Planning the Future

leadership bankers from across the state gathered last week for two days of
Committee and Board meetings.  In addition to the normal reports and
discussions of IBAT activities, the Board approved the Convention Policy
Resolutions and recommendations for Bylaws amendments submitted by the Bylaws
and Nominating Committee.  These will be reviewed and voted on at the
Annual Meeting of the Membership at the IBAT Convention in October.

Pope, Jr., President and Chief Operating Officer of Texas Bank & Trust,
Longview, was nominated as Secretary-Treasurer.  The remainder of the
proposed leadership of IBAT, to be voted on at the Annual Convention, includes
John W. Jay (Roscoe State Bank) as Vice Chairman;  Jay Gober (First State
Bank, Graham) as Chairman-Elect;  and Troy Robinson (Bank Texas, Quitman)
as Chairman.  Scott Heitkamp, the current Chairman of IBAT, will remain in
a leadership position as Immediate Past Chairman. Several new directors were
nominated as well, and will be announced when all have accepted.

Board also reviewed and approved the recommendations of the IBAT Legislative
Committee regarding our proactive agenda for the upcoming 83rd Texas
Legislature.  Additional information will be forthcoming, and we encourage
you to "save the date" - February 5 - for the IBAT Legislative Day in

Baker Market Update

week proved that the equatorial latitudes of the world's oceans are not the
only place in which summer doldrums exist. With the news-worthiest of events
taking place in other arenas, the U.S. Treasury market had little reason to
leave the lower, narrower trading range it has inhabited for the past several
weeks. After starting the week around 1.60%, the Benchmark Ten Year note
reached its low yield of the week (1.57%) [last Thursday], before [Friday]
morning's sell-off pushed that level up to around 1.65%.... Read more in the Baker Market Update.

Is your ATM a Lawsuit Risk?

You may have missed it last week.  Not long after it issued its opinion on
the Affordable Care Act, the Court announced its decision in First American
Financial v. Edwards,
the decision every banker had looked forward to as a
cure for the recent epidemic of EFTA "statutory damages" class actions.  
So, how did the court rule?  It didn't.  Rather than issuing a
decision the Supreme Court dismissed the case, effectively spitting the hook on
this important question.  And now, I have more bad news.  The same
lawyers who vigorously pursued the EFTA "class actions" for lack of a second
sign on your ATM have found a new non-compliance issue:  are your ATMs
accessible to the blind and persons with disabilities? 

These lawyers say "no" and already have started filing "class actions" seeking
injunctions and damages to enforce their position.  A check of Court
records shows that one set of firms has filed no less than ten such lawsuits in
federal courts for the Northern and Eastern District of Texas since June
13.  Experience teaches that these are the first of many such suits; it
also teaches that how our industry reacts to these first cases will have a
large impact on whether more are filed. 

The legal background for this new wave of suits comes from federal and state
statutes and regulations designed to remove architectural barriers for the
disabled.  These statutes generally track Title III of the Americans with
Disabilities Act [the "ADA"], which requires places of public accommodation, a
term defined in the ADA to include banks, to provide disabled customers with
reasonable and appropriate accommodations that enable them to partake of the
bank's services to the same extent as non-disabled customers because of their

To implement the ADA, the Department of Justice established advisory committee
to create accessibility guidelines that became known as the ADA Accessibility
Guidelines, usually referred to as ADAAG.  There are two comprehensive
sets of these ADAAG, one issued in 2004 and another issued in 2010.  The
2010 Standards, which incorporate the 2004 standards and include provisions
governing ATMs, became effective on March 15, 2012.  Under the ADAAGs, at
least one ATM at every location must meet the specific requirements in ADAAG;
the ADAAGs treat lobby ATMs and drive-up ATMs at the same facility as two
different locations; therefore, say the Plaintiffs, machines at both locations
must comply.  The issue will be particularly acute at drive-up ATMs, where
it is more difficult to provide a reasonable alternative service.

As with the EFTA cases, there are potential responses and defenses; they are
"potential" at this point because the 2010 ADAAGs have only been in effect
since March, and there is virtually no case law addressing where the main
statutory language meets the ADAAGs.  It also appears to be reasonably
probable that these cases probably will not proceed as "class actions,"
although that is relatively little solace for those who are affected:  an
injunction requiring the Bank to take action requires the same action
regardless of whether there are one or a million plaintiffs.

So what do you do?  Just as it was with the EFTA signage cases, the best
way to avoid a problem is to make sure your ATMs are compliant; if they provide
audible services for visually-impaired users, check the functionality from time
to time to make sure it works.  The response for many banks will be that
they have ordered new, compliant equipment but that the manufacturer has not
been able to deliver it yet because of high demand.  That's good as far as
it goes, but some judge will ask, "What are you doing in the meantime?" 
What are you doing in the meantime?

