Time is Running Out!

Financial literacy is a real problem in Texas and the IBAT Education Foundation is committed to doing something about it!

The need for better financial literacy is obvious: 

  • Texans have among the lowest credit scores in the nation
  • Texas ranks 48th in household net worth and 44th in home-ownership rates
  • Major payday lenders report that fully two-thirds of their nationwide profits come from Texas

In 2011 the Education Foundation launched the IBAT Teach the Teacher Program providing teachers a practical, holistic approach to teaching money management to high school students.  This program was so successful there are plans to roll it out across Texas in 2012.  But we need your help!  By purchasing a raffle ticket you will be funding the programs of the Education Foundation.

To support the IBAT Education Foundation and its mission to create a more financially literate Texas please consider participating in our 2012 Guiltless Giveaway Raffle for a chance to win:

Grand Prize - $5,000 Discover Gift Card

2nd Prize - Apple iPad2 Wi-Fi, 3G, 32GB
3rd  Prize – Apple iPad2 Wi-Fi, 3G, 32GB
4th Prize – Apple iPad2 Wi-Fi, 3G, 32GB
5th Prize - Nikon Digital Camera
6th Prize – Nikon Digital Camera
7th Prize – Tiffany Necklace
8th Prize – Tiffany Bracelet
9th Prize – Tiffany Bracelet

Buy Guiltless Giveaway raffle tickets now!
The drawing will be Friday, April 13, 2012.

Credit Analysis Summit

On April 18, IBAT will host its 2012 Credit Analysis Summit at the Sheraton Dallas.  This one day program is designed to introduce critical financial and non-financial credit analysis considerations, documentation, monitoring and other important factors central to the review of most major loan types. The program emphasizes ratio analysis, balance sheet and income statement trends, SFAS 95 cash flow analysis and non-financial considerations critical to sound underwriting principles.

Real estate lenders and others involved with lending on real estate, loan review, personnel, credit administration, accountants, other consultants and regulators are encouraged to attend.  

Topics include:

Credit Analysis Procedures

  • Purpose of Loan Analysis
  • Regulatory Authorities
  • Loan Grading

Financial Statement Analysis

  • Purpose of Financial Statement Analysis
  • Analytical Techniques
  • Cash Flow Analysis—SFAS 95/UCA Cash Flow
  • Converting Tax Return Income to Cash
  • Industry Comparisons
  • Working Capital Conversion Cycle

Non-Financial Credit Considerations

  • Character
  • Management Ability
  • Industry

The Credit Write-Up

  • Critiquing Sample Credit Write-Up
  • Collateral
  • Valuation Issues
  • Accounts Receivable and Industry Considerations
  • Tracking Systems

Regulatory Underwriting Expectations

Grading of Credits

  • Discussion of Key Components of Risk Ratings
  • Discussion of Various Grading Systems

Registration is now open for the event.

Community Banking Month


Members of the Independent Bankers Association will be joining with our counterparts across the nation to celebrate Community Banking Month.  During the month of April we recognize the contributions of our Texas-based financial institutions to the state’s economic growth.  

Community banks historically have played a significant role in the growth of Texas by providing the financing necessary to ensure the success of the towns and cities within our borders.  Today, more than 2,000 independent banks and branches in 700 Texas communities still provide the majority of small business and agricultural loans and provide a hometown choice for Texans.

Let us know how your bank plans to celebrate Community Banking Month with your customers and we’ll post it on our website!

For more information, please contact Mae Beth Palone at mbpalone@ibat.org.


Community Banking Month

With financial literacy month just a few days away, it's not too late to consider ways that you can help encourage your customers to take better charge of their financial health. This month, we've compiled a list of resources that can be helpful to you, your customers and even the next generation of community bank customers. Plus, don't miss Chairman Willard Still's IBAT column for a step by step outline to leaping into action.

A REAL Free Credit Report
Customers who are actively engaging in monitoring their credit reports are less susceptible to fraud and identity theft.  Perhaps you've heard a certain catchy jingle sung by a man in a pirate costume about his free credit report. There are so many sites that claim to offer that service, but almost all of them require a subscription and a credit card number that will be charged monthly beginning 30 days after the user first logs in. AnnualCreditReport.com is the only truly free option that allows anyone to pull their full credit report from each of the three reporting agencies for free once each year.

IBAT Career Day Resources
If your local school hasn't already contacted you about participating in a career day, then maybe it's time to reach out to them!  IBAT has a number of free career day resources already developed for community bankers to go into the schools to talk about how banks work and, more importantly, how they work in the community.

