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Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                     January 22, 2014

Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Regulators Ease Volcker Rule Provision on Community Banks
  • ICBA Outraged at Retailers Blaming Banks for Data Breaches
  • CBAI and ICBA Urge Enhanced Security of Consumer Data
  • Mega Banks Lobbying to Influence Critical GAO Report
  • House Passes Thrift Holding Company Relief Legislation
  • ICBA Community Banking Live 2014 Convention -- Plan Now to Attend!
  • CBAI Compensation Survey Now Online
  • Continuity Control: 2013 Was Toughest Regulatory Year
  • CLEAR Relief Act Tops 100 House Cosponsors
  • Baker Market Update
  • Rural Economic Growth Slows in January
  • News From The Federal Reserve Bank of Chicago
  • 2014 Group Meeting Schedule Is Now Available!
  • CDD Spring Meeting to be Held March 18-19
  • Join CBAI’s Career Development Division
  • CFPB Seeks Applications for Community Bank Advisory Council
  • Does Your Bank Need Additional Insurance Coverage for Concealed Carry?
  • President Obama Nominates Three to Serve on Federal Reserve Board
  • Analyzing Tax Returns Seminar Set for January 29 & 30
  • 2nd Quarterly Community Bankers for Compliance Set for February 4 & 5
  • Credit Risk Management Workshop Scheduled for February 11-12

  • Regulators Ease Volcker Rule Provision on Community Banks

    At the request of ICBA, CBAI, and other financial trade groups, federal regulators last week revised a rule that would have forced community banks to take write-downs on collateralized debt obligations backed by trust-preferred securities. Most banks that own these securities purchased them before the financial crisis that emerged in 2008. The revised rule would apply to any bank that invested in CDOs backed by trust-preferred securities that were issued by banks with less than $15 billion in assets. In addition, the CDOs must also have been established before May 19, 2010, and a bank must have acquired them before December 10, when the Volcker Rule was completed.
    Read More. See New York Times Article.

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    ICBA Outraged at Retailers Blaming Banks for Data Breaches

    ICBA today expressed outrage at a National Retail Federation letter blaming banks for recent data breaches at Target and other retailers. ICBA’s Cam Fine said in a release, “Retailers and their processors – not banks – are responsible for the systems in their stores that process payment cards.” ICBA emphasized that retailers must step up to the responsibility that comes with handling personal information of consumers. This issue will likely become a contentious debate during this session of Congress.
    See ICBA Release.

    ICBA and CBAI have called on Congress to ensure that parties that suffer a data breach are required to bear responsibility for fraud losses and restitution to affected parties (See Next Article.)

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    CBAI and ICBA Urge Enhanced Security of Consumer Data

    CBAI and ICBA have urged Congress to ensure that the party that suffers a data breach - whether it is a retailer, data broker, financial institution or other entity - should be responsible for fraud losses and the costs of mitigation and restitution when consumer information is compromised. In addition, both Associations also called for a single national standard to replace the patchwork of state laws on data security that fosters confusion and puts consumers at risk.
    Read More.

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    Mega Banks Lobbying to Influence Critical GAO Report

    GAO Study on Too-Big-To-Fail Bank Funding Advantage Nearing Completion

    Not surprisingly, lobbyists for the mega banks and the various associations that represent them are working hard to influence the outcome of an important study being conducted by the General Accounting Office to quantify the funding advantage for banks deemed too-big-to-fail. The study was requested by Congress. JPMorgan Chase, Goldman Sachs, and The Clearing House Association among other have been churning out reports and studies that contend recent regulations have reduced their advantage, and no further regulation is necessary.

    CBAI believes the evidence clearly shows that TBTF banks have an unfair market advantage over other banks, and TBTF banks should be downsized so they can be properly supervised, managed, and resolved without a taxpayer-funded bailout.
    See Article.

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    House Passes Thrift Holding Company Relief Legislation

    On January 14, 2014, The United States House of Representatives passed, with strong bipartisan support, CBAI supported legislation to allow thrift holding companies to take advantage of the new 1,200-shareholder Securities and Exchange Commission deregistration threshold. The Holding Company Registration Threshold Equalization Act (H.R. 801) also would raise the registration threshold to 2,000 shareholders. Due to an oversight in the Jumpstart Our Business Startups (JOBS) Act, thrift holding companies could not take advantage of the increased shareholder threshold below which a bank or bank holding company may deregister with the SEC. The bill was co-sponsored by Illinois’ Mike Quigley (D-05).

