New FFIEC Committee Appointment

The Federal Financial Institutions Examination Council (FFIEC) recently announced the appointment of Commissioner Caroline Jones to the Council’s State Liaison Committee (SLC). Jones currently serves as the Commissioner of the Texas Department of Savings and Mortgage Lending. She will serve as the American Council of State Savings Supervisors (ACSSS) representative on the SLC for a two-year term that goes through March 31, 2017. 

The four current SLC members that Commissioner Jones joins are SLC Chairman David Cotney, Commissioner of Banks for the Commonwealth of Massachusetts; Mary Hughes, Financial Institutions Bureau Chief of the Idaho Department of Finance; Lauren Kingry, Superintendent of the Arizona Department of Financial Institutions; and Karen Lawson, Director of the Office of Banking within the Michigan Department of Insurance and Financial Services.

Descending on the Capitol

IBAT members are gathered in Austin this week for Community Banking Day at the Capitol. Throughout the day on Tuesday and Wednesday, community bankers from across the state will meet with legislators to discuss issues on IBAT’s proactive legislative agenda, including:

  • Common sense measures to curb some forms of debit card fraud;
  • Address the matter of liability in losses from data security breaches;
  • Enforcement of the prohibition on debit card surcharges at the point of sale;
  • A fix for the calculation of points and fees on home equity loans;
  • Clarity on account beneficiaries; and
  • Provide prior notice to existing lien holders on property tax loans.

IBAT members will also hear from a number of dignitaries during a legislative briefing on Tuesday. Among those scheduled to address the group are Speaker Joe Straus, Texas Comptroller Glenn Hegar, Banking Commissioner Charles Cooper, Sen. Kevin Eltife, Sen. Lois Kolkhorst, Sen. Kirk Watson, Rep. Tan Parker and Rep. Larry Gonzales.

“While many of the issues affecting community banks are decided at the federal level, IBAT is first-and-foremost a state lobbying organization,” said IBAT President and CEO Chris Williston. “The show of force that Texas community bankers are bringing to the Texas Capitol this week is nothing short of impressive.”

A full recap of Community Banking Day at the Capitol will be included in next week’s Bottom Line newsletter.

New Member Resource

Pursuant to an IBAT suggestion earlier this year, the Department of Banking and the Department of Savings and Mortgage Lending eliminated the annual requirement in the User Notice on ATM Safety Rules for state banks (page 39), state savings and loan associations (page 73), and state savings associations (page 77). In addition to eliminating the annual requirement, the amended rules updated the information that must be contained in the safety notice provided whenever an access device is issued or renewed. It is not necessary to provide the notice when an access device is replaced.

IBAT created an ATM Safety Notice Form for your bank’s use. Please feel free to personalize it for your bank and distribute it to your customers. 

Baker Market Update: Apr. 6, 2015

Bonds like it, but Janet Yellen and her merry band of monetarists have probably got the Good Friday blues. With the Fed expecting to find around 250k new jobs in their Easter basket, the early visit from the big bunny only brought them about half of that. This morning’s report from the Bureau of Labor Statistics showed that employers only added 126k to Non-Farm Payrolls with the Unemployment Rate staying at 5.5%. This past winter has apparently hit rabbits particularly hard, and, much like last year, the weather gets the blame. Helping to keep the rate of unemployment down was yet another drop, slight though it was, in the Labor Force Participation Rate. That measure fell another tenth to 62.7%. Also falling was February’s job total. A revision to March’s report lowered the initially reported 295k new jobs down to 264k. 

Read more in the Baker Market Update.

IBAT Office Hours - April 3

In observance of Good Friday, the IBAT offices will be closed Friday, April 3, 2015. We will resume to regular business hours on Monday, April 6, 2015.

We wish everybody a joyful Easter!

IBAT Comment

IBAT submitted a comment letter on the CFPB’s proposed amendments to Reg. E and Reg. Z on prepaid accounts. Primarily, IBAT is concerned with the proposed rule’s effect on payroll cards. IBAT’s letter has several contentions, including the following:

  • There is no data supporting a need to modify the rule, 
  • There is a current regulatory regime to deal with any issues, and 
  • The current payroll card rule is adequate and consistent with best practices and is also authorized by a Texas Supreme Court opinion.

The provisions on overdrafts could foreshadow regulation of bank account overdrafts. Therefore, we expressed our opposition to the treatment of fees as finance charges. Additionally, IBAT commented on the short- and long-form disclosures, overdraft and other credit features, and the rushed implementation date.

Regulation A+

Last week, the Securities and Exchange Commission (SEC) approved changes to Regulation A that would allow banks and bank holding companies to raise up to $50 million without going public or asking permission from state regulators. The changes apply to banks that do not currently report to the SEC. 

