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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 10, 2014

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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • We’ve Had Enough of Wall Street!
  • Stanford Professor Says Big Banks Poised for Another Collapse
  • Community Banks Are Winners in Washington
  • Community Banks Outperform Industry in Third Quarter
  • Fed Governor Brainard: “Don’t Apply Big Bank Rules to Small Banks”
  • OCC Comptroller Addresses Reg Burden for Community Banks
  • Senator Calls for Eliminating Credit Union Tax Exemption
  • CBAI News From the Front Veto Session Edition
  • Attend the Community Banking Event of the Year!
  • Farm Sector Profitability Expected to Decline in 2014
  • Baker Market Update
  • CBAI Foundation Announces Partnership with iHELP
  • Fannie, Freddie Announce 3 Percent Down-Payment Option
  • What Makes a Community Bank Insurance Specialist So Special?
  • Protecting Profits after a Catastrophic Claim
  • CBSC and Wolters Kluwer Team Up To Offer Regulatory Toolkit
  • Is Your Bank Budgeting for 2015?
  • Need a Year-End Tax Deduction?
  • EMV at the ATM: Devil is in the Details
  • Take This Week’s CBAI Quick Poll
  • NFTB: U.S. Supremes Don’t Buy Crook’s Federal Bank Fraud Statute Argument
  • Stack the Deck in Your Favor with Instant Card Issuance
  • Why It's Time You Give Up Spreadsheets in the ALLL Calculation
  • Are You Getting Exactly What You Need from Your Core Solution?
  • Lenders’ Guide to Mortgage Loan Compliance Set for January 7 & 8 and 13 & 14
  • Compliance Institute (Operations/Deposit) Scheduled for January 13-14
  • Community Bank Directors’ College Scheduled for January 21-22
  • Ag Lenders’ Conference to be Held January 28


  • We’ve Had Enough of Wall Street!

    The Obama Administration has chosen yet another Wall Street insider, Antonio Weiss of the global investment banking firm Lazard, for the position of Under Secretary of Treasury for Domestic Finance. CBAI believes that this and previous Wall Street nominees ignore the importance of Main Street community banks to the nation’s financial services profession, small business job creation, and the inconvenient fact that Wall Street greed and abuse caused the financial crisis and the Great Recession. The Administration is ill-advised to exclusively rely on Wall Street insiders who represent a narrow, and often times flawed and biased perspective. Read CBAI Commentary. See SNL Article.

    Former FDIC Chair: Put Community Banker on Fed

    If the Obama administration wants broader support for the nomination of Antonio Weiss to serve in the Treasury Department, it should also nominate a community banker for the Federal Reserve Board, former FDIC chairman Sheila Bair wrote.

    In a Fortune blog post, Bair wrote that Weiss critics are frustrated that Wall Street perspectives too heavily dominate financial policy discussions and are seeking a greater range of viewpoints. She advocated filling the two open Fed Board seats with a community banker and a financial reformer. See Fortune article.

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    Stanford Professor Says Big Banks Poised for Another Collapse

    One of the foremost authorities on global banking is warning that the world financial system is primed to experience another collapse, with little likelihood of timely reform to avert the danger. Stanford University’s Anat Admati said, “We’re all living the illusion, like in 2006, when we thought that everything was all right, but the entire financial system is now living dangerously and close to the abyss.” She recommends markedly higher capital requirements for large global banks that have high risk profiles.

    CBAI has long advocated downsizing the too-big-to-fail banks that put taxpayer funds at risk and reinstituting Glass-Steagall provisions to separate or limit risk-taking activities in insured commercial banking. CBAI also favors a tiered approach to capital requirements based on the risk profile of each institution. See ThinkAdvisor Article.

    Office of Financial Research Agrees

    Excessive risk-taking amid low interest rates and the migration of financial transactions away from the heavily regulated banking sector have combined to make the system even riskier in 2014 than a year ago, according to a report released last week by the Office of Financial Research. Read More.

