IBAT News

Making Bipartisan Progress


As reported in last week’s Bottom Line, the House Financial Services Committee voted on numerous community bank regulatory relief bills throughout the week. 

Promising bipartisan progress was made on several fronts, including the passage of the following:

  • H.R. 766, the “Financial Institution Customer Protection Act of 2015,”
    to protect financial institutions and their customers from Operation Choke Point;
  • H.R. 1210, the “Portfolio Lending and Mortgage Access Act,” 
    to give Qualified Mortgage treatment to loans held in portfolio by the originator;
  • H.R. 1553, the “Small Bank Exam Cycle Reform Act of 2015,”
    to provide an 18-month exam cycle for community banks with $1 billion or less in assets;
  • H.R. 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act,”
    to reform CFPB indirect auto financing guidance;
  • H.R. 1941, the “Financial Institutions Examination Fairness and Reform Act,”
    to create a workable exam appeals process and common-sense standards for classifying loans;
  • H.R. 3189, the “Fed Oversight Reform and Modernization Act of 2015,”
    to improve the economy’s performance by bringing greater accountability and transparency to the Federal Reserve; and
  • H.R. 3192, the “Homebuyers Assistance Act,”
    to provide a TILA-RESPA Integrated Disclosure safe harbor.

Lawsuits Filed


Notwithstanding the victory in the DataTreasury case, three new Patent Trolls - Finnavations, LLC, Plano Encryption Technology and Turn IP - have filed suits in the Eastern District of Texas. They are alleging infringement of various patents that generally relate to the secure transmission and storage of data from customers, claiming that the banks' Mobile Banking Platform infringe these patents. 

If you have received one of these letters or been served, below are steps to take immediately:

  1. Check your appropriate vendor contract for an indemnity and duty to defend. In any event, promptly notify the vendor(s) in writing about these claims and ask them to provide a defense to the bank.
  2. Implement a “litigation hold” to make sure that you don’t inadvertently destroy records that might relate to the threatened litigation. Don’t overlook emails that might relate to the programs that are under attack.
  3. Send a copy of the letter or pleadings to Shannon Phillips at IBAT. 

We are working collaboratively to develop a joint strategy on this new round of claims so that no one bank or entity needs to stand alone. The Dykema Cox Smith team of IP counsel has begun researching the validity of these patents and is working toward a proactive approach through IBAT. For more information, click here.

2015 PAC Auction


This is a friendly reminder that September 1 is the deadline to have your IBAT PAC Auction item included in the Auction Guide. While we will happily accept items after that date, they won’t be listed in the auction booklet. If you would like to donate an item to the PAC Auction, click here for the online pledge form or here to download a PDF. This year, we’ve added a new feature that allows you to take a photo of your item and submit it with your online form. If you’d rather not shop, you may send us a check or credit card number and we’ll do the shopping for you!

Dream Vacation entries are available by submitting this form or calling the IBAT Office at 800-749-4228 (ask for Patty Mullins). The winner of the Dream Vacation Sweepstakes will receive a $5000 vacation or prize of equivalent value. To download the order form and see official rules, click here.

FDIC Banker Outreach


The Independent Bankers Association of Texas and the Texas Bankers Association have partnered with the FDIC to provide this important update on current and emerging banking issues. Breakout sessions are tailored for directors, risk management staff and consumer compliance staff. Attendees will be provided with resource materials for future reference.

All bank directors, CEOs and bank officers are encouraged to attend this timely update, participate in the sessions and share their perspectives with the group. Topics that will be covered include consumer protection, information technology, concentration risk management and internal routines & controls/fraud.

FDIC Banker Outreach Programs will occur in Austin on August 18 and in Dallas on August 20. Please make your reservations early - this meeting has been known to sell out.

Patent Troll Update


In April 2015, the Patent Trial and Appeal Board held that DataTreasury’s patents relating to check-imaging methods and processes were invalid because the two patents, known as the Ballard patents, claim nothing more than the abstract idea of transmitting encrypted information from one place to another. However, that victory has apparently not slowed down the Patent Trolls. Since the ruling in the DataTreasury case, several Patent Trolls have already resurfaced, demanding significant sums from various banks and financial institutions. 

