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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 25, 2017

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Elect Todd Grayson to the FHLB Chicago Board!
  • Senate Votes to Overturn the CFPB Arbitration Rule!
  • See Convention Highlights and Wingert Farewell
  • House Committee Passes CBAI and ICBA Advocated Regulatory Relief
  • Report on CBAI Staff's Quarterly Visit to Washington, D.C.
  • Lawmakers Seek Delay in FASB Accounting Standard
  • ICBA Pushback on ILCs Featured in PYMTS
  • Bill Introduced to Add State Regulator to FDIC Board
  • ICBA Denounces Megabanker Claim of Too Many Banks
  • Paper Supports Continued Viability of Community Bank Model
  • Economic Council: Corporate Tax Reform Boosts Household Income
  • Investment News From THE BAKER GROUP
  • The Baker Group: 2018 Regulatory Focus: Liquidity Risk Management Webinar
  • Americans Positive About Fintechs, But Won’t Leave Their Banks
  • Will Credit Risk Take Banking into Crunch Again?
  • Finding Opportunity in Small Business Transitions
  • Fall Is Here! Time to Think About Holiday Gifts!
  • Tech Staff Want the Latest & Greatest - And You’re Not It
  • CBAI LEGAL: No Insurance Recovery After Settling O.D. Fee Suit
  • CBIS: Does Your Bank’s Management Liability Policy Cover Wage and Hour Claims?
  • Save the Date for CBAI’s 44th Annual Convention in St. Louis!
  • It’s Renewal Time for the Community Bankers for Compliance Program!
  • CFO Conference Slated for November 2
  • Ag Credit Analysis To Be Held November 7
  • CBAI’s Community-Bank Directors’ Conference Set for December 11


  • Elect Todd Grayson to the FHLB Chicago Board!

    CBAI is recommending Todd Grayson, president of South Central Bank, N.A., Chicago, for election to the 2017 Federal Home Loan Bank of Chicago Board of Directors. Ballots are now out to all FHLB member institutions, and CBAI urges all members to complete and return the ballot to the FHLB in support of Todd Grayson.

    Here are important guidelines for voting:

    • Members must vote the original green ballot they have been sent. Copies cannot be accepted. If the original ballot is lost, please contact the FHLB to receive a replacement ballot.
    • The original green certification form must be completed and signed by an officer or director of the member and returned with the ballot.
    • The ballot and certification form must be mailed or sent via FedEx or UPS. The FHLB cannot accept faxes or e-mails.
    • The ballot and certification form must be received in the FHLB by the close of business on November 3, 2017.
    • Each member must have a resolution of its Board or governing body on file authorizing officers or directors to vote the members’ ballot, but it is not necessary that a copy of the resolution be sent with the ballots and certification form. It simply needs to be available in case of an audit. Read Grayson Background.

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    Senate Votes to Overturn the CFPB Arbitration Rule!

    In a major victory for community banks, the United States Senate voted Tuesday evening to overturn the Consumer Financial Protection Bureau’s (CFPB) controversial Arbitration Rule (Rule) which was set to take effect in March. The United States House of Representatives voted to rescind the Rule in July. Both votes in the House and Senate were generally along party lines with Republicans voting in favor and Democrats voting against the repeal. The Community Bankers Association of Illinois supported the repeal of the CFPB Rule which would have banned the use of binding arbitration clauses in bank agreements. Read Article.

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    See Convention Highlights and Wingert Farewell

    CBAI’s 43rd Annual Convention was held last month in Springfield, and now the highlights from all the major events are available for viewing. The convention attracted bankers and guests from more than 100 community banks and featured an exhibit hall with more than 90 companies demonstrating their services.

    A special event was also held to recognize the nearly 43-year career of Bob Wingert as the association’s only president. He is retiring at the end of this year and will serve CBAI as an outside consultant in 2018. Kraig Lounsberry, CBAI’s senior vice president of governmental relations, will succeed Wingert as president on January 1, 2018. See Convention Highlights. See Wingert Farewell Video.