The rule, now dubbed Regulation A+, increased the cap on how much community banks can raise from $5 million to $50 million for Tier 2 offerings or $20 million for Tier 1. The rule also opened up access to a new pool of investors by removing the investment restriction to “accredited investors” - meaning those who made more than $200,000 a year or had a net worth of more than $1 million. Investors would be limited to buying the greater of 10% of their annual income or net worth on a Tier 2 offering. There is no individual investment limit on Tier 1 offerings. 

Regulation A+ was promulgated as a result of the IBAT-advocated Jumpstart Our Business Startups (JOBS) Act, which Congress approved in 2012.

Meeting with Jack Lew

A number of community bank leaders, including IBAT members Scott Heitkamp and Cynthia Blankenship, met with Treasury Secretary Jack Lew last week for an informal roundtable to discuss community bank challenges and opportunities as well as economic conditions.

“Secretary Lew was open and wanted to hear first hand our concerns,” said Heitkamp. Blankenship added that, “We were pleased with the fact that Treasury was receptive to our concerns and sincerely interested in what micro-changes should be made to allow us to continue to serve our communities.”

What was the tone of the meeting with Secretary Lew?

Scott Heitkamp, ValueBank Texas President and CEO:

The tone of the meeting with Secretary Lew was upbeat and positive. He opened the meeting by asking a question to the group regarding what the greatest concerns and issues facing community bankers are. As we worked our way around the table, the story became the same. We all had one common denominator and that was regulatory burden and how it is strangling community banks. If this issue is not addressed soon, there will be continued consolidation of community banks and Main Street banking will not exist.

What was discussed during the meeting?

Cynthia Blankenship, Bank of the West (Grapevine) Vice Chairman and Chief Operating Officer:

We expressed how important it continues to be to have a community banker or someone who understands community banks at the Treasury, Federal Reserve and the regulatory agencies. Specific topics addressed included the concern of the lack of new charters (two since 2008); access to capital, particularly for Subchapter S banks; QM and the fact that a lot of banks are no longer making mortgages, which in some areas will drive consumers to continue to rent; the problem that small business may be looking for alternative funding, such as credit cards because regulation has made it so cumbersome to access credit; the fact that in 600 rural or micropolitan counties, community banks are the only banks that serve them; and the statistic that community banks make 50% of all small business loans and 77% of all agricultural loans.

Reg Relief Bills

Eleven regulatory relief bills were approved by the House Financial Services Committee last week, many of which included provisions in the IBAT-endorsed Plan for Prosperity. Among the measures approved are:

  • The Community Institution Mortgage Relief Act of 2015 (H.R. 1529), which would exempt from escrow requirements any mortgage held in portfolio by financial institutions with $10 billion or less in assets. The threshold for small service exemptions would also be increased from 5,000 to 20,000 loans.
  • The Helping Expand Lending Practices in Rural Communities Act (H.R. 1259), which would create a petition process for the CFPB to reassess the rural status of counties.
  • The Mortgage Servicing Asset Capital Requirements Act of 2015 (H.R. 1408) to delay and study Basel III rules on mortgage-servicing assets.
  • The Eliminate Privacy Notice Confusion Act (H.R. 601) to eliminate a provision requiring financial institutions to provide annual privacy notices to customers even when their policies have not changed.

All of these measures passed with bipartisan support and will now go to the full House for consideration. Congress currently stands at recess for two weeks for Passover and Easter holidays.

Pandora Ads Debut

Are you ready for Community Banking Month? It officially kicks off tomorrow and as reported in last week’s Bottom Line, we want to help your bank celebrate and tout the benefits of community banks to your community.

IBAT created two Pandora ads (listen here and here) with different messages about community banks that focus on Community Banking Month as a time to make the switch. We encourage you to use these ads as part of your bank’s social media efforts in April.

IBAT has also created a Community Banking Month Facebook page. Please “Like” the page and check in daily for interesting community bank facts and articles. Feel free to make your own posts and share interesting information on this page as well.

We’ve written a letter to the editor that you can submit to your local newspaper. It’s simple - fill out the letter, call your local paper and ask for the best email to send a letter to the editor, then immediately email the letter with a brief note. See last week’s story for tips about submitting a letter. Or feel free to call IBAT, and we’ll be happy to assist.

Lastly, Governor Abbott has officially proclaimed April as Community Banking Month in Texas. In his proclamation, the Governor “encourages all Texans to acknowledge the civic contributions of community banks and the role they play in strengthening local economies.” We couldn’t have said it better.

Final Reminder

The new Basel III capital rules that went into effect for all banks on January 1, 2015 allow community banks to make a one-time, permanent opt-out of the changes to the treatment of accumulated other comprehensive income (AOCI) components. The permanent opt-out must be made by banks on their March 31, 2015 call report, and any parent holding company must make the same election as its subsidiary bank. This is a one-time opportunity to opt-out so bankers should think carefully and consult with their accountants before making such a decision.