And if you're sued?  No one wants the publicity of being the "bad guy" in
a suit by a blind or disabled individual, but ADA and the companion Texas Act
include words like "reasonable" and "undue," which mean there are
defenses.  Those words are important but work best when you have taken
steps in advance to create accommodations for disabled customers.  It is
not improper or unreasonable to make a plaintiff prove their case and to show
that their injury is real rather than self-directed for profit.  Our work
with EFTA cases suggests it may be possible to resolve these claims early and

The other issue is insurance.  Here, the fact that ADA does not provide a
remedy in damages may initially prompt insurers to deny coverage. 
Nonetheless, this is an issue that should be carefully considered.  To
ensure that coverage is not lost because of late notice, submit the claim
early; it may be possible to start a dialogue with the insurer that leads to
some support, just as occurred when IBAT members and IBAT Financial Services
worked with insurers to secure coverage for EFTA suits.

The Supreme Court's non-decision in First American and this new wave of
suits ultimately carry a simple, overarching message:  there aren't going
to be any "silver bullets" we can use to resolve these issues.  We will
have to roll up our sleeves, work on compliance, respond appropriately and
forcefully to litigation and work with our insurance professionals to resolve
risk management issues. 

Thomas B. Alleman is of Counsel, Cox Smith Matthews
Incorporated, 1201 Elm, Suite 3300, Dallas, Texas 75270.  Please direct
questions to the author at 214 698 7830 or talleman@coxsmith.com.  The
material discussed in this article is for general, educational purposes and
does not create an attorney-client relationship.

TAG Extension A Win-Win

unlimited FDIC protection for non-interest-bearing accounts is so good
for the biggest American banks, then why is the American Bankers
Association silent on the need for the program to be extended?

This is the question that came to my mind time and time again as I read "More Evidence TAG Helps Only the Big Banks" in American Banker
last week. The piece, written by Christopher Whalen, senior managing
director of Tangent Capital Partners, certainly made some interesting
points. Mr. Whalen supports his claim with the following arguments... Read more.

ICBA: Fine Points

This month 236 years ago, our Founding
Fathers set in motion our country's radically ingenious American experiment. No
other social or political revolution has done more to spread freedom,
opportunity and prosperity.

As our country continues its slow recovery
from the recent financial and economic debacle, we shouldn't lose sight of, or
forget to tell others about, how essential community banks are to sustaining America's
great economic promise. Jefferson, Madison, Hamilton and the other founders
understood that personal political freedom and individual economic liberty are
intertwined. Each helps ensure the other. That remains as true today as in

roots of our diversified community banking system-a dynamic system unmatched by
any other country's for its resiliency-extend back to our nation's earliest days.
By backing hard work, initiative and ingenuity, community banks remain the most
widely accessible gateways to the American economic dream. By their very missions and operational models, community banks most
efficiently and safely deploy our country's collective economic capital. Turning local
deposits into fertile funding for local small businesses and households,
community banks provide vital support to the backyard inventors and startup
entrepreneurs that fuel our nation's economy. Community banks are this nation's
primary small-business lenders, and small businesses generate more than 70
percent of all new jobs, often in new industries with bright futures.

freedom stems from having a viable chance to achieve one's own financial
goals, to control one's own economic destiny, to succeed based on one's own talent,
effort or ideas. Whether a dream involves a candle-making shop or a software
development firm, those opportunities remain the most accessible and alive at
community banks.

Today's sharp policy debates in Washington
and on this year's campaign trails reflect the decisions Americans face in
recalibrating the role of government in the aftermath of the Wall Street
financial crisis. In part because of your efforts and ICBA's, the dangers of
financial overconcentration and unstable too-big-to-fail institutions also
figure prominently in that debate. So, too, does the discussion of what is
appropriate and sensible regulation for community banks and small businesses.

America is listening. Most people recognize
that our country's economic recovery depends significantly on the ability of
small businesses to grow and create more jobs. As community bankers, your
firsthand work and experience as responsible stewards of our Main Street
economies have never been more relevant and important. Your views can influence
the direction and trajectory of our country's economic public policy as never

day community banks like yours-where direct accountability
still drives common-sense decisions-continue to fulfill America's founding
ideals of economic liberty and opportunity for all. Never forget that's what you
do, and what, together, we are working to pass along to future generations.

Independence Day!

Risk-Based Capital Rules

week, the Independent Community Bankers of America (ICBA) posted a comprehensive summary of the new interagency
proposed rules on risk-based capital. The summary covers proposed capital
ratios and their phase-in schedule, prompt corrective action requirements and
asset risk weight requirements.

along with ICBA, is researching the various provisions proposed and is
preparing an official comment letter.   Further, we will be meeting
with senior regulatory officials in mid-July to discuss the community bank
concerns relative to the proposed rule, continuing our history of involvement
on this developing issue. 

