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.

27th Annual Leadership Conference

bankers and partners have inquired and the answer is YES - you can still register for the IBAT Leadership Conference, June
14-16 at The Woodlands Resort and Conference Center.
don't want to miss the opportunity to connect with like-minded community
bankers for great education and networking in a family-friendly setting.  

General sessions will focus on leadership topics. In addition, you will
be able to participate in some timely round-table discussions on: Vendor
Management, Risk Assessments, Multifactor Authentication, Third Party Risk,
Fair Lending. Download the full conference brochure or the registration form here

Texas Primaries

The results are in the books for the delayed Texas primaries
and, as usual, there was plenty of drama, and a few surprises.  Here
is a brief recap of the high and lowlights:

US Senate
IBAT-endorsed David Dewhurst fell short of the majority vote
needed to avoid a runoff with 46%.  He and Ted Cruz will no doubt have a
lively and costly campaign leading up to the July 31 runoff.

On the Republican side, there were 23 contested races. 
The IBAT FedPAC contributed in sixteen of these, and supported the winners in
all.  The other seven races were either very crowded open-seat races, or
contests in which Rs are running in solidly D districts with little, if any,
chance of success in November.

On the Democratic side, there were 16 races, including
several open seats and a number of candidates running in solidly R districts. 
We contributed in three of these races, won two, and were unsuccessful with the
loss of El Paso Congressman Silvestre Reyes.

For the two-year election cycle, we have contributed in 27
of the now 32 Texas Congressional races, along with several key out-of-state

Texas Senate
There were ten contested races on the R side.  We made
contributions in nine of these, and were nine for nine.  There were no
contested primaries on the D side.  So far this cycle, the IBAT PAC has
made contributions in 23 (of 31) Senate races.

Texas House
There were 59 races in the Republican primary  . . . we
contributed to candidates in 37 of these, again with those we didn't being open
seats with no clear consensus among our members or Rs running in D
districts.  We contributed in five open seat races after polling our
district bankers, and those races resulted in three outright wins and two
runoffs.  Additionally, four incumbent candidates supported by the IBAT
PAC will be in runoffs.  Five incumbents supported by the IBAT PAC lost
their races . . . Beck, Christian, Eissler, Nash and Truitt.

On the D side, there were 23 contested races, and the IBAT
PAC was six for six in those where we made contributions.

So far this cycle, we have made contributions to 104 candidates
in the Texas House races.

You can follow all of the election results on the Texas Tribune
, or get vote totals for the Republican and Democratic primary
races on the Secretary of State's

Special thanks to all of you who provided input regarding
races in your districts to allow us to make early contributions to a number of
candidates.  We will be "going back to the well" for the runoffs, and hope
to have the opportunity to be engaged in a number of these contests. 
Additionally, your contributions to the IBAT PAC and IBAT FedPAC are greatly
appreciated.  Thanks to all of you for your faithful support of our political

Fun Fact: Shelby American Tour

Later this year, one Texas community bank will attract
locals and car enthusiasts as they host a display of rare and vintage
automobiles.  LegacyTexas Bank in Plano hosts Shelby American's 50th Anniversary Tour
on its only Texas stop.  The event, scheduled for Saturday, June
30th, will celebrate one of the most recognized American auto brands of
the last half century. 


Chosen as one of only 13 tour sites nationwide,
LegacyTexas will host the event at its corporate headquarters on Legacy Drive
and open the day's activities to the public at no charge. The local
community bank, which will soon celebrate its 50th anniversary, is
majority-owned by the Shelby family of North Texas. According to Executive
Vice President Aaron Shelby, the tour will honor the innovation
and craftsmanship synonymous with the Shelby name, as well the memory
of the late Carroll Shelby, the iconic auto designer.

General Purpose Reloadable Card

Consumer Financial Protection Bureau (CFPB) is seeking information about
prepaid cards known as a general purpose reloadable card (GPR card). GPR cards
are issued for a set amount in exchange for payment by a consumer. They are
reloadable and may use devices such as a key fob or cell phone app that access
a financial account.  At this time, the CFPB is not seeking information
about closed loop cards, debit cards, non-reloadable cards, payroll cards,
electronic benefit transfers, or gift cards.  The CFPB is gathering this
information to determine how to best implement consumer protection rules for
GPR cards. The CFPB has put together an online visual guide to prepaid cards
and why they are interested in them entitled "What's the deal with prepaid cards?"

TIB's 30th Anniversary

congratulates The Independent Bankers Bank (TIB) which celebrated its 30 year
anniversary at its annual shareholders' meeting in Irving last week. "It
was a truly memorable event with over 250 shareholders, directors and past
directors in attendance," said IBAT President and CEO Chris Williston.

there was plenty to celebrate, including TIB's record consolidated net income
of $15.9 million and a record-setting return of revenue to TIB customer banks
of $25.5 million. TIB now boasts customer banks in all 50 states and Guam.

was instrumental in passing legislation in the 1981 Texas Legislative
session that authorized the creation of the Bankers Bank.

The State of Our Economy

I recently kicked off a tour across Texas to talk
about the state of our economy and a few important fiscal challenges we are sure
to face in the future. I think it is important for Texas taxpayers to
understand the facts, figures and trends fueling our economy and ensuring our
strong fiscal health.

The Texas economy is strong. Unemployment is only 7
percent, more than a point better than that of the entire country. The number
of Texas workers reached an all-time high of 10.65 million in December 2011.
Texas employers replaced all 427,600 jobs shed during the recession as our
economy rebounded more quickly than the U.S. as a whole, and continues to add
jobs. Nationally, through March 2012 only 41 percent of recession-hit jobs have
been recovered.

In addition, we've had 25 consecutive months of
growth in sales taxes and our rainy day fund is a healthy $6.2 billion.  In many ways, it is good to be a Texan.

For example, Texas banks
are healthier than nationwide averages, reflecting the relatively intact
Texas housing market and comparatively resilient strength in the overall
economy. According to the Federal Deposit Insurance Corporation, only 7.4
percent of Texas depository institutions were unprofitable during the period
ending December 31, 2011, only half the national average of 14.7 percent. Texas
banks also had an average return on equity of 9.9 percent, compared to 8.1
percent nationally. In addition, Texas banks showed a slightly higher return on
assets, a higher return on net equity, and lower nonperforming assets than the
average of national banks.

However, while our economy is expanding, a growing
population and demand for public services as well as an increase in federal
regulatory burdens could pose challenges to the economic growth we are
currently experiencing.

For example, the federal health care reform law
will drive Texas Medicaid spending sharply upward. By 2014, Texas' Medicaid
population is projected to grow by more than 75 percent, from 3.5 million to
6.2 million recipients. By 2023, we expect to see Medicaid consume more than 37
percent of general revenue, with public education receiving about the same
share. That means three-fourths of state spending will be on just two services,
leaving other state needs fighting for a share of the remaining quarter.

Fortunately, there are things we can all do in our
own neighborhoods to help the economy. Get engaged. Find out what you can do to
institute smart practices in your community or the public sector. Look for ways
various levels of government can cooperate with each other to save money. For
example, in one Dallas-area suburb, school district officials collaborated with
city officials to house district and city offices and the police department in
the same building. The measure saved about $4 million in combined construction
costs and another $50,000 annually in district operating costs.

Keeping this economy strong is up to all of
us.  Let's work together and continue to
make Texas the economic model for the rest of the country.

Susan Combs is Texas Comptroller of Public
Accounts. For more information on the Texas economy, please visit the
Comptroller's Texas Ahead website at