    Similar legislation (S. 872) has been introduced in the Senate. The bills are among many regulatory relief provisions in ICBA’s Plan for Prosperity platform for the 113th Congress.

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    ICBA Community Banking Live 2014 Convention -- Plan Now to Attend!

    Make Plans Now to Attend! ICBA Community Banking Live 2014® will be like no community banking conference you’ve attended. We are again setting the standard, raising the bar and creating a masterpiece that will be the community banking event of the year and you’re invited!

    Why Attend?

      1. Access to DYNAMIC industry leaders

      2. Connect with community bankers from all over the country who share your zest for our DISTINCT profession

      3. Choices of dozens of INTERACTIVE educational workshops and roundtables

      4. Wake up each day in a place so MAGICAL that you might just find yourself smiling just listening to the waves lap against the sand

      5. Participate in the world’s largest most COMPREHENSIVE gathering of community bankers in the world

      6. Explore hundreds of products and services ESSENTIAL for your bank

    Learn More and Register Today!

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    CBAI Compensation Survey Now Online

    How does your bank compensation stack up? CBAI’s 24th Annual Officer Compensation Survey registers officer salary, incentives, benefits, total compensation and more. It also tabulates support personnel benefits and compensation, plus compensation to bank directors. Peer results will include information based on bank asset size and geographical location.

    For a .pdf of the Survey to use as a worksheet,
    Click Here.

    To complete the actual Survey, Click Here.

    For questions, contact Andrea Cusick, CBAI Senior Vice President Communications.

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    Continuity Control: 2013 Was Toughest Regulatory Year

    According to Continuity Control, a CBAI marketing partner that provides an automated compliance platform for community banks, there were 245 new regulatory items involving 16,000 pages of regulations that banks were required to address. That makes 2013 the toughest regulatory year on record.

    CBAI offers one of the most comprehensive compliance support services in the nation, comprised of the highly-regarded Community Bankers for Compliance Educational Program with Young & Associates, and Continuity Control’s award-winning compliance platform specifically for community banks.
    See BankNews Article. More About Continuity Control.

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    CLEAR Relief Act Tops 100 House Cosponsors

    Since November, more than 30 additional members of the House and Senate have signed on as cosponsors of the CLEAR Relief Act of 2013 (H.R. 1750/S. 1349), legislation to provide much-needed regulatory relief for community banks. Efforts by ICBA and its affiliated state associations including CBAI brought the cosponsor total to more than 100 in the House and more than 20 in the Senate in a matter of weeks. The legislation, inspired by ICBA’s Plan for Prosperity regulatory relief platform, offers community bank exemptions from mortgage and auditing regulations and supports additional capital opportunities for small bank holding companies. The growing cosponsor list has increased momentum for congressional action.

    New Senate cosponsors include Senate Banking Committee members Tom Coburn (R-Ok.), Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.). New cosponsors in the House include House Financial Services Committee members Sean Duffy (R-Wis.), Scott Garrett (R-N.J.), Dennis Heck (D-Wash.), Robert Hurt (R-Va.), Ed Perlmutter (D-Colo.), Dennis Ross (R-Fla.) and Keith Rothfus (R-Pa.).

    CBAI and ICBA continue to encourage community bankers to view the list of cosponsors for the House and Senate legislation and to urge their members of Congress to cosponsor the legislation if they have not yet signed on. Find Cosponsors for
    H.R. 1750 or S. 1349. Send a Message to Urge Support.

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    Baker Market Update

    Sometimes, trying to figure out all the economic news that is heaped upon us can be as dicey as trying to figure out who actually is the First Lady of France. Both endeavors involve more than a few mixed signals. We’ll leave Monsieur Hollande to work on his mixed signals; we’ve got enough of our own. And for the past week, our mix of mixed signals has mainly favored the positive, beginning with the National Federation of Independent Business Optimism Index. The survey of 800 small business owners pushed this measure to 93.9 from the prior month’s 92.5.
    See Baker Market Update.

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    Rural Economic Growth Slows in January

    Rural economic growth declined sharply in January, according to the latest Rural Mainstreet Index from Creighton University. The index fell to 50.8 from 56.1 in December as the farmland-price index sunk to its lowest level since October 2009 and farm-equipment sales declined for the seventh straight month. Nearly 80 percent of bank CEO respondents said they expect cuts in the 2014 ethanol-blending level to negatively affect the economy.
    See January RME Report.

