Baker Market Update: Jan. 26, 2015

Looks like the Swiss are still making headlines, but this time it’s on the sports page. Switzerland’s national hero, Roger Federer, was ousted in the early going of the Australian Open Tennis Championship by little-known Andreas Seppi, a native of Bolzano, Italy. Signor Seppi, however, was not the week’s biggest Italian newsmaker. European Central Bank President Mario Draghi’s announcement on Thursday that the ECB would embark upon an aggressive bond-buying program may have been anti-climactic, but was nonetheless newsworthy. Although this latest step in European efforts to spur growth and avoid deflation was widely expected, the magnitude of the effort was a surprise to many. News of the planned €1 trillion ($1.14 trillion) in sovereign bond purchases was a boon to credit and equity markets, but sent the value of the Euro plunging. ECB spokesmen were quick to squash rumors that Bill Belichick had been called in as a deflation consultant.

Read more in the Baker Market Update.

ATM Safety

IBAT would like to thank the Department of Banking (DOB) and the Department of Savings and Mortgage Lending (SML) for their proposals to eliminate the annual User Notice on ATM Safety for state banksstate savings and loan associations, and state savings associations. IBAT participated in early discussions with the DOB about eliminating this annual notice.

However, the proposals would also require resending the notice every time a debit card is reissued. With breaches resulting in multiple reissuances, we feel it is overkill and requested that it be eliminated from the rule. See here for our comments. If you have had to reissue multiple times - or simply see that as an unnecessary regulatory burden - we encourage you to email your comments to the DOB at legal@dob.texas.gov and to SML atsmlinfo@sml.texas.gov.

EGRPRA Meeting - Dallas

On February 4, 2015 in Dallas, the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB) and the Federal Deposit Insurance Corporation (FDIC) - collectively, the agencies - will hold the second in a series of outreach meetings on the agencies’ interagency effort to reduce regulatory burden as required by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). These federal banking agencies will hold the following additional outreach meetings throughout 2015: Boston on May 4, Chicago on October 19 and Washington, D.C., on December 2. Additionally, the agencies plan to hold an outreach meeting this summer that will focus on rural banking issues.

Community bankers are encouraged to attend an EGRPRA outreach meeting to share their views on how to reduce unnecessary burdens in OCC, FRB and FDIC regulations. For those unable to attend the Dallas meeting in person, a live webcast will be available on the EGRPRA website. Registration and the agenda for the Dallas meeting can be found here. The registration deadline is January 28 or when all seats are filled.

TechMecca 2015

TechMecca 2015, IBAT's annual technology conference and expo kicksoff in just over a week. 

The current rate of change in technology influencing the operations and customer service of community banks is nothing short of dizzying. While everyone has an eye towards the future and “what’s next,” TechMecca 2015 will call attention back to the C-O-R-E areas of concern:

  • Compliance,
  • Operations,
  • Risk Management, and
  • EMV Workshops.

The agenda includes dynamic general sessions led by industry experts who understand the fragile balance between technology, marketing and customer service, and concurrent sessions that focus on specific topics to help attendees move their financial institutions forward in a changing industry. 

Make certain that your institution is fully represented to take advantage of the wealth of knowledge and information available.

Basel III Capital Rules

The new Basel III capital rules that went into effect for all banks on January 1, 2015 can be confusing. All Non-Advanced Approaches Banks (< $250 billion assets) are required to make a one-time, irrevocable election to opt-in or opt-out of the new accumulated other comprehensive income (AOCI) treatment for regulatory capital computations on their March 31, 2015 call report.

The general thinking is that most banks will want to opt-out, meaning they elect to continue neutralizing the unrealized gains or losses on available-for-sale debt securities in their regulatory capital ratio computations. However, you should consider your bank’s current capital position as well as its future strategies before determining the election. It is also advised to consult with your bank’s account and financial advisors. Additionally, the FDIC offers aresource to check multiple scenarios of your bank’s Basel III capital ratios.