In April 2015, Finnavations, LLC filed 17 lawsuits against various banks and financial institutions in the Eastern District of Texas. It is asserting that the Mobile Banking Platform utilized by the financial institutions allegedly infringes Finnovations’ patent entitled “Financial Management System.” 

In May, Plano Encryption Technology (Plano) started sending out numerous demand letters to various banks, credit unions and other financial institutions alleging that the financial institutions infringe Plano’s patents related to the secure transmission and storage of data from customers. Subsequently, beginning at the end of June, Plano began filing a series of lawsuits against banks in the Eastern District of Texas. So far, Plano has filed three separate lawsuits.   

Then, at the beginning of July, Turn IP filed 23 separate lawsuits, again in the Eastern District of Texas. It is asserting that various banks and financial institutions allegedly infringed its patent, entitled “User Interface for Defining and Automatically Transmitting Data According to Preferred Communication Channels,” which relates to the sending and storing of data and information over a network having a plurality of network subscribers. Turn IP accuses the various banks of violating the patent by providing services “which allowed its customers to choose their preferred method of contact such as by choosing paperless billing or allowing the customer to choose the address, e-mail, or phone number to be contacted at” of infringing the Turn IP patent. Although the patent expired on October 4, 2013, Turn IP now seeks monetary damages for the six years prior to filing of the lawsuit. 

If you have received one of these letters or been served, below are steps to take immediately:

  1. Check your appropriate vendor contract for an indemnity and duty to defend. In any event, promptly notify the vendor(s) in writing about these claims and ask them to provide a defense to the bank.
  2. Implement a “litigation hold” to make sure that you don’t inadvertently destroy records that might relate to the threatened litigation. Don’t overlook emails that might relate to the programs that are under attack.
  3. Send a copy of the letter or pleadings to Shannon Phillips at IBAT. 

We are working collaboratively to develop a joint strategy on this new round of claims so that no one bank or entity need stand alone. The Dykema Cox Smith team of IP counsel has begun researching the validity of these patents and is working toward a proactive approach through IBAT.

Baker Market Update: Aug. 3, 2015


Most people have heard the story about the guy who asked the waiter to cut his pizza into sixths instead of eighths. He wasn’t hungry enough, he reasoned, to eat eight slices of pizza. So, it’s all in how one looks at things. Well, the Bureau of Economic Analysis (BEA) decided to take another look at how things played out for the economy over the last few years in an attempt to rectify “seasonal biases.” It’s 2015, and there is no place in our economy for biases; seasonal or otherwise. The most salient adjustment relates to what represents the fourth counting of first quarter GDP. The previously reported “final” calculation of a .2% decline has now become a .6% increase. Voila’. How’s that pizza?

Read more in the Baker Market Update.

Operations Compliance


The operations side of the bank is facing increasing challenges. Technology is driving more products, but creating new security and compliance burdens. Innovative products are bringing in more non-interest income, but also raising regulatory concerns. And non-bank agencies continue to poke around in bank records and operations!

New this year!
The Summit has added a panel of experts to conduct a case study concerning Cyber Security & Disaster Recovery.

Topics Include:

  • Cyber Security
  • Escheat Basics
  • Electronic Banking
  • CFPB Update
  • Common HR Mistakes for Today’s Bankers

Who Should Attend
This Summit will benefit anyone with responsibilities in the operations and compliance departments of community financial institutions. Learn more and register.

BOI/BLI


What are the biggest challenges facing community banks? According to the Office of the Comptroller of the Currency’s Semiannual Risk Perspective, community banks are most challenged by operational and lending issues, including:

  1. Strategic risk caused by shifting bank strategy to adapt to low interest rates, competition and slow economic growth;
  2. Management succession and retention of key staff;
  3. Expansion into new products requiring specialized risk management expertise;
  4. Reliance on third-party vendors for operational and business functions;
  5. Increasing volume and sophistication of cyber threats; and
  6. Increasing BSA/AML risks.

