social media Guidance - Independent Bankers Association of Texas

Transcription

THE TEXAS
VOLUME XL NO. 4
JULY/AUGUST 2014
INDEPENDENT
BANKER
20
IBAT 39th Annual Convention
22
For Social Media, Look Before You Leap
By Lee Thomas
24
IBAT Congressional Visit "Makes a Difference"
30
Trends in Financial Literacy
By Christopher L. Williston, VI and Mary Lange
34
Seven Measures Banks Should Take to Comply
with Social Media Guidance
By Erika L. Del Giudice, CISA, CRISC, Sean F. McAloon, CISA, and James E. Stempak
36
Rewards Program Compliance: Points Under Scrutiny
By Linnea Solem
Bonnie Kankel / Editor in Chief
Mary E. Lange / Contributing Editor
Darlene Revers / Advertising Manager
Leslee Walker / Advertising Assistant
John Wilson / Cover Design/Illustration
Barbara Jezek / Design/Production
IBAT’s bi-monthly magazine, The Texas Independent
Banker, welcomes letters from readers. The Texas
Independent Banker, July/August, Volume XL, Issue
4. Published bi-monthly by the Independent Bankers
Association of Texas, 1700 Rio Grande Street, Suite 100,
Austin, TX 78701, 512/474-6889, FAX 512/322-9004.
Inquiries should be sent to the Editor. Editorial guidelines
are available upon request. Advertising rates may be
obtained by contacting Advertising Sales at 800/7494228 or 512/474-6889. Advertisements do not imply
sponsorship by IBAT. ©2014 by the Independent Bankers
Association of Texas. No part of this publication may be
reproduced in any form without written permission of
the publisher. Opinions expressed in this publication do
not necessarily reflect official policy of the Independent
Bankers Association of Texas.
Departments
4
6
8
10
12
14
Up Front
Foundation Footprints
Services Solutions
Frontline Leadership
General Counsel’s Corner
Interest Rates
16
18
41
43
43
46
Personnel Update
Association News
Advertising Directory
IBAT Calendar
IBAT Around the State
Compliance Guy
Quote: Dr. Seuss
July/August 2014
www.ibat.org ★ 3
Up Front
Turning Frustration into Action
“I’m mad too, Eddie!”
C
hances are that if you were driving around Texas in the
1970’s you would see that expression plastered on many
a car bumper. A native Texan and founder of what
became one of the country’s largest petroleum companies, Harrell Edmonds “Eddie” Chiles took to the radio
airwaves to promote conservative ideals. His trademark sign on,
“I’m Eddie Chiles, and I’m mad as hell,” was the catalyst for that
particular bumper sticker craze.
An advocate for smaller and less intrusive federal government, Chiles had little fondness for Uncle Sam tightly regulating the oil and gas business. Chiles was TEA party before
there was TEA party; a bona fide folk hero in Texas and the
Southwest.
One can only wonder what Chiles might say about the
heavy hand of government and regulatory overkill if he were
with us today. It probably would not be politically correct to
post on a bumper sticker.
Five years have transpired since the financial crisis which
has resulted in unprecedented mind-numbing regulation, the
likes of which many community bankers have never seen.
Unless they were a product of the 1980’s when Texas’ agriculture, real estate and oil and gas industries were upside down —
along with too many financial institutions — today’s environment has many scratching their heads wondering what’s next.
Recent studies have concluded that the average community bank now spends over $150,000 in compliance support
costs in an attempt to manage the more than 16,000 pages of
new regulations. That’s 3400 hours on average yearly; or stated
another way, 2.15 full-time equivalents devoted to the compliance function per institution.
Consider just a few of the most pressing regulatory issues we
are all dealing with:
•Unworkablenewmortgagerulesthathavecausedconfusion
and frustration and restricted credit to home buyers;
•NewcapitalstandardsundertheBaselIIIaccord–rulesthat
have the potential to cause many banks to rethink their
Subchapter S tax status;
•Newproposedaccountingstandardsthatwillalterandcomplicate the process to determine the bank’s reserve allocation
for the allowance for loan and lease losses;
•Inconsistentfederalregulatoryrulesonoverdraftprograms;
4 ★ The Texas Independent Banker July/August 2014
•Outdatedandflawedregulatoryanalysisoffairlending
practices;
•Pressureonbankstorestrictdealingswithlegitimatebusinesses (Operation Choke Point).
The list is far from exhaustive. Each day seems to bring on a
new challenge and an opportunity for well-intentioned institutions to be slapped with a cease and desist order or other “public
beating.”
Both IBAT and ICBA have redoubled efforts to address
many of these issues through corrective legislation. Until such
legislation is achieved, our advocacy — and especially your
advocacy — with the regulatory authorities has never been
more crucial.
It is not good enough to just be mad and accept the proposals handed down from the 202 area code. It is everyone’s responsibility to answer the call for submitting comment letters and
answering calls to action when corrective legislation is being
considered in Congress.
Let’s turn our frustration into action!
Perhaps a bumper sticker is in order. I’m open to any and all
ideas, and I would love to hear yours. ★
Editor’s Note: The study mentioned
above is from a nationwide study conducted by Continuity Control in 2013 of
community banks with less than 10 billion
in assets. The company is headquartered
in New Haven, Connecticut.
ChRISTophER L.
WILLISTon, CAE, is
President and Chief
Executive Officer of the
Independent Bankers
Association of Texas.
Foundation Footprints
What Can Texas Teachers Help Us Learn
About Financial Education
E
Learning Financial Education from Dedicated Texas Teachers
very day, the banking, business and consumer news
presents a growing array of payment platforms. These
choices provide an astonishing number of payment
options. Then, add the endless barrage of mobile apps
that compete with the plastic cards and cash in our wallets. We have a host of providers, each trying to claim technical
superiority and market dominance.
Common sense tells us that the variety of ways to save and
pay for products and services cannot keep expanding forever. If
some of these technologies are to be short-lived, which ones,
then, will stand the test of time? If you are a Texas teacher in
a 2014 classroom, how do you begin to address the concepts of
earning, saving, and spending with your students?
Well, worry no more. We’ve pulled sections from our three
winning teachers’ applications submitted in the recently completed 2014 contest and here are some of their responses to the
following question: When a student leaves your classroom, what
three elements of financial literacy do you want him/her to take
home?
1. How to gain positive habits associated with earning and saving
money.
2. At an early age they can become savvy savers and spenders.
3. What they have learned in the classroom will foster their real life
spending habits.
I challenge you to count up how often they bring up payment
systems, mobile apps, plastic cards and cash.
Lisa Tate, Beckville Sunset Elementary School
This teacher was nominated by Becky Eubank and Jim Payne, First
State Bank & Trust Company, Carthage
M
y financial literacy curriculum is simple but effective. It is
a third grade classroom. Students are greeted each morning
by the “banker.” This job is shared weekly by a student who
“pays” classmates as they enter in the morning for “coming to work.”
Students are paid throughout the day for “doing their jobs” while following the rules that foster a good work ethic.
Students then count their earnings weekly and record them in
a ledger. Students receive “bonus pay” for going above and beyond
expectations. Students get to spend or save their classroom dollars
each six weeks at the school store or auction.
At an early age, we all learned how to buy things we want.
What we did not learn was that money did not grow on trees. My
students are excited to see the “fruits” of their labor by spending their
hard earned money at the classroom store or auction. Incentives are
awesome!
At the end of the semester, I want my students to leave
knowing...
John Owens, College Park High School, The Woodlands
This teacher was nominated by Ray
Sanders, Woodforest National Bank
I
have formulated my curriculum
of financial literacy based upon
sources such as The Playbook for
Life (Hartford), basic principles from
advisors like Dave Ramsey, Junior
Achievement, The Federal Reserve
Bank Houston Branch, as well as
local bankers and financial advisors.
Probably the most important resources
to our students are past experiences
and personal testimonials.
Nothing captures a student’s
attention like shattering a PVC
pipe against the wall. The lesson on
“opportunity costs” always gets a
reaction. Since the goal is to fix the
problem of the PVC pipe, I walk them
(Continued on page 40)
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Relationship Based Architecture Built on
Foundation of Trust & Expertise
G
rowing up in East Texas, my mom and dad bestowed
many important life lessons upon me that I continue to carry with me as a father, a husband and as
a community banker. One lesson in particular was
the importance of first impressions and the enduring
effect they can cast. A positive first impression can withstand
a lifetime while a negative first impression may figuratively be
the beginning and end of a lifetime. As community bankers, we
know first impressions can mean the difference in establishing a
lifetime relationship with a customer or having no relationship
at all.
Recognizing the vital nature of first impressions, IBAT
sought to bring a leading architecture and design firm to the
table to provide experienced counsel to Texas community banks
and in the summer of 1994, IBAT endorsed MG Architects (then
McCleary German Associates). Now celebrating its 20th anniversary as an IBAT Endorsed Service Provider, MG Architects has
played an integral role in the strategic growth of countless community financial institutions by delivering unique, tailored services including design-build, master planning, interior design,
merchandising system design, prototype building design, site
selection and facility evaluation and renovation.
The Difference That Matters
Experience matters. With more than 1,000 individual projects completed for financial institutions in Texas and numerous
states across the country, MG Architects’ niche expertise and
exclusive focus on designing community financial institutions is
the difference that matters. Extensive experience with a wide variety of architectural designs and styles, branch concepts, delivery
systems and technology infrastructure positions MG Architects
as invaluable experts when advising clients on what works, what
doesn’t work and most importantly, what is right for the client.
A strategic approach also matters. MG Architects begins
each new project with a conversation covering the bank’s strategic plan, vision, budget and objectives for the project. Whether
expanding the bank’s footprint into a new market with a traditional standalone branch, increasing operational efficiency by
reducing square footage through micro-branch concepts or creating new revenue opportunities with commercial lease space in
a mixed-use design, MG Architects draws upon best practices
and innovative branch concepts to offer a unique perspective
for how banks can most effectively achieve their growth and
efficiency objectives in alignment with their strategic plan.
Lastly, aesthetic appeal and customer experience matter.
At the onset of each new project, MG Architects also learns
about the bank’s culture, customers and how the bank wants
to be perceived through architectural design. Community bankers can attest that their banks are largely a reflection of the
community which they serve and oftentimes even allow their
community to use the bank’s facilities for meetings and gatherings. Projecting the right image not only strengthens the bonds
between the bank and its community but also provides a sense
of comfort and ease for customers, especially when dealing with
such intimate topics as finances. Beyond aesthetics, every community bank is unique by virtue of the customers they serve and
the tailored customer experience they provide. From furniture
and workstation designs to signage and teller delivery systems,
MG Architects is able to leverage their established relationships
with technology providers and insights from across the industry
to develop a design around the right solutions that maximize the
customer experience community banks seek to offer.
Foundation of Trust
Just as community banking is a relationship-based business,
MG Architects prides themselves
as relationship-based architects and
a fundamental partner for supporting growth of community banks
across the country. These relationships aren’t simply driven by MG
Architects’ experience and expertise alone but more so by the trust
established with the client. Trust
that is rooted in a deep understanding of the bank’s vision, strategic
counsel with the bank’s best interests in mind and delivering excepROGERS POPE, JR.
tional designs time and time again
is Chair of the IBAT
that balance aesthetics, functionalServices Board and Vice
ity and pragmatism in alignment
Chairman and Chief
with the bank’s plan for growth,
efficiency and customer experience.
Executive Officer of Texas
It’s no surprise that 90–95% of their
Bank and Trust, Longview.
projects come from repeat clients or
client referrals.
Frontline Leadership
Changing of the Guard
F
irst of all, I want to thank you for allowing me to serve
as your Leadership Division chairman for 2014-2015.
Becoming involved in the Leadership Division has been
the most rewarding experience of my professional career.
The friendships that I have made and the expansive network of bankers and associate members I’ve developed are both
personally fulfilling and professionally invaluable.
I remember the first Leadership Conference I attended in
2002 at Moody Gardens in Galveston. My oldest son, Sam, was
3 months old and I was not at all sure what to expect. It proved
to be a fun-filled, family-friendly event where I met many new
people who I call friends today. There are always plenty of
learning opportunities to develop professionally and as a leader,
but to me the people you get to know make it truly special. I
consider it an honor and privilege to serve as your chairman.
Thank you to my friend Kevin Monk for a great year as
Leadership Division chairman this past year. With his leadership and many people’s hard work and dedication, the new
Leadership Division structure is now complete in all regions.
This new structure is allowing more people to get involved in
a more meaningful way than ever before. Regional presidents,
committee chairs and committee members participated in valuable breakout sessions at the Leadership Conference designed
specifically to help them with ideas to provide opportunities for
more Leadership members to become involved, learn, make a
difference for community banking, develop professionally and
build friendships and a professional network at the regional
level.
