including the Federal Housing Administration, to use fair-value scoring. Ryan argues the current budgetary treatment of FHA loans underestimates their actual cost.
      Delineate Banking and Proprietary Trading. At a May town hall meeting in Wisconsin, Ryan indicated banks should perform traditional functions. “If you’re a bank and you want to operate like some non-bank entity like a hedge fund, then don’t be a bank,” Ryan said. “Don’t let banks use their customers’ money to do anything other than traditional banking.” This support of the so-called “Volcker rule” may differ from Romney’s stance, whose staff has indicated the Volcker rule may be one provision of the Dodd-Frank Act Romney is seeking to repeal.
      Privatize Fannie Mae and Freddie Mac. Ryan’s proposed budget would unwind and privatize Fannie Mae and Freddie Mac.
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    New CFPB Proposed Rules to Regulate Up-Front Mortgage Loan Fees

    New CFPB proposed rules would regulate payment of upfront points and fees for most mortgages and require lenders to offer a no-point, no-loan fee option. It would also change existing rules governing mortgage loan originators’ qualifications and compensation. The public will have 60 days, until October 16, 2012, to review and provide comments on the proposed rules. The CFPB will review and analyze the comments before issuing final rules in January 2013.
    Read More.

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    Baker Market Update

    July’s leading economic indicators rose more than expected, signaling a more stable outlook for growth in the U.S. Meanwhile, Industrial production surged 0.6% in July following last month’s 0.1% increase as demand for manufacturing goods firmed. Capacity utilization continues to increase steadily as manufacturers put to work readily available resources in order to meet recent demand.
    Read More.

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    23rd Annual CBAI Officer Compensation Results Are Now Available

    Participants have been sent the results. CBAI member banks can purchase the results for $300; non-members for $500. Contact Andrea Cusick,
    cbaicom@cbai.com or 800/736-2224 to purchase.

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    OCC Proposes Stress-Testing Rules for Big Banks

    The Office of the Comptroller of the Currency
    proposed annual stress-test reporting requirements for covered institutions with total consolidated assets of $50 billion or more. Comments are due by Oct. 15. The OCC said it will publish a separate proposal addressing the reports required by covered institutions with assets between $10 billion and $50 billion.

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    ATM, Checking And Overdraft Fees Rise In 2012

    A new survey of 50 of the nation’s largest banks finds that basic banking costs jumped in just about every category in 2012. Broken down by bank size larger banks with more than $25 billion in deposits charge more with the average monthly maintenance fee $13.88 while it was only $9.87 at small banks (those with less than $5 billion in deposits).
    Read Article.

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    Agencies Propose Rules on “Higher-Risk” Mortgage Loans

    Federal regulators
    issued a proposed rule to establish new appraisal requirements for mortgage loans that are secured by a consumer's home and have interest rates above a certain threshold. For these “higher-risk mortgage loans,” the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property. It would also require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report. Comments are due by October 15.

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    Affinion Launches Merchant-Funded Loyalty Program for Banks

    CBSC preferred provider Affinion Group
    announces a new innovative merchant-funded loyalty program called BankMyRewards. BankMyRewards offers financial institutions the opportunity to expand customer engagement and loyalty through cash-back savings from thousands of merchants nationwide. Through BankMyRewards, Affinion’s clients provide their customers with relevant and robust cash-back savings or points from Affinion’s extensive network of thousands of retailers, merchandise items, daily deals and gift card providers. In addition to receiving extensive savings on everyday spend, bank customers and credit union members are treated to individualized, promotional offers generated from Affinion’s sophisticated modeling and analytics and actual shopping behavior, and distributed through Affinion’s patented technology.

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    Bank Employers Also Need to Maintain Accurate Employment Records

    The U.S. Department of Labor (DOL)
    announced an electronic application for remote devices to help employees track their own work hours and the wages employers owe them. According to the Department of Labor (www.dol.gov), workers filed a record number of wage and hour lawsuits against their employers in 2010 — approximately 700 more lawsuits compared to 2009. For more information contact Community BancInsurance representative Patti Tobin at 217-546-6900 or 800-982-6564.

