Leadership Division Region 9

join your IBAT colleagues and Leadership Division members in the Houston and
surrounding area on January
for an Educational Forum: Opportunity, Risk &
Regulatory Implications in 2013 featuring guest presenters:

  • Kurt
    Purdom, Director, Bank and Trust Supervision, Texas Department of Banking
  • Dr.
    James Bexley, Sam Houston State University School of Banking
  • Robert
    Hoag, Doeren Mayhew Financial Institutions Group

meeting will be at Integrity Bank, 4040 Washington Avenue in Houston and is
sponsored by Integrity Bank and Doeren Mayhew Group.

register, click here.

Silver Alerts




Andrews Police Department is searching for William L Townsley, diagnosed with an
Altered Mental State, WHITE, MALE, 72 years old, DOB 09/25/1940, HEIGHT 5' 3",

The senior
citizen was last seen at 0400, 01/13/2013 at 1010 NW 8TH STREET,
driving a SILVER, 2010 TOYOTA TACOMA with TX License Plate BL43900.

enforcement officials believe this senior citizen's disappearance poses a
credible threat to HIS/HER own health and safety.

If you have
any information regarding this missing senior citizen, contact the ANDREWS
POLICE DEPARTMENT at 432-967-0657.

News Media
Point of Contact is
POLICE DEPARTMENT at 432-523-5545.





with Alzheimer's, WHITE,
MALE, 80 years old, DOB 01/28/1932,
WEARING DARK BLUE JACKET, BLUE JEANS, WHITE TEE SHIRT UNDER BROWN SHIRT.                                                                                           

The senior
citizen was last seen at 2015, 01/15/2013 at BRIANWOOD AND

enforcement officials believe this senior citizen's disappearance poses a
credible threat to HIS/HER own health and safety.

If you have
any information regarding this missing senior citizen, contact the MIDLAND POLICE DEPARTMENT at 432-413-5021.

Media Point of Contact is
DEPARTMENT at 432-413-5021


Secure Loans

All IBAT member banks make loans secured by real estate (both commercial and residential), and a substantial portion of those loans are kept "in-portfolio." Additionally, many of these loans do not have an escrow arrangement for insurance and taxes. As property tax due dates are right around the corner, we wanted to make sure you were "covering your bases" with your customers responsible for paying their own taxes, especially with respect to tax lien loans.

In recent years, there has been a proliferation of entities and individuals offering "tax lien loans." In many cases, these companies scour the tax records, and solicit those who have not yet paid their property taxes. While improvements have been made to this situation over the past several legislative sessions, there are still some significant pitfalls for you as a lender.

First and foremost, these lenders take a priority lien position in the property just as if they were the taxing authority. Your collateral value will clearly be diminished in virtually all of these situations. The loans generally are at high interest rates, and come with hefty fees, potentially impacting your borrower's ability to repay. Thus, both your customer and your bank will be adversely affected if such a loan is used for taxes.

While most of you already have a good system in place, please consider some or all of the following actions to mitigate some potentially expensive problems:

Procedures should be in place to annually contact your residential and commercial real estate loan customers (as necessary) to remind them that evidence of paid taxes is a requirement of the loan covenants. This is especially important if there are indications (late or missed payments, overdrafts, etc.) of financial problems. You may also wish to advise them that if they are having potential problems paying the taxes due, they should visit with their loan officer to discuss possible options, like adding the taxes on to their existing loan. Additionally, you might wish to remind them that allowing a priority lien to be imposed on the property (such as a tax lien) violates one of the promises in the deed of trust, and is an event of default;

If you send payment notices or periodic statements, you might consider a notice on some or all of these stating that third party property tax lien transfers create a priority lien on the property and violates the loan agreemen;

Please remember that evidence of taxes paid does not disclose the source of the funds utilized to pay said taxes. If your customer has contracted with a tax lien lender, there is simply no way to tell other than to check the public records. A notice of tax lien transfer must be sent to the first lien holder of record under state law, but only "after the fact"; and

Your home equity loan portfolio is obviously also subject to risk in this area.

Proper procedures and proactive measures can clearly alleviate potential problems and unnecessary diminution of collateral values. Tax lien lenders are licensed and regulated by the Office of the Consumer Credit Commissioner, 512/936-7600 or feel free to call Shannon Phillips at IBAT (800/749-4228) if you have questions or comments.

CFPB Mortgage Rules

By Kevin Dobbs, Senior Reporter
and Columnist for SNL Financial

New mortgage rules outlined Jan. 10 by the Consumer Financial
Protection Bureau won the cautious and at least partial backing of lender
advocacy groups that had for months trumpeted concern that the regulator would
overreach with its definition of a so-called qualified mortgage and crimp the flow of
credit at the community bank level.

