As previously reported, proposed FASB Changes for Financial Instruments Related to Credit Losses – otherwise known as the Current Expected Credit Loss (CECL) model initiative – are expected to be released in the first quarter of 2016. As proposed, CECL will require banks to forecast loan losses using “forward-looking information,” replacing the current historical loss and incurred loss models. This change will require banks to book an allowance for the loan from the day of origination throughout the life of the loan – referred to as the “lifetime expected loss estimate.” This creates an immediate day one loss that penalizes community banks for investing in loans and certain securities. Adding to that complexity, each loan’s lifetime expected loss estimate would have to be adjusted every quarter.

We encourage you to read the information available on the ICBA “Be Heard” resource page and not underestimate the impact this change will have on your bank. The Office of the Comptroller of the Currency estimates this change will result in loan loss reserves increasing 30-50% “…with some banks experiencing higher increases.” The unnecessary and costly “hoops” to calculate the ALLL under CECL will also create additional burdens on community banks. While this change is proposed by FASB, an independent organization promoting accounting standards, the primary regulators are reported to be “fully supportive” of this initiative. The ultimate impact on community banks will be in large part dependent upon the implementation of this accounting standard by the regulators.  

IBAT has been engaged in this issue for more than two years, and in addition to a comment letter to FASB, we have taken every opportunity with the federal regulatory authorities to express our serious concerns. 

Both IBAT and ICBA continue to push for a reversal on this proposed plan, or at the very least a “right sized” carve out for community banks. We urge you to use the “Be Heard” resource page to send a letter to FASB opposing CECL. IBAT also encourages you to reach out to your primary federal regulator to express your opposition to yet another backdoor assault on community banking.

As stated in the IBAT comment letter, “Sadly, much like the original Basel III capital proposal, the credit loss proposal now under consideration reflects an ongoing disconnect between the regulatory entities and the reality of Main Street community banking.” Or, as an IBAT member eloquently stated, “Enough is enough!”

Comments Encouraged

The Texas Credit Union Commission has proposed rules to further liberalize restrictions on the field of membership. IBAT submitted a comment letter expressing our concerns and opposition to this proposal.

“The ‘common bond’ has evolved into nothing less than a sham,” said Chris Williston, IBAT President and CEO. “Virtually anyone, anywhere can join any number of credit unions by living in one of multiple counties or even an entire state. Consumers can now join an affinity group for next to nothing or seemingly, just ‘being able to fog a mirror.’ The differences between credit unions and community banks continue to be blurred, and we believe this proposal is another move toward that end.”

The federal regulator for the credit union industry, the NCUA, has proposed a similar relaxation in its rules regarding field of membership. We will no doubt be commenting on those proposals as well.

The comment period deadline for the state rules is November 29, 2015. If you are so inclined, please feel free to refer to our letter as well as the proposed amendments 7 TAC § 91.101 and 7 TAC § 91.301 to submit your comments.


The best deals from Dell are now online and accessible through IBAT’s exclusive endorsement. Avoid the crowds, stay home and enjoy your friends and family this Thanksgiving and Black Friday. 

Black Friday deals include:

  • Laptops
    25-40% off Dell Latitude
    50% off Dell Inspiron
    33% off Dell Vostro
  • Desktops
    30% off Dell Inspiron 
    40% off Dell Vostro 
    30-40% off Dell Optiplex 
  • 2-in-1 – Tablets/Touchscreen Laptops
    12-31% off Dell Inspiron

On top of these seasonal specials, don’t forget that IBAT member banks, their employees and customers enjoy an average of 30% off all orders through dell.com/ibat, by using IBAT link number GS126658178. This includes savings on Nikon/Canon DSLR cameras, HDTVs, projectors and other consumer electronics.

Baker Market Update: Nov. 23, 2015

[Friday] morning’s big news out of the Food & Drug Administration heralding the approval of genetically modified salmon may provide some unintended benefits for the nation’s keepers of monetary policy. If genetic scientists can now produce fish that grow bigger and faster than what nature planned, maybe econometric scientists can do the same thing with price levels. Genetically-modified inflation (GMI) may be the new path for the FOMC’s policy-makers.

Read more in the Baker Market Update.

Last Chance

The IBAT Education Foundation’s 10-day Fall Member Drive will be over TODAY, and we've set an ambitious goal of raising $100,000 from November 10-20.

The Education Foundation is a member-supported 501c3 philanthropic entity that focuses on financial education in Texas. Our mission is Building Financially Literate Communities Across Texas. We can only uphold this with your support. Will you help us reach our goal by becoming a corporate member today? Click here for the online pledge form.