What a great Leadership Conference we had this year at the
wonderful new J. W. Marriott Hotel San Antonio Hill Country Resort and Spa. We heard from fantastic speakers including
Thom Singer who spoke on how to use social media tools without losing the personal side of relationships. Former CIA Deputy Director for Intelligence Carmen Medina discussed how the
lessons learned from those in national security can be applied
to the business community and help individuals become effective innovators in their organization. IBAT President and CEO
Chris Williston’s presentation encouraged community bankers
to focus on building lasting value by directing their efforts on
their customers, key employees and the local community. And,
of course, one of the most popular speakers was Daryl “Moose”
Johnston, former fullback for the Dallas Cowboys. A threetime Super Bowl champion and two-time Pro Bowl selection,
“Moose” provided an inspiring message on his passions for literacy, child welfare and fatherhood.
Special congratulations to Peter Smith of Happy State Bank
in Lubbock on receiving the 2014 Excellence in Leadership
Award. I cannot remember a Leadership Division member ever
jumping in and making the kind of positive impact that Peter
has made so quickly. Following last year’s Leadership Conference, Peter returned home and was instrumental in signing up
21 new Leadership Division members his first year as a member
himself! We can all take a lesson from him on what a difference
excitement and hard work can make in an organization!
I’d also like to congratulate the three recipients of the IBAT
Five-Star Award. Our associate members and service providers are so instrumental to the success of our member banks and
each year we select three of those providers for this award. This
year’s recipients are: Granville Financial Group, John M. Floyd
& Associates and BKD, LLP. Thank you for being our industry
partners!
Last, but certainly not least, I’d like to thank the board
members who left the board at the June Leadership Conference.
Each and every one of them has worked hard in transitioning
the Division to the new regional concept, been active in PAC fundraising
and served as goodwill ambassadors
for the Division.
Brandon Bartek
Keary Barnes
David Fuller
Chad Golden
Kenneth Moore
Michael Rehm
Craig Roberts
Thanks for your service!
Be sure to check the IBAT
website for information on upcoming events in your area! H
MICHAEL R. MOORES
is Chairman of the
Leadership Division and
Executive Vice President
“The growth and development of people is the highest calling of leadership”
– Harvey S. Firestone
& Chief Lending Officer
at Citizens National Bank,
Henderson.
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GENERAL cOUNSEL’S CORNER
Home Equity Update
A
number of significant developments have occurred
with regard to home equity lending in Texas. While the
judicial process took almost a decade to resolve Finance
Commission of Texas v. Norwood (the “ACORN case”),
the Texas Supreme Court very promptly answered
certified home equity questions from the federal Fifth Circuit
Court of Appeals in Sims v. Carrington Mortgage Services, L.L.C.
(“Sims”). These two cases plus adjustments by the Finance
Commission to the official interpretations and issuance of expedited foreclosure forms by the Supreme Court have significantly
changed the landscape for home equity policies and procedures
in Texas — some for the better and some for worse. Let’s look at
these in more detail, considering how lenders should adapt.
Loan Modifications
The core concern in Sims involved the distinction between
a modification and a refinancing. Mr. and Mrs. Sims took out a
30-year home equity loan in 2003. In 2009 they entered into a
“loan modification agreement” with Carrington Mortgage Services. The agreement capitalized past-due interest and other
charges including fees and unpaid taxes and insurance premiums. In addition, the modification reduced the interest rate and
monthly payments. Unfortunately, the Simses got behind again
and entered into another modification, again reducing the interest rate and payments. Two months later, however, the Simses
brought a class action suit against their lender, claiming that the
modification violated the Texas Constitution, and proving once
again that no good deed goes unpunished. The note could not
have been refinanced when Sims got behind because the property values had dropped, and the 80% LTV requirement could
not have been satisfied. Foreclosure or forgiveness of debt were
the only other alternatives.
The trial court dismissed the case, and the Simses appealed
to the Fifth Circuit Court of Appeals. That court wisely certified certain questions to the Texas Supreme Court since the case
effectively required careful parsing of Texas law. The Supreme
Court concluded that a transaction that does not satisfy or replace
the original note but merely modifies the terms is a modification
rather than a refinancing for purposes of the home equity law.
In addition, the court concluded that the capitalization of the
past-due interest, fees, property taxes or insurance premiums do
not constitute an impermissible “advance of additional funds.”
As argued in IBAT’s amicus brief, the Court concluded that all
of these were “terms of the original extension of credit” and not
new funds. Furthermore, a modification is not a new extension
of credit and thus does not trigger the 80% LTV test. Finally,
advancing premiums and taxes (as authorized by the note and
deed of trust) does not magically make a closed end home equity
loan a revolving line of credit.
Origination Fees/Interest
Unfortunately, the Texas Supreme Court in ACORN created a unique definition of “interest” just so it could conclude
that origination fees (which are typically interest for usury law
purposes) are not interest for purpose of the 3% fee cap. Instead
of using the interest definition found in the Constitution and the
Texas Finance Code, the Court defined interest as a rate applied
against principal over time. But this raised the specter that perhaps discount points and per diem interest were not interest.
Therefore, the Court issued a supplemental opinion specifically
excluding legitimate discount points and per diem interest. The
discount point issue is probably of more academic than real interest to community banks. Basically, to be “legitimate,” the discount
points need to actually buy down the interest rate.
Powers of Attorney
The ACORN decision also
took an unexpected turn with
regard to closing home equity loans
using a valid power of attorney.
The Court decided that the execution of the power of attorney was a
part of the execution of the home
equity loan itself. Therefore, only
a power of attorney signed during
the twelve day cooling off period
at either an attorney’s office, title
company or the lender could be
used to close a home equity loan.
So, if a durable power of attorney
were executed as part of a person’s estate planning prior to the
need for the home equity loan, it
couldn’t be used to close the loan.
However, the attorney in fact could
sell the house, using the power of
attorney! This particular holding
Karen Neeley
received her BA and
JD from the University
of Texas at Austin.
She is a director for
the Texas Association
of Bank Counsel and
General Counsel for the
Independent Bankers
Association of Texas.
would appear to adversely affect responsible persons who try to
plan ahead as well as servicemembers who execute a power of
attorney before shipping out.
New Finance Commission Interpretations
As I write this, the Finance Commission attorneys are working on revisions to the official interpretations to deal with both
the interest/fee cap and power of attorney issues. Assuming that
they are adopted in a form consistent with the documents sent
out for pre-comments, the new rules will clarify the meaning of
“legitimate discount points,” revise the definition of “interest”
consistent with the ACORN decision, and provide a safe harbor process for reliance on powers of attorney. An established
system of verifiable procedures for powers of attorney might
include either or both of the following: (a) written statement in
the power of attorney itself acknowledging the date and place at
which it was executed or (b) a certificate of acknowledgement
signed by a notary acknowledging the date and place at which
the power of attorney was executed. Finally, the consent to the
home equity loan must be signed by the owner and the owner’s
spouse, or an attorney in fact (who meets the new requirements)
at an office of the lender, attorney, or title company.
Expedited Foreclosure Forms
A home equity loan may not be foreclosed until the
procedures for expedited foreclosure have been satisfied. The
Texas Supreme Court has promulgated the rules for this type of
foreclosure. These were amended to include the possibility of
court ordered mediation if the consumer answers the proceeding
and requests it. More recently, the Court has approved Expedited Foreclosure Proceedings Forms. These can be found at the
Court’s web site: http://www.supreme.courts.state.tx.us/miscdocket/14/14904700.pdf. As a member of the court-appointed
task force for this project, I can assure you that all stakeholders
were represented! Also, we all hope that if attorneys use these
approved forms, the trial judges will be more comfortable with
the proceedings and will be less likely to throw up road blocks
(as they have in some jurisdictions).
Last Word
The Texas House Investments and Financial Institutions
Committee has heard testimony during an interim study meeting on Texas home equity issues. In particular, the problems
with the 3% fee cap and the restrictions on closing with a power
of attorney were described by all of the affected lending trade
associations. In addition, a plea to make seasoned refi’s of home
equity loans with no new funds advanced into a traditional first
lien mortgage was raised by the banking trade associations. Stay
tuned for more developments! H
July/August 2014 www.ibat.org ★ 13
interest rates
Asset/Liability Management and
Balance Sheet Dynamics
The Banking Environment
It is no surprise that community banks have seen their
net interest margin fall in recent years. We know that funding
cost hit bottom some time ago, while yields on earning assets
continued to whittle lower. Older loans and bonds paid off or
matured and were replaced by newer and much lower yielding
assets. As noted by the FDIC, margin compression is especially
problematic for smaller institutions since three-quarters of their
net operating revenue comes from net interest income. Clearly,
community banks have a great incentive to focus on their asset/
liability management processes.
Dynamic Analysis
Bank financial performance is the result of dynamic processes. Balance sheets are constantly changing as the volumes
of different assets and liabilities, the rates paid (or earned) on
those balances, and the cash flows moving into and out of those
accounts are fluctuating and unpredictable. What we need to
know is, given the mix of assets and liabilities and the rates
associated with them, how can we expect margins and earnings
to perform under different rate environments as the re-pricing
assets and liabilities filter through the balance sheet over time?
In order to do this analysis, we must have tools that allow
us to make assumptions about rate changes, options risk, curve
shifts, prepayments, and sensitivities or betas. The ultimate
point of the exercise is to determine how the bank is positioned,
and what changes, if any, the bank may wish to make in order to
shore up exposures to interest rate risk.
built into the pricing and maturity structure of a bank’s balance
sheet. For most banks, re-pricing risk is the most visible source
of interest rate risk, and is measured by comparing the volume
of a bank’s assets that mature or re-price within a given time
period with the volume of liabilities that do so. Rate differentials are then applied to the re-pricing balances so that income
and expense changes can be projected.
Yield Curve Risk: The nature of banking is such that banks
borrow short and lend (or invest) long. The shape of the yield
curve is dictated by the relationship between short-term rates
and long-term rates. From the bank’s perspective, it’s the difference between funding cost and earning asset yield. Relative
rate changes cause the yield curve to flatten, steepen, or become
negatively sloped (inverted) during the course of an interest rate
cycle. Yield curve variation can exacerbate the risk of a bank’s
position by magnifying the effect of maturity mismatches. To
further complicate things, these maturity mismatches are often
uncertain and difficult to predict due to options risk.
Options Risk: Options risk has to do with the uncertainty of
cash flows due to various types of options that are attached to
or embedded within some financial instruments. These options
may alter the level and timing of cash flows and create an
unpredictable liquidity situation
for the bank. Unscheduled paydowns of principal, for example, or
call options attached to bonds are
common reasons for sudden shifts
in balance sheet cash flows.
Every Balance Sheet Is Different
Summary
Each community bank has unique characteristics and ways
of doing business that reflect the economic landscape of the
market that they serve. Some are loan-driven suburban banks
that face strong competition for deposits. Others do business
in agricultural communities where loan demand and deposit
growth are driven by seasonal factors. The one thing they all
have in common is the fact that they operate in the same interest rate environment at any given point in time. Every bank
must assess its exposure to interest rate risk and the interplay of
three subcategories of risk: re-pricing risk, yield curve risk, and
options risk.
Re-pricing Risk: Re-pricing risk results from differences in
the timing of rate changes and the timing of cash flows that are
Sound management decisions require an understanding of
the unique dynamics of the balance sheet. We must model the
expected behavior of re-pricing
balances, changes in rate structure,
and uncertain cash flows under
different market conditions and
yield curve scenarios. Asset/liability managers must make reasonable assumptions that makes sense
for the particular type of business
JEFFREY F. CAUGHRON
is Associate Partner with
The Baker Group LP
Interest Rate Risk and
Investment Strategies Seminar
As the economic environment transitions into a new phase, bank managers must gear up to meet
new challenges and opportunities. Achieving high performance in a fast-changing environment
requires powerful tools, techniques, and processes to find the optimal balance between risk
and reward. It also requires a partnership with proven winners.
The Baker Group’s Interest Rate Risk and Investment Strategies Seminar is developed specifically
for managers of financial institutions. Designed for high performance, it is an in-depth examination
of current topics.
October 16-17, 2014
Oklahoma City, Oklahoma
The Skirvin Hilton
One Park Avenue
Oklahoma City, OK
Agenda
Featured Speaker
Who Should Attend
John Ryding is the Chief Economist
and a founding partner of RDQ
Economics LLC—a New-York based
independent macroeconomic
consulting, advisory, and research
firm. John formed RDQ Economics
with Conrad DeQuadros following
the merger of Bear Stearns and
JPMorgan in 2008. Prior to the
merger, John was the Chief U.S.
Economist for Bear Stearns.
Financial institutions’ CEOs,
CFOs, investment officers, board
members, and those who are
directly or indirectly responsible
fo r f i n a n c i a l m a n a g e m e n t
functions will benefit from this
seminar. There is no cost for this
seminar.
CPE credits will be earned for
your attendance.
Thursday, October 16
Golf and Dinner included
Friday, October 17
Breakfast, Seminar, and Lunch
Registration
Register online at GoBaker.com/
seminars. For more information,
call Skoshi Heron at 888.990.0010.
