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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                            October 15, 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
  • CBAI Legislative Outreach Welcomes Your Ideas!
  • Court Dismisses FDIC Suit Against Officers and Directors of Failed Community Bank
  • Regulators Considering Merger of Two Failed Mega Banks
  • Regulatory Capture Old News for Community Banks
  • Fine: Numbers Show Industry Resilient and Strong
  • 2015 CBAI Essay Contest for 26 Scholarships Now Underway!
  • FHFA Extends Comment Period for Proposed FHLB Rule
  • Baker Market Update
  • Baker October 2014 Prepayment Summary
  • New FREE Quarterly Ads for Community Banks Now Available
  • Understanding Financial Institution Bonds
  • Survey: Consumers Seeing No Savings from Debit Interchange Amendment
  • BankOnIT: A Critical Deadline Is Approaching
  • Why Checking Matters
  • Seven Cybersecurity Questions Bank Boards Need to Ask
  • Millennials a Good Fit for Community Banks
  • Have the Right Conversation with Customers
  • News from the Bench: Foreclosure “Credit Bid” Surplus Cannot Pay Delinquent Taxes
  • IDFPR and CBAI are Hosting Cannabis Related Business Education Events
  • Mark Your Calendar for CBAI’s 41st Annual Convention in Nashville!
  • BSA/AML Update Scheduled for October 23
  • Auditing ECOA (Reg B), Servicemember Civil Release Act, and Reg O Overview Set for October 27
  • Consumer Loans and HELOCs, Origination & Review Scheduled for October 28 & 29
  • Developing a Successful Sales Machine to be Held October 29


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

    The CDD Annual Fall Meeting, scheduled for October 21, 2014, at the I-Hotel & Conference Center, Champaign, is geared toward honing professional and banking skills. In addition to the educational offerings, this year's meeting includes a fun networking opportunity at the hotel the evening of October 20th, where the entertainment is a trivia night. Come prepared to battle wits with other CDD members and enjoy a night of networking! The Fall Meeting begins the next morning with the popular Networking Session where bankers engage in a roundtable discussion with other bankers sharing their job responsibilities. CDD members will then attend a general session with Jeff Compton entitled, “The Ultimate Goal of the Game,” followed by a set of breakout sessions: “Interest-Rate Risk and Asset/Liability Management;” “Lending Compliance Update: What Examiners Are Saying;” and “Learn to Lead.” The Business Meeting Luncheon includes an association update by then CBAI Chairman Todd Grayson and a legislative update by CBAI senior vice president of governmental relations, Kraig Lounsberry. The afternoon agenda features the following breakout sessions: “Macroeconomic Outlook-Linkages to Ag & Community Banking; “New Regulations and Requirements;” and “Card-Fraud Update.” Then a second Networking Session of more roundtable discussions on a variety of topics will be held. The Fall Meeting concludes with an afternoon general session with Jeff Compton titled, “The Driving Force in Communication.”

    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 have been mailed to all FHLB member institutions, and they must be returned to the FHLB and received by October 31st. See Announcement.

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    CBAI Legislative Outreach Welcomes Your Ideas!

    We need your help! CBAI’s Committee on Legislation and Regulation will meet later this year to discuss and propose a legislative agenda to pursue during the Spring 2015 session of the Illinois General Assembly. As always, we are soliciting your ideas. Our remarkable success in initiating over 50 bills since 1988 which ultimately became law has benefitted all community banks in Illinois. Many of these laws began with this process. Each year, ideas for changes in Illinois law submitted by bankers are reviewed by the Committee and evaluated in terms of the breadth of their application to CBAI’s member banks and the likelihood of mounting a successful campaign for their passage.

    Please send us your ideas! Specificity is appreciated but general ideas for legal changes are welcomed. Please email your suggestions to Kraig Lounsberry, SVP Governmental Relations. Each and every suggestion for legislation will be considered by the committee this year.

    Your participation is what makes CBAI a great organization.

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    Court Dismisses FDIC Suit Against Officers and Directors of Failed Community Bank

    Decision Could Affect Future Cases

    A federal judge last month dismissed an FDIC lawsuit against the directors and officers of a failed community bank in North Carolina, an action that could have a significant impact on future cases.

    The court raised a critical question: Was it fair to bring this case given the overwhelming impact of the Great Recession and the seemingly arbitrary nature of which banks survived and which didn’t? As Judge Terrence Boyle put it, “It appears that the only factor between defendants being sued for millions of dollars and receiving millions of dollars in assistance from the government is that Cooperative [the bank] was not considered ‘too big to fail.’”

    Judge Boyle added, “Taking the position that a big bank’s directors and officers should be forgiven due to its size and an unpredictable economic catastrophe while aggressively pursuing monetary compensation from a small bank’s directors and officers is unfortunate if not outright unjust.” CBAI compliments Judge Boyle for his decision. See AB Article.