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    Community Banks Are Winners in Washington

    ICBA’s Cam Fine Reviews 2014

    As 2014 comes to a close, ICBA President Cam Fine cites the reasons why 2014 has been a successful year for community banks on several fronts. Read Fine’s Year in Review.

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    Community Banks Outperform Industry in Third Quarter

    Community banks bettered the industry’s overall numbers in three key areas: 1) net income, 2) loan growth, and 3) net interest margin. Nearly two-thirds of community banks reported higher earnings for the third quarter 2014 over 2013, and community banks’ share of small business lending held steady at 45%. See Bankers Exchange Article.

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    Fed Governor Brainard: “Don’t Apply Big Bank Rules to Small Banks”

    Federal Reserve Board Governor Lael Brainard said last week that small banks should be exempt from rules aimed at stemming financial stability risks at large banks. She said, “Accordingly, we think it is important to tailor rules whenever possible to clearly differentiate expectations for different portfolios of banks and reduce undue burden on community banks.”

    CBAI and ICBA have been advocating implementation of a tiered regulatory structure for several years, and despite a lack of support from big bank associations we are finally moving the ball down the field. The chances for meaningful action in the new Congress on legislation calling for regulatory exemptions and tiered regulations for community banks have never been better. See More.

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    OCC Comptroller Addresses Reg Burden for Community Banks

    OCC Comptroller Thomas Curry addressed the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). He discussed three efforts to reduce regulatory burden affecting community banks.

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    Senator Calls for Eliminating Credit Union Tax Exemption

    Senator Tom Coburn (R-Okla.) is targeting the credit union industry’s federal tax exemption in a new report on government tax expenditures. In his “Tax Decoder” report released this week. Coburn recommends eliminating the credit union tax exemption, which he says will cost taxpayers $11.9 billion through fiscal 2018.

    Citing the Congressional Research Service, the report notes that credit unions are the only depository institutions exempt from federal income taxes even as the industry’s asset size has nearly doubled to more than $1 trillion in 2012.

    CBAI and ICBA have repeatedly called on Congress to review the credit union industry’s unwarranted federal tax subsidy and have strenuously opposed the industry’s expansionist agenda. See Report.

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    CBAI News From the Front Veto Session Edition

    The General Assembly concluded their 2014 Veto Session last week. The House adjourned sine die, meaning they completed their work for the current General Assembly, and the Senate adjourned but is scheduled to reconvene session January 13. Governor Quinn could call legislators back to Springfield for a “special session” to try and pass a minimum wage bill; but he has indicated that he does not intend to do so. Read More.

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    Attend the Community Banking Event of the Year!

    ICBA Convention Scheduled for March 1-5, 2015 in Orlando

    Join with thousands of community bankers from across America at the premier event for networking, education, and entertainment. CBAI and The Baker Group will host a reception for Illinois community bankers and guests during the convention which will be held at the beautiful Gaylord Palms Resort and Convention Center in Orlando. Make plans now to attend! See ICBA Convention Flyer.

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    Farm Sector Profitability Expected to Decline in 2014

    According to the USDA, net farm income is forecast to be $96.9 billion in 2014, down more than 23 percent from 2013’s estimate of $126.5 billion. The 2014 forecast would be the lowest since 2010, but would remain $14.5 billion above the previous 10-year average. Crop receipts are expected to decrease by $27.2 billion (12.3 percent) in 2014, led by a projected $10.5-billion decline in corn receipts and a $7.9-billion decline in soybean receipts.

    The slowdown in growth is a result of lower net income leading to less capital investment, and moderation in the growth of farmland values. Farm sector debt is expected to increase 3.1 percent, increasing more than assets for the first time since 2009. Most of the anticipated increase in debt is for nonreal estate loans with lower income spurring demand for operating funds. Despite the anticipated higher debt, the historically low levels of debt relative to assets and equity reaffirm the sector’s strong financial position. Read USDA Article.