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    House Committee Passes CBAI and ICBA Advocated Regulatory Relief

    The House Financial Services Committee last week passed on a bipartisan vote several pro-growth bills inspired by ICBA’s Plan for Prosperity regulatory relief platform. The measures approved by the committee include the:

    • Home Mortgage Disclosure Adjustment Act (H.R. 2954) to exempt low-volume community bank mortgage lenders from new HMDA data-collection requirements (passed 36-24),
    • Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017 (H.R. 3072) to increase the CFPB’s exam threshold from $10 billion to $50 billion in assets (passed 39-21),
    • Protecting Advice for Small Savers Act of 2017 (H.R. 3857) to repeal the Labor Department’s fiduciary rule (passed 34-26),
    • Community Institution Mortgage Relief Act of 2017 (H.R. 3971) to exempt from mandatory escrow requirements mortgage loans held in portfolio by financial institutions with assets of $25 billion or less and to increase the small-servicer exemption from 5,000 to 30,000 loans (passed 41-19),
    • H.R. 1585 to modify the definition of “accredited investor” by taking into account the individual’s education or job experience (passed 58-2),
    • TAILOR Act of 2017 (H.R. 1116) to require banking agencies to tailor regulatory actions based on the business model and risk profile of regulated institutions (passed 39-21), and
    • Financial Institution Customer Protection Act of 2017 (H.R. 2706) to curtail abuses like Operation Choke Point (passed 59-1).
    CBAI and ICBA will continue working with the committee and other members of Congress to pass comprehensive regulatory relief for the nation’s community banks. Read ICBA Release. Read House Committee Release.

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    Does your financial institution originate ACH transactions? Do you work with third-party senders? New NACHA Operating Rules now require financial institutions that originate ACH transactions to register their Third-Party Sender customers or attest to maintaining no such customers. Visit the new risk-management portal to register your Third-Party Sender customers by March 1, 2018.



    Report on CBAI Staff's Quarterly Visit to Washington, D.C.

    During the week of October 9, 2017, CBAI’s Vice President of Federal Governmental Relations, David Schroeder, visited the offices of every member of the Illinois Congressional Delegation, met with the Federal Deposit Insurance Corporation, Office of Comptroller of the Currency, Consumer Financial Protection Bureau, Council of Federal Home Loan Banks, and conferred with senior legislative staff at the Independent Community Bankers of America (ICBA).

    The primary purpose of Schroeder’s quarterly visits is to inform the Illinois Congressional Delegation and urge their support for CBAI positions on issues of importance to Illinois community banks. As the 115th Congress continues to move forward, Schroeder emphasized again that lawmaker and regulator support for these positions will strengthen community banks which are built on customer trust, promote competition in financial services, give consumers more choices, and support small business development, home and education lending, and long-term financial security. Read Article.

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    Lawmakers Seek Delay in FASB Accounting Standard

    A coalition of House Financial Services Committee members recently called on the Financial Accounting Standards Board to delay its Current Expected Credit Loss standard until it has closely examined the impact on the banking sector. In a letter to the Securities and Exchange Commission and FASB, the group of 26 lawmakers said the standard could inhibit lending, harm lender balance sheets, and affect regulatory capital requirements.

    ICBA provided input on the letter, and both CBAI and ICBA have worked with FASB for years to promote the scalability of the CECL standard for institutions of all sizes. Read Congressional Letter.

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    ICBA Pushback on ILCs Featured in PYMTS

    ICBA’s years-long opposition to the industrial loan corporation charter was featured in PYMTs.com. The article cites ICBA’s opposition to ILC applications by SoFI and Square and its general opposition to the ILC loophole, which permits ILCs and their parent companies to avoid Bank Holding Company Act regulations and consolidated supervision. SoFi recently withdrew its ILC application following ICBA opposition.

    CBAI has also lobbied for years in opposition to industrial loan company (ILC) applications. Read PYMTS Article. See Release on SoFi Withdrawal.

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    Bill Introduced to Add State Regulator to FDIC Board

    Senators Orrin Hatch (R-UT), Mazie Hirono (D-HI), Representatives Frank Lucas (R-OK), and Denny Heck (D-WA) have recently introduced bipartisan legislation (S. 1910 and H.R. 3915) to ensure that the FDIC Board include a state regulator.

    Senator Hatch said, “State bank supervisors understand local credit markets and comprehend the vital role banks play in individual communities… it is critical a state bank supervisor is on the FDIC board to contribute their unique expertise and viewpoints.”

    John Ryan, president of the Conference of State Bank Supervisors (CSBS), noted that the legislation clarifies the current law, making clear that the FDIC Board must include at least one member who worked in state government as a state bank supervisor. Ryan said, “These bills are yet another bipartisan affirmation by Congress that the state perspective is indispensable to creating effective, common-sense bank regulation. We look forward to working with Congress on swift passage.” CBAI supports the legislation. Read CSBS Release.

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    ICBA Denounces Megabanker Claim of Too Many Banks

    In a statement issued late last week, ICBA President and CEO Cam Fine disavowed claims from Kelly King, the head of $220 billion-asset BB&T, that the U.S. banking system is overbanked. “The challenge facing the banking industry today is not how to bump off more locally based competition to benefit megabank investors, but how to maintain a diverse and decentralized system to ensure continued access to financial services for all Americans,” Fine said. “While megabank CEOs and their representatives in Washington might think there are too many banks, in truth there are not enough.”

