Due Diligence

margins and non-interest income are on the minds of almost every community
banker in Texas, but regulators sent a warning shot to those looking at new fee
producing third-party relationships, according to an article in American Banker last week.

"Federal Reserve
examiners are focusing on how institutions, especially small banks, plan to
recoup revenue lost from reduced exposure to commercial real estate," the
article said, referencing comments made by Kevin Bertsch, the associate
director in the Fed's division of banking supervision and regulation.  

The article
went on to identify sufficient due diligence as the major issue of focus by

"Everyone is
on the lookout for that silver bullet to stem the tide of lost revenue," said
Chris Williston, president and chief executive officer of IBAT, "but, regulator
comments highlight the need for advanced due diligence on third-party
relationships.  Getting those relationships right on the front end will
clearly translate into a lot fewer headaches down the line."

IBAT has
established a stringent system of due diligence for endorsed service providers
through the involvement of the IBAT Services Board of Directors.  To learn
more about the IBAT due diligence process for endorsements, please click here.

Leadership in Action

The only way to grow your small business into a
real company is to hire employees. While doing this well will be one of your
biggest keys to success, it is also the most difficult to achieve.
Small-business owners are notorious for being bad at hiring employees who make
valuable contributions over a long period of time. Here are the seven keys to
staffing up your company effectively. More

Basel III

outcry against the Basel III capital proposals grew ever-louder last week as
sixteen members of Texas's Congressional delegation signed a letter to federal regulators opposing the
measures.  This is in addition to the Congressional letters we mentioned
last week from Representatives Conaway, Hensarling and Neugebauer.  

"A one-size-fits-all approach to banking regulation has the potential to
create more unintended consequences than it yields in market stability,"
the letter said, echoing long-time calls by IBAT for a bifurcated regulatory
structure which accounts for the traditional business model of community banks.

IBAT extends our sincere thanks to these members of Congress for their support
on this vital issue. We encourage IBAT members who live in the sixteen
districts represented by these members to extend their thanks as well.

Early Voting - Last Chance!

opportunity to participate in early voting for the upcoming election ends this
Friday evening.  To locate your polling place, please follow these instructions. The "big day" is
next Tuesday, November 6.
 Whether you vote early, or with the masses on Election Day, please do
take time to vote, and encourage those in your circle of influence to do the

last week's edition of The Bottom Line, we
reviewed a number of "competitive" races and indicated those
candidates receiving support from the IBAT PACs in those races.
 Additionally, we provided a link to judicial candidate recommendations.
 Rather than reprint that information, we encourage you to access that
information here.

Treaty Oak Bank Conversion

Tony R. Clark, President and CEO
of NORTHSTAR BANK OF TEXAS recently announced that
Treaty Oak Bank will become part of NORTHSTAR BANK

effective November 5th, 2012. 

a member of Carlile Bancshares, Inc., headquartered in Fort
Worth, TX, NORTHSTAR BANK is the largest community
bank in Denton County,
and one of the largest in the Dallas / Ft. Worth
area.  Over the past 13 years, NORTHSTAR, as a full-service bank, has grown from 2
locations to 10 locations located throughout North Texas,
with assets over $1 billion. 

NORTHSTAR continues to be a
leader in the banking and mortgage industries. 
 Their professional staff and personalized
style of banking have been the key ingredients to their success.  Mr. Clark stated: "We are excited to expand
our NORTHSTAR BANK work family into the
Central Texas region and be able to deliver
our unique, personalized style of banking to the area."  Ron Simpson, President of Treaty Oak Bank,
affirmed:  "This merger will be an asset
to the customers of Treaty Oak Bank knowing that the conversion will bring
added resources, products and services to the markets we currently serve."

NORTHSTAR BANK recently brought recognition to our industry once again,
when they were named as one of the Best Companies to Work for in Texas for the year 2012
for the 4th straight year.  This
program was created in 2006 and is a project of Texas Monthly, the Texas Association of Business (TAB), the Texas
State Council of the Society of Human Resource Management (TSC-SHRM), and Best
Companies Group.

the move into the Austin and Marble Falls
areas, NORTHSTAR BANK OF TEXAS looks forward to
expanding its hometown style of community banking into Central
Texas, with all the benefits of that a mega bank would bring.  Watch for our "star" rising in this

Member FDIC and Equal Housing Lender

Lone Star Capital Bank

ANTONIO, TX (October 23, 2012) - 
Lone Star Capital Bank
was honored to be recognized as a United Way pacesetter for the second year in
a row as a record breaking 1,200 business and community leaders gathered last
week at the United Way's kick-off luncheon.

bank has already contributed $22,424 this year, a 20 percent increase over last
year's donation and, for the eighth year in a row, the bank attained 100
percent participation from its employees.

efforts of Lone Star Capital Bank, along with the other organizations that
gathered to kickstart this year's campaign, contribute largely to San Antonio
being named the number one best performing city in America for United Way
giving.  Combined giving from local pacesetter institutions in 2012
totalled $32.9 million - an unprecedented lead toward the $49.3 million goal.

collected for the United Way will be invested in 135 high-quality programs and
initiatives at 64 agencies throughout the community, ensuring that vital work
will continue to assist older adults, respond to emergencies, fight hunger and
homelessness, strengthen families, promote early childhood education, help young
people stay in school and graduate, support the disabled, and build a stronger

Star Capital Bank specializes in providing customized banking services for
entrepreneurs, executives, professionals, small businesses and real estate
investors. It is a member of FDIC and an Equal Housing Lender.

