CECL Model Guidance

During a recent Financial Accounting Standards Board (FASB) meeting, two key decisions were announced related to the Current Expected Credit Loss (CECL) model. The FASB is currently discussing the proposed Accounting Standards Update, Financial Instruments-Credit Losses (Subtopic 825-15), with the goal of developing final guidance for the impairment of financial assets. The March 12 meeting minutes call for the final ASU to be issued in the second half of 2014. 

The other key decision made states that the current CECL model should apply to all financial assets. This means all public and private financial institutions will be subject to the new requirements once announced and implemented.

The proposed CECL model, originally released in December 2012, has been a topic of much debate. In its present form, it will require institutions to recognize an immediate allowance for credit losses that represents all expected losses. The OCC’s Thomas Curry is on record stating the proposed model will likely increase a bank’s ALLL reserve by 30-50 percent.  In October of 2013, IBAT weighed in with FASB on the proposed rule via a comment letter, calling the proposal “complex and cumbersome.”  We are continuing efforts to protest this burdensome and unnecessary “piling on” to community bank regulatory burden and IBAT members are encouraged to keep up the pressure on FASB by submitting comment letters of their own.

IBAT Associate Member, Sageworks, has developed a FASB CECL preparation kit to assist community bankers in learning more about the data requirements and to prepare for the change.  Sageworks also provided content for this article.  It is important to note that the preparation kit is based on the CECL as it is proposed, and changes are (we hope) likely in the final rule.  Click here to download the kit.  

2014 Leadership Conference

Last week, we sent an email out to our members announcing that registration is open for the 29th Annual Leadership Conference, taking place June 26-28 in San Antonio. The IBAT Leadership Division also provided the full agenda and speaker line-up for the Conference.

Our featured speakers include:

  • Daryl "Moose" Johnston, 3x Super Bowl Champion, Dallas Cowboys;
  • Carmen Medina, Former Deputy Director of Intelligence, Central Intelligence Agency; and
  • Thom Singer, Author, Some Assembly Required.

The Conference will take place at the JW Marriott San Antonio Hill Country Resort & Spa. You may reserve your room with the hotel directly, by clicking here. For detailed information, please visit our website.

April Consumer Tips

With April's Financial Literacy Month under way, IBAT has begun to distribute Consumer Tips - Personal Finance Principles Every Child Should Know.  

This month's tips were drafted by Judy Haley, a retired high school teacher from Longview, TX, and faculty member of the IBAT Teach the Teacher Program™, which provides instructional methods to engage teachers and students in practical conversations about personal financial management. She is also a past winner of the IBAT Teaching Excellence in Financial Literacy Award.

As always, IBAT members are encouraged to distribute the tips to their local papers, in bank publications or in any other way you'd like. A customizable version of the release is available upon request.

Corporate Cybersecurity

Last week a federal judge held that the United States Federal Trade Commission (FTC) has the authority to regulate the cybersecurity practices of many U.S. corporations.

The ruling came in a case in which the Wyndham hotel chain was challenging the right of the FTC to regulate data security practices under Section 5 of the FTC Act, which prohibits “unfair” or “deceptive” trade practices.  The FTC has been increasingly active in this area in recent years, handing out monetary penalties and, in some cases, twenty years of mandatory third-party audits of privacy practices. 

While community banks are not affected by the ruling because they are not regulated by the FTC, it stands as a critical setback for retailers, already under increased scrutiny following headline data breaches over the past six months. 

The FTC has failed to publish a standard set of data security practices, leaving retailers no recourse but to review the Commission’s earlier complaints against companies to understand expectations. 

LD Regional Meetings

The IBAT Leadership Division has several upcoming meetings and we'd like to invite you to join in on the networking, fellowship and education.

On April 17, Region 5 will partner with the Northeast Texas Bankers Association for a golf tournament and dinner at the Yantis Country Club.  Guest speaker will be Steve Scurlock, who will present an update on federal legislation and regulations affecting your bank. For more information or to register, click here.

It's springtime in the Panhandle and time to get those golf clubs out after a long winter.  Join your colleagues from Region 1 at the Ross Rogers Golf Complex in Amarillo for an afternoon of golf, with dinner being served after the tournament. For more information or to register, click here.

