Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois Community Bankers Association of Illinois
 
     A Bi-Weekly News Bulletin for CBAI Members                  August 25, 2010 Graphic
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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois


  • The Top 10 Reasons to Attend CBAI’s 36th Annual Convention
  • KC Fed Chief Says TBTF Policies Hurt Community Banks
  • An Assessment of Financial Reform
  • Insurance Fund for Asset-backed Securities Gaining Ground
  • FDIC Offers Storm-related Relief to Illinois Banks
  • New Credit Card Rules Take Effect
  • Community Bankers Voice Concerns with FASB Accounting Plan
  • FDIC Provides Guidance on Balloon Loans
  • Economic Signals Continue Mixed
  • Baker Market Update
  • Consumers Prefer Community Banks Over Mega-Banks for Mortgages
  • Regulators Issue Guidance on Reverse Mortgages
  • Banks Facing Fight Over Mortgage-Loan Buybacks
  • CBAI Offers New Community Banking Newspaper Ads
  • Get the Power of Direct Marketing At the Click of a Mouse
  • Accountability: Establishing, Enforcing, and Running the Framework Scheduled for September 8 & 9th
  • Analyzing Business Financial Statements Set for September 14-15
  • Save the Date for CBAI’s Women in Community Banking Conference


  • The Top 10 Reasons to Attend CBAI’s 36th Annual Convention

    More than 100 community banks have already registered for
    CBAI’s 36th Annual Convention & Expo, scheduled for September 30 – October 2 in Louisville, KY. If you haven't registered yet, take a look at the TOP 10 REASONS to sign up today! Click Here.

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    KC Fed Chief Says TBTF Policies Hurt Community Banks

    Thomas Hoenig, President of the Kansas City Federal Reserve Bank, testified this week before the House Subcommittee on Oversight and Investigations that community banks are placed at a competitive disadvantage because the market continues to perceive the largest banks as too big to fail. Hoenig also noted that the community banking business model works, especially in comparison with the megabank model that had to be propped up with taxpayer funding. He added that community banks are essential to the prosperity of the local and regional economies. He said community banks during the past year increased total loans by about 2 percent while the large banks decreased lending by 6 percent.
    Read Hoenig’s Testimony.

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    An Assessment of Financial Reform

    SHAZAM® Vice President of Corporate Communications James Ghiglieri Jr. pens comments on Financial Reform, noting that the overall impact on community financial institutions remains unclear.
    More.

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    Insurance Fund for Asset-backed Securities Gaining Ground

    Proponents of a catastrophic insurance fund for mortgage-backed securities received a boost from central bank officials who are advocating creation of an FDIC-like fund for all asset-backed securities. The concept was released as Congress began discussions on GSE housing finance reform.
    See Article.

    A recently advanced plan would have Fannie Mae and Freddie Mac replaced by privately-capitalized, federally-chartered companies that buy mortgages from the primary market and deliver them into a federally guaranteed mortgage-backed security. The companies would pay fees to create an insurance fund to cover catastrophic losses. See Article.

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    FDIC Offers Storm-related Relief to Illinois Banks

    The FDIC announced this week that it is offering regulatory relief to Illinois banks in those areas affected by recent storms. The relief includes allowance to extend repayment terms and restructure loans for borrowers adversely affected by severe weather. The FDIC also indicated it will consider relief from certain filing and publishing requirements.
    See FDIC Release.

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    New Credit Card Rules Take Effect

    Effective this coming Sunday, new rules intended to protect credit cardholders from “unreasonable” late payment fees and penalties constitute the final provisions to be implemented as part of federal legislation enacted in 2009. For more details,
    See Article.

    Market research group Synovate just released data indicating that credit card interest rates soared in the second quarter to a nine-year high of 14.7%, creating a spread of 11.45 percentage points between the average rate and the prime rate which is the greatest margin in 22 years. See Article.

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    Community Bankers Voice Concerns with FASB Accounting Plan

    ICBA leadership community bankers met with the chief accountants of the banking regulators and members of their staffs to share the community bank perspective on the Financial Accounting Standards Board’s
    Exposure Draft, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities. ICBA leadership community bankers Rusty Cloutier, Wayne Cottle, Jeff Gerhart, Doug McClure, and David Skiles, and ICBA Vice President of Lending and Accounting Policy Ann Grochala and ICBA Senior Vice President and Senior Regulatory Counsel Chris Cole attended the meeting.

    The five community bankers voiced strong opposition to the accounting proposal and the high costs and burdens of compliance. They discussed the difficulties they would face in determining fair value information for loans that are not readily marketable, such as agricultural and small-business loans held by community banks, and for core deposits.

    The community bankers also discussed proposed changes to impairment recognition and loan-loss calculations. They raised concerns that if the proposal goes forward, it would threaten the viability of many community banks due to associated costs and the impact on capital of increased volatility in asset and liability valuations. They also disagreed with FASB’s view that the proposal will simplify and improve reporting for financial instruments by developing a consistent and comprehensive classification framework. Instead, they noted that the result would be more complicated accounting treatment that is based on assumptions that will be difficult to compare across institutions with no resulting benefit to shareholders or users of their financial statements.

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    FDIC Provides Guidance on Balloon Loans

    FDIC provides clarification regarding the
    disclosure of the loan term for balloon payment obligations in accordance with the Real Estate Settlement Procedures Act (RESPA).

