A Bi-Weekly News Bulletin for CBAI Members January 30, 2019
 CBAI Receives National Attention for Supporting Fed Role in Payments The Community Bankers Association of Illinois (CBAI) and CBAI Payments Task Force Chairman, Mark Field (Chairman and President of Liberty Bank in Liberty, IL) were highlighted in a January 29th Forbes article for strongly supporting the Federal Reserve’s proposal to operate a real time payments system. Chairman Field challenged the notion that the largest banks in the country should own and control the payments system. CBAI concurred with Field and stated the Fed is uniquely situated to provide open and fair access to the payments system for all community banks regardless of size, charter type or location; and cautioned that a payments system that disadvantages community banks will have a devastating impact on the nation’s consumers, small business and agriculture. Read Forbes Article. Back to top CBAI Urges Meaningful Call Report Relief In a comment letter dated January 17, 2019, CBAI urged the OCC, Federal Reserve and FDIC to finally provide meaningful Call Report regulatory relief to community banks. The letter highlighted CBAI’s efforts to win relief in 2014, 2016 and 2017, which unfortunately received an insufficient response. Finally, in 2018, Congress enacted the bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) which included requiring the regulators to issue additional regulations for a meaningful reduction in these reporting requirements. CBAI again urged the Agencies to only require the Balance Sheet, Income Statement and Changes in Bank Equity Capital in a new short-form Call Report for covered depository institutions (less than $5 billion in total consolidated assets) for the first and third quarters of a year. Read Comment Letter. Back to top CBAI and ICBA-Advocated Reforms Expand Access to Sub S Tax Cut Subchapter S bank shareholders will have significantly expanded access to the 20 percent tax deduction for pass-through businesses under a Treasury Department final rule that includes CBAI and ICBA-advocated reforms. The final rule expands the availability of the Tax Cuts and Jobs Act’s deduction on qualified business income to include income from the origination and sale of mortgage loans. Advocated in community banker grassroots letters and meetings with Treasury officials, this is a significant change that will benefit hundreds of community banks. However, the final rule does not appear to rectify other banking activities ineligible for the deduction, such as wealth management and retirement planning. It remains unclear how the disqualification of “investing and investment management services” would apply to trust or fiduciary services offered by a bank. Further, de minimis thresholds to qualify for the full deduction were unchanged despite CBAI and ICBA calls to raise the thresholds to a flat 25 percent. ICBA has prepared an analysis of the final rule, and CBAI and ICBA will continue working with policymakers to maximize Sub S community bank eligibility for the tax deduction. Read Final Rule. Read ICBA Analysis. Back to top ICBA Seeks Hearings on “Emergency” CU Merger ICBA has called on key congressional committees to hold hearings on the National Credit Union Administration’s approval of an “emergency merger” between Pentagon Federal Credit Union and Progressive Credit Union. The merger allows PenFed, the third-largest U.S. credit union, to benefit from Progressive’s “open charter” to serve the entire country without restriction. ICBA’s request went to the House Financial Services and Ways and Means committees and the Senate Banking and Finance committees. In a recent blog post, ICBA President and CEO Rebeca Romero Rainey wrote that policymakers need to see this deal for what it really is—just the latest credit union industry power grab. Read ICBA Letter. Read Blog Post. 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 event will be held on February 20, 2019, at the Crowne Plaza in Springfield and 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 Tracy McQuinn. For more information or to register, please Click Here. Back to top
A Wave of New Banks May Be Coming This Year Many banking analysts have said that there will soon be a wave of new banks opening for business, after de novo bank formation came to a screeching halt in the wake of the financial crisis. CBAI for years has urged regulators to be more accommodating to the establishment of new bank charters, and recent actions are very encouraging. While these predictions have yet to come to fruition, that may be about to change. This year could be “the year of the de novo,” says Richard Hills, a partner at the Nashville law firm Waller Lansden Dortch & Davis LLP. He believes there could be as many as 50 approved or pending applications for FDIC insurance by the end of 2019. He cites three big reasons. Read More. Back to top CBAI Makes Recommendations to Expand Small-Dollar Consumer Lending In a comment letter dated January 19, 2019, CBAI