Is your bank prepared to respond to these challenges? IBAT offers two great schools focused on developing the next generation of lenders and operations officers to help you respond to every challenge facing community banks:

  • Bank Operations Institute (October 11-16, 2015)
    BOI builds its innovative banking program around moving operations officers from the back room to the boardroom. The emphasis is on practical, real-world banking issues and sure-fire solutions
  • Bank Lending Institute (November 8-13, 2015)
    BLI offers strategic insight into both the present and future of banking technology, best practices, administrative processes and project management. The bank training emphasis is on practical skills and approaches required for effective and profitable bank lending management.

2015 Salary Survey


The data collection period for IBAT’s Texas Community Bank Salary and Compensation Survey will close this Friday, July 31, 2015. If you haven't already, please submit your bank's data by clicking the link above.

What are the benefits of submitting your bank's data? Participating banks receive:

  • A PDF copy of the full survey report for FREE;
  • Exclusive access to a compensation strategies webinar, hosted by Bank Compensation Consulting, FREE of charge; and
  • Discounted pricing on the segmented data reporting tool. 

Finally, we’ll send the person who completes the report a $5 SONIC gift card to “sweeten” the deal. Participation is open to all Texas community banks. Please help us set a new record for participation this year and make the survey more valuable than ever.

Click here to create a profile, complete the survey online or download a printed reporting form to complete the survey and send back via fax.

IBAT Webinars


Did you know? IBAT, in conjunction with Financial Education, Inc., hosts close to 150 webinars a year. Webinars are a very economical way to train your staff for one low price. Everyone can sit in on the program with the use of a speakerphone and a computer, or access archived webinars on-demand.

Topics are broken up by category or by date and include:

  • Auditing & Accounting
  • Collection
  • Compliance
  • Directors
  • Frontline and New Accounts
  • Human Resources
  • IT
  • IRA
  • Lending
  • Operations
  • Security & Fraud
  • Senior Management

You can access a complete listing of upcoming webinars and archived webinars here.

Reg Relief Round-Up


A promising effort on the reg relief front escaped much notice last week. Sen. Susan Collins added the Community Bank Sensible Regulation Act of 2015, a game changer for community and regional banks under $10 billion in assets, to the financial services appropriations bill before it was approved by the Senate Appropriations Committee late last week. The provision would grant the FDIC, OCC and Federal Reserve Board with powers to exempt community banks from select regulations they deem unnecessary or burdensome to smaller institutions. This measure would help exempt these institutions from regulations like the Volcker Rule.

Additionally, several other reg relief bills are scheduled to be considered by the House Financial Services Committee this week:

  • H.R. 3192 to provide a TILA-RESPA Integrated Disclosure safe harbor;
  • H.R. 1210 to give Qualified Mortgage treatment to loans held in portfolio by the originator;
  • H.R. 1553 to provide an 18-month exam cycle for community banks with $1 billion or less in assets;
  • H.R. 1941 to create a workable exam appeals process and common-sense standards for classifying loans;
  • H.R. 1737 to reform CFPB indirect auto financing guidance; and
  • H.R. 766 to protect financial institutions and their customers from Operation Choke Point.

Lastly, media outlets across the country published stories last week about Dodd-Frank’s unhappy fifth birthday. The House Financial Services Committee kindly put together this press release with a compilation of these stories.

Dell Flash Sale


Dell is pleased to offer exclusive discounts for IBAT members, including 45% off Optiplex desktops ordered before July 31, 2015 with coupon code 15XM?498ZLDML7

Other special promotions currently available include:

  • Save an additional 10% on PowerEdge servers $1299 and more with coupon code 0N25ZQG3C75KSS
  • Save an additional 10% on Dell Precision Workstations with coupon code 26MCRQ5LQ31S20
  • Save an additional 5% on select Dell electronics and accessories with coupon code W42L1$VV$55VWZ

IBAT members save an average of 30% on orders with Dell. To access these discounts, visit the IBAT landing page on Dell’s website or contact Bryan Horten, IBAT’s Strategic Account Manager, at 512-942-9120 to order. As a reminder, whenever ordering Dell equipment please be sure to include the unique Dell/IBAT link number GS126658178.

