The Texas Independent Banker

Flood Insurance Update 3.11.14

Inching towards resolution on drastic premium increases for those covered by the National Flood Insurance Program, the U.S. House of Representatives last week passed the Homeowner Flood Insurance Affordability Act.  The legislation would:

  • reinstate grandfathered status for covered properties,
  • repeal the home-sale and new-policy rate-increase triggers,
  • provide a refund for people who have realized large premium increases due to the purchase of a pre-FIRM subsidized home without the full transparency from the Federal Emergency Management Agency as to the new rate structure, and
  • require FEMA to complete an affordability study and to propose an affordability framework to help homeowners cope with dramatically higher premiums.

Missing from the House bill was the all-out four year delay of premium increases which was included in the Senate bill passed in January. The Senate must now decide whether to take up the House bill or reconcile it with their own.

2014 Primary Results Round 1

Please note that candidates supported by IBAT are marked with an asterisk.

Governor As expected, Greg Abbott* and Wendy Davis will continue to duke it out until November 4 as their parties' nominees for CEO of Texas.
U.S. Senate Senior Senator John Cornyn* easily won in a field of eight with 59% of the vote.  The Democrats will have a runoff on May 27 between David Alameel (49%) and Kesha Rogers (21%)
U.S. Congress No big surprises here as usual. IBAT friend Pete Sessions* handily defeated what was considered a serious challenge from the right in CD32. Longtime Congressman Ralph Hall* (CD4) fell just short of a majority, and will be in a runoff with John Ratcliffe. In the seat left open due to Congressman Steve Stockman's run for the Senate (CD36), Brian Babin and Ben Streusand survived a field of 12 and will be in a runoff.  On the D side, freshman Congressman and friend Marc Veasey* easily won in CD33.
Statewides Incumbent Lt. Governor David Dewhurst* goes into a runoff with Senator Dan Patrick.  Patrick garnered 41% of the vote to Dewhurst's 28%. For Attorney General, two friends will be in the runoff - Senator Ken Paxton (44%) and Representative Dan Branch (33%).  Senator Glenn Hegar was a whisker away from an outright victory in the Comptroller's race, with some mail-in ballots still outstanding.  Runner-up Representative Harvey Hilderbran graciously conceded, which gives Senator Hegar the Republican nomination.  Two former state representatives will vie for Ag Commissioner on the R side - Sid Miller (35%) and Tommy Merritt (21%).  For the Dems, newcomer Jim Hogan and Kinky Friedman will square off in the May runoff.  The three contested races for Supreme Court were won by IBAT supported candidates - Hecht*, Brown* and Boyd*.
Texas Senate One of the bigger surprises of the evening was the narrow defeat of longtime public servant John Carona* of Dallas in SD16 by Donald Huffines. Incumbent Senator Bob Deuell* (SD2) will be in a runoff with Bob Hall and, in SD10, former state rep Mark Shelton will face Konni Burton.
Texas House Eight House incumbents were defeated in the primary - George Lavender* (HD1), Lance Gooden* (HD4), Ralph Sheffield* (HD55), Naomi Gonzalez (HD76), Lon Burnham* (HD90), Diane Patrick* (HD 94), Linda Harper-Brown* (HD105) and Bennett Ratliff* (HD115). The IBAT PAC contributed to two candidates who were defeated in open seat races - Bob Senter* lost to Wayne Faircloth in HD23, and Austin Keith* to Brooks Landgraf in HD81. There will be 11 runoffs to determine who will be running for House seats in November.  IBAT was involved financially in three of these: incumbent state rep Stefani Carter* faces Linda Koop in HD102; community banker Will Metcalf* vs. Ted Seago in HD16; and DeWayne Burns* will run against Philip Eby in HD58.

Baker Market Update: Mar. 10, 2014

After the announcement [Friday] morning by the Bureau of Labor Statistics (BLS) that the 175k increase in Non-Farm Payrolls (NFP) exceeded expectations by 30k, the blame-it-on-the-weather excuse hasn’t gotten much of a mention. Maybe it should. Despite the higher than expected number of new jobs, February’s performance was still well below the 189k average over the last twelve months. The number of unemployed persons increased by 223k and the Unemployment Rate rose by a tenth to 6.7%. In what might pass for relatively good news, neither the Employment-Population Ratio (58.8%), nor the Labor Force Participation Rate (63%) went down. Spring is in the air!... Read more in the Baker Market Update.

Regional Meetings: Round 2

IBAT Chairman Jay Gober, Commissioner Charles Cooper of the Texas Department of Banking and IBAT staff are busy preparing for the upcoming Regional Meetings (Tour de Texas), beginning in two weeks. We will be traveling to 8 Texas cities in March to conduct briefings on our regulatory and legislative agenda.

