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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                                    December 23, 2015

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

  • Merry Christmas and Happy New Year from CBAI
  • Community Banking: It's a Wonderful Life!
  • Highway Funding Bill Includes Community Bank Regulatory Relief
  • Omnibus Funding and Tax Extenders Signed into Law
  • Your Voice Matters! Here’s How
  • CBAI Calls on Regulators to Advocate for Community Banks with the NCUA and FCA
  • CBAI Urges Consideration of Wilmarth’s TBTF Resolution Reforms
  • Another Call to Reinstate Glass-Steagall
  • Fine: FASB Fabrications Show Disconnect with Reality
  • CBAI Responds to FASB's Misguided Comments About Community Banks
  • Notable Banking Predictions for 2016
  • Brookings: Community Banks Outperform Megabanks
  • THE VOTES ARE IN! Patty Clarke Elected to St. Louis Fed Board
  • Investment News From THE BAKER GROUP
  • Rural Index Continues Decline on Commodity Prices
  • Dell Offers Preferred Pricing on Servers, PCs to Community Banks
  • Kasasa by BancVue Named a Top Workplace in the World
  • BankNews: Credit Analysis Streamlined at CBAI Member Bank
  • Don’t Believe the Hype: Core Conversion Should Not be Painful!
  • CBIS Nicoud: Self-Funded Group Plans Poised to Grow
  • Midwest Office is your Envelope Headquarters
  • Compliance Institute: Operations/Deposit Session Set for January 12 & 13
  • CBC Program: RESPA in a TRID World To Be Held February 2 & 3
  • Ag Lenders’ Conference Scheduled for February 3


  • Merry Christmas and Happy New Year from CBAI

    All of us at CBAI extend our best wishes to you and yours for a joyous Christmas season with friends and family. We are optimistic that 2016 will bring prosperity and growth to community banks as Congress approves further regulatory relief for Main Street institutions. We are proud and honored to serve and represent the community banking profession. You’re really what America is all about! Thanks for all you do!

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    Community Banking: It's a Wonderful Life!

    See Community Banking: It's a Wonderful Life Video! (may take a few moments to load)

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    Highway Funding Bill Includes Community Bank Regulatory Relief

    Congress passed and President Obama signed into law a highway and transportation funding bill that includes community bank regulatory relief. Three welcomed regulatory relief measures were included in an amendment to the funding bill. All had previously passed the House as stand-alone measures with very strong bi-partisan support. Read More.

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    Omnibus Funding and Tax Extenders Signed into Law

    Congress also passed and President Obama signed into law a $1.1 trillion omnibus spending bill and $680 billion package of tax extenders, wrapping-up the 2015 congressional session. While CBAI was disappointed that no additional regulatory relief for community banks was included in this legislation, the year-end package did include several CBAI and ICBA-supported provisions. Read More.

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    Your Voice Matters! Here’s How

    Your response to CBAI’s Action Alerts is an important part of our governmental relations efforts which support your bank’s performance and shareholder value. These Alerts are delivered to you via e-mail, are simultaneously posted on our website, and are prominently featured in our bi-monthly E-Newsletter. These Alerts communicate your position on critical community bank issues to legislators and regulators. Read More.

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    CBAI Calls on Regulators to Advocate for Community Banks with the NCUA and FCA

    Community banks are confronted with blatant discrimination and disadvantages when competing against credit unions and Farm Credit System (FCS) banks. CBAI has urged the Federal Reserve Board (Fed), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), (collectively, Regulators) to aggressively and publicly advocate for community banks and to emphasize to the National Credit Union Administration (NCUA) and the Farm Credit Administration (FCA) that there needs to be a level playing field. Read More.

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    CBAI Urges Consideration of Wilmarth’s TBTF Resolution Reforms

    Arthur Wilmarth, George Washington University (GWU) Law School professor, is a nationally-recognized authority on bank regulation. Professor Wilmarth is the author of more than thirty articles and books in the field of banking and has testified before committees of the U.S. Congress on bank regulatory issues.

    Wilmarth is highly critical of the lack of meaningful reform of the financial system to successfully address and resolve the problem of large financial conglomerates (i.e., too-big-to-fail (TBTF) banks). CBAI believes Wilmarth’s observations and recommendations in his 2015 GWU publication, “The Financial Industry’s Plan for Resolving Megabanks Will Ensure Future Bailouts for Wall Street,” have considerable merit and warrant serious consideration by lawmakers and banking regulators. If implemented, Wilmarth’s recommendations would compel mega banks and their insiders to internalize at least some of the systemic risks that they impose on society, encourage them to follow more sustainable long-term business policies, and also support current efforts by regulators to persuade mega banks to reduce their size and complexity. Read More from Professor Wilmarth.

