Featured Convention Speaker

The following article was written by Lee Wetherington,
Director of Strategic Insight for ProfitStars.  Lee will be one of the
featured speakers at IBAT's 38th
Annual Convention
, October 6-9 in Austin, TX.  Lee directs the
development of actionable insight and strategy for the financial services
industry. To this end, he creates programs, presentations, and articles
designed to orient and educate financial executives on the trends and
implications of new technologies.

Camouflage: Your
Best Prospects Are Disguised as Customers

I live in South Georgia. On a dirt road. In the woods.

Camouflage is common here. On hunters, trucks, barco loungers, even toilet
paper. Yes, toilet paper...the last thing you'd want camouflaged when you really
need it. Go figure.

Maybe it's where I live, but lately I've been seeing everything-or is it
nothing?-in camouflage. It seems both banks and credit unions suffer from being
unable to see what is lurking nearby.

To hedge against dwindling fee income per account, many financial
institutions are desperately seeking new account acquisitions to bolster
volumes. The problem, according to a Cornerstone
' report, Benchmarks
and Best Practices for Mid-Size Banks
, is that banks are closing 100
accounts for every 112 new accounts opened, i.e., they are "opening 112 new
accounts to net grow only 12".

Other financial institutions, however, are beginning to look inward for
growth, and they are discovering major opportunities camouflaged among existing

Underbanked Disguised as Banked

Birmingham, Ala.-based Regions bank has received a lot of press recently for
discovering that 23% of its customers are also consumers of alternative
financial service
s such as check cashing, money orders and payday
loans. In other words, Regions realized that they were already and unwittingly
underserving the underbanked.


Basel III Update

Last week, IBAT issued a clarion
call to action for all IBAT members to contact their members of Congress and
urge action to exempt community banks from proposed Basel III capital rules.

"Community bankers are upset, and
justifiably so, over what we believe to be totally unnecessary and
inappropriate proposals to redefine capital adequacy for all banks, regardless
of size or risk profile," wrote Chris Williston, IBAT President and CEO. "None
of us recall an issue that has generated more concern, confusion, anger and
frustration... and there have been a number of issues and challenges over the
past few years."

With lawmakers on August recess,
IBAT hopes that all community bankers will encourage their members of
Congress to contact the Fed, the FDIC and the OCC to let the regulators know
that we are all gravely concerned about this damaging proposal.

Williston's full email to members,
including helpful bullet points is available online here.

International Money Transfers

Consumer Financial Protection Bureau (CFPB) issued its final rule on
international money transfers and increased the previously proposed safe harbor
of 25 transactions to 100.  The new rule provides that institutions
consistently conducting 100 or fewer remittance transfers per year will not be
subject to the requirements of the remittance rule.  (IBAT is interested
to know how the CFPB's remittance rule will affect your bank. Please take a
moment to complete our two question survey on this issue.)

Although the final rule is an improvement, the ultimate result hasn't
changed-many community banks will be forced out of the business of
international money transmission. And that will be devastating for many
community banks, particularly those in border states such as Texas.
Many community banks will be faced with the choice of cutting off their
transmission business after 100 transactions or exiting the business
altogether. There is a third choice: comply with the disclosure requirements
and assume the additional liability mandated by the error-resolution
requirements. But that is impossible or impractical for most, if not all,
community banks.

the road to hell is paved with good intentions, community bankers are
travelling on a compliance superhighway," said Chris Williston, President
and CEO of the Independent Bankers Association of Texas. "I'm not sure how
much more help consumers can take from the federal government. This rule will
put an end to international transmissions at many community banks, resulting in
less choice and ultimately higher costs to consumers as they are forced to do
business with a smaller pool of larger players."

not delayed, the rule will take effect February 7, 2013, which does not give
community banks sufficient time to establish agreements with upstream

IBAT is considering all options, including a challenge to the rule
to be filed with the Financial Stability Oversight Council, as we believe the
rule disproportionately and unfairly impacts community bankers in border


(a.k.a. The Texas Financial Institutions Directory & Fact Book) is a
powerful resource book with over 500 pages of detailed, up-to-date information
about Texas banks and savings and loans - all right at your fingertips!
 Everyone in your organization needs this handy daily reference. It's the
perfect selection for corporate professionals and associates who need to be
current with financial data.  To order your copy, contact Jessica Molina at

Silver Alert





with Alzheimer's, HISPANIC,
MALE, 63 years old, DOB 11/15/1948,
WEARING RED T-SHIRT AND BLUE PANTS WITH A STRIPE DOWN THE LEGS.                                       

The senior
citizen was last seen at 930 AM, 08/16/2012 at 2540 WICKER

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 FARMERS BRANCH PD at 972-484-3620.