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    Regulators Considering Merger of Two Failed Mega Banks

    CIT Bank, which went bankrupt in 2009 after receiving $2.3 billion in TARP funds that it never repaid, has now emerged from bankruptcy with the intent to acquire One West, which rose from the ashes of the failed IndyMac. George Soros and several former Goldman Sachs executives stand to double their money in the merger. If approved, the merger would give CIT about $67 billion in assets. As noted in a recent article in The Fiscal Times, “Before we move back into an era of big bank growth, and reward investors handsomely for banks that the public helped bail out, maybe we should ensure some second chances for Main Street first.” CBAI fully concurs! See Fiscal Times Article.

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    Regulatory Capture Old News for Community Banks

    A new report on the New York Fed’s deference to the megabanks it regulates is making waves in Washington, but it is old news to community bankers, ICBA President and CEO Cam Fine wrote in a recent blog post. He emphasized that ICBA and community bankers have been saying for years that the regulatory playing field is heavily tilted in favor of the megabanks.

    Fine’s commentary follows a ProPublica report on the agency’s “regulatory capture,” in which regulators are co-opted by the banks they oversee. “We appreciate the investigative reporting, with its secret recordings and bureaucratic inertia in the face of Wall Street power,” Fine wrote. “But, please, tell us something we don’t know.” Read Fine’s Blog Post.

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    Fine: Numbers Show Community Banks are Resilient and Strong

    The nation’s community banks are standing up to and even standing above the largest financial players, according to ICBA President and CEO Cam Fine. In his latest Fine Points column, Fine wrote that the latest industry numbers show community banks are top-producing lenders with strong earnings.

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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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    FHFA Extends Comment Period for Proposed FHLB Rule

    The Federal Housing Finance Agency (FHFA) today announced that it is extending the comment period for the agency’s proposed rule on Federal Home Loan Bank membership by 60 days. The comment period was previously set to close on November 12, 2014, 60 days after publication in the Federal Register. The comment period will now close on January 12, 2015. CBAI encouraged the FHFA to extend the comment period in a September 8th comment letter. Read Comment Letter.

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    Baker Market Update

    Last Friday's release of September’s FOMC minutes reveals a growing concern that weak or negative growth in the EU and elsewhere could crimp our own potential. See More.

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    Baker October 2014 Prepayment Summary

    For the second straight month, prepayment speeds fell for all three agencies after a 5 month run of increasing speeds. Fannie 30 years fell 0.1 CPR to 11.9 with Freddie 30 years down 0.3 CPR to 12. See Summary.

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    New FREE Quarterly Ads for Community Banks Now Available

    To access your free ads, visit CBAI's Members Only section at www.cbai.com or contact Andrea Cusick, CBAI SVP Communications, at 800/736-2224 or cbaicom@cbai.com. See Sample Ads.

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    Understanding Financial Institution Bonds

    Financial Institution Bonds exist to account for human nature’s complexity. Even trusted employees, sometimes with longstanding relationships with their community-bank employers, are capable of explicit fraud. Then there are the outside threats... CBIS/Nicoud is a CBSC preferred provider. Read More.

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    Survey: Consumers Seeing No Savings from Debit Interchange Amendment

    On the third anniversary of the implementation of the Durbin debit interchange amendment, consumers have seen none of the savings they were promised by retailers. The Electronic Payments Coalition, of which ICBA is a member, released a survey that shows 94 percent of consumers have seen prices that have increased or remained the same over the past three years.

    “When Congress interferes in a fight between two industries over who pays what, it is almost always consumers who lose,” ICBA President and CEO Cam Fine said. Read Survey Details.

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    BankOnIT: A Critical Deadline Is Approaching

    Has your bank upgraded to new servers yet? Many banks haven’t. Analysts are predicting that many businesses will ignore the deadline and continue operating with the familiar and stable Windows Server 2003. But the consequences could be very serious. BankOnIT is a CBSC preferred provider for Bankers Private Cloud and IT managed services. Learn More.

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    Why Checking Matters

    Consumers prefer paper checks for some types of payments… In 2012, Americans wrote 18.3 billion checks… Checking accounts enhance relationships and contribute to profitability… A new checking household is valued at $791. These are just a few of the facts contained in a new report published by Harland Clarke, CBAI’s preferred provider for check printing and marketing services. Read More.

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    Seven Cybersecurity Questions Bank Boards Need to Ask

    Recent cyberattacks against several big businesses show that a wide variety of industries are engaged in a nearly nonstop battle against hackers who seek to steal intellectual property, data, and funds. The personal information of nearly half of all American adults has been exposed in the last year or so, according to a recent report from CNNMoney and the Ponemon Institute. See AB Article.

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    Millennials a Good Fit for Community Banks

    The millennial generation does not like the biggest banks, thereby opening an opportunity for community banks, according to a new study featured in the National Journal. The study found that one-third of millennials are open to switching banks in the next 90 days, and four in 10 of the generation’s most hated brands are large financial firms. See Study Details.

    The National Journal report quotes several community bankers and cites their efforts to attract millennials through social media, mobile banking and the profession’s locally focused model. Read NJ Report.

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    Have the Right Conversation with Customers

    What do people buy from banks? What do banks actually sell? Find Answers Here.

