Madden v. Midland Funding

In a move that means the United States Supreme Court is considering a request to review a case that could have serious ramifications for many lending models, the court asked the U.S. Solicitor General to file a brief regarding the 2015 Second Circuit Court of Appeals decision in Madden v. Midland Funding, LLC. The Madden case involves Section 85 of the National Bank Act, which allows national banks to export the usury rate in the state where it is located. The Second Circuit held that a national bank transferring a note to a third party does not transfer its authority to charge interest in excess of the state’s usury caps of the state in which the third party is located. Thus, the third party could not charge the contracted rate if it exceeded the usury rate in the state where the borrower was located.

“We believe that the Second Circuit’s decision conflicts with the valid-when-made doctrine,” remarked IBAT Deputy General Counsel Shannon Phillips. “If reviewed and upheld by a majority of the current justices, the decision, which is currently binding in only three northeastern states, would apply nationwide and potentially disrupt online lending and all secondary markets.”

Because the Riegle-Neal Act gave state charters the same preemption authority, this could also affect state charters. Although Supreme Court briefing rules will not likely provide IBAT an opportunity to file a brief with the court, we will follow this case and report on any developments.

Staff contact: Shannon Phillips, sphillips@ibat.org, 512-275-2221

SWACHA Webinars

IBAT is proud to bring you a series of ACH webinars in partnership with SWACHA. Throughout 2016, join us for the live webinars or purchase the on-demand version of the programs and learn in your own time. For all upcoming programs, please visit our webinars pageWhen registering online, please specify that you heard about this program through IBAT.

For now, we'd like to bring your attention to the April programs.

SWACHA: Government ACH Reclamations
April 27, 2016  |  10:00-11:30 a.m.  |  Register

Reclamations of Federal Government benefit payments pose considerable liability and are among the most common sources of charge-offs for Receiving Depository Financial Institutions (RDFIs). Timely and accurate handling of these government payments is a critical competency for RDFIs to limit their liability and prevent loss. This seminar will explore government ACH processes in-depth in the unique handling requirements for reclamations. A member from the Bureau of Fiscal Services will be presenting the session on Green Book Chapter 5.

Who should attend?
ACH / branch operations personnel, operations officers/supervisors, compliance officers/personnel.


H. R. 3791 Bill Passed

Texas Congressman and House Financial Services Committee Chairman Jeb Hensarling spoke in support of community banking last week during his comments related to the successful passage of H.R. 3791, which raises the threshold for small bank holding company treatment to $5 billion. H.R. 3791 passed the House 247-171. In a press release accompanying the text of his comments, Hensarling pointed to the challenges facing community banks and small businesses that are struggling to deal with the ever-expanding regulatory pressure from Washington, D.C. 

“Wouldn’t it be nice to hear for a change that community banks are once again hiring new loan officers to serve their communities as opposed to more regulatory compliance officers to serve their Washington masters?,” Hensarling stated in his comments. “That’s how you help capitalize more small businesses and help families pay their bills, plan for the future and achieve the dream of financial independence.”

IBAT appreciates the continued efforts of Chairman Hensarling and many others in Congress to move regulatory relief provisions forward. Special thanks to Congresswoman Mia Love, the bill author, along with bill co-sponsors Congressmen Blaine Luetkemeyer, Pete Sessions, Steve Stivers and Roger Williams.

Staff contact: Steve Scurlock, sscurlock@ibat.org, 512-275-2226

Texas House Interim Hearing

The House Committee on Investments and Financial Services held its second interim hearing last Tuesday in Irving. Lyle Walden, Director of Information and Operations Services at TIB-The Independent BankersBank, represented IBAT in the portion dealing with cybersecurity issues facing financial institutions. His comments and written testimony were well received, and we appreciate his willingness to share his expertise with the Committee on behalf of IBAT. 

Additionally, the Committee heard testimony on the continued consolidation of community banks and the impact on communities across the state. Steve Scurlock, IBAT Executive Vice President, testified on this issue.

IBAT continues to be engaged on a variety of issues at the state level in preparation for the 85th Texas Legislative Session. The IBAT Legislative Committee will meet in June to set our proactive agenda and priorities. Please let us know if you have particular issues you would like to see addressed in the next session.

Staff contact: Steve Scurlock, sscurlock@ibat.org, 512-275-2226

Bank Operations Institute

Registration is now open for the 36th Annual Bank Operations Institute (BOI). We encourage bankers who want to ensure their bank's success, maximize operational efficiency and improve compliance strategies to consider attending this two-year program.

Taught by the industry’s top experts and consultants, BOI is brought to you by IBAT and the prestigious SW Graduate School of Banking at Southern Methodist University. Each of the two annual six-day sessions (Level One and Level Two) is designed for the highest faculty-student interaction and team bonding. Tailored to bank operations and administration, the program takes attendees out of their comfort zone and challenges them to see the big picture and the critical role they play in their banks' ultimate success.