Winning the Performance Challenge
Member: FINRA and SIPC
www.GoBaker.com
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Personnel Update
Gaines
Maddox
Sullivan
Amarillo
Beverly Gaines, senior vice president of Happy State Bank
in Amarillo, was recognized in the Bank Investment Consultant
2014 Top Program Managers list. The list, published by Bank
Investment Consultant (BIC) magazine, recognizes the managers of the most productive bank and credit union-based advisors.
The ranking is based upon five main factors, including average
production per advisor, percentage growth of team assets from
the previous year, percentage growth of team production from
the previous year, the number of advisors under the manager’s
direct supervision and the number of licensed branch employees
under the supervision of the program manager. The investment
program at Happy State Bank is associated with LPL Financial
Institution Services program.
Arlington, VA
Joell Maddox has joined Promontory Interfinancial Network as regional director for South Central Texas. Maddox comes
to Promontory with a solid financial background and brings a
wealth of experience from a variety of banking and financial
positions demonstrating direct sales and marketing capabilities,
development of regional territories, and creative strategies for
business development and customer coverage. She attended the
School of Banking at Southern Methodist University and is also
a Certified Mortgage Banker.
Austin
The Texas Mortgage Bankers Association has elected new
officers and directors for 2014–2015. Officers include President
Tom Rhodes with Sente Mortgage; Vice President Tom Tallent,
AMP, CMB with Southwest Bank; Secretary-Treasurer Mary
Pirrello, AMP with Nexbank, SSB; Associate Representative
and Board member Ruth Ruhl with RUTH RUHL, PC - Attorney At Law.
The 2014–2015 TMBA Board members are: Blane L.
Bauch, ServiceLink; Judith A. Belanger, CMB, Cornerstone
Home Lending, Inc.; Michael A. Carroll, Mortgage Guaranty
Insurance Corporation; James Clapp, Starkey Mortgage; Amy
J. Coke, Polunsky Beitel Green, LLP; Tracy Maynard Cole,
Johnson
Smith
Kuykendall
Colonial National Mortgage; Brian Collins, Cendera Funding,
Inc.; Troy W. Garris, Weiner Brodsky Kider PC; Scott Gillen,
CMB, Stewart Lender Services; Jason Gillespie, AMP, CMB,
Santander Bank N. A.; Dana Gompers, CMB, Envoy Mortgage; Jonathan M. Grafflin, Chase Home Finance; Michael L.
Kennemer, Mid America Mortgage, Inc.; Renessa Knowles,
Peoples Bank; Mike Manley, Security Service Federal Credit
Union; Cari McCue, Guardian Mortgage Company, Inc.;
Dayna D. McElreath, Sente Mortgage; Paulina S. McGrath,
Republic State Mortgage; Vicki Murphy, McGlinchey Stafford
and Youngblood & Associates, LLP; James Sean O’Neill,
CLBB, Texas Capital Bank, N.A.; Chad Overhauser, AmeriPro
Funding Inc; Allan B. Polunsky, Polunsky Beitel Green, LLP;
Mark A. Raskin, PrimeLending; Steve Remington, Benchmark Mortgage; Todd Salmans, PrimeLending; Andrew Taylor,
Franklin American Mortgage Company; Billy F. Vaughn, Fidelity National Title Group, Southwest Agency; and Trey Worley,
Comerica Bank - Warehouse Lending.
TMBA also announced that James S. DuBose of Colonial
National Mortgage was honored with the 2014 Larry E. Temple
Distinguished Service Award. Each year since 1953, TMBA has
recognized an individual who has provided extraordinary leadership and service to the association and the mortgage banking
industry.
Carrollton
Tim Sullivan has joined AccuSource Solutions as an
expense management specialist. Sullivan has served community
banks for over 30 years and will participate in IBAT’s Leadership Division. He joins the team headed by Mark Wood and Bill
Saunders and looks forwards to working with community banks
to reduce expenses through AccuSource’s Expense Management
Program.
Dallas
Brian Johnson has been promoted to managing director of
Commerce Street Capital’s Financial Institutions Group. His
primary responsibilities include advising companies on mergers and acquisitions, balance sheet restructuring, business plan
development and the private placement of capital for initial and
McCullough
Beckman
Logue
secondary offerings. Johnson, who joined CSC in 2011, began
his career with Bear, Stearns & Co. Inc. (acquired by J.P. Morgan Chase) in New York where he advised state and local governments on public debt capital raises and refinancing opportunities. He has a Bachelor’s degree from Bucknell University and
holds the Chartered Financial Analyst (CFA) designation.
Hatch Cummings Smith, Jr. of Commerce Street Capital
was named the Intermediary Dealmaker of the Year at the 2014
Mergers & Acquisitions Awards in Dallas. Smith, a vice president in the firm’s Financial Institutions Group, was recognized
for his work on the acquisition of Park Cities Bank by Olney
Bancshares of Texas, Inc. Smith joined CSC in 2008 and spent
85 percent of his time in 2013 working on a resolution and serving as a strategic advisor for Park Cities Bank and its parent. The
2014 M&A Awards were presented by D CEO and the Association for Corporate Growth to honor a variety of North Texas
mergers and acquisition deals and dealmakers in six different
categories.
Bobby Boyce was named chief compliance officer for Commerce Street Holdings, LLC, the holding company of Commerce Street Capital. Boyce joins the company with 12 years
of experience in financial services. As chief compliance officer,
he will focus on compliance matters for the holding company’s
FINRA-registered broker/dealer and SEC-registered investment
advisor. Prior to joining Commerce Street, Boyce was the chief
compliance officer for McGowan Group Asset Management,
Inc.
Don Kuykendall was named a managing director in CSC’s
Business Development Group. In this role he will focus on
expanding CSC’s corporate investment banking opportunities
and strategic business development in the Central Texas and
Houston corridor. Prior to joining CSC, Kuykendall began his
banking career in 1972, and prior to joining CSC he was the
chairman of the board and president of Stratfor, a global intelligence company.
Benchmark Bank has announced the leadership team for its
newly formed Private Wealth Management Division.
Wayne McCullough will serve as president and managing partner of the division. He previously served as Managing
Almon
Director of Kayne Anderson Capital Advisors where he was
responsible for the firm’s sales and marketing efforts that focused
on high net worth, family office, and select institutional relationships as well as the management of the Dallas office.
McCullough received his BA from the University of Texas at
Austin and holds his Certified Financial Planning designation
as well as multiple other industry designations.
Keith Beckman, who currently serves as senior vice president/director of special projects for Benchmark Bank, will assume
the role of managing partner at Benchmark Private Wealth
Management. His prior positions include serving as senior vice
president of CSG Investments, portfolio manager at Highland
Capital Management, and senior analyst for Richmond Investment Advisors. Beckman received his BBA in Finance from
the University of Texas at Austin and his MBA from Southern
Methodist University and holds the Chartered Financial Analyst (CFA) designation.
Rawles Bell will join Benchmark Private Wealth Management as associate director, client advisor. A graduate of Texas
A&M University with a degree in Finance, Bell holds series 7,
66 and his insurance license. He was most recently a financial
advisor at RBC Wealth Management.
Traci Shore has been promoted to senior vice president/
human resources for TIB-The Independent BankersBank. Shore
joined TIB in 2008 and possesses almost 20 years of experience in the human resources field, both as a generalist and an
employee relations consultant. She earned a B.A. in Psychology
from the University of North Texas.
Denton
Chris L. Logue has joined NORTHSTAR BANK OF
TEXAS as area president for the Central Texas markets. He will
be located in the Austin-Westlake Banking Center. Logue holds
an MBA in Management from St. Edward’s University, a BBA
in Finance from Southwest Texas State University, and various
securities licenses. He has an extensive background in banking, finance, business management, technology, and financial
planning.
Terry Almon has joined NORTHSTAR as chief operations
Association News
Community Banker Joins
IBAT Services Team
The Independent Bankers Association of Texas
(IBAT) is pleased
to announce the
addition of Lori
Cortez to the
IBAT
Services
team.
Lori joins IBAT Services as a vice
president, following 30 years of service as
a Texas community banker, most recently
with Southwest Bank in Fort Worth,
Texas.
In her new role, Lori will expand
the knowledge base of the IBAT Services
team, providing an in-house banker’s perspective to identifying new products for
endorsement by the IBAT Board of Directors and the due diligence that underlies
every new endorsement.
To reach Lori, or any member of the
IBAT Services team, call 512-474-6889.
“WatchDOG Social Compliance allows
institutions to eliminate these apprehensions and explore the benefits of social
media with a resource in place to mitigate
risk.”
WatchDOG Social Compliance
offers users a vast range of tools and services to further promote full regulatory
compliance, including:
•Archiving all Facebook, Twitter, YouTube and LinkedIn posts for required
timeframes;
•Creating an approval process to ensure
posts meet regulatory requirements;
•Utilizing targeted search and reporting
capabilities;
H
IBAT Announces Endorsement
of CSI’s WatchDOG Social
Compliance Solution
IBAT is pleased to announce its
endorsement of the WatchDOG® Social
Compliance solution from Computer
Services, Inc. (CSI). WatchDOG Social
Compliance provides financial institutions with advanced compliance capabilities and protection for participating
in social media across multiple online
platforms.
“Although the risk of compliance
violations and the added time required to
engage in these outlets has many institutions hesitant to adopt, examiners nevertheless expect institutions to monitor and
manage their social presence,” said Chris
Williston, IBAT’s president and CEO.
•Performing reputation and sentiment
analysis; and
•Evaluating the institution’s competitive landscape.
H
First American Payment Systems
Updates Loyalty Capabilities
recently announced a software update to
1stPayPOS that will include a customer
loyalty suite. The update will allow merchants to implement customized rewards
programs for their customers, encouraging
repeat business on a more consistent basis.
The First
National Bank of
Hebbronville staff
joined thousands of
Texan volunteers to
pick up trash during
the “Don’t mess
with Texas Trash-Off
Annual Cleanup Day.”
Last year more than
89,000 volunteers
collected 7.5 million
pounds of trash. The
“Don’t Mess With
Texas Trash-Off” is
the single largest
one-day cleanup
event in the state
and serves as Texas’
signature event for
the “Great American Cleanup,” the
nation’s largest community improvement
program. Pictured
are: David Ramirez,
committee chairman,
Maria Elena Gutierrez, Aurora Rocha,
Glenda Cantu, Elma
Ramos, Anabel Montalvo, Juan Carlos
Guerra, and Loudie
Molina. Also helping out was Carlos
Guerra, Constable
Precinct No. 2.
Merchants will be able to select from a
variety of options, such as a punch card,
points system or date-based discounts and
rewards.
“With 1stPayPOS, First American
gives small to medium-sized businesses
the ability to leverage the same featurerich loyalty programs typically reserved
for the large national retailers, but at a
price budgeted for small businesses,” Rick
Rizenbergs, executive vice president of
sales at 1stPayPOS, said.
H
Customer Satisfaction with
Banks at Record High
According to a recent J.D. Power U.S.
Retail Banking Satisfaction Study, customer satisfaction with banks is at an alltime high as banks improve experiences
for their customers, reduce problems and
create a better understanding of fees. In
Texas, Frost Bank, Woodforest National
Bank and Amegy Bank ranked highest for
customer satisfaction.
However, the study also reports that
midsize banks lack satisfaction from millennials (born 1977–1995), minorities and
affluent customers. They are falling behind
In Memoriam
B.T. (Tol) Ware II, Amarillo banker and philanthropist, died May 12 at the age of
95.
Ware was chairman of Amarillo National Bank, the largest 100% family owned
bank in the United States. His grandfather and namesake purchased the bank in
1908, and it has remained in the family’s hands, with the fifth generation now in the
bank. He believed that family ownership had its advantages and was very proud of
Amarillo National being the only major bank in Texas with three generations of the
family on the active board of directors. He and his sons were named “Bankers of the
Century” by Texas Monthly magazine in 1999.
Ware graduated from Amarillo High School and attended the University of
Texas where he was president of his fraternity, a member of the Cowboys, and intramural champion in tennis and baseball. He served in the U.S. Army during World
War II.
He served on the boards of most of the major charities in Amarillo and was
very active in nearly every fundraising drive over the last 60 years. He was named
Philanthropist of the Year in 2004.
Tol exercised every day since college, playing tennis for 65 years, swimming
and walking—including walking nine dogs to death.
Mary, his wife of 68 years, died in 2011 and his son, Bill, died in 2012. He is
survived by his son, Richard, and his grandchildren, Anne-Clayton Vroom of Dallas,
William, Pat, Benj, W. Tol and Savannah Singleton, all of Amarillo, as well as eight
great-grandchildren.
E.T. Summers, Jr., chairman emeritus of TrustTexas Bank, passed away May 13 at
the age of 95. He served for 63 years on the bank’s board of directors. He was elected
chairman of the board in 1990 and chairman emeritus in 2014.
