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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    September 16, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI's 41st Annual Convention & Expo Begins in Nashville
  • Earnings Up at Community Banks, but Challenges Persist
  • CBAI and ICBA Comment on FDIC’s Proposed Assessments for Small Banks
  • Time for DOJ to Prove Commitment to Ending “Too Big to Jail”
  • Mega Banks Pay Yet Another Fine for Wrongdoing
  • Community Bankers’ Petition Spurs FFIEC to Pursue Call Report Relief
  • CBAI Leadership Banker Attends "Meet the Comptroller Roundtable"
  • Fine: Mega-Breaches Require Retailer Security Standards
  • Vilsack: Farm Bill Programs Face Cuts Unless Congress Acts
  • Rise in New Vehicle Prices Leads Consumers to Buy Used, Extend Terms, or Lease
  • September Is National Preparedness Month
  • Investment News From THE BAKER GROUP
  • CBAI LEGAL: Bankruptcy Filing Tip - Cancel the Disney World Trip
  • CBAI Email Partner Intermedia Named Among the World’s Top Cloud Providers
  • Wolters Kluwer Expert to Speak on Pending HMDA Rules at CBAI Convention
  • WKFS Community Impact Award Announced
  • Raising the Bar on Cybersecurity Compliance
  • CBAI FedPac Fundraiser – Another Grand-Slam!
  • Appraisal Review Seminar Slated for September 29 & 30
  • ACH: Stay Informed and In Compliance Scheduled for October 1, 6, & 27
  • Community Reinvestment Act Seminar Set for October 1


  • CBAI's 41st Annual Convention & Expo Begins in Nashville

    CBAI’s 41st Annual Convention & Expo kicks off tomorrow in Nashville, TN. CBAI’s showcase event has drawn one hundred banks and 200 bankers, with nearly 600 in total attendance. Highlights of day one include a golf outing at the Hermitage Golf Course, Musical Journey through Nashville Partners’ Program, and the Welcoming Reception featuring the BancPac Live and Silent Auction. On day two, attendees hear an Opening Breakfast presentation by RCA recording artist and successful entrepreneur Robin Crow, two sets of break-out sessions on hot topics for community bankers, the Annual Business Meeting Luncheon, and desserts and hospitality in the Exhibit Hall.

    The third and final day starts off with the Innovations Breakfast, a third Exhibit Hall session featuring nearly 100 booths, two more sets of educational breakout sessions, the Annual Recognition Luncheon, and Closing General Session with Dr. James Bullard, President and CEO of the Federal Reserve Bank of St. Louis. The event is capped off with the Saturday night dinner dance featuring Diamond Rio. Convention coverage will be available on www.cbai.com following the event!

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    Earnings Up at Community Banks, But Challenges Persist

    Banking earnings rose, net charge-offs declined to pre-crisis levels, and margins bounced back just a bit from 30-year lows in the second quarter, but community banks earned almost double what their non-community peers did, according to the FDIC’s recent quarterly banking profile. Read More.

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    CBAI and ICBA Comment on FDIC’s Proposed Assessments for Small Banks

    CBAI commented on the FDIC's Notice of Proposed Rulemaking to refine the deposit insurance assessment system for small depository institutions ($10 billion in assets and under). The Federal Deposit Insurance Act requires the FDIC Board to establish a risk-based deposit insurance system applicable to small depository institutions to more accurately reflect risk. CBAI requested the FDIC to incorporate its recommendations into the revised assessment system. Read More.

    Meanwhile, ICBA filed a comment letter with the FDIC indicating that it generally supports a risk-based deposit insurance system and appreciates the FDIC’s efforts to improve the system.

    An ICBA survey of leadership bankers indicated that assessments generally would go down if the proposal was adopted. However, ICBA noted that there was a vocal group of bankers that had concerns about the proposal. ICBA said it is generally concerned that the proposal picks winners and losers in the financial services industry based on historical data that will change over time.