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 a resource to check multiple scenarios of your bank’s Basel III capital ratios.

Comment Submitted to CFPB

On Monday, IBAT submitted its comment letter to the CFPB on the agency’s proposed amendments to the definitions of “small creditor” and “rural and underserved areas” for purposes of certain special provisions and exemptions from various requirements provided to certain small creditors under the CFPB’s rules. The letter begins by reiterating IBAT’s position that in-portfolio loans should be given QM status. We thank the CFPB for several proposed changes, which include raising the origination limit for determining small-creditor status, excluding loans held in portfolio in determining small creditor status, adding certain grace periods for small-creditor determination, expanding the definition of rural, adding two safe-harbors, retaining the definition of underserved and extending the two-year transition period.

The remainder of the letter concentrates on specific examples of the inequitable effects the proposed definition of rural would have on small creditors in counties throughout the state, again suggests that the CFPB define rural as areas outside of large urbanized areas and concludes with a scenario sent to us by the president of an IBAT member community bank.

Action Alert

Chairman Rene Oliveira’s bill to require a borrower to provide a 10 day prior notice to existing lienholders (HB 1936) was heard last Tuesday in the Business and Industry Committee.  The first step in the process is to get this bill out of Committee, and a vote is expected as early as Tuesday.  If this is an important issue to you and your bank, and if you are a constituent of or have a relationship with any of the members of the Committee (see listing below), we encourage you to call and let them or their office know that you are in full support of HB 1936.

As a property tax loan is a priority lien loan, the mere fact that one of your borrowers enters into such a transaction is more than likely a breach of the deed of trust  covenants and loan agreement, and puts that borrower in default.  Further, borrowers are likely not aware of the other options available – an installment program with the taxing entity or an accommodation by the lender.  These options will likely result in a better deal for the borrower, and certainly less expense and expenditure of resources for your bank.  This option benefits not only your customer, but also your bank and your lien position.

Here is the contact information for the Committee.  There will no doubt be further opportunities to eventually contact all members of the Legislature before this process is complete. 


First Name

Last Name



Phone Number










Vice Chair

































The property tax lending industry has a good – and very profitable – thing going, and has again “lobbied up” this session.  Our grassroots and being on the right side of this issue are a winning combination . . . but it will take your engagement to get this passed into law.  

Baker Market Update: Mar. 30, 2014

The term “Sweet Sixteen” means different things to different people. For sports fans, the term conjures up images of hard working student-athletes proudly and fiercely fighting to defend the honor of their respective institutions of higher learning. Right. For others, the term merely refers to those members of the FOMC who are not Janet Yellen. For those sixteen, this week’s inflation report from the Bureau of Labor Statistics was not all that sweet, nor was it all that bitter. We learned on Tuesday that the Consumer Price Index reversed last month’s .7% drop with a .2% rise month-over-month. On an annualized basis, CPI now stands at, uh, zero. If one takes out the volatile food and energy components, the annualized rate stands at a more committee-friendly 1.7%; slightly friendlier than last month’s 1.6% measure.

Read more in the Baker Market Update.

Rural Communities Update

The ongoing debate over how “rural” communities should be defined under CFPB mortgage rules received new attention last week as Senate Majority Leader Mitch McConnell, along with Senators Joe Manchin and Dean Heller, weighed in on the issue in a letter to Director Richard Cordray.

The letter called upon the Bureau to create an appeals process to allow communities excluded from the rural definition to petition for reconsideration of their status. As reported in an earlier edition of the Bottom Line, legislation recently filed by Rep. Andy Barr and Rep. Ruben Hinojosa would force the CFPB to create such a mechanism for appeals.

“Fine-tuning of the rural definition is a priority for us,” said IBAT President and CEO Chris Williston. “IBAT was instrumental in bringing the issue to the forefront of the CFPB’s attention and we support any measure that expands the rural definition. However, IBAT also believes that much of the consternation surrounding the rural definition could be circumvented with an outright granting of QM status to all loans held in portfolio at community banks.”

Teaching Excellence Award

The nominations deadline for the 2015 Teaching Excellence in Financial Literacy Award has been extended to April 15, 2015. 

Don't miss the chance to nominate a local teacher for a $1,000 prize. All elementary, middle, high school and community college teachers are eligible to be nominated. The goal of this award program is to reward individuals who show initiative and innovation in teaching students the importance of financial responsibility. Three teachers will be selected and will be recognized during ceremonies at their schools. Additionally, all three winners will become part of the IBAT Teach the Teacher Program™ Advisory Task Force. Bankers can nominate teachers in their area schools by completing the nominations packet.