Nonresident Alien Deposits

Over the longtime staunch opposition of IBAT and other banking trade groups, the IRS, as anticipated, issued a final rule last week to require reporting of interest earned on nonresident alien deposits.  You may wish to review IBAT’s comment letter on the rule for background and a recap of our concerns.  While not an issue for most of our banks, this is a blow to those community banks with this category of deposits as a significant part of their funding mix.  

We are hopeful that pending legislation to prohibit the IRS from collecting this information will be successful, and negate what we believe to be misguided policy from the Treasury Department.  

Guidance on the final rule is available here.

The rules are applicable to nonresident alien accounts beginning January 1, 2013.  We will provide additional information as it becomes available.

IBAT Comment Letter

Last week, IBAT filed a comment letter in response to the Consumer Financial Protection Bureau's (CFPB) proposed rule regarding treatment of privileged information.  

Under section 1026 of the Dodd-Frank Act, the CFPB can require community and regional banks to provide reports to it and the CFPB may participate in regulatory examinations on a "ride along" basis. Through these reports and examinations, CFPB employees could inspect documents that are subject to the attorney/client privilege. Current federal law allows federal banking agencies to view documents without affecting any privilege; however, the CFPB is not included in the definition of federal banking agency.  A bank faced with an examination or a request for documents from the CFPB could find itself between a rock and a hard place:  provide privileged documents and risk waiving a privilege or defy the CFPB's request for privileged documents and risk administrative action.  IBAT urged the CFPB to suspend implementation of the rule to give Congress time to address the issue.  Pending legislation would fix this problem.

Credit Union MBL Vote Expected

After months of intense pressure by credit union activists, the United States Senate is expected to take up S. 2231, The Small Business Lending Enhancement Act (AKA, "Member Business Loans," or "MBL"), as early as this week.  The measure, which would increase the cap on credit unions' small business lending authority from 12.5 to 27.5% of total assets, bypassed the Senate Banking Committee thanks to a procedural gimmick employed by Senate Majority Leader Harry Reid.  

As late as last week, some lines of division became clear in the CU camp, as the effort came under fire by Stuart Perlitsh, CEO of a California-based credit union for teachers.  "There is a silent majority of credit unions that neither wants nor needs this legislation," Mr. Perlitsh said in a letter to Congressional leaders, quoted in American Banker.

Perlitsh went on to tell American Banker that, "he is not certain that the credit union industry as a whole has the expertise to properly judge risk on commercial lending."

We are advised by our two Senators that they've heard the message from Texas community bankers loud and clear, and that additional contacts are not necessary at this time.  IBAT will be sending yet another letter to reinforce our strong opposition to this unnecessary and unfair initiative. 

IBAT Teach the Teacher Program

The Education Foundation of the Independent Bankers Association of Texas officially launched its 2012 IBAT Teach the Teacher series on Saturday, April 14, 2012, at West Texas A&M University in Amarillo. A pilot program, which was an overwhelming success, was held in October at Baylor University, and three additional IBAT Teach the Teacher programs are planned by the end of 2012 in Houston, San Antonio and East Texas.

The goal of this one-day program, for which participants earned six hours of Texas Education Agency-approved continuing education credit and an incentive stipend, is to provide educators with engaging and practical approaches to teaching money management to high school students. Sixty teachers—impacting more than 8,500 students—from 20 school districts across West Texas registered to attend. Program sponsors include IBAT, Amarillo National Bank, FirstBank Southwest, First National Bank Spearman, Happy State Bank, Herring Bank, PULSE Network and West Texas A&M University.  

“The IBAT Foundation chose to focus on financial literacy because statistics show that Texas trails most of the nation in this important area,” Mary Lange, IBAT Foundation president, said. “Not only do Texans have low credit scores but we also rank 48th in household net worth and 44th in home-ownership rates. Texas community bankers see these trends and set out to do something about them through their Foundation. By learning relevant financial habits in the classroom, high school students can begin the path to financial success that will help break these startling statistics.”

Concepts taught during the program align with the Texas Essential Knowledge and Skills (TEKS) and State of Texas Assessments of Academic Readiness (STAAR) tests as well as C-SCOPE standards. Additionally, the Texas Legislature has mandated financial education as a requirement for graduation from a public high school, and beginning in 2013, the TEKS test will include a financial literacy component.

The opening session of the program included a keynote presentation, “Understanding the New World of Credit and How Credit Scores Are Constructed” by Eddie Johansson, the nation’s top expert on consumer credit scores. Johansson, founding president of Credit Security Group, has analyzed more than 6,000 credit reports and educated thousands of lenders and consumers alike about the credit scoring system. Additional sessions focused on specific class-level lesson plans, activities, worksheets and tests, and other evaluation tools. Participating teachers received a local community banker mentor for the school year to serve as an advisor.