    ICBA recommended that the FDIC continuously test the assumptions behind its statistical model to verify that it accurately reflects recent failure and charge-off data. The association also had specific comments about the loan-mix index, the ratio of core deposits to total assets, and the one-year asset-growth measure. CBAI also concurs with ICBA’s analysis of the FDIC assessment proposal. Read ICBA Comment Letter.

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    Time for DOJ to Prove Commitment to Ending “Too Big to Jail”

    Professor Cornelius Hurley of Boston University, an outspoken critic of the double standard applied by the Department of Justice (DOJ) concerning mega banks versus community banks, has now called on the DOJ to follow through on its recent commitment to prosecute high-ranking individuals for white-collar crimes.

    Rather than settle for plea deals with fines paid by mega bank stockholders, Hurley said DOJ should bring cases against senior management due to the enormity of their transgressions, the lavishness of their compensation, and the depth of the harm they caused. Read AB Article.

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    Mega Banks Pay Yet Another Fine for Wrongdoing

    Twelve big banks including Bank of America, JPMorgan Chase, and Citigroup plan to pay $1.9 billion to settle charges levied by large investors that they conspired to control the credit default swaps market during the run-up to the financial crisis. Despite repeated violations, nothing has been done to stop the bad behavior of the mega banks other than accepting fines. See DealBook Article.

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    Community Bankers’ Petition Spurs FFIEC to Pursue Call Report Relief

    In August of 2014, approximately 15,000 community bankers (over 1,000 of which were from Illinois) signed an ICBA petition to the Federal Financial Institutions Examination Council (FFIEC) calling for relief from increasingly onerous quarterly Call Report requirements. CBAI is pleased to report that, in reaction to this impressive grassroots effort, FFIEC has announced the steps regulators are taking to reduce the regulatory burden by streamlining and simplifying Call Report requirements for community banks. The proposal will be put out for public comment for 60 days and will take effect either in December 2015 or March 2016. The plan would apply to banks and savings associations but not credit unions.

    This welcomed action has been pursued by the ICBA and CBAI for years as one of our top-priority regulatory relief initiatives. ICBA's Terry Jorde noted in a blog post that community bankers deserve the credit for the call report relief. Read ICBA Blog Post. See Reuters Article. Read Proposed Rule.

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    CBAI Leadership Banker Attends "Meet the Comptroller Roundtable"

    Mary Sulser, President and CEO of Buena Vista National Bank, Chester, and former Chairman of the Community Bankers Association of Illinois, attended a "Meet the Comptroller Roundtable" at the Central District Office of the Office of the Comptroller of the Currency in Chicago. This roundtable was an opportunity for the invited bankers to share their views on important community bank and thrift issues with senior OCC regulators. Read More.

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    Fine: Mega-Breaches Require Retailer Security Standards

    The recent rash of data breaches requires federal data security safety standards for entities that are prone to mega-breaches, such as big-box retailers, ICBA President and CEO Cam Fine wrote in a new op-ed. On The Hill’s Congress Blog, Fine noted that the financial services sector sets the watermark standard for protecting customer financial data due to the Gramm-Leach-Bliley Act.

    Fine called on Congress to pass the Data Security Act (H.R. 2205/S. 961), which would require all entities that handle consumers’ sensitive financial data to have a robust process to protect data. This legislation would also effectively replace the current patchwork of state and federal data-breach regulations with uniform protections. Read Fine’s Op-Ed.

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    Vilsack: Farm Bill Programs Face Cuts Unless Congress Acts

    Farm bill safety net programs face budget cuts of roughly 7 percent due to sequestration unless Congress acts, Agriculture Secretary Tom Vilsack said this month. Vilsack indicated that the Agriculture Risk Coverage and Price Loss Coverage programs would be subject to cuts between 6.8 percent and 7.3 percent if Congress doesn’t address the funding cutback in appropriations legislation. Farmers have until September 30 to enroll in the farm bill programs, which trigger financial protections for producers when market forces cause substantial drops in crop prices or revenues. Read Vilsack’s Comments. See USDA News Release.