Social Media

media is an everyday reality that is penetrating through the walls of our daily
lives. The use of social media has become unavoidable due to the use of smart
phones, laptops, and tablets that people are using to connect with people all
over the world. People are constantly posting pictures, tagging posts about
their current location, and even sharing mass amounts of personal information
to the World Wide Web through social media websites like Twitter, LinkedIn, and
Facebook. Some people see this over share of information as a bad thing, but in
reality it can actually be an asset to your business as long as you remember
three things about social media. They are three easy to remember lessons: Be
passionate, know your company's identity, and trust your people.

first lesson, be passionate, is key to using social media. Have you ever gone
to a grocery store and been overwhelmed by how many different choices of water
there are? You look around and there are twenty choices for "different" types
of water all at the same price and you have no idea which one to pick because
there actually isn't much of a difference. You end up picking the first pack of
water you see, or you walk away from the water all together because you're
overwhelmed by the endless choices. This is kind of like the world of Twitter.
Every day limitless amounts of content circulates Twitter because companies
force their employees to share information to popularize the company's brand.
This is wrong. This type of information is typically ignored by the public
because it is not personalized and not interesting to read about it. The key to
fixing this problem is to stir passion in your employees. Get your employees
excited about unique things that are going on within the organization. This
will then create a desire within the employees to promote your company through
social media. The passion in their tweets will then create interaction between
customers and your company. That passion will help create that unique brand
recognition that will make your company stand apart from the rest.

second lesson is to know your company's identity. What makes your company
unique? What makes your employees want to work hard so that your organization
can be successful? It is important to celebrate your company's values because
they make up your company's identity. If you are a small and low cost company
you do not have to have a Facebook page just because it seems like every other
company does. In fact having a Facebook page for that type of company could
actually clash with your brand image. Remember to know what your company
values, know what your company needs to be successful, and then use the
necessary tools to achieve that success.

third and final lesson is to trust your people. Since social media is so deeply
intertwined with our everyday lives, it would almost hurt your company more to
block all forms of social media in the workplace.  Instead you should make
social media important to your employees.  Be strategic with social media
by creating a type of training session for your employees that teaches them how
to use social media successfully for the company and for themselves. Have the
right tools in place to show them what is appropriate and what is good for the
company, but remember to never force your employees to use social media because
that can hurt your company more than it actually can help.

media is a wonderful emergent tool that, when used properly, can benefit your
company exponentially. Embrace twitter, Facebook, and any other social media
website and use them to your advantage. Today we discussed three things about
social media that can make your company successful: be passionate, know your
company's identity, and trust your people. If you remember to use all three of
these tools you will help eliminate the mass amount of clutter and noise that
circulates the web and you will have effectively used social media to your
company's advantage.

Silver Alert


NWS Brownsville &
Corpus Christi


Pharr PD is searching for Martin Anaya, diagnosed with
Alzheimer's, White, M, 92 years old, DOB 11/11/19, HEIGHT 5' 3", WEIGHT 130
lbs, Gray Hair, Brown Eyes, wearing blue button shirt, khaki pants and a white
cowboy hat.                                    

The senior
citizen was last seen at 1:00 p.m., 10/24/12 at 426 E Villegas, Pharr, TX
78577, driving a White, 2003 Nissan Frontier with TX License Plate 951-9AY.

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 Pharr Police
Department at 956-784-7700.

News Media
Point of Contact is
Police Department at 956-784-7700.

Baker Market Update

Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation recently picked up somewhat, reflecting higher energy prices. Longer-term inflation expectations have remained stable... Read more in the Baker Market Update.

Jimmy Rasmussen

Congratulations to Jimmy Rasmussen, President
and CEO of HomeTown Bank and former IBAT Chairman, on his election to the
Federal Reserve Bank of Dallas Board of Directors.  

will serve a three year term beginning January 1, 2013. 

Stress Testing Guidance

Last week, the OCC released guidance
to national banks with assets of $10 billion or less on the use of stress
testing to assess risk in their loan portfolios. 

"Stress tests do not need to involve sophisticated analysis
or third-party consultative support," the guidance said. "For most community
banks, a simple, stressed loss-rate analysis based on call report categories
may provide an acceptable foundation to determine if additional analysis is

IBAT has discussed stress testing for community banks with
senior staff at the OCC and expressed concern that the results of such testing
might be inconsistently evaluated by examination staff.  Additionally,
IBAT remains concerned that the addition of stress testing expectations adds
one more layer to the regulatory burden which plagues community banks in the
aftermath of Dodd-Frank.

Silver Alert




POLICE DEPARTMENT is searching for PAT G BROWN, diagnosed
with Alzheimer's, HM, 81 years old, DOB 03/17/1931, HEIGHT 5'4", WEIGHT 140
WITH GRAY PANTS AND BLACK DRESS SHOES.                                                                                                

The senior
citizen was last seen at 10:30 P.M., 10/22/2012 at 1013 JULIUS, VICTORIA, TX,
driving a SILVER, 2004 BUICK LESABRE with TX License Plate


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 VICTORIA

News Media
Point of Contact is

Mortgage Originator Proposal

Under the
proposed loan origination compensation amendment to Regulation Z, if a creditor
pays loan originator compensation, the creditor may not impose any discount
points or origination points or fees unless the creditor makes available to the
consumer a comparable, alternative loan that does not include discount points
and origination points or fees, unless the consumer is unlikely to qualify for
such a loan. To recover costs, lenders may have to set rates at levels that
trigger federal and state high-cost loan laws. Additionally, contributions to
profit-sharing plans and 401K plans may be affected. Finally, the rules would
require bank mortgage loan originators to essentially meet the rules for
licensing non-bank lenders.  IBAT's comment letter brought each of these issues and
more to the attention of the CFPB.