Welcome Lori!

The Independent Bankers Association of Texas (IBAT) is pleased to announce the addition of Lori Cortez to the IBAT Services team.

Lori joins IBAT Services as a Vice President, following thirty years of service as a Texas community banker, most recently with Southwest Bank in Fort Worth, Texas.

In her new role, Lori will expand the knowledge base of the IBAT Services team, providing an in-house banker’s perspective to identifying new products for endorsement by the IBAT Board of Directors and the due diligence that underlies every new endorsement.

To reach Lori, or any member of the IBAT Services team, call 512-474-6889.

Travelers Webinar

Financial institutions continue to see a problem with lender liability claims, despite the overall economic improvements.

Please join Travelers on June 25, 2014 from 1:00-2:00 p.m., for a webinar intended to provide you with the necessary analysis for the following steps of the loan origination process:

  • Loan Proposal and Negotiation
  • Due Diligence and Loan Underwriting
  • Loan Approval and Commitment
  • Loan Documentation and Closing

Take advantage of this opportunity and register for the webinar. Multiple individuals from the same bank can listen in on the call.

Malware Targets Banking Apps

The relatively calm waters of mobile security are being stirred up this week as media outlets are reporting that the first major threat to mobile banking security has arrived in the U.S.

A new breed of Russian malware, Svpeng, is targeting Android devices and looking for specific mobile banking apps (Citi, Amex, Wells Fargo, B of A, TD, Chase, BB&T and Regions) on the phone.  Upon finding a target, the phone is locked and hackers demand money in the form of Green Dot’s MoneyPak cards to unlock it. 

The malware does not currently steal login credentials to the banking apps but is expected to do so in the future.  Right now, its functionality is focused only on holding ransom those devices that house one of the aforementioned apps.   

“Every mobile app, whether developed for Apple or Android, is prone to attackers displacing the app with their own,” said Jeff Multz, Director of North America/Security Evangelist of Dell SecureWorks.  “Each app needs to be tested each time it’s upgraded and constantly validated as correct.”

Special Educational Opportunities

IBAT is pleased to offer two upcoming educational opportunities to help Texas community bankers take their careers to the next level. 

The Bank Operations Institute (BOI), slated for October 12-17, is a two-year banking program that provides the practical bank management and leadership strategies necessary for successful community bank operations. It offers strategic insight into both the present and future of banking technology, best practices, administrative processes, and project management.

Also, save the date for the all-new Bank Lending Institute™ (BLI), offered November 16-21, 2014.  This program will be valuable for community bank lenders early in their career and will emphasize practical skills and approaches required for effective and profitable bank lending management.

For more information on either of these programs, please contact Julie Courtney.

Business Continuity Planning

This story originally ran in the May/June issue of The Texas Indpependent Banker magazine.

By Christopher Williston & Kelly Goulart

Over the last few years, Texas community bankers have learned first-hand the importance of disaster preparedness.  In the wake of disasters like Hurricane Rita, the Bastrop wildfires and the fertilizer plant explosion in West, we have all seen the devastating effects that natural and man-made disasters can have on communities and the ability of Texas businesses to serve their customers.

While much has been written on the necessity for disaster preparedness for these types of catastrophic events, many community banks live under a different but serious threat: over-reliance on key personnel.

What would you do if 25-50% of your bank’s employees suddenly contracted the flu?  That’s exactly what happened to one IBAT member bank (which will remain unnamed) in late 2013.  Tellers, loan officers and senior staff alike were suddenly and without warning absent from the bank for days at a time.

In this kind of nightmare scenario, there is no shortage of issues which might be affected.  While the bank might rally to ensure that frontline interactions with customers are covered, there is likely to be an overall disruption in the continuity of some business operations.  It might be impossible to ensure that business continues as usual, but there are a few things that community banks can do to prepare for this scenario.


Cross-training of employees in different tasks is always a good idea, even though it will never be exhaustive enough to cover every aspect of the bank’s operations.  The Society of Human Resource Managers recommends that employees “swap” or exchange jobs for a defined period of time.  In addition to providing natural backups for employees, it also gives them the opportunity to contribute at a different level of bank operations and expands employee skill sets.

While cross-training might result in more training time for each employee, it can prove to serve the bank well in times of distress, or in the event of scheduled employee time off.

Develop a Continuity Plan

Every department knows its strengths and weaknesses.  Rather than relying on management to develop a plan for business continuity in each department, have employees take the lead with their individualized understanding of business processes.  As part of this planning, ask employees to identify critical versus non-critical tasks in the day to day workflow.  In the event of a catastrophic staffing occurrence, it might be necessary to interrupt non-critical products or services.

