Connected To Community Banking!
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 7, 2016

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • 2016 Advocacy Year in Review
  • Illinois Legislation Effective in 2017
  • Report on CBAI Staff’s Quarterly Visit to Washington
  • The Changes in Washington Create Opportunity for Progress
  • Fine on CNBC: Regulatory Relief a Top Priority
  • Community Banks Due a Break Early in Trump Term: Hensarling
  • Investment News From THE BAKER GROUP
  • Beige Book: Economy Continues Steady Growth
  • Community Bank Net Income Rises in Third Quarter
  • FCS Regulator Says Questionable Practices Meet ‘Other Credit Needs’
  • Debit-Card Fraud Losses Increase in 2015
  • Looking Back at Payments In 2016
  • Five Essentials Millennials Expect From Their Banks
  • Happy Holidays (and a $30 off coupon) from Midwest Office!
  • Kasasa® Named a BankNews Innovative Solution Award Winner
  • Wolters Kluwer 2016 Regulatory and Risk Management Indicator Survey
  • CBIS Nicoud: Specialized Products for Community Banks’ Unique Needs
  • CBAI LEGAL: Lender Wins 2, Loses 1 in Guaranty Case
  • Community Bank Directors’ Conference Slated for December 12
  • Compliance Institute Set for January 10 & 11
  • Appraisal Review Scheduled for January 18 & 19
  • Earn a Certified Community Lender Designation!

  • 2016 Advocacy Year in Review

    Community Banks Set for Continued Success

    With yearend quickly approaching, it’s a great time to reflect upon our year of community bank advocacy—what we fought for, what we accomplished, and what we have yet to achieve.

    Due to the stellar reputation of community bankers in our nation’s capital, ICBA, CBAI, and other state community bankers associations have achieved positive gains and are poised to take advantage of new opportunities in the coming year. With a new Congress and presidential administration for 2017 and beyond, community banks can look back at 2016 as a year of advocacy success. Community bankers have made substantial progress on numerous policy fronts.

    Regulatory Relief
    There were several early regulatory relief victories for community banks. Year-end 2015 legislation cleared the way for the Consumer Financial Protection Bureau to ease mortgage burdens on community banks that operate in rural or underserved areas, and for bank regulators to extend the 18-month exam cycle to more community banks. The FDIC also reduced heightened supervisory monitoring of de novo banks. Meanwhile, ICBA’s comprehensive Plan for Prosperity regulatory relief platform advanced in Congress this year and is teed up for the 115th Congress arriving next month. More than 50 bills were introduced embodying nearly every provision of the plan, including provisions in the Financial CHOICE Act, which will continue to be a focus next year.

    Credit Unions
    Community banks said “enough is enough” with the National Credit Union Administration’s repeated efforts to dramatically expand lending loopholes for credit unions. ICBA filed suit against the NCUA challenging its unlawful rule issued earlier this year allowing credit unions to exclude purchased commercial loans or participations from their calculations of the cap on member business loans. If allowed to stand, the NCUA’s final rule would allow tax-exempt credit unions to exceed limitations on commercial lending activity established by Congress while relaxing regulatory oversight.

    Farm Credit System
    Community bankers also fought against mission creep at the Farm Credit System, testifying how the tax-advantaged entity is undermining rural credit availability, how the system has strayed from its mission, and how it focuses on cherry-picking farm loans out of community bank portfolios.

    Accounting Reform
    Following relentless community banker advocacy, the Financial Accounting Standards Board substantially improved its final accounting standards update on credit losses. Under previous drafts of the Current Expected Credit Loss standard, community banks would have been required to use complex cash-flow modeling to determine loan reserves. After heeding our calls for a more workable solution, the final standard will allow community banks to rely on their judgment, knowledge of local economic conditions, and existing systems to determine reserves.

    For more community bank advocacy efforts in 2016, Click Here.