Me Save?
Everyone has their excuses for not saving enough money.  But there are plenty of ways that little decisions can make a big difference in the financial lives of your customers.  Help them see and calculate the cost of their decisions with Me Save? from Feed the Pig.   

Financial Literacy Games for Kids
There are many games that kids can play to help reinforce the concepts of saving, investing and spending wisely.  Consider letting your customers know about games like Money Metropolis, Coin Memory and Financial Football that can help get kids thinking about and understanding money. 
Financial Health Throughout Life
Each phase of life brings its own challenges and opportunities for long-term financial health.  The U.S. Securities and Exchange Commission has practical tips, check lists and suggestions for consumers that coincide to life events such as a first job, marriage, separation & divorce, caring for loved ones and inheritance.  Use this information in your own bank to inspire resources for you to share with your customers to connect to these major life events.

20th Annual Congressional Visit

The financial services industry is facing unprecedented challenges, not the least of which are emanating from the legislative and regulatory bodies in Washington, D.C. Community banks need to stand together and send a consistent message to our elected representatives and regulators. IBAT represents you and you alone. Our message is neither diluted nor compromised. The time to fight for community banking’s future is now!

It is incumbent upon each of us to be proactive advocates for community banking. Please join me and your community banking colleagues as we travel to Washington D.C., April 24-27. It has been especially gratifying over the past three years joining over 150 community bankers from Texas on a mission to tell and reinforce our story. Standing room only in Congressional offices with passionate community bankers makes a huge impact on our members of Congress.

Our room block at the Gaylord National Harbor Hotel expires on Friday, March 9, and we cannot guarantee availability or discounted rate beyond this date so don’t delay. Download the registration form and fax (512.322.9004) or scan and e-mail a copy (jholstien@ibat.org) TODAY! You’ll be out of the bank for only three days, and the ultimate benefits of personally delivering our message to Congress and the regulators far outweigh the cost of the trip. Our visit is scheduled in conjunction with the ICBA Spring Policy Summit, and you will be a part of timely briefings by Congressional leaders and top regulators.


Register now for IBAT's 2012 Congressional Visit


The Latest Beige Book

Dallas Beige Book
February 29, 2012

Federal Reserve Bank of Dallas

The Eleventh District economy continued to grow at a moderate pace, and outlooks were more positive than in the last report. Manufacturers reported increased activity. Demand for business services was solid, and activity in transportation services rose modestly. Housing and commercial real estate markets continued to improve. Overall building activity remained subdued, with the major exception being robust multifamily construction activity. Contacts said retail sales growth was tepid and automobile sales held steady. Financial services respondents said overall loan demand edged up. Energy activity was strong, and agricultural conditions improved. Employment levels were flat to up slightly. Price and wage pressures were modest... read more.

IBAT's goal is to provide a diversity of opinions and viewpoints
about national banking news.  Some news articles do not necessarily
reflect the opinion of the Independent Bankers Association of Texas.



IBAT on Capitol Hill

After months of lobbying members of the Texas Congressional delegation and the Chairman of the House Financial Institutions Subcommittee, IBAT presented oral testimony on March 1st in Washington DC on the detrimental ramifications of Regulation Q repeal which now permits banks to pay interest on business checking.  The 70 year old prohibition was repealed and became law with the passage of the Dodd-Frank Financial Modernization bill.

IBAT has warned for months that the repeal would result in serious unintended consequences that would unnecessarily raise the cost of credit to small business borrowers by limiting a bank’s ability to make long term fixed rate loans.

Frost Bank’s Senior Executive Vice President Cliff McCauley presented the IBAT testimony along with Mr. Alex J. Pollock of the American Enterprise Institute. 

This is an important development for all community banks, particularly if there are serious attempts by members of Congress to roll back some of the harmful provisions of Dodd-Frank.

Mobile Services

More consumers are completing banking transactions, like paying a bill, through online and mobile services, a new survey from Fiserv Inc. has found.

Roughly one out of four survey participants have used mobile banking, while 40% of those users have paid a bill using their phone (up from 28% in 2010), the Brookfield, Wis., found in the survey released on Monday. Those who used their mobile phone to transfer money increased from 25% in 2010 to 32% in the current survey... read more.

Login is required to view the entire story at www.americanbanker.com.  Subscriptions to American Banker are available for IBAT members as a FREE benefit of membership.  To gain access to your subscription, please contact Alina Greavu at agreavu@ibat.org or 512-474-6889.