Additionally, have departments submit a written plan to management detailing what would be required for their departments to continue operations with 25% and 50% of employees out of the bank.

Risk Assessment

Extraordinary times call for the bank to reexamine its risk profile and determine how it will minimize risk for the duration of the catastrophic staffing event.  This might require the bank to cut back on the number of daily reconciliations made by staff, possibly extending some out to every other or every third day, where possible.

In other cases, banks might consider shutting down the lobby and funneling all transactions through the drive through or vice versa, ceasing the opening of new accounts or the acceptance of new loan applications.  You still need to provide essential services to your customers, but you might have to get creative about how you are going to provide those services.  Any task that is reliant on staff-intensive verification (including wire transfers) should be considered for interruption to protect the bank from undue risk while handling the bare minimum for ACH customers.  Even if staff who usually handle those processes are not out of the bank, shutting down those services for a temporary period of time will free them up to handle other tasks.

Back Up Partnerships

If you haven’t already done so, you might consider entering into an agreement with another community bank to serve as a backup processor.  While this will depend on being able to find a bank using the same platform program, doing so will add an extra level of protection and allow for certain operations to continue in the most dire of circumstances.

Christopher Williston VI is IBAT’s Senior Vice President – Communications; Kelly Goulart is IBAT’s Regulatory Compliance Manager.

Baker Market Update: June 23, 2014

"Consistency, thou art a jewel” is a well-known metaphor often attributed to William Shakespeare, but Janet Yellen has become its personification. In what was described by most outlets as “breaking news”, it was reported on Wednesday afternoon that the FOMC has no intention of altering its behavior. No change in rates, no change in tapering, no change in forward guidance. That’s not breaking news. Spain being eliminated from the World Cup after losing its first two games; now that’s breaking news. The fortunes of Spain’s soccer team, however, do not move markets. Ms. Yellen’s utterances, however banal, generally do, and so it was this week.

BOCB Deadline

Don't forget to have your Best of Community Banking (BOCB) entries to the IBAT office by 5:00 pm on June 23

Categories include community service, financial literacy, architectural design and marketing.  Click here for entry details and an entry form.

Celebrate the accomplishments of your bank and your employees and the difference you make in the lives of your customers and citizens in your town. 

All entries will be displayed at the Annual IBAT Convention in September at the Worthington Renaissance Hotel in Fort Worth and the Gold Award winners will be recognized during the BOCB Awards luncheon on Monday, September 29.

Special Report

Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated. Household spending appears to be rising moderately and business fixed investment resumed its advance, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Read full report

CSBC Vice Chair

Last month, at the Conference of State Bank Supervisors (CSBS) State-Federal Supervisors Symposium in Chicago, Illinois, Texas Banking Commissioner Charles G. Cooper was elected Vice Chair to the 2014-2015 CSBS Board of Directors. He also serves on the CSBS Executive Committee.

Commissioner Cooper served as Treasurer of the CSBS Board during 2012-2014 until his election to the position of Vice Chair. During his term as Treasurer, Commissioner Cooper served as a board member of the State Regulatory Registry (SRR) which is responsible for all policy matters governing the Nationwide Mortgage Licensing System (NMLS), and the CSBS Education Foundation Board of Trustees (EFSBS). In 2010 he served as Chair of District IV and as Chair of the CSBS Legislative Committee.

“IBAT extends its congratulations to Commissioner Cooper on this honor, and our appreciation to him and to CSBS for their energetic and effective efforts to preserve the community banking model,” said Steve Scurlock, IBAT Executive Vice President.

Commissioner Cooper currently serves as an active member on the CSBS Legislative Committee, Regulatory Committee, the MSB Task Force, the Emerging Payments Task Force, and is a member of the Community Bank Steering Group.

Coalition Letter Signed

A coalition of state community banking associations, including IBAT, signed on to a letter to House Speaker John Boehner and Leader Nancy Pelosi last week, urging action by the full House on regulatory relief bills passed recently by the House Financial Services Committee.

The letter was the latest in a series of actions in which IBAT has participated to progress some measure of regulatory relief in this Congress.  As reported, IBAT previously wrote to Pete Sessions, Chairman of the House Committee on Rules, asking the committee to bring H.R. 4521, H.R. 4466 and H.R. 2673 to the Floor.

As always, we will issue an Action Alert at the appropriate time – when floor action is scheduled – to ask that you urge your Member of Congress to support these important bills.

Fed Nominees

Two new members of the Federal Reserve Board, Governor Lael Brainard and Vice Chairman Dr. Stanley Fischer, were sworn in yesterday at a private ceremony with Fed Chair Janet Yellen.  Also sworn in was second-term Governor Jerome Powell. 

