IBAT ESP Rebranding

A renovation 75 years in the making has all been building to this.

With pride in our history and a renewed vision for the future, we are proud to announce that McCleary German Architects is transforming into MG Architects. Though our brand has changed, we are still committed to beautiful, sustainable and functional architecture. Additionally, our focus on uncommon service excellence and long-standing client relationships still remain the same, just as they have been from day one.

Get the full story on our rebrand at the MG Architects homepage.

The Prospect for Reform

With Congress back to work after the summer recess, what is the possibility of substantial banking reform making its way through the process this Fall?

In an article published yesterday, American Banker laid out the considerable hurdles that any legislation would have to overcome as the attention of lawmakers will be focused on the conflict in Syria, the need for a continuing budget resolution and a looming battle over the debt ceiling.

Making matters even more difficult is the number of financial services-related issues that Congress could take up, including GSE reform, nomination of a new Federal Reserve Chairman, ending "too big to fail" and, of course, regulatory reform for community banks.

"In order for community banks to see regulatory reform rise to the top of the priority list, bankers across the country need to stay focused on communicating urgency to their lawmakers," said Steve Scurlock, IBAT Executive Vice President.  "While I remain optimistic that something meaningful can happen for community banking, I'm also growing increasingly frustrated. It's time for Congress to act to take the regulatory thumbscrews off of community banks so they get back to the business of banking and serving their customers."

If you have not already done so, please contact your lawmakers and urge their support of the Community Lending Enhancement and Regulatory Relief (CLEAR) Act, H.R. 1750 and S. 1349, which includes many components of ICBA's Plan for Prosperity.  

Staff contact: Steve Scurlock, sscurlock@ibat.org, 512-275-2226

Happy 10th Anniversary!

IBAT would like to congratulate Fidelity Bank on their 10th anniversary. With an incredible staff on-hand, President Tommy McCulloch was able to take the bank’s capital from $8 million, 1 branch and 10 employees in 2003, to $25.2 in capital, 3 branches and 40 employees at the end of 2012.

To commemorate the occasion the bank put together a brochure, detailing their continued success. In his message, McCulloch included a list of important events, including:

  • July 18, 2003 - Offering circular mailed seeking $6 to $10 million of capital.
  • September 9, 2003 - Fidelity Bank opens at Kemp and Kell in the Fidelity Bank building.
  • August 12, 2005- Burkburnett branch opens with Jack Aaron joining the bank as a director and Randy Aaron joining as president of the Burkburnett branch.
  • December 31, 2005 -Total assets reach $99.5 million and equity capital rises to $8.2 million .
  • September 26, 2006 - Downtown branch opens at 8th and Lamar with Linda Holbrook and Patsy Betts managing the branch.
  • June 30, 2008 -Total assets exceed $200 million and equity capital more than doubles since inception to $16.1 million.
  • December 31, 2012 -Total assets are $257.6 million and equity capital is $25.2 million.

 McCulloch also adds: “The major reason for our growth and success has always been our staff. Today, we have 40 bankers who are dedicated to taking care of customers and are extremely efficient in their work. Using numerous peer metrics, I can tell you that your group of Fidelity bankers is among the best bank staffs in Texas. Employee retention remains high with 18 of the 23 who helped open our branches still employed with us today.”

The bank opened its doors in 2003 and has been an IBAT member ever since. For more information, please visit their website.

Week in Review: September 6, 2013

One might think that, in a week containing a national holiday celebrating the efforts of the American worker, poetic justice would require this morning's jobs report to be a good one. Well, it doesn't look like this is going to be the week for poetic justice. The 169k rise in Non-Farm Payrolls came in disappointingly short of the 180k that most experts were expecting. Also surprising to the experts were the downward revisions to the prior two months' numbers. The 162k increase in new jobs that we thought were created in July was actually only 104k. June's gain of 188k new jobs was actually only 172k. No iambic pentameter there.... Read more in the Baker Market Update.

NMLS Training Workshop

The Nationwide Mortgage Licensing System & Registry (NMLS) will present a training webinar on September 13, 2013 from 1 - 2:30 p.m. ET to provide an overview of the Federal Registry and the registration process. The registration fee is $75. 

Online registration is provided.