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    Overcoming Challenges to Estimating ALLL

    The estimation of the Allowance for Loan and Lease Losses (ALLL) has been a part of the financial institution’s accounting process for years, but it has taken on increased importance over the last several years. Between increased regulatory scrutiny and the challenges of documenting and defending the allowance estimation to multiple constituencies, many community bankers are frustrated with the process. In this article, Sageworks, a CBSC preferred provider for commercial loan analysis tools, discusses three steps that will help calculate ALLL and minimize regulatory criticism.
    Read More.

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    Diebold Webinar Series: Leveraging Recycling-ready ATMs

    CBSC Preferred Provider, Diebold Inc., the leader of self-service delivery systems, security and service for community banks, is hosting a FREE webinar on Tuesday, September 18th , 2012, the program will explore how high performance recycling-ready ATMs can help a bank optimize total cost of ownership, learn how cash recycling technology can help enhance consumer efficiencies, and find out how a bank can better streamline their operations.
    Click Here for more information and to register.

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    Routine Internet Inquiry Results in Malware Attack on Bank

    What happens when a bank employee conducts a Google search of another bank’s routing and transit number? In the case of one Illinois community banker it triggered an assault on the bank’s computer network. While the bank’s sophisticated firewalls appear to have prevented an intrusion, management decided to replace the affected server and block all dynamic content at the Internet content filter. Better safe than sorry.

    The bank’s security officers believe the attack was launched by cyber criminals using sophisticated spyware called an ”exploit kit” that monitors the Internet for messages that are financial in nature, then launches an attack against the source of the message hoping to steal financial data. The stolen data is often sold to other criminals.

    Defenses against the exploit kit

    Banks can defend their systems by educating employees about the consequences of inappropriate Internet-based inquiries. Bankers should also make sure the bank’s browser, browser's plug-ins, and operating systems are up to date. Many exploit kits target vulnerabilities in older versions of browsers as well as many popular plug-ins like Adobe Flash, Adobe Reader, Firefox, Google Chrome, Internet Explorer, Java, and Safari. Bankers should implement a security utility with a good antivirus and good host-based intrusion prevention system (HIPS). A good HIPS will defend against the unique nature of some of these exploit kits that allow the code to mutate often enough that many antivirus programs lag behind in the identification of new algorithms of the malware.

    Working together, we can learn from shared experience. Please let us know if your bank has had an unusual IT or security-related experience that we can share with the membership. Your bank’s name will be kept confidential. Please send your story to Mike Duke via email
    miked@cbai.com.

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    Credit-Risk Management Institute Set for August 29 & 30

    Many banks which historically enjoyed have good credit performance are now confronted with significant credit problems. In addition, many have discovered that much of what they thought was good lending was not! This
    two-day program provides tools and best practices to help better 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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    Global Cash-Flow Analysis Set for October 2 & 3

    “Global Cash-Flow Analysis” utilizes the Uniform Cash-Flow Analysis (UCA) method and provides guidance in calculating global cash-flow analysis for those entities that must rely on excess cash generated by their owners to service the business entity’s commercial debt. The course begins by defining cash flow as the tool to transform an accrual-basis financial statement into a statement of cash flow and its importance to bankers when considering a long-term loan request. It then proceeds to demonstrate how cash flow is calculated by utilizing the accounts on the balance sheet and the income statement to determine the sources and uses of cash from operating, investing, and financial activities. Next, a review of the owner’s personal financial statements and tax returns is presented in order to determine the excess compensation necessary to support the debts of the business entity and the individual. Leading this seminar is Jeffery Johnson, president and founder of Bankers Insight Group, Atlanta, Georgia, who has more than 25 years’ experience in the banking field.

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