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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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    CBAI Foundation Announces Partnership with iHELP

    Providing Funding Opportunities for Students

    A bank customer turns to you for student-loan assistance for his high-school daughter. You’d like to help, and you don’t want to see the business go to a big-bank competitor. Now, you have an answer!

    iHELP has partnered with the Community Bankers Association of Illinois’ Foundation for Community Banking to offer a Referral Partner program to CBAI member banks that also helps fund the Foundation’s scholarship programs while offering affordable private student loans to Illinois residents. This includes both in-school loans and loan consolidation. What does your bank have to do to participate? Simply put the iHelp icon on your bank’s web site. That’s it!

    The icon will direct the parent or student to www.ihelploan.com. There, through a simple process, loan assistance may be forthcoming for qualified students. If the loan goes through, your bank receives fee income and the CBAI Foundation for Community Banking receives a donation. Your bank does not make the loan nor bear any risk– it simply acts as a conduit.

    For more information about the iHELP private student loan program, contact Kevin Moehn, Program Manager, at kmoehn@ihelploan.com or 571/313-1307.

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    Fannie, Freddie Announce 3 Percent Down-Payment Option

    Fannie Mae and Freddie Mac announced that they will allow qualified first-time homebuyers to get a mortgage with a down payment as low as 3 percent. The 97 percent loan-to-value ratio option has the blessing of the government-sponsored enterprises’ regulator, the Federal Housing Finance Agency, which said the programs will improve access to mortgage credit. The loans will require private mortgage insurance; eligible borrowers must complete a homeownership education program; and the properties must be owner-occupied. The Fannie Mae program takes effect this weekend, and Freddie Mac’s will be available after March 23. Read More from Fannie Mae. Read More from Freddie Mac.

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    "CBAI Connected to Community Banking"
    Is Sponsored
    by The SHAZAM Network


    As the year draws to a close, the SHAZAM Network sends best wishes for a warm and safe holiday season. And, when you’re ready to implement your strategic plans for the new year — remember to call SHAZAM for help with all your payments needs. Learn More how to benefit from the choice and flexibility SHAZAM offers.



    What Makes a Community Bank Insurance Specialist So Special?

    Community BancInsurance Services powered by Nicoud, is widely regarded among Midwest bankers as THE source for bank insurance. What makes Nicoud’s bank insurance specialists so special? Working with 200 community banks, Nicoud has developed an expertise in community banking that is unmatched by any insurance agency. How does that expertise benefit community banks? See Article.

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    Protecting Profits after a Catastrophic Claim

    The virtues of comprehensive property-liability coverage are widely recognized by community bankers. And while some nuance exists when it comes to setting coverage limits, by-and-large it is one of the more straightforward areas of a bank’s liability. Less so is the fall out suffered by a bank’s operation in the event of a significant or catastrophic claim on property and casualty policies. Read More.

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    CBSC and Wolters Kluwer Team Up To Offer Regulatory Toolkit

    Community BancService Corporation (CBSC) and Wolters Kluwer have announced an addition to the firms’ longstanding product and services endorsement agreement initiated in January 1988. The TILA-RESPA Tool Kit addresses the required changes of the Truth-In-Lending Act and the Real Estate Settlement Procedures Act Integrated Disclosure requirements which go into effect August 1. For more information, please Click Here.

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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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    Need a Year-End Tax Deduction?

    Remember, donations to the CBAI Foundation for Community Banking, which funds 32 annual scholarships offered annually, are 100% tax deductible! Scholarships are solely funded by your donations. Simply make the check payable to the CBAI Foundation. Questions? Contact Andrea Cusick, 217/529-2265 or cbaicom@cbai.com.

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    EMV at the ATM: Devil is in the Details

    A new EMV effort is beginning — how to best implement EMV at the ATM.

    EMV agreements struck between the major card brands and regional PIN networks will impact financial institutions (FIs) and ATM-driving independent service organizations (ISO). As with nearly every aspect of business, the devil is in the details. Here are a few important questions for debit card-issuing banks to ask their vendor partners. See Questions.

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    Take This Week’s CBAI Quick Poll

    Take this week’s Quick Poll on the utilization of mobile devices by bank employees. Click Here to view results of the previous polls.

