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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                                    December 6, 2017

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Community Banks Achieve Major Regulatory Relief Vote!
  • Senate Advances Tax Reform with CBAI and ICBA-Led Improvements
  • ICBA Statement on GSE Profit Sweep Discussions
  • President Trump Appoints Mulvaney as CFPB Acting Director
  • ICBA Sues Equifax Over Massive Data Breach
  • Joseph Otting Takes the Helm at the OCC
  • Investment News From THE BAKER GROUP
  • Q3 GDP Increase Revised Up
  • Farmer Mac Releases New Report on Ag Economy
  • Opinion: Congress Should Let More Banks Make Small-dollar Loans
  • Three Key Ways to Prepare for Digital Transformation in 2018
  • SBA Offers Litigation Plan & Legal Fee Reimbursement Webinar
  • Community Banks Are Bigger Than You Think and Have Something in Common
  • SHAZAM Reports Increased Black Friday Activity
  • CBAI LEGAL: Lack of Note Endorsement Kills Foreclosure
  • CBIS: Cyber Policies, Community Banks Must Maintain Open Communication Channels
  • CBAI’s Community-Bank Directors’ Conference Set for December 11
  • Managing Commercial Banking Relationships Slated for December 13
  • Loan Portfolio Management Scheduled for December 15
  • Compliance for Lenders to be Held January 8, 9, & 31


  • Community Banks Achieve Major Regulatory Relief Vote!

    Yesterday the Senate Banking Committee approved CBAI and ICBA-advocated legislation to provide significant regulatory relief to the nation’s community banks. Following persistent outreach by community bankers, the panel voted 16-7 to send the bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) to the Senate floor.

    In a message to community bankers, ICBA President and CEO Cam Fine said the successful bipartisan vote is a major step forward for the industry’s regulatory relief push. He noted that the bipartisan vote was achieved amid an acrimonious political environment, and community bankers helped fend off amendments that would have watered down and jeopardized the bill.

    “Congratulations on this critical Senate step, community bankers,” Fine wrote. “We are almost to the finish line!” The bill would implement numerous measures from ICBA’s Plan for Prosperity regulatory relief platform, including provisions to increase Home Mortgage Disclosure Act exemptions, expand the “qualified mortgage” definition, simplify capital requirements, provide relief for larger community banks, and much more. CBAI has been campaigning for meaningful regulatory relief for several years and has worked to build relationships with elected officials that has helped deliver the community banking call for tiered regulations based on size, function, and complexity. These diligent efforts are about to prove successful.

    The strong bipartisan vote followed S. 2155’s introduction by 20 bipartisan senators led by Senate Banking Committee Chairman Mike Crapo (R-Idaho) and committee Democrats Joe Donnelly (Ind.), Heidi Heitkamp (N.D.), Jon Tester (Mont.) and Mark Warner (Va.).

    CBAI and ICBA thank community bankers for their grassroots outreach and will continue working to deliver the bill to the president’s desk to be signed into law. Read Fine’s Message. Read Release.

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    Senate Advances Tax Reform with CBAI and ICBA-Led Improvements

    The Senate advanced comprehensive tax reform legislation over the weekend with major improvements advocated by CBAI and ICBA. Both organizations thank community bankers for their grassroots advocacy, which helped to significantly improve the Tax Cuts and Jobs Act’s (H.R. 1) treatment of Subchapter S community banks, non-qualified deferred compensation plans, mortgage-servicing rights, and more.

    Senate passage continues the momentum for pro-growth tax reform, including lowering the top C-corp rate from 35 percent to 20 percent, providing estate and individual rate relief, and reducing the alternative minimum tax.

    Following outreach by community bankers, the House and Senate bills create a carve-out for small-business borrowers from limits on the deduction for business interest expenses, and they preserve the current tax treatment for non-qualified deferred compensation plans and mortgage-servicing assets. Further, the Senate bill preserves the mortgage interest deduction, while the House bill would limit it to $500,000 of indebtedness on new home purchases and grandfather current mortgages.

