FDIC Financial Institution Letter

In response to concerns of banks organized under Subchapter S of the tax code, the FDIC issued a Financial Institution Letter (FIL-40-2014) detailing how it will consider requests to pay dividends to shareholders to cover taxes on their pass-through share of the bank's earnings, when these dividends would otherwise not be permitted under the capital conservation buffer requirements in the Basel III rule.

The letter emphasized that decisions on dividend payments will be evaluated on a case-by-case basis with consideration of the following facts and circumstances:

  • Is the S-corporation requesting a dividend of no more than 40 percent of net income?
  • Does the requesting S-corporation believe the dividend payment is necessary to allow the shareholders of the bank to pay income taxes associated with their pass-through share of the institution’s earnings?
  • Is the requesting S-corporation bank rated 1 or 2 under the Uniform Financial Institutions Rating System and not subject to a written supervisory directive?

Is the requesting S-corporation bank at least adequately capitalized, and would it remain adequately capitalized after the requested dividend? (If not, the dividend is not permitted pursuant to statutory PCA, 12 U.S.C. § 1831o(d)(1)(A).)

2014 BOI

If you want to be a part of the strategic planning team in your bank, you'll need to be up-to-date on the latest changes affecting the community banking industry.  New CFPB mortgage rules, increased scrutiny of fair lending and IT security are just three of the most pressing issues operations officers must be prepared to help their financial institutions address in the days ahead.

Come to the 34th year of the IBAT Bank Operations Institute October 12-17, 2014 on the campus of SMU in Dallas.  We invite and encourage you to select someone from your bank to attend this critical operations school. Your bank will benefit from greater operational efficiencies, enhanced regulatory compliance and a greater awareness of income opportunities driven from the operational side of the bank. 

To learn more about BOI, please click here.

Deadline Today

Today is the last day in the data collection period for IBAT’s Salary & Compensation Survey. Submit your bank’s data online at the IBAT Salary Survey home page or via fax before the July 31 deadline. Banks submitting information will receive a complimentary copy of the comprehensive PDF report, due out in early September, thanks to exclusive sponsor Bank Compensation Consulting.

Click here to download the form to submit data via fax.


Get Involved

Want to be more involved with IBAT? The best way for immediate involvement and to really make a difference in the community banking industry is participation in IBAT’s Leadership Division. In 2012, we began shifting the governance structure of the IBAT LD to allow greater participation and volunteer opportunities in regions throughout the state. This shift creates an opportunity for you to embrace a leadership role in one region of Texas and to serve along side community bankers to plan LD activities.

Click here to learn more about each region. If you need help figuring out which region you belong to, or have other questions about the regions, you may contact Julie Courtney.

LD Fan?

The IBAT Leadership Division is on Facebook! You can check out photos from past events and connect with other LD members. Like us today!

Leadership in Action

IBAT launched a new resource for members of the Leadership Division and top-level management in member banks, the Leadership in Action newsletter.  Through a partnership with Multiview, an online publisher, IBAT has added another dimension to the benefits of being a member of Leadership Division.

Published on Friday of each week, Leadership in Action contains easy-to-read, practical resource articles focused on the areas of management, leadership, communications and team building.

New Proposed Rule

Last week, the CFPB issued a proposed rule to expand HMDA data reporting requirements. In addition to new data points specifically required by the Dodd-Frank Act, the proposal would require collection and reporting of several new data points and the inclusion of some loans not presently covered. Generally the proposal would increase the number of closed-end loans or reverse mortgages made in a year to trigger HMDA reporting from one to 25 in a year.

“While we commend the CFPB for the proposed reporting threshold increase, we are disappointed with the inclusion of unnecessary additional data points,” said IBAT President & CEO Chris Williston.

When IBAT completes its study of the 573 page proposal, we will provide IBAT members with more information and submit a comment letter on or before the October 22, 2014 due date.

Debit Surcharge Update

Last week, the Texas Department of Banking notified 14 merchants that they are in violation of Texas law and must immediately cease imposing illegal surcharges on debit card purchases. The merchants were also instructed to provide refunds to customers who come into their restaurants and present evidence that they were forced to pay illegal surcharges on debit card purchases.

Banking Commissioner Charles G. Cooper stated, “In investigating the illegal surcharges being incurred by some consumers it has become apparent that the merchants imposing these charges have relied upon erroneous information provided by their payment processor. The good news is that only a handful of consumers in two or three communities have reported this activity. The Department is attempting to eliminate these illegal surcharges before they become widespread affecting more citizens of Texas.”

A prohibition on debit surcharges was championed by IBAT and passed by the Texas Legislature in 2013.

“IBAT appreciates the work of the Texas Department of Banking in addressing illegal surcharges,” said IBAT Executive Vice President Steve Scurlock. “We encourage IBAT member banks to make their customers aware of the prohibition on surcharges and report any violations of law to the Department.”