Summers graduated from the University of Texas in Austin in 1939, Harvard
Business School in 1943, and served as a U.S. Army WWII Captain. For 30 years
he was president of the Cuero Coca-Cola Bottling Company, which distributed to an
eight county region.
E.T. was active in his community and the soft drink industry. He served as a
member of the Cuero City Council, the Cuero Industrial Foundation, and the Cuero
Community Hospital Foundation. He was recognized as Sultan of the 1960 Turkey
Trot, 1966 Cuero Chamber of Commerce Citizen of the Year and 1989 Cuero Independent School District Distinguished Service Award. He represented DeWitt County
on the Board of the Guadalupe Blanco River Authority for three terms. He served
as president of the Texas Soft Drink Association, and as a board member of the
National Soft Drink Association and the National Coca-Cola Bottlers Association.
He married Lou Cretia Morris in 1941, and they were married 63 years
prior to her death in 2005. They were blessed with three children who survive
him: Linda Summers Wagner and husband, Ed Wagner of Port Lavaca; Toby
Summers and wife, Lana Summers of San Antonio; and John M. Summers
and wife, Nancy Summers of Meridian, Mississippi. He is also survived by a
sister, Elmire Cash of Victoria, as well as seven grandchildren and two greatgrandchildren.
E.W. Williams, Jr. of Amarillo passed away May 3. He was born on May 19,
1927, at Post, Texas.
After receiving an Honorable Discharge from the U.S. Army, E.W. earned
a Bachelor of Business Administration in Banking and Finance in 1949 from
Southern Methodist University, where he was a member of the Phi Delta Theta
fraternity. He also graduated from the School of Banking of the South at Louisiana State University and the American Bankers Association Graduate School of
Banking at Rutgers University. While completing his education he also earned
his pilot’s license.
Throughout his banking career, E.W. served as an officer and director at
various banks and other businesses in Texas and New Mexico. He was also
involved with the South Plains and Texas Bankers Associations. In 1974 he
helped organize the Independent Bankers Association of Texas.
A Mason since 1958, he volunteered his time and expertise to numerous
civic and charitable organizations, including the SMU and Texas Tech Foundations, American Red Cross, YMCA and Boy Scouts, PTA and Rotary. E.W. was
named “Man of the Year” for 1976 by the Amarillo Globe News and in 1996, the
E.W. Williams, Jr. / Centennial Bank Chair in Finance at Texas Tech University
was endowed
He married his college sweetheart, Mary Anne Morrison of Dallas, in 1950.
Mary Anne predeceased E.W. in 2013 after over 60 years of marriage. They are
survived by son E.W. Williams, III, of Dallas; son J. David Williams and his
wife Amanda Barfield Williams of Kerrville; six grandchildren; and two greatgrandchildren. H
July/August July/August 2014 2014 www.ibat.org www.ibat.org ★ ★ 19
19
Oh, The Places We've Been
annual
September 27–30, 2014
Worthington Renaissance Hotel * Fort Worth
EXHIBITORS
(as of 6/23/14)
Abound Resources, Inc.
AccuSource Solutions
Advantage Health Plans Trust
Agri-Access
Amerisource Funding, Inc.
The Baker Group
Banc Professional Services
BancVue
Bank Compensation Consulting, Inc.
Bank Financial Services Group
Bankers Healthcare Group, Inc.
BankOnIT
BOK Financial
Briggs & Veselka, Co.
Buzz Points, Inc.
CalTech
Cardtronics
Catalyst Financial Company
CenterState Bank
Chandler Signs
Comptroller of the Currency
Computer Services, Inc.
Condley and Company, L.L.P.
Consultants + Builders, Inc.
Country Bankers Systems, LLC
CSPI
Curtis 1000, Inc.
Cushman and Wakefield of Texas, Inc.
D+H
Davis Kinard & Co, PC
DEI Incorporated
Dell Inc.
Dell SecureWorks
Deluxe Corp.
Diebold
Doeren Mayhew
Equias Alliance
Employer Flexible
Farmer Mac
Federal Home Loan Bank of Dallas
Financial Design & Construction, Inc.
First Data Online Banking
FTSI
Garland Heart - Security/Compliance/
Consulting
Glory Global Solutions
Graduate School of Banking at
Colorado
Gulf Coast Business Credit
Harper & Pearson Company, P.C.
Harvest
Hogan Financial Systems Inc.
Holman Capital Corporation
Independent Community Bankers of
America
Investment Professionals, Inc. (IPI)
J. B. Lloyd & Associates, LLC
Jack Henry Banking
John M. Floyd & Associates
LEVEL5, LLC
Main Street Checks, Inc.
MEA Financial Enterprises, llc
MG Architects
Modern Banking Systems
Nicola Banking System, Inc.
Oliver Garrison LLC
Outsource ATM
Phase Engineering, Inc.
PrecisionLender
Promontory Interfinancial Network, LLC
PULSE
Quest Analytics
Reynolds Williams Group
SHAZAM
SNL Financial
Subchapter S Bank Association
SWACHA
Texas Department of Banking
TransFund
Unicom Technologies, Inc.
Verafin
Works24/Bank On Hold
Convention Sponsors
(as of 6/23/14)
TITANIUM SPONSOR
$50,000 and above
The Baker Group
. . . The Places We'll Go!
PLATINUM SPONSOR
$20,000-49,999
PULSE
convention
SCHEDULE OF EVENTS
Saturday, September 27
4:00–6:00pm
Chairman’s Tailgate Party
Evening Free
Sunday, September 28
7:00–7:30am
Devotional
10:45am–12:00pmRegulator Roundtables
12:00–3:00pm
• Drum Café
• ICBA Update
• Rick Rigsby
3:00–5:00pm
5:00–7:00pm
General Session (includes lunch)
Exhibits
Reception with Exhibitors
Evening Free
Monday, September 29
7:30–9:00am
Informational Breakfast featuring Exhibitor Stage Demos
9:00–11:00am
Exhibits
11:00am–noon Learning Labs
• Capital Planning and M&A
• Small Business Revenue Opportunities
• Compensation Trends
• FSA Guaranteed Loan Program
12:15–2:00pm
• Tom Hoenig
Best of Community
Banking Awards Luncheon
2:00–3:00pm
Learning Labs
• Compliance Hot Stuff
• 5 Keys to Your Community
Bank’s Success
• EMV
• Dealing With the Media
3:00–4:45pm
General Session
• Attorney Panel
5:00–6:30pm
Hospitality Suites
6:30–9:30pm
26th Annual PAC Auction
9:30–11:30pmSongwriters’ Late Show
•Marv Green
•Paul Overstreet
•Jason Sellers
Tuesday, September 30
Banker to Banker 7:30–8:30 am
Resource Sharing
•Maximizing Your Social Media Strategy
•IBAT Services Offerings
•Minimizing Retail Breach Exposure
•Mobile Payments
8:45–9:45 amLearning Labs
•Affordable Care Act
•Effective Tax Strategies
•Cyber Security / Corporate Account Takeover
•Appraisals
9:45–11:45amGeneral Session
& Annual Meeting
(includes Brunch)
•Gene Ludwig
GOLD SPONSORS
$10,000-19,999
Deluxe Corp.
Federal Home Loan Bank of Dallas
SILVER SPONSOR
$5,000-9,999
BKD, LLP
Bracewell & Giuliani LLP
Diebold
Hunton & Williams
Padgett, Stratemann & Co., L.L.P.
BRONZE SPONSOR
$1,500-4,999
American National Insurance Company
Amerisource Funding, Inc.
Crowe Horwath LLP
D+H
Davis Kinard & Co, PC
Dell Inc.
Dell SecureWorks
Doeren Mayhew
Equias Alliance
Federated Investors, Inc.
Fenimore, Kay, Harrison & Ford LLP
Frost Bank
Independent Community Bankers of America
Kennedy Sutherland LLP
MG Architects
Rosenthal Pauerstein Sandoloski Agather
TIB-The Independent BankersBank
Verafin
Yennik, Inc.
BLUE RIBBON SPONSOR
$750-1,499
The Bankers Bank
Bank Compensation Consulting
Catalyst Financial Company
Condley and Company, L.L.P.
The Genesis Group
Subchapter S Bank Association
SWACHA
For Social Media,
Look Before
You Leap
E
veryone’s going “social” these
days. With the rise of social
networking tools, consumers feel more empowered
than ever to share, engage,
complain and spur others
to action. But not only are
your customers and prospects active on
social media, your competitors are as
well. Social media has changed the way
people interact, and those banks choosing not to participate will be left out of
the conversation and left behind by the
competition.
But despite the pressure to join in,
many institutions are still wary of participating in social media. No doubt, the
FFIEC’s guidance solidified that reserve.
Either out of fear of the unknown (e.g.,
how do we begin a social media strategy?)
or fear of the known (e.g., how will our
regulator judge our social media program given the guidance?), many banks
are missing out on this fertile marketing
venue. So, now is the time for financial
institutions to let go of that fear and
instead start talking about how to become
active on social media.
For financial institutions, entering
the social media conversation without
first mapping out a thorough strategy
is like heading up the proverbial creek
By Lee Thomas
without a paddle. It’s dangerous…and not
very smart.
Even if your institution is already
engaged in social media, regularly reviewing your strategy is wise, given the FFIEC’s
Social Media Guidance, finalized last year.
The guidance intends to dictate that each
financial institution employ a risk management program allowing it to identify,
measure, monitor and control risks related
to social media.
To help, try planning — or reviewing
— your social media efforts using these tips:
Strategize first, then jump.
Think through your existing marketing strategies and determine how social
media will fit—today and long term.
Decide which demographics you wish
to reach and which platforms you’ll use.
Remember, you don’t have to jump in all
the way at first. Many institutions start
with one platform, typically Facebook, to
test their plan before expanding.
Compliance Tip: Within your documented social media policy, required under
the FFIEC guidance, remember that your
stated objectives are what you must measure for effectiveness. Keep it clean and
simple, and maintain effective customer
relations, which can be measured using
customer satisfaction ratings.
Assign ownership.
Yes, the board of directors is responsible for general oversight, but someone
must manage your day-to-day social media
activities. This person or team owns it,
and reports any issues to the board. And
before launching your social media program, train your employees on it. Make
sure they understand what is acceptable if
they’ll play any role in it.
Compliance Tip: There is no escaping
that your employees have personal social
media accounts. Make sure they understand your policy and what is acceptable
on your proprietary social media pages.
Assume the best, but prepare for the worst.
After fulfilling the items above, your
institution’s foray into social media should
go smoothly. But what happens if, after
you’ve launched your Facebook page, your
website goes down? You’ll most likely be
inundated with angry posts and negative
comments. So proactively develop a crisis
communication plan for such instances.
Identify the appropriate parties and their
responsibilities, so the plan can be implemented immediately.
Compliance Tip: Document your
crisis communication plan within your
social media policy so your primary regulator sees that you’ve considered the risks
associated with social media.
IBAT
Congressional Visit
“Makes a Difference”
C
ommunity banker involvement can and does make a difference. A hardy delegation of
Texas bankers and industry partners braved the torrential rain and normal challenges
that Washington, D.C. offers to “tell the community banking story.” We very much
appreciate all who took time away from their respective “day jobs” to join us for this
important annual event.
We were able to meet with 34 of our 36 members of the Texas delegation, heard from a number of lawmakers in our traditional group
meetings and joined ICBA and well over 1,000 community bankers
SPONSORS
Red Level
Dell + Dell SecureWorks
Deluxe Financial Services
PULSE
White Level
Federal Home Loan Bank
Blue Level
BancVue
Bank Compensation
Consulting
Diebold
Equias Alliance
Federated Investors
Fenimore, Kay, Harrison &
Ford LLP
SWACHA-The Electronic
Payments Resource
from across the country for a variety of events and programs,
including an address by Fed Chair Janet Yellen.