The Independent Community Bankers of America said CFPB's final
rule on consumers' ability to repay mortgages wisely includes accommodations
for community banks. The tightened qualified mortgage rule includes a legal
safe harbor and, under that standard, says certain balloon-payment loans made
by small lenders in underserved rural areas can
count as qualified mortgages.

"ICBA and the nation's community bankers have been strong
advocates for tailored rules that will address the problem actors in the
mortgage industry while not inhibiting community banks' ability to provide
mortgages to their customers," ICBA President and CEO Camden Fine said in
a statement emailed to SNL.

"Excessively rigid rules would threaten to force community
banks out of the mortgage market, making it harder for Main Street consumers to
get a home loan and slowing the nation's housing recovery," he added.
"ICBA appreciates CFPB's recognition of community banks as common-sense,
relationship lenders that help their communities thrive."

Under the new rules, lenders who follow the
standards for a qualified mortgage - such loans cannot go to
borrowers who would have a total debt-to-income ratio of more than 43%, cannot
exceed 30 years, cannot carry fees that add up to more than 3% of the loan
amount, and cannot have interest-only payments and other risky features that
have imperiled homeowners - will be shielded from legal action should a
borrower ultimately struggle to pay off the loan.


Loan & Deposit Pricing

By Jim Smitherman

For the majority of traditional community banks, over 90% of
earnings are driven by net interest income.  In a bank with assets of $500
million, a change of just 10 basis points in net interest spread represents
approximately $500 thousand in net revenues; a change of a single basis point
(.0001) will impact the bottom line by $50 thousand.

Since small, seemingly insignificant pricing variations can
affect a bank's bottom line so dramatically, a system to create real commercial
loan pricing discipline within an institution has become essential.  In
fact, along with a relentless focus on asset quality and service excellence,
pricing discipline must be part of every bank's DNA.  The fact remains,
many banks are still being driven by winds of competitive pressures, the
product of the day, or the informal whims of the CEO or the board.

Based on my discussions with other community bank CEOs, I
believe that over half of all community banks have no formal process to
determine interest rate pricing based on required yields/rates necessary to
achieve the banks' specific profitability goals.  Pricing models have been
around for years; however many community banks continue to neglect the
discipline a model brings to interest rate pricing.  In the past, I have
engaged in the same "seat-of-the-pants" pricing, which did not serve me or the
institution well.

Superior performance requires a deliberate approach to
pricing with constant fine tuning and consistent looks back.  Models are
the tools to achieve pricing consistency.  Without a model built around
the bank's desired return, consistent pricing is impossible over extended
periods of time.  I cannot stress enough the importance a pricing model
has on consistent long-term superior performance.

Here are some of the many lessons I have learned over the
past decade regarding loan deposit pricing:

  • A poor model is better than no model (the
    simpler the better).
  • Bankers without minimum return requirements tend
    to "give away the farm."
  • Bankers have the tendency to price at the
    minimum goal level. Pricing above the model minimum rate should be the
    goal and should be acknowledged and rewarded when achieved.
  • When the customer is the only person thanking
    the banker on the agreed upon rate, net interest spreads will tend to decline
    over time.
  • For most small businesses, "rate" does not rank
    in the top 5 of their major concerns but will still be a topic of some
  • To enhance the net interest spread, bankers have
    to be good negotiators. I have noticed, on occasion, many bankers would
    rather negotiate rate with the bank (their boss) than with the customer.
  • In fact, many bankers have the distorted belief
    they work for the customer and not the bank.
  • Multiple pricing options are always better than
    one. When the customer has choices, he feels empowered.
  • During times of rapid interest rate change,
    "seat-of-the-pants" pricing can be a bank earnings killer due to increased
    interest rate risk.
  • Providing "great service" does not automatically
    lead to better pricing but knowledgeable, professional bankers providing high
    quality customer service in a culture of strong pricing discipline will always
    be able to improve a bank's net interest spread over time.

Jim Smitherman is President/CEO of Security Bank, Odessa,

First American Payment Systems

Is growing Non-Interest Income one of your bank's objectives for 2013?  Perhaps you are also seeking to add more services for your current business customers while helping them control costs?  IBAT's newest Endorsed Service Provider can help you achieve these goals.

IBAT is proud to announce its endorsement of a merchant services provider that will offer you advanced products, customized marketing support, and increased fee income.  We urge our community bank members to attend this webinar and learn about how merchant services is the answer to higher non-interest income and stronger relationships with your business & commercial clients.