    Back to top

    The biggest reason 2016 was great? You — our clients, partners and industry advocates who’ve helped us in our goal of being THE trusted partner in providing answers, choice and innovation to community financial institutions. SHAZAM thanks all of our member participants for making business bright in 2016! We’re excited for what 2017 will bring and wish everyone a joyous holiday season. Contact SHAZAM for ideas to help you succeed in the new year.

    Illinois Legislation Effective in 2017

    Several amendments to Illinois law become effective on January 1, 2017. See Legislation Effective in 2017.

    Back to top

    Report on CBAI Staff’s Quarterly Visit to Washington

    CBAI’s Vice President of Federal Governmental Relations, David Schroeder, recently visited the office of every member of the Illinois Congressional delegation, met several times with Officials at the Comptroller of the Currency (OCC), and conferred with senior legislative staff of the Independent Community Bankers of America (ICBA). The purpose of Schroeder’s quarterly visits to D.C. is to discuss a variety of issues of importance to Illinois community bankers.

    During this Lame Duck session of Congress, Schroeder urged the passage of legislation to promote fair competition in financial services and give consumers more choices. The bills Schroeder highlighted would strengthen community banks, which are built on customer trust, and support small business development, home and education loans, and long-term financial security. Schroeder also urged legislators and regulators to not permit the criminal misdeeds of Wells Fargo to stall or prevent regulatory relief for community banks, and to oppose the expansion of powers of credit unions and Farm Credit System lenders. Read Report on CBAI Staff Visit.

    Back to top

    The Changes in Washington Create Opportunity for Progress

    In his recent blog, ICBA’s Cam Fine notes that, for the nation’s community banks, radical change in Washington will mean an exceptionally busy year, but also a period of potential positive breakthroughs. Community bankers enjoy strong and positive relationships with policymakers on both sides of the aisle. ICBA and CBAI look forward to working with both parties under the new regime in Washington to make meaningful reforms that will support local communities, job creation and economic prosperity nationwide. See Blog.

    Back to top

    Fine on CNBC: Regulatory Relief a Top Priority

    The new Congress and presidential administration are expected to take up much-needed regulatory relief for community banks, ICBA President and CEO Cam Fine told CNBC. Fine recenly told the network he expects sections of the Dodd-Frank Wall Street Reform Act dealing with the Consumer Financial Protection Bureau and Volcker Rule to be reviewed in 2017. Watch the Interview.

    Back to top

    Community Banks Due a Break Early in Trump Term: Hensarling

    Community banks will face less red tape and be able to lend to more small businesses once Congress erases financial rules conceived after the economic downturn of 2008, a leading Republican lawmaker said last week. The plan from Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, would roll back parts of the Dodd Frank reform legislation, a law that was meant to prevent a future financial meltdown by muzzling Wall Street.

    The Trump administration and fellow Republicans who control Congress will set the administration's legislative priorities, Hensarling said. But he noted that his alternative to Dodd Frank, known as the Choice Act, would be the first legislation to move through his committee. "When we get the word from the Speaker (of the House) and the administration that it's time to go, the House Financial Services Committee will be ready." Read More.

    Back to top

    Investment News From THE BAKER GROUP

    Baker Market Update

    Expectations for improving economic fortunes continue to grow, and those expectations continue to fuel a Trump Jump that has pushed the Dow to an all-time high. Everybody likes that. The same Trump Jump has pushed prices on Treasury bonds to new lows for the year. Not everybody likes that. The Organization of Petroleum Exporting Countries agreed recently to cut production, making sellers of crude oil happy. See Baker Market Update.

    Back to top

    Beige Book: Economy Continues Steady Growth

    The economy continued to expand at a moderate or modest pace across most regions, according to the Federal Reserve’s Beige Book of regional conditions. Banking conditions were largely stable, residential and nonresidential real estate activity improved, and investment in oil and gas drilling increased slightly. Meanwhile, farmers were generally satisfied with this year’s harvests, though low commodity prices continue to weigh on farm income. See FRB Beige Book Report. See Chicago Region Report. See St. Louis Region Report.