    CBAI and ICBA also worked closely with Subchapter S community banks to ensure the Senate bill provided significant S-corp tax relief, lowering the effective S-corp tax rate by providing a 23 percent deduction for qualified business income. However, concerns remain that the bills do not address the disparity between taxpaying community banks and tax-exempt credit unions and the Farm Credit System.

    As the House and Senate proceed to conference, CBAI and ICBA will continue working with policymakers to ensure pro-growth tax reform that benefits community banks and the communities they serve. Read More. Read Release.

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    ICBA Statement on GSE Profit Sweep Discussions

    ICBA President and CEO Camden R. Fine released the following statement last week on reports that the Federal Housing Finance Agency is meeting with the White House on the ongoing sweep of Fannie Mae and Freddie Mac profits to the U.S. Treasury.

      “Fannie Mae and Freddie Mac last month reported more than $7.7 billion in third-quarter net earnings, all of which would be swept into the U.S. Treasury before the end of the year unless the Federal Housing Finance Agency directs otherwise. With this latest profit sweep, the government-sponsored enterprises will have transferred more than $280 billion to the Treasury since 2013—nearly $100 billion more than the capital infusion they received during the Wall Street financial crisis.

      “While this arrangement has been a great investment for the Treasury and has compensated taxpayers handsomely, both companies will enter 2018 with zero capital to protect taxpayers and support the mortgage market unless Washington acts. ICBA continues to call on FHFA Director Mel Watt and Treasury Secretary Steve Mnuchin to end this destructive sweep of GSE earnings and to allow both companies to begin to rebuild their capital buffers to avoid another taxpayer bailout. Community banks depend on the liquidity that Fannie Mae and Freddie Mac provide, as do American homebuyers.” Read Release.

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      President Trump Appoints Mulvaney as CFPB Acting Director

      President Donald Trump has appointed Management and Budget Director Mick Mulvaney as acting Director of the CFPB after Richard Cordray resigned the post. The appointment has not been without controversy, however, as Cordray attempted an 11th hour appointment of his own. Cordray referenced language in Dodd Frank when he appointed his chief of staff Leandra English as acting director hours before Trump appointed Mulvaney under the Federal Vacancies Reform Act. English filed suit to block Mulvaney’s appointment, but U.S. District Judge Timothy Kelly rejected the arguments in the law suit and recognized the Federal Vacancies Reform Act as the prevailing authority for the appointment. The judge’s ruling should pave the way for Mulvaney to serve as acting director until a permanent director is nominated by the President and confirmed by the U.S. Senate.

      CBAI has been critical of the CFPB in numerous meetings and comment letters for not using the authority granted to the CFPB by Congress under the Dodd-Frank Act to broadly exempt community banks from rules intended exclusively for the largest banks, financial firms, and the shadow banking industry. CBAI is encouraged by the Mulvaney appointment and looks forward to working with the acting director and his eventual successor to appropriately focus the efforts of the Bureau and give community banks needed regulatory relief.

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      ICBA Sues Equifax Over Massive Data Breach

      Last week ICBA filed a lawsuit against Equifax for its recent breach of 145.5 million consumer records and 209,000 payment cards. Bank of Zachary, La., and First State Bank in Barboursville, W.Va., joined ICBA in this suit which asks the U.S. District Court for the Northern District of Georgia to require Equifax to compensate all community banks harmed by the breach and to improve its security to avoid additional harm to the consumers and local communities that community banks serve. Read Release. Read Complaint.

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      Joseph Otting Takes the Helm at the OCC

      The Community Bankers Association of Illinois (CBAI) congratulates Joseph M. Otting on the occasion of his being sworn in as the 31st Comptroller of the Currency. President Trump nominated Otting in June and was confirmed by the United States Senate on November 16th. He was sworn into office by Secretary of the Treasury Steven T. Mnuchin.

