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.

Longtime South Texas Banker Passes

Community banker and friend Frank Bain, Sr. passed away last week, four days after the death of his wife of 70 years, Josephine.  Mr. Bain and his family have been community bankers in Devine and Stockdale since the 1930’s.  A very nice tribute may be found in his obituary.

IBAT wishes to express our heartfelt condolences to the Bain family.

BOCB Award Winner Citizens State Bank

Citizens State Bank received a Silver medal in the Best of Community Banking Awards sponsored annually by the Independent Bankers Association of Texas (IBAT).  All six branches of Citizens State Bank in Burleson County participate in Relay for Life, the American Cancer Society’s fight against cancer. Throughout the year, they hold fundraisers unique to their area, such as turkey shoots, strawberry sales, bake sales, softball games and more. The whole community participates and form teams for the relay.  Many of the bank’s employees have been personally affected by cancer constituting an overwhelming involvement in this event. Over $16,000 was raised by Citizens State Bank this year with a total of $51,000 raised throughout Burleson County.

IBAT Banker Pam DeCeault in the News

Photo by: Kilgore News Herald

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.

She's a former president of the Kilgore Rotary Club, a saltwater fisherman, a member of the Coterie Club, a fervent advocate of the Boys & Girls Club and Habitat for Humanity and executive vice president of Kilgore National Bank.

As of Tuesday night, Pam DeCeault is also the 2011 Kilgore Chamber of Commerce Citizen of the Year... Read more.


FDIC Banker Outreach

The Independent Bankers Association of Texas and the Texas Bankers Association have partnered with the FDIC and Texas Department of Banking to bring you this important update on current and emerging banking issues. Breakout sessions are tailored for directors, risk management staff and consumer compliance staff. Attendees will be provided with resource materials for future reference. Register now!

IBAT Member Frost Bank News

Frost Bank last week announced that they had filed to convert from a national bank to a state member bank.  In a San Antonio Express story, Chairman Dick Evans indicated that the move was to facilitate better communication with their primary regulator, and was in the best interest of the bank. American Banker also covered the story.

Texas Finance Commission Appointments

Governor Rick Perry last week reappointed two members and named a new appointee to the Texas Finance Commission.  All the appointments are for terms ending February 1, 2018. 

Jay Shands, President and CEO of First Bank and Trust East Texas, Lufkin, was reappointed as one of the now two commercial bank representatives. 

Darby Byrd is the retired CEO of Orange Savings Bank, and currently serves as Vice Chairman of the bank.  He has been reappointed as the savings bank representative.

Both of these gentlemen have served with distinction.   IBAT congratulates them on their reappointments, and appreciates their commitment to the industry.

New to the Finance Commission is Victor Leal of Amarillo.  Mr. Leal is president and CEO of V. Leal’s Management and Leal’s Mexican Restaurants, and is a former mayor of Muleshoe.  We look forward to working with Mr. Leal in the coming years.

Further information is available in the Governor’s press release.

IBAT Member First State Bank & Trust Celebrates 110 Year Anniversary

On February 16, 2012 the First State Bank & Trust of Carthage, Texas will celebrate 110 years of service to the people of Carthage and Panola County, Texas.

First State Bank & Trust was founded in 1902 as Merchants and Farmers National Bank with capital of $25,000. The founder was R.E. Trabue. Thomas Boren was President, L.J. Smith was VP and Cashier and 3 other employees opened its doors on February 27, 1902. The deposits at the end of the year totaled $6,021.

The bank changed its name in 1910 to Guaranty State Bank. The reason for the change was to take advantage of the guaranty fund which was developed by the State of Texas to ensure the deposits of banks after the Panic of 1907. This was a forerunner of FDIC Insurance, which came into being in 1933 by the act of Congress. The original amount of FDIC insurance for individual accounts was $5,000 per account. The program remains in place today with coverage for individual accounts up to $250,000. Mr. Trabue sold the bank to Mr. R.P. (Pink) Ash in 1910. Bank deposits at the end of that year exceeded $93,000.

In 1923 Guaranty State Bank reported deposits of $410,733. The bank was headed by President R.P. Ash, Vice President A.A. Jordan, Cashier Horace R. Allison, and Assistant Cashier Mrs. Berna Ash Reeves. Mrs. Reeves was Mr. Ash’s daughter and served on the Board of Directors along with Mr. Allison, Mr. Jordan, Mr. Ash, J.M Carnes, Lee Ferguson and J.H. Wooten. In 1925 the bank name changed to First State Bank. Mr. A.L. Lipscomb, Sr. served as interim President until 1927 when B.F. Payne, Jr. purchased the bank from Mr. Ash. B.F. Payne, Jr. was elected President in 1928 and served in that capacity until 1960 when he was succeeded by his nephew, Milton L. Payne. B.F. Payne continued to serve as Chairman of the Board until his death in 1963. Milton Payne served as President until 1984 when he became Chairman of the Board. He served as COB and President until 1984. W.C. Applegate succeeded him as President and served until 1988. Milton served as COB and President from 1988 to 1990.

In 1990 Jim Payne was elected Vice Chairman of the Board and Lynn Vincent was elected President. In 1998, Jim was elected Chairman of the Board and Milton Sr. Chairman. Milton and Jim have served the bank a total of 110 years (Milton-65, Jim-45), which coincides with the 110th Anniversary in February 2012.

