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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    September 28, 2016

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Congressman Blaine Luetkemeyer Addresses CBAI Convention
  • Session Cites Successful Community Bank Advocacy on FASB/CECL
  • David Pirsein Named CBAI 2016 Outstanding Member
  • Fitech Payments Receives CBAI 2016 Outstanding Service Recognition
  • Two Member Banks Honored with BKD Award for Excellence and Innovation
  • Congressman Bost Introduces Legislation to Increase USDA Loan Guarantee Limits
  • ICBA Establishes Litigation Fund to Support Lawsuit Against NCUA
  • Fine: ICBA Standing Up to Reckless Regulator
  • Federal Reserve Supports Restoration of Certain Glass-Steagall Provisions
  • Community Bank Message to Congress: "We Are Not Wells!"
  • Brookings Paper: Big Banks No Safer Since Crisis
  • Gruenberg: DIF Reserve Ratio Ahead of Statutory Deadline
  • The Politics of Regulation and the Presidential Race
  • Jim Ashworth and Michelle Gross Elected to FHLB Chicago Board of Directors!
  • McKee Named Chairman of CBAI Foundation for Community Banking
  • Farm Loan Restructuring Rises as Rural Economy Sags
  • FDIC Publishes Affordable Mortgage Lending Guide
  • CSBS White Paper Discusses Opportunities for Community Banks to Collaborate
  • Investment News From THE BAKER GROUP
  • Mastercard Says Fraud Costs Dropped 54% Since (EMV) October 2015
  • CBIS Nicoud: Time to Consider Basic Work Comp and General Casualty Protections?
  • CBAI LEGAL: Innocent Mistake Does Not Create Binding Terms
  • Your Bank’s Board is Referenced 40 Times in the FFIEC’s Newest Release
  • Save the Date for CBAI’s 43rd Annual Convention in Springfield!
  • ACH: Stay Informed and In Compliance Set for October 4, 12, and 19
  • Developing a Business-Development Strategy To Be Held October 12
  • CFO Conference Scheduled for October 27


  • Congressman Blaine Luetkemeyer Addresses CBAI Convention

    On Saturday, September 17th, Missouri Congressman Blaine Luetkemeyer (R-03) addressed a general session of community bankers during CBAI’s 42nd Annual Convention in Kansas City. The Congressman is a former bank examiner, community banker, small business owner, and currently operates a 160 acre farm. He was first elected to Congress in November of 2008 and serves on the U.S. House Financial Services Committee, and is its Housing and Insurance Subcommittee Chairman, as well as serving as the Vice Chairman of the U.S. House Small Business Committee. Read More.

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    Session Cites Successful Community Bank Advocacy on FASB/CECL

    During a lively Breakout Session at CBAI's 42nd Annual Convention community bankers heard first-hand accounts of how their aggressive advocacy efforts, and those of the associations that exclusively represent their interests, resulted in significant revisions to the proposed Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) model. Read Article and Access Helpful Links.

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    David Pirsein Named CBAI 2016 Outstanding Member

    By virtue of an exceptional contribution of time, energy, and ideas to serve community banking, the 2016 CBAI Outstanding Member is DAVID PIRSEIN, FIRST NATIONAL BANK IN PINCKNEYVILLE, who was named at CBAI’s 42nd Annual Convention & Exposition held recently in Kansas City, MO. Read more in the November issue of Banknotes magazine.

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    Fitech Payments Receives CBAI 2016 Outstanding Service Recognition

    The recipient of the 2016 Service Development Award is FITECH PAYMENTS, a partner of Community BancService Corporation (CBSC), the business-services subsidiary of CBAI. Fitech enables community banks to provide small-business clients with merchant-card processing at no risk to the bank while generating new residual income and below-market pricing and superior customer service. Read more in the November issue of Banknotes magazine.

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    Two Member Banks Honored with BKD Award for Excellence and Innovation

    First Robinson Savings Bank was named the winner of the 2016 Excellence and Innovation BKD Award for its leadership in mentoring young engineers temporarily assigned to the small community. Its innovative approach to welcoming them to and including them in the community impressed the judges immensely.

    STC Capital Bank, St. Charles received an Honorable Mention for its work with the LivingWell Bridge Walk in support of a local cancer facility. Read more about each in the November issue of Banknotes magazine.

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    Congressman Bost Introduces Legislation to Increase USDA Loan Guarantee Limits

    CBAI thanks Illinois Congressman Mike Bost (R-12) for introducing The Beginning Farmer and Rancher Guaranteed Loan Modernization Act of 2016 (H.R. 5733). This legislation increases USDA guaranteed farm operating and guaranteed real estate loan limits from $1.39 million to $2.5 million while maintaining the existing 90% guarantee against default. Additionally, it allows higher loan limits in $100,000 increments up to $3.5 million while stepping down the guarantee percentages in 1% increments (90% to 80%). The legislation also includes an exception for certain producers (i.e., qualified beginning or socially disadvantaged farmers or ranchers) with a higher guarantee limit of 95% and stepping down to 85%. An annual inflation adjustment is also included so the guarantee amounts need not be revisited to keep them current. Read Legislation.