Bearden's Tips on Leadership

In my younger days-much younger-I had the privilege of serving as a Marine officer. The training required to earn a commission in the Marine Corps is rigorous, and the providers of that training are mighty demanding. They are also very good at what they do. You might say that they have a passion for it.

One of my instructors at Officer Candidates' School was a Marine gunnery sergeant, a "gunny" (although officer candidates are well advised not to take the liberty of calling them anything other than "gunnery sergeant"). The "gunny" was absolutely certain that his mission as an instructor at OCS was to ensure that every one of us who earned our commissions (survived his tender mercies) was able and willing to lead Marines just like him.

The "gunny" used every activity as an opportunity to teach us fundamental truths about leadership. Field exercises, long runs, classroom sessions and every imaginable form of physical training became his "pulpit" for instilling in us his passion for leading men in difficult situations.

There are probably variations on his central message that are more eloquent or sophisticated, but none will ever have more impact on me than the lesson on leadership we learned from the gunny:

"You can't lead from the rear!"

That lesson from a man for whom I had-and still have so much respect, is the basis for what I see as a key characteristic of effective leaders. They are out front.

Here are some suggestions for putting this tip to use:

1. I want to begin a process we'll continue in subsequent tips in this series, so as you complete these steps, remember that we'll come back to them later.

2. I want you to make a list of some of the people you admire for their effectiveness as leaders. They can be people with whom you've worked or people you've admired "from afar".

3.Next, I want you to identify some of the specific things those people have done or are doing to earn your respect for them as leaders

4. Here are some points to consider as you complete your lists:

  • Notice that what I'm asking for are specific behaviors, and not characteristics of behavior
  • If you've listed things like "courageous", "professional", "good communicator" or other such terms, what you've identified are not specific behaviors but characteristics of behavior
  • What I'm looking for here are the specific things the people on your list did or are doing, the specific behaviors they've exhibited to earn your regard for them as leaders

5. The point I'm making here is that "lead" is a verb; leadership is a composite of the things leaders do to get "out front."

Jim Bearden, CSP

Excellence in Leadership

Darrell Brown, Senior Vice
President of Business Development with Town and Country Bank was awarded IBAT's
Excellence in Leadership Award at the 2012 Leadership Conference, June 15 in
The Woodlands.

Excellence in Leadership Award is presented annually by the Leadership Division
Board of Directions, honoring personal commitment to the division, as well as:

  • Outstanding
    leadership recognition within their community;
  • Selfless
    donation of time to promote, support and serve independent bankers in the
    state of Texas; and
  • Creating
    excitement about political action and support for the PAC.

is a past president of the IBAT Leadership Division and current member of the
IBAT Education Foundation Board of Directors.  In 2007, he was honored
with the IBAT Chairman's Award.  In addition to his involvement with IBAT,
he has been active with the Stephenville Chamber of Commerce, the NAACP,
Tarleton State University Texan Club, United Way of Erath County and a member
of the Stephenville City Council.  

Brown is a tireless giver, supporting IBAT and its mission," said outgoing
LD President Angie Brown, who presented the award.  "He has given
literally thousands of hours to support this organization, and I cannot think
of a more worthy recipient."

Photo: IBAT Leadership Division President Angie Brown presents
Darrell Brown with the Excellence in Leadership Award.

Frost Bank

Charles Cooper announced last week that Frost Bank has completed
the conversion process and is now a state-chartered bank.

"Frost is the only one of the ten largest Texas-based banks to survive the
1980's crisis without merging or closing, and their commitment to Texas is
clear," said Chris Williston, President and CEO of IBAT.  "We
appreciate the long-term partnership between IBAT and Frost, and their
commitment to community banking.  This charter conversion is a strong
signal that they intend to remain a Texas-based force in the financial services
industry in our state for years to come."

Texas Bank Files Lawsuit

State National Bank of Big Spring, along with at least two other think tank
groups, filed suit in the District of Columbia federal
court last week challenging the constitutionality of the Dodd-Frank financial
reform measure.  The suit specifically challenges the creation of the
Consumer Financial Protection Bureau (CFPB) because Congress does not appropriate
its budget and the courts face restrictions in reviewing its rule making

phone began to ring off the hook Thursday afternoon when the lawsuit was
filed," said IBAT President and CEO Chris Williston.  "Members
of the financial press wanted to know about the bank's involvement and whether
IBAT was directly or indirectly involved."

is not a plaintiff in the lawsuit and was never contacted about our initiating
or joining the suit.  The IBAT Board will receive a complete briefing on
the suit and its prospects at its regularly scheduled meeting in Austin later
this week.