The Fort Worth and Dallas regions (Region 3 and 4) are teaming up on May 22 to present a luncheon at the Hackberry Creek Country Club in Irving. David Miller, founder of The Spirit Ranch, will speak on the Four Cornerstones of Leadership.  Lunch is complimentary for all bankers, members of the Leadership Division and luncheon sponsors.  For more information or to register, click here.

Second Lien HE Loans

The Texas Supreme Court’s denial of claim in Porterfield v. Patton et al., issued last week, effectively saved second lien home equity loans in the state. The Court correctly denied Porterfield’s claim that Patton, the substitute trustee under a purchase money deed of trust, should have paid some of the cash proceeds from a foreclosure to the homeowner (Porterfield) and not to the home equity lienholder (America’s Servicing). Porterfield claimed that:

  1. America’s Servicing must obtain a court order before it may foreclose its lien, and
  2. The deed of trust granted the home equity lender a lien against the homestead property only and not against excess cash proceeds remaining after the foreclosure of the senior deed of trust.

The trial court ordered Porterfield recover nearly $300,000. The defendants appealed, IBAT filed an amicus curiae brief supporting the defendants, and the appeals court reversed the trial court’s decision and rendered a take-nothing judgment against Porterfield. The Texas Supreme Court has now affirmed the appeals court ruling by denying Porterfield’s Petition for Review.

Online Security

Last week the media was abuzz with news of the Heartbleed bug, an apparent weakness in internet security protocols which allows hackers to peek on packets of secure information transmitted between users and web servers. CalTech, an IBAT Associate Member, reports that they did not find many of their clients' “in-house” servers or services that were affected, but suggested checking services provided by other 3rd party vendors.

CalTech recommends the following steps to determine whether any of your other systems might be infected:

  1. Browse here and enter in the domain name you would like to check. The report page will appear and in the summary it will state one of the following:

    "This server is vulnerable to the Heartbleed attack. Grade set to F. (Experimental)”
    “This server is not vulnerable to the Heartbleed attack. (Experimental)”

  2. If a system is vulnerable to the Heartbleed bug, then contact that vendor for an update on when their systems will be patched. They can also provide to you any additional actions you should take to protect your organization.

Additionally, the FFIEC and IBAT Endorsed Service Providers Dell SecureWorks and Deluxe published advisory actions on this issue

Twitter 101

Last year, the IBAT Strategic Planning Committee charged staff with developing resources to help community bankers better understand social media. In particular, the committee identified Twitter as an area of interest for bankers to consider due to its value for grassroots interaction with lawmakers. As a result, IBAT staff have developed five short instructional videos to help community bankers answer the basic questions, “What is Twitter?” and “How do I use it?”

All of the videos can be found online here. Or, you can access the videos individually here:

All of the videos are 1-3 minutes in length. If you have suggestions for topics to be covered in future videos, please forward them to Christopher Williston.

Baker Market Update: April 11, 2014

In an age characterized by the instantaneous global distribution of information; in an age where high-frequency traders look for timing advantages measured in nano-seconds; in an age where waiting more than five seconds for Google to answer a question is “forever”, it seems incongruous that something that occurred weeks ago could have any contemporaneous relevance. And then there’s the FOMC. Wednesday’s release of the post-mortem of the Committee’s March meeting still managed to influence financial markets. The new news about the old news provided comfort and reassurance to those market participants still wary of a Central Bank they perceive to be transitioning to a more restrictive monetary... Read more in the Baker Market Update

Lending Compliance Summit

Join IBAT's general counsel, Karen Neeley, at the 12th annual Lending Compliance Summit.  This commercial and consumer lending summit will provide an overview of recent regulatory changes, litigation of interest, as well as practical recommendations for implementation at community banks, including:

  • Fair Lending - There are a myriad of commercial and consumer Fair Lending issues, including auto dealer paper, small loan programs, loan officer discretion in lending, rate sheets, and the safety and soundness implications of deciding to not make HPMLs, to name a few.  We will help you identify and understand the issues and give you the tools to operate compliant lending programs.
  • Home Equity Lending - Learn the current status of home equity lending in light of recent significant court cases.  We will explore other issues including the differences between the allowable fees in Qualified Mortgages and the Texas home equity laws.
  • Unfair, Deceptive, Abusive Acts and Practices - We will help you identify which practices may get you in trouble, how to avoid them, and what to do when you hear your regulator speak one or more of these dreaded words.

