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 28, 2011 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
Happy New Year!

  • CBAI Board Member Speaks at Small Business Summit and Expo
  • CBAI Reminder: Legislation Effective January 1, 2012
  • “Community Banks Should Ask for a Divorce”
  • Comment Period Extended on Volcker Rule
  • ICBA Takes In-Depth Review of 2011: Pursuit of Fairness, Equity Hallmarks
  • Chicago FHLB to Proceed with Stock Repurchase Plan
  • “Legal Link” Q & As Added to CBAI Members’ Only Section
  • Fine Points: Clear Dividing Lines
  • From the Top: Diversity Is Our Strength
  • 2012 CBAI Washington Visitation Dates Set
  • Baker Market Update
  • Chicago Fed Economic Index Declines
  • St. Louis Fed’s Burgundy Book Released
  • Home Prices Decline More Than Forecast
  • CSBS Sets 2012 Strategic Goals
  • IASB and FASB Reach Reporting Agreements
  • Agencies Release Annual CRA Asset-Size Threshold Adjustments
  • Elder Financial Exploitation Training Now Available
  • Compliance Institute (Operations/Deposit) Scheduled for January 10-11
  • Community Bank Directors’ College Set for January 18 & 19
  • Compliance for Lenders to be Held January 23-25

  • CBAI Board Member Speaks at Small Business Summit and Expo

    CBAI Regional Vice Chairman Todd Grayson spoke on December 12th in Chicago at the Small Business Jobs Summit and Expo which was hosted by Illinois Congressman Danny K. Davis (D-7th).
    Read More.

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    CBAI Reminder: Legislation Effective January 1, 2012

    Although many of the bills that were passed during the Illinois General Assembly’s Spring Session in 2011 are already effective, at least 19 bills were enacted with a delayed effective date of January 1, 2012. You can find summaries of those soon-to-be effective laws by
    clicking here.

    The first legislation summarized (Public Act 97-016), although not banking related, is included as an item of general interest. With the start of the New Year in Illinois, it will be a violation for occupants in the back seat of a passenger vehicle to not be wearing seat belts.

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    “Community Banks Should Ask for a Divorce”

    In a recent BankThink opinion piece, a former chairman of Security Pacific National Bank and now director of a community bank said the relationship between big and small banks is on the rocks and it’s time for a divorce. Robert H. Smith, who helped found Commerce National Bank in Newport Beach, California in 2003, said community banks should convey the message that they must be divorced from the mega banks both in reputation and regulation and must stand alone. CBAI fully concurs with his assessment that community banks must differentiate themselves from the big banks in the eyes of the public, lawmakers, and regulators.
    See BankThink Article.

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    Comment Period Extended on Volcker Rule

    At the request of the large banks, the federal agencies extended until February 13, 2012, the comment period on proposed rules to implement the Volcker Rule which would restrict or prohibit banks and nonbanks from engaging in proprietary trading and having certain interests in hedge funds and private equity funds. The original deadline for comment was January 13, 2012. CBAI supported the Volcker Rule during the financial reform debate in 2010 as a means of reducing risk in the banking system. The provision, however, was watered down by amendments backed by the same Wall Street firms that contributed to the financial crisis.
    See Joint Regulatory Release.

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    ICBA Takes In-Depth Review of 2011: Pursuit of Fairness, Equity Hallmarks

    After a watershed year in financial services law and regulation, 2011 was no less significant, according to ICBA Senior Executive Vice President of Government Relations and Public Policy Karen Thomas. In an
    in-depth review of the year in community banking, Thomas covers a wide variety of issues that the community banking profession faced in 2011 to advance fair and equitable regulatory treatment. Read Article.

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    Chicago FHLB to Proceed with Stock Repurchase Plan

    In an announcement last week, the Chicago Federal Home Loan Bank said it will repurchase approximately $500 million of excess stock in the first quarter of 2012, or on or about February 15, 2012. The bank also received approval from its federal regulator (FHFA) to redeem the stock of its former members, a one-time redemption of $527 million scheduled for today, December 28, 2011.
    See FHLB Letter.;

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    “Legal Link” Q & As Added to CBAI Members’ Only Section

    Five additional “Q & As” have been added to the Legal Link Library found online in the Members Only section of CBAI’s web site. Legal Link is a free service available to CBAI members.
    Read More.

