A Bi-Weekly News Bulletin for CBAI Members January 16, 2019
 CBAI ACTION ALERT: Urge Meaningful Call Report Relief The Community Bankers Association of Illinois (CBAI) asks all community bankers contact the OCC, FDIC and the Federal Reserve to urge the regulators to provide meaningful regulatory relief for community banks by requiring a short form Call Report for the first and third quarters. This short form Call Report would consist of only the Income Statement, Balance Sheet and changes in Bank Equity Capital. CBAI and the Independent Community Bankers of America (ICBA) have been strong advocates for this regulatory relief dating back to 2014 when 15,000 community bankers (1,000 from Illinois) submitted a petition calling for relief from the increasingly onerous Call Report requirements. Read More. Send Message Now. (Under $1B) Send Message Now. (Over $1B) Back to top 101st General Assembly and Executive Officers Take Office The new 101st General Assembly was sworn into office on January 9, and Illinois’ 43rd Governor, J.B. Pritzker and other state executive officers took the oath of office January 14. It’s now time for them to get to work. They all return to Springfield to begin the 2019 spring legislative session January 29. Last December, the CBAI Legislation and Regulation Committee met to consider legislative proposals submitted by community bankers and to set the association’s legislative agenda for 2019. Read the Most Recent NEWS FROM THE FRONT. Back to top CBSC Payments Committee Meets with Faster Payments Vendors As part of its ongoing quest to gain a better understanding of the developing faster payments and settlement systems in the United States, the CBSC Payments Committee recently met with representatives from NACHA, Zelle, The Clearinghouse (TCH), FIS, and Shazam. Needless to say, when representatives with such diverse interests meet at one time in one location, the discussion can be lively. While everyone agrees that Americans require a world-class payment system where they can safely and securely pay anyone, anywhere, at any time, and with near-immediate funds availability, not everyone agrees on who will control the system. Fintech companies and the largest banks have been working for years and invested hundreds of millions of dollars developing a faster payment ecosystem and next-generation digital devices that provide consumers immediate and multiple payment options. However, community banks and their advocacy groups are rightly concerned about fair, non-discriminatory and affordable access to the new systems. Competition benefits end-users. When the cost of entry is too steep to encourage more competition, the government needs to get involved, which in this case is the Fed. Read More. Back to top
U.S. Faster Payments Council Names Interim Leadership The recently launched U.S. Faster Payments Council (FPC) has named Kevin Christensen, a senior executive with the SHAZAM Network, as its Acting Executive Director and Interim Board Chair. Christensen was among the 27 payments industry leaders who comprised the Governance Framework Formation Team, which developed and established the FPC at the direction of the former Faster Payments Task Force. His employer, the SHAZAM Network, is a founding sponsor of the FPC. Read More. Back to top CSBS Survey Findings: Financial Regulations Are a “Regressive Tax” on Small Banks Relationship Lending Gives Community Banks Competitive Advantage Compliance costs may have dropped in 2017, but community banks still suffer from an inherent competitive disadvantage, according to recent analysis of the Conference of State Bank Supervisors (CSBS) 2018 Community Bank Survey. Overall annual compliance costs at community banks declined by 13 percent to $4.6 billion from 2016 to 2017, the national survey shows. But that is still a challenge for many small banks because they do not have the same infrastructure as larger banks to efficiently absorb these costs, according to a research paper by Temple University Professors William C. Dunkelberg and Jonathon A. Scott. The paper is one of a series that takes an in-depth look at the results of the CSBS annual survey, which this year included 521 community banks from 37 states. Dunkelberg and Scott explain: “Few small banks have their own legal or compliance departments. Compliance often requires incurring additional fixed costs larger than needed -- hiring an additional accountant or computer programmer, for example -- which impairs the bottom line to a larger degree than at larger banks. More importantly, this burden creates a competitive advantage for larger banks that can more easily absorb (utilize) these fixed costs.” The findings show 38 percent of small banks (under $100 million) reported that compliance costs were more than 20 percent of their total expenses, whereas only 13 percent of large banks (more than $800 million) reported a similar burden. Small banks reported most of their compliance costs were spent on salary and data processing, the paper found. “Compliance uses up valuable and scarce capital and hours of expensive human capital,” the report concluded. The two noted economists also determined that community banks have a competitive advantage in small business lending due to their relationships and personal attention. Community banks use relationships in addition to hard data such as financial statements when lending to small businesses, but large banks focus on professional referrals and are more likely to use business credit scores. In addition to regulatory compliance, the annual survey asked questions