Data Breach Update

Last week’s news of a high profile data breach of Tennessee-based Community Health Systems (CHS) has potential implications for Texas community banks and their customers. The company, which owns and operates hospitals in 26 states (including Texas), fell victim to malware which exploited network vulnerability originating from the Heartbleed security flaw. The breach resulted in the loss of critical information on 4.5 million patients including names, birth dates and social security numbers. No medical records or credit card numbers were compromised, according to a company release.

Per the CHS website, it owns or operates 19 hospitals in Texas, including locations in Abilene, Alpine, Big Spring, Brownwood, Cedar Park, College Station, Corsicana, Granbury, Hillsboro, Jourdanton, Laredo, Longview, Lufkin, Mesquite, San Angelo, Tomball, Weatherford and Victoria.

“The case is a warning sign for banks to carefully check all computing devices connected to their networks for vulnerability to Heartbleed and to renew their diligence in monitoring customer accounts for signs of fraud,” wrote Penny Crosman of American Banker. Crosman’s article also includes practical considerations for bankers to take next steps in ensuring that network-connected devices and third-party applications don’t pose a potential risk to bank systems.

Save the Date: Winter Summit XV

We’re a “go” for IBAT Winter Summit XV! The top regulators are in... the attorney panel is back... and we hope to see you in South Lake Tahoe February 8-10, 2015. A unique education value in a relaxed setting at a terrific venue.

Watch for more information and registration information on this popular program. 

Bitter Frosting on a Poisonous Cake

Last week, the National Retail Federation and other retail groups filed a petition asking the United States Supreme Court to take up the ongoing case regarding the Federal Reserve’s rule implementing the Durbin interchange amendment of the Dodd-Frank Act. 

You’ll recall that the Fed’s rule was struck down in a July 2013 ruling, which determined that the agency set the cap on debit card transaction fees too high by taking into consideration factors outside of the statutory guidelines.  In March, a D.C. Circuit Court of Appeals overturned that decision, siding with the Fed.

“While fully anticipated, IBAT is disappointed that this ‘attorney annuity’ continues to be litigated,” said Chris Williston, IBAT President and CEO. “The Durbin Amendment is bitter frosting on the poisonous cake that is Dodd-Frank.  We are hopeful that reason will prevail if and when the Supreme Court reviews this matter, but would very much prefer for Congress to address and correct this and other damaging sections of Dodd-Frank in an expeditious manner.”

Call to Action

As reported earlier in the month, IBAT President and CEO Chris Williston has put out a call to action to all community bank employees, directors and shareholders to sign an ICBA-initiated petition calling for a simplification of the quarterly call report. Specifically, the petition requests the regulators consider allowing well capitalized community banks to submit the call report short form at the end of March and September. More than 10,000 community bank supporters across the country have stepped up to participate in the petition thus far, but further participation is needed.

“Federal regulators are under the false assumption that the banks’ core processing systems automatically prepare the call report,” Williston said. “They are astounded when they learn that it is taking community bank personnel hundreds of hours to complete the work each year.”

Williston noted that the standard call report for credit unions is only 25 pages long, while the bank call report has swelled to 80 pages, requiring a 600 page set of instructions to complete.

IBAT thanks all those who have already signed the petition. We especially thank H.L. “Buddy” Baker and the board of directors of the First National Bank of Lake Jackson, for their resolution in support of the IBAT and ICBA petition.

2014 Bank Lending Institute

The Bank Lending Institute (BLI)™ leads the field in preparing community bankers for banking in the 21st Century.  Guided by the industry’s top regulators and banking professionals, BLI gives community bank lenders the tools necessary to serve their customers while effectively  managing their institution’s risk and enhancing its profitability.  Here the emphasis is on practical, real-world issues and solutions.  During the first year, BLI takes students through the “nuts and bolts” of lending offering techniques to better understand the borrower and his needs. The second year builds on that knowledge base by covering specific types of lending. It helps elevate lenders to a new level of strategic thinking and presentation.

Click here to learn more or register here

Baker Market Update: Aug. 25, 2014

Late summer is upon us, the kids are heading back to school, and the baseball pennant races are heating up. There are two sets of protagonists in particular that are headed for a major showdown, and it’s got nothing to do with Milwaukee vs. St. Louis. The clash between the Yellen Doves and the Plosser Hawks in the Central Bank League is shaping up to be a classic confrontation that may make all the other rivalries look tame. The release [last] week of the most recent FOMC minutes shows that oddsmakers can no longer ignore the growing momentum of the surging Hawks as they point to improving economic performance and growing threats of asset bubbles as reasons to dethrone the Doves and Ms. Yellen’s easy-money style. While still outnumbered, the scrappy Hawks seem to be slowly bringing in a few converts off the bench.

Read more in the Baker Market Update.

Hotel Deadline

The hotel reservation deadline for IBAT's 40th Annual Convention has been extended through Monday, August 25, 2014. All hotel reservations must be made through IBAT, by either registering online, or filling out the paper registration form. The hotel is not accepting reservations for the IBAT Convention directly.

Rooms cannot be guaranteed after the August 25 deadline. If you have any questions, please do not hesitate to contact our registrar, Leslee Walker, by calling 512-474-6889 / 800-749-4228 or emailing her at lwalker@ibat.org. She will be happy to assist you.

