2012 LD Executive Committee

During the recent IBAT Leadership Conference,
Brandon Bartek of Mills County State Bank in Early was elected Chairman of the
IBAT Leadership Division. Other officers elected include Kevin Monk of Alliance
Bank in Sulphur Springs, Chairman-Elect; Michael Moores of Citizens National
Bank in Henderson, Vice Chairman; and Mark Sheffield of Roscoe State Bank in
Bastrop as Secretary-Treasurer.   Angie Brown of First National Bank
in Giddings will serve as Immediate Past Chairman.

Zach Dean of
Fort Davis State Bank was elected to the Leadership Division Board of

directors include Lawson Allen, Jason Brummerhop, Anita Collins, Kirk Hudson,
Michael Marshall, John G. "Butch" Northcut and Gary Wells.

A sampling
of photos from the 2012 Leadership Conference is now
online, with more to come over the next several days.  

 Members of the IBAT Leadership Division Executive Committee (back, left
to right) Michael Moores, Mark Sheffield, Kevin Monk, (front, left to right)
Brandon Bartek, Angie Brown and retiring LD Board Member Gary Wells.

Making a Difference Award

is looking for that one person in your bank that goes above and beyond the call
of duty - the person who everyone looks to for ideas or assistance, whose
attitude inspires others to do more, or whose service to the community sets an
example for others. 

you know someone who fits this profile, please consider nominating him/her for IBAT's
Making A Difference Award.
  Nominations are now open for the 2012
award and will be accepted until Monday, June 18, 2012.  Award recipients will be selected by an outside panel of
judges and will be honored during the IBAT Annual Convention, October 6-9, at the Hilton Austin Hotel.
All nominees will be included in the IBAT magazine and on the IBAT website.

If you're interested in nominating one of your co-workers, please click
for full contest rules and entry guidelines.

"Mobile Wallet"

The "mobile wallet" has been a much talked about concept
over the last several years, with little result for most consumers.  In
2011, Google rolled out its mobile wallet app on select devices, but the launch
was marred by a security breach and low adoption.  While Google's missteps
appeased the naysayers, the real test for mobile wallet technology has always
rested at the feet of Apple and its history of influencing consumer behavior
and expectations.

Last week, Apple took the first steps towards a full mobile
wallet solution with Passbook, a new native app announced for the forthcoming
iPhone software update.  At launch, Passbook will allow consumers to add
their gift cards, boarding passes, movie tickets and other commonly used
"passes" to the device for easy scanning. 

While Passbook is hardly a game-changer in its first
iteration, it allows Apple to test and perfect the software side of mobile
payments while the stakes are lower.  It has been widely suspected that
the new iPhone, due to launch in Q4 this year, will incorporate a near-field
communication (NFC) chip that will communicate directly with point of sale
terminals at retailers around the world.  At that point, Passbook will
likely include the ability to connect Passbook to Visa, Mastercard and other
major credit card accounts.

Civil Money Penalties

November 2011 we reported that there
was activity by FDIC examiners whereby they were citing banks for carrying the Civil
Money Penalties endorsement for scheduled Directors & Officers on the
bank's D&O policy. May 30, 2012 delivered a new chapter to the
saga when legislation was introduced that would prohibit executives from
purchasing civil money penalties coverage or any other type of "clawback"
coverage to protect them from penalties intended to be punitive in nature.

bill was introduced by Representative Barney Frank and is entitled, "Executive
Compensation Clawback Full Enforcement Act
".  Experts in the insurance industry believe
it's likely to pass because there's no significant opposition.  The Civil Money Penalties coverage developed largely
due to competition - if one carrier offered it, everyone else had to follow or
they would lose market share.  A few
insurance carriers elected not to provide the coverage, but soon were forced to
add it, just to gain or keep business. 
Simultaneously, the cost for the coverage has historically been cheap -
not an exaggeration - at $25 per director or officer, it has been too cheap for
many banks to pass up!  Recently, due to
the controversy, some insurance carriers have been adding the endorsement, upon
request by the bank, to the bank's D&O policy. Without additional premium,
there's no money in it for the insurance industry - so they're not expected to
challenge the new legislation.