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    ICBA Establishes Litigation Fund to Support Lawsuit Against NCUA

    On September 7, 2016, the Independent Community Bankers of America (ICBA) filed suit against the National Credit Union Administration for unlawful rulemaking which allow tax-exempt credit unions to exceed limits on commercial lending established by Congress. Learn More.

    ICBA has established the ICBA Litigation Fund to allow community bankers to directly contribute to this lawsuit. All contributions to the Fund are strictly voluntary and will be directed solely to the ICBA’s campaign to level the playing field between community banks and credit unions through the courts. Contribute.

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    Fine: ICBA Standing Up to Reckless Regulator

    ICBA’s credit union lawsuit challenges a captive federal regulator that is attempting to rewrite the law for the tax-exempt industry it is charged with overseeing, ICBA President Cam Fine wrote last week. He noted that the National Credit Union Administration’s rule allowing credit unions to exceed commercial lending limits set by Congress unilaterally sidesteps the legislative branch.

    “After years of evolving from a regulatory agency to a cheerleader for its tax-exempt industry, the NCUA has finally gone too far,” Fine wrote. “In attempting to serve as the regulatory rubber stamp for a handful of growth-oriented credit unions seeking to expand at all costs, the NCUA has overstepped its legal bounds.” Read Fine’s Blog. More on Lawsuit.

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    Federal Reserve Supports Restoration of Certain Glass-Steagall Provisions

    In a surprise move, the Federal Reserve recently called on Congress to repeal parts of the Gramm-Leach-Bliley Act that ended the Glass-Steagall era in 1999. The Fed recommends preventing mega banks from operating in-house private equity funds and running physical commodity empires.

    The Fed's position is part of a long-awaited multiagency report that Congress mandated with Dodd-Frank back in 2010, in an effort to get a clearer picture of what exactly the mega banks had been doing to grow so big and risky.

    CBAI has long advocated restoration of certain provisions of Glass-Steagall to reduce risk in the banking system and supports the Fed’s recommendations. Read More.

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    Community Bank Message to Congress: "We Are Not Wells!"

    CBAI was compelled to write to the Illinois Congressional Delegation regarding the disturbing revelations about the massive fraud at Wells Fargo Bank which resulted in a multi-million dollar fine against yet another mega bank. Well Fargo’s misdeeds add to a tragically long list of violations (often criminal) by the nation’s largest banks as evidenced by billions of dollars in fines and settlements, enforcement actions, and deferred prosecution agreements (conditional amnesty). These mega banks have again proven that they are Too-Big-To-Manage, Too-Big-To-Regulate, Too-Big-to-Behave, Too-Big-To-Prosecute, and are apparently Too-Big-To-Jail. CBAI strongly urged the Illinois Delegation to not let the sins of Wells Fargo, and the nation’s megabanks, stall the passage of meaningful regulatory relief for well deserving community banks that treat their customers and communities with honesty and respect. Read Article.

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    Brookings Paper: Big Banks No Safer Since Crisis

    A Brookings Institution paper found little evidence that large institutions are significantly safer than they were before the financial crisis and some support for the notion that risks have actually increased. The paper from Harvard PhD candidate Natasha Sarin and former Treasury Secretary Lawrence Summers concludes that while regulatory measures have increased safety, they have contributed to a dramatic decline in the franchise value of megabanks. It also suggests financial markets underestimated risk prior to the crisis. See Brookings Institution Paper.

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    Gruenberg: DIF Reserve Ratio Ahead of Statutory Deadline

    FDIC staff project that the Deposit Insurance Fund reserve ratio should reach 1.35 percent in 2018, roughly two years ahead of the statutory deadline, FDIC Chairman Martin Gruenberg said. By meeting this target earlier than the mandate, the FDIC is less likely to have to raise rates unexpectedly in the event of a future period of stress, which supports stable and predictable assessments, he said. Read Gruenberg’s Statement.

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    The Politics of Regulation and the Presidential Race

    Community banks’ role is a presidential campaign theme

    Tired of politics? Probably, but since the cause of community banks was championed in the platforms approved at the presidential nominating conventions of the Democratic and Republican parties, they deserve our attention. Regulatory topics also came up from time to time as the campaigns roamed the countryside looking for votes.

    The two platforms actually agreed on a few points, but generally diverged on specific banking issues — like the candidates on most topics. Read More from BankNews Editor Bill Poquette.

