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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    December 9, 2015

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

  • Congress and President Approve Highway Bill with $200M Fed Dividend Exemption
  • Community Bank Persistence Paying Dividends on Regulatory Relief
  • FASB and Regulatory Relief Remain Key Grassroots Initiatives
  • Succeeding With Your Succession Plan
  • Congress Needs to Continue Examining Farm Credit System Abuses
  • Regulators Plug Regulatory Relief Efforts at Final EGRPRA Meeting
  • Investment News From THE BAKER GROUP
  • Issuance of SOP 50 57 2, 7(a) Loan Servicing and Liquidation
  • Shopping for Service Providers under TRID
  • SHAZAM Offers Tips to Customers and Merchants for Safer Shopping
  • CBAI LEGAL: Condo Association Lien Might Survive Foreclosure Sale
  • Midwest Office is your Envelope Headquarters
  • Lenders’ Guide to Mortgage Loan Compliance to be Held December 10 & 11
  • Auditing Reg Z and RESPA Scheduled for December 14
  • Compliance Institute: Operations/Deposit Session Set for January 12 & 13


  • Congress and President Approve Highway Bill with $200M Fed Dividend Exemption

    Following strong, CBAI, ICBA and community bank advocacy, Congress sent to the president compromise highway legislation offering important relief to community banks. The legislation, which President Barack Obama subsequently signed into law, exempts community banks $10 billion and under from cuts to Fed stock dividends and also advances several ICBA Plan for Prosperity regulatory relief provisions.

    Estimates indicate that the exemption will save community banks roughly $200 million per year. According to the projections, a $500 million and $1 billion bank would save roughly $300,000 and $600,000 per year, respectively. The new law also provides that banks over $10 billion in assets will receive a floating dividend rate on Fed stock based on the 10-year Treasury rate with a maximum of 6 percent.

    Due to community bank grassroots outreach, the transportation agreement also:

    • Includes beneficial policies from ICBA’s Plan for Prosperity to eliminate redundant privacy notice requirements, expand the 18-month exam cycle, eliminate the word ‘predominantly’ from the Consumer Financial Protection Bureau definition of ‘rural area,’ expand TruPS CDO relief for small bank holding companies, and allow thrift holding companies to take advantage of new Securities and Exchange Commission registration thresholds,
    • restores funds cut from the crop insurance program that would have significantly curtailed the private-sector delivery of federal crop insurance, and
    • drops language that would have extended higher Fannie Mae and Freddie Mac guarantee fees.
    ICBA has posted a fact sheet and a visual chart spotlighting the key financial services provisions of the highway law that includes an important community bank exemption from Fed dividend cuts. In addition to the exemption for community banks with $10 billion and under in assets, the new law also includes a variety of regulatory relief provisions from ICBA’s Plan for Prosperity.

    CBAI and ICBA will continue working with lawmakers to ensure the final highway spending bill does not adversely affect community banks or the local communities they serve. See Fact Sheet. See Visual Chart. Read ICBA Release. Read CBAI Letter to Senator Durbin. Read Beneficial Policies. Read Crop Insurance Provisions.

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    Community Bank Persistence Paying Dividends on Regulatory Relief

    The community bank exemption from a backdoor tax hike on most Fed-member banks wasn’t exactly what ICBA was advocating, but it nevertheless remains a major victory for the industry, ICBA’s Fine wrote in a separate blog.

    While ICBA and community bankers pushed passionately to completely scrap the dividend cut on members of the Fed, Fine noted, lawmakers agreed to exempt community banks under $10 billion in assets. He also cited several regulatory relief measures that passed in the bill signed into law last week.

    “Together, these successes show what ICBA and the community banking industry can accomplish by working together on all fronts,” Fine wrote. Read Fine’s Blog Post.

    In a separate message to community bankers, Fine noted that community bankers have scored a number of victories this year due to their outsized reputation and influence in Washington. In addition to recent successes on Fed dividends, accounting standards and ICBA’s Plan for Prosperity, community bankers have also advanced mortgage and call report relief, cybersecurity and data-security bills, and a variety of other important issues.