If you’d like to learn more about the Basel III final rules and how they’ll affect your bank, register for one of IBAT’s Basel III & RC-R Webinars on January 23, 2015.

A special thanks to Padgett, Stratemann & Co., CPAs for providing this information.

.bank Domain

As has been reported over the past few months, the .bank domain will soon be available. While banks are not required to use the .bank domain, it is highly encouraged that you register and secure your bank’s name at the .bank domain. To assist with this process, the Independent Community Bankers of America has created a “How to Register for .Bank” webpage that includes links and deadlines for registering domain addresses, pre-approvals for .bank designations and additional information.

The deadline to register existing web domain addresses is May 15, 2015.

Debit Interchange Rules Untouched

Yesterday, the United States Supreme Court declined to hear a case from retail groups seeking to overturn the Federal Reserve’s rule that established debit card interchange fees.

The decision of the Supreme Court to decline hearing the case effectively solidifies the March 2014 decision by the U.S. Court of Appeals that affirmed the methodology used by the Fed to establish interchange fees. Retailers have maintained that the Fed interpreted the statute too broadly when establishing the fee and ultimately settled on a maximum fee that was too high.

While banks under $10 billion in assets are excluded from the interchange rule, IBAT has long been concerned that the outcome of this case would create market forces long term that would certainly drive interchange rates down for all institutions.

“The Supreme Court’s decision to decline hearing the case is welcome news to the banking industry,” said IBAT President and CEO Chris Williston. “As banks continue to face the impact of retailer data breaches, the affirmation of the Appeals Court decision provides certainty for the banking industry that they may continue to charge a reasonable fee for debit transactions.”

TILA Right of Rescission

Last week, the United States Supreme Court held in the case of Jesinoski v. Countrywide Home Loans, Inc., that a borrower seeking to rescind a loan pursuant to the Truth In Lending Act’s (TILA) extended right of rescission need only submit notice to the creditor within three years to comply with the three-year limitation on the rescission right. TILA gives select borrowers a right to rescind their mortgage loans.

The Court’s decision clarifies that a borrower doesn't have to file a lawsuit within three years to rescind a loan under TILA. The Court held that a borrower's notification of intention to rescind is sufficient. The full decision can be found here.

2015 Regional Meetings

IBAT is coming to your town - or a town near you - for the 2015 “Tour de Texas” Regional Meetings, which start this month. We officially invite you to join IBAT Chairman John Jay and President and CEO Chris Williston for a legislative and regulatory update as well as a big-picture overview of the year ahead for IBAT. Registration and other information can be found here.

The schdule is set:

  • January 26 - Wichita Falls, Fort Worth 
  • January 27 - Amarillo, Lubbock 
  • January 28 - El Paso, San Angelo 
  • January 29 - Waco, San Antonio
  • January 30 - Austin
  • February 24 - Galveston, Schulenburg, Weslaco
  • February 25 - Corpus Christi, Houston, Kilgore
  • February 26 - Mt. Pleasant, Dallas

We look forward to seeing you later this month or in February, and we welcome your input beforehand on issues you’d like to hear discussed.

Week in Review: Jan. 20, 2015

Even though it was only seven days ago, last Friday’s world seems a lot different from the one that many market participants find themselves in today. Some may recall that last Friday morning brought us an encouraging jobs report with a larger than expected growth in Non-Farm Payrolls and a larger than expected drop in the Unemployment Rate. Life was good and the green light was still brightly “on” for a mid-year dose of tightening by the Fed. The Ten Year Treasury note was yielding 2.02% and moving up. Well, for those who hadn’t previously learned this lesson at summer camp; a lot can happen in a week.

Read more in the Baker Market Update

Round 1

IBAT is coming to your town - or a town near you - for Round 1 of the 2015 “Tour de Texas” Regional Meetings, which begin January 26. We officially invite you to join IBAT Chairman John Jay and President and CEO Chris Williston for a legislative and regulatory update, as well as a big-picture overview of the year ahead for IBAT. Registration and other information can be found here.