      Otting takes the OCC helm from Keith Noreika, who was acting Comptroller following the departure of Thomas Curry. Otting brings to the position deep executive-level banking experience with CIT Bank, OneWest Bank, U.S. Bank, and Union Bank, and is distinguished from other recent Comptrollers because he has led banks whose primary regulator was the OCC. Blake Paulson, Deputy Comptroller (Central District) of the OCC said at a recent Federal Reserve Bank of Chicago Community Bankers Symposium that he believes Otting’s extensive management and banking experience will be positive for the Agency and the 1,400 national banks it regulates.

      Mr. Otting holds a bachelor of arts in management from the University of Northern Iowa and is a graduate of the School of Credit and Financial Management, at Dartmouth College in Hanover, New Hampshire. Read OCC’s News Release. November 30, 2017

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      Investment News From THE BAKER GROUP

      Baker Market Update

      Headlines have been dominated lately with reports of the ebbs and flows of the legislative process as the Senate applies the finishing touches to its version of tax reform. See Baker Market Update.

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      Q3 GDP Increase Revised Up

      The U.S. gross domestic product was upwardly revised to a 3.3 percent increase in the third quarter, according to the Commerce Department’s second estimate. The initial estimate projected a 3.0 percent increase. The GDP rose 3.1 percent in the second quarter.

      Separately, pending home sales rose 3.5 percent in October following three straight months of diminishing activity, the National Association of Realtors reported. See Commerce Department Release. Read More on Revision. Read Realtors’ Release.

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      Farmer Mac Releases New Report on Ag Economy

      Farmer Mac this week released the winter edition of The Feed, a quarterly perspective on the agricultural economy. This edition features a special report on farm labor, severe weather and its effect on agriculture, an analysis of USDA's farm income forecast accuracy, and more. Read Report.

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      Opinion: Congress Should Let More Banks Make Small-dollar Loans

      Former FDIC Chairman William Isaac believes that when it comes to short-term, small-dollar loans, banks are between a rock and a hard place. He notes that consumers are demanding short-term credit, and officials such as former CFPB Director Richard Cordray have urged banks to meet this need. On the other hand, stringent regulation meant to shut down predatory lenders is understandably causing banks to hesitate about jumping into the market.

      Isaac notes that partnerships between banks and fintech firms could spur traditional institutions to get more involved. Unfortunately, a few court decisions have put a cloud over these ventures by raising questions over which party is the "True Lender" in these partnerships. Fortunately, Congressmen Trey Hollingsworth (R-Ind.), Alcee Hastings (D-Fla.), Blaine Luetkemeyer (R-Mo.), and Henry Cuellar (D-Tx.), recently introduced bipartisan legislation to clear up this regulatory mess by clarifying banks are the True Lender. Isaac concludes that this legislation will help banks provide millions of Americans more access to credit. Read More.

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      Three Key Ways to Prepare for Digital Transformation in 2018

      As the end of 2017 nears, CRM consultant Chris Palmer urges bankers to look ahead and begin to plan the initiatives that will help their banks compete in the rapidly-shifting financial marketplace of the future. Palmer has pulled together a list of three big-bucket items to add to your strategic plan. All rely on the intelligent use of technology to decrease operational complexity and costs, and boost growth and customer satisfaction. Read More.

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      SBA Offers Litigation Plan & Legal Fee Reimbursement Webinar

      Join Counsel Andrea Button-Ott of the SBA Illinois District Office as she presents on the proper procedures for SBA litigation plans and legal fee reimbursements. The better you understand this important SBA process, the easier it will be for you to litigate and obtain payment from the SBA for your collection efforts. Register for Free Webinar.

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      Community Banks Are Bigger Than You Think and Have Something in Common

      The size of community banks is growing. In the 1950s, a community bank was thought of as having a single office serving a single community. Today, many community banks have branches, some with six, 12 or 36 offices, serving multiple communities. Illinois has 432 community banks, and community banks represent 92% of all FDIC insured institutions in the USA. And there’s something they all have in common. See More.