Constituents and engaged community bankers who have
taken time away from the office and spent money to get to
D.C. because they believe in their message and their industry
is very compelling to our elected officials. You are making a
difference, and your efforts are appreciated tremendously. H
Congressional Visit Attendees
Hazem Ahmed, Integrity Bank, ssb,
Pasadena
Brandon Bartek, Mills County State
Bank, Goldthwaite
Lin Beardin, First National Bank of
Weatherford
Cindy Blankenship, Bank of the West,
Grapevine
Gary Blankenship, Bank of the West,
Grapevine
John Bloss, The Baker Group, Austin
Stanley Bujnoch, Jr., Peoples State Bank,
Hallettsville
Joe Burnett, First National Bank Texas,
Killeen
Kayla Carpenter, Happy State Bank,
Amarillo
Sonny Collins, Commerce Street Capital, LLC, Dallas
Windol Cook, TIB-The Independent
BankersBank, Jacksonville
Charles Cooper, Texas Department of
Banking, Austin
Doyle Cooper, Texas Leadership Bank,
Royse City
Julie Courtney, IBAT Education Foundation, Austin
Gary Cox, Texas Bank, San Angelo
Doak Crabtree, Happy State Bank,
Stratford
Trey Deupree, Equias Alliance, LLC,
Plano
Shawn Dillon, First American Payment
Systems, LLC, Fort Worth
Chris Doyle, Texas First Bank,
Texas City
Chuck Doyle, Texas First Bank,
Texas City
Kevin Drew, TIB-The Independent
BankersBank, Irving
Kelly Earls, Bank Compensation Consulting, Inc., Plano
Wade Easley, First National Bank of
Hereford
Jeremy Edwards, Dell SecureWorks,
Atlanta, GA
Chet Fenimore, Fenimore, Kay, Harrison
& Ford LLP, Austin
Terri Flow, BancVue, Austin
John Fuller, PULSE, Plano
Brad Garland, Garland Heart, Wylie
Brad Giddens, CalTech, Carrollton
Jay Gober, First State Bank, Graham
Pat Gray, TIB-The Independent
BankersBank, Irving
Gary Guerrero, Diebold, San Antonio
Scott Heitkamp, ValueBank Texas,
Corpus Christi
Christy Hester, Texas Bank and Trust,
Longview
Pat Hickman, Happy State Bank,
Amarillo
Gary Hinders, Happy State Bank,
Amarillo
Israel Hinojosa, First National Bank of
Hebbronville
Janey Holstien, IBAT, Austin
Bryan Horten, Dell Inc., Georgetown
Kirk Hudson, Deluxe Corporation, Tyler
Keith Hughey, John M. Floyd & Associates, San Antonio
Kyle Irwin, Gruver State Bank
Denney James, Dell Inc., Cedar Park
Rick Jamieson, TIB-The Independent
BankersBank, Irving
Jackson Julson, Frost Bank, Dallas
Mayo Kasling, Jr., First National Bank of
Hughes Springs
Mark Kelley, Bank Compensation Consulting, Inc., Plano
Pat Kennedy, Jr., Kennedy Sutherland,
L.L.P., San Antonio
Milt Klohn, Federated Investors, Inc.,
Oakdale, MN
Jeanie Knezek, Yoakum National Bank
Kim Kreps, John M. Floyd & Associates,
Austin
Mary Lange, IBAT Education Foundation, Austin
Patrick Laughlin, BancVue, Austin
Justin Long, Bracewell & Giuliani, LLP,
Austin
Brian Marek, Hunton & Williams, LLP,
Dallas
Mark Martin, PULSE, Houston
Tom Matthews, American Bank,
Corpus Christi
Julie Mayrant, Woodforest National
Bank, The Woodlands
Page 26
(Top) Rep. Randy Weber, Chuck Doyle,
Jimmy Rasmussen, Karen Neeley, Allen
Rasmussen
(Bottom) Sen. John Cornyn, Mark Martin
Page 27
(Top) Rep. Jeb Hensarling, Cindy Blankenship, Gary Blankenship, Jamie Miller
(Bottom) Sen. Ted Cruz, Doak Crabtree
Congressional Visit Attendees Cont’d
Page 28
(Top) Zan Prince, Rep. Joe Barton
(Bottom) Rep. Roger Williams, Jay Gober
Page 29
(Top) Elorine Sitka, Jeanie Knezek,
Rep. Joaquin Castro
(Center) Chris Williston, Rep. Pete Sessions,
Steve Scurlock
(Bottom) Joe Burnett, Mike Thompson,
Rep. John Carter, Terry Tuggle, Glen
Thurman
Cliff McCauley, Frost Bank,
San Antonio
Shaun McCrary, D+H, Mt. Pleasant, SC
Jamie Miller, Veritex Community Bank,
Garland
Ronnie Miller, Community National
Bank, Hondo
Anita Minor, Bank of the West,
Grapevine
Kevin Monk, Alliance Bank, Sulphur
Springs
Gordon Moore, IBAT Services Inc.,
Austin
Michael Moores, Citizens National
Bank, Henderson
Melissa Nance, Advantage Health Plans
Trust, Oklahoma City, OK
Karen Neeley, Cox, Smith, Matthews,
Inc., Austin
Mack Neff, Jr., Integrity Bank, ssb,
Houston
Curt Nelson, IBAT Services Inc., Austin
Tami Newett, BancVue, Austin
Erik Ommen, Falcon International Bank,
Laredo
Michael O’Rourke, TIB-The Independent BankersBank, Irving
Les Parker, United Bank of El Paso del
Norte
Jim Payne, First State Bank & Trust Co.,
Carthage
Shannon Phillips, IBAT, Austin
Rogers Pope, Jr., Texas Bank and Trust,
Longview
Zan Prince, First National Bank,
Weatherford
Nik Prosser, Garland Heart, Wylie
Allan Rasmussen, Jr., HomeTown Bank,
N.A., Friendswood
Jimmy Rasmussen, HomeTown Bank,
N.A., Galveston
Connie Ratliff, Happy State Bank,
Amarillo
Rick Rizenbergs, First American Payment Systems, LLC, Fort Worth
Craig Roberts, Guaranty Bond Bank,
Sulphur Springs
Mark Roe, John M. Floyd & Associates,
Burleson
Lisa Roemer, PULSE, Houston
Debbie Scanlon, BKD, LLP, Houston
Jeff Schilling, Dell SecureWorks,
Atlanta, GA
Steve Scurlock, IBAT, Austin
Don Shafer, BancVue, Austin
Dennis Simmons, SWACHA, Dallas
Elorine Sitka, Yoakum National Bank
Peter Smith, Happy State Bank, Lubbock
Bo Stahler, Bank Compensation Consulting, Inc., Plano
Laura Steele, SWACHA, Dallas
Justin Steinbach, Frost Bank, Dallas
Dub Sutherland, VI, Kennedy Sutherland, L.L.P., San Antonio
Keith Taylor, Security State Bank,
Pearsall
Robb Temple, Independent Bank,
McKinney
Mike Thompson, Extraco Banks, Temple
Glen Thurman, First National Bank of
Moody
Brad Tidwell, Citizens National Bank,
Henderson
Greg Todd, TIB-The Independent
BankersBank, Irving
Terry Tuggle, Fort Hood National Bank +
First National Bank Texas, Killeen
Tom Turner, First State Bank, Abernathy
Pam Underwood, Vintage Bank,
Waxahachie
Val Ure, IBAT Financial Services, Inc.,
Austin
Christine Weinzapfel, Muenster State
Bank, Gainesville
Robert Weinzapfel, Muenster State Bank
Will Welch, CalTech, San Angelo
Chris Williston, IBAT, Austin
Christopher Williston VI, IBAT, Austin
David Willmann, Llano National Bank
Ryan Willmann, Llano National Bank
Mike Wilson, Security State Bank,
Pearsall
Jim Wise, Pace, LLP, Arlington, VA
Cody Yanchak, First American Payment
Systems, LLC, Fort Worth
Tom Yenne, Green Bank, Dallas
Sammy York, Citizens Bank, Kilgore
Rene Yzaguirre, Jr., First National Bank
of Hebbronville
Trends in
Financial
Literacy
By Christopher L. Williston, VI and Mary Lange
C
ommunity bankers know firsthand the lasting impact that the
financial crisis has had on our industry and the overall economy.
But behind all of this high level impact, the drastic downturn in
the economy six years ago has left a lasting effect on consumers’
individual psyches as well.
Only recently has individual borrowing and reliance upon
consumer credit begun to tick back up, following a number of
consecutive years in which consumers paid down their credit card balances and
other loans. This begs the question of whether the crisis provided American
consumers with a healthier respect for credit and for using it responsibly, or if
they were just temporarily paralyzed by fear of the unknown.
Whatever the answer to that question, bankers, educators and policy makers alike are more focused than ever on helping consumers understand what it
means to borrow responsibly and, hopefully, prevent the next financial crisis.
Simultaneously, a number of new players are piggybacking on technology to
reach out to consumers and expand financial services to previously underrepresented markets.
With all of this movement toward greater financial knowledge, education
and consumer empowerment, it seemed prudent to take a step back and examine the “broad strokes” of the current state of play of financial literacy. To
provide much needed perspective, we asked Mary Lange, president of the IBAT
Education Foundation, to help community bankers understand the current
trends and what they mean for the industry as a whole.
Q
A
Between January 2009 and January 2014, the average credit card debt held
by American households dropped from $19,000 to $15,191. Do you think
that the financial crisis caused a shift in the way families and individuals
think about their need to prepare for the future and their reliance on credit?
Yes, I do. The financial crisis resulted in an entirely new level of uncertainty
surrounding jobs, housing, health care costs. It was a huge wake-up call to
not only Americans, but families and individuals across the world. As the
investment houses grew wobbly, it in turn made the “too big to fail” banks wobbly. That scared everyone. As a result, folks began to cut back on their spending
and put away some savings to better weather these uncertainties.
Q
A
There seem to be many new products and services (like Walmart’s Bluebird)
focused on the unbanked and underbanked. Do you think these products
(like prepaid cards) move these individuals toward a traditional banking
relationship, or are they just stopgaps to meet need?
The new products provide ways for the underbanked and unbanked to: a)
Place their funds in a secure place without fear of theft of cash; b) Transfer
funds safely; c) Receive direct deposit; d) Have a way to save securely; e)
Conveniently use their monies in our “card” world.
While these new products began as stopgaps to meet needs, they have
the capacity to move individuals toward a trusted banking relationship. It all
depends on the conversation community bankers have that spells out the benefits of saving and the safety that comes from not carrying too much cash. That
then leads to the conversation about creating a budget to live by and learning
how to use debit and credit tools. How that conversation takes place and the
follow-up individual action is critical for folks who have never experienced a
trusted banking relationship.
Q
IBAT, through the IBAT Education Foundation, has been on the front lines
of financial literacy education, seeking to expand the knowledge of consumers by giving teachers the resources to better teach financial literacy
concepts in the classroom. To date, the IBAT Teach the TeacherTM program,
which began in 2012, has reached 471 teachers and their 69,000+ students. As
you have worked with teachers around the state through the program, what has
surprised you most?
A
What has surprised me most is how eager ALL students are to talk about
handling money, debit cards, insurance for mobile devices, saving for a car,
an apartment, and continuing education. The students are watching their
parents and families closely; they see the choices their parents make and are curious to ask about them.
I am so impressed with our Texas teachers…the respect they show their students for every level of financial question. Our teachers are a safe haven for our
students. They meet the students where they are and have their own life experiences to share. Every teacher I meet talks about the honesty in the classroom
and the real world conversations about money. Many describe that wonderful
moment when students return and say “What I learned from you helped me buy
my truck and understand what the interest rate meant to my wallet.”
Q
The Education Foundation has almost three years of the IBAT Teach the
Teacher program under its belt. How has the program evolved and what
evolution lies ahead?
Don’t miss the
many free tools and
resources available at
www.ibat.org/
foundation.
Financial Literacy cont’d
A
When we started the program in
Waco back in 2011, we had no idea
if the teachers would have an interest in instructional methods to start the
conversation about money. Now with ten
programs under our wings, we’ve learned
teachers are very interested in effective
ways to better connect students to the
language of money, especially the impact
of the credit score. We used to include
discussions on buying a home and demonstrated the value of amortization tables on
paying off a mortgage; we quickly learned
that while teachers were fascinated, students could not relate to buying a home.
Today, we demonstrate the time/value
amortization table for paying off a student
loan.
We’ve also learned that teachers are
as eager to learn about personal financial management as students; many leave
the IBAT program saying…I wish I had
known how this all worked earlier.
And by focusing on instructional
methods, we respect whatever curricula
that is in place at the local level. Our goal
is simply to show proven ways to engage
students and teachers in a financial conversation. The glowing testimonials indicate we are on the right path.
TIB 0.33 4-color new www.mybankersbank.com
Trusted. Partner.
Q
A
What excites you most about the
current season in financial literacy
initiatives?
I am delighted that a focus on financial education is on everyone’s radar
screen. A few years ago, you would
not have heard such open conversation.
In fact, five years ago, IBAT conducted
the IBAT Money Show at the Austin
Convention Center for consumers with
workshops and exhibits on financial fitness techniques. Alas, at that time, it did
not attract a large enough audience to sustain such a program. Nowadays you hear
regular financial fitness discussions on TV,
cable, radio, in schools, in workplaces
and yes, even around the kitchen table.
Everyone wants to learn more about practical personal finance.
Students want to make smart
decisions about saving for college or ongoing learning expenses; families want to
save for retirement; small business owners want to be smart about how they grow
their businesses. Everyone wants to be
able to afford health care. The first step is
knowing what things cost and then how
to pay.
The puzzle is when to have these
“just in time”/”teachable moment” conversations. And then, the who...who
should be guiding these conversations.
For our kids, families and teachers are the
first line of communication. For adults,
these conversations can happen around
the kitchen table, in community banks,
in churches, in community colleges, and
in civic gatherings.