IBAT Bank Wins BOCB Awards

FirstBank Southwest in Amarillo won a Gold Eagle as well as the Community Spirit Award for their entry in the Best of Community Banking competition.  In an effort to draw together support for the High Plains Food Bank and corporations in the 29 counties served by the Food Bank, FirstBank Southwest created a contest for local high school art students to give their creative interpretation of the Food Bank’s mission. The winning art pieces, along with 12 corporate sponsor logos, decorate the Food Bank’s 18-wheeler. The truck will become an artistic visual collage of the face of hunger, as it delivers over 7 million pounds of food to 29 counties year round. Corporations were asked to give $5,000 for logo placement on the truck and FBSW has presented the Food Bank with a significant donation that will continue to be given annually, over 5 years.

April 3rd Webinar

Many banks, especially community banks, are looking for sources of revenue to replace their traditional real estate lending and C&I concentrations. Treasury management services are revenue generators that have proven increasingly attractive to those banks. However, there are many such services, and providing them can become a potentially risky process if the bank isn’t careful about how it words its agreements with its customers.

Moreover, as the bank adds to the list of such services it makes available, managing the various agreements for each service, and coordinating the customer agreements with the bank’s vendor agreements, can become not only a legal minefield, but a logistical nightmare.

On April 3, IBAT will host a webinar, Making Sense of Treasury Management Services Agreements, featuring Erin Fonte of Cox Smith Matthews in Austin, TX.  Erin’s legal practice includes advising financial institutions, alternative payments providers, vendors and retailers regarding financial services, regulatory, bank product and services and payment systems laws, including commercial treasury management and cash management services, retail banking products, and stored value/mobile/emerging payments methods, systems and legal considerations.

CFPB-Overdraft Provisions

The Consumer Financial Protection Bureau (CFPB) recently announced an initiative to identify and ultimately address problems in account agreements that it perceives as overly complex and lacking transparency. Richard Cordray, the Director of the CFPB, provided his remarks at a town hall meeting held in New York to gather information on overdraft practices, the first step in shaping future policy decisions by the Bureau.

Over the next several months, some of the country’s largest banks will provide the Bureau with information on their overdraft practices.  The Bureau will then engage in a public outreach effort to gain “actual customer experiences” to drive structural reform to overdraft programs and fees.  

While overdraft practices were put under a microscope by last year’s FDIC guidance, Cordray’s assurance that any action taken by the CFPB would, “…build upon actions taken by other federal banking regulators,” signals that the scrutiny of overdraft programs is far from over.

Employee Benefits Webinar

Since the passage of the Patient Protection and Affordable Care Act in 2010, many businesses have been struggling to keep up with changing rules and regulations for their employee benefits offerings.  This Spring, Advantage Health Plans Trust is offering a free webinar series to help you stay on top of the shifting landscape in employee benefit compliance and avoid costly pitfalls.  

The first webinar in the series, Employee Benefits - The Basics, will be held on Tuesday, March 6, 2012.  The webinar is scheduled for 45-60 minutes and will feature discussion on the following topics:

  • Reporting
  • Terminations
  • Avoiding discrimination

Please encourage your human relations and other interested staff to attend this free educational offering. Registration is now open.

New Windstorm Models Raise Rates

Many Texans have had little else other than drought on their mind for the past two years.  I, for one, still feel the effects of our most recent dry, hot summer; especially as I replace “evergreen” plants that are anything but green! 

But, while ranchers and gardeners have been praying for rain in any form, another organization has been rethinking the risk model of a very different catastrophic weather occurrence: hurricanes and windstorms.   RMS (Risk Management Solutions), a catastrophic risk modeling firm that produces models and reports for the insurance industry and others, recently released a newly calibrated catastrophe model for Atlantic tropical storms that has dramatic implications for property insurance capacity, underwriting and pricing. 

Following are some of the pertinent points regarding the findings and possible impact on insurance programs:

  • Previously, hurricane modeling predictive tools were drawn from a sample database of storms going back 100 years;
  • RMS found that over the extreme long term, their loss predictive tools were accurate, but needed to be revised due to cyclical variations such as El Niño or La Niña and long-term temperature fluctuations (whether natural or man-made) that we’re currently experiencing;
  • Since 1995 there has been a marked increase in sea surface temperatures.  Temperature fluctuations (i.e., climate change) appear to cause higher sea surface temperatures.  Higher sea surface temperatures are strongly linked to a higher rate of hurricane activity;
  • Researchers from several esteemed universities were engaged to validate these findings and they concurred that higher sea surface temperatures were here to stay for at least five years;
  • For the next five years they expect greater frequency and severity for windstorm losses including hurricanes;
  • The new hurricane model takes into account $18 billion of detailed claims data for the past 20 years and analysis including pre- and post-landfall behaviors;
  • Due to increased and highly specialized new instrumentation, these new models appear to be more scientifically accurate;
  • In 2011, the U.S. had a reported $25 billion in losses from storms, and these numbers have not been factored into the new model;
  • The likelihood of a Cat 3 storm making landfall is 20% higher than previously modeled;
  • Losses are expected to be 40% greater, on average, than previously modeled for the Gulf Coast;
  • “Super Cat” is a new term applied to some regions expected to experience Hurricane Katrina-type losses in the next 2-5 years.  Properties in these areas are expected to see up to 125% greater losses than other “high-prone areas” and include Houston;
  • Underwriters of property insurance will be more demanding of explicit, accurate and complete information to properly evaluate and price risks; specifically areas that have a direct correlation to the degree of vulnerability to the amount of the loss
    • Occupancy type
    • Year built
    • Construction type
    • Number of stories
  • Loss amplification factors have also been added to the model, i.e., additional inflated areas in the claims payout due to the catastrophe nature of the loss
    • Demand surge – increased costs due to demand on building materials and suppliers
    • Delay in repair – generating further deterioration of damaged property and longer payouts in extra expense or business interruption values
    • Claims inflation and coverage leakage – increased claims settlements in an attempt to close claims files quickly, including covering some items that may have been otherwise denied, just to close the file without further delay

The implementation of this new modeling is upon us and we’re already seeing increases in property insurance statewide, with significant increases in property insurance in the Houston area.  Chubb has indicated that they will no longer accept ANY new values in Houston – even a small branch of a bank located elsewhere!   So we know that Chubb is “rebalancing” their portfolio to reduce the amount of “Super Cat” locations they have on the books.

Travelers is also realigning their windstorm writings.  At least at this point, they’re still offering coverage for good risks in all areas of Texas; albeit at increased premiums and deductibles.  We recently received an offer from them that placed a minimum wind/hail deductible on Houston properties at $50,000.

The insurance carriers have to pay attention to this modeling because it’s the acceptable barometer in the industry and therefore they must use it to make prudent pricing and deductible offers for coverage.  Likewise, the insurance carriers have to show an acceptable underwriting profit so the rating agencies will continue to look favorably upon them.  We’ve recently seen the effect that a reduced AM Best Rating has on insurance carriers with the downgrading of BancInsure. The cause and effect of this new model is harsh for all of us.

We’ll continue to report on the changes in our markets as they develop.

Carol Troy is the Agency Manager and Chief Operating Officer for IBAT Financial Services, a corporate insurance agency licensed by the State of Texas to offer insurance services to Texas community banks.

History Lesson: Liberty Nat'l Bank

Source: The Paris News

Liberty National Bank, a privately-owned community bank that serves Paris and Lamar County from its main bank downtown on Lamar Avenue, as well as two branches: one on Bonham Street in West Paris, and one on Collegiate.

Drive in East Paris, had its origins in City National Bank, according to Philip Cecil, current chairman of the board. The bank was chartered and open for business in 1890. Cecil said from the beginning, “The bank has always been centered on the financial well-being of the people in this community.”

The original City National (see photo) was located in the middle of the block on the north side of the square. It was an imposing structure, made of pink granite with polished granite columns. It was totally destroyed in the Paris fire of 1916. Cecil said that at the time of the fire, there were five banks located around the square. The only one that was spared was First National, located in the First National Building, one of the few downtown structures to survive the conflagration. Representatives from the four banks hired a contractor to erect a building on the square, which all four banks used as a temporary location until new structures were built. It was an unusual arrangement, but not as unusual as the fact that all four shared one vault.

City National then built a five-story building on the southwest corner of the downtown square. Because of the difficult circumstances of the time, including the fire, rebuilding costs and the collapse of the cotton market in 1920, City National was forced close its doors in January 1925. The Liberty National Bank of Paris was organized to acquire the assets and assume the liabilities of City National Bank, saving depositors any loss. Additional capital was paid by shareholders and the bank opened with a new charter by March of that year.
Cecil said the bank’s president, E. H. McCuistion, brought in his grandfather J. M. Cecil, a banker from Valiant, OK, as cashier and responsible for the bank’s management. A Cecil has been at the helm ever since.
Economic conditions leading up to the Great Depression, especially those affecting agricultural values, devastated the Paris area and the banks were hit hard. On April 17, 1931, with its capital depleted, the Liberty National Bank of Paris was re-organized into the Liberty National Bank in Paris. Again additional capital was paid in and the bank re-opened on April 20, with a new charter and a new name. Many in the community were unaware that any changes had been made.