This program is intended for those looking to develop, enhance and perfect their managerial competencies around the operations of community banking. Ideal attendees include operations and lending officers, cashiers and head tellers transitioning into management, branch managers and other supervisory personnel as well as future C-Suite talent wanting a better grasp of the overall operations of the bank. Register now to join us in Dallas, October 9-14, 2016, for BOI.

Staff contact: Julie Courtney, jcourtney@ibat.org, 512-275-2227

Baker Market Update: April 18, 2016

April is National Poetry Month, so what better time to recall T.S. Eliot’s description of it as also being the “cruelest month.” And while that characterization had more to do with his low mood than with the IRS, we can all relate to the sentiment. The sentiment of consumers, meanwhile, may have more in common with Mr. Eliot’s outlook than anyone would like to see. Last week, the University of Michigan’s Index of Consumer Sentiment fell unexpectedly to 89.7 from 91. The puzzle for many observers is not that it fell, but instead, why that fall was unexpected.

Read More in the Baker Market Update

Fun Fact Friday: April 15, 2016

For most of us April 15 is tax day. But today, for the employees of The First National Bank of Ballinger, it's a day to celebrate Community Banking Month and the many positive attributes of community banks. During a time of regulatory burden it is important to stop and celebrate the importance these institutions hold, not only in our communities, but also in the economy.   

Top 5 Reasons to Attend Conference

Would you like to attend the best networking, leadership and motivational conference for community bankers? IBAT’s 31st Annual Leadership Conference will be held at the beautiful Moody Gardens Resort & Spa in Galveston, June 23-25, 2016. You are guaranteed to be inspired by new ideas, motivated to get the job done and educated about how to do it. With the theme It’s Fun in the Sun: It’s FUNancial, this year’s conference is loaded with expert speakers who will help you become your bank’s strongest champion.

Here are the top 5 reasons why you should attend:

#5 Build relationships with other banking leaders without judgment or competition.

#4 Extreme ROI like no other industry conference. We focus on what matters to you, because it matters to us, too.

#3 Learn how to challenge the traditional leadership approach in “The Art of Leadership: Unleashing Your Inner Superhero” general session.

#2 You can’t beat the “Best Practices Panel Discussion and Battle” general session.

#1 Learn to think outside the box with “Disrupt: Sparking Business Transformation with Innovation” general session.

Staff contact: Julie Courtney, jcourtney@ibat.org, 512-275-2227

Commercial Banking Program

Texas A&M University’s Commercial Banking Program Class IV resume book is now available for viewing. The students featured in this resume book will graduate next month and are actively seeking post-graduation employment.

Resumes of each student are accessible by clicking on the individual photo. If your bank is looking for junior-level talent, we encourage you to use the resume book as a resource. Please contact Jennifer Garcia, Commercial Banking Program Coordinator, with any questions or if you’d like additional information.

Staff contact: Steve Scurlock, sscurlock@ibat.org, 512-275-2226

Best of Community Banking Awards

By now, you should have received the 2016 Best of Community Banking (BOCB) Awards mailing that includes the brochure and entry form. 2016 marks the 25th year of this award competition, which provides an opportunity for you to showcase your bank, employees and officers, and the contributions made to keep your local community thriving and prosperous.

Categories include architectural design, community service, financial literacy and marketing. Entries are due to IBAT by 5 p.m. on Monday, June 27, 2016.

Special thanks to this year’s sponsors:

  • Bank Compensation Consulting
  • BKD, LLP
  • CalTech
  • Federal Home Loan Bank
  • Fenimore, Kay, Harrison and Ford, LLP
  • Garland Heart
  • Rogers-Ford, L.C. Architecture and Interior Design
  • TransFund

All entries will be displayed during the IBAT Annual Convention at La Cantera Hill Country Resort in San Antonio, September 24-27, 2016. Gold Eagle Award winners will be recognized during the Best of Community Banking Awards luncheon on September 26, 2016.

Staff contact: Mae Beth Palone, mbpalone@ibat.org, 512-275-2219

De Novo Efforts

Last week, the FDIC hosted a national conference in Washington, D.C. to address challenges in the community bank sector. Several Texas community bankers and senior IBAT staff were in attendance. Four panels of bankers, regulators and industry experts focused on the community banking model, regulatory developments, technology, ownership structure and succession planning. Additionally, FDIC Vice Chairman Tom Hoenig discussed his legislative initiative to create a two-tiered regulatory system based upon business model, risk profile and maintenance of a 10% equity-capital ratio.