Q
A
What is the role of Texas community
banks in the future of a more financially literate Texas?
Texas community bankers play a vital
role in being a resource in their community for trusted personal financial
practices. Back in the day, the community
banker would help a customer balance his/
her checkbook, help a graduating senior
open a bank account and help small business owners with their business proposals
and loan requests. Today, debit cards and
automated systems make some of those
practices seem quaint. Yet, even with
modern tools, the underlying basics of
knowing how each one of us earns, saves
and spends remain as the critical foundation of financial conversations.
Recognizing the fact that there is
less foot traffic in many lobbies,
community bankers have a prime
opportunity to reframe their connections to customers, their communities, their local businesses, and
their local schools. Their message
needs to revolve around personal
financial fitness being a critical
skill set to compete in our vibrant
Texas economy. Taking this message out the door of the community
bank and into the community is an
essential activity.
The kicker is this: this is not just a
role for the marketing or business development officer. This is a role for everyone who calls themselves a community
banker…teller, loan officer, credit analyst,
personal banker, security officer. ★
Christopher L. Williston, VI, CAE, is Senior
Vice President of Communications for the Independent Bankers Association of Texas; Mary
Lange, CAE, is President of the IBAT Education Foundation.
Don’t miss the upcoming
financial literacy summit at
the Dallas Federal Reserve
Bank July 24-25, 2014.
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Atlanta • Austin • Bangkok • Beijing • Brussels • Charlotte • Dallas • Houston • London • Los Angeles
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July/August 2014
www.ibat.org ★ 33
Seven Measures Banks
Comply with
T
hese days, the employees of many banks and other
financial institutions use social media to interact
directly with existing and potential customers. As
the number of consumers who use social media continues to rise, risk management of social media is
becoming a bigger challenge for institutions.
In December 2013 the Federal Financial Institutions Examination Council (FFIEC) issued final guidance
on risk identification and mitigation activities related to social
media. The guidance is intended to help banks understand the
potential risks — such as consumer compliance and legal risks,
reputation risks, and operational risks — of using social media.
The guidance, titled “Social Media: Consumer Compliance Risk Management Guidance,” directs banks to verify that
their risk management programs provide oversight and controls
that are appropriate for the risks presented by the types of social
media they use.
Implement Appropriate Measures
A bank’s risk management program should be commensurate with the institution’s size, complexity, activities, and relationships with third parties. The FFIEC guidance suggests that
the program should address social media and include several
areas, each of which demands the involvement or oversight of
senior leadership.
Now that the guidance is final, it is time for banks to follow
it by implementing these seven measures.
1. Put in place a governance structure.
Social media can play a significant role in supporting a bank’s
strategic plans, taking into account the entire institution, from
human resources and marketing to legal and IT departments.
Prior to using social media, a bank should put in place a governance structure, complete with clear roles and responsibilities,
whereby the board of directors or senior management directs how
social media will contribute to the bank’s strategic goals.
2. Establish policies and procedures.
In addition to a strong governance program, policies and
procedures guiding the use of social media are critical to a financial institution. Whether the required elements form a standalone social media policy or are integrated into other policies
such as the information security policy, banks need to establish
these policies and procedures for all employees and departments
Should Take to
Social Media Guidance
By Erika L. Del Giudice, CISA, CRISC, Sean F. McAloon, CISA, and James E. Stempak
that are using this mode of communication. Due to the everchanging social media environment, related policies should be
updated on a periodic basis with the support and approval of
senior leadership or the board of directors.
Besides the policy aspects of social media, banks should
incorporate social media concepts into other applicable procedures and documentation, such as incident response procedures
and vendor nondisclosure agreements. Banks need to consider
how adding social media to the organization will affect their risk
profile and, as much as they can, use policies and procedures to
guide employees on the steps to take to reduce the risks associated with using social media.
3. Train employees.
With the advent of social media in an organization, employees will need to be trained on social media policies and procedures. Even if the bank is not actively using social networks,
employees should be educated about the risks involved, since
employees are likely to use social media outside the workplace.
Appropriate training encompasses the use of social media for
business and personal activities on both personal and enterpriseowned equipment.
Training also should reinforce the compliance rules and regulations required when using social media to engage in activities
such as lending, deposit services, or payment activities in the
same way as when using other media for these activities. One
example is training employees that tweeting about the rate or
terms offered on a loan triggers disclosure requirements just as it
would when communicating the information via a website.
4. Monitor social media use.
It is tempting to think that a bank could protect itself from
related risks by avoiding the use of social media altogether, but
that simply is not the case. A bank might not use social media,
but the bank’s employees, vendors, and clients likely do. A comprehensive monitoring program includes monitoring various
social media sites for posts, tweets, and comments pertaining to
the institution. Banks also might want to consider using social
media monitoring tools and techniques to identify heightened
risks and to respond appropriately.
5. Perform due diligence of third parties.
Because banks’ social media sites are typically hosted
Rewards Program
Points Under Scrutiny
M
erchants,
airlines,
retailers and financial
institutions all look
for ways to get and
keep valued customers. Getting and keeping a loyal customer is
not just a component of the right product
offering and a positive customer experience, but may come down to the type of
rewards you provide in the customer relationship. Consumers expect to be rewarded
for their purchases in today’s economy and
desire financial benefits for being enrolled
in frequent-buyer programs.
Recent studies have shown that the
primary factor in selecting a particular
credit card was for the benefits involved
in the reward program: earning miles,
getting cash back or merchandise based
on their spending preferences. Rewards
programs have multiple benefits for both
the consumer and the financial institution. Rewards program credit cards tend
to attract consumers who spend more, or
engage higher value purchases, enabling
a higher interchange fee paid by the
merchant.
Fundamentals of Rewards Programs
Basic Operating Models
Rewards programs are based on a
variety of formulas for earning points or
value and configured by each issuing bank
or financial institution. Funding redemptions make up more than 90 percent of
rewards program costs. The interchange
rate is the fee that is charged to the retailer
by the issuing bank. Interchange rates
range from 1–3 percent of the value of the
transaction. Rewards and cash back cards
usually come with higher interchange fees
than traditional credit and debit cards.
Banks use the interchange fee to help
subsidize the cost of the rewards program.
Initial debit card rewards program campaigns were designed to incent customers
to leverage PIN debit or signature debit
depending on what triggers the financial
institution wanted to reward — creating
a financial balancing act of revenue per
transaction with risk of fraud loss.
Rewards programs for both credit
cards and debit cards have faced challenges in today’s regulatory landscape.
Prior to Dodd-Frank, and the Durbin
Amendment, large financial institutions
had diverse debit card rewards programs
driving the uptick in debit card transactions as an overall percentage of the
payments pie. When interchange rates
were capped as part of Dodd-Frank, the
promotion of debit card rewards all but
disappeared from the largest institutions.
Rewards programs are configured using
two primary operating models:
• Issuer-funded Programs: Typically
points-based, in which the financial
institution offering the program defines
the rewards or points criteria, thresholds and rules of the program. The
institution defines which transaction
types “earn” points, and sets the rules
for how to redeem or “burn” points.
Issuers fund their own program by paying the costs when points are redeemed
which requires maintaining a liability
or “cash on the balance sheet” for
unredeemed but active points.
• Merchant-funded Programs: Typically
cardholders receive some sort of cash
reward when they redeem an offer
available through this program. Merchants pay for the reward which is
passed from the merchant to the bank
and on to the bank’s customer. Most
of the merchant-funded solutions have
no cost to the participating financial
institution.
Organizations that structure a
rewards program for credit accounts, debit
accounts or the overall customer relationship tend to define their behavior triggers
for rewarding points based on key attributes that define the customer relationship: By customer, By product, By use.
Attributes that derive rewards value
can include factors like overall tenure of
the customer, product ownership, number
of products and desired channel behaviors
for how the customer uses the account.
Channel behaviors can be used as triggers
to reward specific transactions.
While rewards programs evolve,
they are not without some level of scrutiny or oversight. Federal regulations
already exist for disclosures of fees and
interest rates, but there are not unique
Compliance
By linnea solem
federal regulations specific to disclosure
of rewards. The overall focus on consumer
protection is on the marketing terms, conditions and disclosures. In fact, a 2013 JD
Power survey indicated that 33 percent of
consumers were unclear on the benefits of
their rewards program.
Consumer Protection Focus Areas
Understand Emerging Concerns
Rewards programs require program
requirements based on what behaviors
to reward, creating a layer of complexity that has triggered scrutiny by consumer protection advocates and regulators. The Consumer Financial Protection
Bureau (CFPB) published complaint data
from 2013 that shows that 2.5 percent
of reported complaints concern rewards
programs. However, in the effort to assess
the need to look at credit card rewards
program marketing practices the agency
focused on the “detailed and confusing
rules” that exist in many rewards programs. Examples that they cited in their
review of card practices since the Card
Act:
• Add-on products: Optional services
sold by credit card companies to cardholders, including debt cancellation,
identity theft protection and credit
monitoring. The focus is on the techniques used in marketing the products,
activation and ensuring value/benefits
are understood.
• Disclosures: Concern that consumers
may not understand the terms or rules
for when they qualify for a bonus and
what actions may negate them receiving the bonus. When receiving points,
consumers may not understand the forfeiture rules and the differing earn rates
that create the value of a “point.”
• Confusing Requirements: Concern that
consumers may not understand the
terms and conditions for redemption
requirements, formulas for computing
rewards and the overall complexity of
the rewards program.
Compliance Considerations
Navigating the Alphabet Soup Rules
Simplicity and transparency are
the key tenets for addressing consumer
protection compliance in any type of
rewards program. However, when rewards
programs are structured outside of the
credit card relationship, but are tied to
the demand deposit or checking account,
there are other areas of compliance to
consider in program configuration. Cardholders have many accounts, so financial institutions structure their rewards
programs for multi-product activity to
enable customer loyalty and create the
cardholder’s primary financial institution
relationship with the rewards program as
the incentive.
While some of the complexity for
paying a bonus on deposit accounts was
reduced by changes to Regulation Q,
there are compliance nuances to consider
in defining the customer, product and
transaction behavior triggers that you
want to reward.
• Account Type: Recognize that as you
develop a rewards strategy the type
of account matters. Not all checking accounts are alike — Consumer
Checking vs. Business Checking vs.
Savings Accounts trigger different
treatments for items like payment of
interest and handling of electronic
transactions. NOW accounts vs. DDA
accounts trigger different obligations for determining if premiums are
applied to the account.
• Bonus Considerations: A “bonus” is a
premium, gift, award or other consideration worth more than $10 (whether
cash, credit, merchandise or any equivalent) given or offered to a consumer
during a year in exchange for opening,
maintaining, renewing or increasing an account balance. Bonuses do
not include the value that consumers
receive through the waiving or reduction of a fee or expense.
• Interest: When bonuses are offered to
a customer for opening, adding to or
maintaining an account, the Internal
Revenue Service (IRS) defines this
as interest. The account type and
behavior rewarded may trigger interest
obligations, including the tracking of
the fair market value of points earned.
Annual dollar value thresholds need to
July/August 2014
www.ibat.org ★ 37
Social Media Guidance cont’d
externally, the outside party should be
included as part of a bank’s vendor management program and due diligence processes. This means following the same
selection and management procedures for
social media vendors that the bank follows for any other vendor. One area the
bank might want to understand is how the
vendor stores and retains the information
it has posted.
6. Conduct internal audits.
To confirm ongoing compliance with
the bank’s established policies, an independent evaluation of the procedures and
controls related to social media should be
part of an internal audit. The social media
audit should include some testing of the
operating effectiveness of controls, with
the results being submitted for review by
the bank’s audit committee or full board of
directors. Establishing an audit and compliance function for social media controls
also helps the bank maintain compliance
with current regulations.
7. Report to management.
The bank’s senior leadership or board
of directors should be made aware, on an
ongoing basis, of the progress and status of the social media program. Reports
that include updates related to all six of
the areas listed previously enable management to compare the program’s performance with the bank’s objectives for
the program. Appropriate reporting on
the effectiveness of the social media risk
management program makes visible how
a bank is trying to use social media to
achieve its strategic goals.
Assess the Risk
As part of its risk management program, a bank should conduct a risk assessment aimed specifically at identifying,
measuring, monitoring, and controlling
the risks of social media. Whether or not
a bank uses social media now, addressing
social media risks is important not only to
understand how to use social media in the
future to connect with customers but also
to prevent customer complaints and data
breaches from tarnishing the bank’s image.
The FFIEC guidance details many
regulations that banks already comply
with and need to apply to social media,
such as fair lending laws, Truth in Lending Act/Regulation Z, Real Estate Settlement Procedures Act, Fair Debt Collection Practices Act, and requirements
related to unfair, deceptive, or abusive
acts or practices.
The guidance is intended to help
banks understand and successfully manage the risks associated with activities
conducted using social media channels.