Round 1

  • January 26 - Wichita Falls, Fort Worth                                  
  • January 27 - Amarillo, Lubbock                                            
  • January 28 - El Paso, San Angelo                                          
  • January 29 - Waco, San Antonio
  • January 30 - Austin

We look forward to seeing you soon, and we welcome your input beforehand on issues you’d like to hear discussed.

American Banker

We are pleased to announce that IBAT has renewed its collaboration with American Banker to bring members access to the daily publication as a complimentary benefit of membership. The list price for the publication is $1,375, making American Banker a valuable and exclusive member benefit for bankers and associate members alike.

American Banker provides industry news and analysis, delivered to your inbox every day via PDF. IBAT members also gain full access to theAmerican Banker website and mobile applications.

You must let us know if you or a member of your team would like to begin receiving American Banker in 2015. Please email Alina Greavu with the names and email addresses of interested subscribers and we’ll add them to the list.

New Positions

IBAT would like to congratulate Al Jones and Michael Rigby on important new positions. Al Jones, Chief Executive Officer and Chairman of American Bank in Corpus Christi, has been appointed to the Federal Reserve Bank of Dallas’ San Antonio Branch Board of Directors. Jones previously served on the Dallas Fed’s Bank Advisory Council at its San Antonio Branch.

Michael Rigby, Market President of Liberty Bank in North Richland Hills, has been elected Vice Chairman of the Federal Home Loan Bank of Dallas (FHLB Dallas) Board of Directors. Rigby has served on the FHLB Dallas Board since 2010, most recently as Vice Chairman of the Risk Management Committee and the Compensation and Human Resources Committee.

January Consumer Tips

At one point or another, most of us have found ourselves in the unfortunate position of having misplaced our wallet. IBAT’s January Consumer Tips addresses what to do in this situation. This publication can be downloaded here, and we encourage you to share the information with your customers. 

Terrorism Risk Insurance Act

Last evening, President Obama signed into law the Terrorism Risk Insurance Act, which will extend the federal government’s terrorism risk insurance program through 2020. The President’s signature follows strong bi-partisan votes on the measure, which passed on a 93-4 vote in the Senate and a 416-5 vote in the House.

Other provisions in the bill require the Federal Reserve Board to have a member with community banking experience and call for a national licensing system for insurance agents.

Texas Legislature

As mentioned last week in the Bottom Line, the Texas Legislature will officially commence today in Austin. If you have not had the opportunity to review this article about how you can play a role in the legislative process, we encourage you to do so now.  

Your IBAT staff has spent the interim laying the table for another successful 140 days (and hopefully, not a day longer due to anticipated special sessions) for community banking. We intend to continue to periodically - every two weeks or as needed - provide salient updates on various issues of interest to you as community bankers. We know that you are busy and have plenty to read. Our goal is to ensure you are kept abreast of our activities and bills that could impact your bank, and do so in a succinct and meaningful manner. Additionally, we will periodically request your engagement in contacting your senators and representatives on particular issues. We promise not to “cry wolf” and will call upon you only when absolutely necessary.

Thank you for your engagement in this process, and as always, stay tuned for more as the session gets underway in earnest over the coming weeks and months.

ICBA/Travelers SelectOne

IBAT and IBAT Financial Services are proud to partner with Travelers Insurance Group to market its SelectOne portfolio of products to Texas community banks. The Independent Community Bankers of America (ICBA) announced recently that 1,200 member community banks across the nation will share a $2.9 million policyholder dividend resulting from their group experience in the Travelers SelectOne ICBA insurance program of property and casualty products during the 2013 program year.

As a reward for successfully managing their insurance exposures, which reduce claims, policyholders in the program will receive this dividend for the 13th consecutive year.