Wish Granted!

National Credit Union Administration (NCUA) last week unilaterally expanded the
commercial lending powers of over 1000 credit unions by streamlining the
process to qualify as a "Low Income Credit Union" (LICU) to a simple
"opt in" rather than the normal application process. This announcement was made by President Obama in a
press conference to announce several measures aimed at providing drought
relief.  As an editorial aside, we are at somewhat of a loss to ascertain
the nexus between expanded business lending for credit unions and drought
relief for farmers and ranchers.

In addition to the ability to completely ignore the already generous limits on
member business lending, LICUs are also eligible for Community Development
Revolving Loan Fund grants and low-interest loans; have the ability to accept
deposits from non-members; and have authorization to obtain supplemental
capital (another item on the "wish list" for the credit union

The credit union industry has attempted for the past several sessions to expand
business lending.  We have continually believed - fervently - that such
was a terrible idea, and have fought any expansion by this tax-exempt industry
to compete directly with community banks in yet another area and play by
different rules.  Congress has not acted, and there is no indication that
they have plans to do so.  While this initiative is applicable only to
LICUs, we find it unacceptable and inappropriate, and will be letting our
members of Congress and the Administration know our thoughts.

San Angelo Sporting Clays

Join your colleagues on Thursday, August 30, for
the 8th annual San Angelo Sporting Clays Tournament. This popular event grows
each year and we appreciate the sponsors who make it happen, including our Gold
Sponsors: The Bankers Bank of Oklahoma, CalTech, Fiserv and The Garland Group.
Following the tournament, there will be a barbecue dinner and news about some
exciting new developments with the IBAT Leadership Division.  Registration deadline is August 24.
To register online, click here.

Sub S Tax

have received several calls from accountants, attorneys and bankers regarding
last week's Bottom Line lead story on potential tax increases if Congress fails
to act.

First, obviously "dividends" as referred to in the original story are
not taxable at the individual level when distributed from Subchapter S
entities. You've already incurred tax liability on your pro-rata share of the
earnings of the entity.  We knew that!  Our apologies for this
oversight and any confusion created.  

Second, if the Bush tax cuts are not extended, the maximum personal income tax
rate reverts to 39.6%.  In addition, one of the provisions in the Obama
healthcare bill imposes a new 3.8% surtax on the "net investment
income" of those married taxpayers with joint income over $250,000 or
individual taxpayers reporting over $200,000.  In general, net investment
income includes interest, taxable C corporation dividends, annuities, royalties
and rents, as well as income from a trade or business that would be treated as
a passive activity with respect to that taxpayer.

In the context of a Subchapter S bank, the surtax would be imposed on
the allocable share of the S corporation's ordinary income on shareholders
whose involvement in the bank is "passive."  However, a full
time bank employee would not be subject to the surtax on that employee's share
of the ordinary income of the bank.  The IRS is currently using the
definition for "passive activity" used in the passive loss rules of
Section 469 of the Code to determine whether a shareholder's share of the S
corporation as income would be treated as "passive" for purposes of
the 3.8% surtax. The IRS has indicated it plans to issue additional guidance on
this subject in the coming months.

It is not pleasant to err... but it is indeed gratifying to know that our
members are carefully reading what we distribute.  Special thanks to
Stormy Greef of Hunton & Williams LLP for lending his expertise and edits.

TAG Extension

Ryan, President and CEO of the Conference of State Bank Supervisors (CSBS),
sent a letter to House and Senate leadership urging an extension of the
Transaction Account Guarantee Program (TAG) for two years. Ryan stressed the
importance of the program to community banks in the face of the ongoing
competitive imbalance with the too-big-to-fail institutions.  

