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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                            October 1, 2014

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • 2014 CDD Fall Meeting Slated for October 20-21 in Champaign
  • CBAI Endorses David Pirsein for the Chicago FHLB Board
  • Community Banking in the 21st Century Conference Held in St. Louis
  • House Approves ICBA/CBAI-Backed Thrift Holding Company Relief
  • CBAI Initiative Unanimously Endorsed by Illinois’ U.S. House Delegation
  • Farm Bill Decision-Making Tools and Signup Dates Available
  • ICBA: Basel Endorsing Megabank Bailouts
  • Whistleblower Says New York Fed Coddled Goldman Sachs
  • Baker Market Update
  • Baker Group Quarterly Conference Call Set for October 9th
  • Rural Economy Stagnating on Low Grain Prices
  • Building Relationships Key to Retaining and Gaining Customers
  • Identify Loan Portfolio Risks Before They Show Up on Delinquency Report
  • Financial-Advisory Services Add Value
  • The Transformation of Small-Town Branches
  • .Bank Domain Launching in 2015
  • 2015 CBAI Essay Contest for 26 Scholarships Now Underway!
  • CBSC and Diversified Crop Insurance Services Extend Relationship to Help Community Banks Earn Fee Income
  • News from the Bench: Cautionary Tale about FMLA’s Small-Employer Exemption
  • SHAZAM EMV Expert Says ‘Go Slowly’ on Chip-Card Migration
  • Save the Date for CBAI’s 41st Annual Convention in Nashville!
  • Run, Hide, Fight, or Comply? Robbery Training Scheduled for October 8
  • Ag Credit Analysis to be Held October 9
  • Appraisal Review Scheduled for October 15


  • 2014 CDD Fall Meeting Slated for October 20-21 in Champaign

    Be a Game-Changer! That is the challenge presented at the General Session for the CDD Fall Meeting.

    • Change bad habits to achieve your goals.
    • Overcome road blocks in communication.
    • And more!

    To view the brochure and to register, please click here or contact Melinda McClelland at 217.529.2265.

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    CBAI Endorses David Pirsein for the Chicago FHLB Board

    Please exercise your right to vote!

    CBAI is urging all community banks to vote only for David Pirsein, President and CEO of First National Bank in Pinckneyville, for election to the Federal Home Loan Bank of Chicago Board of Directors.

    The ballots were mailed to all FHLB member institutions last week, and they must be mailed to the FHLB and received by October 31st. Banks need to adopt a board resolution to be eligible to vote. See Announcement.

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    Community Banking in the 21st Century Conference Held in St. Louis

    The Federal Reserve and Conference of State Bank Supervisors hosted the conference last week at the Federal Reserve Bank of St. Louis. Speakers included ICBA’s Rebeca Romero Rainey, Fed Governor Jerome Powell, CSBS President and CEO John Ryan, and Federal Reserve Bank of Kansas City President Esther George. The co-sponsors submitted the results of a nationwide survey of more than 1,000 community banks. See Survey Results.

    George Says Community Banks Hurt by for Wall Street

    During the conference Federal Reserve Bank of Kansas City President Esther George said community banks have been disadvantaged by the regulatory overhaul aimed at preventing excessive risk-taking by the mega banks. She advocated regulatory relief for community banks and support for higher capital requirements for large banks. See Bloomberg Article. Read George’s Remarks.

    ICBA: Community Bankers Must Fight for Regulatory Relief

    While community bankers should be optimistic about the future of their profession, they must continue their fight for relief from excessive regulation, ICBA Vice Chairman Rebeca Romero Rainey said in her keynote address at the Community Banking in the 21st Century research conference. She emphasized that community bankers must ensure regulations do not get between their banks and the communities they serve. She continued ICBA’s and CBAI’s call for tiered regulation that varies according to the size and complexity of regulated institutions. See AB Article.