When McCuistion retired in 1941, J. M. Cecil was elected president and served until his death in 1953. His son, J. Gilbert Cecil, who had served as cashier and vice president, succeeded him. In 1975, Gilbert Cecil was succeeded by his son, Philip R. Cecil, who served as president until January 2002. Carl T. Cecil, the fourth generation of Cecils to serve as bankers, is  currently president of Liberty National Bank.

Personal Service

If you have been around Friendswood for a while, say 40 years, you remember
on the land across the street from the present City Hall used to be Bales

When he was young, Loy Trevino would, “…wonder through the woods and explore
this whole area.”

“I used to play on this land. I used to fish in all the creeks. I knew every
creek and pond in this town,” Trevino said.

He came here in 1967 and graduated Friendswood High in 1980.

After Baylor University, he came back to Friendswood... read more.

Nuts and Bolts Summit

The Nuts and Bolts of Banking is a two-day summit for anyone wanting a complete banking overview – veteran bankers looking for a refresher course, new employees who need to learn the basics and bank suppliers who could use a primer on how a bank works.  This program is designed to acquaint attendees with banks and the banking environment.  You will understand how banking institutions are structured and regulated along with what banks do and how they do it.

“Take this summit – if you are at all interested or have questions about banking.  Especially young bankers,” said an attendee of last year’s event.  

The Nuts and Bolts of Banking Seminar will be held on March 28-29  at the Sheraton Gunter Hotel in San Antonio, Texas.  Registration is now open.

BOCB Award Winner FNB Killeen

The First National Bank Texas in Killeen took home the gold in the Best of Community Banking competition with their Lemonade Day entry. Lemonade Day is a national event that teaches children financial literacy and entrepreneurship. First National Bank Texas introduced this learning experience to the communities of Killeen and Fort Hood. Structured so that the youth would market “who has the best lemonade,” the children learned to set goals, develop business plans, establish budgets, seek investors, provide customer service, while also learning about banking basics and philanthropy. FNBT registered 1,490 children for the program in 2011, twice as many as the year before. Many of the lemonade stands donated their profits to a charity of choice after paying their “investors” back (usually their parents).

Bankers Push for TAG Extension

In October of 2008, with the country in the depths of the financial crisis, and banks failing by the dozens, Congress needed to create confidence in the safety of bank deposits. Its answer was the Transaction Account Guarantee program, which authorized the Federal Deposit Insurance Corp. to insure business transaction accounts with no limits.

There is no doubt that the program was popular. Balances in excess of the old coverage limit held in eligible transaction accounts — which by law earn no interest — now stand at $1.2 trillion... read more.

Login is required to view the entire story at www.americanbanker.com.  Subscriptions to American Banker are available for IBAT members as a FREE benefit of membership.  To gain access to your subscription, please contact Alina Greavu at agreavu@ibat.org or 512-474-6889.

IBAT Member's New Branch

Amarillo’s second-largest bank hopes to gain a foothold in the highly competitive Lubbock banking market and is turning to a longtime Lubbock banker to make it happen.

Happy State Bank announced Friday it has filed applications with state and federal banking regulators to open a branch in the Roman Oaks Center, 8001 Quaker Ave... Read more.

FSB Overton's 100 Year Anniversary

OVERTON — In the past century, First State Bank has adapted to new technology
and regulations to keep up with changing times, but it has never drifted away
from serving the community, Bank President Todd Meadows said.

“It is a community bank. It's all about the community. It's here to serve the
community. It's here to help the community achieve its goals, whether it's some
individual wanting to open a small business or someone buying a car. It serves
the financial needs of a community,” he said... Read more.

The Missing Linc

One has to admire the tenacity of the credit union lobby. Once again, a handful of very large credit unions are wearing out Congressional officials to pass legislation that will increase their business lending authority from 12.5% of their total assets to 27.5%... Read more.

February Capitol Comments

Click here for the February 2012 Capitol Comments. 

You must be a member to view this information.  If you have any questions please contact Alina Greavu.

Click here for the Capitol Comments Archives.

ATM Disclosure Suits

IBAT's goal is to provide a diversity of opinions and viewpoints about
national banking news.  Some news articles do not necessarily reflect
the opinion of the Independent Bankers Association of Texas.

By Ed Roberts

A coalition of bank and credit-union lobbyists joined the ATM industry in requesting legislation to stop lawsuits alleging violation of the Electronic Funds Transfer Act... read more.

Learn more about IBAT's American Banker subscription program.