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    Economic Signals Continue Mixed

    Mainstreet Index Dips Again in August

    For the second straight month, the overall index for the Rural Mainstreet economy dropped below growth neutral 50.0, according to the August survey of community bank CEOs in a 10-state region. The survey found that, while Mainstreet businesses are experiencing declining economic activity, farm income is fairing better due to upturns in farmland prices.
    See Index Release.

    Chicago Fed Index Rebounds in July

    Meanwhile, the Chicago Fed National Economic Index showed a slight rebound in economic activity in July. See Fed Report.

    Rasmussen Consumer Index Fluctuating

    The Rasmussen Consumer Index, which measures economic confidence of consumers on a daily basis, was down three points on Monday from its level one month ago. Seventy percent (70%) of adults believe the U.S. is in a recession. See Rasmussen Report.

    Home Sales Lowest in 15 Years

    Existing home sales fell last month to the lowest level in 15 years, according to the National Association of Realtors. The 27% decline was the largest monthly drop on record dating back to 1968. In the Midwest, for example, homes priced between $100,000 and $250,000 tumbled nearly 47%. See AP Report.

    Agribusinesses Show Confidence

    According to the first DTN/The Progressive Agribusiness Confidence Index, the outlook for American agribusiness is upbeat. Based on a survey of 100 business managers from a variety of agribusinesses, the index was 71.0. Any score above 50.0 indicates optimism. For more details, Click Here.

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    Baker Market Update

    Treasuries rallied once again this week as economies across the globe see lower growth on the horizon. Axel Weber, an official at the European Central Bank, warned of the likelihood of the ECB needing to keep existing emergency lending facilities in place until 2011.
    More.

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    Consumers Prefer Community Banks Over Mega-Banks for Mortgages

    A recent
    survey showed that future home buyers prefer to work with smaller, local banks, as compared to the big national banks like Wells Fargo and Bank of America. Among other things, people felt they would get more personal attention and lower rates.

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    Regulators Issue Guidance on Reverse Mortgages

    The Federal Financial Institutions Examination Council released guidance this week emphasizing consumer-protection concerns with reverse mortgages and the importance of mitigating compliance and reputation risks associated with these products. The guidance also focuses on the need for banks and thrifts to provide clear and balanced information to consumers about the risks and benefits of reverse mortgages. The guidance, which was adopted by the federal financial regulators, will be effective 60 days after publication in the Federal Register.
    Read More.

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    Banks Facing Fight Over Mortgage-Loan Buybacks

    While mortgage delinquencies are easing, banks are facing a new round of losses from loans made just before the financial crisis, and the fight to keep them off their balance sheets is intensifying. Leading the charge to make originators repurchase their loans are Fannie Mae and Freddie Mac, the two government-owned finance agencies that guaranteed the mortgages. The firms are sorting through delinquent loans for signs of any violations of the representations and warranties, known as "reps and warranties." In essence, they are looking for lies made by borrowers or lenders in loan applications.
    More.

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    CBAI Offers New Community Banking Newspaper Ads

    Click here to view the latest community banking newspaper ads available at no cost to CBAI members.

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    Get the Power of Direct Marketing At the Click of a Mouse

    Introducing CBAI On-Demand Marketing, a completely turn-key approach to capturing more profitable accounts with powerful direct mail campaigns. At a cost of less than $1.00 per piece, INCLUDING MAILING, get a great return on your marketing investment without major overhead.

    Create a targeted, custom mailer every time. It’s easy. Just log into the CBAI On-Demand Marketing website, select your template and messaging, and we take care of the rest.

    For more information and special CBAI Member Pricing for CBAI On-Demand Marketing contact:
    Stan Myatt |
    stan.myatt@affiniongroup.com | 615-390-6041 or
    Rebekah Coats | Rebekah.coats@affiniongroup.com | 615-764-2558

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    Accountability: Establishing, Enforcing, and Running the Framework Scheduled for September 8 & 9th

    This September, CBAI is pleased to offer
    “Accountability: Establishing, Enforcing, and Running the Framework,” in two locations. It helps you maximize your revenues and insulates you from inferior audits. Regulators and auditors are going beyond banks’ stated policies to examine whether they follow them – that’s accountability. This seminar examines establishing, enforcing, and running the framework the community banks can employ to ensure the accountability of their people while minimizing legal ramifications and maximizing positive reinforcement. Objectives include the components of an accountability framework, the effective use of these components, options to enforce accountability objectives, managerial activities necessary to make the framework run, the potential in advertising the framework to various constituencies, and the managerial skills that make the framework most effective. Leading this seminar is Mike Lehr, human resource consultant at Young & Associates, Inc. Lehr has more than 20 years of experience in the practical application of HR principles.

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    Analyzing Business Financial Statements Set for September 14-15

    CBAI is pleased to offer
    “Analyzing Business Financial Statements,” September 14 – 15 in two locations. This seminar is designed to address the needs of bankers and credit analysts by reinforcing their credit analysis skills. Credit analysts with little or no experience, credit officers, commercial loan officers/managers, loan review officers, and branch managers would all benefit from attending this seminar.

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    Save the Date for CBAI’s Women in Community Banking Conference

    Mark your calendar now for CBAI’s fourth annual “Women in Community Banking Conference” scheduled for Wednesday, November 17, 2010, at the Crowne Plaza in Springfield. The conference begins with an evening social on Tuesday, November 16, with the full-day conference the following day. The keynote speaker for this event is Allison Blankenship, president of Precision Speaking, Inc., Birmingham, AL. Blankenship will present two programs at the conference, entitled “Real Women Have Chipped Nails” and “Upside: How to Zig When Life Zags.” Additional information on the conference will be distributed later in September. For a biography and more information, please
    click here.

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