    Back to top

    Community Bank Net Income Rises in Third Quarter

    Community banks reported an 11.8 percent increase in net income in the third quarter from the same time last year, the FDIC reported in its latest Quarterly Banking Profile.

    The 5,521 institutions identified as community banks reported total loan and lease balances rose $31.1 billion during the quarter and $127.6 billion over the past year. Net operating revenue increased 8.5 percent to $23 billion, while higher loan-loss provisions and noninterest expenses also rose.

    Overall, insured banks and thrifts reported an increase in aggregate net income of $45.6 billion (12.9 percent) since the third quarter of 2015. The increase was mainly attributable to a 9.2 percent increase in net interest income and a 1.9 percent rise in noninterest income.

    Of the 5,980 reporting insured institutions, 60.8 percent reported year-over-year earnings growth. The proportion of banks that were unprofitable in the third quarter fell to 4.6 percent from 5.2 percent last year, the lowest percentage since the third quarter of 1997.

    The number of banks on the FDIC’s Problem List fell from 147 to 132 during the third quarter, the smallest number in more than seven years and down significantly from the peak of 888 in the first quarter of 2011.

    The Deposit Insurance Fund’s Reserve Ratio increased $2.8 billion during the third quarter to 1.18 percent. Because the reserve ratio surpassed 1.15 percent on June 30, lower regular FDIC-assessment rates went into effect in the third quarter. Read Community Banking Data. Read More from FDIC.

    Back to top

    FCS Regulator Says Questionable Practices Meet ‘Other Credit Needs’

    The Farm Credit Administration responded to an October letter from ICBA calling on the agency to review illegitimate activities undertaken by Farm Credit System entities. ICBA’s letter cited several examples of questionable FCS loans and advertising and asked the agency to answer questions about the FCS misconduct.

    In its response, the FCA said the loans qualify as meeting the “other credit needs” of borrowers, though it conceded a deed of trust cited in ICBA’s letter was incorrectly marked as an agricultural property.

    ICBA and CBAI will continue working to halt the mission creep of the tax-subsidized FCS into commercial banking and to demand stricter oversight of the government-sponsored enterprise, which has attracted congressional scrutiny in recent House and Senate agriculture hearings. Read FCA Response.

    Back to top

    Debit-Card Fraud Losses Increase in 2015

    The median debit card issuer had an average cost of authorizing, clearing, and settling transactions of 12.3 cents in 2015, the Federal Reserve Board reported. However, ACS costs varied greatly, with high-volume issuers reporting the lowest costs per transaction and bringing the average to 4.2 cents per transaction.

    The board estimated that debit-card fraud losses to all parties, including merchants and cardholders, increased by 44 percent from 2013 to $2.41 billion in 2015. The median covered issuer's average fraud loss as a share of transaction value was 6.6 basis points, up from 5.1 in 2013, with fraud-prevention and data-security costs of 1.9 cents per transaction. See Press Release.

    Back to top



    This special image program for community banks is an ongoing public relations effort to promote community banking revolving around the theme, “A Real Community Bank®.” ARCB® is designed to alert the public to the advantages of doing business with community banks and the benefits they bring to their communities. New enhancements have been made! Check Them Out Here.

    Back to top

    Looking Back at Payments In 2016

    With 2016 coming to a close, it is important to reflect on the major developments and changes that occurred within the payments industry. Not only were there new security regulations that impacted payments, but also it was the one-year anniversary of EMV. Mobile-payment acceptance also continued to grow and expand.

    See A Few Top Payment Headlines, presented by CBSC preferred provider Fitech Payments.

    Back to top

    Five Essentials Millennials Expect From Their Banks

    Brand experience is everything for Millennials. It’s the quintessential factor that will determine how they select a bank. A millennial with banking experience offers some suggestions. Read More.

    Back to top

    Happy Holidays (and a $30 off coupon) from Midwest Office!

