Happy Thanksgiving!

We pause this week and reflect on our many blessings and give thanks and appreciation to others.

Your IBAT family celebrates the humbling honor to represent a noble cause and honorable industry.  May we all look past this week and give thanks and appreciation to others all throughout the year.

We wish you and yours a very happy and safe Thanksgiving!

Christopher L. Williston, CAE

Please note: The IBAT offices will close at noon on Wednesday, November 27th, and will remain closed for the rest of the week. Regular office hours will resume on Monday, December 2, 2013.

Is Your Bank Safe Enough?

By Jeff Multz

Make no mistake: big things come in small packages. That’s no secret to cyber thieves. They often take the path of least resistance and see small and regional banks as easy prey since they likely have fewer resources than larger financial institutions, and have the same exposure as larger banks.

We often see threat actors testing their tactics on small and regional banks before attacking a larger financial institution. A small bank feels the pain of a million-dollar-or-more loss far worse than a big bank, and suffers more in a loss of time, productivity and reputation. 

Small banks often tell me, “We’re too small to matter,” “We don’t store valuable data,” and “Our core provider provides security.” Because smaller banks have less money to secure their systems and often don’t monitor their networks 24/7, it’s easy for cyber thieves to get in and out of their networks sight unseen. Some banks that “outsource” to a core provider (a company that provides cloud services for the bank’s core processing system) mistakenly believe that the core provider provides security for the bank. Core providers only provide security for themselves, so if you have malware on your system, it won’t affect them. Most bank/financial core providers don’t even mention the word “security” in the business contract, and they don’t provide security for your corporate environment!

There is no one device you can buy nor one thing you can do to ensure the security of your corporate environment. I often talk about the ‘50/30/20’ rule:

  1. We find firewalls notify you of about 50 percent of the security events that occur on your network.
  2. About 30 percent of notifications come from another security layer, the Intrusion Detection/Protection System (IDS/IPS), which is a good risk mitigation and a regulatory compliance demand.
  3. About 20 percent of your security event notifications come from servers, routers and switches that securely direct or receive your traffic. 

Your IDS/IPS and firewalls should be closely monitored, and they should be managed and deployed in a multi-layered security configuration. Your cyber security devices must be tuned and updated regularly so they are effective and do not disrupt normal business traffic. And, you should monitor all of these devices on your networks 24/7, so when malware gets in, you can get it out fast, often before any information has been stolen.

It is more cost effective and is easier to keep intruders out rather than to get them out. Having intruders in a network is one small package no one wants to open.

Jeff Multz, Director of North America Midmarket Sales at Dell SecureWorks, began his career as a software programmer in 1985 and has worked in technology ever since. He holds a Bachelor of Science Degree in Computer Science from Mercer University. For help with your cyber security, contact Jeff@secureworks.com.

Texas Gulf Bank Celebration

LAKE JACKSON, TEXAS – Texas Gulf Bank’s Centennial Celebration marked a special night for both the bank and several local charities. The event honored the strong relationships between employees, customers and friends. And as a special thank you for making the community a better place, nine non-profit organizations were presented a total of $100,000 in donations.

Receiving its charter in 1913, Texas Gulf Bank opened its doors as Freeport National Bank with $50,000 in capital stock. The original location in Freeport, Texas took up 2,200 square feet of the first floor of its building, while the Freeport Sulphur Co. occupied the second floor. The bank facilitated cashing checks for sulfur company employees, often staying open until midnight on paydays.

Since those days, the bank has grown and thrived - moving locations, expanding, adding new banking centers, and adopting the common name of Texas Gulf Bank, N.A. Today, the bank operates nine banking centers throughout Brazoria, Galveston and Harris counties with $432 million in deposits.

“We are extremely proud of our history at Texas Gulf Bank and our continued growth,” said James F. Brown, Jr., CEO of Texas Gulf Bank. “A lot has changed in 100 years, but there is one thing that remains the same. Our business is all about the people. We are a bank building strong foundations through strong relationships.”

Texas Gulf Bank’s commitment to building solid relationships in its communities was highlighted later in the evening with the presentation of donations to nine local charities, totaling $100,000.

Earlier in the year, the employees and Board of Directors of Texas Gulf Bank selected nine non-profit organizations to be finalists in the Texas Gulf Bank Giving to Grow $100,000 Community Giveaway. The allocation of the donations was determined by the community via voting on Facebook, at their local banking center, or on the Texas Gulf Bank website. Over 10,500 votes were cast in support of the finalists. Each finalist was guaranteed to receive at least a $3,000 donation, while the organization with the most votes would receive a $25,000 donation.