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    Rise in New Vehicle Prices Leads Consumers to Buy Used, Extend Terms, or Lease

    The difference between the average monthly payments for new and used vehicles reached its highest level on record. Findings from the report also show that consumers are continuing to extend their loan terms as a way to keep payments down, especially for used vehicles. Read More.

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    September Is National Preparedness Month

    The Office of the Comptroller of the Currency (OCC) reminds national banks and federal savings associations to maintain effective plans to respond to natural disasters and other emergencies as September is National Preparedness Month. The OCC also reminds national banks and federal savings associations of its guidance to assist financial institutions and customers affected by extreme weather and other emergency conditions. The Federal Emergency Management Agency (FEMA) also provides a variety of guidance and information regarding emergency preparedness, including information about how to protect your business, preparing your plan, and the Integrated Public Alert and Warning System.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    With football season now in full swing from high schools through the professional ranks, sentiment is running high around water coolers everywhere. That sentiment is not, however, running high around consumers. In fact, it’s not running at all. Investors manning their water coolers recently learned that the University of Michigan’s Index of Consumer Sentiment plummeted in August to 85.7 from 91.9. That’s the largest, single monthly drop since late in 2012. See Baker Market Update.

    MBS Market Strategies
    September 2015 - Prepayment Summary

    Aggregate speeds have now fallen in 4 of the last 5 months with all three agencies reporting declines in August. Fannie and Freddie 30yr speeds fell the most on the month, both down 1.6 CPR to 12.8 and 13.1, respectively. See MBS Market Strategies.

    Baker Economic Brief
    Chart of the Day

    As the Fed meets to discuss a possible rate increase, it’s interesting to look back at how dramatically they’ve changed the way they operate. See Baker Economic Brief.

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    CBAI LEGAL: Bankruptcy Filing Tip - Cancel the Disney World Trip

    A recent (August) decision of the U.S. Court of Appeals for the Seventh Circuit suggests that extravagant spending binges by a person who anticipates filing Chapter 7 could influence a federal Bankruptcy Court’s decision to dismiss the bankruptcy filing and refuse to discharge a half million dollar debt. See Most Recent CBAI LEGAL.

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    CBAI Email Partner Intermedia Named Among the World’s Top Cloud Providers

    CBAI is pleased to announce that Intermedia, its partner for delivering protected email services to community banks, ranked #19 among the world’s top 100 cloud service providers, according to Talkin’ Cloud 100, Penton Technologies’ fifth annual ranking of the information industry’s most noteworthy cloud service providers.

    Intermedia, the world’s largest independent Microsoft Exchange business email service, provides unified email, calendar and contacts access on tablets, PCs, cell phones and web browsers. Synching to multiple devices allows bankers to communicate with customers and vendors on the go. Backed by 99.999% availability, a superior disaster recovery plan, and state-of-the-art security, Intermedia helps banks achieve increased levels of reliability and assurance that sensitive data transmitted across multiple devices is protected.

    CBAI members have access to Intermedia's world-class email services at an exclusive discount. For more information about the CBAI Premiere Email Program, contact Mike Duke via email at miked@cbai.com, or telephone at 800/736-2224.

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    Wolters Kluwer Expert to Speak on Pending HMDA Rules at CBAI Convention

    With finalization of the new Home Mortgage Disclosure Act data collection rules expected soon, Wolters Kluwer Financial Services Amy Downey, product manager and regulatory expert for the company’s Consumer Compliance business, will offer her insights on preparing for the new regulations at the Community Bank Innovations Breakfast presentation Saturday morning. Read More.

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    WKFS Community Impact Award Announced

    CBAI preferred provider Wolters Kluwer Financial Services is accepting nominations through Sept. 30 for the 2015 Community Impact Award. The award honors dedicated compliance professionals and their institutions, encourages innovative community lending, and provides the financial industry with examples of programs that work. The award will be presented at the 2015 CRA and Fair Lending Colloquium, scheduled for Nov. 1-4 in Orlando, FL. Submit Nominations Here. Register for the Colloquium.