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    Fine Points: Clear Dividing Lines

    Cam Fine, ICBA President and CEO, opines on the “one-size-fits-all” approach to banking regulation.
    Read Editorial.

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    From the Top: Diversity Is Our Strength

    ICBA Chairman Sal Marranca comments on the strength of diversity and discusses mutual banks.
    See Commentary.

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    2012 CBAI Washington Visitation Dates Set

    CBAI’s 2012 Washington Visitation will again be held in conjunction with the ICBA’s Washington Policy Summit, which is scheduled for April 24-27 at the Gaylord Resort and Convention Center in National Harbor, Maryland on the Potomac. Hundreds of community bankers from across the nation are expected to attend, and CBAI encourages member bank officers and directors to participate in this important event. It’s a perfect time to visit our nation’s Capital.

    Meetings will be scheduled with the Illinois congressional delegation and representatives of the various regulatory agencies, and presentations will be made by top-ranking government officials. Please mark your calendars now. Further details will be provided in the near future. For more information, please contact either Kraig Lounsberry, SVP Government Relations, at 800/736-2224 ( or David Schroeder, VP Federal Governmental Relations, at 847/909-8341 (

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    Baker Market Update

    In the week before Christmas, the markets received a few pleasant surprises along with a lump or two of coal.
    Read More.

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    Chicago Fed Economic Index Declines

    The Federal Reserve Bank of Chicago’s National Activity Index declined in November, suggesting that growth in the national economic activity was below its historical trend. Industrial and manufacturing production declined; while the sales, orders and inventories category made a neutral contribution to the index.
    See Fed Release.

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    St. Louis Fed’s Burgundy Book Released

    The Federal Reserve Bank of St. Louis’ quarterly summary of economic information for the St. Louis region was recently released and reflects a mixed economic situation. The data show that St. Louis is performing better than the nation based on unemployment and home price growth; however, the issuance of building permits is less favorable.
    See St. Louis Zone Report.

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    Home Prices Decline More Than Forecast

    Home prices experienced a broad-based decline in the year ended October, and the real estate market is bracing for another wave of foreclosures that may keep pressure on home prices. However, increasing construction and fewer unsold new properties indicate that the market is steadying. The Federal Reserve reiterated this month that the benchmark interest rate will remain near zero until at least mid-2013.
    See Bloomberg Article.

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    CSBS Sets 2012 Strategic Goals

    The Conference of State Bank Supervisors (CSBS), the national organization of state bank regulators which advocates dual regulation, has announced its primary policy objectives for 2012. In its goal regarding community banking, CSBS notes that the dual banking system and community banks are critical to preserving local, state, and regional economies and spurring job creation. CBAI has worked in close cooperation with CSBS for many years to support this longstanding strategic goal.
    See CSBS Release.

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    IASB and FASB Reach Reporting Agreements

    The International Accounting Standards Board and the Financial Accounting Standards Board have
    issued common disclosure requirements designed to help financial statement users better assess the effect of offsetting arrangements on a company’s financial position. Offsetting, or netting, is the presentation of assets and liabilities as a single net amount on the balance sheet.

    To address differences between IFRS and U.S. GAAP principles, the boards issued common, expanded disclosure requirements. The requirements also are intended to improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received.

    The FASB and IASB also made some key decisions on the financial instruments impairment model. Under the previously discussed three-bucket approach, the boards agreed that all assets would be initially placed in Bucket 1. Impairment in this bucket would be measured based on expected losses for the next 12 months. Assets would be transferred to Bucket 2 when a more than insignificant deterioration in credit quality has occurred and it is reasonably possible that contractual cash flows may not be recovered.

    The boards will need to provide clarity on the definition of “reasonably possible” as the project continues. Evaluation for transfer of assets with similar risk characteristics from Bucket 1 to Bucket 2 could be accomplished individually or as a group. But for group assessments, if one asset in the group has individually significant characteristics for transfer to Bucket 2, that asset should be assessed individually.