The final allocations were announced at the Centennial Event and were as follows:

  • Boys & Girls Club of Brazoria County - $25,000
  • SPCA of Brazoria County - $20,000
  • BACH - $20,000
  • Archway Academy -$10,000
  • CanCare - $10,000
  • ActionS Inc Brazoria County - $3,000
  • Goodwill Industries of Houston - $3,000
  • Hope Village - $3,000
  • Junior Achievement Brazoria County - $3,000

*The remaining $3,000 was split equally among all nine recipients.

“Over the last 100 years we’ve had the privilege to be a part of many great communities,” said Rich Jochetz, President of Texas Gulf Bank. “It is an immense honor to give back to those organizations that have given so much.”

About Texas Gulf Bank
Texas Gulf Bank is an independently owned and operated community bank that offers a full range of personal and business banking services, personal and business loans and cash management services, through nine locations in Brazoria, Galveston, and Harris Counties. Established in 1913 in Freeport, Texas, the bank has a reputation for strength, stability and prudent capital management. Texas Gulf Bank's capital exceeds regulation guidelines and has a substantial loan capacity. Texas Gulf Bank holds a five star rating from BauerFinancial. Member FDIC. For more information, visit www.texasgulfbank.com.

Week in Review: November 22, 2013

It was reported in the financial press [Thursday] that the Treasury plans to liquidate its remaining 31.1 million shares of General Motors Corporation. Has the government turned bearish on itself? A no less thorny question might be to make the same inquiry of the FOMC. The minutes of their October meeting, released earlier this week, indicate that a wide range of views exists among the members of the Committee. To no one’s surprise, much discussion took place regarding the fate of QE asset purchases. With the path now clear for the ascension of Janet Yellen to the head of the table, the likelihood of any sudden reduction in the nature or magnitude of monetary accommodation seems unlikely without compelling economic justification. On the other hand (there’s always another hand) public remarks made by St. Louis Fed President James Bullard indicate that a tapering announcement in December is still on the table. They have a really nice table... Read more in the Baker Market Update.

Integrity Bank Grand Opening

IBAT staff was honored to attend the grand opening of the Pasadena Branch of Integrity Bank this week. A huge crowd was on hand for the festivities and the evening was emceed by Executive Vice President and Regional Manager Hazem Ahmed.  Also on hand was Integrity Bank President and CEO Charles M. "Mack" Neff, Jr. who said their goal is to try to grow the bank about $100 million a year and take advantage of the tremendous economic growth opportunities in Houston and the surrounding areas.   

Integrity Bank has a long history with IBAT. Mack Neff having served as IBAT Chairman in 1996 and is current member of the Board of Directors of the IBAT Education Foundation.  Hazem Ahmed also serves of the IBAT Leadership Division Board of Directors and is the President of the Houston Region of the Division.

Flags at Half Staff



A half century ago, America mourned the loss of an extraordinary public servant. With broad vision and soaring but sober idealism, President John F. Kennedy had called a generation to service and summoned a Nation to greatness. Today, we honor his memory and celebrate his enduring imprint on American history.

In his 3 years as President of the United States, John F. Kennedy weathered some of the most perilous tests of the Cold War and led America to the cusp of a bright new age. His leadership through the Cuban Missile Crisis remains the standard for American diplomacy at its finest. In a divided Berlin, he delivered a stirring defense of freedom that would echo through the ages, yet he also knew that we must advance human rights here at home. During his final year in office, he proposed a civil rights bill that called for an end to segregation in America. And recognizing women's basic right to earn a living equal to their efforts, he signed the Equal Pay Act into law.

While President Kennedy's life was tragically cut short, his vision lives on in the generations he inspired -- volunteers who serve as ambassadors for peace in distant corners of the globe, scientists and engineers who reach for new heights in the face of impossible odds, innovators who set their sights on the new frontiers of our time. Today and in the decades to come, let us carry his legacy forward. Let us face today's tests by beckoning the spirit he embodied -- that fearless, resilient, uniquely American character that has always driven our Nation to defy the odds, write our own destiny, and make the world anew.

NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim November 22, 2013, as a Day of Remembrance for President John F. Kennedy. I call upon all Americans to honor his life and legacy with appropriate programs, ceremonies, and activities. I also call upon Governors of the United States and the Commonwealth of Puerto Rico, officials of the other territories subject to the jurisdiction of the United States, and appropriate officials of all units of government, to direct that the flag be flown at half-staff on the Day of Remembrance for President John F. Kennedy. I further encourage all Americans to display the flag at half-staff from their homes and businesses on that day.