    As we get ready to close out the 2016 year, Midwest Office, a preferred service provider of CBSC, wants to make sure that your print and promotional products are fully stocked and ready for action as 2017 grows near. Have you checked your inventory lately? Looking for a fresh, clean, start to the New Year? Now is the time to take advantage with our end-of-the-year coupon for $30 off your next order of $150 or more.

    Bring together your brand and target audience to create memorable experiences that help grow your business. To place your next order, contact your Midwest Office Sales Representative, Kevin Gaffney at 217-303-5511 or email Happy Holidays! See Holiday Specials.

    Back to top

    Kasasa® Named a BankNews Innovative Solution Award Winner

    Kasasa®, formerly BancVue, was named a 2016 winner of the BankNews Innovative Solution Awards (ISA) for its refer-a-friend technology, Share KasasaTM. The refer-a-friend programs have proven to be beneficial across many industries, but those available for community financial institutions fall short. Many are paper-based, manual, require back office reconciliation and do not deliver the experience consumers expect today. Share Kasasa changes all of that. It is a digital, automated, mobile-friendly refer-a-friend solution that integrates with all popular social networks, such as Facebook and Twitter. It is also gamer resistant, allowing financial institutions to have larger, engaging rewards, as Share Kasasa allows bonuses only for consumers who become real, active accountholders. It turns an institution’s current customers into brand advocates, allowing the institution to acquire quality accounts at a low cost. Read More.

    Back to top

    Wolters Kluwer 2016 Regulatory and Risk Management Indicator Survey

    Results of this year’s Regulatory and Risk Management Indicator survey of more than 800 financial institutions show that regulatory compliance and risk management concerns have collectively declined for the first time in the survey’s four years, despite rising regulatory pressures. To learn more about the results of the 2016 survey conducted by CBSC Preferred Provider Wolters Kluwer, Click Here.

    Back to top

    CBIS Nicoud: Specialized Products for Community Banks’ Unique Needs

    Wells Fargo’s inexcusable internal practices recently resulted in a $35-million civil-money penalty issued by the Office of the Comptroller of the Currency. That fine may ultimately prove to be a drop in the bucket relative to reputation depreciation to the organization, the millions spent in new ad campaigns aiming to clean up its tarnished reputation (maybe you saw those ads during the World Series), and the inevitable class-action litigation the company will have to defend.

    While Wells’ foibles underscore the value proposition so many community banks in our state deliver throughout communities daily, it is worth noting that regulators are clearly mindful of smaller institutions’ commitments to consumer protections and fair-lending practices. Read More.

    Back to top

    CBAI LEGAL: Lender Wins 2, Loses 1 in Guaranty Case

    The enforcement of the unambiguous terms of a guaranty led to mixed results in the recent Illinois Appellate Court decision in the case of Koenig & Strey GMAC Real Estate vs. Renaissant 1000 South Michigan. Read Most Recent CBAI LEGAL.

    Back to top

    Community Bank Directors’ Conference Slated for December 12

    Don't Miss this Popular Annual Event!

    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. So, please 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; Paul Cornell of Premier Consulting Partners examines shareholder succession; Patrick Dix of SHAZAM Network shares tactics on helping directors leverage the media; Robert Purdy with BKD, LLP, focuses on risk management; and Kraig Lounsberry and David Schroeder of the CBAI governmental relations staff provide a legislative and regulation update.