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    News From The Federal Reserve Bank of Chicago

    Summary of Fed Economic Outlook Symposium

    According to the more than 100 economists and analysts that attended the Chicago Fed’s annual Economic Outlook Symposium on December 6th, the U.S. economy is forecasted to grow at its fastest pace in three years in 2014, with inflation remaining low and the unemployment rate edging down.
    See February Chicago Fed Letter.

    Summary of Fed Agricultural Risks Conference

    On November 19, 2013, the Chicago Fed held a conference to discuss the key risks faced by agricultural producers and lenders, as well as the risk-management tools available to them. Experts from the farm and financial sectors addressed the conference and noted that all types of agricultural risk require producers and lenders to utilize various risk-management techniques in order to prosper in volatile times. See January Chicago Fed Letter.

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    2014 Group Meeting Schedule Is Now Available!

    CBAI leaders and executive staff are visiting 11 locations on the 2014 Group Meeting tour this spring. Bankers from more than 200 banks participate in these enjoyable and informative events each year. Consisting of an optional golf outing and a dinner meeting, Group Meetings also provide an excellent opportunity to get the latest information on key banking issues and catch up with friends and peers. (Note: Groups 1, 2 & 3 this year will include a lunch, meeting, and golf outing.)
    See the schedule of Group Meetings and make plans now to attend.

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    CDD Spring Meeting to be Held March 18-19

    The CDD Annual Spring Meeting is scheduled for March 18-19, at the Hilton Hotel in Springfield. This conference combines motivational, energetic, and informative general sessions with important messages for today’s banker, as well as six breakout sessions with practical solutions and ideas that can be immediately implemented at the bank and a fun-filled social event. Additional conference highlights include:

      David Kemp, president of Bankers Management Inc., is conducting two general sessions at the conference entitled, “The Next Two – Three Years in Community Banking,” and “Leadership That Gets Results!”
      Two networking sessions and the Business Meeting Luncheon, featuring a legislative update, elections of officers, and the Career Banker and Economic Educator of the year awards, are conducted at the conference.
      Social Event – Join us on March 18 from 7 – 9:30 p.m. for an evening of networking fun at the Hilton Hotel where Coole 2 Duel will take the stage. Back by popular demand, Coole 2 Duel will have a dueling piano show. Make sure you bring you requests! This event includes an appetizer buffet, cash bar, and of course, music. This event is included in your registration fee.

    Register Now!

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    Join CBAI’s Career Development Division

    Are you or someone at your bank a rising star? Are you looking to become more involved not only in your bank, but also your community? If so, the CBAI Career Development Division is the place to start! The future of community banking depends upon a new generation of bankers and community bank supporters — progressive, energetic, community-minded, and well-informed. The purpose of CBAI's Career Development Division (CDD) is to keep members on the cutting edge of community banking through:

      • Quality Educational Programs
      • Professional Publications
      • Leadership Training
      • Networking Opportunities

    Make an investment in the future of community banking today. CBAI's Career Development Division, the only one of its kind in Illinois, is dedicated to advancing the principles of community banking. Register by March 15, 2014, to obtain the special offer of $105 for the first member, $95 for a subsequent membership from the same bank/firm. To register, please complete the
    attached form or contact Melinda McClelland at

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    CFPB Seeks Applications for Community Bank Advisory Council

    The Consumer Financial Protection Bureau said it is seeking applications for positions on its advisory groups, including the Community Bank Advisory Council. The CBAC provides the CFPB with feedback on policy development, research, rulemaking and engagement.

    The bureau said the CBAC was created to ensure it receives feedback from community banks less than $10 billion in assets, which are not under the CFPB’s supervision but may be affected by bureau regulations. CBAC members serve single two-year terms.

    Applications will be accepted until February 28.
    Read CFPB’s Federal Register Notice. Access Advisory Board Application.

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    Does Your Bank Need Additional Insurance Coverage for Concealed Carry?

    Many banks have contacted Community BancInsurance Services (CBIS) about insurance coverages that may be needed to protect against any liability arising from a gun-related incident on their premises. Most conventional liability-insurance policies already cover most situations involving gun-related acts of violence; however, it’s important that you review the coverages outlined in your specific policy. Every policy is different and it’s also important that you not only contact your insurance provider, but also your attorney to ensure your bank has adequate coverage.
    See Article.