Appraisals Summit

IBAT's 2013 Appraisals Summit is scheduled to take place in Dallas, September 12th. Please make plans to join your banking colleagues and learn about the critical regulatory "hot buttons" that are presently causing concern for bankers. 

According to the Texas Department of Banking, some of the most common appraisal and collateral evaluation deficiencies noted during recent examinations include:

  • Annual appraisals (or evaluations) on Other Real Estate Owned are not being performed timely;
  • Updated appraisals or evaluations in distressed markets are not being obtained when commercial real estate loans are renewed.

This course provides attendees with the general knowledge required to understand a commercial real estate appraisal and will help bankers evaluate the real estate appraisal as a key component in the credit risk assessment process for commercial real estate loans.

The Push for Reg Reform

The intramurals are over.  Labor Day is behind us and Congress is set to return next week, after the long August recess, to deal with a host of key issues.

While the Administration and Congress wrestle with a historic vote on a possible strike on Syria, another looming battle over the future of Obamacare and a continuing resolution to avoid a government shutdown, your IBAT government relations team has been busy attending Texas Congressional meetings throughout the state to encourage prompt introduction and action on a comprehensive regulatory bill for community banks.

Financial Services Chairman Jeb Hensarling has been working with his Democratic counterparts to craft a bipartisan regulatory relief bill. Hensarling told IBAT staff this is a major priority for him and his leadership team upon his return to Washington.  A plethora of regulatory relief bills has been introduced in the House, many of which address key components of ICBA's Plan for Prosperity.  What components make the final House bill is anyone's guess at this juncture.

Meanwhile, the Senate has introduced its own version of regulatory relief targeted at community banks. Senators Jerry Moran, John Tester, Mark Kirk and Mary Landrieu have introduced a broad and bipartisan bill, S. 1349. IBAT has weighed in with Senators Cornyn and Cruz asking them to co-sponsor the legislation.

"The time has come for Congress to quit simply 'saying the right things' regarding regulatory reform and get about doing something to address these serious issues," said IBAT President and CEO Chris Williston. "We are still optimistic something can be done before year-end to address the growing frustration shared by every community banker who finds themself dealing with a mountain of needless paperwork and implementation of rules that stifles economic growth and the bank's ability to serve their customers," Williston added.

ICBA has provided an excellent summary of all House and Senate regulatory relief bills which can be found here.

Loan Admin Fee Rule

The Finance Commission exercised its new authority granted by SB 1251, passed during the last legislative session, and increased the Administrative Fee Rule from a $20 or $25 maximum fee to a fee that does not exceed $100. Below is the Regulated Lender Advisory Bulletin issued by the Office of Consumer Credit Commissioner.  The effective date of the rule change is September 5th, 2013.


Administrative Fee Rule (Subchapter E)

The Finance Commission has adopted amendments to the rule regarding the administrative fee that may be charged for a Subchapter E loan under Chapter 342. The key amendments to the rule cap the administrative fee at $100 and will be located in Texas Administrative Code, Title 7, Section 83.503(1). The new language states:

"As an alternative to the maximum administrative fee specified in Texas Finance Code, §342.201(f), an authorized lender may collect an administrative fee that does not exceed $100."

Happy Labor Day!

In observance of Labor Day, the IBAT offices will be closed on Monday, September 2, 2013. Business hours will resume to normal on Tuesday, September 3, 2013.

We wish everyone a happy and safe Labor Day holiday!

Power of A Award

IBAT is pleased to announce that the Teach the Teacher™ Program, hosted by the IBAT Education Foundation, has been awarded The Power of A Silver Award by the American Society of Association Executives (ASAE).

The Power of A Silver Award is one of the highest awards given by ASAE and honors associations that engage in activities and initiatives that are essential to building stronger communities.

IBAT's Teach the Teacher Program is a one-day event that provides educators with engaging and practical approaches to teaching money management to students. Participants earn six hours of Texas Education Agency-approved continuing education credit and receive an incentive stipend. High school economics, social studies and business education teachers learn how to teach topics such as credit, debit, taxes and credit scores, among many others.

"The IBAT Education Foundation is thrilled to have been chosen for this award," Mary Lange, president of the IBAT Education Foundation, said. "We are committed to providing the necessary education that will allow students to begin a path of financial success."