Please join us for this introductory webinar to learn more about your new Fort Worth-based Endorsed Service Provider for merchant services, First American Payment Systems. You will learn about their industry leading products and different relationship structures that will help you make 2013 a year of growth.

Date: 1/16/13
Time: 10:00am CT
Duration: 30 minutes
Presenter: Cody Yanchak, Director of Sales - Financial Institutions

Increased Lending

U.S. Treasury Department
Office of Public Affairs

January 8,

CONTACT: Treasury Public Affairs
(202) 622-2960


WASHINGTON - The U.S. Department of the Treasury yesterday released
a new report showing that Texas institutions receiving capital through the
Small Business Lending Fund (SBLF) continue to increase their small business
lending, in total by over $996.0 million over their baselines.

This Use of Funds report represents the sixth
consecutive quarter in which SBLF participants have increased lending to small
businesses and provides strong evidence that the SBLF program is working as
intended.  Across the country, SBLF participants have increased lending by
$7.4 billion overall and $740 million over the prior quarter.  Community
banks participating in SBLF have also increased business lending by
substantially greater amounts than a peer group of similar banks across median
measures of size, geography, and loan type.

"Community banks participating in the Obama
Administration's Small Business Lending Fund have consistently increased small
business lending over the past two years, resulting in increased access to
capital for thousands of small and family-owned businesses across the country,"
said Deputy Secretary of the Treasury Neal Wolin.  "With the help of
lending supported by SBLF, these small businesses continue to grow and create
jobs in their neighborhoods."

Small businesses play a critical role in the
U.S. economy and are central to growth and job creation.  In the aftermath
of the recession and credit crisis, small business owners faced
disproportionate challenges, including difficulty accessing capital.

The SBLF, established as part of the Small
Business Jobs Act that President Obama signed into law in 2010, encourages
community banks to increase their lending to small businesses, helping those
companies expand their operations and create new jobs.  Treasury invested
more than $4.0 billion in 332 institutions through the SBLF.
 Collectively, these institutions operate in over 3,000 locations across
48 states.  This report includes information on the 326 institutions that
continue to participate in the program as of September 30, 2012, including 275
community banks and 51 community development loan funds, or CDLFs.

SBLF encourages lending to small businesses by
providing capital to community banks and CDLFs with less than $10 billion in
assets.  The dividend or interest rate a community bank pays on SBLF
funding is reduced as the bank increases its lending to small businesses -
providing a strong incentive for new lending to small businesses so that these
firms can expand and create jobs.  As of September 30, 2012, the average
rate paid by community banks on SBLF capital was two percent.  Individual
community banks can reduce the rate they pay to one percent if they increase
qualified small business lending by 10 percent over their baseline.

To view the report, including a list of the
change in lending at banks receiving SBLF capital, please click here.

The SBLF is one part of the Obama
Administration's comprehensive agenda to help small businesses access the
capital they need to invest and hire.  Treasury also administers the State
Small Business Credit Initiative (SSBCI), which allocates $1.5 billion to state
programs designed to leverage private financing to spur $15 billion in new
lending to small businesses and small manufacturers. 

For more information on the Obama
Administration's small business initiatives, please visit www.sba.gov.  For more information on SBLF,
please visit www.treasury.gov/sblf.

Amber Alert


The Crosbyton Police Department is searching for Leah Marie Aguirre, Hispanic female, 2 YEARS old, DOB 1/6/11, brown HAIR, brown EYES with UNKNOWN

Police are
looking for "Miguel", Hispanic male, with brown HAIR
and brown EYES IN HER abduction.

The suspect
is driving a red Ford Focus.  The suspect
was last heard from in Crosbyton, TX

enforcement officials believe this child to be in grave or immediate danger.

If you have
any information regarding this abduction, call the Crosbyton
Police Department at (806) 368-1926.

News Media
Point of Contact is
Crosbyton Police Department
at (806) 368-1926.



ICS Webinar

the expiration of the Transaction Account Guarantee program on January 1,
community banks now face an additional challenge to retain their larger deposit
customers. The Insured Cash Sweep® service is best positioned to help you
retain the highest value relationships by identifying large-dollar,
safety-conscious customers and using ICSSM to meet your needs.

join IBAT Services and Promontory for a FREE webinar to learn more about how ICSSM
works and the various ways your bank can utilize the service to attract and
retain customers in addition to generating non-interest revenue.

Webinar details:
Chuck McBrayer, Regional Director

January 9th at 2pm CT OR
January 10th at 10am CT

ATM Requirements

received a Christmas present on December 20, 2012 when President Obama signed
H.R. 4367, which eliminates the requirement for physical notices on ATMs
regarding fees. That information is already disclosed onscreen, and consumers
can't continue a transaction without affirmatively acknowledging and accepting
the possible fee.