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    Jim Ashworth and Michelle Gross Elected to FHLB Chicago Board of Directors!

    The Community Bankers Association of Illinois is pleased to announce the re-election of Jim Ashworth, Vice Chairman of CNB Bank & Trust, N.A., Carlinville, and President of CNB Bank Shares; and the election of Michelle Gross, Executive Vice President, CEO, Information Systems Officer, and Director of the State Bank of Bement, to the Board of Directors of the Federal Home Loan Bank of Chicago. Ashworth and Gross will begin their four-year terms on January 1, 2017. CBAI congratulates these fine community bankers and thanks them for their service. Read More.

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    McKee Named Chairman of CBAI Foundation for Community Banking

    The CBAI Foundation is pleased to announce the election of KIM McKEE, COO, vice president and branch manager (Ladd location) of NORTH CENTRAL BANK, HENNEPIN as chairman of the CBAI FOUNDATION FOR COMMUNITY BANKING. McKee will serve a five-year term. She has served on various committees and boards of CBAI, including her role as chairman of the Association’s Career Development Division (CDD).

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    Farm Loan Restructuring Rises as Rural Economy Sags

    Creighton University’s index of the rural economy sank in September and remained below growth-neutral for the 13th straight month. The Rural Mainstreet Index fell to 37.3 from 41.1 in August and was down from 49.0 a year ago. Nearly four in five surveyed bank CEOs reported a significant upturn in loan restructuring due to weak farm income. See Rural Mainstreet Index Report.

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    FDIC Publishes Affordable Mortgage Lending Guide

    Launches Online Resource Center

    Earlier this month the Federal Deposit Insurance Corporation (FDIC) published a guide and launched an online resource center to help community bankers learn more about single-family housing products offered by federal agencies and government-sponsored enterprises.

    The Affordable Mortgage Lending Guide, Part I: Federal Agencies and Government Sponsored Enterprises describes federal programs for single-family housing lending that support home purchase, refinance, manufactured housing, and some home improvements. It covers programs that are intended to assist a variety of communities, including rural areas and Native American communities, as well as low- and moderate-income individuals, first-time homebuyers, and veterans.

    Bankers can use this guide as a resource to gain an overview of a variety of program resources, to compare different products, for information on Community Reinvestment Act implications, and to help identify the next steps for program participation. See FDIC Release.

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    CSBS White Paper Discusses Opportunities for Community Banks to Collaborate

    Community banks face competitive pressures the current economic and regulatory environment. In response, some community banks are collaborating with shared services arrangements as a means to achieve greater efficiencies, and state bank regulators are favorably responding to this approach.

    A new white paper by the Conference of State Bank Supervisors (CSBS) describes the benefits of collaboration among community banks by pooling human, technological, or compliance resources in order to reduce costs, increase operational efficiencies, and leverage specialized expertise.

    The white paper, “Shared Resource Arrangements: An Alternative to Consolidation,” identifies a number of ways two or more financial institutions have successfully shared resources to either improve compliance, increase efficiency, or both.

    “As state bank regulators, my colleagues and I have a duty to ensure the broad, safe access to credit within local communities and we encourage innovative solutions,” said Shane Deal, Deputy Commissioner of the Minnesota Department of Commerce. “So where well-structured, mutually beneficial shared services arrangements maintain regulatory compliance and expand customer access to products and services, this is a favored alternative to consolidation.”

    The white paper also explains certain risks and restrictions to shared resource arrangements within current regulation. “There are inherent operational and reputational risks that come with engaging in shared services arrangements that banks should consider. There are also state and federal employment law concerns that may serve as a barrier to these types of arrangements. So banks should clearly map out each banks’ legal obligations before entering into a shared resource arrangement,” said Deal. Read CSBS White Paper.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The FOMC decided to maintain the target range for the federal funds rate at 0.25%-0.50%. Three Fed officials: Esther George of Kansas City, Loretta Mester of Cleveland and Eric Rosengren of Boston dissented in favor of a September rate hike, the most since December 2014. This was Mester’s first-ever dissent and none of the three dissenters will be voting members next year, suggesting a potentially reduced hawkish tone of future Fed statements. See Baker Market Update.

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    Mastercard Says Fraud Costs Dropped 54% Since (EMV) October 2015

    Mastercard announced recently that fraud costs have dropped 54% since the shift to chip-enabled cards in the U.S. The card giant indicated that data shows a “positive impact“ through the technology across stakeholders, including issuing banks, consumers and merchants.

    In reference to fraud, the very activity that the cards are designed to thwart, Mastercard said fraud data shows a 54 percent decrease in counterfeit fraud costs at retailers that have either completed or are close to completing EMV transitions, as measured between April 2015 and April 2016.

    The card giant said that, as of July of this year, 88 percent of its U.S.-based consumer credit cards are chip cards, a tally that represents a 105 percent boost in chip card adoption since the liability shift took root on October 1 of last year.