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    Agencies Release Annual CRA Asset-Size Threshold Adjustments

    The federal bank regulatory agencies have announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations. The annual adjustments are required by the CRA rules. Financial institutions are evaluated under different CRA examinations procedures based upon their asset-size classification. Those meeting the small and intermediate small asset-size threshold are not subjected to the reporting requirements applicable to large banks.

    As a result of the 3.43 percent increase in the CPI index for the period ending in November 2011, the definitions of small and intermediate small institutions for CRA examinations will change as follows:

  • "Small bank" or "small savings association" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.160 billion.
  • "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $290 million as of December 31 of both of the prior two calendar years, and less than $1.160 billion as of December 31 of either of the prior two calendar years.
  • These asset-size threshold adjustments are effective January 1, 2012. The agencies will publish the adjustments in the Federal Register. In addition, the agencies will post a list of the current and historical asset-size thresholds on the
    website of the Federal Financial Institutions Examination Council.

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    Elder Financial Exploitation Training Now Available

    Under the new Elder Financial Exploitation Training Rule, all bank employees and officers who have direct customer contact must successfully complete financial exploitation training by February 1, 2012 – or within six months after assuming a new position. Additionally, affected employees and officers must take refresher training every three years.

    To ensure your bank is in compliance with this law, CBAI offers a convenient, 60-minute, on-line course through BankersEdge. Engaging and informative, the BankersEdge Elder Abuse and Financial Exploitation course meets Illinois regulation requirements and will teach your employees how to recognize the indicators of elder financial exploitation; report financial exploitation of older adults in suspect situations; and help prevent financial exploitation by taking precautionary measures. As a CBAI member, you qualify for an exclusive rate on this training. For a limited time, train your entire bank for only $249!
    Click here for more information and to register now!

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    Compliance Institute (Operations/Deposit) 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 and 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 Institute has been divided into two sessions: Operations/Deposit Compliance and Lending Compliance. Registrants can attend one or both sessions, dependent upon need. Session I, Operations/Deposit Compliance, addresses topics including compliance management, Bank Secrecy Act, Truth in Savings Act, Regulation CC, and the Electronic Funds Transfer Act. Topics covered in Lending Compliance, offered in April, include Regulation Z, Community Reinvestment Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, and BSA. Bill Elliott, 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 18-19

    CBAI is proud to offer the second session of the “Community Bank Directors’ College.” The
    Directors’ College was developed in close conjunction with both state and federal regulators, and is designed to teach individuals how to become a more effective, capable, and supportive member of a bank’s board of directors. It is our goal to graduate directors who will 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 Directors’ College provides a thorough understanding of bank operations and bank directors’ responsibilities and is recommended for both new and seasoned bank directors. The College is structured as two, two-day sessions offered on an annual basis. The second session is being held January 18 & 19, 2012, at the Hilton Garden Inn in Springfield. Participants of the Community Bank Directors’ College qualify for 14 hours of CPE credit.

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    Compliance for Lenders to be Held January 23-25

    This January, CBAI will offer
    “Compliance for Lenders” in three locations statewide. The compliance officer is responsible for administering your bank’s compliance program including policies and procedures. Each employee of the bank has a duty to have a working knowledge of the compliance issues that pertain to his or her assigned position description. The challenge is to ensure that lending personnel have the right information at the right time. This one-day program provides an in-depth discussion of the current hot buttons of the financial regulators as related to compliance; up-to-date information on compliance issues and developments in bank regulations that relate to lending; and a review of the major substantive requirements of each compliance act or regulation that relate to lending. By attending this valuable program, lenders will gain knowledge about regulatory compliance issues and how to properly comply with them and help reduce the possibility that inadvertent compliance errors occur within the bank. Leading this seminar is Bill Elliott, senior consultant and manager of compliance with Young & Associates, Inc., Kent, Ohio.

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    First Data Internet Banking Suite


    CBAI EVENTS January 18-19
    Calling all directors...
    The Community Bankers Directors' College
    Hilton Garden Inn, Springfield

    Finer Points Blog





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