    Fine said that whereas consolidation culminated in the 2008 Wall Street financial crisis, locally based community banks are highly capitalized, reinvest in their communities, provide local leadership, and operate a business model built on relationships and accountability. Read More.

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    Paper Supports Continued Viability of Community Bank Model

    Community banks’ average return on assets was relatively stable between 1985 and 2015, according to new FDIC research that suggests the core earnings model of community banks remains sound. The paper from researcher Jared Fronk found that community bank ROA has followed the performance trends of the broader banking industry, trending down during the 1990s and remaining below the levels preceding the 2008 financial crisis.

    However, Fronk wrote that more than 80 percent of the post-crisis decline in profitability is due to negative macroeconomic shocks external to the industry, indicating that the decrease is not due to a decline in the intrinsic profitability of community banks. After controlling for macroeconomic factors, the research found that community bank core profitability has been above its long-run average over much of the post-crisis period, showing the continued viability of the community banking model.

    The research paper was presented at the recent Community Banking in the 21st Century conference held by the Federal Reserve and Conference of State Bank Supervisors. Read FDIC Paper.

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    Economic Council: Corporate Tax Reform Boosts Household Income

    The White House Council of Economic Advisors last week released a report that said reducing the federal corporate tax rate from 35 percent to 20 percent would increase average U.S. household income by at least $4,000 annually. Wage boosts could reach as high as $9,000 per year, the report said. Read CEA Executive Summary.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    In the U.S., the Senate induced a reversal of that rally when it narrowly passed budget measures that enhance the possibility of tax cuts coming to fruition. And stocks prices? Well, they just keep going up ‘cause that’s what they do these days. See Baker Market Update.

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    The Baker Group: 2018 Regulatory Focus Liquidity Risk Management Webinar

    The webinar is scheduled for 10:30 – 11:45 a.m. Topics will include:

    • Community Bank Liquidity Trends
    • Today's Liquidity Risk Management Best Practices
    • Managing the Liability Side of Our Balance Sheet
    • Liquidity and the Investment Portfolio
    • Tools and Resources for Managing Liquidity Risk
    Register Here!

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    Americans Positive About Fintechs, But Won’t Leave Their Banks

    Most American consumers want to do their banking online, and think that physical financial institutions are moving to their end as well as agree that larger banks don’t innovate fast enough for new customer needs.

    But, that majority still won’t leave their bank for a younger fintech model, according to the 2017 Annual Fintech Survey released today by Blumberg Capital. Read More. See Full Survey.

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    Will Credit Risk Take Banking into Crunch Again?

    Risk management veteran Ken Proctor urges bankers not to let your lending engine run full-steam ahead or your bank might fall into the chasm. During his risk management career, Proctor notes that he has seen banking crises caused by REITs; third-world debt; oil embargoes; variable deposit versus fixed mortgage interest rates; changes in tax laws on passive real estate investments; oil price collapses; and economic dips, including the 2008-2010 recession. He believes it’s déjà vu all over again as he is starting to see signs that remind him of the run-up to the last crisis. He offers nine ways to address rising lending risks before the bank skirts the edge. Read More.

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    Finding Opportunity in Small Business Transitions

    As the Baby Boomers reach retirement age, expect to see more ownership transitions for small businesses. According to the latest data from Barlow Research, 57 percent of small business owners are currently 60 years or older, a dramatic increase from 38 percent in 2008. Barlow data also shows that nearly half (48 percent) of small business owners over the age of 60 are planning to transition their business within the next five years.

    This impending increase in ownership transitions creates enormous opportunity for savvy bankers to strengthen relationships with these small businesses and to uncover future wealth management needs of their owners who are on the cusp of retirement and loan needs for those purchasing their businesses. Read More.

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    Fall Is Here! Time to Think About Holiday Gifts!

    Executive gifts attract and maintain customers and build brand image, recognition and loyalty. Midwest Office can help you achieve all these things while maintaining your budget, brand name and consistency. Mention this flyer for an additional 10% off your next purchase toward any executive gift or promotional product! Contact Kevin Gaffney at 217-303-5511 or kgaffney@midwestoffice.com.

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    Tech Staff Want the Latest & Greatest - And You’re Not It

    With high demand for skilled IT professionals, especially in the areas of IT leadership and cybersecurity, attracting qualified technical staff to banking is especially challenging. Technology has simply become too broad and far too complex of a discipline for one or a couple of “great” IT people to protect your bank. What do you know about your IT staffing? Read More from BankOnIT.