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    President Obama Nominates Three to Serve on Federal Reserve Board

    President Obama nominated three people to serve on the Federal Reserve Board last Friday, including Stanley Fischer, former head of the Bank of Israel, as the Board’s next vice chairman; Lael Brainard, a former Treasury Department official; and Jerome H. Powell, who is being nominated for a second term.

    Fischer, 70, would replace Janet Yellen, who has been confirmed to succeed Ben Bernanke as the next Federal Reserve Board chair. He would come to the Federal Reserve Board with years of central banking experience as the former governor of the Bank of Israel from 2005 to 2013. He previously served as vice chairman of Citigroup, deputy managing director of the International Monetary Fund, and a professor at the Massachusetts Institute of Technology.

    Brainard, 51, most recently served as the Treasury’s Under Secretary for International Affairs. Previously, she served as an economic adviser for President Clinton and associate professor at MIT. Powell, 60, is a current member of the Federal Reserve Board, a position he has held since 2012. He recently served as a visiting scholar at the Bipartisan Policy Center and previously served as a partner at the Carlyle Group and as a Treasury official in President George H.W. Bush’s Administration.

    Rounding out the seven-member Board is Jeremy Stein, a former professor at Harvard University; Sarah Bloom Raskin, the former banking commissioner of Maryland; and Daniel Tarullo, a former professor at Georgetown University. President Obama will likely need to appoint another member to the Federal Reserve Board as Fed Governor Sarah Bloom Raskin is expected to be confirmed by the Senate to serve as deputy Treasury secretary. With her likely departure, the Fed Board will not have a member with a community banking background or knowledge of the supervisory process. CBAI, ICBA, and the Conference of State Bank Supervisors (CSBS) have expressed concern. “As the Administration undertakes the critical task of filling vacancies on the Federal Reserve Board, the financial sector as a whole is better served by a Federal Reserve Board that includes individuals with significant experience in and knowledge of bank supervision,” wrote CSBS President & CEO John W. Ryan in a letter to the White House.
    See White House Announcement.

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    Analyzing Tax Returns Seminar Set for January 29 & 30

    Underwriting loans to self-employed and small business borrowers can be tricky due to the sources of income – both business and personal – that affect cash flow and repayment ability. Further, the primary resource used by community bankers to make the cash-flow analysis is tax returns. Several of the tax schedules and forms are confusing since they are designed to report taxable income, not true cash flow. This
    program covers how to analyze both personal and business tax returns provided by self-employed borrowers and guarantors. Using case exercises, we will compute personal cash flow, real estate cash flow and global (combined business and personal) cash flow. Richard Hamm provides consulting and training to banks and businesses as owner of Advantage Consulting & Training in Huntsville, AL, and leads this program.

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    2nd Quarterly Community Bankers for Compliance Set for February 4 & 5

    CBAI is pleased to offer “
    The Loan Estimate and Closing Disclosures,” the second quarter of the Community Bankers for Compliance (CBC) program, in two locations this February. This seminar will begin the training process for the new combined Early TIL and Good Faith Estimate (Loan Estimate) and the new combined Final TIL and HUD-1. The manual will be designed to break each section of the form down into its component parts, and each field will be considered in the course of training. The new forms are far superior to the existing forms, and will allow your staff to give your customers a better understanding of the costs of mortgage credit. However, the forms are very different, which creates “learning curve” issues for everyone, just as we are beginning to understand the Dodd-Frank rules. The goal of our presentation will be to create a framework of understanding for compliance and senior management. The CFPB document developed to explain these new forms is 1,888 pages. The manual is in the “creation” stage as this brochure is being developed. While so far it appears that the new forms can be covered in a single presentation, it is possible that the discussion will continue into next quarter’s CBC. Every attempt will be made to cover both new forms in this quarter; however, speed is not as important as clarity and understanding. As has been the case recently, this quarter’s presentation will be almost all lending related. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH.

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    Credit Risk Management Workshop Scheduled for February 11-12

    Every institution tries to assess risk and predict future patterns in the credit portfolio. The better the information those efforts produce, the better the financial management that is possible, particularly in the area of reserves and capital. Effective credit-risk management cuts across many levels of the bank. This
    seminar examines how credit-risk management affects the board and leadership, the front lines, and the technical staff. Board members, credit administration, credit review, credit risk officers, and chief risk officers would all benefit from attending this seminar. Leading this seminar is Jeff Judy, principal and founder of Jeff Judy & Associates, Bloomington, MN.

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