Our non-profit IBAT Foundation relies on member support to deliver:

  • IBAT Teach the Teacher Program™ - Financial education instructional methods for teachers, with recognition opportunities for community banks;
  • IBAT Teach the Lender Program™ - Credit report tools for community bank lenders;
  • IBAT Teaching Excellence in Financial Literacy Award - Awards for innovative teachers, with recognition for nominating community banks;
  • IBAT Career Day Tool Kit - Presentations for IBAT members to use when visiting schools and civic groups; and
  • IBAT Foundation Footprints - Quarterly e-newsletter subscription with ideas and data that can be used in your bank or community.

Contribute now with a one-time year-end gift or consider a multi-year legacy gift pledge in honor or memory of an individual/group to join the IBAT Wall of Heroes and Legends of Community Banking. Help us make a difference in the communities we serve across this great state.

Rural Updates

Several CFPB rules refer to the rural or underserved and rural counties lists. The CFPB publishes these lists each year and late last month, it published its 2015 lists. IBAT used the CFPB’s list of rural counties to create a map of CFPB’s rural counties in Texas. Lists for prior years are available here.

In addition to counties that are considered to be “rural” under the mortgage rules, the CFBP expanded the definition of “rural” based on comments submitted by IBAT to include census blocks that are not in an urban area as defined by the Census Bureau. When you make a loan in a county that’s not rural, you will be able to look up the address on the Census Bureau or CFPB website to determine if it is inside or outside of an urban area in the non-rural county. If a loan is in a non-rural county, but outside an urban area, it will be considered a rural loan. Click here for a list of urban areas in Texas.

Winter Summit XVI

If you're looking for an unmatched opportunity to learn from senior regulators and expert banking attorneys, as well as access to timely information on the economy, interest rate trends and investment strategies, then Winter Summit XVI is the program for you. Registration is open

What others have said:

  • "The most valuable program I attended."
  • "Great to get one-on-one time with regulators and lawyers."
  • "Good way to network with other bankers who are in similar markets experiencing the same pressures."
  • "I appreciate the opportunity to share ideas with my community banking colleagues and interact with the regulators in a relaxed setting."
  • "The Winter Summit is a must-attend event for senior management and board members."
  • "It is worth the effort to get there, and the regulators are much more approachable in that environment."

In addition to the interactive general sessions, there are ample opportunities for networking and informal conversations with the speakers and other attendees.

After a great run in South Lake Tahoe, this year’s Summit will be held in beautiful Beaver Creek, Colorado, and the schedule allows for time to take advantage of an abundance of recreational opportunities.

Congratulations Cindy Reynolds

Late last month, IBAT presented Dripping Springs High School teacher Cindy Reynolds with its Teaching Excellence in Financial Literacy Award. Reynolds, who teaches 10th through 12th grades, is one of three award recipients from across the state.

The three elements of financial literacy that Reynolds aims to instill in every student are awareness, planning and responsibility. She uses her business background to help create her class curriculum. Reynolds was nominated by Jeff Wilkinson of Pioneer Bank in Dripping Springs.

“Mrs. Reynolds has a unique approach to teaching financial literacy at the high school level as it’s mostly hands-on learning,” said Wilkinson. “Walk into her classroom and you’ll see it looks more like a business than a classroom. She teaches by engaging her students in conversation with an understanding there is never a wrong answer, simply opportunities to learn. She is truly preparing our next generation of community members, customers and entrepreneurs to make wise financial decisions.”

Photo: (l. to r.) Mary Lange, IBAT Education Foundation; Cindy Reynolds, Dripping Springs High School; and Jeff Wilkinson, Pioneer Bank pose after presenting Reynolds with her Teaching Excellence in Financial Literacy Award


Directors' Guide

Copies of The Ultimate Guide for Bank Directors, Revised Edition are now available!

The revised edition of the book is up to date, fast paced and a must-read for all bank directors and officers who are confronting the challenges facing the banking industry today. Updates include new bank regulations and regulatory guidance on topics such as Basel III, CFPB, cybersecurity and risk management, in addition to best practices and practical advice for bank directors.

The Ultimate Guide for Bank Directors is written by Cathy Ghiglieri of Ghiglieri & Company, an IBAT associate member for more than 15 years and former Texas Banking Commissioner, and Jewell Hoover, former Deputy District Comptroller for the Western District at the Comptroller of the Currency. 

