Texas First Donation

Employees of Texas First Bank in Texas City joined efforts to assist victims of the West fertilizer plant explosion in April, adding more than $11,000 to the Texas Bankers Disaster Relief Fund.  

The contributions of Texas First Bank employees will be added to the $143,533 presented to Charles Nemec, President and Chief Executive Officer of POINTWEST Bank, and Dalbert Thiele, President of The State National Bank at a presentation in West on May 31.

"After recent hurricanes, Texas First employees have been all-too-well associated with disaster," said President and CEO Chris Doyle, "we hope in a small way this helps in the healing process for West."

Operations Compliance Summit

There's still time to register for the June 20-21 Operations Compliance Summit at the Sheraton Hotel in Austin! This timely educational seminar will benefit anyone responsible for operations and compliance in IBAT member banks. Among the many issues to be discussed, we'll cover:

  • The current BSA/AML environment and ongoing changes;
  • New Remittance Rules;
  • Employment Law;
  • Account Documentation and Operations Issues; and
  • Emerging Technology.

Click here to learn more or register now to attend the Summit!

Independent Bank

MCKINNEY, TX, June 6, 2013— Independent Bank Group, Inc. (NASDAQ: IBTX), the holding company of Independent Bank, celebrated the opening of its “southern headquarters” Tuesday night in Austin.

The new building in central Austin, 1011 West 40th St., Austin, TX, 78756, will serve as a hub for Independent Bank Group’s central Texas operations under the direction of Brian Hobart, Vice Chairman and Chief Lending Officer. On April 22, the new location officially opened its doors for business, housing a full-service branch, a regional commercial lending center, a mortgage operation and tenant lease space.

“I’m excited about the important role this new location will play for the bank,” Hobart said. “The new facility will allow us to build upon the strong relationships formed in the Austin market and tap into what we believe are tremendous opportunities available in central Texas.”

Hobart said all five Independent Bank locations in the greater Austin area will benefit from the centralized location created to meet the needs of customers in Austin and surrounding communities.

David Brooks, Chairman and CEO of Independent Bank Group, said its Austin location is designed to provide central Texas the same “strong foundation and balanced structure” the company values on a macro level.

“Independent Bank-Austin is positioned to be the bank of choice across three key areas of our business,” Brooks said. “The location is centrally located and gives us the ability to meet Austin’s mortgage, commercial and personal banking needs under the direction of a dynamic leader in Brian, who is enthusiastic about bringing our central Texas bankers together under the same roof.”

Guests at the event were treated to a cocktail style affair and toured the three story location. Designed by Jim Wilson Architects, the building contains many energy efficient features and achieved Silver LEED Certification. Working with Ten Eyck Landscape Architects and Austin artist Lance Letscher, Wilson’s design included a focus on stability, balanced with the unique “casualness” of Austin.

“Our hope is for this project to serve as a bridge between the two personalities of Austin,” Wilson said. “To achieve this goal, the north half of the building is clad in local Texas limestone, while the back half is sheathed in metal, balancing the commercial intensity of the east with the slower-paced, more residential area to the west.”

Member FDIC, Equal Housing Lender

About Independent Bank Group, Inc.

Independent Bank Group is a bank holding company headquartered in McKinney, Texas. Through its wholly owned subsidiary, Independent Bank, the Company provides a wide range of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals.

Independent Bank operates 29 banking offices in 26 communities in two market regions located in the Dallas/Fort Worth metropolitan area and the greater Austin, Texas, area. As of March 31, 2013, the Company had total assets of approximately $1.764 billion, total loans of approximately $1.422 billion and total deposits of approximately $1.415 billion. Visit independent-bank.com or call 972.562.9004 for more information.

Photo From Left to Right: Brian Aynesworth, Board of Directors, David Brooks, Chairman & Chief Executive Officer, Allen Cowden, Torry Berntsen, President & Chief Operating Officer

Patent Trolls Strike Again

DataTreasury Corporation (DataTreasury) is at it again. On May 28, 2013, the so-called "patent troll" company filed three federal patent infringement lawsuits in the Eastern District of Texas against imaging and payment processing software companies and against several of their bank customers. DataTreasury's patents involve methods for remotely capturing and centrally processing document images and data.  