Integrated Disclosure - The CFPB has issued its final Reg. Z/RESPA Integrated Disclosure that goes into effect in late 2015.  We will discuss the disclosure and tell you what you should be doing to get ready for its implementation

Congrats Cynthia!

IBAT would like to congratulate Cynthia Dopjera on being selected as one of the nine finalists for the 2014 "Outstanding Women in Banking and Financial Services." A luncheon celebration to acknowledge the finalists and announce the honorees will be held on April 22, 2014, from 11:30 a.m. - 1:00 p.m.. To be part of this special event, or to learn more, please click here

Networking Event for AMs

The IBAT Associate Member Advisory Council is proud to present the Dallas area Associate Member Complimentary Area Networking Event on May 22. We encourage all IBAT associate members to take advantage of this FREE opportunity to experience associate member "speed dating," with incentives, and opportunities to:

  • Increase your prospect list;
  • Enhance relationships;
  • Continue to build your network; and
  • Get sales call tips from a community banker.

You will get a chance to learn about the IBAT Leadership Division and its regional meetings, as well as provide IBAT with feedback on how we can help you get more out of your membership.

We hope to see you in Irving on May 22!


Last week, the CFPB released the Small Entity Compliance Guide for the TILA/RESPA Integrated Disclosure Rule. The guide is designed to help you complete the integrated TILA/RESPA disclosures when they become effective on August 1, 2015. The guide may be helpful in the months leading up to the effective date, as your bank considers how to implement the disclosures. The guide also includes all of the model forms.

The CFPB is currently working on a companion guide with details about completing the new integrated disclosure forms. 

Additionally, the CFPB's website has Loan Estimate and Closing Disclosure forms in both English & Spanish and samples for different loan types.   

The Tipping Point

Last week, the Wall Street Journal (WSJ) explored the current trend of mergers and acquisitions among community banks and the high cost of regulatory burden at its core.

"In a period when low interest rates are squeezing small banks, the costs of adhering to new regulations are taking a toll. Executives from at least a half-dozen small banks that have agreed to be acquired in recent months said the increasing regulatory burden was a factor in their decisions," wrote WSJ reporter Michael Rapoport.

In response to the article, IBAT President and CEO Chris Williston penned a letter to the editor calling upon lawmakers to "take some meaningful steps to create a two-tiered regulatory system."

"Community banks are quickly approaching, if not already on the wrong side of 'the tipping point,'" Williston said.  "Unfortunately, the primary force working against [the community banking] model is emanating from the 202 area code."

Over the past year, IBAT has called upon lawmakers to take action towards regulatory reform, rather than continuing to wax poetic on the importance of community banks while failing to take any meaningful steps towards ensuring their survival.

Congressional Visit

While we have a great group of Texas community bankers and friends headed to D.C., once again, there's always room for you!  Deadlines are fast approaching, and March 28 is the last day we can guarantee rate or availability at the Omni Shoreham Hotel.

The IBAT trip is again being held in conjunction with the ICBA Washington Policy Summit, and attendees will have the opportunity to participate in meetings with influential lawmakers and regulators throughout the week.  We are pleased to report that both of our Texas Senators are confirmed for our customary group meeting, and we are working on finalizing the schedule with several additional prominent members of Congress.  

"Our annual trip to Washington is one of the most meaningful things we do to make a difference," said Chris Williston, IBAT President and CEO. "Community bankers are a powerful and respected force, and nothing makes a bigger statement than to have an office full of busy people who took the time to travel to D.C. to tell their story."

Will you consider joining your colleagues in D.C.?  Registration and additional information is available on our website, or call us at 800-749-4228  

April Discounts from Dell

Due to the popularity of Dell's March promotion, IBAT members can enjoy an extended offer of 40% off all Precision workstations during the month of April. Remember that the benefits of the IBAT endorsement of Dell can be enjoyed by IBAT bank members and their employees!  

Visit Dell's IBAT Member Portal for the latest deals and stackable coupons.  

For more information on these promotions, please visit Dell's website or call 1-800-757-8442 and mention member link ID: GS126658178. For orders of more than 5 units, please reach out to Denney James at denney_james@dell.com or 512-728-8763.