about trends in small business and other lending, banking services, mergers and acquisitions and management succession. The survey is released each year at the Community Banking in the 21st Century research and policy conference. See Research Paper. Read Full Survey. Back to top FASB: ‘Weighted-Average’ Method Works for CECL The Financial Accounting Standards Board said last week that the “weighted-average remaining maturity” method of estimating expected credit losses is one of many acceptable methods for complying with the Current Expected Credit Loss standard. As FASB notes in a new question-and-answer document, the WARM method uses an average annual charge-off rate as a foundation for estimating credit-loss content. FASB’s accounting standard says there is no preferred method, so bankers will have a wide range of choices. CBAI and ICBA have worked for years with FASB and federal regulators on the standard to ensure it is scalable and flexible for community banks. Regulators have said they don’t expect community banks to need to adopt complex modeling techniques or engage third-party service providers to comply, though CBAI and ICBA continue working to minimize the effect of the forthcoming standard. Read FASB’s Q&A. Back to top Romero Rainey: “‘Emergency’ Merger Another CU Power Grab” An “emergency” credit union merger that will allow anyone in the United States to join $24 billion-asset Pentagon Federal Credit Union is just the latest industry power grab, ICBA President and CEO Rebeca Romero Rainey wrote this week. Romero Rainey also noted that in defending the merger, credit union activists have dropped the idea that credit unions exist to serve people of modest means. “Policymakers need to see this deal for what it really is,” she wrote. Read Blog Post. Back to top The "C” Conference Scheduled for 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. 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 Investment News from THE BAKER GROUP Baker Market Update The partial government shutdown (PGS) became a little more than partial over this past weekend, but, for a change, this is one development that can’t be pinned on the politicians. A big snowstorm back East has most schools and non-essential Federal offices in Washington, D.C. closed today. The determination of which governmental activities are actually essential is unclear. But, the weather in Beijing is much more pleasant and, as such, did noprevent the National Bureau of Statistics (NBS) from publishing the latest Chinese trade data. A quick look at that data might have that nation’s trade negotiators wishing for a blizzard, but it’s too late; the data is already out and it’s not pretty. See Baker Market Update. Back to top USDA Activities Limited by Funding Lapse While Farm Service Agency offices remain closed, the Agriculture Department recently indicated that meat and grain inspections, nutrition assistance programs, and certain other activities will continue during the partial government shutdown. The USDA is not updating its website during the shutdown, though it has provided its comprehensive plan for operations during the current lapse in funding. Meanwhile, last week Senate Ag Subcommittee on Appropriations Chairman John Hoeven (R-N.D.) asked Ag Secretary Sony Perdue to deem USDA farm loans “essential” so they can continue to be processed during the shutdown to allow producers enough cashflow to operate. Read USDA Release. Read Comprehensive Plan. Read More on Hoeven’s Request. Back to top 2019 CBAI Compensation Survey Now Available Online Ensure your bank has the competitive edge in recruiting top talent! Complete the 2019 Compensation Survey quickly and easily by April 16, 2019, and receive free results. (Non-participants pay $300). Conducted by BalancedComp and sponsored by iZale Financial Services, the compensation survey is now available on CBAI’s website. Click Here to Read More and Complete the Survey. Back to top Community Bank CEO Outlook: What’s on Your Peers’ To-Do List? ICBA recently conducted its inaugural Community Bank CEO Outlook survey and asked community bank CEOs how they plan to meet their challenges this year. To learn more about their to-do lists for 2019, from increasing deposits to tackling digital marketing, Click Here. Back to top CBAI Associate Member Vetter Among the 10 Finalists for ICBA Accelerator Program On Jan 9, 2019, ICBA announced that it had selected CBAI Associate Member Vetter as among the 10 startup fintech companies to participate in the ICBA Thinktech Accelerator Program. The first-of-its-kind program exclusively focuses on community bank product development for the benefit of community banks and the customers they serve. “From the first time I met Bryan Adler and saw a demo of his program I knew he had something very special,” said Mike Kelley, president of Community BancService Corporation, Inc (CBSC), the business services affiliate of CBAI. He added, “That’s why I accompanied Bryan on visits with bankers around the state and showed them a demo of the digital loan and deposit gathering platform. While CBSC does not endorse Vetter, we have been monitoring its continued development and acceptance among bankers with the intent of discussing a formal agreement at the appropriate time.” Read More. Back to top New, Redesigned Financial Calculators Now Available on CBAI’s Website CBAI and LRS have partnered to offer new, redesigned financial calculators. Available at no charge to CBAI member banks, these consumer and commercial loan calculators are accessible in the Members Only section of