One week after DataTreasury filed these suits, the Obama Administration - saying that patent trolls cost the economy billions of dollars and undermined American innovation - released a study on the issue, announced executive actions, and called for legislative action, including many provisions called for by IBAT and ICBA members in Congressional visits earlier this year.  

The Administration estimates that in 2011 victims paid patent trolls $29 billion and that in 2012, lawsuits by patent trolls accounted for approximately 62% of all patent lawsuits.  This American Life, a weekly hour-long radio program produced by public radio station WBEZ in Chicago, recently did a follow-up program on patent trolls entitled, "When Patents Attack... Part Two!", providing excellent insight into the patent process and the rise of the patent trolling.

Week in Review - June 7

Like fidgety schoolchildren anxiously awaiting the start of summer vacation, market participants spent [last] week in nervous anticipation of [Friday] morning's jobs report from the Bureau of Labor Statistics. Well, fidget no more. In fact, a yawn might be more in order.

With the Labor Force Participation Rate nudging itself upward to 63.4% from 63.3%, the Unemployment Rate ticked up a tenth to 7.6% even though Non-Farm Payrolls rose by 175k, slightly beating market expectations. Last month’s initially reported gain of 165k was, on second thought, only 149k as those results were downwardly revised. Despite the increase in payrolls, there was no commensurate increase in pay as Average Hourly Earnings were reported unchanged for the month... Read more in the Baker Market Update.

Biggert-Waters Flood Insurance Law

Many community bankers have expressed concern about the implementation of the Biggert-Waters flood insurance law, which expands flood zones to include many new coastal and inland areas and could result in dramatic flood insurance rate increases.  

Last week resulted in the first legislative success, led by Congressman Bill Cassidy (R-LA), the passage of an amendment on the Department of Homeland Security Appropriations legislation in the House of Representatives to delay implementation premium adjustments in Section 207 of Biggert-Waters.

Senators Thad Cochran (R-MS) and David Vitter (R-LA), yesterday introduced The Responsible Implementation of Flood Insurance Reform Act, which would delay the period of phasing-in rates, give flexibility for state and local governments to assist with subsidizing flood insurance, and reform the Federal Emergency Management Agency (FEMA) flood mapping procedure.

Senator Mary Landrieu (D-LA) also offered an amendment to the Farm Bill that would delay premium increases for three years. Although the amendment ultimately did not receive a vote due to parliamentary procedures, it received significant attention on the Senate Floor and in the national media, and has helped move the process forward and raise awareness of the issue.

IBAT will continue to work with the Texas delegation to push for reasonable reforms and affordability of this critical program.

2013 Leadership Conference

The 28th Annual IBAT Leadership Conference kicks off this week at the Horseshoe Bay Resort.  A record-setting group of attendees, including 99 first-timers, will be on hand Friday, as Duck Dynasty's Jase Robertson takes the stage (and sticks around for photos and autographs to follow). Attendees of the conference will also be treated to three days of industry-specific education, inspiring leadership lessons and relationship building with fellow community bankers.

Even if you can't make it to Horseshoe Bay, follow all of the action with the Twitter hashtag #LDC13 or on the Leadership Division Facebook page.

Safe Deposit Boxes

“Safe deposit boxes are obsolete, soon to be history, fading away fast, loss leaders, relics from the past and on their way to oblivion.” These are several of the negative and totally incorrect statements made recently in a news story published by a large New York business news publication.

The reporter who wrote this story called me before publishing his safe deposit box article and requested answers to numerous safe deposit questions. Unfortunately he omitted all of my positive comments and the beneficial aspects of renting safe deposit boxes to consumers. These deletions and numerous incorrect statements caused many of my nationwide clients to suggest that I write a rebuttal article with the proper safe deposit box information.