    Back to top

    Compliance Institute Set for January 10 & 11

    Community banks are constantly faced with a bewildering array of ever-changing regulations. In response to this training need, CBAI is pleased to present the “Compliance Institute” this January & April. An introductory course for those compliance officers who are either new to banking or new to their positions, this institute is designed to provide a comprehensive understanding of the major regulatory-compliance regulations that have been determined to be “must knows” for all compliance officers. The school has been divided into two sessions, Operations/Deposit Compliance and Lending Compliance. Attendees can attend one or both sessions, dependent upon need. Offered in January, session I, Operations/Deposit Compliance, addresses topics including compliance management, privacy of customer information, Fair Credit Reporting Act, Customer Identification Program, Bank Secrecy Act, Regulation D: Reserve Requirements, Regulation DD: Truth in Savings Act, Regulation CC: Expedited Funds Availability Act, and Regulation E: Electronic Funds Transfer Act. Topics covered in Lending Compliance, offered in April, include Regulation Z: Truth in Lending, Regulation B and the Fair Housing Act: Fair Lending, Regulation X: Real Estate Settlement Procedures Act, National Flood Insurance Program, Regulation C: Home Mortgage Disclosure Act, compliance management, privacy of customer information, FCRA and Regulation V (lending portion only), and Customer Identification Program (BSA). Bill Elliott, CRCM, senior consultant and manager of compliance, and Adam Witmer, CRCM, consultant, both of Young & Associates, Inc., Kent, OH, lead this institute.

    Back to top

    Appraisal Review Scheduled for January 18 & 19

    Since 2010, all regulatory agencies have increased their expectations regarding a bank's review of property appraisals. A checklist simply does not suffice anymore, particularly on commercial property appraisals. Banks must gain a better understanding of the appraisal process and of the appraisals it receives. Just because an appraiser is on the bank's approved appraisal list does not mean the bank should accept his or her work without question or review. Banks are expected to thoroughly review the appraisals, and question the assumptions contained therein when necessary. This seminar focuses on the regulatory requirements and expectations regarding the review of third-party appraisals and in-house evaluations. Both single-family dwelling and commercial property appraisals are discussed. Depending on the individual institution's structure, this seminar should be attended by personnel from loan administration, underwriting/credit analysis, to all general loan personnel. Topics covered include appraisal regulations and guidance, terms used in an appraisal, the review process, reviewing commercial-property appraisals, reviewing residential-home appraisals, and case studies. Leading this seminar is Aaron Lewis, consultant in the lending division of Young and Associates, Inc., Kent, OH.

    Back to top

    Earn a Certified Community Lender Designation!

    Since the financial crisis, lenders have increasingly come under fire by regulators. Regulators have also stated that they will continue to expect a high degree of expertise from community-bank lenders. Demonstrate your bank's commitment to a higher standard by establishing a level of lending expertise among your staff. Give your lending staff the opportunity to achieve the level of knowledge and expertise that comes with earning a Certified Community Lender (CCL) designation. Designed to professionalize the position of a community bank lender, this designation is similar to that of a Certified Public Accountant. It establishes a standard of knowledge for the community bank lender and it allows the lender to demonstrate not only to their employer, but to their regulators and to their community, that they have achieved that knowledge. The CCL designation is offered by CBAI, working in concert with Jeff Johnson, president of Bankers Insight Group, Atlanta, GA. Candidates must have three or more years of lending experience and pass a six-hour exam to be awarded this classification. Skills subject to testing include consumer lending, residential real-estate lending, business financial statements, compliance regulations, loan review, loan collection, portfolio management, and problem-loan identification and management. The exam includes approximately 200 multiple-choice questions and two case studies, in which the student chooses from consumer, commercial, agricultural lending, and credit administration. The exam is offered on the second Friday in January of each odd-numbered year at CBAI headquarters in Springfield. The next exam is scheduled for January 13, 2017. To help you prepare for the exam, CBAI is offering two CCL telephone/webcast prep courses. The purpose of these pre-examination sessions is to provide the candidate with vital information required to prepare for the examination.

    Back to top


    THROUGH 02/17/2017






    Finer Points Blog

    800.736.2224 (IL) | 217.529.2265 |

    DISCLAIMER:The association is not responsible for and has no control over the subject matter, content, information, or graphics when viewing links attached to this association's site. If you do not wish to receive e-mails from Community Bankers Association of Illinois (CBAI), 901 Community Drive, Springfield, IL 62703, through CBAI in the future, please click here. - OR - If you would like to be removed from the CBAI e-mail database, please click here.

    © 2016 Community Bankers Association of Illinois. All Rights Reserved.