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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                            November 26, 2014

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Warmest Thanksgiving Wishes
  • CBAI Opposes Expansion of the Farm Credit System
  • Frerichs Wins Illinois State Treasurer Race
  • Dold (R-10th) Rejoins House Financial Services Committee
  • Is the FDIC Subsidizing a 'Too Big to Fail' Merger?
  • FDIC Finalizes Rule Aligning Bank Assessments with Basel
  • FDIC Gives Ground on De Novo Applications
  • FDIC Names Marcotte Chicago Ombudsman
  • Upcoming FDIC Teleconference: Identifying and Mitigating UDAP Risk
  • New Affordable Civil-Money Penalties Insurance Protects Officers and Directors
  • Are Your Directors and Officers in the Loop?
  • Address Your Board's Communication Security While Saving Time and Money
  • Is Your Bank Budgeting for 2015?
  • Service Helps Bankers More Effectively Manage Rising Health Insurance Costs
  • Take the Credit Analysis Challenge!
  • FFIEC Releases Cybersecurity Questions for CEOs and Directors
  • New Director Education Videos
  • Know Your Hired and Non-Owned Auto Exposure
  • U.S. Mobile Payments Market to Boom by 2019, Research Firm Says
  • Take This Week’s Quick Poll
  • Baker Market Update
  • Economic Brief
  • The SHAZAM Network Brand Evolves to Better Reflect Diversified Products
  • Annual Reminder About Weather-Related Bank Closings
  • Account Titling Set for December 2, 3, and 4
  • Directors' Conference to be Held December 10
  • Consumer Lending Institute Slated for December 15-17


  • Warmest Thanksgiving Wishes

    CBAI Opposes Expansion of the Farm Credit System

    The Community Bankers Association of Illinois (CBAI) opposes the expansionist agenda of the Farm Credit System (FCS) which has allowed FCS lenders to become almost the equivalent of commercial banks while retaining the benefits of their Government Sponsored Enterprise (GSE) status. The funding and tax advantages of the FCS constitute an unfair competitive advantage over Illinois’ rural community banks. If the System chooses not to follow its narrow historic mission it should be abolished, or subject to taxation and rigorous oversight and regulation. Read More.

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    Frerichs Wins Illinois State Treasurer Race

    State Senator Mike Frerichs overcame a 19,000 vote Election Day deficit to become Illinois’ 74th State Treasurer. Absentee and provisional ballot counting came to a close on Tuesday, November 18, and when the dust settled Frerichs led State Representative Tom Cross by just under 9,500 votes.

    Cross called Frerichs today to concede and congratulate him on the victory, and although there was no specific mention of a recount, that scenario is highly unlikely considering the cost and the number of votes Cross would have to overcome.

    CBAI would like to congratulate Treasurer Elect Frerichs and we look forward to continuing the excellent working relationship we currently enjoy with him as an Illinois State Senator.

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    Dold (R-10th) Rejoins House Financial Services Committee

    Illinois Congressman-elect Robert Dold has been recommended for appointment to rejoin the House Financial Services Committee (HFSC) when the 114th Congress convenes in January. Read More.

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    Is the FDIC Subsidizing a 'Too Big to Fail' Merger?

    The proposed merger between CIT Group and OneWest Bank would be one of the first times that bank regulators enable a deal that results in a systemically important financial institution.

    In 2009, OneWest — a holding company formed by billionaire investors including George Soros, John Paulson and Dell founder Michael Dell — purchased the failed IndyMac Bank, which had originated thousands of distressed mortgages. As part of the sale, the FDIC entered into a shared-loss agreement with OneWest whereby the government agency agreed to cover the costs of certain IndyMac loan losses.

    The FDIC should also share its rationale for continuing the loss-share at a new bank. In 2009, the FDIC could justify this controversial agreement as necessary to preserve confidence in the financial system, unload failed-bank assets and promote loan modifications for struggling homeowners. But in 2014, the FDIC is no longer looking to unload Indymac assets, and investors in OneWest have reportedly more than recouped their initial investment (with billions more to come if the merger goes through).

    The $2.3 billion that CIT Group received from the U.S. Treasury's Troubled Asset Relief Program, which remains unpaid due to CIT's subsequent bankruptcy filing, serves as an all-too-relevant reminder to regulators about the dangers in subsidizing banks without proper oversight. Before regulators give the green light to this merger, Read More.

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    FDIC Finalizes Rule Aligning Bank Assessments with Basel

    The Federal Deposit Insurance Corp. finalized a rule last Tuesday that spells out the formula banks will be required to use when determining how much they will have to pay into the insurance fund that protects against bank runs. The result will likely be that some of the biggest banks will pay higher assessments into the Deposit Insurance Fund while the vast majority of banks will still pay the same premiums. See Article.

    According to ICBA estimates, most banks are saving more than 30% annually on FDIC premium assessments. Some community banks with at least a billion dollars in assets are saving more than $1 million a year in premium assessments. It is the $2.5 billion dollar a year gift that keeps on giving.