Ready for Dove Season?


Please join us in Leadership Division Region 2 for a sporting clays tournament on August 27 at:
 

San Angelo Claybirds
Association Range
12026 US Highway 67 South
 

1:30 p.m. – Registration
2:00 p.m. – Start Time
5:30 p.m. – Barbecue Dinner (sponsored by CalTech)
 

 

(Trap, skeet, 5 stand and sporting clay ranges open at 1:00 p.m. at shooter’s expense)
Tournament with dinner: $85 per person
Tournament open to bank employees, customers, board members and sponsors.
 

Fee includes shells and meal. Shooters need to bring their own shotgun (auto, over/under or double barrel) and eye protection.
Golf/Hunting carts welcomed.
 

Sponsorships are available. Contact Joseph Thomas (Texas State Bank, San Angelo) at 325-944-7533.

Please join us in Leadership Division Region 10 for a sporting clays event on August 27 at:
 

Boswell-Porter 4-H Range in
Snook, TX
7676 County Road 247
 

3:00 p.m. - Registration
4:00 p.m. - Start Time
Prizes, dinner and drinks will follow.
 


 

The event is arranged to assist IBAT members in networking at the local level and to raise funds for the IBAT Legislative Fund in order to continue the fight in Washington. The event is open to all IBAT bankers, directors and affiliates.
 

Registration fees (include shotgun shells and dinner):
 

$125 per person (4 man team)
$25 per person for networking, dinner and drinks only (non-shooters)
Sponsorships are available at the following levels:
 

Gold: $500 | Silver: $250 | Bronze: $100

Abolishing the CFPB


The Consumer Financial Protection Bureau (CFPB), which last week “celebrated” its fourth year in existence, was hit with a barrage of scrutiny in the United States Congress. First, Senator Ted Cruz and Representative John Ratcliffe introduced legislation (S. 1804, H.R. 3118) to abolish the Bureau, saying that while the Bureau was intended to “help consumers by regulating and reigning in larger financial institutions,” in actuality, “big banks have only gotten bigger and the number of smaller banks and options for consumers have only decreased.”

Separately, Chairman Richard Shelby of the Senate Banking Committee progressed legislation that would place the Bureau within the appropriations process and replace its director-driven governance model with a five-member commission. While Shelby’s amendment is not expected to hold up in its entirety, its place in the subcommittee-approved bill provides an opportunity for debate on meaningful regulatory relief measures for community and regional banks.

In survey results released by SNL Financial last week, 33% of respondents identified the creation of the CFPB as the byproduct of Dodd-Frank that has most impacted their bank.

“Despite lacking direct supervisory power over community banks, the CFPB has left an indelible mark on the regulatory environment overshadowing community banks,” said IBAT President and CEO Chris Williston. “While we support efforts to hold the too-big-to-fail banks responsible for their misdeeds in the marketplace, we believe consumers are under equal threat by having credit availability and banking services limited by CFPB rules,” Williston added. “It’s nothing short of regrettable that the actions of the agency cannot be focused on where the real problems exist.”

New Proposed Tax


The U.S. Senate was hard at work this weekend crafting a highway spending bill that includes a plan to slash dividends paid by the Federal Reserve to member banks with more than $1 billion in assets. Under the plan, the dividend would be reduced from 6% to 1.5%, with the savings being reallocated to highway spending. The established dividend rate of 6% has been in place for more than 100 years. Member banks are required by federal law to buy and hold a set amount of stock in the Federal Reserve System. The stock may not be pledged or sold.

“Applying this tax to any bank is another blow to an industry already crushed with the costly impact of regulatory burden,” said IBAT President and CEO Chris Williston. “Lawmakers need to scrap this proposal altogether,” he added.

