A Bi-Weekly News Bulletin for CBAI Members January 2, 2019
 Trump Signs Farm Bill into Law President Donald Trump signed the CBAI-supported 2018 farm bill into law after Congress passed the measure last month. The Agriculture and Nutrition Act of 2018 (H.R. 2) includes commodity price protections that will provide greater business-planning certainty to producers and community banks over the next five years. Read More. Back to top Agencies Release Annual CRA Asset-Size Threshold Adjustments On December 20, 2018, the federal bank regulatory agencies 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 examination procedures based upon their asset-size classification. Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks and savings associations unless they choose to be evaluated as a large institution. Annual adjustments to these asset-size thresholds are based on the change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million. As a result of the 2.59 percent increase in the CPI-W for the period ending in November 2018, the definitions of small and intermediate small institutions for CRA examinations will change as follows:
Senators Join Push for Call Report Relief A bipartisan group of 19 senators are calling on banking regulators to revisit their proposed rule implementing call report relief for community banks. In a letter led by Senator Jerry Moran (R-Kan.), the lawmakers said the proposal would have little impact on eligible community banks and the communities they serve. The CBAI and ICBA-advocated provision in S. 2155 establishes a short-form call report in the first and third quarters for banks with less than $5 billion in assets. However, the agency proposal barely moves the needle in reducing unnecessary reporting burdens. CBAI and ICBA are calling on community bankers to weigh in by contacting federal regulators and expressing concerns with the proposed rule. ICBA offers separate alerts on its Be Heard grassroots action center for community banks with less than $1 billion in assets and those between $1 billion and $5 billion. Read More. Send Message Now (Under $1B). Send Message Now (Over $1B). Back to top Agencies Finalize Expanded 18-Month Exam Cycle Federal regulators issued final rules adopting interim final rules issued in August expanding eligibility for the 18-month examination cycle. As authorized by the S. 2155 relief law and long advocated by ICBA and CBAI, the agencies raised the qualifying asset threshold for the 18-month exam cycle from $1 billion to $3 billion. Read More. Back to top CBAI is Recognizing Community Bank Member Achievements! CBAI offers several opportunities to recognize our community bank members for their achievements. Is there someone in your bank who will be celebrating 50 years in banking this year? Is there a retired individual from your bank who you would like to nominate for the Distinguished Member award? Is your bank eligible to be a Patron of Community Banking? Do you have a director who should be spotlighted? Please let us know. We would love to honor individuals and bank members in these categories. See More. Back to top The "C” Conference Offered February 20 in Springfield CBAI is excited to announce a new conference, The “C” Conference. Designed for C-level community bankers, the conference will be held on February 20, 2019, at the Crowne Plaza in Springfield. This exciting conference includes inspiring and educational general sessions on “Qualities of High Performing Communities Banks,” by David Kemp, Bankers Management, Inc.; “Economic Update” by THE BAKER GROUP; and “Culture Leader, Culture Warrior, Culture You” by Kirk Weisler of Team Dynamics. The jam-packed agenda also includes two rounds of concurrent session on topics important to CEO’s, CFO’s, COO’s and senior lenders. An opportunity to network with your peers will be held at the luncheon, as well as the complimentary social event the evening prior. For more information and to register, please contact CBAI at 800/736-2224 or via email at tracym@cbai.com. Back to top Mark Your Calendar Today for CBAI’s 2019 Spring Group Meetings CBAI leaders and executive staff are visiting 11 locations on the 2019 Group Meeting tour this spring. Bankers from nearly 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: The Group 1& 2 Meeting will follow a different format). The opening portion of each Group Meeting focuses on critical legislative and association issues. CBAI President Kraig Lounsberry will provide updates on Association projects and community banking in general; and Senior Vice President of Governmental Relations Jerry Peck will offer an up-to-the-minute report of banking-related legislative activities. See 2019 Group Meeting Schedule and Make Plans Now to Attend! Back to top Big Tech Supports Fed Creating Real-Time Payments Network Amazon, Apple and Google are among the large tech companies that are throwing their support behind the creation of a real-time payments network in the U.S. led by the Federal Reserve. Responding by letter to the Fed’s request for comments, the tech giants stated, “Only the Federal Reserve can serve as the catalyst to achieve real-time payments ubiquity in a timely manner.” Walmart and Target and small banks, as well as consumer advocates, back the tech companies’ views, while big banks have taken the opposition opinion. That’s because some of the big banks run their own real-time payment