Baker Market Update: Jan. 12, 2018

Mark Twain once famously told a newspaperman that “the reports of my death have been greatly exaggerated.” This week, famed bond-fund manager Bill Gross proclaimed that the bull market in Treasury bonds was also dead and the time had come to short the market. Mr. Gross may have forgotten that he made a similar declaration way back in February of 2011. Back then, the Ten Year’s yield was about 3.50%. So, Billy, an obvious question comes to mind; how’d that work out for ya’?

Read More in the Baker Market Update

Top Legal Ease

Here are the top 10 Legal Ease questions of 2017! IBAT members have accessed the 600-plus Q&As from the Legal Ease archive more than 195,000 times. This compliance resource is available to our member banks anytime at no extra cost.


Should we be concerned that preparing certain documents “in house” constitutes an Unauthorized Practice of law? 
Read the answer.


We have income tax refunds being made via ACH to an account that is not in the name of the taxpayer receiving the refund. Can we accept the deposit?
Read the answer.


We just want to be sure about the Home Mortgage Disclosure Act (HMDA) reporting thresholds for 2016 and 2017. What is the new threshold? What about collecting and reporting the new “data points?” 
Read the answer.


Our applicant is an attorney who wants to add a large office and reception area on to his home to work out of fulltime. Is this application subject to TRID? 
Read the answer.


If we provide a Loan Estimate, and the applicant does not express their intent to proceed, do we have to provide either an Adverse Action Notice or a Notice of Incomplete Application within 30 days?
Read the answer.


We have a mortgage loan in which our borrower had “sold” the home under a contract for deed to the people living in the house. No surprise in that this blew up and all three parties ended up with attorneys. We have now reached a settlement in which we will allow the people in the home to assume the loan. Do we need to provide the people assuming the loan with disclosures?
Read the answer.


Simple question – Is a Texas home equity loan HMDA reportable?
Read the answer.


A bank originates a temporary construction loan with the intent to provide permanent financing (if the borrower does not find permanent financing elsewhere) when the home is completed. However, they do not do a one-time close. They close the construction loan and when the home has been completed, they document the permanent loan with a modification agreement. Is that HMDA reportable?
Read the answer.


Can a state bank take stock in that same bank as collateral? Can a state bank take stock in a holding company that owns that same bank as collateral?
Read the answer.


Wasn’t there a bill from the last legislative session (2015) that becomes effective this year (2017) that could impact the escheatment of deposit accounts and safe deposit box contents?
Read the answer.


Refresher on Tax Reform

Busy during the holidays and need a refresher on tax reform? Click here to read the ICBA recap.

By and large, many of the issues of concern for community banks were addressed in the final version of the bill, which served as a compromise between the House and Senate proposals.

IBAT thanks Congressional leaders for hearing community banker concerns throughout the legislative process. And, we thank you for staying tuned in and answering the calls to action as tax reform took shape.

Market Conditions 2018

As we transition into a new year, it’s important for bankers to take note of some positive differences from twelve months ago. For example, we have new leadership at the Federal Reserve, including a chairman and vice chairman who are more supportive of regulatory relief for smaller banks. The US economy also comes into the new year with greater momentum and potential for faster growth on the heels of recently passed tax reform. As for the banking system, loan demand is healthy, cost-of-funds remains low, asset quality is solid, and we have stronger capital positions generally than we’ve had in years. The bottom line is that banks are producing the best returns for the industry since the last recession began ten years ago.

Read More

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. 

In Memoriam

Community Banking Legend Passes Away
It is with a heavy heart that we bid farewell to Riter C. Hulsey, who passed this Saturday, December 16. Riter recently celebrated his 97th birthday and his 70th anniversary with American National Bank of Texas (ANBT) where he served as chairman of the board. He began his career with ANBT in 1947 as a teller and has been a historic part of the bank’s growth as well as the Terrell community since then. Riter was appointed chairman in 1986, a position he held until his passing. He served on the IBAT board of directors and, along with his son Robert, was inducted to the IBAT Wall of Heroes and Legends of Community Banking in 2015.

Read ANBT’s tribute to Riter on its Facebook page and feel free to leave a memory on his tribute wall. Our thoughts and prayers to Riter’s family and friends during this difficult time.“Riter Hulsey is a quiet hero to his customers, his community, his board of directors, his executive management, his inside team of employees and his family,” said IBAT President and CEO Chris Williston. “He will be missed by so many but his legacy—in the bank and in the community—will live on.”

Baker Market Update: Dec. 18, 2017

To those brimming with Christmas spirit, who is more reviled; the Grinch, or Ebenezer Scrooge? Well, those two Christmas- carol- curmudgeons are getting a public relations gift this year. By voting against Janet Yellen on the occasion of her fifth and final rate hike, Neel Kashkari and Charles Evans moved to the top of the bah-humbug heap. For the first time since November of last year, more than one committee member chose to dissent, and they chose to do that on the occasion of what was Mrs. Yellen’s final policy action. Nice going guys; is this the year you tell your grandkids there’s no Santa?

Read More in the Baker Market Update

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. 

Survey Results

Bankers have cybersecurity and data security on their minds more than any other issue, according to a December survey conducted by Wolters Kluwer. The data, which tracks banker concerns by quarter, showed risk management concerns up 13 percent year over year. Meanwhile, 83 percent of respondents said they were “concerned” or “very concerned” about cybersecurity.

Another recent survey report, compiled by FS-ISAC, pinpointed bank employees as the source of security officers’ concern. Sixty-seven percent of respondents said their company is more likely to be hit with a cyberattack or data breach in the coming year, with two-thirds expecting it to be caused by an employee falling victim to a phishing scam.

Risk management, cybersecurity and data security will, of course, be topics of primary concern at IBAT’s IT Security & Fraud Summit coming up in just over a week—February 1-2 in Dallas. It’s not too late to register for this important event. 

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.  

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