The notices were originally required when
onscreen disclosure was not always feasible. However, changes in technology
have resulted in consistent, effective disclosures to consumers.

Unfortunately, previous law included a penalty of
the lesser of $500,000 or one percent of the net worth of the ATM operator for
violating the notice requirement. This bounty led to instances of litigants
removing placards, photographing the ATM and filing a lawsuit before the ATM
operator is aware of the missing sign. A rash of class action suits have been

The question is whether or not this change is
retroactive. The Cox Smith litigation team has taken the position that there is
no basis for these lawsuits with the elimination of the statutory remedy. In
any event, we believe punitive damages should not be available, even in cases
alleging missing notices prior to the passage, and actual damages are
nonexistent since the consumer had notice of the fee and agreed to pay it.

The next step is for the CFPB to amend Regulation
E to eliminate the signage requirement in the absence of the supporting law.

For more information, please contact Karen Neeley, IBAT General Counsel at 512-703-6315.

SWGSB Bank Director Assembly

Southwestern Graduate School of Banking (SWGSB) has released information on its
136th Assembly for Bank Directors, entitled "Moving on in a New
Era."  The assembly will be held February 7-10, 2013 at the Atlantis
Resort in the Bahamas.

View the full assembly brochure or visit the SWGSB website.

The Fiscal Cliff

The article below was reproduced
with permission by SNL Financial LC.  To learn more about SNL Financial
please contact Julie Jones at 434-951-4419 or jjones@snl.com.

Cliff deal far from perfect, but bankers express

By Kevin Dobbs

Kevin Dobbs is
a senior reporter and columnist for SNL Financial. The views and opinions
expressed in this piece represent those of the author or his sources and not
necessarily those of SNL.

It is hardly the
grand bargain that many had once hoped for, but lawmakers' Jan. 1 deal that pulled the country back from the
so-called fiscal cliff and staved off sweeping tax hikes for most Americans
infused a significant sense of relief into the community banking world.

"I expected
it to come down to the last Hail Mary, and it did," Paul Willson, chairman
and CEO of Citizens National
Bancorp Inc.
, told SNL, referring to the fact that the deal was
sealed in the U.S. House a day after the official Dec. 31 deadline. "But
I'm relieved. ... I think people are realizing you don't run the country from the
fringes. You have to come back to the moderate world. So I think this is a very
small step in the right direction, and hopefully, this sets the stage to allow
us to work more collegially."

MidSouth Bancorp Inc. President and CEO Clive Cloutier also
was mostly positive in the wake of the deal.

"I'll speak
for our customers here - because
that's who we're focused on - and say that they are going to be generally happy
with this simply because something got resolved," Cloutier told SNL. "Now
they know the tax situation, and so now they can make some business decisions.
Certainty, even a little bit of it, goes a long, long way."

To be sure, the
bankers said, the cliff deal enabled the country to avert a potential disaster.
Had Republicans and Democrats not compromised on the matter, a combination of
across-the-board tax hikes and large-scale spending cuts would have taken
effect - hence the term fiscal cliff - cutting
deeply into Americans' spending power and pulling a big chunk of government
money out of a fragile economy. That, most economists said, likely would have
pushed the U.S. back into recession.


The article below was reproduced with permission by SNL Financial LC.  To learn more about SNL Financial please contact Julie Jones at 434-951-4419.


Leadership in Action

New Year's resolutions tend to be more positive
and forward-looking than reviews of the annum past. Yet it's still worthwhile
to look back and see what we might have learned from the last 12 months, as

IBAT Holiday Hours


As 2012 draws to a close the IBAT
family wishes you and yours a Happy New Year.  May the
season be filled with much joy and many blessings!

For New
Years, IBAT will close at noon on Monday, December 31st and will reopen for
normal business hours on Wednesday, January 2nd.  

The IBAT Bottom Line
will be published late this week with a year-in-review issue and will
recommence with regular Tuesday distribution on January 8th.

2012 IBAT Christmas Project

Like many of our members, each year IBAT tries to make a
difference in the community at Christmas time. 2012 was no different. We joined
forces with American Bank, N.A., and collected teddy bears for their annual
Teddy Bear drive. All of the bears will be donated to the Dell Children's
Medical Center in Austin. The hospital distributes the bears to its patients
throughout the year to make them feel comforted and loved.

Mobile Security

By Tiffany Riley, vice president
of marketing,

Guardian Analytics

Account holders are asking
their financial institutions (FIs) to offer expanded mobile banking services,
such as remote deposit capture, bill pay, ACH payments, and wire transactions.
At the same time, however, consumers are reluctant to use mobile banking
because of the security risks. For example, a recent IntoMobile study found
that 60% of consumers identified security as the top reason for not using
mobile banking.