proposed Act allows insurance for an individual's defense costs. The insurance
industry's traditional D&O policies generally allow for defense costs for
these types of allegations; however the penalties and returned compensation
amounts associated are the real questions of the argument. If Representative Frank's
bill is passed, it's likely that those questions will be answered. Most insurance carriers and brokers, which
have been wrestling with the dilemma for the past year, will welcome the
resolution of these issues.  Unless
there's a call from the banking industry to take on the challenge we believe
the Civil Money Penalties endorsements will be removed from policies, with a
return of the unearned premiums as soon as the bill, as written, becomes law.

hesitate to contact Carol Troy or Connie Tolles of IBAT FS for more
information.  For additional articles on
the topic, we refer you to the following discussions:



Fun Fact Friday

We all know that crime doesn't pay, but perhaps the more
appropriate saying would be "Crime doesn't pay very much."  This,
according to a new research study conducted by economists in the United States
and the UK. 

Published in the journal Significance,
the study claims that US bank robbers made out with an average of $4,330
per person.  British robbers did slightly better, averaging £12,706 (about
$20,000).   At that rate, it would take three successful bank
robberies for a single-bank robber to surpass a poverty-level income as defined
by the United States
Department of Health and Human Services

"Given that the average UK wage
for those in full-time employment is around £26 000, it will give him a modest
lifestyle for no more than 6 months. If he decides to make a career of it, and
robs two banks a year to make a sub-average income, his chances of eventually
getting caught will increase: at 0.8 probability per raid, after three raids or
a year and a half his odds of remaining at large are 0.8 × 0.8 × 0.8 = 0.512;
after four raids he is more likely than not to be inside. As a profitable
occupation, bank robbery leaves a lot to be desired," the researchers

Making a Difference Award

Is there one special person in your bank who contributes above and beyond? The person everyone looks to for ideas or help. The person who contributes through attitude, character and deeds far more than their required job description. Or perhaps in addition to his or her bank responsibilities, this individual makes important contributions to the local community through volunteer efforts in the schools, hospitals, and civic organizations.

This is your opportunity to nominate this special person for the IBAT Making a Difference Award.  IBAT is accepting nominations for this award through June 18.

Award recipients will be selected by an outside panel of judges and will be honored during the IBAT Annual Convention, October 6-9, at the Hilton Austin Hotel. All nominees will be included in the IBAT magazine and on the IBAT website.

Nominees cannot be bank or branch presidents or chief executive officers.

Be detailed in your responses in order to provide the judges with the most complete overview of your nominee. Also, be sure to include a photo (digital preferred). Complete the nomination form and return to Mae Beth Palone:

Via Mail: 1700 Rio Grande Ste 100, Austin, TX 78701
Via E-Mail: mbpalone@ibat.org
Via FAX: 512.275.2269

Basel III Regulation

a somewhat surprising move, the Federal Reserve issued a notice for proposed
rulemaking titled Regulatory Capital Rules: Regulatory Capital,
Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital
Adequacy, and Transition Provisions
that seeks to put all U.S. banks under
the Basel III capital standards. The impact of this proposed rule is
somewhat mitigated by the fact that most community banks across the country are
already held to much higher capital standards (either explicitly or implicitly)
by their primary regulator.  In addition to increasing the capital reserve
requirements, the proposed rules also require capital of a
"higher-quality." The subject standards proposed for capital quality
means the Fed will be taking a harder look at the risk involved in assets held
by the bank. There is a 90-day comment period for the proposed rules. If
finalized in September of this year, the rules would be phased in beginning
January 2013.

will be reviewing and commenting on this proposal.

Please contact Steve Scurlock for more information.

Five*Star Award Winners

to this year's IBAT Five*Star Award

  • Abound
  • The
    Baker Group
  • Diebold

Since 2002,
IBAT has honored our Associate Members with the IBAT Five«Star Award, recognizing those companies who
routinely provide not just excellent service, but innovative solutions that
help community banks grow faster, enhance profits and gain efficiency.

Five*Star Awards will be presented during the Leadership Conference later this
week.  IBAT applauds the efforts of the 17 participating Associate Members
and the IBAT Leadership Division Executive Committee for all the time, effort and
care that went into the selection of this year's honorees.   