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    CBAI LEGAL: No Insurance Recovery After Settling O.D. Fee Suit

    In an October 12 opinion of the U.S. Court of Appeals for the Seventh Circuit, the denial of a bank’s insurance claim by its insurer following a $24 million class-action settlement was upheld. See Most Recent CBAI LEGAL.

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    CBIS: Does Your Bank’s Management Liability Policy Cover Wage and Hour Claims?

    Over the past decade, claims brought against employers under the Fair Labor Standards Act have surged. Alleged wage violations under federal and local statutes could indeed be considered among the lowest hanging fruit for trial attorneys. See Most Recent CBIS Article.

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    Save the Date for CBAI’s 44th Annual Convention in St. Louis!

    Mark your calendar today for CBAI’s 44th Annual Convention and Expo, scheduled for September 27-29, 2018, at the Hyatt Regency at the Arch in St. Louis, MO. More information will be available soon. Highlights from the 43rd Annual Convention and Expo held in Springfield are on the website now, including pictures of all main events. Don’t forget, all convention handout materials from the 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.” An e-mail was sent to all convention registrants with the login information. See CBAI's 43rd Annual Convention Highlights. See Convention Speaker Materials.

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    It’s Renewal Time for the Community Bankers for Compliance Program!

    Now more than ever the community bank is faced with a bewildering array of ever-changing regulations. While all banks strive to comply, the regulatory requirements can seem to be overwhelming. Most community banks do not have the time or money to build elaborate compliance systems. In response to these facts, CBAI has teamed up with Young & Associates of Kent, OH to offer The Community Bankers for Compliance (CBC) program. Now in its 29th year, this program provides you a cost-effective approach to obtaining up-to-date information concerning bank regulations and practical techniques for maintaining an effective compliance program. The Community Bankers for Compliance Program reduces the risk of regulatory action by reducing compliance errors, since your employees have a better understanding of regulatory requirements, and saves you time and money because the experts at Young & Associates translate each regulation into understandable language, developing model policies, training instruments, and audit procedures for you. The first quarter of the CBC program, entitled “The Fifth Bank Secrecy Act Pillar: Requirements and Implementation and Regulation CC Updates,” is being offered October 31 & November 1 in Springfield and Lisle, respectively. Renew Now!

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    CFO Conference Slated for November 2

    This conference not only benefits chief financial officers, it is also geared toward presidents, CEOs—everyone involved in controlling expenses and increasing profitability for their community banks. Topics and speakers include Managing Interest Rate Risk for Uncertain Outcomes with Lester Murray, senior vice president at THE BAKER GROUP, Oklahoma City, OK; Accounting's Impact on the Bottom Line with Fred Markwell, partner, and Leslie Wilson, partner, of BKD,LLP, St. Louis, MO; 2017 State of Cybersecurity with Brendan McGowan, chief technology officer at Safe Systems, Inc., Alpharetta, GA; The Real Price of Risk in Lending with Robert Ashbaugh, senior risk-management consultant at Sageworks, Raleigh, NC; and CECL Is Coming - What Should We Do? with Brett Schwantes, senior manager at Wipfli LLP, Wausau, WI.

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    Ag Credit Analysis To Be Held November 7

    How can I evaluate loan repayment alternatives for agricultural loans, but do it in a timely and cost-effective manner? The agricultural lending environment has changed dramatically from the 2006-2013 period due to lower commodity prices, but principal payments on term debt for capital purchases made during those more profitable years remain. The result is varying degrees of financial stress among agricultural borrowers. A review of the financial information needed to make informed decisions and a spreadsheet that can be used to evaluate repayment alternatives is covered during this workshop. The effectiveness of changes in operating strategies and loan terms on repayment capacity are evaluated for different financial leverage situations, using that spreadsheet. Join us for a day focused on which repayment alternatives are effective and which ones are not during this latest period of farm financial stress. Freddie L. Barnard, Professor Emeritus of Agricultural Economics at Purdue University, Lafayette, IN leads this program.

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    CBAI’s Community-Bank Directors’ Conference Set for December 11

    Being a member of a community bank's board of directors is a challenging and rewarding experience. The community-bank director has duties to the institution, its stockholders and its depositors. And, he or she has responsibilities to the public-at-large. To meet these duties and responsibilities, a director must be knowledgeable and active. Join us at CBAI's Annual Directors' Conference! CBAI gathered top banking experts to make this comprehensive, one-day conference a must-attend. Dale Sheller from THE BAKER GROUP discusses investments and liquidity; Mark Scholl of Wipfli LLP explores new technologies in banking; Jim Mathis of The Reinvention PRO™ discusses how to manage and market to millennials more effectively; and Kraig Lounsberry, CBAI’s senior vice president of governmental relations, provides a legislative and regulation update.

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