    “It’s already been a full year in Washington, and community banks have a lot to show for it,” Fine wrote. “With your continued support and involvement, there is no limit to what ICBA, our affiliated state associations and the community bankers of this great nation can achieve.” Read Fine’s Message.

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    FASB and Regulatory Relief Remain Key Grassroots Initiatives

    CBAI and ICBA remain closely focused on two key grassroots initiatives affecting community banks: opposing the Financial Accounting Standards Board’s new accounting standards and advocating CBAI and ICBA remain closely focused on two key grassroots initiatives affecting community banks: opposing the Financial Accounting Standards Board’s new accounting standards and advocating regulatory relief in “must pass” legislation.

    Community bankers are urged to continue using ICBA’s Grassroots Contact Website to speak out against FASB’s Current Expected Credit Loss plan. The new accounting standard would require all community banks to set aside reserves the day they make a loan or investment and forecast how much they will lose over the life of the financial instrument.

    Meanwhile, community bankers can also use the Grassroots Website to encourage their senators to advance regulatory relief in any “must pass” legislation before the end of the year. CBAI asks all community bank officers and directors to ask Senators Durbin and Kirk to include community bank-specific regulatory relief provisions of the Financial Regulatory Improvement Act (S. 1484) in any “must pass” bill. Contact FASB Today. Ask Senators to Support Regulatory Relief.

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    Succeeding With Your Succession Plan

    Succession planning is often neglected until it becomes a serious issue because of a sudden departure of an executive. Board members must ensure that the bank has a dynamic succession plan in place to meet the competitive challenges of the future. Read More.

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    Congress Needs to Continue Examining Farm Credit System Abuses

    ICBA urged the House Agriculture Committee last week to conduct a series of hearings aimed at uncovering details of how the FCS is avoiding legal constraints. In a statement for a committee hearing on the FCS, the ICBA noted that the system’s regulator—the Farm Credit Administration (FCA)—has gone out of its way to allow FCS lenders to make otherwise illegal loans if such financing is labeled as “investments.”

    ICBA explained that the FCA published guidance instructing FCS lenders on how to gain approval to finance investments, including credit for non-farm businesses, communities, rural areas and infrastructure projects. ICBA also questioned huge loans by CoBank to large multi-national corporations and expressed community banker concerns with FCS cherry-picking.

    At the hearing, several committee members asked pointed questions of FCA Board Chairman Kenneth Spearman regarding CoBank loans and noted the resulting damage to the FCS’s public image. Representative Austin Scott (R-Ga.) said CoBank won’t stop until the FCA steps in, and Spearman said he agreed that the FCS should not extend credit for loans such as car washes and local restaurants. ICBA expects FCS representatives in the coming days to seek to whitewash some of the issues raised during the hearing. Read ICBA Statement. Read ICBA Release.

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    Regulators Plug Regulatory Relief Efforts at Final EGRPRA Meeting

    Federal banking regulators last week cited their efforts to ease excessive regulation on community banks, including CBAI and ICBA-advocated changes to the quarterly call report. At the final Economic Growth and Regulatory Paperwork Reduction Act outreach meeting in Washington, D.C., FDIC Chairman Martin Gruenberg noted that regulators have established a process for identifying how to streamline the call report and are considering the ICBA-advocated short-form call report. Meanwhile, Fed Governor Daniel Tarullo noted his support for simpler capital requirements for community banks, and Comptroller of the Currency Thomas Curry said he supports expanded access to the 18-month exam cycle.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The recent release from the Bureau of Labor Statistics’ last jobs report of the year may have provided the final nail in the coffin for zero-interest-rates. Brought to life in December 2008, ZIRP’s long run may be coming to an end when the FOMC meets the week after next. Last month’s addition of 211k new jobs, along with a slight upward revision to recent reports, may be all the validation that Janet Yellen and her minions need in order to justify an increase in the banking system’s overnight borrowing rate. See Baker Market Update.

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    Issuance of SOP 50 57 2, 7(a) Loan Servicing and Liquidation

    The Office of Capital Access announces the issuance of SOP 50 57 2, which became effective on December 1, 2015. The new SOP provides a requirement for lenders to complete Prudent Liquidation of 7(a) loans within either 24 months from the date of guaranty purchase or 24 months from the effective date of this SOP for loans where lenders are actively liquidating, whichever is later, or receive from SBA prior written approval for extension of that 24-month deadline. Additionally, the new SOP provides clarification to 7(a) lenders and SBA staff on several issues. See SBA Information Notice.