"IBAT appreciates the support of CSBS in urging an extension of the TAG
program.  We believe that this extension is critical for community banks -
and the communities they serve - to continue to attract adequate funding to
fuel local economies," said Chris Williston, IBAT President and CEO.
 "This is a priority for IBAT, and the credibility that CSBS brings
to the table is significant. Special thanks to our Banking Commissioner Charles
Cooper for his support on this important issue."  
Further information can be found in the CSBS press release.

IBAT PAC Auction

Bee Happy... with this delightful
Mary Frances handbag that will be one of our featured items in the IBAT PAC Auction on
October 8.  The strap is removable and can be worn as a necklace.  It
can be yours if the price in right!  Or you may want to take some of your
customers and head down to Harlingen for a South Texas Fishing Trip.  All
meals, drinks and lodging are included for this 2-day fishing experience! 
To see all of the items received to date, click here.

Contribute to the 2012 PAC Auction

won't be going to Louisiana, but you and your guest will have an opportunity to
get up close and personal with an alligator if you are the high bidder for a
three-day, two-night alligator hunting and fishing expedition at one of the
most prestigious hunting and fishing clubs in Texas during the IBAT PAC Live Auction. Want something a little
more tame?  You'll also have the opportunity to bid on a weekend doe hunt
and wine pairing dinner at the Brennan Vineyards in Comanche, Texas.  New
items are arriving daily and we'll be featuring some of them in the Bottom Line
each week.  If you haven't sent in your auction donation yet, click here
for the Auction Participation Form

Leadership in Action

The convergence of four forces - social, mobile,
the cloud and information - is about to turn the world we know topsy-turvy,
according to the analysts at Gartner, a technology research company. Gartner
calls this the Nexus of Forces. But for business owners and IT professionals,
it may look more like the four horsemen of the tech apocalypse saddling up... Read more.

Basel III Extension Letter

a letter dated August 2, 2012, IBAT President and
CEO Chris Williston has asked the heads of each of the federal agencies to
extend the comment period for ninety days for banks, trade groups and other
interested parties on the proposed Basel III capital plan and standardized
approach to risk weighting of bank assets. The comment period currently
ends on September 7, 2012.

is a very complex set of proposals," Williston said.  "The
industry just needs more time to carefully consider the ramifications specific
to their bank."

addition to asking for the comment period extension, IBAT encouraged the
agencies to develop a calculator that financial institutions could use to
determine their Tier 1 capital level, assuming the proposals are adopted as
currently written.

has been very vocal in meetings with the regulatory agencies in Washington
about the potential detrimental effects these proposals will have on community
banks, and encourages bankers to seriously analyze and respond with comment
letters of their own.  IBAT will distribute copies of its own comments for
member banks as soon as they are available.

Flag Display

As a mark of respect for the victims of the senseless acts of violence
perpetrated on August 5, 2012, in Oak Creek, Wisconsin, by the authority vested
in me as President of the United States by the Constitution and the laws of the
United States of America, I hereby order that the flag of the United States
shall be flown at half-staff at the White House and upon all public buildings
and grounds, at all military posts and naval stations, and on all naval vessels
of the Federal Government in the District of Columbia and throughout the United
States and its Territories and possessions until sunset, August 10, 2012. 
I also direct that the flag shall be flown at half-staff for the same length of
time at all United States embassies, legations, consular offices, and other
facilities abroad, including all military facilities and naval vessels and

The following flag(s) have been
directed to be flown at Half-Staff, or a Flag action has been requested:

  • United States Flag
  • State Flag  
  • Agency Flag  
  • Other Flag action

IN WITNESS WHEREOF, I have hereunto set my hand this sixth day of August,
in the year of our Lord two thousand twelve, and of the Independence of the
United States of America the two hundred and thirty-seventh.


Hensarling on Dodd-Frank

week, Congressman Jeb Hensarling "celebrated" the two year
anniversary of Dodd-Frank via a Wall Street Journal
, in which he characterized the bill as the "most confusing,
complex and harmful our capital markets have ever seen."

Congressman was front and center during debate on the bill, and shared IBAT's
position that it should not pass into law.  We encourage you to read this
piece, and appreciate Congressman Hensarling's continued efforts in this and
other areas of importance.

The Fiscal Cliff

the 112th Congress hobbles towards recess in anticipation of the November
general election, there seems to be little political will to steer the nation
away from the "fiscal cliff" by extending tax cuts first passed
during the Bush administration.  Both the Republican-controlled House and
Democrat-led Senate have passed their own tax bills.  