Chairman Marty Gruenberg addressed FDIC efforts to promote tiered regulation, the provision of technical assistance and fostering an environment to encourage de novo bank charters. Key among these initiatives is the reversal of a crisis-era rule extending the “penalty box” for de novo institutions from the existing seven years back to three. Additional information regarding the FDIC’s de novo efforts can be found here.

“We are encouraged to see the FDIC moving aggressively to address the overwhelming level of regulatory burden facing community banks across the country,” stated Chris Williston, IBAT President and CEO. “We look forward to continuing our dialogue with the FDIC, other federal regulatory authorities and, of course, our elected officials to bring some semblance of reason to a broken system.” 

Staff contact: Steve Scurlock, sscurlock@ibat.org, 512-275-2226

Community Banking Month

Community Banking Month in Texas is among us. IBAT wants to help our members celebrate and spread the word. We know many of your banks host events throughout the month. To complement those efforts, we’ve produced a Community Banking Month ad encouraging listeners to find a local bank in their area. It can be used as a stand-alone effort as well.

If you’re interested in placing the ad on digital or terrestrial radio in your town, the IBAT Communications Team will be happy to help. Listen to the ad, and let us know how we can help you use it in your community.

Staff contact: Christopher Williston, clwilliston@ibat.org, 512-275-2208

The Future of Texas Communities

Over the weekend, the Longview News-Journal featured an eloquent op-ed entitled “Banking on the future of Texas communities,” written by IBAT Chairman Rogers Pope, Jr. In the op-ed, Pope, who serves as Vice Chairman and Chief Executive Officer of Texas Bank and Trust in Longview, recognizes Community Banking Month, discusses the importance of community banks in our economy and then takes a personal look at what being a community banker means to him. He also addresses the regulatory burden imposed on community banks due to the actions of too-big-to-fail institutions and the immediate need for a tailored regulatory structure.

Pope poignantly states, “The thing I love most about my job – and I suspect the same is true for almost every community banker – is the opportunity it provides to serve others. I have had more than one customer through the years say to me, 'Thanks for helping to make my dream come true.' Wow! What a privilege it is to be, in some small way, a part of the 'dream-making' business. But what a responsibility it is as well. Trust me when I tell you that community bankers are men and women who care deeply about this responsibility and do not take it lightly.”

He concludes by saying, “Service, relationships, security, integrity – those are the cornerstones upon which the foundation of community banking has been and will continue to be built.”

We couldn’t have said it better ourselves. 

Staff contact: Chris Williston, cwilliston@ibat.org, 512-474-6889

CFPB Guides

Following the CFPB’s recent changes to residential mortgage rules, the Bureau has released new compliance guides for each of the rules below. Click to download the updated guides for:

On Thursday, April 14, 2016, IBAT will host a webinar from 11:30 a.m. to 1 p.m. that examines the changes to the CFPB’s residential mortgage rules, in order to assist community banks in understanding what the changes mean for their bank. Beyond a simple examination of the rules, the webinar will include additional guidance on mortgage lending product options for community banks. Registration is still open for the webinar Parsing QM, ATR & Small Creditor: What has Changed and How That Affects Your Bank's Options.

Staff contact: Kelly Goulart, kgoulart@ibat.org, 512-275-2231

Dell Q1 Discounts

Don't forget about Dell's savings for IBAT member banks, bank employees and customers with deals on PCs, workstations and servers. The offers below will be available until May 1, 2016.

In honor of community banking month, Dell has increased the original 35% discount on OptiPlex and Latitude PCs to 45% for the remainder of April. Don't miss out on this and other amazing offers, including:

  • 45% off select OptiPlex or Latitude
  • 40% off select PowerEdge Servers $1299 and up
  • 10% off select XPS and Inspiron PCs
  • 40% off Dell Precision Workstations 

On average, IBAT members enjoy savings of approximately 30% on each order. Please visit Dell's website to maximize your savings. Be sure to include the unique Dell/IBAT link number GS126658178 when placing your order.

Staff contact: Curt Nelson, cnelson@ibat.org, 512-275-2240

Baker Market Update: April 11, 2016

Spring has sprung and temperatures are heating up right along with the never-ending political rhetoric that presidential campaigners so love. Oval office aspirants do not, however, have a monopoly on rhetorical musings. The current and three most recent occupiers of the chair at the head of the big, shiny table met at a gathering in New York City just last [week] to tell everybody that all is well. To paraphrase Janet Yellen and the three wise men that preceded her at the Fed, the U.S. economy is on a solid course and we don’t really need to worry about any bubbles bursting.  Ben Bernanke weighed in with the soothing reassurance that he didn’t think that our 2016 economy had any greater chance of lapsing into recession than did the economies of the last two years.  It is hoped that his comforting words will assuage the concerns of those with different perceptions.

Read more in the Baker Market Update