Brainard previously served as the Under Secretary of the Treasury for International Affairs in the administration of President Obama. Dr. Fischer is a former economics professor at the Massachusetts Institute of Technology (MIT) and a former Governor of the Bank of Israel.

With the swearing in of these three candidates, only one open spot remains on the Federal Reserve Board of Governors.  Earlier this year, IBAT President and CEO Chris Williston sent a letter to President Obama, urging him to nominate a community banker to fill the remaining seat.  Others, like Fed Chair Yellen, Kansas City Federal Reserve Bank President Esther George and a bi-partisan group of members of the Senate Banking Committee have joined the call for community bank representation on the Board.

2015 Legislative Agenda Set

At their quarterly meeting last week, the IBAT Board of Directors approved the recommendations of the Legislative Committee for an aggressive proactive agenda in the 84th Regular Session of the Texas Legislature in 2015. Among those items discussed and approved are:

  • Debit Card Surcharge Prohibition – IBAT was successful in attaining legislation to prohibit surcharges on debit card transactions at the last session. We will pursue legislation at the next session to provide appropriate rulemaking and enforcement authority.
  • Card Fraud/Data Breach – We have attempted over the past several sessions to make incremental progress to bring some relief to community banks in this area. One area of concern (and continuing losses for our banks) is the purchase of gift cards at point of sale with fraudulent or stolen credit or debit cards. IBAT will pursue legislation to require merchants to verify the identity of an individual purchasing gift cards with a credit or debit card.
  • Home Equity – IBAT is in discussions with various stakeholders to explore streamlining our very cumbersome home equity laws in Texas. At a minimum, we plan to address the issues raised in the recent “Norwood” decision at the Supreme Court, i.e., power of attorney and clarity in what constitutes interest and the 3% fee cap.
  • Patent Trolls – While primarily a federal issue, the ongoing problem of patent trolls is being addressed in several states. We will explore options to curtail this expensive and time-consuming burden on community banks.
  • Property Tax Lenders – While significant progress was made last session with the passage of SB 247, there are many areas worthy of additional reform. We will continue to explore options with an existing coalition of stakeholders, and anticipate several proactive agenda items.
  • Subpoena Abuse – There continue to be cases in which litigators serve large information requests to banks and then fail to reimburse the bank for the production of records. We plan to push for legislation to fix this situation.

Additionally, if history is an indicator of future expectations, there will be developing issues between now and the spring that could warrant additional legislative efforts. We obviously would appreciate any thoughts you may have on additional proactive measures at the state level, and thank you for your engagement in the process.

Leadership Conference

IBAT’s 29th Annual Leadership Conference will be underway next month, June 26-28, at the JW Marriott San Antonio Hill Country Hotel. Among the activities offered during the conference will be our annual Leadership Conference Golf Tournament, which will be held at the TPC San Antonio, a PGA Tour Experience.

The AT&T Oaks Course was designed by PGA Tour legend Greg Norman with player consultant Sergio Garcia. It reflects the Tour’s departure from the modern tournament style course (expansive grass areas and spectator mounding) to a more natural look and feel, without sacrificing the fan experience – making it very tournament friendly. The AT&T Oaks Course plays host to the PGA Tour’s Valero Texas Open.

Early bird registration deadline is this Friday, so register today!

Reg Relief Update

Ongoing efforts to move a regulatory relief agenda continued last week with IBAT writing a letter to Congressman Pete Sessions, Chairman of the House Committee on Rules, urging the committee to bring H.R. 4521, H.R. 4466 and H.R. 2673 to the House Floor.  As reported in previous weeks, these bills - which are part of the IBAT and ICBA-backed Plan for Prosperity - were recently approved by the House Financial Services Committee.

“Each of these measures represents a modicum of regulatory relief for community banks that will allow community banks to realize their full potential as catalysts for job creation and economic growth in local communities nationwide,” the letter, crafted by Chris Williston and Steve Scurlock, read. 

As always, we will issue an Action Alert at the appropriate time – when floor action is scheduled – to ask that you urge your Member of Congress to support these important bills.

June Consumer Tips

The June edition of IBAT’s Consumer Tips is now available online.  This month’s tips provide practical guidelines to help consumers answer the question, “Debit or credit?”

June’s Consumer Tips were drafted by guest-contributor Debbie Scanlon of BKD, LLP.

IBAT’s Consumer Tips are distributed to weekly papers across the state of Texas.  As always, IBAT members are encouraged to distribute the tips to their local papers, in bank publications or in any other way you'd like. A customizable version of the release is available upon request.