    Fed’s Powell: Regulation Particularly Daunting for Community Banks

    While improving economic conditions have begun to offer relief to community banks, these institutions continue to face challenges from regulation, Federal Reserve Board Governor Jerome Powell said. Speaking at the Community Banking in the 21st Century conference in St. Louis, Powell noted that the burden of regulatory compliance can be particularly daunting for community banks.

    Powell said the Federal Reserve Board is committed to understanding community bank challenges, citing the board’s Community Depository Institutions Advisory Council. He noted that community banks’ primary objective is serving members of their local communities, which is a fundamentally different business than that of large banks. Read Powell’s Remarks.

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    House Approves ICBA/CBAI-Backed Thrift Holding Company Relief

    ICBA-advocated legislation to ease regulatory burdens on thrift holding companies passed the House this week. Lawmakers voted 320-102 to approve the Promoting Job Creation and Reducing Small-Business Burdens Act (H.R. 5405).

    Section 301 of the bill would allow thrift holding companies to take advantage of the new SEC registration threshold of 2,000 shareholders and deregistration threshold of 1,200 shareholders. H.R. 5405 would correct an oversight in the drafting of the JOBS Act of 2012 that failed to apply the new thresholds to thrift holding companies.

    ICBA expressed its strong support for H.R. 5405 in a separate letter and a joint letter to lawmakers last week. The House advanced the JOBS Act fix in separate legislation (H.R. 801) that it passed in January. See ICBA Letter. See Joint Letter.

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    CBAI Initiative Unanimously Endorsed by Illinois’ U.S. House Delegation

    A Community Bankers Association of Illinois (“CBAI”) initiative has received unanimous support from members of the Illinois delegation to the United States House of Representatives. CBAI thanks House Financial Services Committee members Bill Foster (D-11) and Randy Hultgren (R-14) for working on a bipartisan basis in leading an Illinois U.S. House member letter to the Consumer Financial Protection Bureau (“CFPB”) urging an expanded definition of “underserved” areas in the Ability-to-Repay and Qualified Mortgage (“QM”) Rules to also include economically challenged areas. Read Illinois Member Letter.

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    Farm Bill Decision-Making Tools and Signup Dates Available

    USDA announced signup dates and electronic decision-making tools for producers to use in making program decisions. Signup for reallocating bases and updating yields run through February 27, 2015, and signup for electing which farm program to operate under runs November 17 through March 31, 2015. Producers have two main program choices: Price Loss Coverage and Agriculture Risk Coverage. More information is available from the USDA, the Farm Service Agency, and the University of Illinois. Dairy producers can access an FSA Electronic Tool for the new margin protection dairy program options.

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    ICBA: Basel Endorsing Megabank Bailouts

    ICBA expressed deep concern with the Basel committee’s endorsement of using public funds to resolve large and systemically risk banks.

    In a comment letter, ICBA wrote that in a recent consultative document the Basel committee produced a valid framework for identifying and dealing with weak banks. However, the committee’s explicit endorsement of unlimited taxpayer funds to resolve troubled banks promotes the presence of large, too-big-to-fail megabanks with outsized balance sheets.

    The letter also noted that by endorsing the use of public funds, Basel is implicitly admitting that capital levels are not sufficient to protect against catastrophic losses, and regulators should instead require sufficient levels of capital at these large institutions to absorb any losses that could occur as a result of an unforeseen crisis.

    In a recent American Banker Op-Ed, ICBA President Cam Fine wrote that while capital is king for the Basel committee, taxpayer funds apparently will do in a pinch. See ICBA Comment Letter. See Cam Fine Op-Ed.

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    Whistleblower Says New York Fed Coddled Goldman Sachs

    A ProPublica investigation alleging weak supervision by the Federal Reserve Bank of New York has sent shockwaves through the regulatory community. The report, based on secret recordings in 2011 by a former examiner, suggests “regulatory capture” kept the Fed from adequately supervising Goldman Sachs. Whether or not this most recent revelation will inspire appropriate action is yet to be determined CBAI has been outspoken for years about the favored regulatory treatment accorded the mega banks, and it’s one of the reasons why CBAI and ICBA oppose consolidation of the regulatory agencies. It wouldn’t take long for mega banks to capture a single national regulatory to the detriment of community banks. See AB Article. Read ProPublica Report.