    This is precisely what we envisioned back in 2009 when CBAI and ICBA vigorously lobbied Congress in support of the Gutierrez Amendment. The amendment, opposed by ABA and many of its state affiliates, proposed changing the FDIC assessment method from based on deposits to based on total assets less tangible capital. Thanks to CBAI’s efforts, the amendment gained bi-partisan support from the Illinois Congressional delegation and was passed into law.

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    FDIC Gives Ground on De Novo Applications

    With new bank chartering at a standstill, the FDIC recently issued new guidance on de novo capital requirements and business plans that should lead to new bank formations. The new guidance clarifies that an 8% Tier 1 leverage ratio is in effect for the first three years of operation, not seven years. Furthermore, applicants only need to describe their business plans for three years, not seven years. Read More.

    CBAI has been vocal in its opposition to the FDIC’s policy of actively inhibiting de novo community bank formation. The FDIC has approved one de novo bank charter since 2010. This is a dramatic shift from the average of 170 for many years. Even in the depths of the S&L crisis (1984-1992), when 1,800 banks and savings institutions failed, an average of 196 de novos were formed annually. CBAI is pleased the FDIC recognized that its one-size-fits-all policy for de novos was inappropriate and too restrictive.

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    FDIC Names Marcotte Chicago Ombudsman

    The FDIC has appointed Dan Marcotte to serve as the Chicago Ombudsman, filling the vacancy created by the retirement earlier this year by Rich Schmalzer. The FDIC Office of the Ombudsman is a confidential, neutral and independent source of information and assistance to anyone affected by the FDIC in its regulatory, resolution, receivership, or asset disposition activities. If you have a problem or complaint with the FDIC that is not involved in litigation, arbitration, or mediation, you may contact the Office of the Ombudsman for confidential assistance. Dan will begin his new duties on December 15 and can be reached via email at dmarcotte@fdic.gov or telephone at 312-382-6908. More About Marcotte.

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    Upcoming FDIC Teleconference: Identifying and Mitigating UDAP Risk

    The FDIC Chicago Region will discuss “Identifying and Mitigating UDAP Risks” during its one-hour Regional Regulatory Call scheduled for 10:00 a.m. (central time) on Wednesday, December 17. Click Here for more information and to register to attend.

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    New Affordable Civil-Money Penalties Insurance Protects Officers and Directors

    Since the FDIC issued its October 2013, letter clarifying that banks cannot provide or pay for insurance to protect bank officers and directors from civil-money penalties (CMP), insurance agents have advised clients to remove CMP coverage from their D&O policies, thereby exposing key executives to potential personal liability. Read More.

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    Are Your Directors and Officers in the Loop?

    CBAI offers subscription services called the Directors Pipeline and Add-an-Officer to allow your directors and officers to become more knowledgeable about CBAI offerings. Subscriptions are minimal in cost and include discounts for seminars and events. For more information, contact Andrea Cusick, SVP Communications, at cbaicom@cbai.com or 800/736-2224.

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    Address Your Board's Communication Security While Saving Time and Money

    The paperless trend has become an integral part of how businesses conduct their board meetings. This is no surprise when you consider that it takes between two and five people several days to prepare board books and committee mailings; even a small board could spend over 7,500 dollars per year on printing and mailing alone. Learn More.

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    Is Your Bank Budgeting for 2015?

    As you prepare next year’s budget, you be wondering if your compensation package is competitive. CBAI member banks that did not participate in the 25th Annual Officer Compensation Survey can still order the results for $300 (banks that participate get the results for free). Contact Andrea Cusick, SVP Communications, at cbaicom@cbai.com.

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    Service Helps Bankers More Effectively Manage Rising Health Insurance Costs

    Community BancService Corporation, Inc (CBSC), the business services affiliate of Community Bankers Association of Illinois (CBAI), the state’s largest banking trade organization exclusively representing community banks, recently announced that it partnered with CBIS Nicoud, the premier provider of insur ance services and expertise to community banks in Illinois and Missouri, to deliver a new health insurance assessment service that will help banks better manage their health care costs. Rising health insurance costs and the new ACA requirements are forcing banks to seek innovative and cost-efficient employee benefits solutions. To bend the cost curve, bankers must consider new plan design options and employee cost sharing arrangements. Click Here for more information.

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    Take the Credit Analysis Challenge!

    Does your bank use a home-grown, spreadsheet-based credit analysis model? This quick challenge will help you identify opportunities to cut costs, redeploy talent and grow portfolio revenue. You'll also see how you stack up against peers. Take The Five-Minute Challenge.

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    FFIEC Releases Cybersecurity Questions for CEOs and Directors

    The FFIEC has released a list of 20 questions that CEOs and directors should ask themselves concerning their bank's internal information process and preparedness with respect to cybersecurity risks. See BankOnIT Newsletter.

    About BankOnIT

    A CBSC Preferred Provider, BankOnIT is the exclusive developer and provider of the Bankers Private Cloud®, a unique cloud-based I.T. solution for community banks that improves efficiency, disaster recovery, and information security while minimizing a bank’s risk – including regulatory and strategic risks – that are present in today’s rapidly changing technology environment.