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    Raising the Bar on Cybersecurity Compliance

    Security risks, reliability risks, regulatory risks – every day, banks are facing new and ever-increasing risks due, in part, to the rapidly changing technology environment. These risks are taking up more time and becoming more challenging to manage. Read BankOnIT Blog.

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    CBAI FedPac Fundraiser – Another Grand-Slam!

    CBAI extends a BIG THANK YOU to the many bankers, associate members, and staff for stepping up to the plate and supporting CBAI FedPac! Read More.

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    Appraisal Review Seminar Slated for September 29 & 30

    Since 2010, all regulatory agencies have increased their expectations regarding a bank’s review of property appraisals. A checklist simply does not suffice anymore, particularly on commercial property appraisals. Banks must gain a better understanding of the appraisal process and of the appraisals it receives. Just because an appraiser is on the bank’s approved appraisal list does not mean the bank should accept his or her work without question or review. Banks are expected to thoroughly review the appraisals, and question the assumptions contained therein when necessary. This seminar focuses on the regulatory requirements and expectations regarding the review of third-party appraisals and in-house evaluations. Both single-family dwelling and commercial property appraisals are discussed. Depending on the individual institution’s structure, this seminar should be attended by personnel from loan administration, underwriting/credit analysis, to all general loan personnel. Leading this seminar is Aaron Lewis, consultant in the lending division of Young and Associates, Inc.

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    ACH: Stay Informed and In Compliance Scheduled for October 1, 6, & 27

    In the ever-changing world of ACH, it is difficult to stay abreast of the risks involved and the ever-changing rules. The presentation gives community banks ideas for reducing risk and improving compliance. The ACH-Rule changes that are effective from 2014 - 2018 are also explained in a practical, easy-to-understand approach. This seminar identifies areas of ACH activity where a financial institution may be held liable if proper procedures are not in place, and learn what examiners are looking for relative to ACH. Fraud schemes occurring within ACH processing are outlined. In response to each risk or fraud identified, there are solutions provided to mitigate the risk to both the financial institution and its account holders. The class provides attendees with ideas for policies and procedures that help protect the financial institution from unnecessary losses. Simplified procedures for maintaining compliance and tips for avoiding those commonly-made mistakes are provided. ACH-Rule changes effective in 2014 and 2015, and those already approved with effective dates 2016 through 2018, are also explained in an understandable manner. Sample written statements for unauthorized debits and stop-payment forms that comply with the rules and limit the bank's liability under Regulation E are provided. Commonly made mistakes regarding ACH-Rules compliance are identified. Nicole Meinhardt, CPA, MST, AAP, and senior manager at Wipfli LLP, Sterling, IL, leads this seminar.

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    Community Reinvestment Act Seminar Set for October 1

    Community Reinvestment Act (CRA) standards and requirements are part of every major banking decision. Over the years, there have been changes in the CRA regulations for banks. However, the concept remains unchanged - take care of all customers at all income levels. As CRA is not going away, all banks should be continuing the process of assuring CRA compliance. This session includes all relevant regulatory information, as well as CRA questions and answers as set forth by the regulators. Proper knowledge of the CRA regulation assists bank management in their decision process. While much of the day focuses on the formal rules, we provide plenty of time later in the day for a discussion of issues that are common to all banks. While we moderate the discussion, the subject(s) of the conversation are determined by attendees. Attendees are strongly encouraged to consider subjects for discussion. Depending on the individual bank's needs, this seminar should be attended by CRA officers, lending managers, loan administrators, senior management, compliance officers, and internal auditors. Leading this seminar is Adam Witmer, CRCM, compliance consultant with Young & Associates, Inc., Kent, OH, serving client banks in the Midwest.

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