IN WITNESS WHEREOF, I have hereunto set my hand this Twenty-first day of November, in the year of our Lord two thousand thirteen, and of the Independence of the United States of America the two hundred and thirty-eighth.


Mortgage Rules Update

Yesterday morning, in a release from the CFPB, we learned that the agency announced they are issuing the final mortgage disclosure rule, "Know Before You Owe" with an effective date of August 1, 2015.  IBAT, along with the ICBA, has been actively pursuing delayed implementation on all new mortgage rules being promulgated by the CFPB.

The news that the mortgage disclosures aren't effective in 2014 is encouraging but community banks deserve delays on all mortgage rules scheduled to take effect in January 2014. Just last week IBAT sent a letter suggesting delayed implementation and has joined a broad coalition of industry advocates requesting the rules be delayed.

We will continue to work toward our objectives to ensure that community banks have adequate time to prepare systems and forms in order to be in full compliance and to not disrupt mortgage availability to bank customers.

You can read the agency release here.  The final rule is available here.

Suspicious Activity Reporting

Several recent questions about Suspicious Activity Reporting, including this week's Legal Ease, prompted our compliance staff to offer a Suspicious Activity Reporting Overview for our readers.  

This one page handout can be given to each department to assist in understanding the suspicious activity reporting process and requirements.

CFPB Mortgage Rules

With new mortgage rules from the CFPB scheduled to take effect in January, IBAT filed a letter with the bureau last week, urging a nine to twelve month delay in implementation.  Additionally, IBAT signed on to a coalition letter of national and state banking associations urging delay.  

Included in the IBAT letter were the comments of a number of Texas community bank compliance officers, who were asked to tell us why they needed a delay in the January effective dates of the CFPB's mortgage rule changes.  

"Texas community bankers are asking for more time to get systems and staff up to speed on the new mortgage rules," said IBAT President and CEO Chris Williston. "The request is a reasonable accommodation to allow for a seamless rollout for banks and customers alike."

Please take the time to read our letter and write a letter of your own to the CFPB.

The Latest on Fair Lending

For the second time in as many years, a lawsuit which could stand to invalidate the doctrine of disparate impact has settled out of court, avoiding an eventual showdown in the U.S. Supreme Court.  

In this instance, the case of Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., was scheduled to be heard by the Supreme Court next month, but the Mount Holly City Council approved a settlement last week.

IBAT has been very concerned about the number of fair lending referrals made to the Department of Justice by federal regulators and is obviously disappointed that the Supreme Court will not have an opportunity to determine the validity of disparate impact as a litmus test to determine when discrimination has occurred. At this time, IBAT is unaware of other cases working their way through the court system.  As such, anticipated action by the Supreme Court is not expected any time soon.

Progress on Regulatory Relief

The House Financial Services Committee unanimously passed H.R. 3329, a bill directing the Federal Reserve to raise the asset threshold in the Small Bank Holding Company Policy Statement from $500 million to $1 Billion. The bipartisan bill, introduced by Congressmen Blaine Luetkemeyer (R - MO) and Patrick Murphy (D - FL), will allow more community banks and savings & loan holding companies opportunities to incur additional leverage when raising capital.

IBAT appreciates the efforts of the bill authors, Chairman Hensarling and Ranking Member Waters, as well as all of the members of the Committee in advancing this bill.  Further, we continue to urge swift consideration of a menu of regulatory burden relief bills presently introduced, including the CLEAR Act (H.R. 1750/S. 1349), which was the subject of a recent call to action.

Week in Review: November 15, 2013

Perhaps the most noteworthy economic news of the week did not come in the form of an arcane statistic. Depending on one’s point of view, the Senate testimony of Janet Yellen, the putative successor to Ben Bernanke, could be seen as either a warning or a reassurance. For those on-board with the current direction of monetary policy, Ms. Yellen’s comments gave no indication that anything would materially change. If you like your Quantitative Easing, you can keep it. Period. For critics of the way things are, Ms. Yellen let them know that they would, in all likelihood, remain critics. Market reactions to Ms. Yellen’s answers were generally favorable.

In the realm of arcane statistics, we learned on Tuesday that the National Federation of Independent Business Small Business Optimism Index (now that’s arcane) fell unexpectedly to 91.6 while the market was looking for 93.5... Read more in the Baker Market Update.