In the new world of communication and
engagement with customers, every financial institution needs to address the risks
of using social media. ★
Erika Del Giudice is with Crowe Horwath LLP
in the Chicago office. She can be reached at
630.575.4366 or [email protected]. Sean McAloon is with Crowe
in the Dallas office. He can be reached at
214.777.5228 or [email protected]. Jim Stempak is a principal with
Crowe in the Dallas office. He can be reached
at 214.777.5203 or [email protected].
Rewards Program cont’d
be tracked if the potential value could
be greater than $600 per year if IRS
triggers are met.
• Advertising: When structuring a typical
rewards program, most awards will be
greater than $10, requiring the financial institution to conduct analysis on
the offer to determine what types of
disclosures may be required for Truth
in Savings Act compliance.
Simple Tips for Rewards
Program Configuration
•Ensure that your debit card rewards
points are related to the debit card
activity and not to opening the
account to avoid triggering assessment
of bonus implications
•Be cautious on the parameters you set
for rewarding behavior, if the payment
of the reward is based on usage of the
funds in the account. Recognize that
you will need to establish the policies
and procedures needed to assess your
rewards program, including creation of
the proper set of disclosures
•Be transparent for life of points,
including annual caps or earning
thresholds. Create simple and easyto-understand model disclosures and
redemption thresholds
•Leverage personalized milestones like
Birthday Bonus or Anniversary of
Account Opening Bonus to reward
loyalty, but also enhance the customer
experience
•Ensure terms and conditions clearly
convey how point values are impacted
by returns/cancellations/refunds of
transactions. Consumers need to
understand the program rules
•Ensure that you consult with tax
experts regarding the structure of your
rewards program to determine if bonus
payments would be defined as interest
on accounts
•Work with third-party providers to
ensure that adequate reporting is provided so your compliance team can
determine if particular bonus or interest thresholds are met that require
1099-INT or 1099-MISC reporting
•Understand the implications for issuing rewards based on maintaining
the balance for a period and develop
checklists for your marketing team to
understand compliance requirements
•If you reward recurring transfers, ensure
that terms and conditions clearly outline which type of automated transfers
earn additional points, if you treat preauthorized transactions set up in the
branch vs. online differently
Bottom line, rewards programs are a
valuable component to financial services
offerings and consumers value the personalization that targeted offers can create.
Create a partnership within your marketing, channel and compliance teams to
assess and configure your program to dot
the I’s and cross the T’s in the compliance
checklist. H
Linnea Solem, CIPP, CIPP/C is chief privacy
officer and director of business risk & privacy
management for Deluxe Corporation (www.
deluxe.com). She can be reached at 651-4837740 or [email protected].
on the move
FOUNDATION FOOTPRINTS
cont’d from page 6
Benchmark Bank, Dallas, has announced
Crowe horwath llp has combined its
the formation of Benchmark Private
Wealth Management, LLC, a wholly
owned subsidiary of the bank and a
Registered Investment Advisor, to
better provide its customers with a
complete suite of financial services.
Its offices will be located at 7019
Hillcrest Avenue in Dallas. The new
channel will be led by industry veterans Wayne McCullough and Keith
Beckman.
Irving and Dallas offices into one
expanded space at 750 N. St. Paul
in Dallas. With nearly 9,500 square
feet, the office is almost double the
size of the firm’s former space. With
the expansion, Crowe was able to
add more features for its employees,
use more eco-friendly furniture, and
continue using video conferencing
capabilities, thereby decreasing the
need to travel and reducing travel
emissions. Approximately 65 Crowe
personnel are located in the Dallas
office. ★
through two scenarios with decision points: the
costs of fixing the problem myself (about $40)
versus the cost of calling in the local plumber
(about $220). Then I translate the skill to
money saving and show them the decision
process and my Home Depot bill and compare it to an actual invoice from a plumber.
Financial literacy is not about doing without;
it is all about making effective choices based
on fact and knowledge.
At the end of the semester, I want my
students to leave knowing…
This question hits at the heart of what a
quality and effective teacher hopes and strives
to attain. This difference in the real world
and student lives is only accomplished if the
information sticks and travels with them the
rest of their lives promoting lifelong learning.
The three fundamental ideas of my financial
literacy curriculum are:
1. Invest in the most important thing in your
life, yourself.
2. Life is about choices and tradeoffs, so
choose wisely.
3. Time: start early, let it grow, and youth
is an advantage.
Rebecca Larson, Temple High School
This teacher was nominated by Becky Johnston and Mike Thompson, Extraco Banks,
N.A.
experience reach
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Doug Van Meter
Jon McDowell
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i
promote common sense financial literacy.
We have weekly discussions over how to
buy a car, types of insurance, financial aid
sources, credit and debit card safety, income
tax returns, banking accounts and financial
intermediaries.
If I could design a financial literacy
starter kit for my students, it would include
a copy of Chad Foster’s Financial Literacy
for Teens, promotional information from
local community banks about their various
accounts, loan requirements, insurance, and
iPhone apps.
At the end of the semester…
1. I want the students to have a sense of
confidence about personal financial
literacy.
2. I want the students to have the ability to
correct financial difficulties before they
become financial disasters.
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BANK
Guadalupe National Bank, Kerrville
Kenneth Early, President & CEO
ASSOCIATE MEMBER
Quest Analytics
Karl Keller, President
Pittsburgh, PA
www.quest-analytics.com
Quest Analytics is a software and training company
helping banks generate new business. Using automated data mining technology, Quest uncovers hidden sales leads and delivers them to your sales force
3. I want the students to have a working knowledge of real world financial
responsibility.
Thanks again to all of our members
who submitted nominations into our
2014 IBAT Teaching Excellence in
Financial Literacy Awards Program. Our
panel of judges carefully evaluated each
application before selecting the three
teachers to receive a $1000 award from
the IBAT Education Foundation. You can
see from the stories and lessons shared by
our award winning teachers that they are
focusing on the life skills involved in personal financial management more than
technology driven applications. Common
sense rules the day. We should be grateful
every single day for the bright and dedicated teachers committing the time and
putting forth the effort to educate our
children. Thank you Texas Teachers for
all you do! H
®
each day. Community banks use Quest to develop an
effective customer centric sales culture.
Teraverde Management Advisors
Al Palmer, Managing Director
Plano, TX
www.teraverde.com
Teraverde Management Advisors provides strategic
planning and management, governance and operations management services to financial institutions
of all sizes to help them identify growth and profit
opportunities and strategic opportunities for process
improvement.
ANICO
www.anico.com
BBVA Compass
bbvacompass.com
p5
p 11
p7
BKD, LLP
www.bkd.com
p 40
CalTech
www.caltech.com
p 38
interest rates
www.first-american.net
they do and the customer base they serve.
Importantly, this requires the right tools
and the right way of thinking about interest rate risk and performance. H
Granville Financial Group
www.granvillegrp.com
p 13
Hunton & Williams
www.hunton.com
p 33
Since 1979, we’ve helped our clients
improve decision-making, manage interest
rate risk, and maximize investment portfolio
performance. Our proven approach of total
resource integration utilizing software and
products developed by Baker’s Software Solutions* — combined with our solid investment
experience and advice — makes us the investment firm of choice for many community
financial institutions. For more information,
contact Jeff Caughron at The Baker Group:
800-937-2257, www.GoBaker.com, or
email: [email protected].
*The Baker Group LP is the sole authorized distributor for the products and services
developed and provided by The Baker Group
Software Solutions, Inc.
IBAT Services New Endorsement
www.ibat.org/services
p 39
JMFA
www.jmfa.com
p 48
PULSE
www.pulsenetwork.com
p 47
The Baker Group
www.gobaker.com
p 15
The Bankers Bank
www.thebankersbank.com
p 42
TIB
www.mybankersbank.com
p 32
services solutions
For more information about how MG
Architects can support your bank’s growth
strategy through experienced design,
please contact Scott Clanton, Principal,
at [email protected] or 713-5520707, ext. 221, or Eric Batte, Principal, at
[email protected] or 713-552-0707,
ext. 215. H
www.accusourcesolutions.net
TransFund
www.transfund.com
p2
p9
?
Need help with a
compliance question
IBAT COMPLIANCE ADVISER
800.749.4228
www.ibat.org/compliance
IBAT2GO*
Look Before You Leap cont’d
Never forget who you are.
IBAT’s official mobile application
*available in the Apple App Store
ASSOCIATION NEWS
in online, mobile and problem resolution,
and fail to meet the high expectation for
personalizedexperiencesthataffluentcustomers require.
“Even with record high satisfaction,
there are some banks that fall far short
in meeting customer needs,” Jim Miller,
director of banking services at J.D. Power,
said. “It is easy for banks to become complacent. To stay at the top of their game,
banks should focus on those customers
who are not satisfied. And consumers
should keep in mind they have the opportunity to shop banks to find the right combination of services, products and fees to
meet their needs.”
★
Calyx Update increases
Connections to mortgage
service providers
Calyx Software, a provider of mortgage solutions for banks, credit unions,
mortgage bankers and brokers, expanded
its Calyx Network with an interface
update. The update allows users of Calyx
Point to directly connect with lenders
and mortgage service providers, automating data exchanges and streamlining the
loan process. The update is automatically
installed into Calyx Point versions 8.1
and higher.
★
vintage Bank wins small
Business of the Year
Vintage Bank was presented with the
Small Business of the Year award by the
Waxahachie Chamber of Commerce at
the 2014 Waxahachie Chamber of Commerce Membership Banquet.
Vintage Bank has provided Ellis
County with community banking options
since 2001. The bank currently has three
branches in Ellis County, and construction
of a new facility in Red Oak is scheduled
to begin this summer. With $170 million
in assets, Vintage Bank remains dedicated
to providing superior customer service in
its communities. ★
Your brand should be the crux of
your social media content. If your bank
has always been known for its “Genuine
HometownBanking”slogan, thenreflect
that within everything you do on social
media, from company profiles to individual posts. That doesn’t mean using your
logo and the slogan as your profile images,
but rather subtly reinforcing that message
every time you converse on social media.
Compliance Tip: Social media poses
reputational risks for financial institutions,
stemming from multiple areas including
privacy, data security and even safety and
soundness. Make sure your social media
policy identifies your bank’s specific risks
and shows your plan for mitigating them.
The important thing to remember is
that social media allows you to connect
with your customers and your community
in meaningful ways. That means there
are many valuable uses for social media
for financial institutions–engaging customers, resolving customer service issues,
marketing new services, conducting product research and, of late, even detecting
fraud. Your bank has countless opportunities to leverage social media; the key is
simply formulating a plan that allows you
to become active on social networks with
an authentic presence and a compliant
process.
At the end of the day, social media
offers banks meaningful ways to not only
connect with customers, but also collect insight that can help drive profitable change. All institutions, regardless if
they have yet to begin using social media
or have been active for a while, should
consider how they can incorporate social
into their growth strategy. After all, social
media is about creating conversations
and community—and today’s community
banks can’t afford to be left out of the
discussion. ★
In his 10 years with CSI, Lee Thomas has held
multiple sales and account management positions, and currently oversees the Regulatory
Compliance Division’s customer relationship
team. He regularly presents webinars on social
media compliance to financial institutions
across the country.
IBAT
Around
the
State
and beyond
Bsa/aml program” in
schulenburg.
may 7
iBat attends the san antonio
area Bankers Compliance
association meeting.
may 13–15
iBat education presents
“2014 real estate lending
Compliance” in lubbock.
may 14
april
pril 25
iB
iBat
Bat participates in the 18th
annual
nnual Bank Directors’ and
executives’
xecutives’ seminar and Golf
tournament in huntsville.
tournament
iB
iBat
Bat services takes part
in advantage health plans
trust’s
trust’
rust’s quarterly trustees
meeting in oklahoma City.
may 21
iBat speaks at the Dallas
area Compliance association.
may 22
april
pril 29–30
iB
iBat
Bat education presents
“2014 nuts and Bolts of Banking summit” in san antonio.
iBat attends the CBao board
meeting in oklahoma City.
april 3
“Key Factors for Your 2014
harlingen.
iBat leadership Division
region 9 hosts an event at
top Golf in houston.
april 4
iBat participates in the
2014 asae association law
symposium in Chicago.
april 4–6
iBat attends the wintergarden Bankers association’s
annual convention at
tapatio springs.
april 9–10
iBat services participates in
snl Conference in Dallas.
april 10
iBat attends a presentation
on “regulatory issues in
residential property seller
Financing” in austin.
Kerrville.
april 10–11
iBat services participates
in the Baker Group “performance 2014 interest rate
risk & investment strategies
seminar” in Dallas.
april 10–13
association to hold a golf
tournament in Yantis.
april 23
iBat participates in tiB’s
annual shareholder meeting
and quarterly board meeting
in irving.
april 24
iBat attends the second
annual texas Bankers hall
of Fame in huntsville.
iBat attends the 21st annual
BaG invitational Golf tournament in san saba County.
april 16
iBat hosts the inaugural
meeting of the austin Chapter of Financial women in
texas.
april 17–18
“2014 lending Compliance
summit” in san antonio.
april 17
region 5 partners with the
northeast texas Bankers
iBat hosts the 22nd annual
Congressional visit in washington, D.C.