Legislative Wish List


IBAT Legislative Committee will be meeting on June 28.  One of the
responsibilities of this Committee is to approve IBAT's proactive legislative
agenda for both the state and federal levels. If there are particular
issues you believe IBAT should address at the upcoming Texas legislative
session or with the ongoing Congressional process, please call (512-275-2226) or email Steve
and we will put your concerns on the agenda for discussion.

BOCB Awards

the wake of the recent financial turmoil, many Texans are realizing the need to
put their trust and money in community banks - True Texas Community Banks. It's
a great time for you to highlight the contributions of your bank and staff -
while giving your shareholders, customers and community another reason to take
pride in our industry - by participating in the 2012 Best of Community Banking Awards.

the past 21 years, IBAT's Best of Community Banking award has recognized the
vital role community banks play in towns and cities across our great State of

Entries must be received in the IBAT office by 5:00 PM on Monday,
June 25th.
Showcase your bank's contributions to your community! Competition
is open to all IBAT member banks in good standing. Click here for more information.

Silver Alert



Brownsville, Corpus
Christi, Austin/San Antonio, San Angelo, Fort Worth, Houston



The San
Antonio Police Department is searching for Annie Elizabeth
Todd, diagnosed with Alzheimer's, white female, 77 years old, DOB
07/26/1934, 5' 0", 135 lbs, gray Hair, hazel Eyes, wears glasses.                                                              

The senior
citizen was last seen at 6:15 am, 06/04/12 at 9207 Stone Edge Place, San
Antonio, driving a black, 1999 Lincoln Town Car with North Carolina License
Plate RSD1930, with handicap placard.

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 San Antonio
Police Department at 210-207-7660.

News Media
Point of Contact is
Antonio Police Department at 210-207-7579.


and the CFPB have interpreted Section 8 of RESPA as prohibiting the retention
of unearned fees and fees that exceed the value of the goods, facilities, or
services provided. Without endorsing mortgage service providers retaining
unearned or excessive fees, the Supreme Court ruled that Section 8 only
prohibits the splitting of fees between two or more persons.

the case of Freeman v. Quicken Loans, Inc.[i], the U.S. Supreme Court held:
"In order to establish a violation of §2607(b), a plaintiff must
demonstrate that a charge for settlement services was divided between two or
more persons. Because petitioners do not contend that respondent split the
challenged charges with anyone else, summary judgment was properly granted in
favor of respondent."

Court held that §2607(b) (Section 8 of RESPA) cannot be understood to reach a
single provider's retention of an unearned fee. It clearly describes two
distinct exchanges. First, a charge is made to a consumer by a settlement
service provider. That provider then gives another person a "portion,
split, or percentage" of the charge.

2001 policy statement says that §2607(b) "prohibit[s] any person from
giving or accepting any unearned fees, i.e., charges or payments for real
estate settlement services other than for goods or facilities provided or services
performed." 66 Fed. Reg. 53057 (2001).  It says that "a
settlement service provider may not mark-up the cost of another provider's
services without providing additional settlement services; such payment must be
for services that are actual, necessary and distinct." Additionally, it
says that a provider may also "be liable under [§2607(b)] when it charges
a fee that exceeds the reasonable value of goods, facilities, or services

Court held that the last mentioned point by HUD is manifestly inconsistent with
the statute. According to the Court, a violation of Section 8 of RESPA can
only occur if the fee charged is split between two or more settlement service
providers. Unearned fees or fees that exceed the reasonable value provided are
not violations of RESPA.

Leadership and Culture

By Jim Bearden

The following article ran as a feature in the May/June edition of The Texas Independent
Banker Magazine

The Ultimate Classroom

After a relatively short ride from the airport, the bus
pulled up to our destination. As it rolled to a stop, two men boarded...one
through the front and the other through the rear doors. In tones that could
only be described as LOUD, and using language that was colorful
(understatement), they told us to get off the bus and to line up using yellow
footprints painted on the pavement as our guides for where to stand. It was 16
September, 1966, and I had just received my welcome to the Marine Corps Recruit

Beginning that evening and continuing for the ensuing ten
weeks of boot camp, followed by twelve weeks of Officer Candidate School and
thirteen months as a Marine infantry officer in Vietnam, I learned, and was
given plenty of opportunities to adapt and apply war-fighting skills. I was
also able to witness, firsthand, the power of organizational cultures and the
role leaders play in creating them.