Interchange Rates

Last week bankers breathed a collective sigh of relief when learning that the Federal Reserve would appeal a ruling by a district judge on the establishment of interchange rates.  Earlier this month Judge Richard Leon ruled that the cost methodology the Fed used in establishing interchange rates merchants must pay to process debit card transactions was contrary to Congressional intent and ordered, barring appeal, the Fed to eliminate all but direct costs they used in determining the rate.

Appearing before the court last week, Fed lawyers announced their intent to appeal and argued that current rates be maintained until such time as the appeal could be heard.

So what does all this mean for community banks? Under the Dodd-Frank legislation and the infamous Durbin amendment which mandated the artificial price control, banks under $10 billion in assets were excluded.  One could argue that the District Court ruling would have little or no effect on these institutions but market forces long term would certainly drive interchange rates down for all institutions. The fact remains that government price controls would only pad the profits of the large retailers at the expense of consumers who have not seen any material reduction in prices since the initial Fed ruling.

It is estimated that retailers have enjoyed a $6 billion dollar windfall since rates have been set by the Fed. Meanwhile all financial institutions continue to suffer heavy losses resulting from debit card fraud while the merchants are void of such liability.

Earlier this year, IBAT was successful in moving state legislation which would prohibit merchants from surcharging debit card transactions at the point of sale and restricting merchants from "steering" debit card usage to the large banks which are subject to the fee cap established by the Fed.

IBAT will continue to monitor and assist in any bank coalition efforts in appealing the District Court decision.

Check Handling FAQs Part IV

Our Compliance Helpline team of Shannon Phillips and Kelly Goulart are often asked questions by member banks dealing with the handling of checks and items that:

To provide some help in that area, we have developed a one-page resource for each of those topics.  These one-page resource papers provide information on the theory, the practice, who pays, questions to ask, and potential defenses.

These are not intended to answer every question or possible situation, but to stimulate the thinking process when banks find themselves confronted by these inevitable situations.

If you have additional questions or suggestions for future white paper series, please feel free to contact the IBAT compliance team.

Diebold Integrated Solutions

Last week IBAT officially announced an endorsement of Diebold's Integrated Solutions which provides complete ATM channel management, including hardware and software, professional managed services and traditional maintenance services.  This marks an expansion of IBAT's current endorsement of Diebold ATM, Retail and Drive-up Banking Equipment and other products.

"IBAT's expanded endorsement of Diebold's integrated solutions package is another example of our commitment to provide IBAT members with leading-edge technology solutions," Curt Nelson, president of IBAT Services, said. "We put great effort into being proactive about endorsing products and services that will translate into success for our members now and in the future."

Diebold's integrated solutions will enable IBAT member banks to establish a single point of contact for monitoring, maintenance and managed services. In addition to improving operational efficiency, delivering an optimum consumer experience and enhancing security, this will help community banks throughout Texas grow and retain a reliable consumer base.

Examination Insights

What are the major areas of emphasis for examiners from each of the federal regulatory agencies? According to a white paper produced by IBAT Associate Member Sageworks, asset quality and capital adequacy top the list.  

Based on survey responses from 165 financial institutions over the past year, the 44-page report includes recommendations that these institutions received during federal exams during the past 12 months. Responses are anonymously broken down by regulatory agency, with sections related to the OCC, FDIC, Federal Reserve, and the NCUA, and cover:

  • Credit administration and asset quality;
  • Allowance for loan and lease losses;
  • Stress testing; and
  • Management and compliance with federal banking regulations.

The full white paper is being offered to IBAT members as a free download via the Sageworks website. 

Week in Review: August 23, 2013

It might very well be that the most significant, market-moving event of the week actually happened last month. With [last] Wednesday's release of the FOMC's minutes from their July meeting, the Fed disappointed many, if not most, market participants who thought they would be getting some clarity about Chairman Bernanke's tapering intentions. Well, if they'd been thinking, they wouldn't have thought that. The minutes reflected pretty much what the Chairman's post-meeting statement indicated; and that is that future Central Bank actions will be determined by how well or how poorly the economy performs. So, it was déjà vu all over again as credit markets swooned as if this was news. [Last] week's swoon took the yield on the Treasury's Benchmark Ten Year Note up to near 2.90%, a two-year high... Read more in the Baker Market Update.