While much has been made of the political implications of the Congressional
game of chicken being played with the extension of the tax cuts, the actual
impact on the United States economy is now more clear, thanks to a study commissioned by ICBA, NFIB, the S
Corporation Association and the U.S. Chamber of Commerce.  

short, a tax increase on individuals making more than $250,000 will likely
translate into a loss of approximately 700,000 American jobs, including 56,000
in Texas.  The impact on Texas is second only to California, which is
expected to lose more than 76,000.  

is particularly concerned for the 273 Texas financial institutions organized as
S-corporations, who would see a tremendous increase in their effective tax
rates.  Not only are individual bank shareholders likely to have their tax
rate increased to 36% or 39%, but dividends issued by the banks to cover the
shareholders' tax liability will be taxed at approximately 44% as part of the
"pay for" included in the Obama healthcare initiative.  

all of these reasons, IBAT has joined 120+ other organizations in urging House and Senate leaders to make the full extension of tax
cuts a priority.  

Diebold Supports Bank Expansion

Date(s): 2-Aug-2012 11:00 AM

Deposit and teller
automation technologies to provide convenience, efficiency for Austin-area

Diebold delivers
advanced automation equipment and project design servicesto support Pioneer
Bank's expansion in the Austin, Texas area.

2, 2012 /PRNewswire/ -- Diebold, Incorporated (NYSE: DBD) is
helping Pioneer Bank expand its presence in the Austin,
Texas, region by delivering advanced self-service and branch equipment,
as well as project design expertise. Based in Dripping
Springs, Texas, Pioneer Bank will soon open its first full service
branch in Austin. The bank turned to Diebold to
support this growth initiative, recognizing the company as a reliable solutions

At Pioneer Bank's newest branch in central Austin,
Diebold is installing an Opteva®
automated teller machine
(ATM) with full deposit
automation capabilities
. In addition, Diebold is providing
project assistance for a redesign of the bank's San
Marcos branch. Diebold will also provide additional solutions for the
bank's future branches.

Pioneer Bank chose Diebold based on a recommendation by the Independent
Bankers Association of Texas (IBAT). The IBAT
board of directors has endorsed several Diebold products and services,
including the company's Opteva ATMs, branch and drive-up equipment. Diebold
also received a 2012 IBAT Five*Star Award for providing service excellence and
innovative solutions to community banks.

"In addition to new locations, our expansion includes adding new
technologies that make the banking experience better and more convenient for
our customers," said Jeff Wilkinson,
president and chief executive officer, Pioneer Bank. "Diebold promises to
deliver the advanced solutions we need, which is why our new Austin branch features our first Diebold equipment. We
plan to outfit our new and existing branches with additional solutions from the

The Austin branch's Opteva 750 ATM allows customers to make convenient,
envelope-free deposits. The deposit automation-enabled ATM features an enhanced
note acceptor
and a bulk document intelligent
depository moduleTM
to facilitate rapid self-service cash and check

As part of Pioneer Bank's San Marcos branch
redesign, Diebold's product
application services (PAS) group
is providing design consultation and
architectural renderings. The group is assisting with the full branch design,
including the drive-thru area layout and placement of equipment and ATMs. PAS
offers a wide range of custom services, solutions and installation drawings to
support any design project.

"From our design services to our advanced technologies, Diebold is
honored to be a new trusted solutions and services provider for Pioneer
Bank," said Mychal D. Kempt, vice president,
North American sales and service operations, Diebold. "We are very excited
about the number of opportunities we are engaged with in North America around branch transformation.  Our
solution set and breadth of experience in the branch is expected and well
received in the marketplace."

About Pioneer Bank

From humble Texas beginnings, Pioneer Bank
has built a true community bank by putting customers first, listening to their
needs and providing them with high-quality financial services. Having built its
business from a mobile structure in Dripping Springs,
Texas, Pioneer Bank now has the largest share of deposits in Dripping Springs, and is serving all of Central Texas with new locations coming soon in Austin and San Marcos.
Further, as the result of its pending acquisition of Colorado Valley Bank,
Pioneer Bank will soon add locations in La Grange
and Weimar, Texas. For more information, visit http://www.pioneerbanktexas.com.

