Baker Market Update: Dec. 11, 2017

“An elephant is very much like a snake” said the blind man who felt the animal’s trunk. “No, an elephant is like a stout tree” said his blind friend who touched one of the beast’s legs. A third sightless companion who came across the tusks remarked that neither was correct; “An elephant is like a spear!” First of all, this well-known parable fails to inform listeners that interacting with elephants is dangerous and should probably be avoided. And secondly, the experience of the intrepid blind travelers may provide an analogy for how our economy is perceived.

Read More in the Baker Market Update

President's Proclamation


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The Congress, by Public Law 103-308, as amended, has designated December 7 of each year as "National Pearl Harbor Remembrance Day."

NOW, THEREFORE, The President of the United States of America, do hereby proclaim December 7, 2017, as National Pearl Harbor Remembrance Day. I encourage all Americans to observe this solemn day of remembrance and to honor our military, past and present, with appropriate ceremonies and activities. I urge all Federal agencies and interested organizations, groups, and individuals to fly the flag of the United States at half-staff this December 7 in honor of those American patriots who died as a result of their service at Pearl Harbor.  


Tax Reform Legislation

The U.S. Senate passed its tax relief bill early Saturday morning after continued negotiations. The House and Senate will continue discussions to come to agreement on a final tax reform bill to send to the President’s desk before year-end. Below are provisions of the Senate bill that are of particular interest to community banks:

  • Lowers the corporate tax rate to 20 percent from 35 percent;
    (Senate – reduction begins in 2018, House – reduction beings in 2019)
  • Provides for a 23 percent deduction on pass-through business income;
    (House – provides a 25 percent rate on business income with some limitations)
  • Top individual rate is set at 38.5 percent;
    (House top individual rate is 39.6 percent)
  • Preserves the mortgage interest deduction at the current $1 million;
    (House – caps the deduction at $500,000 on new home purchases but grandfathers current mortgages)
  • Allows a $10,000 deduction for property taxes but otherwise eliminates the deduction for state and local taxes;
    (House – contains the same provision)
  • Both bills preserve the current tax treatment of non-qualified deferred compensation;
  • Standard deduction nearly doubles;
    (House – contains the same provision) and
  • The estate tax exemption is increased to $11 million per person.
    (House – repeals this new threshold in 2025)

Thank you to all who contacted your members of Congress in recent weeks regarding the tax reform bill. IBAT will continue to communicate with both the House and Senate as the legislation proceeds to a conference committee to ensure the best results for community banks. We will, of course, update you on any new developments.

HDMA Delay

A coalition of 28 House Republicans called on Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney to delay the effective date – currently set as January 1, 2018 – of new HMDA data-collection and -reporting requirements. The coalition asked for a one-year delay while Congress considers legislation to exempt low-volume community bank lenders from the HMDA rule, also citing privacy concerns with releasing HMDA data. There are currently several other efforts in both the House and Senate that would expand HMDA exemptions.

Speaking of HMDA, did you hear that IBAT created a HMDA tool to assist with data collection in 2018? This resource is designed to enhance your HMDA program and reduce your error rating. Click here to learn more or order this new HMDA data collection resource. 

Amarillo National Bank

Congratulations to Richard Ware, president and chairman of Amarillo National Bank (ANB), for being named “Thriving Family Operator” as part of American Banker’s Banker of the Year Awards. Read the full article here. Additionally, American Banker featured ANB for its above-and-beyond customer service. Read about the bank’s exemplary customer service here.

Remember that IBAT membership includes a free subscription to American Banker. Please contact us if you would like to activate it. 

IT Security Summit

Cybersecurity remains one of the top concerns for bankers. IBAT’s IT Security and Fraud Summit, February 1-2, 2018 in Dallas, provides information about how to protect your bank’s most critical assets in the face of increasingly sophisticated cyber threats. IBAT is once again partnering with experts from the Federal Reserve Bank of Dallas, as well as Endorsed Service Providers CalTech, Diebold Nixdorf and Secureworks.

Not-to-miss sessions include:

  • “Using Big Data Machine Learning and Orchestration to Reduce Risk” presented by Secureworks,
  • “Stick to Governance” presented by Garland Heart,
  • “Are You My ISO?” presented by CoNetrix,
  • “Effective Components of Successful Cybersecurity Programs” presented by CalTech,
  • “IT Examination Trends and Best Practices” presented by the Dallas Fed,
  • “Skimmers, Shimmers and Malware, Oh My!” presented by Diebold Nixdorf.

Register here.

Baker Market Update 11.27.17

While most Americans [spent Friday] working through the leftovers of Thursday’s bountiful repast, a few tortured souls worked through the leftovers of the last Fed meeting. The minutes of the November 1 enclave were released this week and quickly became an overnight mixed-message classic. It might even be that the souls enduring the most torture actually belong to the Committee members themselves.

