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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    October 28, 2015

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • CBAI and ICBA Urging Bankers to Call Congress to Oppose Crop Insurance Cuts
  • CBAI Unanimously Endorses Patty Clarke for St. Louis Fed Board
  • ICBA Pushes Back Against Merchant Group PIN Subterfuge
  • Fine: Retailers Trying to Distract from Data-Security Push
  • EMV Not an End-All for Card Security
  • Mark Field Reappointed to the State Banking Board of Illinois
  • Even Bernie Sanders May Actually Underestimate the Size of the Mega Banks
  • CBAI Participates in Chicago EGRPRA Outreach Meeting
  • Presumptive Speaker Paul Ryan and His Positions on Banking Issues
  • Fed Hosting Webinar This Friday on FASB Reforms
  • Illinois Congressmen Oppose Federal Reserve Bank Stock Dividend Cut
  • Banks Rank TRID Implementation, Cybersecurity as Top Concerns
  • Investment News From THE BAKER GROUP
  • CBAI LEGAL: Difference Between State, OCC Lending Limits Goes Beyond the Numbers
  • CBIS Nicoud Insurance: PACE Act Spares Community Bankers Health-Care Hikes
  • Three Illinois Banks Sign up with BankOnIT
  • Q3 2015 Regulatory Update
  • Calling All Banking Execs! Share Your 2016 Priorities with Others!
  • Filling in the Gaps Can Make Health Care More Affordable
  • CFO Conference Scheduled for November 4
  • Safe Deposit Operations, Compliance, Legal, & Disaster Issues To Be Held November 5
  • Women in Community Banking Conference Slated for November 16-17
  • Auditing Fair Lending and FCRA Scheduled for November 19


  • CBAI and ICBA Urging Bankers to Call Congress to Oppose Crop Insurance Cuts

    CBAI and ICBA are urging community bankers to call on their members of Congress to oppose a provision of a two-year budget proposal that could significantly curtail the private-sector delivery of federal crop insurance. Community bankers can use ICBA’s Congressional Contact Site to call their lawmakers and access talking points against the proposed cuts.

    The proposal agreed to by top congressional leaders and the White House would cut more than $3 billion from private-sector delivery of crop insurance over 10 years. Although the House and Senate Agriculture committee chairmen and ranking members expressed opposition to crop insurance cuts, the budget agreement could come to a vote before the full House as soon as today. Contact Your Congressmen Now! Read Ag Committee Release.

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    CBAI Unanimously Endorses Patty Clarke for St. Louis Fed Board

    CBAI’s Board of Directors has unanimously endorsed the nomination of Patricia Clarke (Patty), president and CEO of the First National Bank of Raymond, for election to the Board of Directors of the Federal Reserve Bank of St. Louis.

    Patty is a lifelong member of the Raymond community, has successfully guided her bank during her tenure as President and CEO, and has served in various leadership positions within the Community Bankers Association of Illinois. The CBAI leadership believes Patty will do an outstanding job of representing the interests of community banks in the St. Louis Fed District Group 3. See Patty Clarke's Profile.

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    ICBA Pushes Back Against Merchant Group PIN Subterfuge

    ICBA and a coalition of other financial services groups are pushing back against an effort by state attorneys general in Connecticut and Georgia to essentially mandate the use of PINs in EMV payments cards. In a joint letter to state attorneys general, the coalition noted that merchant lobbying groups’ fixation on PINs is a dangerous narrative that is not suited for today’s security challenges.

    The coalition noted that PINs would not have prevented recent retailer data breaches and that federal regulators have concluded that mandating PINs is not an effective way to protect the payments system or consumer data.

    “We need merchant trade associations to stop trying to halt progress and distract the attention of policymakers from serious data breach vulnerabilities,” the groups wrote. “Instead, we need them to work with us to help everyone implement new and improved solutions that will better protect consumers and secure the payments ecosphere.” Read Joint Letter.

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    Fine: Retailers Trying to Distract from Data-Security Push

    The retail industry is attempting to sideline the debate over data security by resuscitating tired and largely settled complaints over the transition to EMV chip technology, according to ICBA President and CEO Cam Fine. To avoid collaborating on data security and to distract from their own costly security lapses, Fine noted that merchants have fixated on EMV quibbles and the Durbin Amendment.