Bankers Interviewed

Before writing his article, in addition to me, the reporter also interviewed many New York bankers, primarily from the larger nationwide mega banks. He received nothing but negative comments and an entirely different and incorrect perspective regarding safe deposit boxes. These bankers told him they were phasing out safe deposit boxes because consumers no longer wanted or needed them. Due to this lack of consumer demand, they considered safe deposit boxes as unnecessary, unimportant customer service and not a beneficial profit center. They also decided they would not devote any additional time, money or resources to train their employees or secure these boxes properly. To save money, many of these mega banks have converted their safe deposit box service into a less expensive, but extremely dangerous “Self-Service” vault access system that completely eliminates staffing, renter’s signature identification, historic dual control key locks and proper vault access requirements. Due to these actions, I am aware of at least fifteen very large box renter disappearance claims which will soon create significant losses, large legal fees and very expensive safe deposit box litigations. This is obviously the reason these institutions have decided to discontinue this service.

Box Contents Not Insured

Fortunately, the reporter did correctly inform his readers that in case of a burglary, fire, flood, hurricane, tornado or a mysterious disappearance, safe deposit box contents are not insured by FDIC, NCUA or any financial institution. Unfortunately, he neglected to mention that, except for flood losses, this box content insurance is readily available and easily obtained from a box renter’s own insurance agent. This is done by requesting a “Personal Article Floater”, which is merely a rider attached to a home owner’s insurance policy and specifies what items are insured. Written property appraisals are usually required by the insurance companies.

Another box content insurance coverage option is also available and reasonably priced through the insurance provider Safe Deposit Box Insurance Coverage (www.sdbic.com). Their safe deposit box coverage is very unique, does not require the disclosure of a box renter’s contents or any written property appraisals and does insure flood damaged box contents and any other man-made or natural disaster.

Home Safes Not Safe

Purchasing a home safe and the many advantages of using this type of property protection were covered extensively in this article. Based on the size of the home safe, prices usually range from $300 to several thousand dollars according to a very large New York safe company owner who was interviewed. He stated, “I think our business has definitely increased by 20% or 25% a year because of robberies, burglaries, disasters and our nation’s current financial crisis.”  

Again I totally disagree with this home safe, property protection recommendation. Unfortunately, I am a previous home safe owner who is also a past victim of a home burglary. Even with our substantial home security system, all of my family’s valuable possessions that were stored inside an expensive 300 pound safe disappeared in one very traumatic afternoon. Because of this burglary, I am not a strong proponent of storing valuables in a home safe. The former chief of the FBI’s Financial-Crimes Section was also interviewed and agreed with me, that if you do purchase a safe it is only as secure as the good security system that protects your home. He now owns a home safe but he stated; “That’s why I don’t keep anything terribly valuable in it.”  

When you compare this home safe protection to existing safe deposit boxes, you will find that most bank and credit union boxes are located inside a solid steel or concrete vault, protected by a thick vault door armed with door contacts, heat, motion and vibration detectors and a security system that is continuously monitored. It is possible that these safe deposit vaults could be compromised, but with over 25 million boxes rented nationwide, police reports indicate that, compared to home burglaries, these vault burglaries do not occur often. When this reporter contacted his local law enforcement experts, a former New York City Police Captain, he stated; “As a place to store valuables, the safe deposit box is the safest option.”

Disaster Protection

Recently we have all seen on TV the terrible destructive tornados in Oklahoma and Super Storm Sandy’s wind and water damage along the east coast. Mother Nature’s disasters have destroyed thousands of homes and businesses in a very short period of time. Our personal property, family heirlooms and many other valuable items can all disappear in a matter of seconds. The graphic TV and newspaper coverage of the strength of Tinker Federal Credit Union’s safe deposit vault in Moore, Oklahoma was amazing and definitely saved twenty-four lives. The entire credit union building was completely demolished in a matter of minutes by an EF 5 (250 MPH) tornado. Following the disaster, the vault, the employees, the members and all the valuable property stored inside the safe deposit boxes were still intact.

In Conclusion:

Historically and in our current financial environment, the safe deposit service is still considered a financial institution’s best marketing tool. It attracts and enables institutions to cross-sell additional financial services to very affluent consumers. With today’s strong push towards automation, on-line bill paying, ATMs, debit cards and many other electronic services, consumers are no longer required to come into a brick and mortar facility. Renting a safe deposit box continues to be the only service that requires individuals and businesses to come through your lobby doors.