Click here to download the order form.

Critical Prep Required

On November 11, 2015, the Financial Accounting Standards Board (FASB) announced that it will issue updated standards on accounting for impairments in the first quarter of 2016. The decision to move forward with the Current Expected Credit Loss (CECL) model was adopted on a less than unanimous FASB Board vote, based upon information received by IBAT. 

CECL will require banks to forecast loan losses based upon future economic climates, future events and future circumstances from the origination of the loan throughout its entire life. The amount forecasted at origination is called the lifetime expected loss estimate. Larger banks must adopt the CECL standard by 2019, with smaller community banks following by 2020. Not only will this result in significantly higher ALLL reserves, it will also require changes to internal systems that may prove both costly and complex.

IBAT is offering a webinar entitled CECL, the ALLL & FASB’s Proposed Standard for Recognizing Credit Impairment: What’s Changing & Why Preparing Now is Critical on November 30, 2015.  To register for this critically important webinar, click here.

Flags Display

The recent despicable attacks in France are an assault on all of humanity, and the world must unite to condemn acts of terrorism on every front. As a mark of unity and as a sign of respect for those in France touched by this needless assault on human dignity, it seems fitting that flags in Texas should be lowered to half-staff in memory of those who were lost in these attacks.

Therefore, pursuant to Chapter 3100 of the Texas Government Code and 4 U.S.C. § 7, I direct that the Texas and United States flags shall be immediately lowered statewide on Monday, November 16, 2015. Flags should return to full-staff after sunset on Thursday, November 19, 2015. Individuals, businesses, municipalities, counties and other political subdivisions and entities are encouraged to fly their flags at half-staff for the same length of time as a sign of honor, respect and unity.

The First Lady and I extend our thoughts and prayers to the survivors and families and to all those affected in France and around the world.



DX '16

Registration is open for the Deluxe Exchange 2016 (DX16), February 8-10, in Boca Raton, Florida. DX16 is a must-attend event designed to help community bankers grow revenue, prosper and thrive in today’s competitive environment.

Why should you attend?

  • Hear from insightful keynote speakers like Ray Kurzweil, Director of Engineering at Google, and Robert Herjavec from ABC’s Shark Tank;
  • Go “hands on” with the latest in feature financial technology solutions in the DX ’16 Design Labs; and
  • Be one of a few hundred – not thousands – in attendance, allowing you access to peers, analysts, networking opportunities and more.

Click here to see the full event details, watch this video for additional information and register today using code DAP9382 for a registration discount!

Baker Market Update: Nov. 16, 2015

Friday the 13th. Might be a good day to make sure your karma tank is full. Depending upon the source of your karma supply, the cost of topping off that tank may be falling. Markets learned this morning that, as a measure of wholesale inflation, the Producer Price Index fell by .4% last month. If one takes out food & energy prices, it isn’t much different; down .3%. While no one minds paying less for the stuff one has to pay for, the keepers of monetary policy want those prices to go up, not down. That outlook may have macro-economic merit, but poses a karmatic problem for the FOMC members as they ponder the appropriateness of a December rate hike.

Read more in the Baker Market Update.

HOTCO November Meeting

The Heart of Texas Compliance Officers (HOTCO) is a newly created association for compliance officers at banks and credit unions in Travis County and surrounding areas. HOTCO is hosting its final meeting of 2015 on Tuesday, November 17, 2015, presented by IBAT's Legal and Regulatory Compliance team. Shannon Phillips will make a presentation on the seven pillars of a successful compliance management system in a financial institution. Additionally, Kelly Goulart will give an update on the latest issues and developments relating to TRID implementation.

We highly encourage all compliance officers to attend this informative meeting on November 17, 2015 at 6 p.m. at Morelia Mexican Restaurant in Pflugerville. Additional information can be found here.

Kevin Brady

Congressman Kevin Brady (R - The Woodlands) was named Chairman of the powerful House Ways and Means Committee last week, filling the vacancy created by the election of Paul Ryan to Speaker of the House.

“We are delighted that Kevin’s hard work and leadership skills have led to this great honor…and tremendous challenge,” said IBAT President and CEO Chris Williston. “IBAT has had the privilege of working with this committed public servant since his days in the Texas House beginning in 1991, and we appreciate his longstanding support of community banking. We extend our hearty congratulations and know he is up to this important task.”

Brady joins six other members of the Texas delegation (Conaway, Hensarling, McCaul, Sessions, Smith and Thornberry) as chairmen of one of the 21 standing House committees.