Deposits of First State Bank at the end of the decade of the 30’s exceeded $346,000.

The decade of the 40’s impacted business across the nation and created personnel vacancies because many employees were involved in the war effort through military service overseas. The wartime directors included Horace Allison, John C. Brown, Mrs. Nell Owens, B.F. Payne and Mary Payne. Dan Shaw’s wife, Nettie, served as an assistant cashier and director while Dan served overseas. Deposits at the end of the decade were $2,762,614.

In the decade of the 50’s, oil and gas exploration created the opportunity for continued development of local businesses. Two long time employees began their service to the bank in the decade: Welton Sanders (1955) and Lynn Vincent (1957). Mr. Vincent currently serves as President and is a member of the Board of Directors.

Foster Murphy, son-in-law of B.F. Payne, Jr., joined the bank’s board in 1959 and continues in that capacity today. His son, David Murphy, currently serves as Vice President and director.

In 1963 the bank added a trust department and changed its name to First State Bank & Trust Co. The deposits at the end of the decade reached a record $12,153,187.

First State Bank & Trust Co. was given the opportunity for a new location when a butane truck caught on fire and burned several businesses on West Panola Street in the fall of 1968. Construction of a new building began in 1971 and the bank moved to its present location in March 1972. Employees J.R. Duke and Gene Giles joined the bank in this decade. Mr. Duke retired in 2009 as an officer but continues to serve as a director. Mr. Giles currently serves as Sr. Vice President of Lending and is also a director. Deposits at the end of the 70’s were $39,064,618.

A new drive-in on N. St. Mary Street was added in 1983 due to increased demands for drive-in service. Deposits at the end of the year reached $72,205,976. The first ATM was added in 1983.

Decades of the 90’s began with a 12,000 square foot addition to the building built in 1972. This addition included the first escalators in Panola County. Deposits at the end of the decade totaled $188,638,221.

As the bank entered the 21st Century, the pace of change continued with the development of debit cards. The bank celebrated 100 years of service to the community in 2002. The use of computers has driven banks to move forward and to offer new and exciting opportunities for our customers. The latest addition to expand our services to the people of Panola County include a new 3,600 sq. ft. convenience bank at 120 W. Panola. It includes 3 commercial lanes, 10 drive-in lanes and a new ATM in March of 2009. The present directors of the bank are Dwain Brady, John W. Cooke, J.R. Duke, Tom Escoe, Gene Giles, David Murphy, Foster Murphy, Jim Payne, Milton Payne, Kevin Smith, Charles Thomas, Lynn C. Vincent, and Travis Wall.

Deposits as of December 31, 2011 were $383,717,274 and the total capital for the same period was $65,141,422.

As we approach our 110th anniversary, we are more aware than ever that our success as a banking institution has been made possible by the loyal customers of Carthage and Panola County.

BOCB Award Winner Brenham National Bank

Brenham BOCBBrenham National Bank received a Gold medal in the Best of Community Banking Awards sponsored annually by the Independent Bankers Association of Texas (IBAT).  The Brenham bank was recognized in the Financial Literacy category for an aggressive educational campaign to provide a better understanding of financial responsibilities and career opportunities within the community.  Bank employees developed curriculum, conducted workshops and served as volunteer teachers for elementary and high school Junior Achievement programs. Included in the campaign was a “Personal Finance Workshop”, designed to train-the-trainer so that attendees could share information and materials with friends and families.

Growth Strategies: Top 10 Ways Banks Can Grow in 2012

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.

Bankers Digest Featured Articles February 6, 2012 Issue
Source: Grant Thornton LLP

Even in the midst of current industry challenges, banks can take simple steps to grow in the year ahead, according to a recently released report by Grant Thornton LLP.

With the squeeze in interest margins, decrease in lending opportunities, and increase in capital-level requirements, bankers need to focus more clearly on where to deploy capital for the greatest return... Read more.

Appraisals Summit

A recent issue of Texas Bank Report, published by the Texas Department of Banking, identified appraisal and collateral evaluation deficiencies as one of the most glaring issues facing banks in examinations.  The Department specifically identified failure on the part of banks to:
  • Perform timely annual appraisals on Other Real Estate Owned;
  • Update appraisals in distressed markets upon renewal; and
  • Secure an independent third party inspection on livestock and equipment.  

Registration is now open for the March 22 IBAT Appraisals Summit, aimed at updating your real estate lenders, and others involved with lending on real estate, on existing and emerging regulations and trends.

Commenting on Transfer of Regulations

As innocuous as a transfer of regulations from one federal agency to another may at first appear, we are concerned with the deleterious effect the transfer could have on compliance research.  When Regulations B, C, E, F, G, H, I, J, K, L, M, O, P, X, V, Z and DD are transferred to the Consumer Financial Protection Bureau, does that mean that all the links we’ve made to the transferred rules will die overnight. The next time you are researching a compliance issue and you click on a link to read the law, that link may be dead.  Our guess is that it will.  Additionally, the numbering for all these regulations will also change overnight? For instance, Regulation Z will change from 12 CFR part 226 to 12 CFR 1026.  This is going to cause a lot of confusion.  Finally, transactions that occurred prior to December 30, 2011, will be regulated by the old regulations and those closed thereafter will be controlled by the new regulations.

IBAT has written a comment letter to the CFPB, and we encourage you to use it as a template to express your concerns to the CFPB.