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     A Bi-Weekly News Bulletin for CBAI Members                     November 27, 2013 Graphic
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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • HAPPY THANKSGIVING from Us to You
  • Community Bank Directors’ Conference Scheduled for December 11th
  • Staff Visit to Washington Reinforces Support for Community Bank Initiatives
  • Signs of Progress on Regulatory Relief
  • Why Big Is Bad in Government, Business, Banks
  • Justice Department Announces $13 Billion Settlement with JPMorgan
  • CBAI Members' Families Suffer Tornado Loss
  • CBAI Foundation Introduces “5-for-5” Campaign
  • SHAZAM: Real-Time Payments Will Become the Standard by 2018
  • Yellen’s Federal Reserve to Emphasize Resolving TBTF
  • OCC Newsletter Focuses on Financing Business Development in Rural America
  • CFPB Issues Final Rule on New Mortgage Disclosure Forms
  • ‘Twas the Night Before the Examination
  • Baker Market Update
  • Agencies Release Regulatory Capital Estimation Tool for Community Banks
  • Comptroller Releases Final Guidance on Deposit Advance Products
  • FHLB-Chicago Business Technology Conference December 4 & 5
  • House Committee Approves Patent-Reform Bill
  • ICBA Survey: More Community Banks Offering Mobile Payment Services
  • Mobile Remote Deposit Capture Fraud Could Be On The Rise
  • Introducing Bank Fees Without a Customer Backlash
  • Tis the Season: Slip, Trip and Fall Incidents
  • Auditing HMDA Scheduled for December 3
  • Problem-Loan ID and Loan Workout Scheduled for December 5 & 6


  • HAPPY THANKSGIVING from Us to You

    All of us on the CBAI staff hope you experience the joy of giving thanks for all the blessings in this life. We are thankful for the wonderful profession we serve, and we thank you for your service in community banking. We admire your competitive spirit and your dedicated support for local financial needs, economic development, and civic programs that bring your community together. As community bankers, you are truly special. Our nation's founding fathers would be proud. Have a joyful and HAPPY THANKSGIVING!

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    Community Bank Directors’ Conference Scheduled for December 11th

    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.

    CBAI's popular
    Annual Directors' Conference has assembled top banking experts to make this conference a must-attend. Tom Munz of Munz Consulting, LLC, discusses the differences in roles between management and the board; Lester Murray of THE BAKER GROUP examines the impact of market volatility on A/L management and portfolio strategy; Kraig Lounsberry and David Schroeder of the CBAI governmental relations team provide a legislative update; Don Hutson of BKD, LLP, shares what directors and executive officers need to know regarding risk management and regulatory compliance, and Scott MacDonald of the Southwestern Graduate School of Banking finishes the day with a look at the future of community banking. The Community Bank Directors’ Conference also includes a mini-exposition center featuring the latest products and services pertinent to community banks.

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    Staff Visit to Washington Reinforces Support for Community Bank Initiatives

    CBAI's David Schroeder, vice president federal governmental relations, recently visited Washington, D.C. and called on the offices of every member of the Illinois Congressional delegation, the Office of Comptroller of the Currency, Federal Housing Finance Agency, Conference of State Bank Supervisors, and the Consumer Financial Protection Bureau to urge support for positions and initiatives which are vitally important to Illinois community banks.
    Read More.

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    Signs of Progress on Regulatory Relief

    In his latest blog, ICBA’s Cam Fine provides an encouraging status report on our campaign to enact regulatory relief measures that are part of ICBA’s Plan for Prosperity. Just last week the House Financial Services Committee approved two bills that would 1) change the structure of the CFPB so that it is governed by a five-member commission rather than a single director, and 2) strengthen the Financial Services Oversight Council’s review standards for CFPB rules. In addition, the CLEAR Relief Act, which contains numerous regulatory relief provisions, now has more than 100 House cosponsors from both sides of the aisle, including Illinois Congressmen Rodney Davis, Bill Enyart, Mike Quigley, Aaron Schock, and Bobby Rush.
    See Cam Fine’s Blog.

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    Why Big Is Bad in Government, Business, Banks

    American Banker editor-in-chief Neil Weinberg offers compelling, historically-grounded reasons why the mega banks must be downsized. CBAI concurs with his poignant assessment and conclusion.
    See Weinberg Editorial.

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    Justice Department Announces $13 Billion Settlement with JPMorgan

    Illinois’ Pension System to Receive $100 Million

    The nation’s largest bank has agreed to a record $13 billion settlement with the U.S. Justice Department relating to the bank’s sale of mortgage bonds. Illinois’ pension system will receive $100 million from the settlement to resolve a civil investigation into the mega bank’s violations of state and federal laws related to its marketing and sale of mortgage-backed securities.
    See Tribune Article.

    Settlement May Not End Mega Bank’s Legal Issues

    JPMorgan has several other lawsuits pending against it, and there’s an ongoing criminal investigation. The mega bank has set aside $23 billion to cover potential fines and settlements. See Time Article.