About Diebold

Diebold, Incorporated is a global leader in providing integrated
self-service delivery and security systems and services. Diebold employs more
than 16,000 associates with representation in nearly 90 countries worldwide and
is headquartered in the Canton, Ohio region, USA. Diebold is publicly traded on the New York Stock
Exchange under the symbol 'DBD.' For more information, visit the company's
website at www.diebold.com or
follow the company on Twitter: http://twitter.com/diebold_inc.

SOURCE Diebold, Incorporated

For a complete listing of our news releases, please click

Media Relations, Kelly Piero, +1-330-490-3741, kelly.piero@diebold.com, or Investor
Relations, John Kristoff, +1-330-490-5900, john.kristoff@diebold.com

Tax Cut Letter

joined a very diverse group of primarily national trade associations in a letter to the
United States Senate, urging a one year extension of all of the expiring tax
cuts, and urging the expedited consideration of comprehensive tax reform early
in the next Congress.

"Uncertainty regarding future tax rates is having a serious effect on
investment, hiring and expansion decisions by the drivers of economic vitality
and job creation - small business entrepreneurs," said Chris Williston,
President and CEO of IBAT.  "The 'fiscal cliff' is a looming
disaster, and over the near term, Congress must seriously deal with both the
revenue and spending sides of our nation's budget.  'Kicking the can down
the road' is not a solution."

Primaries Over – Finally

In what has been a much longer and more tedious primary
season than normal due to redistricting litigation, we thankfully reached a
conclusion last week with the runoff elections on Tuesday.  Your IBAT
political action committees participated in a number of these races, and what
follows is a brief "scorecard" on the results in those races:

  • Statewide -  You are no doubt aware that Ted Cruz
    defeated Lt. Governor David Dewhurst for the Republican nomination to succeed
    Senator Kay Bailey Hutchison.  Dewhurst was supported by the IBAT
    FedPAC.  Additionally, Supreme Court Justice David Medina, another
    recipient of IBAT PAC funds, lost in his re-election bid to Judge John Devine.
  • Congress -  The IBAT FedPAC contributed funds in three
    races, and each of the candidates won - Randy Weber (R - Surfside), Roger
    Williams (R - Weatherford) and Filemon Vela (D - Brownsville).
  • Texas Senate - The IBAT PAC contributed to incumbent
    Republican Senator Jeff Wentworth of San Antonio, who was soundly defeated by
    Dr. Donna Campbell of New Braunfels.
  • Texas House of Representatives -  Three incumbents
    supported by the IBAT PAC lost their seats in the Texas House.  Chuck
    Hopson (R - Jacksonville) was defeated by Nacogdoches attorney Travis Clardy in
    a close contest.  Sid Miller (R - Stephenville) lost to J.D. Sheffield of
    Gatesville, and Jim Landtroop (R - Plainview) was defeated by Ken King of
    Canadian.  Additionally, we supported Jamaal Smith, a former legislative
    staffer from Houston, who was defeated by Gene Wu in a Democratic

Winners supported by the IBAT PAC included Greg Bonnen (R -
Friendswood), J.M. Lozano (R - Kingsville) and Bennett Ratliff (R - Dallas).

Your government relations staff is
busy meeting with many of the newly elected candidates, and will continue this
process through the end of the year.  If you have a close relationship
with one of these individuals, please contact Mae Beth

We very much appreciate the involvement of the membership in
the political process, and urge you to get to know your new officeholders (if
applicable) in your area.  And, please don't forget the PAC Auction at our annual Convention on October 8.  Further information and contribution
forms are available on our website. 

Silver Alert: Leroy Collins


Fort Worth, Corpus Christi, Austin/San Antonio, Shreveport, LA and Lake
Charles, LA


The Houston Police Department is searching for Leroy Collins, diagnosed
with Dementia, Black,
Male, 71 years old, DOB 01/24/1941
150 lbs, Gray and White Afro Hair, Brown Eyes, and a beard
last seen wearing a blue baseball hat, a striped pullover shirt, and white

The senior
citizen was last seen at 11:00PM, 08/02/2012 at 9603
Homestead, Houston, Texas, driving a Red,
1993, Chevrolet, Suburban with TX License Plate

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 Houston Police Department at 713-731-5335.

News Media
Point of Contact is
Houston Police Department at