    “Here are the facts: EMV is a positive step for consumers, but it is simply not a panacea for payment card fraud,” Fine wrote. “Meanwhile, Congress can take action now—I mean right now—to address the scourge of massive retailer data breaches affecting consumers and the broader economy.” Read Fine’s Blog Post.

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    EMV Not an End-All for Card Security

    Last week ICBA’s Cam Fine emphasized publicly that, while the migration to cards with chip technology will help mitigate card fraud, additional steps by retailers and more layers of security are needed. He noted that fraud will shift from counterfeiting to online fraud and other types of fraud.

    He advocated multiple layers of security technologies such as end-to-end encryption and tokenization. He also cited support for H.R. 2205, the Data Security Act of 2015, which establishes uniform standards for protecting consumer payment and personal information, and require all entities to have processes in place to protect consumer data. Read AB Article.

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    Mark Field Reappointed to the State Banking Board of Illinois

    Governor Bruce Rauner reappointed Mark Field to the State Banking Board of Illinois. Field, Chairman, President and CEO of the Farmers Bank of Liberty, is a Past Chairman of CBAI and an active and outspoken proponent of community banking. Field’s new term began October 12, 2015 and will last until December 31, 2018. Field’s appointment is subject to confirmation by the Illinois State Senate. CBAI congratulates Mark Field on this appointment and thanks him for his continued service on behalf of community banking in Illinois.

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    Even Bernie Sanders May Actually Underestimate the Size of the Mega Banks

    Democratic presidential candidate Bernie Sanders has expressed his support for breaking up the mega banks which he claims have only become larger since the financial crisis. Some have questioned his assertion, partly due to the use of off-balance sheet accounting.

    However, information provided by the OCC reveals that Senator Sanders is absolutely correct. Since 2007 Bank of America has grown 22%, JPMorgan increased by 40%, and Well Fargo exploded by 230% (including its acquisition of Wachovia). Consultant Maria Rodriguez Valladares concluded that the mega banks can’t claim they are true free market advocates when they benefit from opacity, and when they accept bailouts from taxpayers who never benefitted from the mega banks’ off-balance sheet transactions. See Valladares Article.

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    CBAI Participates in Chicago EGRPRA Outreach Meeting

    CBAI’s Immediate Past Chairman, Todd Grayson, President of South Central Bank, N.A., Chicago, was a panelist at the October 19, 2015, Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) outreach meeting at the Federal Reserve Bank of Chicago. Grayson delivered the community bank message regarding overwhelming and counterproductive regulatory burden and the need for community bank regulatory relief and tiered regulation. Read More.

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    Presumptive Speaker Paul Ryan and His Positions on Banking Issues

    U.S. Congressman Paul Ryan (R-Wisconsin) is expected to become the next Speaker of the House which carries considerable weight and influence. Observers believe he will be helpful to the banking profession overall. Ryan’s voting record on banking-related issues includes opposition to the TARP in 2008, calling it “crony capitalism at its worst.” He also has called the Dodd-Frank Act “Obama-care for banks” and a “huge wet rag on the economy.” He has also called for restrictions on the FDIC’s bailout authority, noting that Dodd-Frank “actually intensifies the problem of too-big-to-fail by giving large, interconnected financial institutions advantages that small firms will not enjoy.” Read AB Article.

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    Fed Hosting Webinar This Friday on FASB Reforms

    The Federal Reserve Bank of St. Louis is hosting a webinar at noon (Central time) this Friday on the Financial Accounting Standards Board’s proposed update to accounting standards on loan-loss reserves. “Loss Data, Data Analytics, and the Current Expected Credit Losses (CECL) Model” will feature Fed chief accountant Steve Merriett.

    The St. Louis Fed hosted a similar webinar last week on the FASB proposal, which would change how banks recognize credit losses on all types of loans. The session includes an extensive discussion of the historical loss analysis community banks will need to conduct to prepare for the new standards. Register for Friday’s Webinar. Access Last Week’s Recording.