clearing system via The Clearing House and its RTP system. Read More. Back to top Investment News from THE BAKER GROUP Baker Market Update For the Chinese, their New Year’s celebrations don’t officially begin until February 5, but that didn’t keep that nation’s leader from having a telephonic chat with Donald Trump over the weekend to discuss the upcoming festivities. According to America’s President, the call resulted in “big progress” being made toward some kind of trade deal being included as part of those festivities. Perhaps Chinese President Xi saw his nation’s just- released report on manufacturing and noticed its Purchasing Managers Index slipping into contractionary territory. Or, maybe he just wanted to wish Mr. Trump a Happy New Year. See Baker Market Update. The Baker Group is Offering an Investment Strategies for 1st Quarter 2019 Webinar Save the date for The Baker Group’s Investment Strategies for 1st Quarter Webinar on Thursday, January 10, 2019. Topics include an economic update and Fed policy outlook, industry trends and regulatory hot button issues, current investment strategy recommendations, and interest rate risk and liquidity management guidance. Financial institutions’ CEOs, CFOs, investment officers, board members and those who are directly or indirectly responsible for financial management functions benefit from participating. There is no cost for this webinar. Read More. Back to top Rural Mainstreet Economic Index Shows Growth for December More Than Half of Bankers Increased Farmer Collateral Requirements The Creighton University Rural Mainstreet Index for December rose above growth neutral after slipping below the 50.0 threshold in January, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. The overall index climbed to 54.2 from November’s 49.9, its first sub-growth neutral reading since January 2018. The index ranges between 0 and 100 with 50.0 representing growth neutral. Here are the highlights: 1) Overall index moved above growth neutral for the 10th time in past 12 months; 2) Bankers project negative cash flow (losses) for more than one in six grain farmers; 3) More than half of bankers have boosted collateral requirements for farm loans due to low agricultural income; 4) One-fourth of bank CEOs have made no change in farm lending practices due to weak farm income; and 5) Approximately one in 10 bank CEOs project 2019 farm loan defaults to rise by over 10 percent over 2018 levels. The December RMI for Illinois climbed to 54.9 from 50.6 in November. The farmland-price index slipped to 36.2 from November’s 36.3. The state’s new-hiring index declined to 59.9 from last month’s 68.3. Illinois’ Rural Mainstreet economy added jobs at a 1.6 percent pace, while urban areas in the state increased jobs by 0.9 percent. Read Report. Back to top Trump Names Joseph Otting Acting Director of Federal Housing Finance Agency Comptroller of the Currency Joseph M. Otting issued the following statement on December 20, 2018 after President Donald Trump designated him to become Acting Director of the Federal Housing Finance Agency (FHFA) upon completion of current Director Mel Watt’s term on January 6, 2019. “I am honored that President Trump has named me Acting Director of the Federal Housing Finance Agency. I look forward to serving in this additional role until a permanent Director is confirmed and appointed to this important position. I want to thank outgoing Director Mel Watt for his long service to the country. Successfully leading both the Office of the Comptroller of the Currency and the FHFA would not be possible without the quality staff and leadership at both agencies. I look forward to continuing the vital work of the OCC to ensure the federal banking system operates in a safe, sound, and fair manner just as I look forward to leading the FHFA in its important roles overseeing the Federal Home Loan Bank System and conservator of Fannie Mae and Freddie Mac." He concluded, "In 2018, the OCC made great progress promoting the federal banking system’s ability to encourage economic growth and create jobs. I expect to further that work in the new year by modernizing the regulations implementing the Community Reinvestment Act, making Bank Secrecy Act compliance more efficient and effective, encouraging banks to provide customers more short-term small dollar credit options, and supporting responsible innovation in the federal banking system by beginning to accept national bank charter applications from fintech companies engaged in the business of banking.” Read President Trump’s Statement. Back to top Mark Your Calendar for the 2019 FHLBank Chicago Member Meetings! The 2019 FHLBank Chicago Member Meetings are coming to a city near you this spring. If you are a member, then please watch for your meeting invitation with event registration details to arrive soon. Agenda topics include: Balance Sheet Strategies for Today’s Environment; FHLBank Chicago Products and Solutions; and Economic, Housing, and Mortgage Market Outlook. Here are the dates and locations:
Banknotes Magazine to be Distributed Via E-Mail in Addition to Print Version Beginning with the January 2019 edition, CBAI’s Banknotes magazine will now be distributed via e-mail. The e-mail version will not replace the printed magazine but offers another avenue to access the publication. An online version with page flip capabilities is already available on CBAI’s website under the Publications heading. Look for your e-mail version of the magazine in early January! Back to top 2018: The Year of Evolution in Payments Revolution From cash to digital, from plastic cards to mobile wallets, from cash registers at the front of restaurants to tablets brought to tables, the way we pay shifts along with the availability of technology, and tech shifts as commerce demands new features. Among those demands, at least on the part of the consumer, are speed, flexibility and personalization. Expect transactions, and the commerce tied to those transactions, to be quick and around the clock — and far-reaching, around the globe. It seems like a revolution — but, of course, revolutions have evolutions. The end of the year, or the beginning of a new one, marks a good place to take stock. PYMTS spoke to a plethora of payments executives, each with a perspective on what’s in the rearview mirror and what lies on the road ahead. Read More. Download the 2018 Payments E-book. Back to top Cyber Challenge: A Community Bank Cyber Exercise The FDIC created “Cyber Challenge: A Community Bank Cyber Exercise” to encourage community financial institutions to discuss operational risk issues and the potential impact of information technology disruptions on common banking functions. Using nine unique scenarios, the Cyber Challenge helps start an important dialogue among bank management and staff about ways they address operational risk today and techniques they can use to mitigate this risk in the future. The Cyber Challenge is not a regulatory requirement; it is a technical assistance tool designed to help assess operational readiness. Read More. Back to top CSI: Boost Productivity, Collaboration and Communication CSI has been a preferred partner of CBSC for the board portal services since 2010. The Secure Connect Portal provides directors and employees secure access to board materials and other confidential information from the convenience of their homes, offices or tablets. The portal simplifies the process of preparing board materials and makes them available anytime and anywhere. Current and archived materials are available and include online votes, collaboration and more. Read More. Learn more by viewing the links provided below: Back to top Expert: Lenders Can Bank on These Five Trends for 2019 One mortgage expert with more than 20 years in the business predicts that 2019 could become a borrower’s market across the U.S. Here are five predictions the expert believes lenders can bank on in 2019. Read More. Back to top BankOnIT: FFIEC Releases a Cybersecurity Resource Guide for Financial Institutions The Federal Financial Institutions Examination Council (FFIEC) has released a Cybersecurity Resource Guide. The newly developed guide provides a variety of resources specifically designed to help the financial sector address cybersecurity risks and threats while enhancing preparedness. Most of the guide’s resources are integral for a strong information technology/security environment, and some resources are required. How does this affect your bank? Read BankOnIT Blog. Back to top Harland Clarke Offers Free E-Book on the Millennial Market At more than 80 million strong, Millennials are the largest generation ever. They're also the largest segment of the American workforce, hold the most purchasing power and are poised to inherit more wealth than any other generation. As such, they are a crucial market for financial institutions. The good news is that by no means have banks and credit unions “lost” this generation. The bad news is that they haven't completely won it yet either. The latest e-book from Harland Clarke, “Millennials: Attract. Retain. Engage.” seeks to educate financial institutions on what Millennial banking preferences are really about. Full of new insight and actionable strategies that financial institutions of all sizes can employ, this is sure to be a valuable resource for any bank that wants to reach this vital segment. Download Your FREE Copy. Back to top CBAI LEGAL: Bank Escapes Ambiguous Contract Terms A poorly worded subordination agreement could have cost the drafting bank plenty, but an Appellate Court gave the bank a way out. Read Most Recent CBAI LEGAL. Back to top CBIS: Insurance Year in Review and Expectations for 2019 With 2019 now here, this article examines recent insurance trends and expected changes for the coming year. From natural disasters to technology, big data, marijuana businesses, cryptocurrency and more, find out what to expect in the insurance arena in 2019. Read More from CBIS. Back to top Compliance for Lenders Scheduled for January 8-10 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. With the risks of fair lending issues, the flood rule in an unsettled state, and the TRID rules, the life of a lender is getting more and more complex. The addition of a new real estate application in the next few months creates additional issues. The challenge is to ensure that lending personnel have the right information at the right time. This one-day program, Compliance for Lenders, provides a review of the fair lending rules and flood rules, and the lender’s responsibilities. Also included is a discussion of the new application; an overview of the lender’s responsibility for assuring that all the TRID rules are met; an overview of the Loan Estimate and the Closing Disclosure; and any other changes which may occur prior