Round 2 of the Tour, March 11-13, includes stops in Galveston, Schulenberg, Harlingen, Corpus Christi, Houston, Kilgore, Sulphur Springs and Dallas.

We encourage you to take a few minutes and register for one or more of the meetings. This will be an opportunity for you to learn about our efforts and help us fine-tune our legislative agenda for 2014.

Click here for additional information and to register.

Flood Insurance Update

Anticipated action to provide relief from catastrophic premium increases on participants in the National Flood Insurance Program was delayed last week as House Republicans balked at the prospect of rubber stamping the previously-passed Senate version of the bill.

Preceding the vote, the editorial board of the USA Today lashed out at the plan, which would gut the Biggert-Waters Flood Insurance Reform Act of 2012 and delay premium increases for four years.

"Fixing the flood insurance program is vital for fiscal reasons. A government that is $17 trillion in debt can't simply borrow more every time a significant storm hits," said the USA Today editorial board. The piece was countered by one written by Senator Mary Landrieu of Louisiana.

The House has rescheduled to take up the bill this week.

March is PAC Drive Month

A few weeks ago you received information from our IBAT Leadership Division's Board of Directors asking for your help with IBAT’s annual March PAC Drive. Many of you have already been busy helping to raise funds for the IBAT PAC and IBAT FedPAC and we thank you - especially the employees of First National Bank of Ballinger (pictured)!

We don't have to tell you that political campaigns are a fact of life and have become increasingly expensive. That is why we are asking our members to commit to raise a minimum of $1,000 per bank for the IBAT PAC or IBAT FedPAC.

You, as a community banker, are our one and only focus as we work to elect those men and women on both the state and federal levels who understand and appreciate the importance of community banks. We need and appreciate your support of the industry through your contributions to the IBAT PAC and IBAT FedPAC.

And don't forget that those member banks that raise a minimum of $1,000 will have their bank put into a drawing for a BBQ dinner prepared and served by your IBAT staff at a location of your choosing. Donate here.

For more information on ways you can help the PAC, click here.

Mercatus Center Report

Community bankers are well aware of the significant impact that the Dodd-Frank Act has had on their business since 2010. Now, thanks to researchers at the Mercatus Center of George Mason University, there is more empirical data to prove the effects of the law on community banks and their customers.

According to the report:

  • 83% of responding community banks indicate a rise of more than 5% in total compliance costs since the passage of Dodd-Frank;
  • Approximately 25% of banks surveyed are contemplating mergers;
  • The median number of dedicated legal/compliance personnel increased from 1 to 2, with 27% of respondents indicating the intention to add more;
  • Of banks below $200 million in assets, 14.3% anticipate discontinuation of residential mortgages;
  • Banks that identified the Federal Reserve as their primary regulator reported the most substantial changes in compliance costs.

"The survival of small banks is important because they are particularly well-suited to serving small communities, small businesses, and borrowers with unique needs," the report concluded.  "Regulatory burdens on small banks translate into limited options for consumers.  Federal policy can support small financial institutions by freeing them from regulatory burdens that impose costs without corresponding benefits."

"IBAT has been forcefully asserting the disparate impact of Dodd-Frank and other legislative and regulatory initiatives on the community banking sector for years," said IBAT President and CEO Chris Williston. "This study validates our assertions, and will be valuable in our ongoing efforts to bring some relief to the present untenable environment."

Download and read the full report here

Go Vote!

If you did not cast a ballot during early voting, today is your last chance to participate in Texas's primary elections.  Below are links to resources that will help you be informed and prepared when you step into the ballot box.  

As one final reminder, don't forget to take your government-issued photo ID to the polling station.

*Please note that this list includes only those candidates with opposition in the March primary to whom we have contributed. Texas Senators run on staggered 4-year terms, so we opted to include only those running for office in the 2014 cycle.  Additionally, if we have contributed to a candidate who later announced for a different office, we have not included those in the listing. Please also note that we have contributed to a number of other candidates this cycle, and will post an exhaustive list after the primaries for your review and reference.  

CFPB Rural Exemption Update

Last week IBAT sent letters to Texas Senators John Cornyn and Ted Cruz, stating that while we appreciated the effort of S. 1916/H.R. 2672 (the HELP Rural Communities Act of 2014), mortgage rule exemptions based on rural areas determined by counties is fatally flawed and would be prejudicial to states with large counties. IBAT is concerned that creating a petition process within the Consumer Financial Protection Bureau (CFPB) for reassessing a county’s rural designation will subject the determination process to additional bureaucracy, substantial delay and unacceptable subjectivity.