What Sounds Good
Many organizational leaders take a very passive
(unconscious) approach to creating culture. They develop and occasionally
update foundational documents, things like mission statements, core values and
guiding principles. These documents find their way into new employee
orientation materials and may even be prominently displayed in lobbies and
other common areas.

One thing that such documents have in common is they all
sound good. Unfortunately, most of them share another characteristic: little
effort is made to convert the nice-sounding words and phrases into behavior.
And since the true measure of an organization's culture is the behavior of the
people working in that organization, the real culture may bear little
resemblance to all those nice-sounding words and phrases.

A Short List Long on Meaning
Like many other organizations, the Marine Corps has a set of
core values. They are: Courage, Honor & Commitment. The list is short, and
the words are certainly not flowery; but for Marines, it isn't about the words,
it's all about the behavior. The rich history of the Marine Corps, the epic
battles fought and won, are evidence of the Marine Culture. And that culture
has been created and sustained by leaders who know that unless they're brought
to life, foundational documents, even ones containing words like courage, honor
and commitment, have no real power.

With that as our background, here are six things
effective leaders do to bring words and phrases to life, to consciously
create cultures that reinforce and support behavior essential to organizational

Ensure that your employees understand what you expect
from them.
  There are three possible explanations for why people fail
to meet your expectations:

  • They know what you expect, but they're unable to
    meet your expectations.
  • They know what you expect, but they're unwilling
    to meet your expectations.
  • They don't know what you expect.

While the first and second explanations are sometimes
accurate, the third is more accurate more often. That being the case, I want
you to identify 3-5 situations in which employee behavior is especially important
to your bank's success. Next I want you to define the specific behaviors you
expect in each of those situations and then tell employees what you expect.
Before your employees can possibly meet your expectations, they must know what
those expectations are.

Model that behavior for them.  As leaders you
have two primary tools for influencing the choices others make: your words and
your actions. Your words are obviously important...they're the tools you use to
inform your employees about the behavior you expect. Your actions are even more
important. If telling people the behavior you expect is how you inform them, showing
them what that behavior looks like is how you lead them.

Measure their performance using your expectations as the
  Here's something most of us have heard, and based on my
experiences, it is the truth: "What gets measured gets done." After defining
and describing the behavior you expect and modeling that behavior for
employees, you must reinforce the importance you place on their meeting your
expectations. One of the best ways to do that is by observing their performance
and providing them with feedback based on what you've seen. In the absence of
follow-up, some employees will conclude that meeting your expectations is

Honor efforts and progress made toward meeting your
  The operative words here are "efforts" and "progress."
If you expect employees to do things they haven't done before, or to do things
differently than they're accustomed to doing them, then their early
performances will probably reflect their inexperience. What you should be
looking for here are good-faith efforts and any signs of progress; and when you
detect those, you should acknowledge them. Here's a caution: "Don't blow
smoke." Don't tell employees that they're doing "a good job" when they're not.
Simply acknowledge and honor (praise) their effort. If the quality of their
performance is shaky, they know it. If you tell them that they're doing a good
job when they know they're not, your credibility takes a hit.

Confront unwillingness/bad faith.  In the
previous step you responded favorably to good-faith efforts. In this step you
must respond appropriately to the alternative - people who are unwilling to try
and meet your expectations. Here are some points to remember about this
uncomfortable, but absolutely essential step in consciously creating culture:
Most people will make good-faith effort to meet your reasonable expectations;
some won't. You do a disservice to those who will by tolerating those who
won't; so don't.

Regardless of the words and phrases found in your
foundational documents, your bank's real culture is revealed by the behavior of
the people working in your bank. The words and phrases may sound good, but it's
the behavior that really matters. Effective leaders consciously create
cultures that reinforce & support behavior essential to their
organizational success. The six steps I've listed are things you can do to
close the gaps between what sounds good and what gets done.

Jim Bearden, CSP, facilitates
Leadership Development Seminars, conducts Sales Training Programs and delivers
customized keynote presentations on personal and professional
development.  For more of Jim's thoughts on leadership visit his web site
at www.jimbearden.com.

View the article as it appeared in The Texas Independent Banker magazine.