responded to the Federal Deposit Insurance Corporation (FDIC) request for information (RFI) on small-dollar lending. CBAI highlighted challenges in this area including: the increased costs of loan origination, underwriting, funding and administration; barriers to charging sufficient interest rates and fees; and higher loan charge-offs. CBAI stressed that the understanding and cooperation of the FDIC will be required, particularly regarding the differences in underwriting and loan features between community banks and other lenders, and the important role “character” plays in community bank lending decisions. Flexibility will be needed both on the part of the FDIC and community banks to encourage an expansion of small-dollar consumer lending. Read CBAI’s Comment Letter. Back to top Investment News from THE BAKER GROUP Baker Market Update It’s business as usual, sort of, for all government employees as those portions of the government that have been closed for more than a month are reopening again; at least for the next three weeks. Domestic equity markets seem to be nonplussed at the news and are set to begin the week in the red. Dark red. After experiencing some selling pressure last week, bonds are looking to recapture at least some of its lost ground as the Ten-Year sits comfortably at 2.74%. See Baker Market Update. Back to top Rural Mainstreet Economic Index Falls for January More Than Forty Percent See Loan Defaults Biggest 2019 Challenge The Creighton University Rural Mainstreet Index for January fell, but remained above growth neutral, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. "Our surveys over the last several months indicate the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector," said Ernie Goss, PhD, at Creighton University’s Heider College of Business. Highlights: 1) the overall index moved above growth neutral for the 11th time in past 12 months, 2) more than four of 10 bank CEOs expect farm loan defaults to be biggest 2019 challenge, 3) more than one third of bankers support the Federal Reserve holding on 2019 rate hikes, and 4) only 22.9 percent, or slightly more than one in five, bankers reported expanding economic conditions in their area. The January RMI for Illinois fell to 52.2 from 54.9 in December; the farmland-price index climbed to 38.3 from December’s 36.2; the state’s new-hiring index declined to 58.5 from last month’s 59.9; and Illinois’ Rural Mainstreet economy added jobs at a 1.5 percent pace, while urban areas in the state increased jobs by 0.9 percent. Read More. Back to top Operating Loan Growth Boosts Farm Lending: Kansas City Fed The volume of non-real estate farm debt continued to increase in the fourth quarter of 2018 on growth in operating loans, according to the Federal Reserve Bank of Kansas City. The reserve bank said interest rates on agricultural loans trended higher at the end of a year characterized by lower farm incomes, uncertainties about agricultural trade and the growth of lending volumes, which could put additional pressure on some farm operations. Read More. Back to top Agencies Issue Private Flood Insurance Rule Federal regulators issued a final rule requiring lenders to accept private flood insurance policies, as required by the Biggert-Waters Act of 2012. Effective July 1, 2019, the final rule:
Community Banking Week in Illinois is Coming! April 7 – 13, 2019, is the 29th Anniversary of Community Banking Week in Illinois. This year’s theme is “Sharing Your Dreams.” Invite the friends and neighbors of your community bank to help celebrate the independent spirit that is the hallmark of locally-run banks. For your FREE kit, contact Bobbi Watson today! 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 Submit a Nomination for the 2019 Excellence & Innovation BKD Award Nominations are now being accepted for the 2019 Excellence & Innovation BKD Award, presented by CBAI. This award recognizes CBAI member banks that go above and beyond to demonstrate their commitment to their customers, employees, shareholders and the community through innovative outreach programs. Since 1999, CBAI and BKD have honored financial institutions for their efforts to build a healthy future for themselves and their communities by developing an innovative way to serve customers or enhance corporate citizenship. Institutions may nominate themselves and do not need to be a BKD client to participate. The deadline to submit is Monday, June 3, 2019. The winner will be announced at CBAI’s 45th Annual Convention & Expo, September 19-12, 2019. The winning institution receives a $1,000 donation to the charity of its choice as well as an award symbolizing its innovation and excellence. See More Information. Download Entry Form. 