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    News from the Bench: Foreclosure “Credit Bid” Surplus Cannot Pay Delinquent Taxes

    The message from an Illinois Appellate Court to a mortgagee bank making a credit bid in a foreclosure sale: Pay the real estate taxes early, as any surplus cannot be applied against past due taxes and instead the mortgagee credit bidder may lose the surplus to the mortgagor. For details on the Second District Illinois Appellate Court’s September 26th opinion in the case of Bank of America vs. Higgin, Click Here.

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    IDFPR and CBAI are Hosting Cannabis Related Business Education Events

    The Illinois Department of Financial and Professional Regulation (IDFPR) has scheduled two seminars to address topics relevant to financial institutions for medical cannabis related business in Illinois. The Department will host a seminar on November 12 in Willowbrook and November 19 in Springfield. For additional information and to register, Click Here.

    CBAI is offering a 90-minute webinar entitled Marijuana Businesses: Offering Services and Avoiding Errors,” on December 11. Presenting this webinar are Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., in Kent, OH, and Jerry Cavanaugh, CBAI general counsel in Springfield. More information will be available soon.

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    Mark Your Calendar for CBAI’s 41st Annual Convention in Nashville!

    Mark your calendar! You won't want to miss CBAI's 41st Annual Convention and Exposition. Scheduled for September 17-19, 2015, it will be held at the new Omni Hotel in Nashville. Please click here to add a reminder to your Outlook calendar for CBAI's showcase event! Then read the upcoming issues of Banknotes, our bi-monthly magazine, and the various publications for complete details and registration forms. The 2015 convention features high-quality speakers and educational break-out sessions from which to choose, 100 firms exhibiting the latest in bank products and services; and outstanding social events including the Annual Golf Tournament, the Welcoming Reception and Live and Silent Auctions; and the fabulous Saturday Dinner Dance.

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    BSA/AML Update Scheduled for October 23

    While not the nightmare of the early 2000's, regulatory expectations for BSA remain high, and there continue to be changes in the enforcement of the rules. This means there is a continued need for you to focus on the effective and meaningful elements of your BSA program. This seminar discusses many “need-to-know” issues for the BSA/AML professional. Building a solid BSA/AML program requires an effective assessment of the money laundering and other BSA risks facing your bank. This session discusses the risks that must be evaluated and provides practical ideas on how to move beyond the basic assessment methods provided in the examination manual. This seminar also covers regulatory update and emerging trends, an OFAC update, suspicious activity reporting, and compliance challenges. Leading this seminar is Adam Witmer, a compliance consultant with Young & Associates, Inc., Kent, OH, serving client banks in the Midwest.

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    Auditing ECOA (Reg B), Servicemember Civil Release Act, and Reg O Overview Set for October 27

    An effective audit of these subjects can serve as an early warning mechanism to inform bank management of any weaknesses within the bank’s programs. Ideally, the audit would confirm that the bank is following the regulations and has sound and equitable fair lending practices. However, if there are issues, early warnings are far better than discovery during examinations by federal regulators, or worse – the plaintiff’s attorney. Over the last several years, the regulators have been increasingly critical of issues related to these topics within banks, and have been increasing pressure for banks to make self-assessments. While fair lending will consume much of the day, we will also focus on two other areas. The Servicemembers Civil Relief Act has issues that could easily put banks at risk. And Regulation O violations carry very heavy penalties. Failures in either of these areas carry their own level of risk – and punishment. This full day auditing seminar provides vital regulatory background information, as well as involves a thorough discussion of the Interagency Fair Lending Examination Procedures, and examination procedures for the other two regulations. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance for Young & Associates, Inc., Kent, OH.

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    Consumer Loans and HELOCs, Origination & Review Scheduled for October 28 & 29

    It’s renewal time for the Community Bankers for Compliance (CBC) program, and the first quarterly meeting addresses consumer loans and HELOCs, origination and review. An effective audit of these subjects can serve as an early warning mechanism to inform bank management of any weaknesses within the bank's programs. Ideally, the audit would confirm that the bank is following the regulations and has sound and equitable fair lending practices. However, if there are issues, early warnings are far better than discovery during examinations by federal regulators, or worse - the plaintiff's attorney. Over the last several years, the regulators have been increasingly critical of issues related to these topics within banks, and have been increasing pressure for banks to make self-assessments. While fair lending will consume much of the day, we will also focus on two other areas. The Servicemembers Civil Relief Act has issues that could easily put banks at risk. And Regulation O violations carry very heavy penalties. Failures in either of these areas carry their own level of risk - and punishment. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., in Kent, OH.

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    Developing a Successful Sales Machine to be Held October 29

    In today’s highly regulated environment, banks are forced to look for new sources of revenue. With loan growth low, overdraft income under pressure, low lobby volume, and non-selling employees, community banks may struggle to stay independent. It sounds almost impossible, but examples are everywhere. A sales machine has many moving parts that must operate in harmony. This class discusses the part of the sales machine and offers a plan to help your community bank move profitably forward in the future. Topics covered include marketing and sales, “sellable” product development, employee sales practices, sales tracking, incentives, customer data, sales management, and more. Leading this seminar is Jay Coakley, a 25-year veteran of the financial services field, and president of Coakley Strategic Solutions.

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