Following President Obama signing the Jumpstart Our Business Startups (JOBS) Act last week, the Securities and Exchange Commission is accepting public comments on the implementation of the law. The SEC has up to one year to promulgate rules on the act, which includes a provision to raise the SEC registration threshold for banks and bank holding companies from 500 shareholders to 2,000 and also adjusts the deregistration threshold from 300 to 1,200.

The SEC also issued frequently asked questions on the act. In the FAQs, the SEC clarified that changes to the registration and deregistration thresholds under the Exchange Act are effective immediately. However, it also noted that until the SEC amends Exchange Act Rule 12g-4, which provides for the immediate suspension of the duty to file periodic reports filed under Section 13(a) of the Exchange Act (e.g. 10-Ks and 10-Qs, but not proxy statements) for companies with fewer than 300 (not 1,200) stockholders of record, the registrant’s obligation to file periodic reports under Section 13(a) of the Exchange Act remains in effect for the 90-day period following the filing of the Form 15 unless such registrant currently has fewer than 300 stockholders of record.

Earlier this week, ICBA also issued FAQs on the JOBS Act.

Guiltless Giveaway Winners

Congratulations to the winners of the IBAT Education Foundation’s Guiltless Giveaway Raffle.

Grand Prize - $5,000 Discover Gift Card
Dusty Sheffield – City National Bank

 Apple iPad 2 Winners
George Richardson – Security State Bank
Tommy Brooks – CAMAC International Corporation
Chelsey Hagin – Bank of the West

Nikon Digital Camera Winners
Tammy Harper – Bank of the West
Anita Minor – Bank of the West

Tiffany Jewelry Winners
Joy Smith – TIB – The Independent BankersBank
Melissa Risinger –Bank of the West
Robert Weinzapfel – Muenster State Bank

The Guiltless Giveaway was made possible by the generosity of Dennis Schwartz, founder of McKinney, Texas-based Schwartz & Associates real estate law. Since 1989, Schwartz & Associates has specialized in residential loan document preparation for mortgage lenders of all sizes.

Salary Survey Winner Announced

During the month of March, IBAT urged banks across the state to sign up and begin using our new online and dynamic salary and compensation survey, which collects and aggregates data to assist members in forming their compensation strategies.  

With your participation, we expanded the number of banks in the survey by almost twenty percent. Congratulations to First State Bank in Odem, TX who won one year of free access to the survey data!  

Different from past years, the IBAT Salary and Compensation Survey is not limited to just a moment in time.  Banks can log-in anytime, set up an account, add their own data and access the aggregated data of other participants.  

IBAT members can access survey data for $395 by participating in the survey.  Or, they can purchase the survey data without participating for $875.  To learn more or begin using the survey, logon to the IBAT Salary & Compensation Survey webpage.  

Honor Texas’s Vietnam Veterans

The Texas Department of Veterans Affairs estimates that half a million Vietnam War veterans call Texas home.  One in every twenty soldiers who died in Vietnam were from Texas.  
Despite these staggering statistics, the Texas Capitol currently lacks a monument saluting the service and remembering the sacrifice of these Texans in the Vietnam War.  In 2005, the Texas Legislature authorized the State Historical Commission to match private donations for the building of a monument, up to $500,000.  Since that time, the effort the necessary raise funds has been underway.  
IBAT asks that member banks consider supporting the cause by making a donation to help meet the $1.5 million goal to bring a Texas Capitol Vietnam Veterans memorial to fruition.  Information on the monument can be found online at the homepage of the Texas Capitol Vietnam Veterans Memorial.   If you are interested in donating to this cause, a pledge form is also available.

Tax Lien Lender Request

Representative Burt Solomons recently submitted a request for an Attorney General’s Opinion seeking clarification on two issues related to the expanding tax lien lender presence in our state.

The first question deals with the authority of the tax assessor-collector to effect a valid transfer of lien.  The request also covers the question of whether fees and interest, post-transfer, should be treated as a “priority lien.” You may recall that IBAT pushed for clarifying legislation on this issue at the last legislative session.

We continue to receive calls from banks that are dealing with customers – both commercial and residential – who have entered into third party contracts to pay ad valorem taxes, thus negatively impacting the bank’s collateral position. IBAT created a “best practices one pager” that has been distributed numerous times over the past several years to assist you in avoiding this unpleasant experience.

We appreciate the efforts of Representative Solomons to bring some clarity to a growing source of frustration for our member banks.