If you would like to weigh in on this proposal, please do so using ICBA’s customizable messaging platform.

41st Annual Convention


IBAT’s 41st Annual Convention, themed “It’s Island Time in Galveston,” will be here soon. We officially invite you to join us in Galveston, September 19-22, 2015, for a variety of educational sessions, networking events, entertainment that can’t be beat, opportunities to contribute to the IBAT PAC and keynote speakers that will make you think long after their sessions.

Keynote speaker Joe Dittmar will discuss “Lessons Learned from a Date with Destiny/An Inspirational and Historic View of 9/11/01.” This session is not to be missed as Dittmar presents an intriguing and gripping perspective on what really happened before, during and after the terrorist attacks. He will also share concepts and ideas about what we learned that day and what lessons we can continue to teach.

Registrations received on or before August 7 are eligible for early bird pricing. August 14 is the cut-off for the special room rate at both the San Luis Resort, Spa & Conference Center and Hilton Galveston Island Resort. Space is limited and will be available on a first-come, first-served basis. We encourage you to register today and secure your accommodations. Additional Convention information can be found here.

Baker Market Update: July 27, 2015


It’s the dog days again, and things are heating up. With the winter season getting much of the blame for 2015’s economic  malaise, should it then follow that summer gets the credit for macro-prosperity? Well, first let’s see if we can find some. Prosperity, that is.
 
The sellers of Existing Homes might be feeling pretty prosperous this week with the announcement that a 3.2% increase was notched in that measure last month; a pace of growth that more than tripled market expectations. Unfortunately, there’s a yin for every yang and New Home Sales got yinned down by 6.8% in June. Home prices in general got a bit of a boost as the Federal Housing Finance Agency (FHFA) announced that for May, residential property prices rose by .4%. More price data will be available next week when a new Case-Shiller Home Price Index report comes out on Tuesday. Coming out of the Kansas City Fed today, however, was a disappointing report for manufacturing’s prosperity. Their Index of Manufacturing Activity came in at a value of -7.  Minus signs are a definite yin.
 

Power of A Award


Independent Bankers Association of Texas (IBAT) has earned a 2015 ASAE Power of A Gold Award for its Teach the Teacher Program, giving Texas high school teachers, who are mandated to teach financial management to 12th grade students, an understanding of and confidence in the course material.

IBAT’s Teach the Teacher program responds to an urgent local need. Consumers in Texas rank among the lowest in average credit score (48th nationwide), household net worth and home ownership. In 2005, the Texas Legislature mandated the Texas Education Agency (TEA) that practical financial management be taught in the 12th grade within social studies/economics curricula. Because most faculty assigned to teach financial education lacked understanding/confidence in the material, the IBAT Education Foundation developed the program.

“Congratulations to IBAT for helping make the world a better place,” said Hugh “Mac” Cannon, MPA, CAE, Executive Director of ACEC of Metropolitan Washington, and chair of the Power of A Awards Judging Committee. “Their program exemplifies how associations make a difference every day – not just to the industry or profession they represent, but to society at large.”

IBAT’s Teach the Teacher Program is now a statewide program. Because of the number of community banks across the state, in both rural and urban areas, IBAT has been able to leverage community connections, school board involvement and additional resources to bring this program to each of 20 TEA Education Service Centers. Through 2014, IBAT provided the six-hour live program to 13 of the 20 regions, with plans to complete the final seven regions in 2015.

“By training teachers, who have students' trust and respect, we can dramatically improve the personal financial education outcomes,” said IBAT President and CEO Chris Williston.  “The association is attacking the national problem of financial literacy on a local/statewide level by connecting local community bankers, local teachers, local schools, and ultimately, local students.”

ASAE’s Power of A (association) Awards, the industry’s highest honor, recognize the association community’s valuable contributions on the local, national and global level.  The Power of A Awards reward outstanding accomplishments of associations and industry professionals for their efforts to enrich lives, create a competitive workforce, prepare society for the future, drive innovation and make a better world.

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