to the seminar date. With the law changes from last May, regulatory changes may occur at any time. By attending this valuable program, lenders gain knowledge about regulatory compliance issues and how to properly comply with them. This helps in reducing the possibility that inadvertent compliance errors occur within the bank. While primarily designed for lenders, newer compliance officers, internal auditors, compliance back-up personnel and other bank employees who want to be comfortable with the lending compliance regulations should attend this informative program. Bill Elliott, CRCM, senior consultant and manager of compliance at Young & Associates, Inc., Kent, OH, leads this seminar. Compliance for Lenders is offered in Mt. Vernon, Springfield and Utica. Back to top Compliance Institute: Operations Offered January 15 & 16 at CBAI 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 & March. 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 (NOW and Savings Accounts only), 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 March, include 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). This year, due to the massive size of regulations, Regulation Z (Truth in Lending) will be covered in its entirety in a separate program called Reg Z University. This two-day program will be offered April 16-17, 2019. Bill Elliott, CRCM, senior consultant and manager of compliance, and Dale Neiss, consultant, both of Young & Associates, Inc., Kent, Ohio, lead this institute. Back to top Community Bank Directors’ College Session I Scheduled for January 24 & 25 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 banks’ 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 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. Either may be attended as a stand-alone course. The first session is being held on January 24 & 25, 2019, and the second session is June 26 & 27, 2019, both at the CBAI Headquarters in Springfield. Back to top CBAI Offers Credit Risk Training on January 28 Credit risk has always been an integral part of commercial loan analysis. With the dynamics of economic changes and the challenges forced by business enterprises through credit, collateral, cash flow and guarantor analysis, credit risk training is critical for the success of community banks. Session two of this program analyzes business financial statements including: balance sheets, income statements and understanding cash flows. Leading this program is Aaron Lewis, senior consultant in the lending division of Young and Associates, Inc. Back to top 2nd Quarter CBC Program Set for January 29 & 30 Based on 2017 HMDA data, traditional financial institutions originate less than 50% of the mortgages made in the US. This, combined with general market pressures, has often resulted in management either creating incentives for lenders, or considering other approaches to increased market penetration. But even if your bank is not implementing or considering these approaches, the concepts presented are useful for you. We begin with the underlying requirements for incentivized mortgage programs based in part on the new “Loan Originator Rule: Small Entity Compliance Guide” that was released by the Bureau of Consumer Financial Protection in November 2018. But this session goes beyond just the recitation of the rules and regulations. The program reviews how to create a mortgage compliance management program and details the impact it can have on your bank whether you have an incentive program or not. All compliance issues begin with risk assessment –– then using the risk assessment as the basis for managing the entire process –– policy, procedure, the compliance officer role in the process, compliance monitoring within the lending function and finally audit schedules, whether audit is external or internal. Of course, audit results impact your risk assessment, so the compliance “circle” is ongoing. Only with all these features can an institution have a fully integrated mortgage compliance program. Bill Elliott, senior consultant and manager of compliance with Young & Associates, Inc. leads this program. Back to top Ag Lenders’ Conference Scheduled for February 5 in Springfield This jammed-packed day looks at a variety of issues facing agricultural lenders. Attend CBAI’s 2019 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. Speakers and topics include “Weather Outlook & Forecasting for 2019” with Eric Snodgrass, director of the Undergraduate Studies Department of Atmospheric Science, University of Illinois, Champaign, IL; “The State of Agriculture & Ag Lending” and “Credit Risk 2019 and Beyond: Answers to Critical Questions” with Dr. David Kohl, professor emeritus of Agricultural & Applied Economics, Virginia Tech, Blacksburg, VA; “Best Practices for Managing Agricultural Relationships in a Challenging Environment” with Jeffrey W. Davey, MBA, CRC, manager of loan review, Wipfli LLP, Sterling, IL; and “Powering a Home, Farm or Business with Solar Electric: Tips and Tools for Project Evaluation” with John Hay, extension educator for the Energy Department of Biological Systems Engineering University of Nebraska-Lincoln and Eric Romich, associate professor and field specialist, Energy Education College of Food, Agricultural and Environmental Sciences, Department of Extension, The Ohio State University, Columbus, OH. Back to top |
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