Today there are thousands of banks and credit unions nationwide offering this valuable safe deposit box service correctly and they are actively promoting it to their customers and members. Because of this, many financial institutions have 90% to 100% of their boxes rented and there continues to be long waiting lists for their most popular box sizes.

Consumers, banks and credit unions should all be aware, “Safe Deposit Boxes Are NOT on Their Way Out” as the recent NY news article predicts. There will never be a better security option available to protect our valuables and safe deposit boxes are going to be around for many years to come.

About the Author: David P. McGuinn, President of Safe Deposit Specialists, is a former banker and is often referred to nationwide as the safe deposit GURU. In all 50 states he has trained over 250,000 safe deposit personnel since 1969 and has served as President of the American Institute of Banking and the American, Texas and Houston Safe Deposit Associations. During the past 45 years, McGuinn’s safe deposit employee training, manuals, compliance products and other marketing resources have been recognized as the accepted national standard for the financial industry.

Shelby Car Show

Rare and vintage Shelby Cobras and Mustangs will be on display when LegacyTexas Bank in Plano presents the fourth annual Shelby Car Show on Saturday, June 22. The family-friendly event is free of charge and open to the public. The show is co-hosted by the bank and the Shelby Cobra Association of Texas and sponsored by Dallas Mustang.

LegacyTexas Bank President Phil Dyer says the day’s events will feature something for every member of the family. “This is a community event for car enthusiasts of all ages,” he said. “We’ll have a variety of fun activities, food, live music, and well over 100 cars on display. We anticipate this will be our best show yet.”

The event will be held from 10:00am until 2:00 pm at the bank’s corporate headquarters at 5000 Legacy Drive in Plano. The event will showcase rare Shelby Mustang models from Shelby American as well as cars from Shelby family’s private collection. This will mark the fourth consecutive year LegacyTexas Bank has hosted the Shelby event and coincides with the bank’s celebration of 50 years of service.

About LegacyTexas Bank

LegacyTexas Bank is an independent community bank with $1.7 billion in assets and is majority owned by the Shelby family of North Texas.  In business since 1963, LegacyTexas Bank currently has 20 branches throughout Collin, Dallas, Tarrant and Parker Counties. LegacyTexas Group is the financial holding company for LegacyTexas Bank and also includes LegacyTexas Insurance Services and LegacyTexas Title. For more information, visit LegacyTexasBank.com.

TWIA Update

The 83rd Legislature failed to produce any "major" changes related to the Texas Windstorm Insurance Association (TWIA) and that leaves Coastal Counties with an unresolved concern. As reported in the Bottom Line earlier in the Legislative session, with litigation outstanding, reserves remain high - which caused TDI to request that TWIA's board consent to seek an order of rehabilitation.  That was tabled at the March 25th TWIA Board meeting following numerous comments from coastal stakeholders who remained optimistic that the 83rd Legislature would produce the necessary solution in lieu of receivership. But no such solution was borne through the Legislature and the May TWIA Board meeting was postponed until June 18th.

The Independent Insurance Agents of Texas were successful in their support of SB 1702 which extends the certificate of compliance program two years to a current expiration of August 31, 2015, with certain stipulations.  It is thought that this extension allows more than 20,000 TWIA policies renewal eligibility - which no doubt is good news for Texas bankers and a small step in the right direction.

Governor Perry has indicated that TWIA may be added to the list of issues up for consideration in the current special session, but thus far has not taken action to that effect.  Statistics released by TWIA at a recent agents workshop show the organization has over 266,726 policies in force with 50% of their business generated in Galveston and Brazoria Counties. 


As reported in the IBAT Bottom Line two weeks ago, IBAT2GO, the official mobile application of IBAT, was down temporarily as we underwent a migration of the IBAT website.  

Last week, Apple approved the updated version of the app, which is now available for download.  If you have never downloaded the IBAT2GO Mobile Application, click here to do so now.  If you have downloaded a previous version of the app on your iPhone or iPad, click the App Store on your device and download the update.  