    As for merchants, Mastercard noted that, of the two million chip-active merchant locations that are featured in the company’s network, as many as 1.3 million are regional and local locations, up 159 percent since the liability shift.

    Conversely, counterfeit fraud costs were up 77 percent year over year among larger merchants that have not yet completed, or have not yet even adopted, EMV transitions. Read More.

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    CBIS Nicoud: Time to Consider Basic Work Comp and General Casualty Protections

    The most recent data from the U.S Bureau of Labor Statistics identifies the most common types of workplace injuries and gives community bankers insight as to how they can approach risk-management programs for their workers.

    Now is a good time for bankers to be cognizant of the simple, yet proven, measures to reduce workers’ compensation claims. While we’re, of course, hoping for the best weather possible for as long as we can, summer is drawing to an end. Winter and inclement weather will be here sooner than we think. Read More from CBIS Nicoud.

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    CBAI LEGAL: Innocent Mistake Does Not Create Binding Terms

    What would happen if your bank was offering 30-year mortgages at a rate of 3.50%, but an error in your advertisement in the local newspaper indicated that the rate was 0.35%? If a borrower demanded the advertised rate before the advertisement was corrected, would your bank be obligated under either contract law or consumer fraud statutes? Read Most Recent CBAI LEGAL.

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    Your Bank’s Board is Referenced 40 Times in the FFIEC’s Newest Release

    With regulators commenting over the past 24 months that information security is the biggest threat banks face today, more and more emphasis is being placed on the bank’s board of directors. Regulators expect the directors to effectively manage your bank’s technology risk, similarly to how the board manages credit, interest rate, liquidity and other risks your bank faces. Read BankOnIT Blog.

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    Save the Date for CBAI’s 43rd Annual Convention in Springfield!

    Mark your calendar today for CBAI’s 43rd Annual Convention and Expo, scheduled for September 14-16, 2017, at the Crowne Plaza in Springfield, IL. More information will be available soon. Highlights from the 42nd Annual Convention and Expo held in Kansas City are on the website now, including pictures of all main events. Don’t forget, all convention handout materials from the 20 break-out sessions are also available to convention attendees on the CBAI website. They are posted in the Members Only section titled “CBAI Convention Speaker Materials.” Please refer to the handout in your convention folder provided at registration for the login information. See CBAI's 42nd Annual Convention Highlights. See Convention Speaker Materials.

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    ACH: Stay Informed and In Compliance Set for October 4, 12, and 19

    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 2015 – 2018 are also explained in a practical, easy-to-understand approach. ACH officers and operations officers adn staff would all benefit from attending. Nicole Meinhardt, CPA, AAP and senior manager at Wipfli LLP, Sterling, IL leads this seminar.

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    Developing a Business-Development Strategy To Be Held October 12

    CBAI is pleased to offer Developing a Business-Development Strategy and Plan for Prospects this October. Having an effective and focused business development program is the key to the success of any bank’s growth. This program is designed to provide the foundational systems and develop the skills needed to be effective at making business calls on prospects. This seminar benefits anyone involved in the planning or execution of the bank’s business-development plan, including loan officers, branch managers, trust officers, and retail-banking employees. Topics covered include developing a prospecting program by researching, identifying, and prioritizing prospects; turning a gatekeeper into an influencer; getting an appointment over the telephone; key questions to ask during a meeting with prospects; making the difference – between you and the competition; making joint calls; the five keys to getting a commitment; following up and action planning. Leading this seminar is Dianne Barton, who founded Performance Solutions, Inc. in 1982.

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    CFO Conference Scheduled for October 27

    CBAI’s annual CFO Conference is designed to help community-bank CFOs gain a wide variety of information from expert speakers on hot topics and return to the bank ready to implement newly found ideas and knowledge! This conference not only benefits chief financial officers, it is also geared toward presidents, CEOs, and anyone else who is involved in controlling expenses and increasing profitability for their community banks. Topics and speakers include “Interest Rate Risk Case Study: Managing Through the Turn in Rates” with Matt Harris, vice president of the Financial Strategies Group, THE BAKER GROUP, Oklahoma City, OK; “Preparing for CECL: Financial Considerations and Data Preparation” with Tommy Troyer, executive vice president of Young & Associates, Inc., Kent, OH; “Overcoming Today’s Operational Challenges at Your Bank” with Heather Archer Eastep and Robert Flowers, partners at Hunton & Williams, LLP, Richmond, VA; and “Non-Interest Income: The Performance Difference” with Michael Slater, president of VITAL Financial Services, Clive, IA; and “Accounting Update” with Michael Brown, partner, and Toby Handel, senior manager, of Wipfli, LLP, Sterling, IL.

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