Read more in the Baker Market Update.

Thankful for You

There is no greater time of the year to stop and reflect on the many blessings we enjoy each and every day. Your IBAT family is grateful to represent an industry that does such good throughout Texas communities and throughout the country.

We are especially thankful for your support and friendship and the opportunities you afford us to work together.

This Thanksgiving, we wish you and yours a day full of splendor and merriment, time to enjoy your loved ones, and continued blessings in the days ahead.

The IBAT office will close at noon on Wednesday, November 22 and will remain closed through Friday, November 24. Normal business hours will resume on Monday, November 27.

HMDA Product Now Available

As community bankers prepare to meet expanded data collection requirements under the Home Mortgage Disclosure Act (HMDA), we have heard from many compliance officers requesting resources to help ensure consistent and accurate data collation for reporting. 

In response to these requests, the Compliance Adviser team has developed tools to assist you with HMDA data collection for 2018. For $99 (members) or $149 (nonmember) you’ll receive:

  • Two customized data collection forms (in Excel form and Fillable PDF formats) with all 110 HMDA fields and the regulation defined choices available for the user to make the correct selection for the transaction, minimizing error risk; and
  • An enhanced version of the CFPB’s “Reportable HMDA Data: Regulatory and Reporting Overview Reference Chart,” with an additional column defining suggested documents that the user could use to collect the data. An additional Excel spreadsheet is provided to allow the compliance officer to customize this form based on your bank’s policies and processes to ensure HMDA data collection consistency.

These resources, conveniently packaged for your use, are now available to purchase online. You will receive the products in your email box approximately one hour after completing your purchase.

Baker Market Update: Nov. 20, 2017

The nation’s legislators generated a lot of news this week. Some we can talk about, and some we can’t. Judging from their reactions yesterday, one might conclude that House Republicans had just won the Super Bowl. They might need to be reminded that it’s not even halftime yet. Despite the many, joyous declarations of “victory”, there’s a long way to go before reaching the End Zone of tax reform. As we all learned on Sesame Street, the Senate now needs to finish approving its version, prior to the two chambers then reconciling whatever differences exist between the two plans. Piece o’ cake. 

Read More in the Baker Market Update

Calling all Sub S Banks

With the U.S. House of Representatives expected to act on a tax reform bill this week, your VERY URGENT action is encouraged to express concerns on specific provisions affecting banks organized as S corporations.

IBAT members should call their members of the U.S. House of Representatives today with the following message:

  • H.R. 1 (the tax reform bill) does not afford direct sub s shareholders (employees and directors) the same pass through tax rate as passive shareholders. The majority of sub s shareholders are direct shareholders. Failure to address this disparity would likely result in the elimination of sub s banks and contribute to further consolidation in the community banking industry, with disproportionate effect on rural Texas. 
  • Please let Ways and Means Chair Kevin Brady and Ways and Means committee member Kenny Marchant know that HR 1 should treat passive and active members the same. 

Please use this link, to find the contact information of your member of the U.S. House of Representatives. When calling his/her Capitol offices, you should request to speak with the staff member handling constituent feedback on H.R. 1.

Thank you for your prompt response to this call to action. As always, please share any feedback you receive from your House member.  

2017 Year-End Checklist

As the end of 2017 approaches, it is time to reflect on the successes and challenges faced in the last 10-plus months. For bankers, year-end also means completing various reports and reviews. To help get started, IBAT General Counsel Karen Neeley has prepared her annual year-end checklist. While the list is not intended to fit all situations, it should serve as a great tool to get 2018 started with the right foot forward. We always welcome additions to the list, so please email Kelly Goulart if you have one. 

Baker Market Update: Nov. 13, 2017

At times this week, it seemed like there were more tax-plan iterations floating around out there than say, oh, the number of Saudi princes. Of course, the latter is in decline and the former is in despair. Maybe. Depending on whom one asks, tax reform is a foregone conclusion that’s just going through some legislative fine-tuning, or it’s an attempt at pleasing everyone while ultimately pleasing no one and will never make it to the President’s desk. Which camp are you in? 

Read More in the Baker Market Update

IBAT Legislative Fund

Recently, we sent out a letter requesting support for our Legislative Fund. We are extremely appreciative of the generous responses thus far, and thank you for your support. 

As there have been some questions regarding the submission of contributions, we have developed a form to provide additional information. As always, thank you for your support of IBAT and our efforts to represent community banking.

Home Equity Summit

As you're most likely aware, Proposition 2 (Home Equity Lending) was on the constitutional amendment ballot yesterday. The amendment was overwhelmingly approved by voters.

What This Means for Community Bankers:
You have less than two months to get lenders, loan processors and compliance staff trained for the new laws, effective January 1, 2018. Texas community banks have been able to make home equity loans for nearly two decades, and with the exception of the line of credit (HELOC) addition, not much has changed - until now!