You'll recall that, last year, IBAT raised red flags with the CFPB regarding its methodology for determining which areas qualify as "rural" and proposed that the CFPB abandon the use of counties in delineating rural areas and adopt a rule that delineates any area outside of defined "urbanized areas" as "rural." If all areas outside of "urbanized areas" were considered rural, similarly situated applicants and lenders throughout the U.S. would be treated alike regardless of the size and shape of any county. And mortgage credit in Western states wouldn’t be unnecessarily restricted.

While the CFPB has promised to continue fine-tuning the methodology, IBAT supports a legislative fix that would allow for more opportunities to protect mortgage credit availability. IBAT members are encouraged to write letters to Senators Cornyn and Cruz on this issue.

Baker Market Update

According to Janet Yellen, the soft patch the economy is currently experiencing is really just an icy patch. The nascent Fed Chairwoman just may know what she’s talking about since her Senate testimony this week was supposed to happen a couple weeks ago. It didn’t happen then, because of a big icy patch that hit Washington D.C. and much of the eastern seaboard. Ms. Yellen contends that events such as that storm, and others across the nation, have been major, contributing factors to the disappointing economic performance so far this year.    Read more in the Baker Market Update.

Top Bank M&A Legal Adviser

Fenimore, Kay, Harrison & Ford, LLP was ranked as one of the top law firms in the United States for 2013 in SNL Financial’s league tables for bank and thrift legal advisers, based on number of transactions. SNL Financial is a leading provider of business intelligence services for the banking industry.

During 2013, the firm was the second most active legal advisor among all law firms in the United States, advising on 14 announced M&A transactions for the year. Since its formation in July 2010, the firm has also served as legal counsel in connection with more than 45 private and public capital offerings totaling more than $1 billion, including two initial public offerings by community banks in 2013.

Please click here for a full copy of the press release and SNL Financial's official M&A rankings.

Updated Compliance Guides

On January 6, 2014, the CFPB updated the TILA Higher-Priced Mortgage Loans (HPML) Escrow Rule - Small Entity Compliance Guide.  This is what the CFPB had to say on the recent update:

"The Bureau updated this guide on January 6, 2014 to reflect finalized changes to the rule. The revisions amend the final rule issued January 10, 2013, which took effect on June 1, 2013. Notable changes in the October 2013 Final Rule, which take effect January 1, 2014, impacting guide content include:

Exemption for Small Creditors that Operate Predominantly in Rural or Underserved Areas. The October 2013 Final Rule amends the exemption from the requirement to maintain escrows on certain higher-priced mortgage loans for certain small creditors that operate predominantly in rural or underserved areas. To prevent small creditors from losing eligibility for the exemption in 2014 due to changes in which counties are defined as rural, the revisions extend availability to small creditors that operated predominantly in rural or underserved areas in any of the previous three calendar years and also meet the other exemption criteria. (See "What are the exemptions to the TILA HPML Escrow Rule?" on page 14.)"

The updated Compliance Guides can be found and downloaded on IBAT's CFPB Residential Mortgage Rules resource page.

Minimum Wage Changes

On February 12, President Obama issued an Executive Order establishing a minimum wage of $10.10 for federal contractors. While the order does not take effect until January 1, 2015 and only applies to "new" contracts, it is up to the Department of Labor (DOL) to define what constitutes a "new" contract.

As reported in a recent blog post on this issue, IBAT General Counsel Karen Neeley warns that the DOL "has routinely considered banks to be 'federal contractors,'" due to their role as a depository of Federal funds, serving as a paying agent for U.S. savings bonds, etc.

IBAT will be monitoring the DOL rules as they take shape to determine what, if any, impact they will carry on community banks. Please continue to read the IBAT Bottom Line for information on future action items relating to this and other issues.

Five*Star Awards

Since 2002, IBAT has honored Associate Members with the IBAT Five*Star Award. The Award recognizes companies that routinely provide not just excellent service, but innovative solutions that help community banks grow faster, enhance profits, gain efficiency and SHINE through:

  • Service excellence that provides community banks with the support they can depend upon;
  • Human relationships based upon trust, respect and strong working relationships;
  • Integrity that meets the high standards banks have a right to expect from their trusted suppliers;
  • Never-ending commitment to the success of the community banking industry; and
  • Exceptional value for the products and services provided. 

We invite all of our associate members to apply for this award before February 28, 2014

Please note: No banker nomination form is needed to be considered for the 2014 Award.