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    Baker Market Update

    The U.S. reaffirmed its safe-haven status last month as global capital flowed into dollar-denominated assets following the commencement of bombing in Syria by the U.S. and its allies. This campaign escalation against ISIS, plus the situation in Eastern Ukraine, caused an already-stressed European Union to worry about further pressure on its economy. And, then, there’s China. All of this has pushed global investors into the greenback, now sitting at its highest level on foreign-exchange markets since 2010. For its part, the U.S. Treasury market rallied and the 10-year T-Note yield fell around 8bps from a 2.61-percent to a 2.53-percent level. See More.

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    Baker Group Quarterly Conference Call Set for October 9th

    On Thursday, October 9th at 11:00 a.m., The Baker Group will host a quarterly conference call to discuss investment strategies for the 4th quarter. For more information and to register, click here.

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    Rural Economy Stagnating on Low Grain Prices

    According to Creighton University’s Rural Mainstreet Index, the rural economy is at its lowest level in two years due to declining grain prices. The September index, based on a survey of bank CEOs in a 10-state region, declined to 48.2 and has been trending lower since June 2013. Weaker crop prices are taking the air out of agriculture land prices, the survey found. Most indices for Illinois declined in August. Read Mainstreet Economy Report.

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    Building Relationships Key to Retaining and Gaining Customers

    With the right talent and processes in place, community banks can focus on the critical mission of building strong and profitable business relationships. According to consultants specializing in customer relationships, bankers need to focus on how customers like to do their banking, where their deposits come from, and how they plan to use the account. Read More.

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    Identify Loan Portfolio Risks Before They Show Up on Delinquency Report

    It can be seductive for a loan officer, a loan manager, or even a CEO to think that once a loan has been approved and funded the work is done. Simply set up a payment process with a quality collection department and the job is well in hand. This, of course, is far from the truth. In reality, loan portfolios require constant monitoring and oversight. Read More.

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    Financial-Advisory Services Add Value

    Adding a financial-advisory service component, or even a wealth-management team for your community bank’s wealthier clients, can be a profitable way of growing the non-interest revenue portion of your balance sheet. Article here.

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    The Transformation of Small-Town Branches

    Community banks face unique issues but can improve revenue and efficiency when they target growth segments and embrace new technology. Read More.

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    .Bank Domain Launching in 2015

    The .bank domain will be available in mid-2015, according to fTLD Registry Services. The registry service announced a contract with the Internet Corporation for Assigned Names and Numbers to operate the generic .bank top-level domain. Banks will have the opportunity to voluntarily convert their domains from .com to .bank to begin conducting business in a more secure Internet environment. The .bank domain will have enhanced security requirements, and all applicants will be verified as legitimate members of the banking community before any names are awarded, according to fTLD. The new domain will help prevent users from being redirected to fake bank websites and will mitigate phishing. Further information about .bank participation will be provided in the coming months. Read fTLD Release. Read FAQs.

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    2015 CBAI Essay Contest for 26 Scholarships Now Underway!

    Get on your area’s high-school radar screen. Start publicizing the CBAI Foundation for Community Banking’s annual essay contest for deserving high-school seniors. No cost to banks to participate! See Details. For the full kit to get started, contact Bobbi Watson at bobbiw@cbai.com.

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    CBSC and Diversified Crop Insurance Services Extend Relationship to Help Community Banks Earn Fee Income

    Community BancService Corporation, Inc. (CBSC) has extended its partnership with Diversified Crop Insurance Services, a provider of crop insurance and grain-marketing services. This agreement gives CBAI member banks access to tools that help their farm clients develop an overall risk management program.