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    Another Call to Reinstate Glass-Steagall

    A financial regulatory authority arbitrator is the latest in a growing number of advocates for restoration of Glass-Steagall provisions. Akshat Tewary notes that Dodd-Frank has failed to accomplish its primary stated mission of ending too-big-to-fail, and a new Glass-Steagall firewall would reduce speculation, hyper-liquidity, eliminate perverse incentives for profiteering. He also indicated that community banks would be better able to compete with the mega banks. CBAI has long supported restoration of a firewall between commercial banking and investment banking. Read More.

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    Fine: FASB Fabrications Show Disconnect with Reality

    Despite years of meeting with the Financial Accounting Standards Board on its proposed accounting reforms, remarks from the organization’s chairman show it isn’t listening to the concerns of community bankers, ICBA President and CEO Cam Fine wrote last week. He noted that FASB Chairman Russell Golden not only dismissed community bank concerns, but also implicated Main Street banks in the Wall Street financial crisis.

    “Blaming community banks for the crisis is like blaming Poland for World War II,” Fine wrote. “It shows either a misunderstanding of our financial system, a disdain for local financial institutions, or a selective historical view that one might expect at a lower Manhattan cocktail lounge—not the nation’s financial accounting standards-setter.”p> In a letter to Golden last week the ICBA emphasized that the financial collapse originated on Wall Street and community banks fared well due to their relationship banking model, which FASB’s loan-loss proposal directly contradicts. Golden’s comments demonstrate the need for community bankers to continue reaching out to FASB in opposition to its accounting standards update. Read Cam Fine’s Blog. Read ICBA Letter. Contact FASB Now.

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    CBAI Responds to FASB's Misguided Comments About Community Banks

    CBAI also responded to disturbing comments by FASB’s Chairman Russell Golden about the role community banks played in the financial crisis and presented an alternate approach to the Current Expected Loss (CECL) model. In his remarks, Golden enumerated “troubling misconceptions” including “The credit crisis involved only large banks.” He cited community bank bank failure statistics followed by his conclusion that “Clearly community banks have been a major part of the problem” and that this is the reason why “all lending institutions should be included in the new guidance.” This flawed reasoning is comparable to citing elder financial abuse statistics and then concluding that senior citizens have been a major part of the problem. Read More.

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    Notable Banking Predictions for 2016

    Regulatory Relief for the Small, Not the Big

    "Presidential campaign politics will mean very strong regulatory headwinds for megabanks while community banks will have the regulatory relief winds at their backs. All of the requirements facing bigger banks will intensify, making it more difficult for them to continue to grow. On the other end of the spectrum, community banks can expect some significant regulatory relief centered around Sen. Richard Shelby's bill."

          Cam Fine, president of the Independent Community Bankers of America

    Fintech Product Deals Lead to Other Deals

    "Fintech startups will continue to seek bank partners so they can access the banking system, and then will eventually be swallowed up by their partner banks. Banks will continue to capitalize on innovation by buying innovators."

          Kevin Tynan, senior vice president of marketing at Liberty Bank in Chicago

    The Return of Systemic Shockwaves

    "The failure of a large nonbank financial company — perhaps a hedge fund or private equity fund — in 2016 will threaten the stability of one or more major banks. As was the case with Long-Term Capital Management in 1998 and Bear Stearns, Lehman Brothers and AIG in 2008, that failure will again show us the dangers of close linkages between shadow banks and large global banks."

          Arthur Wilmarth, law professor at George Washington University

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    Brookings: Community Banks Outperform Megabanks

    Community banks continue to recover from the financial crisis and are out-performing the biggest banks in several key measures, according to a Brookings Institute Study. The paper notes that, compared with other banks and credit unions, community banks devote the greatest share of their assets to small-business loans. The authors also report that most of the decline in the number of community banks can be attributed to the lack of entry into commercial banking. See Brookings Study.

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    THE VOTES ARE IN! Patty Clarke Elected to St. Louis Fed Board

    The Community Bankers Association of Illinois is pleased to announce the election of Patty Clarke, President and CEO of the First National Bank of Raymond, to the Board of Directors of the Federal Reserve Bank of St. Louis.

    CBAI’s Board of Directors unanimously supported Clarke’s bid for election and congratulates her on this important accomplishment. CBAI appreciates the many members who took the time to vote in this election. With Clark’s election, community banks are assured of continued strong representation on the St Louis Fed Board for many years to come. Read Press Release.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    The market continues to digest the Fed’s rate hike with the 2yr note down a couple basis points to 0.98% from the highs of last week. The 10yr yield is also slightly down from last Wednesday’s 2.31% high to 2.26% this week. But wait, yields are down since the Fed’s move?!? That can’t be possible! The truth is, the market had been pricing in a rate move by the Fed since October when the 2yr was trading at 55bps and the 10yr was trading a touch below 2%. See Baker Market Update.