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    Illinois Congressmen Oppose Federal Reserve Bank Stock Dividend Cut

    CBAI thanks Illinois Congressman Bill Foster (D-11) for leading a bipartisan letter to the leadership of the United States House of Representatives opposing a proposal that would reduce dividend payments on required Federal Reserve Bank stock by 75% until there is greater examination of the issue and an understanding of the implications of such a statutory change on the banking system. Read More.

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    Banks Rank TRID Implementation, Cybersecurity as Top Concerns
    Wolters Kluwer Financial Services’ Regulatory & Risk Management Indicator Reveals Seven-Percent Jump in Overall Concern

    Increased anxiety over the new “Know Before You Owe” mortgage rules leads the list of major challenges cited by U.S. banks and credit unions in this year’s Regulatory and Risk Management Indicator survey conducted by Wolters Kluwer Financial Services. Concern over the new rules, also known as the TILA-RESPA Integrated Disclosure (TRID) rules, jumped nine percent from last year’s Indicator survey results, with 86 percent of respondents ranking TRID as the top regulatory challenge facing their organization.

    Overall, concerns about regulatory compliance and risk management challenges rose seven percent compared to last year’s Indicator results. Concern over the Consumer Financial Protection Bureau’s rulemaking authority generated a 78-percent rating, up two percent from the previous year’s results. See Indicator Results.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    Information received since the Federal Open Market Committee met in September suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. See Baker Market Update.

    MBS Market Strategies
    October 2015 - Prepayment Summary

    Speeds were modestly down for all three agencies in September, with all but aggregate multi-issuer Ginnies experiencing slower prepayments. Both Fannie and Freddie 30yrs fell to 12.6 CPR while 15yrs were down about half a point to 10.2 and 10.3 respectively. See MBS Market Strategies.

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    CBAI LEGAL: Difference Between State, OCC Lending Limits Goes Beyond the Numbers

    Most bankers are aware of the difference between the lending limits of state-chartered banks versus those of national banks. Beyond the percentages of capital, surplus, undivided profits, and ALLL that are part of the respective lending limit calculations, the State’s and OCC’s treatment of loan combinations or “aggregation” also differ in significant ways. See Most Recent CBAI LEGAL.

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    CBIS Nicoud Insurance: PACE Act Spares Community Bankers Health-Care Hikes

    CBIS Nicoud Insurance Services announced that the recently enacted Protecting Affordable Coverage for Employees (“PACE”) Act, which allows states to have greater flexibility in determining their own small-group market will prove beneficial for many community banks. See More from CBIS Nicoud.

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    Three Illinois Banks Sign up with BankOnIT

    BankOnIT is excited to announce three additional CBAI member banks as clients: State Bank of Waterloo,; Durand State Bank; and Grundy Bank, Morris. Each had specific reasons for choosing BankOnIT ranging from reducing risk, decreasing the amount of executive time spent on IT, and improving the bank’s efficiency. Read More.

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    Q3 2015 Regulatory Update

    According to the Q3 2015 Banking Compliance Index™ (BCI), the average community bank spent $29,145 to manage regulatory changes in the third quarter. Complying with regulatory changes took 384 hours (a decrease of 34% from Q2) , or the equivalent of 1.23 full-time employees. Page counts were up 30 percent to 2,231 pages—a disappointing change after two consecutive quarters of the lowest page counts since the BCI began tracking them in Q1 2013. High page counts typically indicate greater scope and complexity. In this case there were 70 rule changes compared to 73 last quarter.

    Why the discrepancy between more pages and fewer hours? Read the full article to answer that question and learn why compliance costs remain stubbornly high and are likely to stay that way unless compliance is better standardized. See the Q3 2015 Regulatory Update Article.

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    Calling All Banking Execs! Share Your 2016 Priorities with Others!

    Each year, CSI surveys banking executives nationwide to gauge their perspective on the trends facing them. CSI launched this year’s survey at its annual customer conference and wanted to share this survey opportunity with CBAI members. The survey takes no longer than 10 minutes to complete and closes on Friday, November 6. The responses will be used to create a 2016 executive report that’ll be available for free in January. Also, all respondents will be entered to win a $100 Visa gift card. Click Here to Participate.