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    New Director Education Videos

    These videos provide information to new bank directors about their fiduciary role and responsibilities as well as an overview of the FDIC’s risk management and compliance examination processes.

    Video Topics include:

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    Know Your Hired and Non-Owned Auto Exposure

    Community-bank employees commonly leave a bank’s premises and go off-site to conduct business on behalf of the bank. They may do so in a bank-owned, and insured, car. But far more often, employees drive their own vehicles to execute a function on behalf of the bank, particularly in the case of junior and middle-management staff.

    Hired and Non-owned Auto Liability Coverage addresses this specific, fairly straightforward area of commercial auto-liability insurance in cost-efficient ways. Learn More.

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    U.S. Mobile Payments Market to Boom by 2019, Research Firm Says

    Mobile-based payments in the United States are expected to reach $142 billion in volume in 2019, according to a report from the research firm Forrester, from about $50 billion currently. “It’s not just that we have smartphones. It’s that we’re increasingly dependent or rely on or expect them to deliver more,” said Denée Carrington, a Forrester analyst. Ms. Carrington expects that Apple Pay, the first major e-commerce product from the tech giant Apple, will accelerate much of the growth of in-person mobile payments at the register. Read More.

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    Take This Week’s Quick Poll

    Take this week’s Quick Poll on providing banking services to a marijuana-related business, click here to view results of the previous polls.

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    Baker Market Update

    With all the talk about executive actions these days, the nation’s makers of monetary policy might want to consider how such an approach could fit into a macro-economic application. It seems that patience is growing a bit thin among those clamoring for more inflation. See More.

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    Economic Brief

    Revisions to US third quarter GDP this morning show a notably stronger 3.9% rate of growth. Coupled with the second quarter’s 4.6% pace, this marks the strongest six months of growth in over ten years. Part of this is simply a snapback from the first quarter’s 2.1% contraction. When the last four quarters are averaged, the year-over-year rate is still just 2.4%. Nonetheless, momentum has clearly been building since last winter. See Economic Brief.

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    The SHAZAM Network Brand Evolves to Better Reflect Diversified Products

    As part of a multi-stage brand integration strategy, the SHAZAM Network today announced the retirement of the Cardinal Software logo. While the Cardinal Software name will change to SHAZAM Core Services, no changes to the Cardinal products, which include Cardinal Core and Cardinal Connect, or to the staff who support them are planned.

    In addition, SHAZAM's marketing department has unveiled a new company tagline — Delivering Unlimited Possibilities. Read More.

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    Annual Reminder About Weather-Related Bank Closings

    It is that time of year again when CBAI reminds our members about the procedures and protections codified in Illinois’ Banking Emergencies Act. When a hazardous road or weather conditions cause a bank to close one or more of its banking location(s), that bank can seek an emergency proclamation from the I.D.F.P.R. Division of Banking that will protect the bank from liability for business that was delayed due to the emergency circumstances. See Details.

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    Account Titling Set for December 2, 3, and 4

    This seminar is designed for new account representatives, tellers, and headtellers who need to understand the various types of account ownerships that exist–from single account owners through corporations. You learn what the different ownership types represent and how to make sure you are opening the proper type of account for your customer. In addition, the seminar covers Customer Identification Program requirements and FDIC Insurance, as well as stop payments, forgeries, and tips on spotting and stopping a check-kiting operation. Seminar available December 2, Mt. Vernon, December 3, Springfield, and December 4, Utica. Register Now!

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    Directors' Conference to be Held December 10

    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. Thus, we invite you to join us at CBAI's Annual Directors' Conference. CBAI gathered top banking experts to make this comprehensive, one-day conference a must-attend. Tom Munz of Munz Consulting, LLC, discusses serving as a community bank director in a regulated environment; Ryan Hayhurst of THE BAKER GROUP examines the volatile bond market; Kraig Lounsberry and David Schroeder of the CBAI governmental relations staff provide a legislative and elections update; Richard Hamm of Advantage Consulting & Training discusses global cash flow; and Mark Scholl of Wipfli, LLP, shares what’s on the horizon in technology for community bank directors. Register Now!

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    Consumer Lending Institute Slated for December 15-17

    Sound credit decisions by community-bank lenders require a high degree of perception and skill. To reach this level of sophistication, your lending personnel must constantly rethink existing approaches, research new ideas, and update their knowledge. To provide your community bank with guidance and training, CBAI has developed the “Consumer Lending Institute.” This educational program provides essential knowledge and skills to lending professionals and establishes a network of lenders for continued support by sharing experiences with peers. Topics covered include lending compliance, introduction to consumer lending, taking the loan application and interviewing, investigating the application, risk analysis, lending to self-employed borrowers, business development, loan documentation, and collections and bankruptcy. Leading this institute is David Kemp, president of Bankers Management, Inc., College Park, GA, a nationally recognized company in financial services training and bank consulting. Tim Tedrick, CRCM, CRP, and executive officer at Wipfli LLP in Sterling, IL, also instructs during this institute.

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