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    CBAI Members' Families Suffer Tornado Loss

    At least four members of the extended Association family lost their homes in the November 17 tornado that hit the Washington area, just east of Peoria. They are: Don Dempsey, chairman of Washington State Bank and a member of CBAI's 50 Years in Banking Club; Dempsey's son, J.C.; Matt Ghiglieri, son of Jim Ghiglieri who is a former chairman of both CBAI and the ICBA and who currently works for SHAZAM®; and the mother of Mike Manley, director of Midwestern Securities Trading Co. Other communities including Gifford just east of Rantoul were also devastated. Donations to help them and others affected by the storm can be made at the
    RedCross website.

    FEMA Announces Disaster Aid to Affected Counties

    Federal disaster aid has now been made available to supplement state and local recovery efforts in the areas affected by the November 17 storms. Assistance includes grants for temporary housing and home repairs and more. See FEMA Release.

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    CBAI Foundation Introduces “5-for-5” Campaign

    The CBAI Foundation for
    Community Banking 2014 Annual Essay Scholarship Program is now underway, and THERE IS NO COST TO THE BANK TO PARTICIPATE!

    CBAI member dues DO NOT fund the scholarships. Only through the tax-deductible donations of CBAI members and associate members is the funding made available. Please consider the “5-for-5” Campaign. Allocate just $500 per year for the next five years for the Foundation. Again, it’s 100% tax deductible. By doing so, WITH YOUR FIRST CHECK, your bank is eligible to submit names for the two, four-year scholarships sponsored by SHAZAM® and BancVue for the children and grandchildren of your bank employees, officers, and directors. Additionally, your bank will be entered into a two-year scholarship to the Community Bankers School, sponsored by THE BAKER GROUP, the Career Development Division of CBAI, and the Federal Home Loan Bank of Chicago.

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    SHAZAM: Real-Time Payments Will Become the Standard by 2018

    A recent ACI Worldwide survey of 200 financial services professionals found that 83 percent believe that real-time payments will become the standard for financial institutions by 2018. Banks that are preparing now by offering online and mobile banking applications may be at an advantage when adoption of real-time payments becomes widespread.
    See SHAZAM Blog.

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    Yellen’s Federal Reserve to Emphasize Resolving TBTF

    In her Senate confirmation hearing, Fed Vice Chairman Janet Yellen said, “I would agree that addressing the too-big-to-fail problem has to be among the most important goals of the post-crisis period.” She noted that TBTF creates a threat to financial stability and gives advantages to large banks over community banks.
    See WSBE Article.

    The Senate Banking Committee last week voted 14 to 8 to send Yellen’s nomination to chair the Federal Reserve to the full Senate for confirmation which is viewed as highly likely. She would become the first woman ever to head a major central bank. See USA Today Article.

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    OCC Newsletter Focuses on Financing Business Development in Rural America

    The Office of the Comptroller of the Currency (OCC) has published the latest edition of its Community Developments Investments electronic newsletter entitled, "Financing Business Development and Expansion in Rural America." This newsletter provides an in-depth look at how banks are helping rural businesses grow and presents examples of banks helping to finance projects that expand manufacturing and bring services, goods, and jobs to rural communities. The newsletter also discusses the recent changes to the Interagency Community Reinvestment Act Questions and Answers that will provide banks greater flexibility to serve rural communities that are outside their assessment areas, but are in the broader statewide or regional area that includes their assessment areas.

    Related Links
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    CFPB Issues Final Rule on New Mortgage Disclosure Forms

    The Consumer Financial Protection Bureau has issued a
    final rule requiring new mortgage disclosure forms that combine existing disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The new forms, which the CFPB has developed for more than two years as part of its “Know Before You Owe” initiative, include information such as interest rates, monthly payments and closing costs.

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    ‘Twas the Night Before the Examination

    With the holiday season upon us, it’s time for family, friends, and reflection. Yes, we can eat, drink, and be merry… and we should. But that’s not so easy with life’s inevitable burdens. Take, for example, oppressive examinations and regulations. Sometimes the best medicine is to poke a little fun at that which troubles us.
    See More.

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    Baker Market Update

    The decline in prepayments continued for its 5th month in a row for Fannie Mae, Freddie Mac, and Ginnie Mae I collateral while Ginnie Mae II pools increased slightly. Within 30yr pools, Freddie Golds fell 1.3 CPR to 13.4, Fannie 30s fell 0.8 CPR to 12.6, and Ginnie Is fell 0.5 CPR to 15.4. Ginnie IIs were flat from last month at 10.8 CPR.
    See Baker Market Update.

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    Agencies Release Regulatory Capital Estimation Tool for Community Banks

    The federal bank regulatory agencies have released an
    estimation tool to help community banks understand the potential effects of the recently revised regulatory capital framework on their capital ratios.

    The revised framework implements the Basel III regulatory capital reforms and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

    The estimation tool is not part of the revised capital framework and not a component of regulatory reporting. Results from the tool are simplified estimates that may not precisely reflect banks’ actual capital ratios under the framework. Additionally, banks should be aware that the estimation tool requires certain manual inputs that could have meaningful effects on results and should reference the revised capital framework when using the estimation tool.