    Selling crop insurance can help banks offset challenges to profitability while providing a service nearly every farm customer needs. “There are Illinois banks routinely earning $20,000 up to $500,000 annually selling crop insurance,” said Mike Kelley, CBSC president. “Farm Credit Services and local agents are selling crop insurance. The local community bank should also have the same opportunity to sell it and provide valued crop risk-management services to their farm customers.” Read More.

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    News from the Bench: Cautionary Tale about FMLA’s Small-Employer Exemption

    The federal Family and Medical Leave Act (“FMLA”) is unavailable to an employee whose employer is exempt because the employer has fewer than 50 employees within a 75-mile radius of the employee’s workplace. Given that “small-employer exemption” from FMLA, how did an employer with only 33 employees end up paying nearly $375,000 after being sued for denying an employee FMLA leave? For details of a recent (September 19) Federal Court of Appeals opinion in the case of Cuff vs. Trans States Holdings, Inc., Click Here.

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    SHAZAM EMV Expert Says ‘Go Slowly’ on Chip-Card Migration

    When it comes to migrating card portfolios to the EMV standard, SHAZAM CIO Terry Dooley offers the following advice: The liability shift is not going to threaten the profitability of most small issuers’ portfolios. There are other things you can do to reduce fraud losses, like educating your debit cardholders to use a PIN whenever possible. Go slowly. Migrate your card portfolios to EMV under a phased approach that will allow the industry to work out the kinks. It’s going to take time for the industry to universally enable EMV throughout the entire payments eco-system, and you only want to make this transition once. Take your time, make calculated moves and don’t succumb to the bandwagon pressure. Read More.

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    Save the Date for CBAI’s 41st Annual Convention in Nashville!

    Mark your calendar today for CBAI’s 41st Annual Convention and Expo, scheduled for September 17-19, 2015, at the Omni Hotel in Nashville, TN. More information will be available soon. Highlights from the 40th Annual Convention and Expo held in Chicago include pictures of all main events and are available now at www.cbai.com. Don’t forget, all convention handout materials from the 24 break-out sessions are available to convention attendees on the CBAI website beginning on Friday, October 3. They will be 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.

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    Run, Hide, Fight, or Comply? Robbery Training Scheduled for October 8

    Thinking it was a normal bank robbery, three bank employees complied with the demands of the “robber.” He ultimately took all three employees hostage as part of a rambling daylong ordeal that ended in tragedy, and not until it was too late did anyone realize that the perpetrator never intended to rob the bank. Bank employees in other market areas began asking: What should I do if I am ever in the same position? At what point do I consider other alternatives rather than complying with the robber’s demands? How do you know what to do if it looks like it’s a robbery but then it’s not? Help, I need some guidance to deal with a new world of active threats! Jim Rechel of The Rechel Group, Inc. who worked with the bank and its employees to develop a response to the tragedy, and provided guidance for the future, leads this program. We have put the ideas and strategies together into a full-day workshop for institutions of all sizes and locations, to provide information that can better equip you to deal with “active threats” in the workplace.

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    Ag Credit Analysis to be Held October 9

    An agricultural loan officer's responsibility is to perform sound credit analyses and make loans to good customers. This requires a strong understanding of basic agricultural credit analysis, as well as, the drivers of change in the agricultural production sector. The overall objective of this program is to prepare participants to be informed and effective leaders in agricultural lending. A primary focus of the workshop is to review the basic financial statements and ratios that are important to measuring and monitoring the credit risk of agricultural borrowers. Case studies and computerized decision tools are used to illustrate the important concepts. Other contemporary issues such as farmland markets, rental agreements, crop insurance, and other risk management tools are discussed. All participants receive a complimentary copy of computerized decision tools used in the workshop. Leading this seminar is Dr. Paul Ellinger, professor at the University of Illinois, in Champaign-Urbana. He is currently head of the Department of Agricultural and Consumer Economics at the University of Illinois.

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    Appraisal Review Scheduled for October 15

    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 doesn’t 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 will be 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, a consultant in the lending division of Young and Associates, Inc. For more information or to register, please click here.

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