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    Rural Index Continues Decline on Commodity Prices

    Creighton University’s Rural Mainstreet Index sank to 41.5 in December from 43.7 in November. The monthly survey of bank CEOs in rural areas declined for the fourth consecutive month on lower agriculture and energy commodity prices and downturns in manufacturing. Bank CEOs also said they expect farmland prices to drop by another 5.9 percent over the next year. See Rural Index Release.

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    Dell Offers Preferred Pricing on Servers, PCs to Community Banks

    CBAI has partnered with ICBA and Dell in a preferred pricing agreement that is offering 20 percent off certain PowerEdge servers and 10 percent off OptiPlex, Latitude, and XPS PCs. Discount codes are available at Dell’s website for CBAI and ICBA members. The preferred pricing on hardware and software is also available to member bank employees and small-business customers. Access Dell Discounts.

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    Kasasa by BancVue Named a Top Workplace in the World

    CBSC Preferred Partner Kasasa® by BancVue® this week announced it has been ranked the 30th “Best Place to Work” in the world by Glassdoor’s 2016 Employees’ Choice Awards for Small to Medium Businesses. Additionally, Kasasa was ranked the #1 best workplace in Austin and #3 in the entire state of Texas. Read More.

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    BankNews: Credit Analysis Streamlined at CBAI Member Bank

    To meet strategic growth objectives while also maintaining headcount and mitigating underwriting risk, banks are looking for efficiencies in credit underwriting and review that allow their lenders to do more with less and to differentiate their banks from other alternatives. For many institutions, a big driver of that efficiency is credit analysis software. A recent article in BankNews magazine highlighted how State Bank of Toulon is leveraging CBSC Preferred Provider Sageworks Credit Analysis with Agricultural Lending to differentiate, increase efficiency and maintain compliance. See Full Article.

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    Don’t Believe the Hype: Core Conversion Should Not be Painful!

    CBSC Preferred Provider SHAZAM discusses strategies to ensure a smooth core conversion. Read SHAZAM's Strategies.

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    CBIS Nicoud: Self-Funded Group Plans Poised to Grow

    By self-funding a plan, community banks pay employees’ claims directly (stop-loss policies are built into the programs to protect against catastrophic claims).

    One of the core value-adds to self-funding is predictability. For financial institutions of any size, it can be a productive hedge against the regulatory and cost uncertainties of the health-care market that banker-sponsors of traditional plans constantly juggle. But the purported predictability of costs to self-funding is only best actualized when sponsors proactively foster a healthier workforce. Read More from CBIS Nicoud Insurance Services.

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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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    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, OH, lead this institute.

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    CBC Program: RESPA in a TRID World To Be Held February 2 & 3

    The second quarterly Community Bankers for Compliance (CBC) seminar, this program focuses on what RESPA still requires, even though most mortgage loans are governed more by the TRID rules than RESPA. Even with the advent of TRID, the actual RESPA regulation has not changed substantially and still contains many features that need to be considered in the average mortgage loan. In addition to reviewing the regulatory language RESPA and its commentary, we will take a look at the recently changed examination procedures regarding RESPA. The latest OCC version was actually published prior to TRID (April 2015), so we will not focus extensively on this slightly out-of-date version. However, during the last quarter of 2015, both the FDIC (55 pages) and the Federal Reserve (84 pages) issued new examination procedures. We will include relevant portions of all of the examination manuals to offer a broad perspective regarding what the examiners are being told by their agencies to review, with particular emphasis on how these new examination procedures will or could impact your institution. There are circumstances when the Good Faith Estimate and HUD-1 still must be used, however, they are extraordinarily limited. We will discuss those situations in which they are still required and the examination procedures for both of these documents. However, we will not perform a line-by-line review regarding the completion instructions of these forms. Other than the limitation regarding the GFE and HUD-1, we will fully review all other sections of the regulation and the accompanying exam procedures. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Ag Lenders’ Conference Scheduled for February 3

    CBAI is pleased to offer the annual “Ag Lenders’ Conference” at the Crowne Plaza on February 3, 2016. This jammed-packed day takes a look at a variety of issues facing agricultural lenders. Attend CBAI’s 2016 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 covered include “Illinois Farmland Values – At an Interesting Intersection” with Dale Aupperle, AFM, ARA, president of Heartland Ag Group, Ltd., Forsyth, IL; “Chapter 12 Bankruptcy Reorganization” with Kevin Stine, attorney and shareholder, Mathis, Marifian & Richter, Ltd., Belleville, IL; and “Credit Risk 2016: Answers to Critical Questions” and “Effective Traits of a Winning Ag Lender-Producer Team” with Dr. David Kohl, Professor Emeritus, Virginia Tech, Blacksburg, VA.

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