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    Shopping for Service Providers under TRID

    When it comes to shopping for settlement service providers, the TILA-RESPA Integrated Disclosure (TRID) rule introduces new compliance requirements that lenders should take into consideration. The loan cost section of the Loan Estimate requires lenders to identify the settlement services that consumers may and may not shop for, subject to reasonable requirements established by the lender. Read More from Wolters Kluwer Financial Services.

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    SHAZAM Offers Tips to Customers and Merchants for Safer Shopping

    For Bank Customers: The holidays are here, so shop with care!

    The holidays often bring friends and family together for celebrations and good cheer. For many, this means spending more time shopping online and at the mall for that perfect gift. Unfortunately, thieves are also busy at this time of year, looking for unsuspecting victims. Share these tips with your customers to help them have a safer holiday shopping experience. Read the Tips.

    For Your Merchants: Eight fishy transaction traits your merchants can monitor

    For any business, turning down a sale is unnatural. After all, the idea is to make money. However, keeping an eye out for fraudulent purchases, particularly those originating from e-commerce, is a smart tactic. By doing things right, your merchants can avoid charge backs and keep themselves out of the fraud victim’s seat. To advise your merchants on some common signs of fraud, Click Here.

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    CBAI LEGAL: Condo Association Lien Might Survive Foreclosure Sale

    Earlier this month (December 3), the Illinois Supreme Court resolved a perceived conflict between the interests of condominium associations under Illinois’ Condominium Property Act and the interests of mortgage foreclosure sale purchasers under the mortgage foreclosure statutes of Illinois’ Code of Civil Procedure. See Most Recent CBAI LEGAL.

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    Midwest Office is your Envelope Headquarters

    As we get ready to close out the 2015 year, Midwest Office wants to make sure that your supplies and print products are fully stocked and ready for action as 2016 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 of our Drive-thru and Statement envelopes savings! See Midwest Office December Specials!

    If you have any questions, please contact Kevin Gaffney at kgaffney@midwestoffice.com or by phone (217) 303-5511.

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    Lenders’ Guide to Mortgage Loan Compliance to be Held December 10 & 11

    During the last few years, both Congress and the various federal regulators have crafted revisions to some of the regulations that have been a part of our lending lives. This has resulted in many additional regulatory issues in every mortgage loan transaction. As a result, lenders have been struggling to determine what they should do to assure that they not only make a safe and sound loan for the bank, but also in a manner that will not create regulatory problems for the bank. This year will continue this process with many, many new rules and mandated ways of doing things. This two-day seminar covers all aspects of mortgage compliance that a lender should know, including the current rules that became effective in October of 2015. If there are additional changes, which are always possible, we will do our very best to assure that they are included in the training. All subjects that will be covered will include all of the latest information available. This seminar is designed to discuss the compliance issues from the perspective of mortgage lenders and lending management. This seminar will also assist compliance officers, senior management, bank trainers, loan auditors, loan operations personnel, and others involved in the mortgage lending compliance process to understand all of the new requirements and to share this information with others inside the bank. Leading this seminar is Adam Witmer, CRCM, a compliance consultant with Young & Associates, Inc., serving client banks in the Midwest.

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    Auditing Reg Z and RESPA Scheduled for December 14

    It seems as if every time we look, Regulation Z has expanded its scope and complexity. And recent events have altered the focus of what we should be auditing in the world of RESPA. As a result, CBAI is offering two auditing courses over the next few months, with different subject matter. This first offering covers selected subjects for both Regulation Z and RESPA. For Regulation Z, the seminar covers basic Regulation Z requirements, consumer loans and auditing the mortgage underwriting process. For RESPA, the discussion focuses on escrow and servicing issues. The second auditing course focuses on the paperwork portion of mortgage loans (think TRID). Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Compliance Institute: Operations/Deposit Session Set for January 12 & 13

    CBAI is pleased to present the Compliance Institute this January & May. 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 May, 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, Ohio, lead this institute.

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