IBAT in Washington

Several bills of interest to community bankers are scheduled for mark up today in the House Financial Services Committee. H.R. 4042 requires federal banking regulators to study the impact of Basel III mortgage servicing rules on community banks, and delays any rule implementation until six months after the completion of the study. H.R. 5148 exempts “higher risk mortgages” (generally a closed end HPML that is not a QM) of $250,000 or less held in portfolio for at least three years from the more onerous appraisal standards. Both bills were introduced by Congressman Blaine Luetkemeyer (R-MO).

"We appreciate the efforts of Chairman Hensarling, Congressman Luetkemeyer and so many others who attempt to progress common sense solutions to the ever-increasing impediments on community banks," said Chris Williston, President and CEO of IBAT. "While very little time is left before a new Congress begins in January, we will continue to press forward to achieve real relief for community banks."

IBAT staff was in Washington last week meeting with key members of Congress and regulators in our continuing efforts to effect meaningful change for community banking

Featured Resource

In response to requests from a number of members, IBAT’s regulatory compliance staff have developed a general brochure for banks to use with customers in determining which type of account to open. The purpose is to assure that customers understand the consequences of opening different types of multi-party accounts.

The brochure explains how each account type operates during life and what happens to the account upon the death of the accountholder, using language taken from statute.

For your convenience, the brochure is available in PDF and .DOC formats for customization with your bank’s information (e.g. logo, contact information, locations and hours of operation).

Be More Involved...

The mission of the IBAT Leadership Division is building exceptional leaders through involvement.

The Leadership Division provides its members the opportunity to develop lifetime business relationships with the best and brightest people in community banking across the country. From networking with peers to political activism, members have the opportunity to help ensure the future of the Texas community banking industry.

We want community bankers involved in their respective regions. Make plans to attend the upcoming Leadership events:

August 6

IBAT Teach the Lender - Graham

Region 3

August 7

IBAT Teach the Lender - Irving

Region 4

August 8

IBAT Teach the Lender - Lubbock

Region 2

August 27

Sporting Clays - Snook

Region 10

August 28

Clay Shoot - San Angelo

Region 2

September 5

Golf Tournament - Frederiksburg

Region 8

October 15

10 Absolute Must-Have Strategies for Community Banks - Mount Pleasant

Region 5

October 15

10 Absolute Must-Have Strategies for Community Banks -  Longview

Region 5

Baker Market Update: July 28, 2014

One might have hoped that the passage of a week’s time would have brought the world a little peace and quiet. At a time normally occupied by consternation over the off-season misdeeds of our favorite college football players, the gravity of multiple geopolitical conflicts continues to dominate headlines and the attentions of market participants. This attention to non-financial event risk has, for the most part, taken precedence over the normal to-and-fro that is the common result of economic travail and policy nuance.

Read more in the Baker Market Update.

Comment Letter

Last week, IBAT filed a comment on the Texas Department of Banking’s proposal to limit the time for providing required information in corporate filings. As proposed, the rule would eliminate the automatic extension of time to submit additional information and the further extension for good cause, replacing these with an extension at the sole discretion of the commissioner.

The letter cited many circumstances in which greater flexibility might be required for both the applicant and the Department of Banking and suggested several changes to the rule that would reduce costs and shift the timeframe of expected response by corporations. Finally, IBAT proposed that an extension be granted “on a showing of ‘good and sufficient cause,’” rather than being reserved to the discretion of the commissioner.

Staff contact: Shannon Phillips, sphillips@ibat.org, 512-275-2221

Reg Relief Update

At the urging of IBAT and many Texas community banker constituents, Senior Texas Senator John Cornyn has added his name to the list of co-sponsors to S. 1349, The CLEAR Relief Act of 2014.

“This is a significant development to advance our efforts in obtaining comprehensive regulatory relief for community banks,” said IBAT President and CEO Chris Williston. “This bill will provide much needed relief in restoring consumer access to credit, particularly in the mortgage markets. Senator Cornyn, as a member of the Minority Leadership, can be instrumental in helping us get the bill to the Senate floor,” Williston added.

Nineteen members of the Texas Congressional Delegation are currently co-sponsors (171 co-sponsors overall) of the companion house bill, H.R. 1750. IBAT thanks the following members of the Texas delegation for their sponsorship of this important legislation: Carter, Cuellar, Farenthold, Flores, Gallego, Gohmert, Granger, Hall, Johnson (Sam), Marchant, Neugebauer, Olson, Poe, Sessions, Smith, Stockton, Thornberry, Veasey and Williams.

The future of the bipartisan bills is uncertain as there are limited days remaining in the current Congressional year. IBAT will be in D.C. this week to push for floor time before or immediately after the August recess.

All community bankers are encouraged to meet with their elected officials during the August district work period and encourage members of the delegation to advance the measures.

Staff contact: Chris Williston, cwilliston@ibat.org, 512-474-6889