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    NFTB: U.S. Supremes Don’t Buy Crook’s Federal Bank Fraud Statute Argument

    In a June, 2014 opinion of the United States Supreme Court, a defendant’s conviction under a federal bank fraud statute was upheld despite the defendant’s argument that there was no proof that he had any specific intent to defraud the bank. For more information on the case of Loughrin vs. United States, Click Here.

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    Stack the Deck in Your Favor with Instant Card Issuance

    In-branch card issuance can meet account holders’ need for speed and convenience, while meeting your community bank’s need for income. The account holder walks away with a fully personalized new card for immediate use. Account holders who receive their cards via in-branch instant issuance use their new cards within eight hours of activation, on average. And when account holders use their cards, your bank begins to generate transactional fees. An increase of four or more transactions per instant issue card over a 10-day period can result in a transactional revenue gain of approximately $2.00 per card. Some financial institutions have begun to see an almost immediate uptick in transactions when they’ve provided instant card issuance. In fact, after just three years, a financial institution with five branches can achieve a potential return on investment from in-branch instant card issuance of up to 309%. Read More.

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    Why It's Time You Give Up Spreadsheets in the ALLL Calculation

    Years ago, using spreadsheets was the preferred way to calculate the ALLL. In today's environment, how can technology overcome spreadsheet concerns and improve your ALLL process?

    In this article, Sagework’s, CBSC’s preferred provider for web-based credit and loan portfolio risk management solutions, explores improvements in technology for ALLL and discusses how employing an automated ALLL solution allows bankers to take control of the process instead of being at the mercy of it.

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    Are You Getting Exactly What You Need from Your Core Solution?

    With the core processing system being among a community bank’s biggest IT expense, satisfaction with service and complete disclosure of all fees are the top priorities. Jace Day, president of Core Services for the SHAZAM Network, a CBSC Preferred Provider, writes “All financial institutions, regardless of size, are entitled to the same features and services at affordable rates, without being nickel-and-dimed at every turn.” See SHAZAM Network Article.

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    Lenders’ Guide to Mortgage Loan Compliance Set for January 7 & 8 and 13 & 14

    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, and have added new regulations as well. 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 do so in a manner that will not create regulatory problems for the bank. This year continues this process with many, many new rules and mandated ways of doing things. This seminar covers all aspects of mortgage compliance that a lender should know, including the current rules and regulations as they now stand. This seminar is designed to discuss the compliance issues from the perspective of mortgage lenders and lending management. This seminar also assists 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 Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Compliance Institute (Operations/Deposit) Scheduled for January 13-14

    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. 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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    Community Bank Directors’ College Scheduled for January 21-22

    The Community Bank Directors’ College was developed in close cooperation with both state and federal regulators and is designed to teach individuals how to become more effective, capable, and supportive members of their bank’s board of directors. Its goal is to graduate directors who return to your bank more active, more knowledgeable, and more decisive. In effect, they will be an even bigger asset to your community bank. The College is offered once a year and provides a thorough understanding of bank operations and bank directors’ responsibilities. The college is recommended for both new and seasoned bank directors. It is structured as two, two-day sessions offered on an annual basis; either may be attended as a stand-alone course. The first session is being held at Northfield Inn and Conference Center in Springfield, IL, January 21-22, 2015.

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    Ag Lenders’ Conference to be Held January 28

    This jammed-packed day takes a look at a variety of issues facing agricultural lenders. Attend CBAI's 2015 Ag Lenders' Conference to develop the skills and tools to better understand the issues affecting your farm and agribusiness customers and to meet their credit needs. A mini-expo featuring the latest in products and services for ag lenders also highlights the day. Topics and speakers include “Global Dashboard Indicators for Value-Added Producers and Lenders” and “Effective Traits of a Winning Ag Lender-Producer Team” by Dr. David Kohl, Professor Emeritus, Virginia Tech; “Global Grain Marketing” with Dan Hueber, The Hueber Report; and “Farm Bill Update” by Larry Smith, Diversified Crop Insurance Services.

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