TAG Conference

We're very excited that The Advisory Group (TAG) is bringing their annual conference to San Antonio September 14-17, 2014!

There is much excitement surrounding this year’s conference, especially the speakers who have signed up to run the education sessions. Many of the presenters will lead discussions around branch transformation, managing operational complexity and successful technology deployment and implementation. One of IBAT’s own members, Gene Erwin, SVP Retail Banking from Guaranty Bank & Trust, will host a branch transformation session, A New Approach to Customer Service.

The conference is a great opportunity to preview the latest industry technologies, get up to speed on industry trends and network with your peers and Diebold team members.

Learn more about the conference and register today!


In a recent advisory, the Financial Crimes Enforcement Network (FinCEN) provided instruction to U.S. financial institutions on promoting a culture of BSA/AML compliance. The suggestions stemmed from recent enforcement actions, from which FinCEN gleaned recurring themes for banks’ consideration, and included:

  • Involve bank leadership: Create tailored BSA training for the institution’s leaders and ensure they set the right tone by supporting BSA/AML training for all employees.
  • Don’t compromise compliance for revenue: Make sure your compliance staff have sufficient authority and autonomy to do what’s right for the institution.
  • Share information throughout the organization: There is information in various departments of a financial institution that may be useful and should be shared with compliance staff.
  • Invest in compliance: Leadership should invest in the human and technological resources necessary to support BSA/AML compliance.
  • Test your program: Subject your program to testing by an independent and competent party.
  • Understand how BSA reports are used: Better understanding enables better reporting.

Click here to download the full advisory article. To see IBAT's schedule of upcoming BSA/AML cluster programs, click here.

2014 PAC Auction

Over the last several weeks, we’ve highlighted a number of ways that you can support the IBAT Political Action Committee (PAC) during IBAT’s 40th Annual Convention in Fort Worth next month. But, no event is more anticipated than IBAT’s annual live and silent auction.

Get a leg up on the competition by scoping out a number of the items, now available for viewing online, before you arrive in Fort Worth.

Also, don’t forget that, even if you can’t be with us in Fort Worth, you can still have a shot at winning $5,000 cash in our Dream Vacation contest. Click here to buy your tickets.

Director Education

The Certified Community Bank Director Program (CCBD) will be held October 30-November 1, 2014 at the Cox School of Business on the campus of Southern Methodist University. The CCBD designation is a collaboration of and is administered by IBAT and the Southwestern Graduate School of Banking (SWGSB) Foundation. A comprehensive curriculum has been created to address all areas of bank directorship – from duties and responsibilities to the foundations of bank finance.

IBAT also offers a bank director series of webinars for live viewing, digital download or CD-Rom receipt. Upcoming programs include:

Clay Shoot Events

IBAT Leadership Division Regions 10 and 2 are hosting sporting clay events on August 27 and August 28, respectively. These events are organized to help community bankers network at the local level and to help raise funds for IBAT's Legislative Fund in order to continue the fight in Washington.  

Both events are open to bank employees, directors and sponsors. If you are not interested in attending the clay shooting part of the events, you are welcome to attend the networking and dinner portions of the day.

We hope you can join us in Region 10, Region 2, or both!

The New FICO Score 9

Earlier this month FICO announced that the new FICO® Score 9 introduces a more nuanced way to assess consumer collection information, bypassing paid collection agency accounts and offering a sophisticated treatment differentiating medical from non-medical collection agency accounts. The intent is to ensure that medical collections have a lower impact on the score, commensurate with the credit risk they represent. FICO’s press release says that these enhancements help lenders because they result in greater precision.

"Unfortunately, the release of a new FICO scoring model does not automatically result in a change of credit scores for the consumer when they go for a loan. The lender must also use the new FICO model,” said Eddie Johansson, President of Credit Security Group and instructor in IBAT’s Teach the Teacher Program™ and Teach the Lender Program™.

"The only scoring model that matters to the borrower is the one their lender is using. And most lenders are not using the latest FICO model now. In the mortgage loan industry, the major factor is the model Fannie Mae and Freddie Mac use. Both currently use models that are ten years old or older - several generations behind FICO's most recent release,” Johansson added.

New Leadership at TDSML

New leadership was ushered in last week at the Texas Department of Savings and Mortgage Lending (TDSML). Nearly 150 savings executives and industry practitioners gathered in Austin to celebrate the tenure and service of retiring TDSML Commissioner Doug Foster and to welcome new Commissioner Caroline Jones.

The Independent Bankers Association of Texas (IBAT), Texas Bankers Association (TBA) and the Texas Mortgage Bankers Association (TMBA) jointly sponsored a reception in their honor at the Austin Club. Foster was presented with a quilt embroidered with all the names of the state savings banks as well as a resolution commending him for his public service. “IBAT has enjoyed working with Commissioner Foster and we congratulate Ms. Jones on her appointment,” said IBAT President and CEO Chris Williston. “Commissioner Jones will be an asset to the regulatory system in Texas,” he added.

Jones will make her first formal appearance and introduction to the IBAT membership at IBAT’s 40th Annual Convention in Fort Worth in late September, as part of the State Bankers Regulatory Roundtable.