the CBAI website. Contact Stacy Workman, vice president of operations and communications, at 800/736-2224 to find out how you can benefit your customers by offering these calculators on your bank’s website. Back to top CBAI Promotes Stacy Workman The Community Bankers Association of Illinois (CBAI) is pleased to announce the promotion of Stacy Workman to vice president of operations and communications, effective January 1, 2019. Workman began her employment at CBAI in May of 2007 as an administrative assistant in the operations department. Read Press Release. Back to top 2019 Holiday Closing Signs Available on CBAI Website Holiday closing signs for 2019 are now available on CBAI’s website. Signs come in English or Spanish and are available in color and black and white versions. Take advantage of this free member benefit and print yours today! All signs are available in a pdf format. Download Here. Back to top Wolters Kluwer Survey: Regulatory and Risk Concerns Persist In Wolters Kluwer’s most recent Regulatory & Risk Management Indicator survey of U.S. banks, 62 percent said they “do not anticipate a likely reduction” in regulatory burden over the next two years. The survey did, however, reveal an 18 percent decrease in overall concern levels compared to the 2017 Main Indicator Score. Wolters Kluwer is a CBSC Preferred Services Provider. Read More. Back to top CBSC Energy Program for CBAI Members Just Got Better! The Community Bankers Association of Illinois (CBAI), the state’s largest banking trade organization, and The Stone River Group (SRG), the premiere aggregator of energy services in the state, announced a new partnership that gives CBAI member banks even better access to low-cost energy services. As electric and gas procurement experts, SRG is independent of any energy producers, sellers or transmitters. They do not make or sell power – they make it more affordable for CBAI members. How? SRG solicits qualified proposals from a number of gas and electricity service providers. Additionally, SRG consultants aggregate members from the same region of the state and use their combined purchasing power to negotiate even lower rates. Read Press Release. Back to top Card-Not-Present Fraud Growth: No End in Sight? Card-not-present fraud will cost retailers worldwide $130 billion between 2018 and 2023, a new report from Juniper Research predicts. This fraud is growing faster than CNP transactions because of the increasing sophistication of fraudsters' techniques, says Steffen Sorrell, author of the study. As a result, Juniper is forecasting an annual CNP fraud growth rate of 14 percent through 2023, he says. Sorrell suggests better fraud detection and prevention tools are essential to the CNP fraud crackdown effort. Read More. Back to top Hanging Up Happy: How to Turn Contact Centers into Customer Satisfaction Centers Customer satisfaction is now seen as the number one indicator of success, more than increasing revenues, decreasing costs or hitting target metrics. If you embrace this idea, the question then becomes, how can we use contact center resources to proactively nurture and enhance customer satisfaction? How can we ensure customers are happy when they hang up? Read Harland Clarke Whitepaper. Back to top BankOnIT: How Much Information Should a Bank Board Receive and Review? A board’s primary responsibility is to manage risk of all types in the bank, including information security risk. Carrying out good risk management also helps the director avoid personal liability. To perform top-level oversight and monitoring of information security as regulators require, the board needs accurate and high-quality information. There are several ways to think about what kinds of IT information the board should receive, and how much. Read More. Back to top CBAI LEGAL: No Hardship Relief from Statutory Wage Deduction A recent Illinois Appellate Court opinion reversed a circuit court judge’s exercise of discretion to reduce post-judgment wage deduction amounts below the statutory formula on the grounds of “undue hardship.” Read Most Recent CBAI LEGAL. Back to top CBIS: Market Conditions for Employment Practices Liability A year after the #metoo movement began, CBIS is starting to see some change in overall Employment Practices Liability (EPL) exposure. The Equal Opportunity Employment Commission (EEOC) released data stating they filed 66 harassment lawsuits in 2018, with 41 specific to sexual harassment, which is a 50 percent increase over the previous year. In that same report, the EEOC noted that the number of findings of reasonable cause has increased by almost 25 percent to 1,200 in the last 12 months. These statistics point to a trend of potentially increasing exposure that could expand over the next few years. Read More from CBIS. Back to top 2018 Data Breaches: The List No One Wanted to Make Verizon recently reported that there were 2,216 confirmed data breaches across 65 countries in 2018. Even more disturbing, perhaps, is that 68 percent of those breaches took months for the breached companies to discover. Read More. Back to top TCM Bank Supports Shutdown-Affected Cardholders TCM Bank, N.A., a subsidiary of ICBA Bancard, said it will support its community bank partners by providing financial relief assistance to their cardholder customers furloughed as a result of the government shutdown. Customers are encouraged to call TCM Bank customer service at 800-883-0131 to evaluate their options. Read Press Release. 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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