    The revised capital frameworks are available in the Federal Register 09-10-2013 and 10-11-2013.

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    Comptroller Releases Final Guidance on Deposit Advance Products

    The OCC has finalized supervisory guidance for national banks and federal savings associations addressing risks and agency expectations associated with deposit advance products. Deposit advance products are small-dollar, short-term loans made by banks or thrifts to customers who have recurring direct deposits with that institution. The deposit advance loan is to be repaid from the proceeds of the customer’s next direct deposit.

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    FHLB-Chicago Business Technology Conference December 4 & 5

    The Federal Home Loan Bank of Chicago will host its first conference focused on Business Technology Leadership. The
    conference will feature risk management and security experts sharing insight, strategies and recommendations to help support business technology management for banks.

    Speakers include Kevin Mitnick, the “World’s Most Famous (Former) Hacker”, who now helps companies prevent the types of data security violations he once perpetrated; and Theresa Payton, the former Chief Information Officer at the White House. This conference will be valuable to CEOs, board members and other senior executives who are responsible for understanding and managing the considerable technology risk challenges facing financial institutions today.

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    House Committee Approves Patent-Reform Bill

    The House Judiciary Committee advanced legislation to address abusive patent-infringement demands. The Innovation Act of 2013 (H.R. 3309) would help address the growth of patent-assertion entities, which assert infringement of poor-quality business-method patents by legitimate businesses, including many community banks.

    CBAI and ICBA have been closely monitoring this issue. H.R. 3309, introduced by Committee Chairman Bob Goodlatte (R-Va.), includes an ICBA- and CBAI-advocated provision that would allow the director of the Patent and Trademark Office to waive the costly filing fee required to initiate a transitional proceeding at the PTO that re-examines the validity of these patents. Absent a waiver, it would be cost-prohibitive for community banks to petition the PTO.

    Financial institutions of all sizes have been targeted by PAEs, which assert low-quality business-method patents through vaguely worded demand letters or intentionally vague complaints.

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    ICBA Survey: More Community Banks Offering Mobile Payment Services

    The 2013 ICBA Community Bank Payments Survey found that the number of community banks offering mobile payment services increased by 23 percent from 2011, and another 43 percent plan to offer such services by 2015.

    Most banks viewed payments as a source of greater efficiency and a way to improve customer service. Person-to-person electronic payments services also continue to grow.
    See Bank Credit News Article. See Key Survey Findings.

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    Mobile Remote Deposit Capture Fraud Could Be On The Rise

    Mobile remote deposit capture (MRDC) has become one of the most sought out mobile banking app features. Celent Research indicates that financial institutions (FIs) are answering consumer demand by adding MRDC to their product offerings. In 2009, 72 percent of FIs surveyed did not plan to offer MRDC. In 2012, all but 18 percent of FIs surveyed intended to provide MRDC service to their customers.

    Thus far, FIs have been fairly successful at warding off MRDC-related fraud. Celent’s data indicates that approximately 90 percent of FIs offering MRDC reported zero losses in 2012. Unfortunately, growing consumer interest and more widespread use increases the potential for fraud.
    See Shazam Article.

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    Introducing Bank Fees Without a Customer Backlash

    The deputy editor of BankThink, Jeanine Skowronski, offers ideas for introducing bank fees without triggering a customer backlash.
    See BankThink Article.

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    Tis the Season: Slip, Trip and Fall Incidents

    Words of Wisdom from Community BancInsurance Services, Inc., Powered by Nicoud

    Wintertime means less daylight hours and more inclement weather, which leads to a higher chance of injury due to falls. The National Safety Council estimates that workplace falls cause approximately 300,000 injuries and more than 1,500 deaths each year. Slips, trips, and falls account for about 15% - 20% of all workers’ compensation costs.
    See Additional Tips.

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    Auditing HMDA Scheduled for December 3

    Do you know how to audit HMDA? Do you know where the traps are? Do you have the right tools to efficiently and effectively test your institution's loan-application register? Do you want to make sure your institution is getting it right before you have to deal with all the changes? Using both the regulators' guidance and our independently created process, we walk you through an understanding (via examples) of what the regulation covers, how to select and test files, how to evaluate results, and how to search for unreported loans and denials. Get the answers to the tough questions that may confront auditors dealing with HMDA. Tim Tedrick, CRCM, CRP, and executive officer at Wipfli LLP in Sterling, Illinois, leads this
    seminar.

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    Problem-Loan ID and Loan Workout Scheduled for December 5 & 6

    This
    seminar is divided into two sections; Problem Loan Identification and Loan Workout 101 for Community Banks. The morning session covers problem-loan identification. A clear, concise, and organized approach to dealing with problem loans is essential to minimizing credit risk. This session provides you with the conceptual framework and templates needed to identify and develop a plan to remediate or exit problem relationships. It offers real-time, pertinent information based on actual experiences that help institutions prepare for their next regulatory exam. The afternoon session examines loan workouts, focusing on limiting your exposure and maximizing your return on problem loans. Leading this seminar is Ancin Cooley, CIA, CISA, founder and principal of Synergy Bank Consulting, Inc.

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