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      SHAZAM Reports Increased Black Friday Activity

      The beginning of the 2017 holiday shopping season saw consumers ready to spread joy and cheer. Shoppers spent more money during the 2017 Thanksgiving holiday compared to those in 2016, which is a promising development for the financial services industry. These are the transaction totals for SHAZAM for Black Friday 2017 compared to the previous year. Total transactions for Black Friday 2017 were 3.5 million compared to 3.29 million from 2016. The 2017 transactions totaled $65.8 million compared to $59.4 million from the previous year. The average debit card purchase was $21.60 compared to $21.06 from last year. The average cash withdrawal from an ATM was $27.80 compared to $24.23 in 2016.

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      CBAI LEGAL: Lack of Note Endorsement Kills Foreclosure

      U.S. Bank Trust, N.A. v. Lopez is a case decided November 14, 2017 by the Illinois Appellate Court for the Second District. The Court’s opinion teaches the lesson that a foreclosing mortgagee must make sure that the note was timely endorsed to it prior to filing a foreclosure complaint. See Most Recent CBAI LEGAL.

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      CBIS: Cyber Policies, Community Banks Must Maintain Open Communication Channels

      As a financial-institution specialist agency, we spend a lot of time in the field, working directly with our community-bank partners to ensure their insurance programs are calibrated to ever-evolving risks. On more than a handful of recent occasions, we’ve walked into a bank lobby and noticed a brochure advertising a technology-centric service, like a new mobile-banking application, or a re-worked website. And in some cases, those services have been offered unbeknownst to us.

      That’s a problem, because it means that, more than likely, the bank has not communicated its new offering with its cyber-insurance carrier. When it comes to cyber policies, carriers almost uniformly insist they are made aware of any changes in technology platforms, new service rollouts, and even vendor relationships. Read More.

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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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      Managing Commercial Banking Relationships Slated for December 13

      This one-day course focuses on commercial-loan portfolios and customer relationships at the lender level, using a six-step process for organizing a lender's portfolio to achieve both credit quality and sales/production goals. Included are worksheets and case examples for organizing and improving the handling of relationships, with the goal of enhanced customer service and bank profitability within a community-bank environment. The seminar also allows time to discuss and share best practices from among the participants - things that really work on the front lines. Topics covered include key issues in determining and updating a credit-risk grade; reducing delays in obtaining updated financial information from the customer; maximizing the cross-selling of non-lending products and services; common habits or practices of high-performing relationship managers; recognizing potential problem loans; loan-pricing tips and traps; practical ideas for setting and monitoring loan covenants; and key early warning signals of problem loans or problematic relationships. Leading this seminar is Richard Hamm, owner of Advantage Consulting and Training in Huntsville, AL.

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      Loan Portfolio Management Scheduled for December 15

      Managing a bank's loan portfolio occurs at three levels: the highest level is the board of directors and executive management. The lending department manager or senior lender has additional duties, while at a third level the day-to-day performance of the lenders is critical. This course looks at the key roles and duties at all three levels. The focus in on the lender level, since that is the starting point for effective, overall management. Successful lenders achieve sales goals and maintain credit quality at the same time. It doesn't happen by accident, nor does it require a workaholic approach to the job. The key is organizing your individual portfolio. The result is better service to your most important customers and prospects on an individual basis. Leading this seminar is Richard Hamm, owner of Advantage Consulting and Training in Huntsville, AL.

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      Compliance for Lenders to be Held January 8, 9, & 31

      Each bank employee has a duty to master a working knowledge of the compliance issues that pertain to his or her assigned position description. And with a relatively new set of Dodd-Frank rules and the even newer TRID rules, the life of a lender is getting more and more complex. The challenge is to ensure that lending personnel have the right information at the right time. This one-day program provides an overview of the current "hot-button" changes that are part of the lender's responsibilities; an overview of the lender's responsibility for assuring that all the TRID rules are met; an overview of the Loan Estimate and the Closing Disclosure; and up-to-date information on other compliance issues and other developments in bank regulations that relate to lending. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance with Young & Associates, Inc., Kent, OH.

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