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 Fintech Forecasts for 2019 There are many pundits predicting change in banking and FinTech this year. Here’s a review of a few of the ones that have some depth. American Banker published seven FinTech predictions for 2019 by Bob Legters, Chief Product Officer of Banking and Payments at FIS. Read More. Back to top BankOnIT: The ‘C’ in CIO Stands for ‘C’Ya Later’ The demand for IT professionals is greater than the supply of qualified people. Today, more Chief Information Officers are not sticking around. The danger for banks is that this position, which is critical for a bank’s success, may become vacant without warning, perhaps for many months, with no one who can immediately take over, and no one who can train a successor in the job’s specific responsibilities. Meanwhile, the tasks involved in this position will not be carried out by anyone, and the bank may be vulnerable to a variety of information security risks. Read More. Back to top CBAI LEGAL: Reminder Regarding Emergency Bank Office Closing CBAI has fielded multiple inquiries from member banks regarding emergency closing due to hazardous winter weather conditions. No doubt there will be more unsafe winter weather conditions ahead that could be hazardous for bank staff and customers. Read Most Recent CBAI LEGAL. Back to top CBIS: No Bank Reforms for Marijuana – Yet! Congress’ recent passing of the First Step Act, a law that reforms the criminal justice system by addressing the sentencing of non-violent criminals, did not include provisions protecting financial institutions that bank legal cannabis-related businesses (CRB) in the 33 states that have legalized medical or recreational use of the drug. Read More from CBIS. Back to top ICBA Bancard Contactless Card Efforts Make News A new PYMNTS article features ICBA Bancard’s efforts to make contactless card deployment more affordable for community banks. As recently announced, ICBA’s payments services subsidiary has negotiated special pricing for its FIS banks and is providing educational resources to help explain how the technology works. Read PYMTS article. Read ICBA Announcement. Back to top IRA Institute Scheduled February 12 & 13 in Springfield This program begins with the basics and builds from there to an intermediate level. Many times, people are trained on IRAs but the training they receive is brief and sketchy at best. With a two-day format, this program allows you to take the time to get comfortable with the rules, to ask questions about “How?,” “What if?,” “Why?,” and, just as importantly “Why not?” While not attempting to make you a tax advisor, this program looks at tax implications of traditional and Roth IRAs to enable you to feel very confident that you'll know when to say, “Yes, I can answer that question.” and when to say, “Go see your tax advisor.” This two-day program is presented by Randy J. Heidmann and Robert Skomars, both consultants at Wolters Kluwer Financial Services, who have a combined experience of over 75 years in the industry. Back to top Lender’s Guide to Mortgage Loan Compliance Set for February 26 & 27 During the last few years, both Congress and federal regulators have crafted revisions to many of the regulations that have been a part of our lending lives. This has resulted in many additional regulatory issues in every mortgage loan transaction. As a result, lenders have been struggling to determine what they should do to assure that they not only make a safe and sound loan for the bank, but also do so in a manner that will not create regulatory difficulties. This two-day seminar covers all aspects of mortgage compliance that a lender should know, including all the current rules and recent changes. All subjects that are covered include all the latest information available. Leading this seminar is Bill Elliott, CRCM, senior consultant and manager of compliance, Young & Associates, Inc. Back to top Seminar for the Community Bank Attorney To Be Held March 1 in Springfield This seminar assists community bank attorneys with obtaining the latest information regarding the myriad of legislative, legal and regulatory mandates facing community banks. It also meets the Supreme Court of Illinois’ requirements for Minimum Continuing Legal Education (MCLE). Entitled, “Seminar for the Community Bank Attorney,” CBAI has developed this comprehensive one-day education session which utilizes the expertise of a number of attorneys who specialize in banking law and related topics. CBAI General Counsel Jerry Cavanaugh speaks on “Recent State Legislation and Case Law Affecting Financial Institutions.” Back to top FDIC & CBAI Community Bank Directors’ Workshop Set for March 4 in Springfield Being a member of a community bank's board of directors is a challenging and rewarding experience. The community bank director has duties to the institution, its stockholders and its depositors. And, he or she has responsibilities to the public-at-large. To meet these duties and responsibilities, a director must be knowledgeable and active. CBAI and the FDIC have joined together for the Directors' Workshop. Representatives from the FDIC discuss hot banking topics to make this comprehensive, one-day workshop a must-attend. Back to top |
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