CFPB Arbitration Clauses

required by the Dodd-Frank Act, the CFPB is studying the issue of pre-dispute
arbitration clauses in consumer transactions. As a preliminary step, the CFPB
requested information to identify the appropriate scope of the study and the
methods and sources of data for conducting the study. IBAT commented on the three areas identified by the
CFPB: prevalence of use, use and impact in particular arbitral proceedings and
the impact and use outside particular arbitral proceedings. IBAT's primary
message to the CFPB is to urge support for the U.S. Supreme Court's approach,
which provides businesses with a template for fair arbitration provisions, and
to advocate reasonable parameters on arbitration clauses in consumer

IBAT Leadership Division

The IBAT Leadership Division, the nation's largest organization for present and future banking leaders, is expanding its reach to provide more opportunity for its members to connect.  The change was recently approved at a meeting of the Leadership Board of Directors following recommendations made by its Strategic Planning Committee.  

The plan calls for the creation of eleven chapters throughout the State of Texas which will elect its representatives to the Leadership Board and establish local committees to provide opportunities for greater involvement for the Division's 550 members.  Three committees will be established in each of the districts to help advance the Division's mission of assisting IBAT in raising political action committee funds, providing local specialized education and networking opportunities and expanding the Division's membership.

"The Board unanimously and enthusiastically endorsed the new structure," said Brandon Bartek, Mills County State Bank, Early.  Bartek was named Chairman of the Division for the 2012-2013 fiscal year.  "We needed a structure that would allow for the membership to work on Division projects and that could tap the expertise of so many that have expressed interest in being involved.  I'm excited about these enhancements, and the opportunities to increase banker involvement in an already terrific organization."

Two regions (Texas Panhandle and Northeast Texas) will serve as pilots this year.  Other regions will begin to phase into the new structure over the next several years with full implementation scheduled for 2015. 

Leadership members will soon receive details of the plan and are encouraged to engage in this important opportunity to further the cause of community banking, as well as foster personal and professional development. 

Fun Fact Friday

Money can't buy happiness, but how much would it take to
make you feel successful?

A recent
survey conducted by CareerBuilder
found that the answer for most Americans
might be less than you'd think.  According to the survey, "the vast
majority of U.S. workers - 75 percent - don't feel that they need to earn six
figures in order to be successful."

Twenty-eight percent of respondents said that a salary of
$50,000 to $70,000 a year would give them a feeling of success.  Twenty
three percent put the number at less than $50,000.  Only one in ten said
that it would take $150,000 or more.

Men were twice as likely than women to say it would take six-figures
for them to feel successful.   

TAG Extension

just over six months to go until the December 31 expiration of full FDIC
coverage for non-interest-bearing transaction accounts, IBAT is stepping up the
efforts to gain support for five year extension of the program.  First
crafted by the FDIC in October 2008, the Transaction Account Guarantee (TAG)
program was meant to stabilize the banking system and protect depositors.
 In 2010, Congress, with bi-partisan support, modified and extended the
coverage for two years.  

full coverage of these deposits provides a counter-balance to Congress'
failure to end the implied "too big to fail" de facto protection of
deposits at the largest American banks, providing small businesses with
confidence to keep their transaction accounts with community banks.  

has drafted letters to the Texas Congressional delegation
urging their support on this issue and is currently distributing a letter to the editors of Texas newspapers to raise
awareness of this issue among the small business community.

Silver Alert


Lake Charles, Houston, Corpus Christi, Austin/San Antonio, Fort Worth


The Harris County Sheriff's Office is searching for Alberto
M. Montalvo, diagnosed with Dementia,
white male, 88 years old, DOB 10/10/1923, 5' 6", 193 lbs, gray Hair, brown Eyes,
wearing a beige polo shirt over a white t-shirt, blue
jeans, and brown loafers.  He has a scar on his face and bruises on his

The senior
citizen was last seen at 9:00 am, 6/20/12 at 7866 Battleoak
Drive, Houston, TX, driving a white, 2000
Chevy Silverado with TX License Plate 29MXP5.

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 Harris County Sheriff's Office at 713-755-7427.

News Media
Point of Contact is

Harris County Sheriff's Office at 713-755-7427.

Charles Cooper

Banking Commissioner Charles Cooper was elected Treasurer of the Conference of
State Bank Supervisors (CSBS), the Washington-based organization representing
the state banking departments across the country. Cooper has previously served
on the CSBS Board of Directors, and most recently was Chairman of the
Legislative Committee.

extends our sincere congratulations for this well-deserved honor, and
appreciates the Commissioner's willingness to take a leadership role in this
important organization and in the future of community banking.