If you joined LinkedIn and filled out your profile thinking it was essentially an online resume, you're probably missing out on a world of opportunity. Sure, LinkedIn's profile features are essentially the same questions you'd answer on a resume. But there are more than 150 million people there who are ready to do business. It is, after all, the professional social network. Here are four ideas that can help you turn LinkedIn into a prime source of new prospects for your business. MORE

President Signs JOBS Act

Late last week, President Obama signed the JOBS Act (H.R. 3606) which overwhelmingly passed Congress. IBAT and ICBA enthusiastically supported the measure as it contained an IBAT/ICBA-supported provision to raise the Securities and Exchange Commission (SEC) registration threshold for financial institutions from 500 shareholders to 2,000, and a provision to raise the de-registration threshold from 300 to 1200. These provisions are effective immediately.

ICBA has prepared an excellent Frequently Asked Questions (FAQ) sheet that can be accessed here.

The SEC registration and de-registration provision is just one of the many community bank friendly provisions contained in the Communities First Act (H.R. 1697, S. 1600) that is being supported by IBAT and ICBA.

Successful PAC Drive

March has come and gone and with it the conclusion of the official PAC Drive Month. Judging from our mail, it appears that many of you conducted PAC Drives in your bank. We thank you! Remember, you have until Wednesday, April 18 to finish collecting your contributions and sending them to IBAT in time for the April 20th drawing for a catered barbeque dinner prepared and served by your IBAT staff.

Every PAC contribution counts toward helping to elect men and women who understand community banking and its role in the economic prosperity of Texas’ towns and cities. Help us keep spreading the word by supporting the IBAT PAC and IBAT FedPAC. Your future depends on it!

For more informarion, contact Mae Beth Palone, 512-474-6889.

IBAT Offices Closed April 6

In observance of Good Friday and the Easter Holiday weekend, the IBAT offices will be closed on Friday, April 6.  IBAT will reopen for normal business hours on Monday, April 9. 

Rethinking Online Communities

The following article originally appeared in the print edition of IBAT’s publication The Texas Independent Banker magazine.  

By Christopher Williston
For the past five years, community bankers have heard endless calls urging them to wander into the unfamiliar waters of online communities.  Timidly, some banks dipped in their toes.  Others jumped in, only to be left asking, “now what?”  Most ran screaming in the other direction.

“We block all of those sites,” one banker boasted recently.  It was clear that he saw Facebook, Twitter, LinkedIn and other social sites as little more than an unnecessary distraction that posed a risk to employee productivity.

Others have shared their concerns about security, noting that social media sites are a point of weakness where a single misclick can result in harmful malware infecting a bank computer.  

The practical reasons for a social media blackout are clear.  But are there unforeseen consequences of discouraging employees from using the sites?  

The population of social media sites is growing at exponential rates.  Facebook alone has more than 850 million users, half of whom log in on any given day.  LinkedIn, the business social network, touts 150 million users in 200 countries.  Sixty hours of new video are loaded to YouTube every minute.

With these statistics in mind it’s safe to assume that, in all likelihood, most of your employees are already using one or more of these sites to connect with their online communities.  And, with more than 50% of American adults now owning a smartphone, they don’t need their computer to access the sites and stay connected, even during work hours.

This begs the question:  does the blackout of social media sites send an unspoken message to employees that their lives in online social communities should be completely separate from their lives as community bankers?  

Read More

Leadership in Action

Recently, IBAT launched a new communication benefit for members of the Leadership Division and top-level management in member banks, the Leadership in Action newsletter.  Through a partnership with Multiview, an online publisher, IBAT has added another dimension to the benefits of being a member of Leadership Division.  

Published on Friday of each week, Leadership in Action will contain easy to read, practical resource articles focused on the areas of management, leadership, communications and team building.  

“With lives busier than ever, we don’t always have the time to seek out resources and read books that give us the skills to be more effective,” said Chris Williston, IBAT President and CEO.  “Leadership in Action is intended to be a short, directed source of practical reminders that will help community bank leaders succeed.”  

Among the articles in the first newsletter were, 6 Traits of Great Leaders and 5 Myths About Giving Praise.

In addition to providing resources for member bankers, Leadership in Action also represents a new opportunity for IBAT Associate Members to reach their audience through advertising.  

Leadership in Action is a free member benefit for those members of IBAT’s Leadership Division.  If you are interested in becoming an LD member, please download and complete a membership application.  If you have questions, please contact Mae Beth Palone at 512-474-6889 or mbpalone@ibat.org.

Impact Your Local Community

As community banks across the country work to promote April’s Community Banking month, IBAT and ICBA encourage Texas banks to take it one step further by beginning a Go Local campaign in their communities. 

Go Local is a grass-roots initiative encouraging consumers and business people alike to commit to first consider local options for everything from shopping, entertainment and yes, banking.  To assist banks with the initiative, ICBA has teamed up with MPI to equip member banks with tools and unique resources to promote the Go Local message in their own facilities and in local businesses.

These resources and more information about the Go Local campaign can be found by visiting the Go Local homepage.  As a consumer resource, ICBA has also created the Bank Local webpage, which enables consumers to find a community bank by entering their address.