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    Filling in the Gaps Can Make Health Care More Affordable

    The Affordable Care Act has created a lot of confusion in the health-care marketplace. Whether you have an employer sponsored or individual plan, finding the right health-care coverage is a challenge and can be anything but affordable. While many don’t see healthcare as a financial issue, it is a critical component to corporate and individual wellbeing. Most people cite their health as their primary concern, and yet six in 10 individuals have trouble paying medical bills even when they have medical insurance. Read More.

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    CFO Conference Scheduled for November 4

    The 2015 CFO Conference is designed to help community-bank CFOs gauge the potential impact of higher interest rates, prepare for the final guidance on the FASB’s current expected credit loss model, change the culture surrounding enterprise risk management, and gain insights on how to approach key strategic issues. Participants gain a wide variety of information from expert speakers on topics that community bank chief financial officers have repeatedly requested, and return to the bank ready to implement newly found ideas and knowledge! Topics and speakers include “Portfolio Management and Interest Rate Risk: What Worries You about Higher Rates?” with Lester Murray, SVP Financial Strategies Group, THE BAKER GROUP, Oklahoma City, OK; “The Latest on the FASB’s CECL Model and How to Prepare” with Robert Ashbaugh, senior risk management consultant with Sageworks, Inc., Raleigh, NC.; “Enterprise Risk Management” with Sara Mikuta and Cheryl Thomas, Wipfli, LLP, Westchester, IL; and “Top 10 Strategic Issues Facing Illinois Community Banks” with Thomas Homberg and Patrick Murphy of Godfrey & Kahn, S.C., Milwaukee, WI.

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    Safe Deposit Operations, Compliance, Legal, & Disaster Issues To Be Held November 5

    Are your internal safe-deposit procedures now in compliance with all state and federal security regulations and do you follow correct day-to-day operating procedures? This timely and comprehensive program contains important information about your “Most Frequently Asked” operations and compliance questions. It covers the SCRA, USA Patriot Act, Suspicious Activity Reporting, Bank Protection Act, OCC, FDIC, NCUA and ADA regulatory requirements, plus recommended procedures for renting, surrendering, box access, key control, deceased renters, living trusts, payable-on-death accounts, delinquent boxes, record retention, unclaimed property and many other legal and operation issues. Leading this seminar is David McGuinn, president and founder of Safe Deposit Specialists, a former banker with 45 years of safe-deposit experience.

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    Women in Community Banking Conference Slated for November 16-17

    Scheduled for November 16-17 at the Hilton Hotel in Springfield, the Women in Community Banking Conference begins with an evening social on Monday, November 16, and a full-day conference is scheduled for Tuesday, November 17. Topics covered include “Seven Magic Wands for Making Difficult People Disappear” and “Overcoming Adversity and Bouncing Back Higher” with Colleen Kettenhofen, award-winning keynote speaker, author, and frequent media guest; “Attracting the Next Generation of Customers – The Millennials” with Sophie Kelley, senior manager at Wipfli, LLP; and “Relax and Renew: Prescription for Stress Relief” with Bridget Rolens, MA, BSOT, St. John's Hospital Center for Living. CBAI Chairman Kevin Beckemeyer, president & CEO of Legence Bank, Eldorado, provides a CBAI Update. The agenda also includes a networking session by area of banking where attendees participate in a roundtable discussion to share issues and ideas with female community bankers statewide. Also highlighting the agenda is remarks by Illinois State Comptroller Leslie Geissler Munger.

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    Auditing Fair Lending and FCRA Scheduled for November 19

    With the vast number of changes that have taken place in the last few years, many banks have taken great strides to ensure compliance with new rules. What about the rules that haven't recently changed? One of the best ways to identify compliance deficiencies is to conduct an in-depth audit. Taking a systematic, step-by-step approach to reviewing certain areas allows a financial institution to discover any compliance deficiencies before the examiners do. Of course, not every bank can allot the time to do that type of audit. The fair lending portion of the seminar focuses on how to conduct a full scope compliance audit based on regulator examination procedures and guidance, which always should be the goal. For those institutions that cannot accomplish this, or just want to quickly discover where to spend their precious audit time, we offer concrete suggestions for ways to focus a review. We include case studies to demonstrate these techniques. The second portion of the seminar focuses on the Fair Credit Reporting Act, using the examination procedures and regulator guidance for conducting an FCRA audit. 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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