Mobile banking indeed is particularly
susceptible to fraud, at least in part because of how account holders treat
their smartphones - like phones, not like the computers that they are.
Smartphones hold a lot of personal information - friends, phone numbers,
passwords, online banking links, personal information used in challenge
questions - making the phones very attractive to fraudsters. Account holders are
reasonably well trained in how to use their computer safely, but they're not
translating that behavior to their smartphones. They click on links in text
messages from unknown parties, download apps from unsecure app stores, click on
QR codes that fraudsters place over the original, and give their phones to
children who will download and click on anything.

Accordingly, it should be
no surprise that the volume of mobile malware is exploding. A recent
McAfee study found a 600% increase in mobile malware from 2011 to 2012. Fraudsters
have repeatedly demonstrated not only their technical ability to bypass most security
solutions, but also their creativity. For example, a recent scheme spoofed
alerts from Apple regarding availability of the iPhone 5, which they knew
consumers were anxious to read and therefore, more likely to open.

This presents a unique hurdle between financial institutions and
the compelling opportunity presented by mobile banking. Improving mobile
security will increase customers' comfort with using the mobile channel,
thereby increasing revenue-producing adoption of expanded mobile banking
services. And preventing mobile fraud will keep those account holders as
happy, loyal customers for years to come. But to be successful, FIs must secure
the mobile banking channel with the expectation that the device has been

The best fraud prevention solutions utilize an important strategic
benefit that FIs have over the fraudsters - knowledge of each account holder's
unique mobile banking behavior. Readily available behavior-based anomaly
detection solutions can detect and prevent even the most sophisticated fraud
attacks while enabling FIs to conform to the FFIEC guidance that calls for
anomaly detection for all electronic banking channels, including mobile.

Fraudsters have demonstrated their ability to circumvent security
solutions that focus on log-in credentials, challenge questions, malware
detection, device ID, tokens and OTP, and out of band authentication, to name a
few. But fraudsters cannot mimic the mobile banking behavior of each individual
client. Behavior-based anomaly detection solutions build a model of each
account holder's behavior and then compare all subsequent activity, from login
to logout, for every mobile banking session, to those established patterns.
This enables FIs to detect suspicious or anomalous activity patterns that are
indicative of fraud. By monitoring all electronic banking activity FIs not only
will detect fraud early in the account compromise, reconnaissance and set-up
stages when it's much easier to prevent, they will be in a position to contact
account holders proactively before the money is gone, which is a level of customer
service that goes beyond satisfaction into the realm of delight.

Behavior-based anomaly detection solutions have another
advantage. We know that fraudsters will continue to innovate, developing as yet
unseen schemes for emptying bank accounts through mobile devices and online
banking channels. Cyber criminals continually reinvest their "profits" into new
technologies and work together to share successes and failures. As a result,
they quickly scale successful attacks and modify unsuccessful ones, leaving FIs
with a never-ending barrage of new attacks against which they must defend
themselves and their customers.

Behavior-based anomaly detection solutions don't operate
based on which malware is in being used or how the account was compromised. So,
regardless of the attack scheme, fraudsters will do something unexpected,
something that tips off the FI to the fact that this session for this
account holder indeed may be fraudulent.

FIs are encouraged to assume the mobile device has been
compromised, monitor all mobile banking activity from login to logout, be
proactive in detecting the early stages of fraud, and use behavior-based
anomaly detection to take advantage of their best strategic advantage over the
fraudsters - knowledge of their mobile banking customers' legitimate behavior.

About Guardian Analytics - Guardian Analytics is the pioneer and leading provider of
behavior-based fraud prevention solutions for financial institutions. With
nearly 200 customers, more financial institutions trust Guardian's SaaS
solutions to protect their clients' assets and conform to FFIEC expectations
for anomaly detection than any other solution. To learn more, please go to www.GuardianAnalytics.com.

About Tiffany
Vice President, Marketing

Riley has been Guardian Analytics VP of Marketing for over two years, leading
the company's marketing efforts through a period of tremendous success and
growth. She is a regular presenter are industry events and author of
contributed articles, white papers, and blog posts. Tiffany has over 15 years
of enterprise software marketing and product strategy experience having
successfully delivered market leadership, customer satisfaction and
unparalleled brand awareness in emerging and mature markets. Prior to Guardian
Analytics, Tiffany worked for Market Live, Nextance, Blue Pumpkin Software,
Siebel, Scopus and Sybase.