“2014 real estate lending
Compliance” in san antonio.
may 6
regions 3 & 4 hosts a
regional meeting in irving.
iBat hosts an associate
member area networking
event in irving.
region 9 holds its annual
sporting Clays tournament
in Katy.
may 28
iBat attends the texas
Department of Banking town
hall meeting in lubbock.
iBat Calendar
april 15
iBat speaks at lubbock
Chapter of Financial women
in texas “Bring your Ceo
night.”
april 29–may 1
may 6–8
iBat attends the hill Country
Bankers association annual
convention in Fredericksburg.
region 1 holds its annual
golf tournament in amarillo.
iB
iBat
Bat education presents
“moving
“m
moving Forward with DoddFrank rules in 2014” in
irving.
rving.
Financial women in texas
hill Country Chapter meeting
in harper.
may 16–17
may 20
april
pril 29
april 1
south Central texas Bankers
association golf tournament
in la Grange.
July
11 Leadership Division Region 8 Golf
Tournament, Fredericksburg
24–25 Financial Literacy Summit
30 Teach the TeacherTM Program,
Abilene
San Angelo
August
14–15 Operations Compliance Summit
27 Leadership Division Region 10 Clay
Shoot, Brenham
28 Appraisals Summit
September
Corpus Christi
27–30 IBAT Convention, Fort Worth
October
12–17 Bank Operations Institute, Dallas
31 Certified Community Bank Directors
Program
November
1 Certified Community Bank Directors
Program
6 Investment & Asset/Liability
Management Summit
13 Leadership Division Region 8
Networking Event, Austin
13 Associate Member Area Networking
Event, Austin
16–21 Bank Lending Institute, Austin
For information about any of these programs,
contact Julie Courtney at 800-749-4228 or
[email protected], or visit www.ibat.org.
Garrison
Cheavens
Cromer
DavisHernandez
personnel update
officer. Almon has over 20 years of banking experience, and holds a BA degree
from Texas Christian University, a Master
in Banking Designation from Sheshunoff
Executive Banking Institute, along with
numerous accomplishments from various
banking schools and associations. She will
be located in the Denton Headquarters.
Houston
Cynthia Dopjera was selected as one
of nine finalists for the 2014 “Outstanding Women in Banking and Financial
Services” by The Women’s Resource of
Greater Houston. Dopjera is chairman of
the board and financial institutions practice leader for Harper & Pearson Company, P.C.
Kyle
TrustTexas Bank has promoted Mark
Garrison to senior vice president/regional
lender. Garrison’s previous title was VP of
business development. He has 22 years of
banking experience with strong expertise
in personal and commercial loans, and has
been with TrustTexas Bank since 2007.
Longview
The board of directors of Texas Bank
and Trust Company has announced several staff promotions.
ValentineHarper
Rose
Jeff Cheavens was promoted to
senior vice president and trust officer in
the bank’s West Grande branch in Tyler.
Cheavens joined Texas Bank and Trust
in 2008. He is a 1984 graduate of The
University of Texas at Tyler with a Bachelor of Business Administration degree in
Finance. He is a certified trust and financial advisor, has received his financial
planning certificate from Kaplan University and is a graduate of the Texas Bankers
Association’s Employee Benefits School.
With 30 years of experience in the trust
industry and with extensive training in
investment management, his current
responsibilities are personal trust, estate
and agency account administration.
Yanika Valentine was promoted to
senior vice president and controller. Valentine has been employed by the bank
since 2001, most recently as vice president
and controller. She holds a Bachelor of
Science degree with a major in accounting and minor in business administration
from Wiley College, and is a member of
Alpha Kappa Alpha Sorority, Inc. She
is certified by the Independent Bankers
Association of Texas’ Bank Operations
Institute program.
Jennifer Harper has been promoted
to vice president in the bank’s commercial lending department. Harper has been
involved in the banking industry for over
McDaniel
Collins
Knott
Reese
20 years, and has served in a variety of
roles with Texas Bank and Trust since
1998. In addition to her own loan portfolio and account management responsibilities, Harper works directly with the bank’s
president as well as other senior lenders in
the commercial lending division.
Lane McDaniel is now vice president
and branch manager in the bank’s South
Broadway branch in Tyler. He has been
involved in community banking since
2002, and holds a Bachelor of Business
Administration degree from Texas A&M
University – Texarkana.
Lois Collins has been promoted to
assistant vice president. She has been
with Texas Bank and Trust since 1999 and
currently manages projects for the loan
operations division.
Jon Cromer has been promoted to
assistant vice president. Cromer joined
the bank in 2012, initially as an investment analyst in its trust division. He
relocated to the lending division in April
2013 and currently serves as a commercial
lender. Cromer holds a Bachelor of Science degree in Economics and a Bachelor
of Arts degree in Interdisciplinary Studies,
emphasis in pre-law, from the University
of Texas at Arlington.
Chris Davis, who joined Texas Bank
and Trust in 20013, has been promoted to
assistant vice president. He worked as a
served as president and chief executive
officer since 2003.
Herd
Canfield
commercial teller prior to moving into the
technology division in 2007 as the ACH
processor. He was later given responsibility for the day-to-day oversight of the
cash management operations, and he is
currently the bank’s electronic banking
manager. Davis holds a Business Administration degree from East Texas Baptist
University with a minor in accounting.
He is accredited by the National Automated Clearing House Association as a
Certified ACH Professional with an AAP
designation.
Alfredo Hernandez has been promoted to assistant vice president. He has
been employed by Texas Bank and Trust
for more than 14 years. He has worked in
new accounts and customer service, and
is currently a lender at the bank’s North
Longview branch. Hernandez currently
serves on the bank’s Hispanic Services
Committee and has participated in community events including Cinco de Mayo,
Celebrity Read-a-Thon, and various
health fairs.
Beverly Rose has been promoted to
assistant vice president. Rose has been
employed by the bank since 2005, after
serving in the United States Navy for
seven years. Initially a mortgage loan
processor, she currently serves in the
loan operations department as processing
manager.
Kimberly Knott was promoted
to administrative officer in the bank’s
administrative operations division. Knott
began her employment with Texas Bank
and Trust in 2012 as an enterprise risk
management coordinator in the risk management division, and relocated to the
administrative operations division later
that year. She holds a degree in Business
Administration from the University of
Texas at Dallas.
Hall
Bahner
Amy Reese was promoted to trust
officer in the bank’s trust division. Reese
has been employed by Texas Bank and
Trust since 2010. She received her Bachelor of Science degree from the University
of Texas at Tyler in 1991, and after teaching in elementary school for five years, she
began her banking career with Regions
Bank. She has experience in teller, customer service, new accounts, and individual retirement accounts areas as well as
experience with retirement plans, 401(k)
plans, profit sharing plans, and pension
plans. Reese earned the Certified Retirement Services Professional certification
in 2008.
In addition, Chairman Rogers Pope
announced that Danielle Herd has joined
the staff of Texas Bank and Trust Company as senior vice president and director of retail services. Herd has more than
15 years of experience in the financial
services industry, most recently as manager of the East Texas region retail division of JPMorgan Chase & Co. In her
new position with Texas Bank and Trust,
she will be responsible for the oversight
and management of the bank’s branch
operations functions. Herd holds a Bachelor of Business Administration in Business Management degree from Baylor
University.
Mason
Thom Canfield, president and
chief executive officer of Mason Bank in
Mason, Texas, was recently elected to the
Board of Directors of IBAT Services Inc.
As a member of the IBAT Services Board
of Directors, Canfield joins a select group
of Texas community bankers charged with
recommending products and services for
endorsement by IBAT. Canfield has been
with Mason Bank since 1992 and has
Newtown, PA
Stephen Hall has recently joined
Bank Financial Services Group as chief
financial officer. In his new position Hall
will oversee all financial strategy, management and reporting. Prior to joining
BFS Hall spent 17 years with JP Morgan Chase where he held various senior
financial positions. He is a graduate of St.
John’s University with a Master’s degree
in Finance.
Paducah, KY
Jared Bahner has joined Computer
Services, Inc. (CSI) as its new business
development director for the South Central region. Based in Austin, Texas, Bahner
has spent his entire career working in the
banking industry. He has various experience working at multiple levels within
financial institutions, from front-line staff
to the C-suite and the boardroom. Bahner
has also worked with financial institutions
in many different roles over the course of
his career, from marketing and technology to leadership and compliance.
San Angelo
CalTech has promoted Allen Rodarte
to marketing coordinator. Rodarte has
been a part of the CalTech family for
over a year and recently received his Master’s degree in Industrial/Organizational
Psychology. H
$
IBAT 2014 Salary Survey
Data Collection Open July 1–31, 2014
IBAT members who submit data will
receive a free copy of the comprehensive
bank compensation report, due out in
early September.
http://www.ibat.org/ibat-salarycompensation-survey
THE COMPLIANCE GUY
By Kelly Goulart, CRCM, CCBCO
H
Wrapping Up Some Loose Ends — Loss Mitigation...Flood Insurance...Social Media...Vendor Management
aving had a number of questions recently
on several topics, I thought I would
take this opportunity to wrap up some
loose ends.
On the loss mitigation procedures found
at §1024.41 of RESPA — One question is,
what exactly is a loss mitigation application? The CFPB has defined a loss mitigation
application as any oral or written request that is
accompanied by any information required by a servicer for the evaluation of loss mitigation options. There
is no standard form. No criteria for what exactly is required.
There are four basic tenets of loss mitigation under RESPA
— 1) early intervention; 2) continuity of contact; 3) loss mitigation procedures; and finally 4) loss mitigation foreclosure procedures. A small servicer is exempt from all but the loss mitigation
foreclosure procedures (no servicer, including a small servicer,
can file for foreclosure until a borrower is 120 or more days delinquent). To be a small servicer you (and your affiliates!) can’t service more than 5,000 you originated or own. If you service any
loans you (or your affiliates!) did not originate or do not own,
you are not a small servicer!
On the flood insurance increase effective June 1, 2014 — Section
100228 of Biggert-Waters clarifies that the aggregate coverage
limits available for one- to four-family residential buildings is
$250,000, and that the aggregate limit available for non-residential buildings is $500,000 for each structure. That begs the
question that for qualifying loans you already have flood insurance on, should you require additional coverage based upon the
increased availability? The answer to that is yes. You should
be sending out 45-day notices on June 1, 2014 for those loans
in which increased flood insurance is available. Remember, the
amount of insurance required must be equal to the lesser of a)
the outstanding principal balance; b) the maximum limit of
coverage available for the particular type of property under the
act; or c) the overall value of the property securing the designated loan minus the value of the land on which the property is
located. If the maximum limit of coverage available increases, so
must your insurance requirement.
On social media and labor law — In the Interagency Guidance
issued by the FFIEC, the agencies indicated that the guidance in
no way was intended to supersede current laws. From the Guidance — “This Guidance does not address any employment law
principles that may be relevant to employee use of social media.
In addition, the Guidance is not intended to impose
any specific requirements for policies or procedures regarding employee personal use of social
media. Each financial institution should evaluate
the risks for itself and determine appropriate policies to adopt in light of those risks.”
If your bank is engaged in social media in any
way, you should carefully review your employee
policies and procedures with a qualified labor
law attorney to ensure your social media policy
and employment policies don’t have any conflicts. It’s
important to note that this is a very dynamic compliance
area for banks and worthy of additional attention to the changing laws.
On vendor management — I spoke with a community banker
who had just had finished their exam. It should come as no surprise that she said a significant amount of time was spent on
vendor management. Banks should have policies and procedures
for evaluating the risk profile of vendors, and they should be
retaining the evidence of risk and compliance management for
all third-party service providers. The more critical the service
provider is to the safe and sound operation of the bank, the more
complex the risk management process for that vendor. One size
risk management does not fit for every third party service provider; what might be adequate for one may prove totally inadequate for another. She shared one interesting piece of information: the OCC examiner asked if the bank had obtained
and documented a review of resumes for consultants the bank
was using in the compliance and credit risk management area.
That was a new one for me, but it really makes sense. Have you
reviewed the skills and professional expertise for those you are
going to rely upon?
It’s also a good time to pull out that Compliance Risk
Assessment you should have reviewed and amended at year end
2013. A lot can — and has — changed in six months.
Until next time…and give me a call or drop me an email
if you would like to share. And if you haven’t already done so,
take a look at our new website Compliance Tools at www.ibat.
org/bankers-toolbox. H
Kelly Goulart is IBAT’s Regulatory Compliance Manager with over 25
years’ experience as a compliance officer in Texas community banks.
IBAT member banks can solicit his advice and pose regulatory compliance inquiries free of charge by calling him at 512-275-2231 or emailing
him at [email protected].
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social media Guidance - Independent Bankers Association of Texas

Transcription

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