Changes include:

  1. Lowering the cap on home equity loan-related fees from 3 to 2 percent, but excluding certain additional fees from counting towards this cap; 
  2. Allowing home equity loans against agricultural property; 
  3. Allowing the refinancing of a home equity loan with a “traditional” mortgage loan; and 
  4. Allowing advances on a home equity line of credit as long as the principal amount remained below 80 percent of the fair market value of a borrower's house.

What IBAT is Doing to Help You:
IBAT's Home Equity Summit is scheduled to take place December 5, 2017 in Dallas. Take advantage of this opportunity and join Karen Neeley, IBAT General Counsel and Senior Attorney with Kennedy Sutherland LLP, in addition to IBAT compliance staff Kelly Goulart and Janie Daniel, for a general discussion on home equity lending and the potential compliance pitfalls of the new revisions to law.

Specific Topics to be Covered:

  • The basics of Texas homestead requirements.
  • Permissible non-purchase money security interests in a Texas homestead.
  • Required notices and delivery issues surrounding home equity lending in Texas.
  • An exploration of Title 7, Chapter 153 of the Texas Administrative Code.
  • What now? Understanding ‘cure’ provisions and what to do if (really when?) mistakes are made.
  • What exactly changes on January 1, 2018?
  • What exactly does not change on January 1, 2018?

If your bank currently makes home equity loans, or wants to get into the home equity loan business, this is a must-attend program. Resverve your spot today.

H.R. 1

The long-awaited tax reform bill, H.R. 1, was rolled out last week by Ways and Means Committee Chairman Kevin Brady of Texas. The summary provided by the Committee hits the high points and is a short read.

This bill is designed to lower tax rates, stimulate investment and simplify the tax code. While difficult, if not impossible, to grasp the nuance buried in a 429-page “simplification” bill, there appear to be both very beneficial provisions and some potentially problematic areas. The issues to be addressed will become more clear as we, and others, review the bill text to determine the ultimate impact on community banking.

Continued from Bottom Line:

Of particular note for banks is a top corporate tax rate lowered from 35 to 20 percent; a decrease in rate for pass-through entities, including Sub S banks, to 25 percent with potential issues regarding limitations; limitations on interest deductions for both commercial and personal borrowings (including a decrease in the mortgage interest deduction and phase out of the deduction for interest on home equity lines of credit and second homes); limits on deductions for FDIC insurance premiums for larger banks (>$10B); and additional limitations on deferred compensation plans. As mentioned, details on these and certainly other provisions will garner more clarity in coming days and weeks.

IBAT is working with other interested parties on the language for Subchapter S shareholders. As drafted, the bill does afford “passive” shareholders—meaning those not materially active in the business—the pass-through rate of 25 percent. Obviously, some Subchapter S shareholders include directors and officers who would not qualify under the passive definition.

IBAT has been active on a number of fronts as this proposal has been crafted and will continue to be engaged to ensure community banking is treated fairly and appropriately. We will provide additional information and potentially request your involvement as this saga unfolds.

Baker Market Update: Nov. 06, 2017

Woody Guthrie once wrote in one of his depression-era songs that, “…the farmer feeds us all.” And he was right. But, farmers don’t get much attention from the Bureau of Labor Statistics (BLS) who reported this morning that 261k more non-farmers found jobs last month. And on top of that, the 33k decline in non-farm jobs reported for September, was actually an 18k gain. So, good news for non-farmers, but one has to dig pretty deep in the 39 page BLS report to find out anything about the people out there getting their hands dirty on our behalf. Where’s the love?!

Read More in the Baker Market Update


Baker Market Update: Oct. 30, 2017

While no evidence exists that anyone has yet become tired of winning, the announcement [Friday] morning by the Bureau of Economic Analysis (BEA) that the economy grew at an estimated 3.0% in the last quarter is feeling like a victory to many. Against this backdrop, the toxicity of the nation’s political environment became practically radioactive. One might think a shipment of uranium had been delivered to Capitol Hill as lawmakers wrangled over proposed tax-reform legislation.

Read More in the Baker Market Update

Baker Market Update: Oct. 23, 2017

What do the rebellious citizens of northeast Spain have in common with recalcitrant Senators in Washington, D.C.? Well, they’ve both been moving the bond market this week. News out of Madrid that the dreaded Article 155 would be invoked in order to bring Catalans to heel, caused a bit of a bond rally yesterday as investors worried about the potentially negative impact such a move would have on the European Union. In the U.S., the Senate induced a reversal of that rally when it narrowly passed budget measures that enhance the possibility of tax cuts coming to fruition. And stocks prices? Well, they just keep going up ‘cause that’s what they do these days. Moo! 