IBAT2GO offers Texas community bankers instant access to IBAT's entire Legal Ease Archive, with over 500 searchable state and federal banking Q&As, along with the IBAT Calendar of Events - a searchable listing of upcoming education opportunities, and the latest banking news and original content from the IBAT website.  The app also includes a full IBAT staff directory.

CFPB Mortgage Reforms - Part 6

In order to provide additional clarification on the recently issued CFPB mortgage reforms, IBAT Regulatory Compliance Manager Kelly Goulart is releasing a series of white papers addressing each change contained in the seven major mortgage lending initiatives, six of which have been finalized by the CFPB (more or less).  

The sixth part of the series, focused on mortgage loan servicing requirements, is now online.

Previous documents in the series can be found here:
Expansion of High Cost and High Fee (HOEPA) Mortgages
Equal Credit Opportunity Act (ECOA) and Higher Priced Mortgage Loan (HPML) rules
Ability to Repay (ATR) and Qualified Mortgage Rules
Escrow requirements for HPMLs
Regulation Z - Prohibited Acts or Practices

SB 247 - Tax Lien Lending

Last week Governor Rick Perry signed SB 247, the IBAT-supported bill addressing some of the major issues related to the tax lien lending industry. While not going as far as we would have liked (and no doubt farther than those in the tax lien lending industry would have preferred), SB 247 is a positive improvement for Texas consumers and Texas community banks. Especially important to the industry is an IBAT-prompted initiative to require prompt payoff information to existing lienholders.  Among the provisions included in the final version of SB 247 are:

  • Judicial foreclosure required;
  • Tightening the requirements for sales of tax lien loans;
  • Prohibiting borrowers from waiving statutory protections through contract;
  • Requiring a notice that the taxing entity may offer installment plans;
  • Prohibiting false, misleading or deceptive solicitations, and enhanced enforcement;
  • Truth-in-Lending disclosure requirements;
  • Prohibition on tax loans to seniors;
  • Prompt payoff statements when requested by an existing lien holder;
  • Additional fee information in disclosure statements; and
  • Outlawing "evergreen" clauses, which allow these lenders to fund subsequent years' taxes without specific borrower approval or consent.

Following the Governor's signature, the Office of Consumer Credit Commissioner released a bulletin on the bill, outlining the changes in law which were made effective immediately.

IBAT is appreciative of the efforts of Senator John Carona and Representative Doug Miller (along with their outstanding staffs), who shepherded SB 247 through the process.

CFPB Ability-to-Repay

On Wednesday, May 29, the CFPB finalized amendments to the ability-to-repay mortgage rules that were issued in January. The amendments take effect on January 10, 2014.

For community banks that have less than $2 billion in assets and each year make 500 or fewer first-lien mortgages, the final rule:

  • Extends Qualified Mortgage status to certain loans held in portfolios even if the consumer's debt-to-income ratio exceeds 43 percent.
  • Provides a two-year transition period to make balloon loans under certain conditions and those loans will meet the definition of Qualified Mortgages.
  • Allows a higher annual percentage rate for certain first-lien Qualified Mortgages while maintaining a safe harbor for the Ability-to-Repay requirements.

There are also certain exceptions to the Dodd-Frank requirement that loan originator compensation be included in the total permissible points and fees for both Qualified Mortgages and high-cost loans. In the amended rule, the compensation paid by a mortgage broker to a loan originator employee or paid by a lender to a loan originator employee does not count towards the points and fees threshold. This amendment does not change the January 2013 final rule under which compensation paid by a creditor to a mortgage broker must be included in points and fees, in addition to any origination charges paid by a consumer to a creditor.

Week in Review May 31

While tapering off may be a sensible approach to ending one's smoking habit or reducing one's calorie intake, when it comes to Quantitative Easing; perish the thought. Perish too, any discussion that hints at the possibility of potentially considering even thinking about contemplating any tapering off of the Fed's pedal-to-the-metal $85B per month bond buying program. The Treasury market expressed its displeasure with such heretical notions this week as nervous bond investors took the yield on the Benchmark Ten Year up to a week-high 2.20%... Read more in the Baker Market Update.