Read More in the Baker Market Update


New OCC Guidance

The Office of the Comptroller of the Currency (OCC) issued new guidance to the Policies and Procedures Manual providing a ‘framework’ for determining what impact evidence of discrimination or other illegal credit practices would have on the assigned CRA rating for national banks. IBAT General Counsel Karen Neeley sees this as a significant—and welcome—change in tone from the OCC.

This policy change appears to remove the probability of an automatic CRA ratings downgrade, despite the fact the bank had already addressed any alleged discriminatory or illegal credit practices and/or their impact on the bank’s CRA activity was inconsequential.

Acting Comptroller of the Currency Keith Noreika issued the following statement regarding the changes to OCC PPM 5000-43, “Discriminatory and Illegal Credit Practices.”

“Today’s changes to an internal OCC policy ensure a logical nexus between our CRA performance evaluation ratings and banks’ CRA-related activities. The revisions make certain we give full consideration to the corrective actions taken by banks during our evaluation. The revised policy ties a CRA rating, and any downgrade, to CRA lending activities so that banks have incentive to improve their CRA activity and are held accountable for any discriminatory or other illegal credit practices related to their CRA activities.”

Baker Market Update: Oct. 16, 2017

In a week where Spain tried to turn itself back into an Ernest Hemingway novel and the Cub Scouts tried to turn themselves into a Virginia Wolff essay, one might be forgiven for missing the release of the FOMC minutes. Not to worry; they were very much like the previous meeting’s minutes. And very much like the minutes before that. To the surprise of no one, the members of the FOMC are universally concerned and frustrated about the lack of inflation, but are of different minds regarding a course of action to address those concerns. Also, according to the minutes, nobody got called a moron. Yet. But, how should one refer to policy-makers who are convinced that raising the cost of credit is an appropriate policy response to a disinflationary environment? Very carefully.

Read More in the Baker Market Update

Baker Market Update: Oct. 10, 2017

It may take a little squinting, but if one can get past a few trees infested with pine-bark beetles, the view of the labor market forest uncloaked by this morning’s jobs report provided many observers with an eye-pleasing vista. It was September of 2010 the last time the monthly NonFarm Payroll (NFP) count was negative, but in the face of last month’s 33k decline, the Unemployment Rate fell by two-tenths to 4.2% while the demographically driven and downward trending Labor Force Participation Rate rose by those same two-tenths to 63.1%. In terms of actual numbers, the actual number of employed persons rose by 906k while the total of those unemployed fell by 331k. Sightseers might want to remember that data from the Household Survey can produce measurements that can sometimes appear to not quite agree with the much larger Establishment Survey. This particular forest is not without weeds.

Read More in the Baker Market Update

IBAT Convention Recap

IBAT’s 43rd Annual Convention wrapped up last week in Austin with near-record attendance and rave reviews from attendees. While there were many highlights from this year’s event, we captured a few special moments for you to enjoy via video, including:

Attendees will receive an email this week with links to many of the slide decks used by presenters. And, don’t miss the collection of photos from the IBAT Convention posted online!

Presidential Proclamation


NOTE: Please be advised that President Donald Trump has issued the following proclamation concerning the flying of the United States flag at half-staff immediately through Friday, October 6, 2017.  Please contact me if you have any questions concerning this proclamation. 


Greg Davidson 

Gregory Scott Davidson, Executive Clerk and

Director of Constituent Communication Division

Office of the Governor ● P.O. Box 12428 ● Capitol Station ● Austin, Texas 78711



Office of the Press Secretary


October 2, 2017


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Our Nation is heartbroken.  We mourn with all whose loved ones were murdered and injured in last night's horrible tragedy in Las Vegas, Nevada.  As we grieve, we pray that God may provide comfort and relief to all those suffering.

As a mark of respect for the victims of the senseless act of violence perpetrated on October 1, 2017, 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, October 6, 2017.  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 stations.

 IN WITNESS WHEREOF, I have hereunto set my hand this second day of October, in the year of our Lord two thousand seventeen, and of the Independence of the United States of America the two hundred and forty-second.




Hurricane Harvey

The Impact of Hurricane Harvey
In a speech last week, Dallas Federal Reserve President Robert S. Kaplan outlined the impact of Hurricane Harvey on the region, including:

  • $75-100 billion in total property damage;
  • $45-55 billion in damage to residential property;
  • $16-20 billion in commercial property damage;
  • $10-12 billion in vehicle damage;
  • $6-10 billion in infrastructure damage.

The storm also resulted in the short-term loss of 55,000 to 75,000 jobs. Click here to access the resources page IBAT put together to aid community bankers in the recovery process.

Hurricane Harvey Relief Fund Update
One final heartfelt thank you to everyone who donated to the Hurricane Harvey Relief Fund to help affected banking families across the state recover and rebuild. We are proud to report that fund distributions given last week totaled nearly $1.5 million to more than 600 bankers and their families.